Sell offs and buy outs in the Jordanian telecom sector

Jordan: Sunday, July 09 - 2006 @ 12:45

The deals enabled two powerful international operators to further strengthen their presence in the kingdom, with Batelco already having a subsidiary, Batelco Jordan, offering fixed line and broadband services in the kingdom, and France Telecom, who had possessed a 40 per cent share in the state owned Jordan Telecom since 2000, now finally grabbing a controlling stake in the operation.

Fierce competition

A report by the Arab Advisor’s Group towards the back end of last year studied the cellular phone market in Jordan and concluded that the sector is in the throes of a rapid expansion.

Since the two more established mobile providers MobileCom, Jordan Telecom’s own mobile operation, and the MTC owned Fastlink have been joined by, firstly, Xpress in 2004, and then Umniah Mobile Communications in the middle of last year, mobile penetration rates have grown and the AAG predicted that there would be more than 3.4 million mobile users in the kingdom by 2009 – perhaps a rather conservative estimate.

Batelco’s decision to buy Umniah certainly seems a logical step as it now gives it exposure to the cellular market, in addition to its existing fixed line and Internet business via Batelco Jordan. Batelco’s Chairman Hassan Ali Juma said that, for now at least, the two businesses will operate more or less independently.

Umniah hit the ground running last year when it started operations in June; in the space of only12 months, it has captured 13 per cent of Jordan’s mobile market and clocked up over 500,000 subscribers. Umniah’s Managing Partner, Michael Dagher, said, ‘Umniah’s role has directly and indirectly resulted in increasing the use of mobile services from 25 per cent before Umniah’s licensing, to more than 60 per cent today.’ This is a dramatic increase and Batelco, after its $415 million investment, will certainly be aiming to add to Umniah’s subscriber base.

Jordan goes French

Just as the dust was settling on the news of Umniah’s buy out, the Jordanian government announced a rather less surprising sale: that of its remaining slice of the national telecom company. The sale has been long anticipated and the decision by France Telecom to buy another 10 per cent, plus the option of a further 1 per cent to give itself a controlling 51 per cent stake, was equally expected.

The overall sale of 41.5 per cent of Jordan Telecom netted the government $731.9 million and such a return, which it will use to drive down foreign debt and build up its foreign currency reserves, will surely be added to by further sell offs in the year ahead.

France Telecom paid $183.3 million for its latest chunk of JT, which last year achieved revenue of $500.3m, an increase of 4 per cent. Jordan Telecom offers communication services across all platforms, with Internet based services via Wanadoo and e-Dimension, and mobile services via its MobileCom subsidiary.

Locking horns

Indeed, France Telecom will find itself sharing not only last month’s headlines with Batelco but also the very congested Jordanian mobile market place. But, with MobileCom only recently chalking up a million subscribers, France Telecom seems to have a good base to work from.

A second report released by the Arab Advisors Group in May of this year showed that in the Middle East and North Africa region, there are at present 85 million cellular phone subscribers and 30 million fixed line users: a staggering 34 million of these mobile users joined up to services just last year. It is little wonder that Batelco and France Telecom have paid the best part of $600m to make sure they get in on the action.

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Sunday, July 9- 2006 @ 12:45 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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