3G in Tunisia: Vive la France (Telecom)!

July 2, 2009

Last week France Telecom and Divona won a 15-year license to provide mobile and fixed services in Tunisia. The Divona/Orange-France Telecom joint venture, which competed with Turkcell and three unspecified local backers, presented the best technical offer as well as the winning bid of US$205.6m (TD257m). The license is technology neutral and open in terms of services and choice of infrastructure (fiber-optic, ADSL, WiMAX, CDMA) in order to market any service to fixed and mobile telecommunications. An additional fixed license will not be awarded until January 1, 2013.

Divona owns 51% of the venture, and France Telecom has the remaining 49%. Divona, an ISP that provides VSAT and WiMAX services to businesses, is controlled by Tunisian businessman Marouane Mabrouk, who also happens to be the son-in-law of Tunisia’s current president. Tunisian Communications Minister Haj Klai disclosed that the new entrant plans to invest $800m (TD1bn) on the network rollout.

The new entrant will start providing services in January 2010. It will compete against incumbent Tunisie Telecom and Orascom’s subsidiary Tunisiana, both having 4.3m mobile subscriptions. Competition between the two mobile providers is fierce: Subscription penetration of population at year-end 2008 reached 82.1%, and we estimate that it will grow to account for 103.1% penetration of population by 2014. In the recent Tunisia CIR, we project that the new entrant will gain 12.4% market share in terms of mobile subscriptions by 2014 (see exhibit), supported by its competitive advantage over the other operators since it will be the first mobile operator licensed to provide 3G services.

Therefore, it will easily target the multimedia-hungry Tunisians, with mobile broadband and value-added 3G-based services.

— Sylwia Boguszewska, Analyst

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