The Public Procurement Authority has halted efforts by Alfa (one of Lebanon’s state-owned mobile operators) to conclude a direct contract without a tender with Suyool, a money transfer application. However, Telecommunications Minister Johnny Corm rejected the Authority’s argument, claiming that this concession is not subject to the Public Procurement Law.
In a press interview on February 7, Corm said that he has dismissed the issue, but sources in the telecommunications sector believe that the minister “might be developing a specifications booklet designed specifically to suit the company, especially given the reports that Corm has asked the two mobile operators to announce a public tender as soon as possible.”
Meanwhile, SMEX has learned that Touch is preparing a specifications booklet for a tender to offer the same service to its subscribers. According to some sources, “This is an attempt by the company to polish its image after the Court of Audit demanded the termination of its contract with InMobiles regarding Application-to-Person messaging (A2P).”
What is Suyool, the company Alfa wants to grant the E-wallet service concession to?
Suyool is a new company that got registered in Lebanon only six months ago. It is one of several companies that have emerged as alternatives to the country’s insolvent banks.
It is headed by Arz El-Murr, owner of Elnashra website. El-Murr also manages SKASH in Cyprus, a company associated with Astrobank and owned partly by Lebanese businessmen.
However, a source in the telecommunications sector said that Alfa has not signed any contract with Suyool regarding e-wallet services, either by mutual consent or a tendering process: “We currently lack the technical, human, and financial resources to launch this service, which requires a license from the Banque du Liban (BDL).”
As for granting a concession to a private company to offer this service, the source told SMEX, “There has been an attempt to activate this service in the telecom sector, but it was unsuccessful. Currently, The fastest way is to contract a company with all the necessary resources to benefit customers.”
The Telecommunications Minister is using his Ministry’s lack of technical and financial resources as a pretext to grant the concession to private companies despite depriving the mobile operators and the government of significant revenues.
As such, a telecommunications expert who asked to remain anonymous expressed his concerns in an interview with SMEX: “Why don’t Lebanon’s mobile operators offer the e-wallet service, either by setting up a department with an operations room (i.e., a pay center) or by establishing a company fully owned by the operators?”
What is an e-wallet?
The e-wallet is a service based on an application installed on users’ phones, which enables them to pay and transfer money to other people through prepaid accounts or accounts that are credited via payments. Users can withdraw their money at any time or transfer it to accounts to pay bills, receive services, or buy products from digital stores.
These applications have become an integral part of daily life around the world. In Lebanon, however, they emerged after the collapse of the banking sector as an alternative service to facilitate online payments.
Most countries offer this service directly through mobile carriers. The same applies to countries in the region; for example, Iraq began offering this service in 2016 through Asiacell and ZainCash from Zain Group, while Egypt offers it through Etisalat Cash and others.
Easy profiteering for investing companies
The Telecommunications Minister has used many pretexts in his press statements to claim that the mobile operators cannot implement the project. He also said that no request for a license had been submitted to BDL and that the process would not be easy.
According to Corm, this is due to several reasons, including the fact that Alfa and Touch would have to be transformed into financial companies licensed by BDL, that a tender is needed to select a company offering e-wallet software, and employees specialized in finance would have to be employed to manage the payment process, all of which entail steady costs to ensure the project’s success. The minister also added that the e-wallet project would only benefit Alfa and Touch and that the outcomes would be uncertain.
The telecommunications expert rejects the excuses put forward by Alfa, Touch, and the Telecommunications Minister on the ground that they are “illogical, illegal, and clientelist. In fact, the service can be offered easily after obtaining the license from BDL by contracting specialized companies to provide the necessary software to run this service without the need for large and costly investments.”
“This is not the first time mobile operators have failed to assume their role. Conceding this service to private companies will lead to squandering funds and allow investing companies to profiteer at the expense of all citizens,” the expert added.
Money transfer companies will receive millions of users at no cost from Alfa and Touch, while the two operators will only receive a commission, which is yet to be determined, according to the expert. “The investing company will make direct and indirect profits by receiving the data of more than 4 million subscribers to the network. It will also gain access to this immense advertising market. This poses an additional risk as users’ data will be shared with third parties, violating their privacy rights,” he explained.
Follow-up by MPs
On January 27, MPs Paula Yaacoubian, Ibrahim Mneimneh, Yassin Yassin, and Najat Saliba submitted a question to caretaker PM Najib Mikati and Telecommunications Minister Johnny Corm about the e-wallet service through mobile operators Alfa and Touch.
The Telecommunications Minister has yet to respond to the parliamentary commission or the Public Procurement Authority, exceeding the legal 15-day deadline. If the minister does not respond, the MPs will resort to the Court of Audit to interrogate him. The parliamentary Telecommunications Commission could also form a fact-finding sub-commission to enquire about the matter, a power that has not been used before, according to MP Yassin Yassin.
In an interview with SMEX, Yassin explained that the state’s telecommunications assets are intentionally being liquidated. He points to five such cases, including the post service, the A2P service, Starlink, the Lebanese government’s cybersecurity, and, most recently, the E-wallet.”
Yassin dismisses the claim that the mobile operators could not receive a license from BDL authorizing them to use digital currencies. “I met with acting BDL Governor Wassim Mansouri, who assured me that the central bank can issue licenses to the mobile operators quickly because they are state-owned,” he said.
Yassin also suspects that the Telecommunications Minister intends to violate the Public Procurement Law, which the two mobile operators must comply with as they are owned by the state. “What reinforces these suspicions is that the Telecommunications Minister is monopolizing decision-making powers and surpassing the Board of Directors rather than adhering to his ministry’s role as regulator of the sector,” Yassin added.
For example, regarding the e-wallet issue, the Public Procurement Authority recommended that mobile operators offer the service directly by obtaining the necessary licenses from BDL and establishing the required administrative and regulatory structures.
“By doing so, the two mobile operators would receive all the revenue generated by this service, rather than only a fraction of it, and users’ data would be protected. If there is a need for specialized services, they can be procured in accordance with the provisions of the Public Procurement Law,” Yassin explained.
Moreover, Yassin confirmed that Alfa and Touch employees have the necessary technical skills: “It is unacceptable to claim that the two operators, which have 1,400 employees, cannot perform their work. Why don’t they strengthen their employees and equip them with technical skills to offer these services instead of privatizing them?”
The telecommunications sector evolves constantly, requiring constant upkeep and upgrades in Lebanon instead of marginalizing its role and squandering public funds. “We will keep monitoring the behavior of the Telecommunications Minister, who is attempting to monopolize decision-making powers,” Yassin concluded.
Main image credits: AFP
