Islamic State, which declared a "caliphate" in June in parts of Iraq and Syria under its control, has been cited as a major security threat by Western governments since posting a video in August of the beheading of U.S journalist James Foley.
The Lebanese army declined to comment but security and Islamic State sources confirmed the latest beheading. Hours later, the group posted a second video showing nine other soldiers begging for their lives, urging their families to take to the streets in the next three days to demand the release of Islamist prisoners as a condition to escape al-Sayyed's fate, said the Reuters report.
Earlier this month, several Syrian groups, including Islamic State and the al-Nusra Front battled the Lebanese army after the arrest of rebel commander Emad Gomaa in the border town of Arsal. Gomaa is an al-Nusra commander who switched affiliation to Islamic State but remained popular among al-Nusra fighters.
The militants seized Arsal for five days before withdrawing to a mountainous border region, taking 19 captive soldiers with them. They have demanded the release of Gomaa and several Islamists jailed since a 2007 insurrection by an al Qaeda-inspired group at a Palestinian refugee camp in north Lebanon.