Tunisian Market Prepares for Shake-up As France Telecom Enters

The Tunisian telecoms market is to gain additional competition with the entry of France Telecom in early 2010. However, Onda Analytics believes the dynamics of the Tunisian telecoms market could change further, with many parties interested in the 35% stake in Tunisie Télécom held by EIT, a holding company for telecoms investments made by Dubai Holdings. The increasingly competitive environment in Tunisia may prompt EIT to consider listening to offers from operators interested in joining the market. Meanwhile, the other 65% shareholding is owned by the Tunisian government, which this week announced a privatisation drive for 2010.

As a result of the pressure from both France Telecom and existing mobile operator Tunisiana, Tunisie Télécom must pursue measures to defend its current market position. Report lead author, Daniel Jones, says "many MENA operators have experience of defending against strong competition and are looking for attractive acquisition targets. As a result of the benefits this experience could bring to Tunisie Télécom, these parties' valuations may provoke EIT's interest."

Onda Analytic's latest report, assesses this potential investment opportunity, as well as forecasting fixed line, broadband and mobile markets.

The incumbent, Tunisie Télécom, is likely to suffer most from the entry of France Telecom, given that the new entrant will be present in fixed line, broadband and mobile markets. Tunisie Télécom's mobile market share is forecast to decline from 50% in 2009 to 34% by 2018. Its fixed line business is also set to be put under pressure from France Telecom, with Tunisie Télécom's fixed share to fall from a current monopoly position to 77% of fixed lines by 2018.

Tunisian mobile operators generated total mobile revenues of US$1.6 billion in 2009. As a result of relatively high mobile penetration and with tariffs set to fall with the entry of the third mobile operator, total mobile revenue is forecast to grow modestly over the coming years. Fixed line growth is expected to buck the trend of many markets with a forecast increase in lines of 30% to 2018, from 1.4 million in 2009, driven by the adoption of broadband services.