TRA Strategic Plan 2008 2009 April 25 2008

TRA Strategic Plan 2008 -2009 April 25, 2008

The TRA Board was appointed on February 21, 2007, and the TRA began its regulatory work as of March 2007 The TRA's Organizational Chart was largely determined by Decree 14264 TRA Chairman Internal Audit ICAU MCU TTU LALU Marketing Tariffs Spectrum Affairs Legal Policy Technical Operations Licensing Market Analysis Standards and QOS Consumer Affairs & Public Consultation Cost Accounting Independent Regulatory Authority Administrative Affairs Financial Affairs

As a first step in assuming its duties as per the Telecommunications Law, the TRA has defined its mission statement and objectives Establishment of an Independent Regulator – April 2007 Mission Statement: To establish a regulatory environment that enables a competitive telecommunications market to deliver state-of-the-art services at affordable prices to the broadest spectrum of the Lebanese population Prerogatives of the TRA Ø Issue regulations and draft Decrees (Art 5) Ø Manage Radio Frequency, Interconnection agreements, numbers, equipment import, etc. . (Art 29) Ø Liberalize the market and take any necessary measure to reach a competitive market (Art 30) Ø License telecommunications service providers and radio frequency bands (Art 20) Ø Resolve disputes between service providers (Art 43)

There is a wide range of benefits stemming from Liberalization Benefits the Customer Increase Penetration Lower Prices Increase Customer Choice 4 4 4 Increase service penetration Increase customer choice Improve price to quality ratio Introduce new technologies and services Reach underserved areas Benefits the Telecommunications Industry Efficient Industry Attract Investments Leading Edge Technology 4 4 4 4 Keep up with technological advances Introduce good governance and management Ensure more effective infrastructure Improve sector productivity Improve financial performance Increase overall telecom revenues Attract private and foreign capital Improve connectivity and penetration of ICT Benefits the Economy Trade Integration Job Creation Increase Growth 4 4 4 4 Generate revenues from privatization Generate revenues from licenses Spur job creation throughout the economy Join international trade organizations (e. g. WTO) Join the global trading system (e. g. EU association) Catalyze growth of information economy Improve global competitiveness of the economy Improve general economic performance

The TRA strategic plan covers three key objectives for 2009, which evolve around privatizing the two existing mobile networks and liberalizing broadband services 1 Ø Liberalization of the telecom sector starting with mobile communications (2 G/3 G) by Q 1 09 if Go. L Decision Ø Broadband 2 3 Ø Providing for competition in the broadband market Ø Providing the regulatory framework for the launch of ADSL services Ø Regularizing DSP licenses Ø Improving Lebanon's international connectivity Ø Issuing key regulations (Spectrum Licensing, Spectrum Pricing Opinion, Interconnection, Quality of service, Numbering, SMP, Consumer Affairs, etc. . ) The Board will focus on building the TRA’s institutional capabilities from 40 in 2007, with a target of 80 -90 professionals by Q 2 2009 5

The TRA's draft Liberalization Roadmap proposes introducing competition across all telecommunications markets while allowing Liban. Telecom some exclusivity over some services for a limited period of time 2008 Mobile Network Operator 2009 2010 3 Virtual Network MNVOs PSTN/ Basic Telephony Broadband International Access Open licensing Network Operator 1 * Reseller Access National ** Facilities Service Provider *** 5+ Reseller Market Review License Award Notes * Liban Telecom expected ** TRA is still considering the appropriate number of NBLs to issue *** Two for the mobile licenses, one for Liban Telecom and two others for the NBLs for data traffic only 2011 2012

The regulations needed to ensure the success of liberalization have been put in place Drafting Stage Unbundling Regulation Accounting Separation Regulation Draft Ready Stage Spectrum Pricing Opinion Broadband Policy Statement VOIP Policy Statement Consultation Stage Final Review (TRA Board) Liberalization Roadmap National Numbering Plan Licensing Regulation Issued Significant Market Power Regulation Decisions: • VSAT, • Trial IPTV • Spectrum trial Allocation for Mo. T / OGERO National Roaming Interconnection Regulation Pricing Regulation Spectrum Refarming Guidelines Type Approval Regulation * Interconnection Interim Pricing Decision Quality of Service Regulation Regulatory Framework for establishment of call centers * Decision approved by the board, , but will be issued concurrently with the Mobile Auction Award. Spectrum Management and Licensing Regulation Consumer Affairs Regulation Lebanese National Frequency Table Administering and Implementing the NNP

The Mobile Auction has been suspended in January 2008, but could be held within 8 weeks from a Go. L decision n Agreement on n RFA and draft n Process retransaction law approved launched structure by Co. M n Updated VDR (HCP, TRA, Access Mo. T) T 0 + 4 weeks T 0 + 2 weeks T 0 + 8 weeks T 0 + 7 weeks n License and Acquisition Documents finalized n Qualifying Applicants announced T 0 + 13 weeks T 0 + 17 weeks T 0 + 12 weeks n RFA amended n Law enacted by n Due diligence n Q&A n Draft Law ready Parliament n Site visits n Consultants recompleted appointed T 0 + 15 weeks n Application due date n VDR closes n Co. M approves / disapproves sale T 1 + 3 weeks T 1= T 0 + 18 weeks n Auction Day n Performance bond (10% of bid amount) posted n Incorporation of companies T 1 + 5. 5 weeks T 1 + 3. 5 weeks n Remaining 60% of bid due n license issuance T 1 + 11. 5 weeks T 1 + 9. 5 weeks n Confirmation n Agreement on letter sent to bylaws & winning bidders capital structure of company T 1 + 12. 5 weeks n 40% of bid due (less credit for Ro. L shares) n IPO Ø Most of the preparatory work for the auction has been completed Ø Until now, and despite the delay encountered, around 10 major regional and international players of the telecommunications sector have shown interest in the auction Ø Delay of the process will lead to: Ø • a rather long extension of the management agreement hampering the development of the mobile market • discouraging investors • extensive update of the financial, legal and technical due diligences Both the TRA and HCP are ready to re-launch the privatization / licensing process at any time

The TRA plans to issue licenses (through an international public auction) in order to establish across Lebanon, best in class core, metropolitan and access networks Competition Fixed Mo. T Infrastructure: currently the only provider of national internet and data transmission, however needs major upgrade of national and international capacity. National Broadband Licenses: Provide a best in class alternative national networks (core, metropolitan and access), enabling the national transmission and provision of high speed communication Broadband Access Licenses: Unleash competition on the access level and provide more choice to consumers ( e. g. incumbent data service providers) Therefore The TRA plans to issue: 1. Two new NBLs (alongside Liban. Telecom) 2. Unrestricted number of Broadband Access Licenses (for existing DSP and new licenses) taking into account limitations in the availability of spectrum resource

The TRA plans to launch the licensing of national broadband networks in Q 4 2008 Draft RFA for Consultation Broadband Policy Statement Nov 08 Spectrum Management & Licensing Regulation Nov 08 IS and Ro. W Decrees Final Broadband Licenses Dec 08 AUCTION Q 1 09 TRA ready to grant licenses that do not require spectrum The TRA is making rapid progress in developing a regulatory framework to introduce competition in the provision of broadband services. The auction for the National Broadband Licenses and the Broadband Access Licenses will take place before Q 2 2009

Our Commitment ü The TRA is committed to bringing the country back to the international telecommunications scene through market liberalization ü The TRA is committed to reconnecting the Lebanese population with the world. We intend to accomplish this by building a thriving, innovative, and competitive telecommunications market place, driven by a technologically advanced infrastructure-based sector and offering services at internationally competitive prices and quality ü The TRA is committed to promoting the interests of telecom Lebanese consumers in the market to make sure they are getting good quality of service at affordable and competitive prices and that their right to safe, secures and confidential access to telecommunications is safeguarded