Six in fray for Syria's 3rd cellphone license

Damascus - 15 November, 2010

Six companies have applied to become Syria's third cellphone operator, a telecom official said, in the first stage of an auction that will test the state's ability to award contracts according to international standards.

France Telecom, Turkcell, Emirates Telecommunications Corp (Etisalat), Saudi Telecom, Qtel of Qatar and Iran's Tamco have submitted documents before the pre-qualification deadline on Sunday, Deputy Telecom Minister Mohammad al-Galali told official media on Monday.

The telecom sector is tinged with politics in Syria, which has been under US sanctions since 2004 for its support of militant groups, but has lifted several bans on investment after decades of Soviet-style economic policies.

Independent political figures who criticised the way the state had awarded contracts to the two existing operators have been jailed for five to seven years.

Telecom executives said that competition for the third licence will be tough, with Saudi Telecom having deep pockets and Turkcell gaining a knowledge of the market after an attempt to acquire Syriatel, one of the existing two operators, collapsed two years ago.

'The pre-qualification process has been vague and messy, but ultimately the tender is written in a way that leaves no chance except for the company putting up the most cash to win,' a market source said.

The tender had been expected to draw international interest for one of the last markets in the Middle East with a major potential for expansion.

According to the tender document, the licence would be awarded 'by way of a multiple round auction with confidential bidding' from applicants who pass the qualification phase.'

Syria has 10.4 million cellphone subscribers, including prepaid cards, according to Telecom Ministry figures. The country has a population of 20 million and 3 million expatriates.

The two current cellphone operators are South Arica's MTN and Syriatel, which is mostly owned by Syrian businessman Rami Makhlouf, who is under specific U.S. sanctions.

Syriatel and MTN operate in Syria under 15-year build, operate and transfer (BOT) contracts that government will scrap next year and convert to 20-year licenses for a fee of 25 billion Syrian pounds ($537 million) each.-Reuters