As of February 14, 2024, the Minister of Telecommunications approved a re-bid, confirming suspicions that he might be under pressure from the head of the Second Chamber of the Audit Bureau, Judge Abdel-Rida Nasser. However, there is no sign of any action from the judicial authorities that involves conducting further investigations into the matter or holding the minister accountable for his indiscretion.
On January 16, 2024, the Second Chamber of the Audit Bureau, led by Judge Abdel Reda Nasser and comprising of advisors Mohammad al-Hajj and Joseph Kesrouani, issued a report regarding the outsourcing of the special system for text messages, known as the A2P service, by the Lebanese Ministry of Telecommunications and Touch, one of the only two mobile telecommunications operators in Lebanon.
The report concluded that Touch’s outsourcing to the company In Mobiles was unlawful and resulted in significant financial losses to the public treasury. As a result, the Audit Bureau recommended the termination of the contract with In Mobiles, as cited in Article 37 of the contract, which permits the voluntary termination of the agreement. This has naturally led to the initiating a new bidding process for resuming the A2P service.
According to a telecommunications industry insider, the A2P service remains operational within Touch as part of its business continuity strategy. It involves managing public services until a new service provider is secured because halting the service without a viable alternative would be impractical.
Regarding users failing to receive messages, the source clarified that this mechanism usually works well with mainstream applications that are widely used and that the delays in receiving registration or verification messages might get flagged as fake traffic for applications that are less commonly used.
When this happens, Touch employees contact the companies of these applications to verify the authenticity of the verification they had sent, which is crucial for distinguishing them from phishing attempts by malicious actors.
The Audit Bureau has released an unprecedented number of reports related to Lebanon’s telecommunications sector over the past two years. These reports mark a significant step forward as the Bureau had begun to comprehensively document everything related to this sector in an effort to curb waste and corruption, particularly following the enactment of the Public Procurement Law in July 2022.
What is A2P?
The service known as “Application to Person” (A2P), also referred to as “Customers receiving messages from global applications,” has gained prominence in the telecommunications sector due to the increasing reliance on mobile software.
With the rise in electronic breaches, it has become essential for applications to verify that users are human and legitimate account owners, particularly when they change their security settings. The A2P service facilitates this verification process by allowing applications to send verification codes to users via email, SMS, or rapid voice dialing.
Given the vast number of applications available, it is impractical for each telecom operator to contract with every application developer directly, so companies have emerged to bridge this gap and act as intermediaries. These companies simultaneously handle the contracting process between the application developers and telecommunications operators, thus overseeing all relevant verification traffic between the users and the telecom providers. According to studies in the field of communications, the A2P messaging market is projected to reach a value of 86.53 billion US dollars.
What are the specifics of the bidding process that led to significant controversy in Lebanon in the past year prior to the decision made by the Audit Bureau? Additionally, what will happen to Touch’s A2P service if their collaboration with In Mobiles is suspended, and how will Touch subscribers be able to activate their applications or engage in verification processes if they encounter a digital security breach?
Insight into A2P service details across the two mobile companies
Lebanon’s foray into this sector has been marked by a lack of organization, characterized by attempts to land deals with companies lacking the requisite qualifications and standards. This has resulted in substantial financial losses for the two mobile telecom companies operating in the country.
According to the recent report by the Audit Bureau addressing the A2P service, the process began with Touch initiating a bid to outsource the service on December 22, 2021. As a result, the other company, Alfa, launched a similar bid in November 2022.
In accordance with the new Public Procurement Law, Alfa’s bid was found to be compliant and up to standard with the Public Procurement Law. In contrast, Touch followed an outdated mechanism, failing to abide by Public Procurement Law. This inconsistency was the main reason behind the confusion regarding the legality of Touch’s bid.
Despite Touch initiating its A2P bidding process 11 months before Alfa’s, it took Alfa only seven months after launching its bid to sign a contract with the winning company, Vox Solutions Global Limited, on June 7, 2023. In contrast, Touch waited a year and seven months before finalizing its contract on May 22, 2023, with the winning company, In Mobiles.
This delay led to numerous shifts in market dynamics, the sector landscape, and pricing structures, prompting the Ministry of Telecommunications to take action based on new information, which it failed to do in a timely manner.
Transgressions of the Minister of Telecommunications
The Audit Bureau’s report on the A2P service has raised concerns regarding the Minister of Telecommunications, Johnny Corm’s insistence on Touch signing a contract with In Mobiles for an additional amount of more than 10 million euros compared to the agreement signed by Alfa with VOX.
The report shed light on the Minister’s reluctance to conduct a unified bidding process for the two mobile companies despite it being in the government’s best interest to secure optimal conditions and prices for administrative purposes. Recommendations across the board were presented to the Ministry of Telecommunications, emphasizing the minister’s need to refrain from improvisation when outsourcing the country’s economic resources. These recommendations included:
- Formulating a clear plan supported by financial feasibility studies that reflect the administration’s interests.
- Adhering to the principles of good governance characterized by transparency, objectivity, and consistency.
- Developing necessary project management plans to outline business objectives and create a roadmap for achieving them while applying reasonable deadlines due to the significant financial implications surrounding the economic context at the time.
Following the comments issued by the Audit Bureau, the Minister of Telecommunications responded with a statement on February 1, refuting all allegations and affirming his adherence to legal boundaries. He emphasized his commitment to ensuring maximum profitability within the bounds of law and employing transparent and standardized terms for launching bids and tenders to provide equal opportunities to all stakeholders.
Minister Corm was not in direct contact with the Audit Bureau. Instead, he explained that upon receiving the Bureau’s report, he immediately forwarded it to Touch management, urging them to comply fully and immediately with its contents.
Corporate fraud or shell company?
The Audit Bureau report uncovered several inconsistencies, the most significant of which was completing the deal between Touch and In Mobiles despite only four out of ten interested companies being qualified.
This discrepancy arose from the invitation being extended to 25 companies, some of which were deemed unqualified from the onset. Furthermore, a qualified company was included in the bidding process despite not being originally invited. The biggest concern was Touch’s request for a second round of bidding among qualified companies due to how similar the bids were from the three companies. This raised questions about the Minister’s insistence on proceeding with In Mobiles’ victory despite the potential for increased treasury revenue from a second bidding round.
The Minister’s uncompromising position raised additional concerns at the Audit Bureau when two companies filed objections to the bidding results to Touch. The winning company failed to meet specified qualifications outlined in the terms and conditions, particularly regarding years of experience. Key points raised in the objections included:
- The requirement for applying companies to possess a minimum of five years of experience in the A2P international messaging system, which In Mobiles lacked.
- The company must have delivered the same service across three operators to a minimum of 20 million subscribers.
Following an investigation by the Objections Committee, the Ministry of Telecommunications discovered that In Mobiles had submitted documents confirming its lack of the required five years of experience in the sector. This should have led to the immediate rejection of its offer.
However, Touch, in correspondence with the Ministry, indicated that the winning company had “general experience in the field of A2P SMS” but lacked specific experience in A2P International SMS, one of the requirements of the bid.
Although a technical and a commercial committee were formed under the Ministry’s supervision along with Touch to verify the objections, the committees did not recommend rejecting the previous bidding result. Instead, they suggested amending the conditions, raising significant questions about the conflict of interests surrounding the A2P service bidding process.
This situation prompts inquiries into whether In Mobiles falsified documents to meet bidding conditions, what underlying motives drove the actions of the Ministry of Telecommunications, as well as Touch’s insistence on In Mobiles. The Audit Bureau’s report views this as either “collusion in the public interest or succumbing to pressures that they were unable to overcome.”
The Bureau has referred these facts to the appropriate judicial chambers and public prosecution offices to investigate potential violations. Will this report follow the pattern of similar previous reports that sparked media sensation but failed to result in significant accountability measures within the judicial system?
*The photo depicts Lebanese Minister of Telecommunications Johnny Corm alongside Salem Itani, Chairman of the Board of Directors of Touch, sourced from Touch’s Facebook page.
