Interview with Marwan Hayek, Chairman and CEO of Alfa Moblile Lebanon

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The mobile penetration rate in Lebanon currently stands as 28% ranking far behind other countries in the region, with Jordan for example having a penetration rate of 74% and Saudi Arabia a rate of 78%.  What is your assessment of Lebanon’s telecom sector and what are the key opportunities and challenges?

First of all, the penetration rate stands much higher than 28%.  Today we are at 55%.  This sector represents a lot of potential growth opportunities for potential investors. The Telecom sector is highly  regulated, it’s kind of a state-owned monopoly even though we have two mobile operators in the country, but they are both owned by the government.  This is limiting the competition between the two mobile players, leaving the sector without a lot of innovation on the services side. The consumer appetite and the budget is there; however, we as operators have to be ready to offer the services the consumer is waiting for and on time.

What is your perception of the regulatory environment in Lebanon?

Frankly speaking we cannot really talk about regulatory environment in Lebanon because it is still a newly born entity. The TRA in Lebanon did not reach a level where it can play its own defined role as per the telecom law.  Unfortunately, we are lacking strong regulatory environment that can have the independent power to regulate the sector since it is still state-owned.

When do you think privatization will take place? If it takes place is ORASCOM going to bid for Alfa?

The government has announced recently that there will be no privatization in 2010.  However there are a lot of discussions taking place today on what way to take for the future of the sector.  Various options are being considered, starting with a public- private partnership model whereby the public and the private will join hands in rebuilding the sector and investing in it.  Another model is full privatization, and selling the assets to new investors. A third model is to continue with what we’re doing today, which is outsourcing the operations to telecom companies that have certain expertise in this field.  It is unclear what the final scenario will be after 2010.  As for ORASCOM Telecom: yes, ORASCOM Telecom is very keen on entering the Lebanese market as an investor in the mobile sector.  That is why we are here and supporting the government, ready to bring our expertise and any experience we can from other markets. 

MTC Touch remains the largest mobile operator with a subscriber base of 1.168 million compared to your subscriber base of one million and ninety thousand.  How do you tackle competition from them?

In the last one year, we managed to grow our subscriber base by almost   the double.  .  There was a massive modernization that took place last year to swap all the old systems we had and replace them with newer technologies which gave us a certain edge or advantage from a technological point of view.  What is still missing is innovation; new services that we need to offer to be competitive enough and appealing to various segments of the customer base especially the youth segment which offers a lot of potential in this country. Innovation and anticipation of subscribers needs are our top priorities for 2010 in addition to continuous improvement of the customer experience which constitutes the main competitive advantage in today’s market.

How much differentiation can be offered on the market?

Not much; however, there’s still room for innovation.  There are a few initiatives that we have in the pipeline, especially for 2010.  We are interested in introducing some services like the Ring Back Tone service to the market, which is very appealing to the youth segment.  Services like e-payment and mobile advertising are under assessment.  Hopefully, this will reposition Alfa as the main and the leading GSM operator in Lebanon.

How much help do you receive from the government and the public sector?

Anything related to investment or capital comes from the government.  There is total support given from the government to the operator.  Being a part of ORASCOM - which is a regional telecom player - we get a lot of support and synergy on various aspects, starting from the purchasing power the group has which helps in reducing our costs to both Alfa and the ministry of telecommunications.  Because we operate in other countries, we can tap into this source of expertise for an operation like Alfa here in Lebanon.

How do you assess Alfa’s performance, and what are the key challenges you are facing during this time?

Alfa’s performance during the first year of operation was impressive.  We managed to double our base in less than one year.  However, there are still a lot of things to be done especially on the innovation and services side.  Going forward, we have an ambitious plan.  Hopefully we will be able to recover the leadership position in the local market.

Can you tell us about Alfa’s constant interest in corporate social responsibility?

This is a subject that is very dear to our hearts.  We have many ongoing initiatives, mainly addressing local non-profit organizations that deal with children with communication needs, such as mentally handicapped children, deaf and mute children, and other various children’s associations.  Another area that we have recently started associating with is women’s rights, whereby we have a plan that is being put in place today to boost this cause and develop it in the country.

What are the prospects of having a third mobile operator on the market?

There is always room in the market to have another mobile operator.

"However, when the three

operators belong to the same

owner it defeats the purpose."

The purpose of launching a new operator is to put pressure on the existing operators, from a competitive point of view: in order to drop prices, improve services. 

"Launching a new operator would not add

any value to the current setup in Lebanon. "

You have been appointed Alfa’s owner and CEO starting March 11, 2010.  What is your vision for Alfa?

It is to really put my expertise at the service of the sector in Lebanon and to try with the rest of the industry players to reposition the telecom sector in Lebanon as a main regional hub.  We want to regain our market leadership position as Alfa.  We want to offer to our employees a better environment that will help them to produce better, and be more efficient at what they do. Last but not least, I want to ensure a long term presence for Orascom Telecom in Lebanese Telecom Sector; mobile or others.