Tunisie Telecom: Foley bought in to transform company’s culture

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At GSM>3G North Africa Forum which took place in Tunis this week, Isabelle Gross met Michael Foley who is currently attached to Tunisie Telecom as the Chief Entreprise Transformation Officer. As his title implies, his main task is to turn around the company and make it a profitable investment for Dubai Holding which so far owns 35% of Tunisie Telecom and is expected to obtain an additional 16% share of the company to reach the 51% required to gain control.

Unlike Morocco, Tunisia hasn’t had yet fully entered the broadband revolution. There are less than 50,000 broadband connections at present, representing a penetration rate of a mere 2%. This slow take-up has its roots in the way in which the market has so far been organised. Although Tunisia has 5 private ISPs (and 7 public ISPs) that retail internet connection services, it remains a state-controlled distribution system headed by the Agence Tunisienne d’Internet (ATI). This agency was created in 1996 as a "société publique anonyme" (SPA), with the role of promoting the Internet to the wider public as a means of communication. One year later the ATI’s role was extended to include the wholesaling of connectivity (provided by Tunisie Telecom) to the two newly licensed private ISPs. In 2001, 3 additional licenses were granted.

In this context, Isabelle Gross interviewed Michael Foley about Tunisie Telecom’s ambitions in the data market.

Q: Do you want to stay a wholesaler of connectivity or do you want to enter the retail market?

A: With regard to the situation of the Internet in Tunisia there are two things to look at. The country has a large infrastructure and most of this is digital. There are more than 10,000 km2 of fibre cables across the country. It is vital that we increase access to the Internet – especially to broadband connections.

We have announced that over 100,000 broadband lines will be put in and made available by the beginning of 2007, and we are currently studying a programme to add about another 400,000 lines by 2008. I am confident that this number of broadband connections can be easily absorbed by the market.

To answer your question Tunisie Telecom has not changed its view. The company is not allowed to be an ISP and at the moment we are not pushing in this direction. We will carry on providing a wholesale access and will help to build up the ISP market - we will supply connectivity to the 5 existing commercial ISPs.

However, this will not stop us from following-up on other access technology through mobile phones for example. We were the first in North Africa to launch push through email. There are other technologies that we are considering, such as Wi-Fi and WIMAX.

 Q: What are your plans for Tunisie Telecom in the next six months?

The key thing is the mandate that I have received to organise the transformation process of the company. The objective is to change Tunisie Telecom from a social public organisation into a commercial company with social responsibilities.

We have identified over ten areas of activity where we want to introduce changes and make improvements. I would mention our enterprise service and our IP infrastructure. We are currently merging the teams that are in charge of the mobile and fixed business in the company. Tunisie Telecom has a great infrastructure but lacks commercial focus, in particular with regard to fulfilling the needs of its customers."

 Q: How will you for example tackle the mentality issue?

A: At Tunisie Telecom, people understand the need for the change. They know that they need to be more customer-focused. Customer care is partly what accounts for the success of Tunisiana, the second mobile operator.

A series of people have come to meet with the management of Tunisie Teleom. I can tell you that of the 12 leaders at the company all are local except for one. Their role is to work on introducing new HR policy, develop customer care and provide input on the commercial strategy for our mobile and Internet activities.

It is essential to make Tunisie Telecom more commercially-oriented and I can tell you that this transformation can be achieved.

As Foley puts it, the beast is of no mean size in terms of employees, infrastructure and over 5 million customers. But he seems confident that he can draw on his previous experience in Bulgaria when he headed ex-state owned M-Tel Bulgaria from March 2004 to July 2005 after the company was bought by Telekom Austria.

"The challenge that we face is to build Tunisie Telecom into a telecom operator that will be recognised at international level. Dubai Holding has invested more than 2.5 billion US$ in the first phase. This is their largest investment abroad and they intend to get a return on it and at the same time provide a better service to the Tunisian people. Let’s consider the broadband data market again. We could generate 8 million dinars (US$6 million) per month with 400,000 active connections at 20 dinars each (US$15)."

"With this level of broadband connections, e-commerce and e-government services will take up too and provide further revenue growth opportunities for Tunisie Telecom."

 Q: What about the status of censorship of the Internet in Tunisia?

Look, I am a commercial guy and a phone operator. I can’t make any further comments in this.

Q: What are Tunisie Telecom’s plans with regard to the issue of a 3G licence next year?

Tunisie Telecom will look at it carefully before making any decision. Again, we will need to work on a business model to find out what revenues could be generated to cover the infrastructure investments that would be required. We will do it if there is a return on investment for us and if the services that could be offered meet the Tunisian needs.

Even though Foley’s response was carefully worded, it reflects a broader scepticism about 3G and the high cost of licences expressed by a number of key operators at this week’s forum. All want lower licence fees because there is such a high level of uncertainty over potential revenues.