Hussam al-Mahmoud – Enab Baladi

Since 30 May, local headlines have been all about the third mobile phone operator in Syria, following Decision No. 2590 by the Ministry of Internal Trade and Consumer Protection, which first appeared in 2021’s 20th issue of the Official Gazette. The decision identifies Wafa Telecom as the third mobile phone operator in the country.

What was particularly striking about the decision is that finally the third operator managed to make a breakthrough, after over 10 years of mere rumors about such an operator.

On 31 May, the Communications and Postal Regulatory Authority made a statement, stressing that the third operator did not obtain a final license, and, therefore, the company could not kick off yet. The authority made it clear that the news reported by media outlets pertains only to the company’s establishment.

There are two such operators in Syria, Syriatel— originally belonging to Rami Makhlouf, Bashar al-Assad’s maternal cousin— that has been seized by the Ministry of Communications and Technology of the Syrian government last May, and the less popular MTN— a Syrian-Lebanese joint operator.

According to figures by the communications ministry, about 10 million people used the two operators’ services before 2011.

Wafa’s suspicious foundation

The Official Gazette also defined the scope of the operator’s services and activities, as well as its registration details. Wafa was established in 2017 to provide services for mobile phone users.  In addition to this, the company is authorized to provide all subsidiary or related services, carry out any commercial activity permitted in Syria— including the import, export and trade of communication devices and chips— as well as do all sorts of investments and cooperate with national and foreign companies and individuals.

The company is founded with a stated capital of 10 billion Syrian Pounds (SYP), with 100 million stocks, each worth 100 SYP. The company’s capital is quite modest compared to the capital of rival operators at the time of establishment and also when measured against the Syrian Pound that has sharply devaluated over the past decade.

Commenting on the capital, economist Firas Sha’bo told Enab Baladi that the dedicated sum of money is a very little investment made into the telecommunications sector, largely considered a second oil sector in terms of revenues.

According to Damascus Securities Exchange, Syriatel was established in 2001 with a capital of three billion and 350 million SYP, while MTN was established in 2002 with a capital of 1.5 billion SYP — at the time, the USD amounted to less than 50 SYP.

Wafa is licensed for 22 renewable years and is to be headquartered in Damascus.

The company is a coalition of seven newly founded Syrian companies that have no real presence on the ground, established in 2017, 2019 and 2020. These companies are  ABC, LBC advanced, LBC Technology, LBC Telecom, Wafa Invest, Tele Space, and You Tell.

Five out of the seven allied companies have contributed 1000 SYP to the founding capital, getting 50 shares together. These small investments make the companies a mere façade or a matter of formalities.

The remaining shares are divided between Wafa Invest and ABC, in favor of the latter that owns nearly 52 million shares.

Any benefits?

Sha’bo said that Wafa Telecom, even if allowed to operate, is unlikely to achieve any financial benefits or even improve the quality of services offered to the Syrian citizen, given that such companies do not use their money in the interest of the domestic economy, but always to fill the pockets of certain individuals.

He added that if Wafa intends to use Syriatel’s equipment and towers— following the recent dispute between the government and businessman Rami Makhlouf, who owned the greatest number of shares in the company— Wafa would be an economic repositioning for the benefit of the new rising group of businessmen.

He added that the regime is using new names, mostly sham, to replace the older and sanctioned ones, to get the economy running.

The Syrian Economist and Policy Analyst Karam Shaar discussed with Enab Baladi the size of the investment and the figures presented as an initial budget for the company’s project, noting that the proposed budget is very small.

Shaar added that the company has not contracted with the Communications Regulatory Authority, and therefore it is not yet an official third operator in Syria.

Regarding a potential reaction from Rami Makhlouf, Shaar said that Makhlouf has been neutralized within Syriatel, which has become at the disposal of the Syrian judicial system, and that the regime’s government is able to harness MTN and Syriatel to serve Wafa or for any other purposes, given that the two companies are subject to judicial receivership.

He said that this promised company probably will not bring anything new, for the two existing companies have already covered Syria. Accordingly, even if not eliminated, as its Iranian precedent has been a few years ago, Wafa will not play a distinct role in the telecommunications sector.

Who stands behind Wafa?

The Syrian media outlet 7al reported that the company was founded in 2017 by Yasar Ibrahim, the director of the Economics Department in the Presidential Palace, in addition to two other people.

The site also said that Ali Ibrahim has been listed as a founder of four telecommunications companies in 2020: Telespace, Spacetel and Golden Tower, in addition to his contribution to Wafa Telecom through the Telespace company.

Sha’bo said that knowing the reasons for the privileges the company is offered contributes to identifying its affiliation.

He added that Wafa is most probably connected to Asma al-Assad, Bashar al-Assad’s wife, who recently sought to banish Rami Makhlouf from the Syrian economic sphere, by depriving him of control over the al-Bustan Charity, and placing Syriatel under judicial guardianship.

In May 2020, the Syrian government seized Makhlouf’s movable and immovable assets to obtain the debts he owed to the Communications and Postal Regulatory Authority.

Makhlouf, at the time, responded, presenting a document confirming that Syriatel  addressed the Authority in a letter declaring its readiness to pay the debts in installments.

The authority then issued a statement, describing Makhlouf as a “scammer”, because he tried to evade paying the debts. The authority also took measures that resulted in stripping Makhlouf of his position as the company’s director.

Failed attempt

Since 2010, there have been rumors also about an agreement with an Iranian telecommunications company in Syria. Indeed, the government signed an agreement of the sort in January 2017.  However, the agreement was a part of serval agreements in various fields that the regime concluded with Iran, without disclosing any further details.

Nearly three months ahead of the telecommunications agreement,  then-Minister of Communications and Technology, Ali al-Dhafeer, made a statement that Syrians “will very soon hear news about a third operator in Syria,” in addition to the launch of 4 G services in 2018.

Information leaked by Syrian government officials in November 2016 confirmed that this Iranian third operator is a Syrian alliance with several active Iranian companies.

With the escalation of conflict in Syria after 2011, the chances of implementing the agreement diminished, particularly after key competitor companies disinvested including Saudi Telecom, Qatar’s Qtel, and Turkey’s Turkcell.

In January 2017, pro-regime Al-Watan newspaper reported that the Iranian MCI company obtained the license to be the third operator in Syria, but the company did not start operating and was ultimately delicensed in September 2019, according to a statement by the Minister of Communications and Technology Iyad al-Khatib.

At the time, al-Khatib said that the third operator in the country would be a Syrian company, denying in an interview with the local al-Iqtisadi news outlet that it would be an Iranian one.