COMPETITION EMERGES IN THE LIBYAN MOBILE MARKET AS GOVT COMPETES AGAINST ITSELF

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As Libya gradually loses its pariah status and slowly but surely returns to the bosom of the family of acceptable nations, changes are also afoot within the state-run Libyan economy. Money is being spent on the country’s tired and overstretched telecoms infrastructure and Libya now has a new mobile phone network that has introduced a sort of competition into what was a massively overpriced and moribund sector.

It is competition “of a sort” because the new operator, ‘Libyana’, is as much owned by the government as is ‘Al Madar’, the country’s original mobile network.

And, the fact is that just how real any competition may be is probably an academic question anyway, because, for the average Libyan, mobile phones are an unimaginable and unattainable luxury. So it is all the more interesting then that Libyana is being pushed as a trendier and more sophisticated version of Al Madar.

It will surprise no-one, either in Libya or elsewhere, to learn that the CEO of Libyana is a certain Mohamed Gaddafi. Yes, he is indeed the son of Muhammar Gaddafi, who has been Libya’s head of state since the late King Idris fled the country for Switzerland.

Mohamed Gaddafi says the fact that the country’s two mobile networks remain firmly in the hands of the state does not mean that the government will keep prices artificially high. He points out that the cost of becoming a mobile subscriber in Libya has fallen by thousands of percent in the last few years and insists that as the Libyana network expands this year and next, costs for subscribers will continue to decline.

Certainly, prices have come down but then it’s all relative, isn’t it? In 1997, it cost the equivalent of USD3,300 to become a subscriber to Al Madar, a sum that would definitely have put all but Colonel Gaddafi’s inner circle out of the running in the “I want a handset” stakes.

In the seven years since, prices have fallen to USD68, an astonishing drop, but subscribers still have to cough up USD410 deposit – and that’s the equivalent of three months pay for the average Libyan. Steep? Certainly, but it is cheaper than the USD710 Al Madar charged before Libyana broke its monopoly.

With the wacky economic logic for which Libya is justifiably famous, Mohamed Gaddafi acknowledges that the deposit is high but says it has been set at that level to discourage a sudden surge in people subscribing to the new operator: So much then for network planning and the laws of supply and demand.

The CEO also says that the each deposit will, “in due course” be offset against call charges and that tariffs will “gradually decrease” as the network expands. Initially Libyana covers the three main cities of Tripoli, Benghazi and Sebha, but will be expanded to cover the entire country during 2005 and 2006.

Now that his father is bringing Libya in from the cold, the country is starting to attract foreign investment for the first time in a generation and Libya now has a better route to market for its considerable oil exports, so money for infrastructure improvement is no longer a problem – and a lot needs to be spent on the fixed line network which is overloaded and old-fashioned. Indeed the country has just signed a USD242 million deal with Alcatel and Nokia for a network upgrade (see Telecom News - issue 224)

However, Mohamed Gaddafi says, “Foreign mobile network companies could come here and spend millions in establishing themselves and their networks, but the reality is that within a few years they would generate billions in profit which would then be taken abroad. This would be counter-productive to our economy. At least the profits generated by Al-Madar and Libyana will be invested in future projects to develop our telecommunications sector and improving the lives of Libyans.”

He does have a point but those prices are going to have to come down. Mobile subscriptions (with a handset thrown in) cost about USD20 in Algeria, Tunisia, Egypt and Morocco.

(SOURCE: Telecom TV)