Arab Advisors Group
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Jordan’s cellular market: Two’s company. But is three a crowd?
Tuesday, September 23, 2003

Jordan's communications market is one of the region's most dynamic markets. Over the past few years Jordan’s communications market passed through massive changes in terms of privatization and liberalization, which has resulted in enhanced offerings of advanced services to the consumers with increasingly competitive rates. A strong debate is apace in the country about the future liberalization steps. The regulator and the government are yet to give a blue print of the road ahead. The lack of direction on the eve of the exclusivity expiry deadline, is not very encouraging. September 23, 2003 - Jordan’s GSM operators’ (Fastlink and MobileCom) duopoly exclusivity period expires by yearend 2003. The government is planning on granting a third GSM license. However, to date, the TRC has not issued any documents or official tender although the end of the year is approaching rapidly with only three months remaining. The Arab Advisors Group believes that the Jordanian cellular market enjoyed its glory years of growth and is experiencing a tapering of annual growth. For a third cellular license to be attractive (be it in the GSM 1800 bands or a 3 G license), we believe the government will have to allow the Mobile Virtual Network Operator model MVNO, national roaming with already present operators and other generous terms such as the ones that were given to the second mobile licensee “ MTC Vodafone Bahrain” in Bahrain to ensure the success of the tender. Moreover, the third cellular license could be a 3G licensee that is required to share infrastructure with all existing operators at favorable terms. After all, with the Radio Trunking operator, XPRESS launching its service in early 2004, the telephone interconnect service of the radio trunking operator, will make it a de facto third cellular licensee. Albeit, one that is focused on the corporate sector. Hence, any third cellular licensee will be the fourth in the country, which may be a hard sell! On the fixed front, Jordan Telecom’s exclusivity period over the fixed and International Long Distance (ILD) expires by yearend 2004. The Arab Advisors Group believes that the ILD will be the most attractive segment. We expect the segment to be of interest to new investors as well as existing operators in the Jordanian market such as Fastlink, Batelco Jordan and XPRESS. As for the fixed line basic phone service, we do not foresee major chances for success especially in the residential segment. Broadband will be an attractive segment for new entrants especially with the liberalization conditions that allow for attractive local loop unbundling and collocation conditions with incumbents. A new comprehensive country report,, “Jordan Communications Projections Report 2003” was released to the Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Service subscribers on September 22, 2003. The 84-pages report fully analyses the Jordanian Fixed and cellular communications market and provides five-year forecasts of more than 40 Demographic, Economic and Infrastructure indicators. It also fully analyses all the major operators in the country and the equipment vendors’ competitive landscape. This comprehensive report can be purchased from Arab Advisors Group for only US$ 850. Any investment in this report will count towards a Strategic Research Service subscription should the service be acquired within three months from purchasing the report. Purchasing the report also entails the ability to attend the Arab Advisors Group’s Media and Telecommunications Convergence Conference in June 2004 in Amman for an additional fee of US$ 50 only. Please contact the Arab Advisors Group to receive the reports Table of Contents. “The year 2003 does not seem to be a good year for the PSTN market: During 2003, the mainlines have decreased, for the first time in Jordan, because of the boom in the cellular market and the increasing fixed to mobile migration of traffic and substitution trend.” Hala Baqain, Arab Advisors Group Senior Research Analyst noted. “Jordan Telecom is focusing all its efforts on attaining a higher subscriber base by offering attractive offers and packages. The Arab Advisors Group believes that the mainline penetration rate will drop to a minimum of 11% in years 2004 and 2005 to rise again to 12% in 2006 and 2007.” She added. On the cellular front, the golden years of substantial growth have passed with an expected growth of only 13% by yearend 2003 when compared to 132% in 2001 and 46% in 2002. The Arab Advisors Group project’s the Jordanian cellular market to grow at a CAGR of more than 15.48% between 2002 and 2007 to exceed 2.44 million subscribers by 2007, a penetration rate of more than 40%. The Jordanian cellular market grew by a CAGR of 94.95% between 1998 and 2002. Revenues wise, Jordan’s cellular market has become the highest contributor to the total communications services revenues. The cellular revenues in 2002 exceeded the PSTN revenues, and the Arab Advisors Group projects the gap between the cellular revenues and the PSTN revenues to continue growing in favor of the mobile segment. With the end of the second year, 2002, of competition both Fastlink and MobileCom managed to increase their combined revenues by 40% to exceed US$ 366 million. 2007 cellular revenues are expected to exceed US$ 517 million when the Monthly Average Revenue Per User (ARPU) becomes US$ 18.5 as opposed to US$ 30 in 2002. The Arab Advisors Group’s team of analysts in the region has already produced more than 180 reports on the Arab World’s communications and media markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Services (Media and Telecom). To date, Arab Advisors Group has served more than 100 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.

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