UPDATE 2-Egypt's OT considering Lebanon's state mobile firm

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By Alaa Shahine

CAIRO, Nov 5 (Reuters) - Egypt's Orascom Telecom (ORTE.CA) (ORTEq.L), the fourth-biggest Arab mobile phone operator by market value, is considering a bid for a state-owned Lebanese operator, Chairman Naguib Sawiris said on Monday.

The Egyptian billionaire shrugged off fears of instability in Lebanon, which is going through its worst political crisis since the end of the 15-year civil war in 1990, and said that the problem could be the expected high price of the license.

"There is no (political) risk," he said. "The problem will be the high price of the auction."

Lebanon is considering selling majority stakes in its two state mobile firms in February to raise as much as $7 billion, the telecommunications minister said in October.

The Lebanese Telecommunications Regulatory Authority set a Feb. 1 deadline for bids in a public auction to be held on Feb. 21.

Kuwait's Mobile Telecommunications Co. (ZAIN.KW) (Zain) is planning to bid for one of the two Lebanese firms, the Kuwaiti al-Rai newspaper quoted the company's chief executive officer as saying last month.

Bahrain's Telecommunications Co BTEL.BH (Batelco) also said it was planning for investments in Lebanon as part of a $4 billion foreign acquisition plan.

Sawiris said competing for the Lebanese market made sense because new investment opportunities in the sector are rapidly running out.

High prices, however, risked making such acquisitions not financially viable, he said.

"Look at Saudi Arabia, the third mobile license was sold for $6 billion. At the time when the (Saudi) license was being sold, the market there was 80 percent saturated."

He added: "What we are afraid of is that prices become so high that it would not become lucrative after that."

Lebanon has about 1.1 million mobile phone users out of a population of roughly 4 million. The annual gross revenue of the telecom sector in Lebanon amounts to about $1 billion. The mobile phone charges remain among the most expensive in the Middle East.

The country's rival political groups are also at loggerheads over the election of a president to succeed President Emile Lahoud, whose term expires on Nov. 23.

Telecommunications Minister Marwan Hamadeh told Reuters in October the offers for the mobile operators would be presented to the next president and government to make a final decision.

But fears are high that if there is no agreement on a president, Lebanon may end up with two rival governments.

Sawiris said his group, which has operations through subsidiaries and joint ventures in countries that include, Iraq, Zimbabwe and Pakistan, was used to political and security risks.

"This is normal for us," he said. "For us Beirut is like a safe haven," he said, laughing.

OT was disqualified from the bid for Saudi Arabia's third mobile license in March.

But the group said in September it would bid for the second fixed-line license in Egypt, where it owns a 33 percent stake in Mobinil (EMOB.CA), the Arab country's biggest mobile operator by the number of customers. (Writing by Alaa Shahine; editing by Gary Hill)