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Home > Privatization Alert - March 2009
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Privatization Alert - March 2009
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Focus: How is the crisis affecting telecom privatization?
In telecoms, the picture until recently had been one of strong growth and ongoing openness to foreign direct investment (FDI) as countries have sought to modernize their existing telecom infrastructure, expand mobile services and encourage competition amongst providers. There are several recent examples: in 2008 Mexico lifted the 49 percent FDI cap in fixed line telecommunications; Vietnam issued a decree that encourages all economic sectors to invest in telecoms; Zambia agreed to deregulate its international telecom gateway to promote competition and foreign investment; and Indonesia reversed an earlier policy to allow Qatar’s Qtel to raise its stake in Indosat’s mobile and fixed-line operator from 49 percent to 65 percent.
A recent trend in the telecom sector has been the emergence of several global players based in the developing world (e.g. Etisalat, Zain and Orascom). These companies are proceeding with their overseas expansion plans and are entering new markets despite the financial crisis. In January 2009 Telecel Globe, an affiliate of Orascom Telecom, acquired Namibia’s Cell One mobile operator. Orascom Telecom has also entered the Korea PDR market (3-G service) and has expanded its activities in Lebanon (management contract for Alfa). Etisalat is expanding in Iran, receiving the country’s third national mobile license as part of a consortium with Taameen Telecom (Iran). The company has also made substantial investments in Pakistan’s telecom sector. Zain has been awarded a license to manage one of Lebanon’s mobile phone operators. These companies, eager to establish themselves as global or regional players, are helping to lessen the overall adverse impact that the financial crisis and economic recession have had on foreign investment in telecoms.
But, as in the case of other industries, the present economic climate is having an adverse impact on privatization in telecoms. A few scheduled sales of state-owned telecoms have been put on hold because of the financial crisis. One recent example is Telekom Srbija (Serbia), whose privatization last year was postponed citing the current economic climate as an important factor (Source: “Crisis to derail privatization process?” B92.net, February 4, 2009). Lebanon has cited the financial crisis for its decision not to pursue the privatization of its cellular networks (Source: “Bassil: Not the best time to privatize cellular networks amid global crisis” The Daily Star, March 3, 2009).
Nevertheless, some sales are proceeding as planned. In February 2009 mobile phone operator Albanian Mobile Communication was further privatized through the sale of a 12.6 percent stake to Cosmote (Greece) for €48.2 million. Ukraine has announced its intention to launch a tender for the privatization sale of 67.79 percent of fixed line operator Ukrtelecom in 2009. This is in line with the country’s accelerated privatization program, which is expected to be a source of funds in the face of the worsening economic conditions in Ukraine.
Status and upcoming transactions
Europe and Central Asia:
Ukraine has published a list of 232 companies to be privatized this year, including a 90.8 percent stake in cable maker Azovkabel and a 100 percent stake in Ukrainian National Airlines. The Czech Republic intends to proceed with the privatization of Ceske Aerolinie despite the global crisis. Montenegro has announced its intention to privatize Port of Bar.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Middle East and North Africa: Tunisia has an open international tender for a mobile telecommunications license award. Iran is privatizing Homa, Iran Air Tour and the Homa Hotel Group.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Sub-Saharan Africa: Nigeria has announced its intention to sell four oil refineries.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
East and South East Asia: Korea is planning to engage in the privatization sale of several state-owned enterprises, which were acquired during the Asian financial crisis in the late 1990s, in an effort to boost FDI.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
South Asia: Pakistan has published the list of enterprises seeking private-sector participation in the context of its recent public private partnerships framework.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
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