MTC Touch

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In April of 2004, Kuwaiti firm Mobile Telecommunications Co. (MTC) won the bidding for a four-year management contract for one of Lebanon's two mobile companies by the Lebanese cabinet. MTC offered the second lowest bid for the former Libancell network, behind Detecon of Germany which bid US$192.3 million. But Detecon also offered the lowest bid (US$201.3 million) for the Cellis network, and chose to accept that contract (the tender terms did not allow one firm to run both networks). The government was to effectively pay MTC US$209,301,151, or US$4.35 million per month, to manage the Libancell network for the 48 month period, beginning in June of 2004. The government in 2001 canceled the licenses of the country's two cell phone operators, Cellis and Libancell, in a dispute over demands that the companies pay hundreds of millions of dollars in back taxes and fines for allegedly exceeding their quotas of 400,000 lines each. The government, however, asked the companies to continue managing the companies for a fee. But the government complained that Cellis and Libancell charged too much for operating the networks and hoped to save money by auctioning them off to foreign firms. In fact, the winning bids were both about 30% less than the management fees charged by the two previous companies. MTC aimed to increase the number of subscribers of the network to 650,000, up from the 400,000 it inherited within the four year contract. The network was given the brand name "Touch." The government was generating US$49 million a month from both networks, a revenue representing 20% of the total income of the state. This made it unlikely that the tariff rates, among the highest in the region, were to be reduced, fueling a series of attempted day-long cellular boycotts among subscribers. The government decided to offer the management contracts to tender after receiving a poor response for the sale of two licences to operate the networks for 20 years. The project was extended for one year in February 2009. The project was extended for one year in February 2011. The project was extended for one year in February 2012, expiring January 31, 2013. Investments are 0 (management contract)