Lebanon’s telecoms revenues – a key income for the cash-strapped budget – have seen a moderate decline this year amid a slowing economy and customers shifting away from text and calls to free messaging and Voice over Internet Protocol applications. “So far this year, there is a small decline in revenues of no more than 3 percent,” caretaker Telecoms Minister Nicolas Sehnaoui told The Daily Star in an interview. Finance Ministry figures released last week show financial transfers from the Telecoms Ministry to the Treasury declined 14.35 percent in the first five months of the year to $510 million – nearly $85 million lower than reported in same period last year. Still, at around 12 percent of all financial receipts by the Lebanese Treasury, telecoms revenues are one of the largest sources of state income. But Sehnaoui said the figure was not indicator of a sharp decline in revenues. “The [Finance Ministry] figure is based on cash flows, meaning it reflects cash transactions [between the ministry and the Treasury]. ... For instance, funds invested in the network upgrades are deducted from the transferred funds,” Sehnaoui explained. Sehnaoui said that according to more recent estimates, the decline in Telecoms Ministry transfers currently stands at 9 percent compared to last year, “but is expected to catch up with last year’s level by the end of the year.” Lebanon’s two state-owned – but privately managed – mobile operators have been investing in extending 3G coverage and both have launched 4G services in Beirut earlier this year. Asked if customers shifting to VoIP and free mobile messaging applications was harming revenues, Sehnaoui said that while voice revenues had decreased over last year they were compensated to a large extent by a surge in data revenues.
“We have a great takeoff in data subscriptions and this is allowing [operators] to create new revenue streams including new packages and services ... which [are] largely compensating for a small decline in voice revenues,” Sehnaoui said but did not offer figures. The minister said that the two telecoms operators had been carefully tailoring data plans to avoid any sharp declines in profits such as happened in other countries. “Many international mobile operators have jumped into giving unlimited data plans to customers, only to realize that this was unsustainable. ... Now the majority of international operators are reconsidering this trend,” he said. But the state monopoly over the sector continues to be highlighted as a major obstacle for growth. “[The Lebanese government’s] tight control over the Lebanese telecommunications sector is holding back investments and innovation, while the lack of competition in the mobile and broadband segments is restraining growth,” a Byblos Bank newsletter quoted a report by Business Monitor International as saying. The report said the number of mobile phone subscriptions was projected to reach 4.4 million by the end of the year, up 10 percent from 4 million subscriptions in 2012. By the end of the year mobile phone penetration in Lebanon will exceed 100 percent, the report added, forecasting a gradual increase to 110.1 subscriptions per 100 inhabitants in 2017. Yet 3G service in Lebanon via handsets, tablets and other 3G-enabled devices will see a whopping increase of 50 percent from 1.1 million in 2012, the report said. Even with the moderate decline in direct revenues, the minister said there would be an overall increase in income from the sector. A new initiative to curb mobile smuggling is expected to add at least $60 million by the end of the year. In May, the government started utilizing the International Mobile Station Equipment Identity, a unique number assigned by manufacturers to every handset, to curb smuggling. llegally imported mobile phones, whose IMEIs have not been registeredat the Customs department when imported, have been made unusable on both the touch and Alfa networks. Asked if the influx of hundreds of thousands of Syrian refugees was increasing telecoms demand, Sehnaoui said that according to a study conducted by his ministry, only one in ten refugees was subscribing. “This means that there might be around 100,000 new subscriptions but the impact on revenues is very low, because most of them are low budget users,” he said.
