• Home
• News Article

Jordan: Mobile telephony investments rise by 48.6%, revenues by 122.7%

AMMAN -- Investments in the mobile telephony sector increased by 48.6 per cent from the year 2000 to 2005 but the revenues were higher by 122.7 per cent, according to a study.

Impact of privatisation in Jordan, a study prepared by Pohl Consulting and Associates and funded by the European Union, showed that the investments in the mobile telephony sector amounted to JD173 million in 2005 compared to JD29.2 million in 2000.

Revenues stood at JD144 million at the end of 2005 compared to JD189 million at the end of 2001. The amounts between 2002-2004 were JD262 million, 365 million and JD399 million respectively.

According to the study, the number of subscribers in the mobile telephony shot up by 707 per cent from 2000 to 2005.

"The customer base, from the moment of introduction of effective competition ( Fastlink and MobileCom in 2000) has grown from 398,000 subscribers to 3,183,000 at the end of 2005," the study indicated.

In terms of penetration rate, the numbers of customers translated into 8.1 per cent in 2000 and 57 per cent in 2005.

The figures, provided by the Telecommunication Regulatory Commission (TRC) , showed that the total number of staff employed in the licensed mobile telephony sector from the year 2000 to 2005 has increased by 124 per cent.

The number of employees totalled 879 in 2000 whereas in 2005 the number stood at 2,142.

"Currently there are 12 Internet Service Providers (ISPs) operating in Jordan," the study said. "This number is steadily growing, apace with the demand for broadband and other Internet and broadband related services, such as voice over Internet Provider (VoIP), customer service and call centres."

It pointed to a 561 per cent growth in the number of ISP subscribers noting that "one subscriber provides access to more than one user. Therefore, the total number of Internet users is considered to be significantly higher."

The number of ISP subscribers were put at 197,000 in 2005 compared to 32,000 in 2000. The penetration rate translated into 3.6 per cent and 0.66 per cent respectively.

ISP revenues were not available for the 2000-2006 period but the amount in 2005 was given as JD170 million.

ISP investments were about JD21 million during the six years.

"In absolute figures, highest investments were realised in the telecommunication sector, reaching a record high in 2001," Pohl Consulting and Associates wrote in the study. "In the subsequent years, investment volumes declined, stabilising since 2003."

The authors, under technical assistance of the Executive Privatisation Commission , surveyed 11 privatised companies and calculated their capital expenditure at JD612.5 million during 2000-2006.

According to the study, all privatised sectors, private investors invested significantly in new plants and machinery, foremost in the technology-intensive telecommunication sector.

"Furthermore, international management systems and tools were introduced to the privatised companies, mainly by applying standards of the international mother companies," the study said. "Most of the companies developed and implemented measures for their employees at various levels of intervention."

It added that further large-scale investments can be expected in the near future, as the government of Jordan embarks on major infrastructure investment projects under public-private partnership schemes (e.g. the Queen Alia Airport Expansion).

Sound fiscal results can be noted across all participating companies. Revenues in the sample have increased by JD204 million from 2003 to 2004, and by JD103 million from 2004 to 2005, the study elaborated.

Compared to the base year of 2000, total revenues surged by JD461.7 million until 2005.

Profitability of all participating companies has increased remarkably. Net profits in 2005 totalled JD213 million, an increase by 175 per cent compared to net profits in 2001.

Return on sales levelled at an average eight per cent in 2000, surged to 31 per cent in 2004 and reached 12 per cent in 2005.

Return on equity stood at an average of six per cent in 2000 and increased to 16 per cent in 2005.

The study concluded that "the remarkably improved overall performance of privatised enterprises can be attributed to large extent to internal efficiency gains. Only a few surveyed companies , particularly in the mining sector, were exposed to international competition and, therefore, benefited from rising world market prices for their products."

The following were the privatised companies covered in the study: Jordan Telecommunications Company, LEMA (water), Royal Jordanian Airlines , Airports Duty-Free Shops, Jordan Aircraft Maintenance Company , Jordan Cement Factories Company , National Electricity Power Company , Irbid District Electricity Company , Asia Transport Ltd., Al Thelal Transport Company and Al Tawfiq.

By Samir Ghawi

© Jordan Times 2007