Dispute between telecom bigwigs

Najla Moussa
5 Min Read

CAIRO: Orascom Telecom Holding S.A.E. (OTH) announced on May 4 that it will file a request for arbitration against Kuwaiti operator Wataniya Telecom (WT) regarding a material breach of a shareholder s agreement between the two operators.

According to a press release issued by OTH, the Egyptian mobile operator will commence arbitration to enforce its contractual right to acquire WT s 50 percent stake in Tunisiana, OTH s mobile operation in Tunisia.

Orascom Telecom Holding first acquired the license to operate global system for mobile communication services in Tunisia in 2002. In the same year, OTH created a joint venture with Wataniya, whereby they sold a 50 percent stake in Tunisiana to the Kuwaiti operator.

Tunisiana has enjoyed flourishing success in the Tunisian telecom market since it was established a few years ago. At the end of 2005, Tunisiana s subscriber base reached two million subscribers, up more than one million in 2004. Driven by its growing customer base, the operator s revenues reached $321 million, a 41 percent increase over the same period last year. Its market share increased from 29.4 percent at the beginning of 2005 to 42.8 percent at the end of the year. EBITIDA for the year ending 2005 stood at 37.9 percent, amounting to $122 million, 45 percent higher than the year ending in 2004, according to Orascom Telecom Holding s 2005 year end financial results.

Currently, OTH says that is has been unable to reach an amicable resolution to its claim, and thus have begun the process of filing a request for arbitration with the International Chamber of Commerce s International Court of Arbitration to enforce its acquisition rights.

Meanwhile, at the Wataniya camp, officials have stated in a press release issued by the Kuwaiti operator that they did not breach any contractual agreement with Orascom Telecom concerning their 50:50 joint venture in the Tunisian operator. Furthermore, the company states that they are confident of the outcome of any arbitration.

The Kuwaiti operator has recently announced that it has joined a consortium, consisting of Univest, the National Bank of Development of Egypt and Aman Trading, to bid for the third license.

While Wataniya s interest in the third license does not conflict with their stake in Tunisiana, it will compete with OTH, one of the two existing operators in the country and Wataniya s partner in Tunisia. Both mouthpieces have been silent on whether Wataniya s bid affects their joint venture.

Wataniya Telecom was launched in December 1999 and currently serves more than four million customers. Born into a monopoly telecom market, Wataniya Telecom is Kuwait s first privately owned operator and has been a driving force in increasing the mobile communications market penetration in Kuwait to over 93 percent of the population; one of the highest penetration rates in the region.

Recently, Wataniya signed an agreement with Nokia giving them a platform to provide reliable network services in the region. It operates in Kuwait, Iraq, Tunisia, the Maldives, Saudi Arabia and Algeria, and is currently in the process of expanding its presence within the MENA region as well as in Asia.

Orascom Telecom is also a bigwig in the telecom industry in the region, with more than 30 million subscribers as of December 2005. OTH operates GSM networks in seven high growth markets in the Middle East, Africa and South Asia, having a total population under license of approximately 460 million with an average mobile telephony penetration of approximately 14 percent.

Orascom Telecom operates GSM networks in Algeria (Djezzy), Pakistan (Mobilink), Tunisia (Tunisiana), Iraq (IraQna), Bangladesh (Banglalink), Zimbabwe (Telecel Zimbabwe) and Egypt (MobiNil).

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