Tunisia issues telecoms ultimatum

Tunisian demand for mobile phone lines far outstrips supply

Tunisia has issued an Egyptian telecoms firm with a "use it or lose it" ultimatum over a mobile phone licence for which payment is still owing, an official has said.

Orascom Telecom won a tender for the licence on the basis of a $454m (£310m) bid and had been due in April to sign the deal and make its first payment for the licence.

Tunisia can no longer indulge Orascom's whims and delays to the deal signing

Tunisian telecoms official

But the Cairo-based company has requested delays to the process on a number of occasions, saying it needed more time in which to raise the necessary funds.

Tunisia has now given Orascom until Monday to sign up to the deal or lose it, Reuters cited an unnamed senior Tunisian telecoms official as saying.

A spokesman for Orascom told BBC News Online: "We do have the funds... we are negotiating with the Tunisians."

He said some issues remained unresolved but negotiations were expected to be concluded next week.

Telefonica in the wings

The Tunisian official said Tunisia could not afford to give Orascom more time because it risked losing its second-placed bidder, Spain's Telefonica Moviles, which offered $450m for the licence.

"Tunisia can no longer indulge Orascom's whims and delays to the deal signing," he said.

"If it does, it risks either losing Telefonica or negotiating with it on less favourable terms."

Under the terms of the deal, Orascom is due to pay $227m on signing and a second instalment of the same amount before the end of the year.

After Monday, Telefonica would have the right to drop its bid.

Demand backlog

At present, Tunisia's only mobile phone licence is held by state-run Tunisia Telecoms.

It has a network of about 500,000 lines and has ambitions to double capacity.

However, demand for mobile phone lines is far in excess in supply.

While a second operator will introduce an element of competition into the market, officials have also said they hope it will help clear the backlog of applications for new lines.