Company profiles
In 2020 what appears to be a reorganisation of the corporate and political architecture of the mobile and Internet landscape has been occuring, with the purge of Makhluf from Syriatel and the change at the top of MTN.
Syria introduced mobile phone services only in 2000, when the government licensed two private companies to supply the services: Syriatel and Areeba. Areeba was owned by the Lebanese Mikati family, which later merged with the large South African Group MTN (and the Mikati family kept holding a share in the newly established group). At the time, the closeness between the Mikati family and Bashar al-Asad was not well known, but recent leaks have shown a strong personal relation between members of the two families, although there are no obvious formal capitalistic links to confirm such a relation between the president himself and MTN-Syria. The other operator, Syriatel is the leading company of the sector, currently holding 71 percent of the market (based on the latest data posted by the two mobile phone companies and mentioned by the The Syria Report), and is owned by businessman Rami Makhluf the maternal cousin of president Bashar al-Asad and one of the most powerful men of the country.
Until 2014, both companies were operating under Build-Own-Transfer (BOT) contracts and each one had to pay 60 percent of their revenues to the State. On 31 December, 2014, the BOT contracts were replaced by new 20-year licenses which have generated huge losses for the Syrian State in the following years, while increasing the profits of the two operators. The share of revenues that the Government collects now is much lower than its share under the BOT contracts (20 percent), although it still receives a significant amount of money.
At the beginning of 2020, Syriatel and MTN-Syria have announced an increase in their revenues for 2019. Based on the data published by The Syria Report, Syriatel posted a year-on-year revenue growth of 20.33 percent to SYP221bn (around US$242m at the end-of-year black market exchange rate); while MTN-Syria posted a more modest increase of 19 percent to SYP90bn (US$98.5m). The significant revenues steadily generated by the two companies can be due to the extensive use of mobile phone calls and data services by a largely displaced population that cannot always rely on the severely damaged landline network. Moreover, the two companies have profited from continued repairs to their network and from the return of various parts of the country – such as Aleppo and Dayr al-Zawr – under the control of government forces. According to The Syria Report, Syriatel has steadily gained market shares since 2011 to the detriment of its competitor. Its current share surge is also due to the fact that it has been able to access and repair the destroyed segments of its network much faster than MTN. “The fact that several armed militias are funded by Rami Makhluf, the company’s main shareholder, reportedly helped the company in its efforts” the website specialised in economic news and analysis states. The two government-controlled companies cover almost the entire geography of Syria.
In April 2020, the Ministry of Communication and Technology claimed a combined SYP233.8bn from the two companies as an adjustment of the original license award. In addition to this amount, the Ministry of Finance has also accused both companies of tax evasion. According to analysts, the pressure piled up on Syriatel and MTN-Syria goes beyond a tax issue, but it is a signal from the government to both Rami Makhluf, Bashar al-Asad’s maternal cousin, and Najib Mikati, former Lebanese Prime Minister, that their time has passed. In May 2020, several members of MTN’s board resigned suggesting a possible change in sight in the capital structure of the company. On the other hand, in June 2020, a Syrian court granted judicial custody of Syriatel to the Syrian Telecommunications Establishment, the state-owned operator of landline network. As stated by The Syria Report, “The court’s decision was complemented by an order from the State Council to the competent authorities —in this case meaning the security services—to enforce the decision, even by force if required.” Therefore, Rami Makhluf, the most influential businessman in Syria for the twenty years of Bashar al-Asad’s rule, has lost control of the management of Syriatel, although he still remains so far the company’s majority shareholder.
Along border zones, Syrian users can also rely respectively on Turkish, Iraqi, Lebanese and Jordanian operators. According to an interview collected in the 2019 Freedom on the Net report by Freedom House, the monthly fees for a 1 Mbps Internet connection were approximately $10 in rebel-controlled areas of northern Syria. Turkish companies have installed telecom transmitters and reverberators close and inside the northwestern part of Syria, an area de facto dominated by Turkish forces (see paragraph Mobile coverage).
In early 2017, in the frame of the signing of five economic agreements between Syria and Iran, the Syrian government signed a preliminary contract for a third license with the Mobile Telecommunication Company of Iran (MCI), affiliated with the Islamic Revolutionary Guard Corps (IRGC). However, since then no new information has been released and it appears that the award of a new license has been temporarily postponed.