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Sun 5 Mar 2006 04:00 AM

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Competitive Jostling

Jordan Telecom has undergone a structural reconfiguration to better adapt to local conditions and new entrant Umniah has proven detractors wrong, performing better than even it believed possible.

|~|mialet200.jpg|~|Jordan Telecom Group's CEO Laurent Mialet says the company may list on the DIFX.|~|One of Jordan Telecom's main preoccupations at this point in time is to resolve the sale of the government's 41.5% stake in the venture. The other is to ward off the effects of increasing competent competition.

France Telecom, Jordan Telecom's strategic partner with an 88% portion of a 40% stake in the Jordanian incumbent is clamouring to raise its shareholding to a controlling one, though the Jordanian government, having confirmed its intention to offload its equity in Jordan Telecom, remains undecided on who to or how to sell off the interest.

"I can tell you that a firm offer has been put to the Jordanian government by France Telecom Group," confirms Laurent Mialet, CEO of Jordan Telecom. "I expect the process to be finished in the next few weeks."

As reported in CommsMEA last November, the Jordanian government was considering the sale of its Jordan Telecom stake on the recently inaugurated Dubai International Financial Exchange, a plan that has since evolved to potentially seeing the Jordan Telecom Group listing on the exchange at the beginning of March.

Jordan Telecom Group is the new company created through the integration of the independent operations of Jordan Telecom, MobileCom, Wanadoo and e-Dimension into a single organisation with a single management structure. The integration was announced last month, and saw Mialet confirmed as group CEO; Mickael Ghossien, formerly head of the MobileCom mobile operation promoted to VP of the group, while his position as MobileCom CEO was taken over by Majd Shweikeh.

"If we go to IPO in Dubai the prospectus is ready. If we do, it will be in March of this year. The advisor for the government here is preparing the move and the final decision has to be taken by the board," Mialet said at the beginning of February. He confirmed that Jordan Telecom management remains prepared to undertake a road show if required.

In terms of the organisational restructuring, Mialet says the timing is ideal given the developments occurring in the domestic market. "This integration has occurred now because we are ready to do it," he explains. "It is an integration drive that is aimed at reducing costs. It will allow the group to share services and have one organisation for IT. It will develop a coherent strategy in business," Mialet adds.

Headcount reductions often follow integration moves and while Mialet does not state there will be any specific cuts as a direct result of Jordan Telecom Group's new structure, the company has been steadily reducing its staffing levels for some time now. "In the year 2000, Jordan Telecom counted 5,000 staff across the group," Mialet reveals. "This number had fallen to 2,600 at the end of last year."

Driving efficiencies is an essential part of Jordan Telecom's aim to maintain, or at very the least, reduce the effects of increasingly confident competitors. Umniah, the operator backed by veteran Jordanian telecoms personality Michael Dagher, launched mobile services in June last year, as the country's fourth mobile operator at a time when penetration stood in the low 30s, the prospects of a successful launch of a new entrant were limited.

||**|||~|Dagher,-Michael-200.jpg|~|Umniah, led by Michael Dagher has been able to add 400,000 subscribers in eight months of operation.|~|Umniah has gone on to add around 400,000 subscribers in just eight months of operation. "We were planning to have something like 100,000 subscribers by the end of 2005," explains Ihab Hinnawi, director of operations at Umniah. "We were expecting to have maybe 50,000 subscribers within two months, then start phase two expansion. But we were shocked, because after five days we had 50,000 subscribers. We reached our year-end target of 100,000 customers within two weeks," he adds.

Subscriber penetration is expected to top 65% within five years, and given the small Jordanian population of under 6 million, the battle for additional subscribers is likely to be a bruising affair. Factors such as quality of service and network rollout will be fundamental, and from Umniah's perspective, a reliance on competitors' networks for national coverage is to be limited as much as possible.

"We had the option to do so (roam on other operators' infrastructure), but we believed more in doing it ourselves," says Hinnawi. "If you use a competitor's network, it will make your life difficult. With phase one of the GSM licence we had to cover 92% of the population, and within 12-18 months we had to have a nationwide coverage. By March, the last batch of deployment will give us nationwide coverage. In 7-9 months we'll have nationwide coverage, and then we'll start adding capacity."

Given the regulatory move towards technology neutral, unified licences, Jordan's operators are permitted to offer a range of services based on technologies of their choice, and Umniah is assessing what other fields of communications it might enter into next, beyond just mobile. "It's definitely on our roadmap. We already started looking at other options. It depends on many outside factors, from a regulatory perspective, from a market perspective, how prepared the market is. The timeframe is actually not that far, either you do it or someone else will," Hinnawi explains.

Much of the dynamism that exists in the Jordanian telecoms sector today has been attributed to the open regulatory environment developed by the Telecommunication Regulatory Commission (TRC), which used to be presided over by Muna Nijem. She tendered her resignation late last year and the position is yet to be filled.

"We advertised the position but no-one has been appointed at this point yet," says a ministry of ICT spokesperson. The date for such an appointment remains unknown, though it is widely accepted that continuity in the post and the role of the TRC are crucial in maintaining the momentum of the market developments.

There is also a new minister at the ministry of ICT, Omar Kurdi, whose appointment in November last year followed the replacement of former minister Nadia Al Saeed. Given the changes of top personnel at both the ministry as well as the regulator, the government should move quickly to restore regulatory leadership and continue fostering an enabling environment within the telecoms sector.

Consolidation is the next obvious stage of the Jordanian market given the large number of both network as well as service providers. Dagher's Umniah has plans to seek investment opportunities outside of Jordan in order to improve the company's general level of exposure to the risk of acquisition, though rumours in the market already exist.

Batelco Jordan, a unified licence holder is preparing to enter Jordan's mobile telecoms space, and Umniah has been rumoured to be an acquisition target to ease Batelco Jordan's entry into the mobile market. "We've heard that rumour too," comments Hinnawi without substantiating further. Such a move would make sense given the vision of the new Batelco CEO, Peter Kaliaropoulos, to make more of the telco's foreign investments.

"Now I don't know why Batelco in the past has not been as aggressive as some of the other regional players [in investing in the region]. I really cannot answer that question because I have not been here, but from where I am today, I am looking forward to growing the business in new geographies, in new vertical markets, because our [domestic] geography is so limited, so I have got to crack other markets," Kaliaropoulos told CommsMEA in September last year following a visit to see Batelco's operations in Jordan and Kuwait.

Jordan Telecom is also looking to investment opportunities in the region, focussing its initial efforts on Egypt and Bahrain. "There will also be other opportunities and they will be evaluated when and if they arise," comments Jordan Telecom's Mialet.

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