Jordan Telecommunications Report Q2 2008

Jordan's telecoms market was completely liberalised at the beginning of 2005, ending the fixed-line basic services monopoly of incumbent telco Jordan Telecom, in which France Telecom has a controlling stake. Although the sector is governed by the Ministry of Information and Communications Technology (MoICT), day-to-day regulatory policy has been delegated to the Telecommunications Regulatory Commission (TRC). Established in 1995, the TRC operates independently of the MoICT. As a fully liberalised market, Jordan's telecoms sector boasts the presence of a large number of service providers across its various sectors, including four mobile operators. The sector also plays host to a number of major strategic investors, including France Telecom, Batelco of Bahrain and Zain of Kuwait, By the end of 2006, there were 4.337mn mobile customers in Jordan, giving the country a mobile penetration rate of 73.8%. Although the number of mobile customers continued to steadily increase throughout much of 2007, the final quarter of 2007 saw a slump in the total number of internet customers.

Mobile market leader Zain (formerly known as Fastlink) appears to have been mainly responsible for breaking the growth pattern, with the operator reporting a total of 1.858mn 'active' mobile customers at the end of 2007, down from 2.032mn in September 2007. Other than referring to the increased competition in the Jordanian mobile market, Zain has not given any explanation for the sudden drop in its active subscriber total in Q407. However, Zain's subscriber base has fluctuated before, and BMI suspects that this is related to the high proportion of prepaid customers within Zain's overall subscriber base (86% of the total are prepaid). We believe that the number of 'active' Zain mobile customers fluctuates from one quarter to the next, and we should not be surprised to see further future fluctuations.

Despite the fall in the number of Zain mobile subscribers in Q407, mobile subscriber penetration at the end of 2007 was still 12.3% higher than at the start of the year; by the end of December 2007, mobile penetration in Jordan is estimated to have surpassed 80%. Meanwhile, Jordan continues to have the second lowest fixed-line and broadband penetration rates in the Middle East. Although it appears that the residential fixed-line sector (using mainly PSTN lines) has been slowly declining since the start of 2005, growth in the number of ISDN lines (used mostly by businesses) has helped to offset this. Although the number of ISDN lines continued to increase throughout 2007, the number of PSTN lines entered a period of accelerated decline in the second quarter of 2007 and this has contributed to the downward trend in the total number of fixed-lines since then. Meanwhile, the low level of broadband penetration is related to the high cost of bandwidth, and the relative lateness with which broadband access services were introduced.

Jordan sits in the lower half of our latest set of Business Environment Rankings for the Middle East, ahead of Turkey and Iran but behind Israel and the countries of the Gulf Cooperation Council (GCC). The country also benefits from having one of the highest scores in the region for regulatory independence, a status which it shares with Israel and Bahrain.