Arab Advisors Group
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Jordan’s third cellular license: Will it attract investors?
Tuesday, November 11, 2003

Jordan’s regulator, the TRC, plans to issue pre-qualification documents for potential bidders for Jordan’s third cellular license this month. Award of the license is slated for April 2004. Barring incentives for new entrants and incumbents alike, the new license tender will prove to be a tough sell. November 11, 2003 - On September 4th, 2003, Jordan’s Council of Ministers approved the Statement of Government Policy on the Information and Communications Technology Sectors and Postal Sector that was prepared by the Ministry of Information and Communications Technology. The Policy Statement entails that the present duopoly cellular market status in Jordan should come to an end and that further competition should settle in, on or the earliest date following January 1st, 2004. Accordingly the Telecommunications Regulatory Commission, TRC, is currently waiting for the government’s approval for the proposed tender procedures for the granting of the third national mobile license in the country. The TRC has set March/April 2004 as the anticipated date for awarding the license. A new small report, “Jordan’s third cellular license: Will it attract investors?” was released to the Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Service subscribers on November 10, 2003. The 7-pages report, analyses the Jordanian cellular landscape, details the preliminary license conditions and suggests steps needed to make the license more attractive. This report can be purchased from Arab Advisors Group for only US$ 200. 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. Please contact the Arab Advisors Group to receive the report’s Table of Contents. “As its stands, the preliminary license terms indicate that it is not a license for 3G cellular infrastructure in Jordan.” Noted Ms. Hala Baqain, Arab Advisors Senior Research Analyst and the author of the report. “The TRC has preliminary set the spectrum bands for the new operator at 2x15 MHz in either the 1800 MHz or the 1900 MHz bands. If the TRC stands with both these frequency bands the new operator will not be able to provide the 3G services (since it operates in either the 1900 MHz - 2100 MHz or the 2500MHz – 2600MHz) nor the CDMA-based 3G standard in the 450 MHz band, which has been adopted by some vendors. However the TRC still did not decide on the final spectrum allocation and reports that it might take into consideration offering other frequency bands depending on the supporting argument of the applicants.” Ms. Baqain added. The reports shows that the golden years of substantial growth in Jordan’s cellular market 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 projects annual growth in the cellular market to be sustained at 19% for 2004 and 2005 - when NewGen/Xpress, the de facto third mobile operator, is expected to enter the market. The Arab Advisors Group projects the Jordanian cellular market to grow at a competition-induced CAGR of more than 15.48% between 2002 and 2007 to exceed the penetration mark of 40%. Arab Advisors Group’s full analysis of the Jordanian mobile operators, their revenues, and the regulatory context is presented in the Jordan Communications Projections Report 2003 released in September. Please contact the Arab Advisors Group for a TOC of this comprehensive report. The following link gives the news release on this major report http://www.arabadvisors.com/Pressers/presser-230903.htm “For the license to be attractive for new entrants, the Arab Advisors Group believes that five fronts need to be fairly tackled by the Jordanian government” Ms. Baqain added. “These fronts include guarantees for fair rates for off net traffic, modifications of the Interconnection rates regime, a smooth and built in 3G migration path for all operators, lowering Taxation on end users to enhance demand and uptake and focusing more on revenue sharing rather than Upfront license fees” She added. On the revenue sharing front, The Arab Advisors Group believes that fees throughout the duration of the license will be ultimately better for governments, operators and end users. This is because new entrants are not weighed down by debts incurred to raise the license fees, which would allow for more reasonable rates to the end users. In Arab AlMaghrib Region the prevailing license model there stresses up front license fees and then gives a free ride to the operators. I.e. Whereas in countries like Egypt and Jordan, operators pay a big share of their annual revenues in license fees and revenue sharing, the licenses in Morocco, Algeria and Tunisia have no such annual license fees. Moreover, they have built in international gateways. In Tunisia for example, Orascom now routes its own international traffic. “Potential interested investors will soon have the final say in deciding the feasibility and viability of the license (away from the current raging debate between the government and the mobile operators in Jordan).” Ms. Baqain concluded in the report. The Arab Advisors Group’s team of analysts in the region has already produced close to 190 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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