The partial privatization of Tunisie Telecom is sailing through rough waters. Unable to manage the intricacies of selling such state assets to a foreign company, further compounded by labor union threats, the Tunisian government is between a rock and a hard place. The situation has gotten so out of control that privatization authorities were forced to postpone the operation by six weeks, after it was already pushed from December 2005 to January 2006. This postponement is the result of a bad offer from the government forcing the withdrawal from the bid process of several companies that have initially expressed interest and of intense pressure from the labor union, which resulted in a preventative strike.
Two weeks ago, Ahmed Mahjoub, the chief executive officer reiterated that his company had no immediate plan to reduce its workforce, "even after it is partially privatized." Rumors have been circulating over the past month about such potential workforce reduction, which had a visible demoralizing impact on the company. The Tunisian government has been looking to sell a substantial stake to a foreign investor, re-branding its initiative as a "search for a strategic partner" in an effort to reduce the negative impact the term "privatization" carries and the potential reaction from unions. But the CEO's attempts to calm the company's workers did not heal appease the situation.
Between a Rock and a Hard Place:
On Thursday, January 4th, 2006 workers staged a strike to oppose the proposed privatization of 35% of the telephone carrier. Resistance among workers has been widespread to the point that an estimated 80% of the workforce took part to the strike. The government contested the number and says it was 70%. Regardless, a 70% is also indicative of a serious resistance against the equity sale. Several questions are raised by the labor union, including the details of the concession, its length and the amount of equity for sale. The union threatens to stage another strike in February if the conditions are not reviewed.
For the Tunisian government, this privatization initiative is turning into a crisis. Several interested buyers decided to withdraw their offers, the last of which was France's Bouygues Telecom, which followed MTC of Kuwait and Batelco of Bahrain. This withdrawal has certainly dealt a blow to the Tunisian privatization program since other major names, including Spain's Telefonica made a similar move judging the Tunisian offer "unsatisfactory."
This privatization initiative, which is the country biggest privatization offer in its history with a price tag of 1.4 billion Euros, still has the chance to produce a positive outcome. Several suitors are still interested, including France Telecom, Telecom Italia, Vivendi Universal and Portugal Telecom, but the departure of four others suggests that the government will have to tweak the conditions of its license. Such changes, if they happen, are likely to further anger the union and the company's workers.
Tunisie Telecom's capital is about 875 million Euros. Its 2004 revenue stood at 750 million euros with 1.25 million subscribers to its fixed telephony service and 3 million to its mobile phone GSM service. The company has 15,000 corporate accounts for data transmission and maintains six call centers, and 70 branches.
© The North Africa Journal 2006
