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New study: Jordan leads the region in full telecom market liberalization

On the 21st of October 2004, The Council of Ministers approved the TRC's proposed licensing program, which has fully opened the fixed telecommunications sub-sector to competition as of January 1st 2005.

The new licensing program introduced a simple integrated license that permits the licensee to offer any service. The TRC doesn’t place a limit on the number of licenses that will be issued, or upon the type and range of non-public mobile wireless services that may be provided, or on the types of associated networks used (except as required by considerations relating to normal network safeguards, security, use of scarce resources and technical limitations).

As of January 1st 2005, all providers of public telecommunications services and underlying networks that use scarce resources will require an “ Individual License”. Scarce resources are defined as radio spectrum, public rights of way and telephone numbers. At the same time, all providers of the public telecommunications services that do not use scarce resources, or those whose use of scarce resources is determined by TRC not to be materialistic (such as VSAT operators), will require a “Class License”. The two kinds of licenses (excluding amended licenses) will be issued for a term of 15 years.

A new report, “Jordan Communications Projections Report 2005” was released to the Arab Advisors Group’s Telecoms Strategic Research Service subscribers on October 16, 2005. The 99-pages report, which has 141 detailed exhibits, provides a detailed analysis of the Jordanian Telecom market and all the major operators and licensees. The report includes 5 year historical and 5 year projections on service uptake and revenues. The report also profiles all the telecom operators and provided a detailed picture on their market strategies. Please contact the Arab Advisors Group to get a copy of the reports Table of Contents.

By September 2005, a total of 29 licenses have been granted by the TRC, Jordan Telecom was the sole operator with an individual license until May 2005, when Batelco Jordan was granted its own individual license in addition to the class license it had before. The remaining 26 licenses are all class licenses. A total of five new licenses were granted in 2005, one Individual license was granted to Batelco-Jordan, while the other four were class licenses granted to “Sirat Telecom Technology”, “LaSilkee Virtual Connection Company Ltd.”, “Pella”, and “ Jordan Bell Telecom”. However, by September 2005 the number of pending applicants stood at 11, one for an Individual license, while the other ten applied for Class licenses.

“Jordan’s household penetration rate is not impressive. In 2002, the household penetration rate declined to 50% down from 57% in 2001. This underlines the fact that many businesses had disguised their lines as residential lines to get lower subscription rates. It also underlines the fact that a significant portion of the population lacks a basic PSTN service. The decline in household penetration rate was mainly due to the increasing trend of the Fixed–to-Mobile traffic migration and substitution. Households are finding the mobile more and more convenient and a feasible substitute for the fixed line.” Mr. Saif Nimry, Arab Advisors research analyst wrote in the report.

The cellular market in Jordan is a highly competitive market. 2001 was a year of more competition which induced rate reductions, more user awareness, heightened marketing and more flexible packages offered by both mobile operators whereby the market grew by 462,000 (almost double the rise in subscribers in 2000). The entrance of a third cellular operator (XPress) in 2004 and a 4th cellular operator in June 2005 (Umniah) had a substantial effect on the intensity of competition which raised the country’s mobile penetration to more than 37% by the end of June 2005.

Jordan’s cellular subscribers grew at a CAGR of 46.8% between 2000 and 2004. The Arab Advisors Group projects the market to continue to grow in the coming few years. Reduced rates, per second billing, extended validities and special offers, are expected to introduce the market with a healthy growth rate of over 46% in 2005. Between 2006 and 2009, the Arab Advisors Group projects the Jordanian cellular market to grow at a CAGR of 10% to exceed 3.43 million subscribers by 2009, a penetration rate of more than 57%.

Amman,11 01 2005
Mena Report
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