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Monday, 22 January, 2001, 20:03 GMT
Syria awards mobile phone licences
Mobile phone users in the Middle East
At present, Syria has only very limited and expensive wireless services
Syria has awarded two companies licences to operate mobile phone services.

The project promises to be a big step forward for phone users in Syria, who, at present, have access only to very limited and expensive wireless services and a creaking fixed-line network run by the state.

Analysts say it is also a sign that cautious moves towards wider economic reforms are advancing under new President Bashar al-Assad.

Other initiatives announced to date include freeing the banking system from government control and setting up a stock exchange. The president has also promised to promote the internet.

Pilot schemes replaced

The successful bidders for the telecoms licences - SyriaTel, a subsidiary of Egypt's Orascom Telecom, and Investcom of Lebanon - will now build global standard for mobiles (GSM) networks to replace pilot schemes they set up in February last year.

Orascom said it expected to have 75,000 subscribers within a year and 850,000 by the end of the licence's 15-year duration.

This compared with pilot schemes covering six cities that had total capacity for up to 60,000 subscribers but attracted few customers because of high sign-up fees and call charges.

'A very important market'

"With a population of over 16 million, three of which reside in the capital city Damascus, and with its prominent role in the Middle East, Syria is definitely a very important market for Orascom Telecom's regional strategy," Orascom Telecom chairman Naguib Sawiris said.

Orascom said it planned "an aggressive rollout for the Syrian network" with a network investment of more than $60m in the first year.

The licences were awarded on a build-operate-transfer (BOT) basis, under which ownership of the networks will revert to the Syrian government at the end of the 15-year period.

SyriaTel and Investcom will each be required to pay upfront frequency fees of $20m for GSM 900 Mhz. Payment of an additional $15m would allow an operator to use GSM 1,800 Mhz frequency bands without any further bidding procedure, Orascom said.

Revenue sharing

The contracts signed with the two firms also laid out a revenue sharing agreement, under which operators are to transfer 30% of their annual revenues to the government in the first three years, 40% in the following three years and 50% in the remaining period.

The Syrian government will have the right after seven years to invite a third operator to enter the market offering a similar scope of service.

SyriaTel and Investcom will be permitted to extend their licences by three years, during which period they would be required to up their royalty payments to 60% of revenue.

Turkey's Telsim, which has about 30% of the Turkish mobile phone market, had also submitted a bid for a Syrian licence.

Orascom Telecom, which has operations throughout the Middle East and sub-Saharan Africa, last week failed to win a Nigerian GSM licence at auction.

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19 Jan 01 | Business
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