Economy2 hours ago (Jan 13, 2022 08:37AM ET)
© Reuters. People queue outside an Alfa telecommunications store in Beirut, Lebanon January 12, 2022. REUTERS/Mohamed Azakir
By Laila Bassam and Timour Azhari
BEIRUT (Reuters) – Lebanon’s telecom duopoly, once cash cows for the state, used to allocate most of their spending on wages, rent and infrastructure.
Now revenues have nosedived, and the biggest cost for Alfa and Touch is diesel for the power generators that – with the country’s economic meltdown causing national blackouts on top of a currency crash – they use to run the creaking telecom network.
“We are in crisis management mode without being able to look at all at long-term problems or see what the overall solutions are because we’re distracted by daily matters,” Telecoms Minister Johnny Corm told Reuters. “We are living day by day.”
While global telecoms operators compete on offers for subscribers or building 5G networks, Lebanon’s mobile firms – which both returned to state hands in 2020 – are focused on more mundane matters such as stopping the regular theft of their network tower cables.
“Every day there is a robbery,” Corm said. “It has reached the point that we contact municipalities to ask for help because the security services no longer have the capacity.”
Last year, when Lebanon’s ailing power grid was just about on its feet, generator fuel made up 7% of the telecom sector’s expenses. That is projected to soar to two thirds of the budget this year, the minister said.
Wages are forecast to fall to 10% of costs from one third – a measure of how revenues are now being eaten up by costs and how employees’ spending power has shrunk.
In dollar terms, those revenues are just 5% of their level before the crisis erupted in 2019, showing the extent of the collapse of the Lebanese pound, which has made imported equipment cripplingly expensive.
The minister said Touch made the equivalent of $850 million in 2018, when Lebanon’s pound was at 1,500 to the dollar. Based on the current exchange rate of 31,000, that shrank to the equivalent of $45.5 million in 2021.
Corm said the companies had to review prices to keep operating and avoid draining the state’s already almost empty coffers.
However, any price adjustment needs cabinet approval, he said, which adds complications as ministers have not met for three months amid a dispute over a probe into Beirut’s huge port blast in 2020.
Internet outages and weak mobile signals plague the system, but Corm suggested the outlook for any improvement was bleak, with as many as half of the two firms’ employees failing to turn up for work. For some, wages don’t even cover transport costs.
Revenues from telecoms were in decline before the crisis, Corm said, a fall often blamed on corruption. But the minister said the impact of graft was now dwarfed by the economy’s collapse.
“When there was a lot of corruption there was a lot of money,” he said. “Today there is no money left.”
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