The push to implement Telecommunications Law No. 431/2002 in Lebanon has once again taken center stage in reform discussions. This law, designed to regulate the telecommunications sector, outlines the state’s role and lays the groundwork for privatization—either partially or entirely. It originally envisioned the establishment of two key entities to drive reform: the Regulatory Authority and Liban Telecom.

However, 23 years after its enactment, the law has become outdated in the rapidly evolving world of technology. Over the years, it has failed to keep pace with fundamental shifts—not only in services and revenue models but also in the declining value and changing management structures of telecom companies. With the state already owning two mobile operators, is the creation of a third state-run company still relevant? Would selling the existing operators, Alfa and Touch, be a viable solution? And what role does the Regulatory Authority play amid this uncertainty?

A Law Out of Sync with Market Realities

In 2002, Lebanon reclaimed its two mobile operators from Cellis and LibanCell after the expiration of their contracts dating back to 1993. The state rebranded them as temporary telecom operators—MIC1 (Mobile Interim Company 1) and MIC2 (Mobile Interim Company 2)—with the goal of privatization. Law 431, passed in the same year, allowed for the creation of Liban Telecom as a third mobile operator intended to compete with the two privatized companies. This new entity was meant to absorb the fixed-line infrastructure from the Ministry of Telecommunications while being 40% privately owned and 60% state-owned.

The State’s Grip on Telecom Revenues

Today, the Lebanese government directly owns and manages both mobile operators, MIC1 and MIC2. "Selling them is no longer as profitable as it once was," says telecom expert and former Touch CEO Wassim Mansour. "These companies generate around $1 billion in annual revenue for the state, whereas selling them would only bring in half a billion dollars as a one-time payment."

Given this reality, the establishment of Liban Telecom as a third public operator is now obsolete. Instead of fostering competition, it would solidify state control over the sector, creating yet another avenue for political appointments and multimillion-dollar deals. "Rather than creating a third state-owned mobile operator, the government should focus on public-private partnerships within the existing telecom companies," Mansour argues. He proposes several models, including allowing private investors to acquire up to 60% ownership in existing mobile operators or establishing a national telecom company that retains ownership of infrastructure while private firms compete to provide services. This would promote competition, improve service quality, and ensure sustainable revenue for the state—an urgent necessity given Lebanon’s financial crisis.

Outdated Technology and Consumer Needs

When Law 431 was introduced in 2002, there were no smartphones, broadband networks, or high-speed internet. The law’s framework, which once considered WiMAX and 3G as cutting-edge technologies, is now entirely outdated in the era of 6G networks. This highlights the urgent need for legislative updates to reflect the modern digital landscape.

The Regulatory Authority: A Stalled Reform

The law also envisioned an independent Regulatory Authority to oversee the sector and ensure fair competition. However, after its establishment in 2007, its role was quickly undermined. By 2010, its chairman, Kamal Shehade (now Minister of Displaced, State Technology, and Artificial Intelligence), resigned due to political interference, highlighting the state’s resistance to independent oversight.

Three Red Lines for the Future

Mansour outlines three key principles for telecom reform in Lebanon:

- No return to full state ownership of telecom companies.

- No delegation of telecom management to private firms without ownership stakes.

- No illusion that selling telecom companies will generate billions in revenue.

The real solution, he argues, lies in expanding the market, increasing competition, and allowing private-sector investment in ownership, not just operations. However, even if the state adopts this model, there is a lingering fear: Will the revenues generated be used for public benefit, or will they continue to fuel Lebanon’s entrenched system of corruption and clientelism?

Ultimately, the debate over whether to maximize public-sector revenues or privatize for efficiency can only be resolved by a functional state with clear legal reforms and a judiciary capable of ensuring transparency. Until then, Lebanon’s telecom sector remains trapped in a cycle of state dominance, missed opportunities, and unrealized reforms.