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Telecom Licensing in Jordan The NewGen Story

Telecom Licensing in Jordan The NewGen Story. New Generation Telecom Company September 2003. The Jordanian proof. 1.2 million GSM subscribers in 2002. Penetration jumped from less than 2% in 1999 to 22% by end of 2002. Major drivers: competition and prepaid.

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Telecom Licensing in Jordan The NewGen Story

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  1. Telecom Licensing in JordanThe NewGen Story New Generation Telecom Company September 2003

  2. The Jordanian proof • 1.2 million GSM subscribers in 2002. • Penetration jumped from less than 2% in 1999 to 22% by end of 2002. • Major drivers: competition and prepaid. • Minutes of usage have increased while ARPU has declined. That is customers are getting much better value for money.

  3. Further Jordanian proof • The Jordan GSM ARPU calculations show that: • 1997 monthly ARPU was US$ 108 • US$ 36.7 in 2001 (for prepaid and postpaid) • Postpaid ARPU US$ 67 (25% market share and 2.5 times prepaid ARPU) • Prepaid ARPU US$ 27 • ARPU US$ 28.3 in June 2002 (Postpaid and prepaid)

  4. Radio Trunking in Jordan • Many attempts to introduce the service failed because of lack of investor interest and lobbying. 1997 - Two tenders did not attract much attention. • Lack of available state of the art technology • Lack of interconnection • The TRC was visionary in allowing existing wireless operators to have the radio trunking license.

  5. Radio Trunking in Jordan • Mirsal was encouraged by the fair conditions such as allowing Dispatch with telephone interconnect , revenue sharing and the presence of a clear interconnection and national numbering plans • State of the art technology (iDEN) • Permission for interconnection with dispatch

  6. Radio Trunking in Jordan • "This significant investment in Jordan comes as a direct result of the amendments to the Telecommunications Law earlier this year, and shows how we can work effectively to build partnerships with investors in Jordan that bring new services and capabilities to Jordanian businesses and people," - Dr. Fawaz H. Zu'bi, Minister of Information and Communications Technology. • "We have been very impressed by the exceptional treatment we have received as overseas investors in Jordan. The strong public/private sector co-operation we have seen, as well as the excellent support of the Ministry of ICT and TRC, has made this move possible," - Tarek Aggad, Executive Director of Aggad Investment Company.

  7. XPRESS’s user profile • The profile of an iDEN subscriber will be more similar to postpaid users than prepaid ones. • 65.5 K iDEN subscribers after five years. 2% of the GSM market of 3.3 million by 2008. 7% of postpaid market

  8. XPRESS Coverage • 95% population coverage • Amman, Irbid, Zarqa, Salt, Madaba, Jerash, Karak, Mafraq, Ramtha, Ajlun, Tafileh, Maan and Aqaba • All major highways and roads ti Iraq and Saudi Arabia

  9. XPRESS Goals • Develop, communicate, and promote a compelling offering targeted to • Group Communication Customers • Leverage its differentiated service to deliver cost-effective and efficient communications to co-workers and clients. • Leverage market proven strategies and adapt to the Jordanian marketplace. • Focus in the first 1-2 years on satisfying the niche market segment of radio trunking users. • Diversity and general availability of quality handsets • Professional and educational promotion campaigns

  10. XPRESS Market Positioning • iDEN differentiated services will compete with postpaid GSM offerings. • We are inclined to have our launch packages in a way not to be in a price competition with the postpaid GSM segment. • The aim is to have a total fee structure that is comparable to the total fees incurred by companies for GSM postpaid plans. • The plans took into consideration the market survey findings that indicated a major market preference for low connection fees.

  11. What XPRESS brings to the table • Satisfying existing need for dispatch services in Jordan. • Enhanced efficiency in the transport sector. • Lower fuel consumption and maintenance costs. • Less congestion. • Improved responsiveness of emergency services (i.e. civil defense, ambulances, police, …etc.). • New job opportunities in the new company (150-200 employees). • Downstream business (i.e. subcontractors, dealers, mobile sales, maintenance, media…etc.). • Technology and know-how transfer.

  12. Government gains • Substantial Government GainsUS$ 260 million(15 Years) • Revenue Sharing • Income Tax • Sales Tax • Frequency Charges • Microwave Charges • Up-front Fees

  13. XPRESS Investment • Initial Investment = US$ 50 million • Fixed assets = US$ 45.6 million • Working Capital = US$ 2.8 million • Pre-operating Expenses = US$ 1.6 million • Debt to Equity Ratio for initial investment is 50:50 • Additional Capital Expenditure of around US$ 30 million for expanding and upgrading the network.

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