The 1975-91 civil war all but wiped out the country's infrastructure, cutting national output by half, and effectively putting a violent end to Lebanon's historic position as the gateway between the East and West. By 1994, however, the Lebanese entrepreneurial spirit had reasserted itself, and Lebanon became one of the first countries in the region to build GSM networks. There were hardly any fixed lines left in service after the war and a number of private short-wave radio networks had been temporarily introduced to fill the communication vacuum.

El Hashem recalls: "Lebanon has been on the leading edge ever since mobile communications took off, and a well-advanced market in terms of user sophistication, traffic volumes and value-added services. It was one of the first countries in the region, in early 2001, to launch GPRS. Data services have been primarily taken up by the business community and professional users."

He adds that mobile telecom development however has been somewhat stalled by the unusual situation in which, under four-year agreements, the government owns the infrastructure and private operators run the show in return for a fixed monthly fee. "With the MoT being responsible for capex decisions and the operators in control of opex, there is bound to be built-in conflict of interest," El Hashem notes.

Consequently, there are only 800,000 mobile subscribers out of a population of 4 million. But, says El Hashem, many characteristics of Lebanese society point to a large pent-up demand. "The education level and the degree of internationalization are the highest in the Middle East. For every Lebanese living in the country, there are more than three living outside and when they come home they require the same technological standard they are used to," he says, predicting that the EDGE-enabled data services to be implemented by Ericsson in the third quarter will fulfill a huge demand.

Moreover, last year tourism rose to 1.2 million visitors. Coupled with Lebanese expatriates and domestic and international business users, it makes roaming traffic a very important source of income for GSM operators. The demand for prepaid cards skyrockets during the holiday seasons.

The depressed state of the global telecom market in the years following the turn of the century, coupled with the inability to reach political consensus on the fate of Lebanese telecoms, has precluded a full privatization of the networks. In 2004, however, the MoT awarded Ericsson a contract to conduct a Revenue Assurance and Network Quality Performance on the existing GSM networks. The project was one of the biggest of its kind for Ericsson, and included development and integration of sophisticated software to extract specific data from the billing process and the core network for Revenue and Quality Performance measurements.

Following the successful outcome of the project, MoT was able to verify its monthly revenues and provide an accurate blueprint for a future privatization tender.