Telecoms Minister Johnny Corm at a meeting to discuss the new telecom tariffs that were approved by the government on May 20. (Credit: Philippe Hage Boutros/OLJ)
Telecoms Minister Johnny Corm, Director General of Ogero Imad Kreidieh, and the Chairmen of the two mobile operators Jad Nassif and Salem Itani presented on Thursday the new telecom tariffs as approved by the government on May 20.
Itani, the chairman of Touch, reiterated that the new tariffs are critical for the survival of the telecoms sector.
Itani stated that the Average Revenue Per User (ARPU) — a metric widely followed in the telecom sector and is the average amount of revenue generated by each active user over a given period of time — stands currently at $1.2 when calculated at the parallel market rate. The rate is down from $26.2 in 2018.
He said, once tariffs are increased, ARPU will increase to $6.3, but will remain the lowest in the region.
Corm said to L’Orient Today on May 20 that total revenues are expected to increase to $350 million from $70 million once tariffs are increased.
Itani explained that operating costs dropped from $530 million in 2018 to $254 million now, and this number excludes capital expenditures.
Itani said in 2018, energy costs stood at 9 percent of operating expenses while now the ratio is close to 60 percent — the objective is to bring it down to 25 percent.
Itani also stated that all previous profits generated by the sector were transferred to the government’s accounts.
Itani explained that the drop in operating expenses from $530 million to $254 million was the result of several cost cutting measures, some of them already completed while others are still underway. He said that the operators have completely eliminated their marketing services, stopped the added value services with third-party suppliers and negotiated lower rents on warehouses and stores.
Itani also stated that the companies have a freeze on employment, and they are losing expertise as resignations already exceed 20 percent of the workforce.
Itani said that one of the cost-cutting initiatives underway is to shut down the 2G network that will save $40 to 45 million per year. He also said the companies will organize an auction to sell old equipment and raise fresh US dollars.
Kreidieh said prices for Ogero services will increase on average by 2.5 times. New prices are already posted on Ogero’s website.
L’Orient Today asked whether rates will be increased again soon, since the operators are basing their forecasts on a reduced cost structure, to which Itani answered that “as long as tariffs are linked to Sayrafa then rates should not change.” Yesterday’s average Sayrafa rate was around LL24,600. Whereas Kreidieh said, “it is impossible to tell, given the complex and dynamic nature of Lebanon’s crisis” and “now the important objective is to assure the continuity of the sector.”
Itani said that the new rates will be calculated based on current prices in US dollars divided by three and then multiplied by the Sayrafa rate.
Some of the changes include:
• Prepaid:
• Recharge cards: Cost per minute is 25 cents and will become 8 cents
• SMS costs will go from 5 cents to 2 cents
• Recharge card (1 month) for $22.73 will become $7.58
• 500 MB data bundle of $10 will become $3.5
• Postpaid:
• Cost per minute is 11 cents and will become 4 cents
• Monthly subscription of $15 will become $5
Clients with already purchased credit will be converted to US dollars at the Sayrafa rate. Nassif, the chairman of Alfa, introduced a new recharge card priced at $4.5 which offers 56 minutes call time or 500 MB with 12 minutes of call time. New prices will be posted on the operators’ websites in the coming days and they will be in effect starting July 1.