TBY talks to Marwan Hayek, Chairman & CEO of Alfa, on the introduction of 3.5G, pricing plans, and the importance of the mobile market for Lebanon's economy.

How has your personal experience in Lebanon and the international marketplace helped Alfa contribute to the development of the local telecoms sector?

Alfa's biggest contribution to the Lebanese telecoms sector in the last 18 months has been upgrading its infrastructure to the latest 3.5G mobile technology, which we expect to launch around at the end of 2011 to our subscribers. My international experience and exposure has given us the know-how that has enabled us as an organization to steadily move forward with 3.5G implementation in Lebanon and to show the Lebanese people that moving to the 3.5G era is the right path for the development of the telecommunications sector in Lebanon and the economy as a whole. Introducing 3.5G in Lebanon is a historical milestone that will give a big boost to our national economy, attract new investments, and spur economic growth.

What data packages will be offered with the introduction of this network and are you pushing for an unlimited data package?

I cannot say that we are pushing for an unlimited package due to the negative effects such offerings can have on networks capabilities. People tend to overuse unlimited offerings, which leads to an overload on the network, especially on the data side. Keeping in mind network capabilities, I believe we will not be able to offer unlimited packages in Lebanon. Hence, the offerings we will be launching will be limited bundles, but with a slightly high-data rollover per package.

“We want to start by driving the telecoms industry in Lebanon at the fastest possible pace."

Alfa managed to increase its number of subscribers significantly in 2010. To what do you attribute this growth?

The growth in Alfa subscribers was estimated at 22% y-o-y until June 2011, and came as a direct result of the reduced prices that were introduced in 2009—a 30% reduction was applied on both post-paid and pre-paid offers. Also, it was a direct consequence of the decision of the Ministry of Telecommunications to re-invest in the sector. The Alfa network is owned by the government, but is managed by Orascom Telecom Group, a leading private telecoms entity. Therefore, the decision of the Ministry to invest in the network and expand capacity went some way to quell the built-up demand that was out there in the market. Today, Alfa has a total subscriber base of around 1.5 million customers out of a total of 3.1 million mobile users, in a country of only 4.5 million. This means that the cellular penetration rate in Lebanon currently stands at around 75%, which is an acceptable rate but still lagging behind that of neighboring countries, where penetration rates are closer to 100%.

How will you be focusing on cheaper plans, especially for pre-paid voice calling rates?

The tariffs here in Lebanon are different between post-paid and pre-paid. Pre-paid offers are considered expensive when compared to other rates in the region, since we are talking about a minute rate of $0.40 per minute. Post-paid rates stand at around $0.13 per minute, which is slightly more expensive than in other countries, so on the post-paid side we are doing fine. However, on the pre-paid side, there was a need to review the prices. That's why there was a rate cut in 2009 that was followed in 2011 by the “Alfa Waffer" plan, meaning “Saving with Alfa" in Arabic. The “Waffer" plan was mainly targeting the low-end segment; i.e. people who tend to only receive calls and not make many outgoing calls. We have three packages in this plan depending on the budget of the customer. For $10 a month you can stay connected, receive unlimited calls, and make calls worth 30 minutes per month. For $15 you benefit from 60 minutes talking time and with $25 you receive 120 minutes. This represents around a 60% reduction on the amount you need to spend to stay connected. On the minute rate, depending on the package you choose, you get a discount ranging from 33% to 40%.

How will the modernization of Lebanon's telecommunications network open up the sector to multinationals?

Dubai is home to numerous multinational companies. One of the reasons for being based there is the ease of connectivity to the rest of the world. If Lebanon sees an improved situation and connectivity comes back to the country, there is no reason why people won't choose Lebanon. Introducing 3.5G will open this door, through facilitating starting new businesses in Lebanon and encouraging international and regional organizations to establish their head or regional offices in Beirut. We want to start by driving the telecoms industry in Lebanon at the fastest possible pace in order to bridge the gap we still have today between other countries in the region and beyond since telecoms is a horizontal growth engine that can positively impact many other sectors, such as health, education, and banking.

© The Business Year - July 2011