With low prices translating into sustained growth in subscriber numbers, Jordan’s highly competitive mobile phone market now has a penetration rate of over 108%. To keep that number increasing, industry players are calling for a sales tax on smartphones to be rescinded, while also launching new mobile phone-based services.
Jordan’s liberalised and well-developed telecoms sector is thus going through some exciting times. Indeed, with the return to normality after political unrest earlier this year, Jordan’s telecoms players are seen to be actively engaging with investors to restore confidence and attract funds to upgrade and expand the kingdom’s network.
The country’s telecoms market is already the region’s most liberalised, with competition among operators intense. Furthermore, subscriptions to higher-value telecoms services will likely be spurred on by expansions in the country’s 3G and 3G+ networks.
Operating as Orange Jordan and majority controlled by France Telecom, the Jordan Telecom Group (JTG) launched the kingdom’s first 3G+ capable network in March 2010. In February 2011, the company introduced its ADSL2+ and 3G+ package, which offer broadband speeds of up to 20 Mbps and 21 Mbps, respectively.
Other operators include Zain Jordan, which introduced GSM mobile services to the country in 1994 and launched its 3G network last March, and Bahrain Telecom’s Umniah, which was granted a GSM licence in 2004.
The expansion of 3G+ services is expected to spark greater interest in smartphones and make it easier for consumers to buy them. To encourage use of the new network, Abed Shamlawi, the CEO of the ICT Association of Jordan, known as int@j, recently called for taxes on these devices to be reduced, saying that the elimination of the 16% sales tax could help significantly increase internet use by smartphone owners.
In mid-August, Shamlawi told local media that as of the end of July, smartphones accounted for 41.6% of the total number of mobile handsets in Jordan. He added that more people are now using smartphones than PCs to connect to the internet.
According to some predictions, mobile penetration is expected to reach 133% by 2015. Shamlawi said that doing away with the 16% sales tax would lead to a surge in smartphone sales, further boosting mobile penetration.
However, even with the tax still in place, Jordanians are already adopting niche services, such as mobile banking. Indeed, one month after mobile services provider Zain Jordan launched 3G network services in March, it announced that its new E-mal service, a mobile technology-based banking service, had attracted more than 30,000 customers since January.
E-mal enables users to transfer money to other Zain subscribers across the kingdom via SMS. The SMS can then be used to withdraw cash from any Zain outlet across Jordan. E-mal subscribers can also top up balances, pay bills and manage bank accounts from their phones.
Zain said it expects significant growth in subscriber numbers by end-2011, as the company plans to launch more mobile-based local and international services. “Currently, we are in the process of launching international top-up from Jordan to abroad and vice versa, which will allow expats living in Jordan and Jordanian immigrants living abroad to recharge talk time for their families in their home countries regardless of the network operator they are using,” Mona Qaddoumi, the commerce manager at Zain Jordan, told local media last spring.
These are just the first steps towards increasing the mobile market’s share of internet use. In the near term, the mobile segment is likely to continue to expand on the back of rising take-up of high-value data services.
Network expansion plans such as Zain’s will foster continued competition among the major players, and the increasing availability of low-cost 3G-enabled devices will enhance the adoption of 3G services. Furthermore, the launch of competing 3G networks by the existing operators will lead to new revenue growth paths that are expected to be concentrated on mobile broadband, applications and content.
Taken together, all this adds up to expectations for a positive growth outlook for Jordan’s telecoms sector. Indeed, many encouraging signs are already pointing to seeing 3G users account for up to 25% of mobile subscriptions by 2015.