Industry Trend Analysis - Wholesale Network To Bolster Broadband Growth Opportunities - NOV 2017


BMI View : The limited reach of Tunisia ' s wireline infrastructure means that mobile networks have shouldered the burden of fast-maturing digital services consumption. This is not sustainable even with 4G technology. A national wholesale network operator would spread the load and make it easier to launch and grow the use of advanced services, benefiting the wider economy.

A consortium headed by the Tunisian Internet Agency (ITA) has secured an infrastructure operator licence that permits it to build and operate a nationwide high-capacity network on a technology-neutral basis. It would offer access to this network on a wholesale basis and will market it to other network operators as well as specialised service providers. The new network would help Tunisian operators extend high-speed broadband services beyond the principal cities and reduce reliance on the ageing infrastructure of incumbent Tunisie Telecom.

Infrastructure Shortage Impedes Broadband Expansion
Tunisia: 3G/4G & Broadband Forecasts
f = BMI forecast. Source: BMI, INTT, Operators

The latter is the largest wireline network operator in Tunisia, directly serving 866,000 voice and 275,000 fixed broadband retail subscribers at the end of June 2017. Although it has been investing heavily in upgrading its copper network with ADSL technology, Tunisie Telecom has struggled to extend its reach into rural areas, owing to the unattractive return on investment (RoI) prospects. Its rivals in the mobile arena, Ooredoo and Orange, also offer wireline voice and broadband services, but this is generally achieved over Tunisie Telecom facilities. As the two smaller players are keen to expand multi-play services to new areas of the country, we expect them to be keen to acquire access to the new player's infrastructure.

As the state owns stakes in both ATI and Tunisie Telecom, we expect these companies to be open to working together, sharing access to ducts, conduits and other rights of way. We also consider it likely that other state-owned utilities, such as the national power distribution company and the national railways operator to also be open to sharing their proprietary communications facilities as well as rights of way. Consequently, work on the TND54mn (USD22.2mn) project has the potential to progress very quickly.

We have been forecasting sluggish growth in broadband service adoption in Tunisia in light of Tunisie Telecom's efforts to decommission older switches and transmission systems on its ageing copper network and its relatively limited efforts to deploy xDSL and fibre as modern replacements. Customer migration to cheaper voice-and-data smartphone subscriptions is well underway and will continue, but this will be less pronounced if there is a more attractive wireline alternative, which this new initiative promises.

We assume that the new network will be based on modern IP technology and will support both fixed and mobile access. The new network will therefore also appeal to mobile operators looking to reduce data transmission latency by adding additional backhaul capacity to their systems and will permit the development of new service paradigms such as fixed 4G and converged service packaging. Operators and service providers will therefore be able to operate on improved operating margins and will gain fresh incentive to address connectivity shortfalls in rural areas, improving digital inclusivity and bolstering economic growth. Currently, we forecast broadband subscriptions to grow from 1.581mn in 2017 to 1.708mn by 2021; there is scope to revise this forecast upwards if the new network is deployed quickly and makes good on expectations to offer wholesale access at fair and transparent prices.