Palestinian telecoms company unbowed by Gaza war

Palestinian telecoms operator Paltel expects gains from its financial investments this year to offset the $30 million of losses caused by Israel's bombardment of Gaza in the summer, its chief executive told Reuters.

An estimated 20,000 Gazan homes were badly damaged or destroyed in the 50-day war that killed more than 2,100 Palestinians, mostly civilians.

The conflict also destroyed dozens of mobile telecoms base stations as well as much of the enclave's fixed-line network which most Gazans rely upon to access the web.

“Our network in many areas was materially destroyed, especially the landline network in the eastern part of Gaza,” said Ammar Aker, CEO of Paltel, whose $30 million of losses equate to nearly a quarter of the company's 2013 net profit.

“Infrastructure was being bombarded, employees were at risk, electricity was cut off and we had to supply many network locations with diesel.”

Aker said mobile telecoms traffic was now back to normal levels but that it would be much more difficult to repair the fixed-line network in the impoverished enclave, which is home to about 1.8 million Palestinians.

The CEO said he expected Paltel's equities investments in both telecom and non-telecom stocks to bolster its profit this year. “I still think we will be able to maintain last year's (profit) figure or maybe have some minor growth, regardless of the Gaza War,” he said.

Paltel, or Palestine Telecommunications Co, had 158.8 million Jordanian dinars ($224.29 million) of investments at the end of 2013, about two-thirds of which were abroad. These include 25.3 percent of Jordan's V-Tel, which has stakes in 10 telecom firms worldwide and posted a 49 percent rise in revenue last year to 93.7 million dinars.

Paltel's 2013 net profit was 91.83 million Jordanian dinars, up from 82.13 million dinars a year earlier.

Damage

Paltel's 2.63 million mobile subscribers at the end of 2013 gave it a 78 percent market share in the Palestinian territories of Gaza and the West Bank. It derived about 30 percent of its revenue from Gaza before the conflict.

Aker said Israel's offensive had caused Paltel more than $30 million of losses. This included $10 million of network damage, $15 million in lost revenue - present and future - plus about $7 million in free credit to subscribers and humanitarian aid.

Paltel has rebuilt 24 Gaza mobile base stations.

“The Israeli army let us send some equipment in to fix the cellular network, but for the fixed network it's difficult unless there's a big plan for rebuilding Gaza,” said Aker.

Paltel's fixed-line network is especially important to the company due to Israel's longstanding refusal to grant the firm - and rival Wataniya Mobile, part of Qatar's Ooredoo - spectrum to launch 3G and 4G services that would allow for mobile Internet in the Palestinian territories.

Consequently, about 58 percent of Palestinian households have Paltel ADSL - or copper phone line - Internet connections.

The Palestinian operators use 2.5G networks, which provides only for texts, calls and very basic Internet functions.

“Israeli operators cover all of the West Bank through the (Israeli) settlements and they started gaining market share because they can provide 3G and 4G services,” said Aker.

Paltel houses its core infrastructure abroad, including in Jordan and Britain since 2005, due to import restrictions imposed by Israel.

“Making a local phone call is actually as if you're making an international call - it's not easy,” said Aker.