Tunisie Telecom's Dubai shareholder decries strike action

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Strike action by Tunisie Telecom workers could scare off foreign investors in the north African state, while the cancellation of its initial public offering was not valid, a Dubai-based owner of a third of the carrier said.

Strikers have stopped other employees of state-controlled Tunisie Telecom reaching work, with call centres and shops most affected, said Deepak Padmanabhan, chief executive of Emirates International Telecommunications (EIT).

EIT - part of Dubai Holding, a conglomerate owned by Dubai's ruler - bought a 35 percent stake in Tunisie Telecom for $2.25bn in 2006. Tunisia owns the rest.

"The strike action is presenting a negative image of Tunisia," said Padmanabhan. "If Tunisie Telecom is a case study for how foreign investors are treated, then I believe this will make other companies think again before investing and may look to other economies where there is greater clarity and security."

Unions in Tunisia have been growing in influence since the fall of former president Zine al-Abidine Ben Ali in January.

The telecoms union could not be reached. The dispute is centered on 63 contractors it claims are overpaid.

Regular employees are classified as public servants and pay rules mean Tunisie Telecom cannot compete for top staff unless it hires them as contractors, Padmanabhan said. Rival players Orange and Tunisiana - a Qatar Telecom unit - are not bound by the same rules.

"Why are the unions focusing on the removal of 60 employees rather than fighting for increased benefits for the remaining 8,450?" said Padmanabhan. "EIT wishes for a proper framework for a social dialogue between the unions and Tunisie Telecom."

In Tunis and urban Tunisia, up to a fifth of staff are estimated to be on strike, but in other regions up to 100 percent of employees are boycotting work. The firm cannot confirm who is on strike and so continues to pay all employees.

In February, Tunisie Telecom called off an initial public offering after talks with union officials.

Padmanabhan said the talks should not be considered "a valid or legally binding agreement" since chief executive Raouf Chkir -- who resigned soon after the meeting -- was not authorised to make a deal.

The IPO would have sold 20 percent of Tunisie Telecom, with each shareholder selling 10 percent of the company.

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