Growth slowing in Jordan's mobile sector

The golden years for Jordan's mobile market would appear to have passed with research house, Arab Advisors, predicting only 13% growth in the sector this year.

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By  Richard Agnew Published  September 23, 2003

The golden years for Jordan's mobile market would appear to have passed with research house, Arab Advisors, predicting only 13% growth in the sector this year.

The mobile market has become the highest contributor to communications service revenues in Jordan, and the research house projects the gap between cellular and PSTN revenues will continue to widen.

At the end of 2002, Jordan's GSM operators, Fastlink and MobileCom, managed to increase their combined revenues by 40%, to exceed US$366 million.

Arab Advisors expects cellular revenues to exceed US$517 million in 2007, when monthly Average Revenues Per User (ARPU) will fall to US$18.5, as opposed to US$30 in 2002.

Additionally, the mobile market will expand at a compound annual growth rate (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%.

However, the predicted 13% growth rate this year would suggest more modest increases in the market going forward when compared to figures of 132% in 2001 and 46% in 2002.

This also goes alongside the lack of a blueprint on future liberalisation plans, the research house says.

The duopoly of Fastlink and MobileCom, expires by year-end 2003 and the government is planning to grant a third GSM license.

However, to date, Jordan's Telecommunications Regulatory Commission has not issued any documents or official tender, although the end of the year is rapidly approaching.

Arab Advisors believes that, for a third licence to be attractive, the government will have to allow entry of a mobile virtual network operator (MVNO).

National roaming offered on the present operators' networks and generous terms such as those provided to second mobile licensee, MTC-Vodafone, in Bahrain, could ensure the success of the tender, the analyst house says.

Alternatively, the third licencee could be offered a 3G licence and required to share infrastructure with the existing operators at favorable terms.

Radio trunking operator, XPRESS, which is launching its service in early 2004, will also be offered an interconnect service with existing operators.

This, according to the research group, will make the provider a 'de facto' third cellular licencee, albeit focused on the corporate sector, and cause the official third licence to become a much tougher sell for the regulator.

On the fixed front, Jordan Telecom's exclusivity period over mainline and international long distance (ILD) telephony expires by year-end 2004.

Arab Advisors believes that ILD will be the most attractive segment to new investors in Jordan, as well as existing operators in the market such as Fastlink, Batelco Jordan and XPRESS.

As for the fixed line basic phone service, the group does not foresee major opportunities, especially in the residential segment.

However, broadband will be an attractive sector for new entrants considering the liberalisation conditions that allow for local loop unbundling and collocation of DSL equipment.

"The year 2003 does not seem to [have been] 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 increasing fixed to mobile migration of traffic," says Hala Baqain, Arab Advisors senior research analyst.

"Jordan Telecom is focusing all its efforts on attaining a higher subscriber base by offering attractive packages. Arab Advisors believes that the mainline penetration rate will drop to a minimum of 11% in years 2004 and 2005, and rise again to 12% in 2006 and 2007," she adds.

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