The Jordanian cellular market enjoyed its glory years of expansion and is experiencing a tapering of annual growth. According to a new Arab Advisors report, the lack of direction on the eve of the exclusivity expiry deadline is not very encouraging.
Jordan's communications sector 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.
On the cellular front, the golden years of substantial growth have passed with an expected growth of only 13 percent by year-end 2003 when compared to 132 percent in 2001 and 46 percent in 2002. The Arab Advisors Group project’s the Jordanian cellular market to grow at a CAGR of more than 15.48 percent between 2002 and 2007 to exceed 2.44 million subscribers by 2007, a penetration rate of more than 40 percent. The Jordanian cellular market grew by a CAGR of 94.95 percent between 1998 and 2002.
Revenue 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 percent to exceed $366 million. 2007 cellular revenues are expected to exceed $517 million when the Monthly Average Revenue Per User (ARPU) becomes $18.5 as opposed to $30 in 2002.
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. Jordan’s GSM operators’ duopoly exclusivity period expires by year-end 2003. The government is planning on granting a third GSM license. However, to date, the Telecommunications Regulatory Commission (TRC) has not issued any documents or official tender although the end of the year is approaching rapidly with only three months remaining.
For a third cellular license to be attractive, be it in the GSM 1,800 bands or a 3G license, 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 year-end 2004. The Arab Advisors Group believes that the ILD will be the most attractive segment. The segment is forecasted to be of interest to new investors as well as existing operators in the Jordanian market such as Fastlink, Batelco Jordan and XPRESS.
“The year 2003 does not seem to be a good year for the PSTN market,” noted Hala Baqain, Arab Advisors Group Senior Research Analyst. “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.”
“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 percent in years 2004 and 2005 to rise again to 12 percent in 2006 and 2007.” she added.
As for the fixed line basic phone service, the group does 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. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
