Setting out with an unbending will and unwavering confidence to achieve the vision of his Majesty King Abdullah Bin Al Hussein in making Jordan a haven of technology and innovation, Zain Jordan's CEO, Ahmad Al Hanandeh, discloses to Telecom Review Zain's strategies and plans to maintain the company's leadership in the Kingdom through partnerships, unparalleled services, and building solid ties within the Jordanian community.
Brief 2012 Roundup
Zain's financial performance during 2012 has been very satisfactory according to the company's CEO who says, "Despite all the challenges and the difficulties, Zain Jordan has achieved good financial results. We have grown in revenue year-over-year. Growth rates are expected to be between 3% and 5%. Our profitability is in line with the budget. Our overall performance is very good in terms of its financial results and we are hoping that this performance will continue in the coming years."
The Jordanian Telecom Market: Challenges and Changes
Ever since his appointment as CEO in July 2011, Al Hanandeh has been making the best out of all the opportunities available on the market to provide better services, create new revenue streams, increase investments as well as penetration rates. He comments, "Right now, the major opportunities are in value added services that are built on data. By the time I joined Zain, HSPA had been launched. After my appointment, we continued working on the expansion of the network. Our customer base today is around 700, 000 to 800, 000 subscribers in mobile data and around 300, 000 in home data including dongles and routers as well as 3G subscriptions. As we were expanding the network, we were working on establishing and marketing most of our products in the Jordanian market. This has helped us increase our customer base and achieve a revenue growth in a market which is considered as one of the most highly competitive markets in the Middle East. We did that in a time when prices were actually dropping by 5% compared to an increase of 10% to 15% in voice services." Al Hanandeh adds that the decrease in prices is the direct result of the negative competition which has recently taken over the competitive Jordanian market.
Commenting about the situation of the market, the CEO says that in order to achieve revenue light of such negative competition, it took a lot of effort and time to maintain market leadership especially in terms of revenue and customer base. However, Zain Jordan has always been up to the challenge.
Regarding the market challenges, Al Hanandeh explains that the Jordanian telecom market is greatly affected by the economic situation of the country as well as the telecom complications faced on a daily basis. He says, "We work on developing value added services such as the new roaming offers where customers are getting medical and life insurance in addition to better data roaming packages. Our new offers guarantee that customers are given the best value for their money."
Elaborating further, the CEO says that competing on price is not a top priority for Zain Jordan at the moment. What really matters is creating value for people and providing them with the best quality of services. He adds that Zain Jordan is focused on two main issues: first, data connectivity, local and international; second, applications and content development.
Zain Jordan is working hard to be the one and only entity in providing the best content and applications for customers as well as creating new sources of revenue streams that can cover up for the drop off in the voice revenue which is expected in years to come.
When 3G was first launched in March 2011, the market share was very humble. Al Hanandeh says, "At that time, we had a very small share in overall data services; today our share has reached 37% in data connectivity only 18 months after the launch."
However, in a relatively small market, competition is very intense. The CEO comments, "The level of competition that we reached, especially in the absence of any regulatory presence and interference, added to the overall congested condition of the telecom market; there are big challenges in maintaining revenues and retaining customer base. The condition of the market as such exerts a lot of pressure on the acquisition side as well as the retention side."
Al Hanandeh says, "On the retention level, we are trying to provide customers with the best value for their money. We are also investing heavily in providing quality service. Our network is considered the best in Jordan. We cover almost 97% to 98% of the populated and semi-populated areas. We have the biggest coverage, the biggest number of towers and latest technologies in our infrastructure. We do not compromise on the account of the quality of the service or the latest technologies and solutions that we offer. This approach helps us retain our customer base."
He adds, "It is true that investing heavily in infrastructure and technology affects profitability at the end of the day. But still, we are holding our investments despite all the challenges that the country's economy and the telecom industry are facing in terms of negative competition, in addition to the decline of voice revenues and the competition of the new entrants to the markers like OTT players. Despite all these challenges, and in order to keep investments pouring in, the big portion of profitability is being put back into the network, the infrastructure, the services and the technology. This helps us retain our customers, secure and confirm our commitment to them in terms of providing the best and the newest offers and solutions."
Keeping up with these challenges, Zain Jordan has also set out to revamp its products. "Our revamping was different; it was done based on consumer behavior. Our teams carried out a thorough analysis of subscribers' behavior and came up with new packages that suit their needs. We increased the level of transparency so that our customers started to realize that with these offers they are actually saving more money," adds Al Hanandeh. Through the revamping of its products, Zain Jordan has achieved a balance in reducing prices and increasing the number of users.
The Ongoing OTT Threat
The threat brought by OTT players and applications cannot be avoided or disregarded. These applications are negatively affecting revenues for sure, comments Al Hanandeh, who believes that such applications are consuming big shares of international revenue streams and profits rather than local ones as users still tend to use voice services particularly at reasonable rates.
Al Hanandeh adds, "Jordan is considered the second lowest country in terms of mobile voice prices in the Middle East and the Arab countries. Many customers still depend on voice calls just as others depend on OTT applications. However, the latter are more used to replacing roaming services and international calls; this is where we, as operators, get affected. This is where the prices have to be reduced if we plan not to lose traffic for the benefit of the OTT players."
"On a different perspective, there are individual licenses which grant people the right to operate VoIP commercial traffic. It is in such cases where we strongly need to regulate the VoIP commercial usage to the benefit not only of the operator, but the consumer and the country as a whole."
Al Hanandeh clearly expresses his attitude towards the necessity of managing and regulating the competitive environment in the country in order to secure the interest of everybody, the least operators. He admits, "We cannot stop people from using OTT applications. However, the real question is, are we going to charge them for using such applications? This is a question that needs to be answered by all the operators. It is a decision to be taken with the regulatory authorities in Jordan."
In order to march towards a better future of telecom in Jordan, Al Hanandeh believes that operators and regularities must be well prepared for the years ahead as these OTT applications will continue to branch and develop. He says, "These applications are competing with us while using our data services without us getting the same revenues in return. Our data service environments are very competitive and the prices of our data services have reached the bottom from the day of their launch due to this type of negative and unfair competition."
A Driven Price Market
With complete transparency, Al Hanandeh answers Telecom Review's question about the importance of pricing in the market by saying, "I believe the presence of 3 operators in such a small market can easily get you there."
He goes on to narrate how at one point competition was taking the industry by storm. He reminisces how that golden era of voice services enabled operators, regardless of what they did, to increase their revenues and penetration rates year-over-year.
At that time, he says, the decisions which were taken were not long term decisions and strategies - this was the shortcoming of that era. Operators missed the fact that the telecom industry has always required nonstop investments in order to constantly expand and develop. They did not realize that growth penetration will come to a halt and decline once the market reaches saturation. Such a fault formed the grounds on which operators stand today in Jordan.
The Jordanian Vision
Setting out to render Jordan a haven for technology and innovation requires a lot of partnerships and cooperation between different entities.
Al Hanandeh states that the industry is made up of 3 segments: the government, operators and consumers. In between these 3, there are the stakeholders and the regulatory authorities. In order to make Jordan a regional hub for ICT and telecommunications, the private and the public sectors should work together to increase investments and penetration rates. They must also cooperate to improve infrastructure and integrate online services that would facilitate individuals' lives whether in the fields of health, education or other public services.
He also noted that such services will not only increase internet penetration rates, but they will push companies to upgrade their networks and infrastructure thus prompting more investments and employment opportunities.
Broadband and 3G Coverage
From the day Zain Jordan launched its services, a firm decision was made: these services would cover the whole Kingdom as coverage was going to be Kingdom wide. Al Hanandeh declares, "From the very first day on which we launched this project, we were determined that wherever we are covering voice, we are covering data. From the moment on, we never stopped expanding. During 2012 itself we added around 500 new locations; we upgraded our devices, services, systems and technologies so that we could accommodate the high demand on internet usage. Users are increasing and so is the capacity."
He adds, "Our total investments in 2012 were budgeted at 85 million JD for the infrastructure and the capital expenditure where most of it goes to the expansion of data networks. At the same time, part of this budget is dedicated to the development of new solutions related to home connectivity such as Ethernet or FTTH. Another part is dedicated to business development and creating new solutions. We strongly believe that 3G alone is not the future; it should be supported by proper infrastructure of home connections and fiber. We also hang a lot of importance on value added services as new the revenue streams are anticipated in the coming few years such as the IP TV. IP TV cannot be provided over a 3G network; it can only be provided over a wired network. That is why we are going into an all IP network in the future."
In paving a better way for a brighter Jordanian telecom market, Zain Jordan has recently selected Ericsson to renovate its network core technology and Charging System and Billing solutions to insure a quick and cost effective future introduction of new services. This agreement will prepare Zain Jordan for the future by increasing network capacity to cater to the exponential mobile data growth while reducing operating costs and improving the quality of services.
Enriching customer experience and the value provided to them is among the operator's top priorities. Hence, these enhancements and upgrades are carried out. Such upgrades not only promise of more growth opportunities, but they also foretell of an ever-increasing customer base. Al Hanandeh comments, "With this upgrade our customers will enjoy bundled voice and data services with tailored offering and controlled spending. On the other hand, enterprise customers will enjoy Zain Jordan's integrated services with flexible, tailored and bundled offers."
The adoption of cutting-edge technologies along with the enhancement of the existing infrastructure is a must for future growth and expansion, adds Al Hanandeh. In accordance with this growth vision, the CEO declares that Zain Jordan is carrying out LTE trials in the hope that the government will give them the green light to start the deployment and implementation within the coming year. He adds that LTE would be run on the current frequencies to avoid paying extra money. This is done for the benefit of the operator, the consumer and the country as a whole.
The Jordanian Telecom Market: Today and Tomorrow
As per Al Hanandeh, Jordan today is one of the most advanced countries in the telecommunication offerings; however, as a number one operator, Zain Jordan has not reached the ultimate target. The reason is simple, explains the CEO, who says, "There is always something new in terms of developments; consumer behavior is always changing, so are the requirements of the service especially now that competition went beyond licensed operators. We are satisfied with our performance, market position and ability to keep up with the constant changes. Our system is flexible enough to respond and adapt. But we can never be satisfied as there are always new happenings."
As to the future of the telecom sector, Al Hanandeh reveals that it will depend on the internet, on content and applications. It will depend on the value added services that need to be provided to the customers. And so, operators need to think of new revenue streams built on their infrastructure, technology and new e-services such as mobile money and mobile advertising for example.
In order to attain that aim, Al Hananden believes that there has to be more strategic partnerships with other sectors in the industry like banks, health and educational institutions. Operators also need to support content and application providers to come up with new customized and localized applications, and content based on market and user demands.
Zain Jordan Going Forward
Commenting on the way ahead, Al Hanandeh states, "Going forward, our teams are working 24/7 to come up with new revenue streams to handle the challenges we are facing. We are looking into content and applications, into local and international connectivity solutions. We are balancing between retention, acquisition and new revenue streams. We are looking into operational efficiency and excellence to achieve the best and to maximize utilization of resources that will allow us to invest more in the future. There are developments taking place on the network and commercial levels which we think will help us to be flexible enough to respond to the challenges we face."
He adds, "The rewards that have been granted to Zain Jordan are the best proof of Zain Jordan's commitment to the future of the industry. We were awarded the best operator network. We have invested a lot of effort and money in that network. We have also received awards for our value added services, and this also confirms our commitment to the community, and our perseverance and will to provide services that would make people's lives easier."
"In the future, we will walk on the same path; we will always do all that is necessary to maintain our leadership position in the market on all levels whether customer base, revenues, community involvement, or even being the employer of choice for the country," ends Al Hanandeh.
© Telecom Review 2012
