OT's minority stake means that the debt of the Tunisian licence will not be consolidated into the company's financial results. This will allay the fears of some analysts who worried that the new licence might strain the company's balance sheet, which is already squeezed by the debt burden of the Algerian GSM licence. OT has a 51 per cent stake in Orascom Telecom Algeriawhich was awarded the country's first private GSM licence for $737 million last August (MEED 10:8:01).

The Tunisian licence fee will be payable in two instalments with the first tranche due upon the signing of the licence contract. OT will finance its share of the investment through an equity package, which Egypt's EFG Hermesis expected to have arranged by the end of April. 'We are working on several different scenarios and we don't want to expand on details at the moment,' says OT's Hatim el-Gammal.

The terms of the 15-year licence have not yet been finalised but Orascom Telecom Tunisia (OTT)is expected to benefit from favourable tax conditions and the right to operate its own international gateway - an important consideration given the 5 million tourists that visit Tunisia each year. There will also be a four-year exclusivity period before a third licence is awarded during which time OTT will compete with the incumbent state-run operator, Tunisie Telecom. The Tunisian carrier has operated the GSM network since 1996 and, with 400,000 subscribers, has reached full capacity. At least 300,000 people are awaiting a GSM connection.

As in Algeria, OT is facing a tight timetable for rolling out the new network, with commercial operations scheduled to start within six months. The company plans to cover 10 major cities during its first year of operations, but has not announced how many subscribers it hopes to gain over the same period. 'We will try and get as many as we can,' says El-Gammal. 'Operating conditions in Tunisia are more competitive than Algeria, as Tunisie Telecom has a strong customer base and plans to expand its network. However, we are confident the Tunisian market offers very promising potential for OT.'