Lebanon's telecommunications sector is on the brink of collapse. Are there solutions in sight?

BEIRUT – The crisis of the telecommunications sector in Lebanon has entered a dangerous turn as a result of the significant deterioration in network and Internet services, coinciding with the demands of the employees of the government agency "Ogero", whose union carried out a strike that lasted for days and caused a number of "exchanges" to go out of service in some areas.

The union of employees "Ogero" - the official operator of terrestrial communications and Internet supply in Lebanon - temporarily withdrew from the strike last Saturday, pending a government session and what will be nominated for it, as the union received promises to implement the terms of the employees' demand paper, and said in a statement, "After the repercussions of our strike reached the required extent locally and regionally, and after its repercussions affected the overall local situation, and after the minister's initiative to call for a government session dedicated to discussing the situation in Ogero, and his adoption of the reform paper and demand, we suspend the strike."

But in content, experts believe that the solutions circulating are immediate and unsustainable compared to the pace of collapse, and will not be a springboard to save the telecommunications sector from the worst forms of decay it is witnessing, with voices rising to discuss the possibility of privatizing the sector or not.

Al Jazeera Net discussed the backgrounds of the demand movement of Ogero employees, and the causes and repercussions of the risks threatening the sector, with the Minister of Communications Johnny Corm, the head of the "Ogero" employees union Emily Nassar, the expert in information and communication technology Amer Tabsh, and the economist Ali Noureddine.

Ogero crises

Ogero is the official operator of terrestrial communications and internet supply in Lebanon, affiliated to the Ministry of Communications, and fed by the mobile phone companies "Alfa" and "Touch" and private Internet companies to provide services to its customers, and Ogero provides diesel to about 2100 telecommunications electrical stations, and faces great difficulties in covering its expenses and its ability to provide maintenance services is reduced due to the scarcity of its resources.

Its employees number about 2500,2019 employees in its various centers, and they are part of the public sector employees who lost the value of their actual salaries before the collapse in the fall of 1507, when the official exchange rate of the dollar was 105,<> liras, while it currently exceeds after cumulative jumps more than <>,<> to the dollar.

Ogero employees are demanding an improvement in their salaries, which are now less than $50, pay part in cash, receive a transportation allowance that covers all petrol costs and activate their health and education guarantee.

Captain Emily Nassar says that the salaries of Ogero employees do not cover the transportation allowance to work, and constitute about 1% of their actual value, despite the fact that they work 7 days a week, and explains that the temporary retreat from the strike is linked to the outcomes of the next government session in terms of dealing with their demands, which were adopted by Imad Kreidieh, Director of Ogero and Minister of Communications, which includes reviewing and correcting salaries and how to provide resources for them.

"If the government's response is positive, we will continue our work, and anything that is contrary to our just and urgent demands will push us to escalate strikes," she added.

Communications Minister Johnny Corm commented that the situation of Ogero employees is like that of various state employees, and given the state of collapse, solutions cannot be obtained by challenge and are in the hands of the government, because Ogero's expenses are part of the public budget.

"When we adjusted the tariff last July, the aim was to cover expenses, mitigate losses and provide resources for Ogero, but the exchange rate was 20,90 liras to the dollar, whereas it is currently around <>,<> to the dollar," he said.

To compensate for the large difference, "we may be forced to impose an additional increase on telecommunications of at least 6 times the current prices," the minister explains, explaining that Ogero tariff prices have been fixed in pounds since then, while the prices of "Alfa" and "Touch" have risen about two and a half times in line with the exchange rate of the Lebanese pound against the dollar.

Ogero is the official terrestrial and internet operator in Lebanon (French)

Loss between Alpha and Touch

Alfa and Touch are owned by the Lebanese state, but their management is private, and since July 2022, the government has given them the opportunity to improve the tax and raise its tariff in pounds for telecommunications and the Internet at a moving pace according to the dollar exchange rate on the "Exchange" platform, while the adjustment of the tariff in Ogero requires a government decision.

ICT expert Amer Tabsh describes Ogero's resources as scandalous, and explains that Ogero – which imports the Internet from European companies in cash dollars – is forced by the government to sell it cheaply to "Alfa" and "Touch" and to private companies, as they buy the "E1" package for about 1,475 liras (about $ 4), while "Alfa" and "Touch" sell it to users for about $ 200, and private companies distributing the Internet sell the service to subscribers in cash dollars, and the small package is not less than 10 Dollars.

According to sources familiar with Ogero's demand paper, it is proposing to improve its resources by issuing a decree allowing it to sell Alfa, Touch, and private Internet companies in dollars, with a selling price not lower than the actual value of the E1 package.

"Alfa and Touch are agents of Ogero, and they buy data from them, but all three belong to the state and their surplus goes to public finances," Corm said.

Economist Ali Noureddine believes that Ogero is paying the price for the government's disregard in its plan for this type of loss resulting from the collapse, but its employees have an exceptional case of using strikes as a bargaining force, because the disruption of their sector causes disasters for various sectors.

Amer Tabsh talks about the mismanagement of the government and the ministry of the Ogero crisis, and "by granting my mobile and private Internet companies privileges in collecting and paying fees, in exchange for the absence of oversight over the work of private companies, which has fostered the growth of the illegal distribution environment of the Internet to achieve huge profits."

"The authority has deprived Ogero of its competitiveness in the market, at the expense of citizens, which will lead to its bankruptcy in the future if it does not witness a comprehensive correction of its current status," he said.

Alfa and Touch are owned by the Lebanese state but have private management (Reuters)

Digital facts of the collapse

Historically, the telecommunications sector is the second most important source of state revenue after taxes, and was nicknamed "Lebanon's oil", and used to supply the treasury annually with about $ 1.4 billion, but the reality has changed upside down, and the sector suffered huge losses that appeared after the crisis and the actual value of its imports is no longer known today, according to Tabsh.

In this context, the Minister of Communications says that the amendments imposed in July 2022 reduced the pricing of mobile phones in dollars by about 3 times, despite its increase in lira, after telecommunications in Lebanon before 2019 were among the most expensive in the region, and as a result, "our revenues decreased more than 4 times due to the decline in income from about one billion and 400 million dollars to about 300 million dollars, and the expenses of my cellular company decreased from about 600 million dollars to 250 million dollars."

On the communications infrastructure, Corm said that for about 3 years there have been no investment expenses in Ogero, and the ministry has not purchased any new generator, which affects the quality of services and sectors in general.

Noureddine says that the telecommunications sector's budget does not allow for maintenance and investment, which caused a dramatic collapse in infrastructure, and considers that the crisis lies in the multiplicity of exchange rates, the gap in collection operations and the value of actual bills, turning telecommunications into a losing sector.

Privatization debates

In practice, political conflicts over the telecommunications sector led to the non-implementation of Resolution 431 of 2002, which stipulates in one of its provisions the privatization of the sector and opening the door to competition for new partners, breaking the exclusivity of the two operators of the cellular communications sector.

Amer Tabsh believes that the behavior of the government and the ministry paves the way for putting the telecommunications sector on the path of privatization, as a result of the losses that Ogero is drowning in, and the lack of transparency about its revenues, in exchange for ensuring the profits of Alfa and Touch.

Meanwhile, the ICT Minister states that the system of the two operating companies as Lebanese joint stock companies does not entitle them to take loans from the state, and the profits they previously achieved are not held in banks, but they have accounts in private commercial banks, and the surplus between their operating expenses and revenues is transferred to the state treasury, and does not benefit from its previous profits.

Here, Noureddine commented that there are different models of privatization, the model of the total exit of the state from the telecommunications sector and its sale, and the model of partnership with the private sector, which "has degrees such as awarding (such as) awarding operations or awarding investment in exchange for fees or awarding the management of the sector."

He believes that privatization will not be a solution, but rather a tool for a broader solution that pushes towards the advancement of state institutions, integration with a comprehensive economic plan, with the imposition of good governance that guarantees the management of communications, and explains that all the solutions currently proposed are patchwork and postpone the total collapse of the sector.