Internet Lebanon

The prospects for Lebanon ICT development and broadband development will remain good in Lebanon. Over the past 4-5 years we have seen growth in Lebanon ICT sector of around 15-20% and this has been restricted by the unavailability of the basic ingredients for internet-international capacity and availability of access lines in Lebanon ICT sector.  If these restrictions were moved, these ingredients present, and reform took place, we could easily see 40-50% growth in the telecom sector .


Interview with Khaldoun Farhat, General Manager of Cable One and Terranet

Lebanon ranks 82nd out of 159 countries and 9th among the Arab countries in ICT development.  To what extent do you agree and disagree with this, how has ICT changed Lebanon, and what is your current assessment of this sector?

This ranking is unfortunately true.  Lebanon lags far behind many regional countries in ICT development and telecom structure.  Mobile cellular telephones started in Lebanon in 1994 and internet in 1995 and these were all early in the Middle East but for political and strategic reasons the clock stopped in the year 2000.  Our licenses has internet and data providers stopped being returned for long-term and only year as of a few years ago and the sector has frozen.  Liberalization and privatization are at odds but the current priority in the country is to move ahead with telecom reform and Lebanon privatization and we will see how the politicians pursue this.

“The World Bank assessed that a 10% increase

in the broadband infrastructure in Lebanon could

result in 1.2-1.5% increase in GDP and the capital

expenditure needed for that is far

less than the return in one year.

What are the prospects for future development?

The prospects for ICT and broadband will remain good in Lebanon.  Over the past 4-5 years we have seen growth of around 15-20% and this has been restricted by the unavailability of the basic ingredients for internet-international capacity and availability of access lines.

“If these restrictions were moved, these ingredients

present, and reform took place, we could easily see 40-50%

growth in the telecom sector.”

We are always hopeful in Lebanon and the private sector is the driver behind the economy.  If you were to remove regulations and politicians I think we would see a lot more growth.  Over the next few years I think some of the regulations will still be there and the clash between the TRA , regulator, and the Ministry, but there a steady 15-20% growth will remain.

How do you operate in such an environment? What is your strategy?

We find ways to get by.  We continue to lobby on the political side, the TRA side, and the government side.  We operate in an uncertain environment but we have to manage to supply service and move forward.  Providing quality is a priority for us too but this is also difficult.  The solution is reform, privatization, and deregulation of the telecom sector.

Once the reform is adopted do you expect to grow at a very high rate?

Yes, like any operator in the country with good vision, intent to succeed, and the appropriate investment, ICT and telecom should be see growth of around 30-40%.   We are optimistic to a certain extent and we will be very happy if deregulation takes place to allow for big growth.  TRA has to push the government, reassess their role, and redefine telecom privatization strategies due to current economic conditions around the world.  This will help the private sector and the country increase ICT and broadband despite difficult economic conditions.

As a company, what is your market share, growth targets, and how would you characterize your strategy for the next three years?

Cable One is among the top two providers in the country for internet and data.  For the future we see ourselves investing in broadband in Lebanon and we are looking at consolidation of ISPs and DSPs as well as between existing operators.  In terms of figures we have seen constant growth since 2007, averaging around 20% with figures nearing 40% in some sectors.  This slowed down in 2009 due to the lack of international capacity and lines from the incumbent.  For this year we wait to see the Ministers position and vision for telecom in Lebanon , particularly for the private sector and whether the Minister will be able to curve the unfair competition of the incumbent.

What is your long-term vision for the ICT sector in Lebanon and the country itself?

“Internet penetration is less than 30% and this will

continue to grow for natural reasons in the mean time.”

If reform is taken up this should reach 70% within the next few years because the demand is there but the need has been unmet.  We have been in the market since 1994 first in the cellular sector and now in the broadband internet sector and we intend to remain a player while we encounter consolidation and growth in the market.

Speaking of consolidation, you too could become part of an acquisition as a small company.  How do you remain competitive?

We are looking all of the various possible scenarios.  We recently created a product targeted towards corporate/businesses because these services never stop growing.  We serve many of the banks in Lebanon , all of the country, and this is a very steady stream of income for us that we intend to increase over time with the provision of complete solutions and services.  We have considered the possibility of acquisition but we are also looking at our own acquisitions and/or mergers.  I believe that as an entity we will continue to operate in broadband and telecom in Lebanon for years to come.

How do you structure your communications and marketing strategy given the current climate in Lebanon?

This is a difficult we face regularly.  We prepare our marketing budget and strategy yet we face specific roadblocks along the way that prevent you from doing things.  There are always various levels of marketing that you can do as we take things as they come.  Over the past few years we have survived and even grown during difficult times (2006 war) and continued to operate.  Growth increases because internet demand increases at home and work during difficult times.

Would you like to enter any other domains?

We have looked at this in the past looking at web services,etc. Ultimately as a data/ISP, once you have reform and liberalization, an ISP does not provide internet and access only but also value-added services.  At one point we were the leader in this area in Lebanon and now we are looking at this again for ways to improve.  We would also like to provide VOIP when regulations allow for it.  Also, we went abroad to look at new markets and this is why we have operations in Africa (four mobile operations) and nine WiMax licenses (with two currently operational).  We have looked to the Middle East and from 2003-2007 we managed operations with the state-owned internet services in Iraq and increased their subscriptions from 5000 to 250,000.  The organization was profitable but in 2007 due to security and political pressures we pulled out.  Today we are looking at that again and due to the peace we see there we are looking at entering Iraq again.  Syria is a virgin market that remains to be tapped so there is potential there for business as well.

How can the international business community help you with the challenges you are facing in Lebanon?

We have considered partnering with equity business investors in Africa, for example and at the moment we are talking to financial institutions in Paris.  The networks we want to deploy wireless (Lebanon, Iraq, and Syria in the future) require a large investment and we would like to share the risk with these financial institutions.

“In general, the finance and business community

should look at Lebanon as a safe haven for investment .”

The World Bank expected Lebanon to see growth of 4% in 2009 yet we saw around 7% so things are positive. 

Why should financial institutions want to partner with you instead of other players in the market?

We probably have more difficult conditions for partnerships but we are established and proven ourselves since 1994 and been successful.  We are a well established, experienced partner with know how for both Lebanon and the MENA region.  In the Middle East you would not seek big partners where internet/data is a small portion of revenue.  For Africa, we are seeking mostly equity investors to share risk with as we expand.

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