IHS Global Insight Perspective | |
Significance | Orascom is selling off a relatively strong asset for a good price; however, the asset fits with Qtel's expansion strategy. |
Implications | Orascom is in the process of selling off around 50% of its assets to Russian operator VimpelCom. The deal will require restructuring. |
Outlook | With limited assets available in the MENA region, operators are trending more towards M&A activity to expand their international coverage. |
The remaining 50% of Tunisian mobile operator Tunisiana, which is owned by Orascom Telecom, has been sold to a consortium led by Princesse Holding of Tunisia and the Qatari incumbent operator, Qtel, through its subsidiary, Wataniya, Qtel has said in a press release. Qtel's chairman, Sheikh Abdullah al-Thani, commented, "The acquisition is in line with the Qtel Group's vision ... and with our strategy of active portfolio development, through which we may seek to increase our ownership in well-performing assets with further growth potential." Under the terms of the deal, the partners will work with the Tunisian authorities to finalise the transaction and are looking to close with Orascom Telecom in early January 2011. Wataniya will finance its portion of the transaction using existing cash and debt, and will control the board and management of Tunisiana. The announcement comes after Orascom Telecom announced a deal to sell its mobile assets to Russian group VimpelCom, which will create the world's fifth-largest mobile phone operator (see Middle East and North Africa: VimpelCom to Buy Wind and Control of Orascom for US$6.6 Bil.).
At end-2009, there were 9.75 million mobile subscribers in Tunisia, equating to a penetration of 95%. Tunisiana competes with the incumbent, Tunisie Telecom and Orange, which launched mobile services in May 2010. It has a three-year exclusivity contract, enabling it to offer a wider range of services than its competitors, such as 3G. The operator will be targeting business users and youths, which make up a significantly large percentage of the population.
Outlook and Implications
The press release does not state how much Qtel itself will actually own; however, the deal fits in line with its long-term expansion strategy.
- VimpelCom/Orascom Implications: Orascom is in the process of trying to sell off around 50% of its mobile assets to Russian operator VimpelCom. At present, VimpelCom has not commented on the deal. Tunisiana makes up around 5.6% of Orascom’s customer base, but 20% of its revenues. Clearly the sale is of some concern to VimpelCom, which will now have to restructure the deal. However, it is not a core asset, such as Djezzy, which is currently the major barrier to the Orascom/VimpelCom deal.
- Tunisiana's Performance: Tunisiana has performed reasonably well over the past few years—at the end of 2009, it increased its customer base by 22.4% to 5.2 million. Tunisiana is the leading mobile operator in the country with around a 52% market share at the end of 2009. However, this will have decreased due to the entrance of Orange in May 2010. Orange is potentially a threat to both Tunisie Telecom and Tunisiana due to its 3G exclusivity, but with the backing of Qtel, Tunisiana is likely to acquire a 3G licence when it is legally allowed to do so.
- Tunisiana's Strategy: Tunisiana’s strategy has been on developing its post-paid market, which has increased revenues and built customer loyalty by securing its customer base against the threat of Orange and the incumbent, Tunisie Télécom’s tactical promotions.