Arab Advisors Group
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Jordan Telecom: A transformed operator?
Monday, October 21, 2002

A newly released report from the Arab Advisors Group provides a detailed analysis of Jordan Telecom's fixed lines traffic. The report reveals that the company has managed, reasonably well, its transformation from an old school monopoly operator into a player in a much more competitive market.

October 21, 2002 -

Jordan Telecom's profit has actually been decreasing in the last two years. 2001 profits stood at US$ 64.6 million compared with US$ 83.9 million in 2000. Revenues however, grew from US$ 401.5 million in 2000 to US$ 435.5 million in 2002.

A new report," Jordan Telecom: A transformed operator?" was released to the Arab Advisors Group's (www.arabadvisors.com) Strategic Research Service subscribers on October 20, 2002. The report states that the reduced profit margins of Jordan Telecom do not necessarily show a troubled operator. The Arab Advisors Group believes that these are the signs of the transformations that have been happening at Jordan Telecom (and the CAPEX investments it has made).

"The number of local and national minutes on the fixed network has decreased between 2000 and 2001 by 2.38% and 6.48% respectively. Given the massive growth in number of mobile phones in Jordan during the same period, and the increasing intra-mobile traffic in Jordan, the decline is a very clear evidence of substantial mobile - fixed traffic substitution in Jordan." Arab Advisors Group's President, Jawad Abbassi wrote in the report. "While the local fixed traffic volume has decreased on JTC's network, the revenues actually increased by 8.45% to exceed US$ 56 million which stems from Jordan Telecom's tariff rebalancing." Mr. Abbassi added.

The 5-pages report shows that while PSTN national and local traffic volume is decreasing, the fixed-mobile traffic is increasing at very healthy rates. Between 2000 and 2001, fixed to mobile traffic increased by 50.52% and mobile to fixed traffic increased by more than 86%, and will grow to become one of the very important revenue streams for Jordan Telecom.

The report also explains the effect of VoIP international traffic termination in Jordan. Incoming international traffic was almost flat between 2000 and 2001 as it grew by only 1.5%. More importantly, 2001 was the year when, for the first time, outgoing international traffic was higher than incoming international traffic in Jordan. "Given the growth in the subscriber bases of fixed phone and mobile phones, the lack of growth in incoming international traffic can only be attributed to VoIP traffic termination." Mr. Abbassi noted. "Jordan Telecom is now much less dependent on international incoming traffic. Whereas the incoming international revenues made up close to 32% of its total traffic revenues in 1999, they constituted no more than 20% in 2001 while overall revenues grew in the same period. The company is therefore much less susceptible now to the phasing out of the international accounting rates regime." Mr. Abbassi added.

The report concludes by promising exciting time for Jordanian consumers. Even lower rates, attentive operators and two or three viable major operators in the country to choose from. Clearly, the region will be watching the Jordanian experience with much attention.

The Arab Advisors Group's team of analysts in the region has already produced close to 125 reports on the Arab World's communications markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group's (www.arabadvisors.com) Strategic Research Service. To date, Arab Advisors Group has served more than 60 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.

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