Boston, MA -- (ReleaseWire) -- 04/10/2014 -- Jordan's telecoms operators reported weak financial results in 2013, mainly due to tax increases during that year and rising operating expenses. We expect this to reduce operators' appetite for capital intensive projects with low returns on investment, such as rural expansion. The regulator is struggling to generate interest in 4G licences, an indication of investor apathy in the telecoms sector on the back of adverse macroeconomic and industry-specific factors.
- Jordan's mobile market grew by 12.3% in 2013, although this masks a contraction of 0.6% in Q413.
- Mobile ARPU continued its downward trend, with BMI estimating a 17.7% y-o-y decline in FY13.
- The fixed-line sector also contracted in FY13, with the number of subscriptions shrinking by 5% during that period.
- The internet sector remains the strongest performing sector in the telecoms market, following an impressive growth of 51.4% in total subscriptions during FY13.
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Jordan dropped one place to 11th position in BMI's Risk/Reward Ratings table for Middle East And North Africa in the Q214 update, with an overall score of 45.1. Jordan scores below the regional average in the Industry Rewards, Country Rewards and Country Risk categories of our ratings table. The government's decision to raise taxes on the telecoms sector poses a downside risk to subscriptions growth and operators' profitability.
Key Trends And Developments
In February 2014, Jordan's Telecommunications Regulatory Commission (TRC) announced it has rejected bids from two potential new entrants for 4G licences and has re-opened the tendering process to local telecoms operators Orange, Zain and Umniah (Batelco). According to the TRC, USbased Ameriphone and Jordanian ISP Kulacom did not meet the financial requirements of the tender. None of the three mobile network operators participated in last year's 4G spectrum auction, which ended in September 2013, given their opposition to the proposed entry of a fourth operator. Now that Ameriphone and Kulacom's bids have been rejected, BMI believes the best solution would be a compromise between the government and the three existing telecoms players on 4G spectrum allocation.
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