Umniah prepares for June launch

Michael Dagher, managing partner of GSM licensee Umniah Mobile Company, sees massive potential for his company to play a profitable role in expanding Jordan's mobile penetration rate.

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By  Tawanda Chihota Published  March 30, 2005

|~||~||~|With two GSM operators and a single iDEN player already competing in a market that has an addressable market of perhaps 4 million subscribers, the entrance of a third GSM protagonist appears unnecessary. Market penetration already stands at around 25%, representing approximately 1.5 million users, and the incumbent GSM operators - Fastlink and MobileCom -offer innovative services with a customer-oriented flavour. Despite these challenges, Michael Dagher, managing partner of GSM licensee Umniah Mobile Company, sees massive potential for his company to play a profitable role in expanding Jordan's mobile penetration while at the same time looking at opportunities to invest elsewhere in the region. Umniah intends to offer GSM coverage of up to 92% of Jordan's population when it launches in “early summer,” according to Dagher. “Our licence calls for national roaming and sharing of sites. National roaming is under discussion right now, though we don't think we'll need it considering our (own) coverage plans from the first day of operations,” Dagher comments. He forecasts that penetration will grow to reach 50-55% within the next 5-7 years and estimates that his company will invest up to US$350 million in network deployment over that period, with the operator gaining a proportionate market share over that period. “The Jordanian government will reap benefits of US$ 600 million in the next 5-7 years as a result of this investment,” Dagher forecasts. The main shareholders in Umniah include Dagher in his personal capacity, together with the Fouad Al Ghanem and Sons Group of Companies, a company based in Kuwait. The licensee's strategic partners are Chinese equipment vendor Huawei Technologies and Hewlett Packard, which has been awarded a contract to supply Umniah with the IT infrastructure required to build its business support system. Last month Umniah also announced the award of a contract to Harris Corporation to supply and install Harris' network backbone and cellular backhaul services. Dagher has significant knowledge of the Jordanian mobile market having previously held the position of chief executive officer at market leader Fastlink. He believes that an opportunity exists in the market to offer innovative services at an "attractive price," with one such innovation being the offer of 2.75G services across the entire network. Umniah services will be targeted at the mass market, with a consumer orientation. "Look at the success of the easyjet (the UK-based budget airline) model. It has been very successful but the application of that type of model has been limited in the telecoms world due to a lack of liberalisation," comments Dagher. However, he is not likely to have it all his own way. Second-placed GSM operator MobileCom has been improving its customer proposition from the time iDEN operator Xpress came to market in June 2004. In July 2004, MobileCom launched EDGE, becoming the first Jordanian operator to do so, and pledged to remain a market leader in launching new technologies. Speaking at a conference later in the year, MobileCom CEO Mickael Ghossein said he thought the launch of Xpress and Umniah would only serve to interrupt the development of the Jordanian mobile market. “I believe the mobile market will be disturbed by the entry of Xpress and the third GSM operator. I do not believe the market can sustain four players,” Ghossein said at the time. Despite his doubts over the viability of the new GSM entrant, Ghossein still views the entrance of Umniah as a serious competitive threat. As such, MobileCom is set to invest some JDn20 million (US $28 million) in the upgrade and expansion of its network this year, and having experienced a 28% growth rate in subscriber numbers in 2004 to 455,000 users, Ghossein is looking to maintain that momentum. Meanwhile, the prospects for the long-term survival of Xpress look even bleaker with the imminent entry of Umniah. The iDEN operator had been attempting to create a niche within the push-to-talk (PTT) market, but with MobileCom saying that it has now received regulatory approval to launch its Kodiak-based push-to-talk over cellular services, Xpress' primary differentiator appears greatly eroded. Dagher says that Umniah too plans to offer PTT services over GSM, though he emphasised that this would not be the operator's main focus. The challenging market conditions present in Jordan are perhaps one of the contributing factors in Dagher's desire to seek out other investment opportunities in the region and not depend solely on the Jordanian operation. "We are set to pursue other opportunities in the region," comments Dagher, without specifying how rigorously or how soon. "At around 15%, the mobile penetration rate across the Middle East is low in comparison to other parts of the world and with liberalisation ongoing, we are looking to expand into the region," Dagher adds. ||**||

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