Jordan’s annual growth in the cellular market is forecasted to sustain at 19 percent for 2004 and 2005 - when NewGen/Xpress, the third mobile operator, is scheduled to enter the market, says the Arab Advisors Group in a recent report.
The Arab Advisors Group projects the Jordanian cellular market to grow at a competition-induced CAGR of more than 15.48 percent between 2002 and 2007 to exceed the penetration mark of 40 percent.
The report shows that the golden years of substantial growth in Jordan's cellular market have passed with an expected growth of only 13 percent by year-end 2003, compared with 132 percent in 2001 and 46 percent in 2002.
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.
“As its stands, the preliminary license terms indicate that it is not a license for 3G cellular infrastructure in Jordan,” noted Arab Advisors Senior Research Analyst and the author of the report, Hala Baqain. “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 nor the CDMA-based 3G standard in the 450 MHz band, which has been adopted by some vendors.”
“However the TRC has still not decided 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,” Baqain added.
On September 4, 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 1, 2004.
Accordingly, 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.
“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” 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 for the users.
In Arab Al-Maghrib region, the prevailing license model there stresses up front license fees and then gives a free ride to the operators, whereas in countries like Egypt and Jordan, operators pay a big share of their annual revenues in license fees and revenue sharing. 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. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
