Prepared By
 
Abu-Ghazaleh & Co. Consulting
Member of Talal Abu-Ghazaleh & Co. International
 

 
Executive Summary
 
Telecommunications sector proves itself to be one of the most booming and dynamic sectors in Jordan. It has achieved remarkable developments on more than one front, including the regulatory and legislative domains, infrastructure, new services, and improving the quality of existing services at more reasonable prices. Over the past few years this sector has received the full support of His Majesty King Abdullah II who strongly promised to get rid of any potential difficulties that might hold back the progress and development of the sector.
 
Telecommunications Regulatory Commission (TRC) is the formal and authorized body responsible for regulating telecommunications and information technology services in accordance with the government’s general policy. TRC has set the milestone required to continuously keep the local market up with the latest international trends and norms in the field of telecommunications. As Jordan has become an active member in WTO, the government is steadfast in its efforts to totally liberalize the market and put an end to the current doubly of the two Global Systems for Mobile Communications (GSM) operators (Fastlink and MobileCom) and the monopoly of Jordan Telecommunications Company (JTC) as well.
 
Following are the main indicators on telecommunications market in Jordan by the end of 2003.
 
Service
Starting Date
Market Structure
No. of Service Providers
No. of Subscribers (K)
Penetration Rate (%)
Total Investments (US$)
Total labor force
Fixed Phones
1921
Monopoly until the end of 2004
1
623
11.4
16,242,938
3,663
Mobile Phones
1995
Competitive
3
1,325
24.2
106,214,689
1,172
Data Communication
1996
Competitive
21
92
1.7
2,118,644
270
Radio Trunking
2004
Competitive
1
-
-
120,000,000
95
GMPCS
1999
Competitive
2
2.3
0.04
-
-
Telephone Pre-Paid Calling
2001
Competitive
4
-
-
1,553,672
41
Paging
1990
Competitive
1
2.3
0.04
-
10
 
The local market is 100% dependent on imports. The total market size for telecommunication equipment has remarkably boomed over the last two years. It has jumped from US$ 73,085,411 in 2002 to US$ 109,950,682 in 2003 at a growth rate of approximately 50%. Also, it is estimated that the total market size will reach US$ 192,691,509 in 2004 representing a growth rate of 50% over 2003. The experts in the domestic market strongly project a continuous positive growth from 35% to 50% for the overall market over the next three years. In 2003, Hungary imports hold the lion share of the total imports with a share of 18.53% followed by Germany and Finland with 13.86% and 12.55%, respectively. With regard to the U.S. products, they hold around 7.72% of the total market imports. The main U.S. companies that have good presence in the local market are: AT&T, Cisco, Motorola, Zeorex, 3Com, Microsoft, IBM, Dell, and Avaua.   
 
Governmental institutions, banks, financial institutions, residential customers, educational institutions, hospitals, hotels, and tourism companies are the main end users for telecommunications equipment in the local market. Competitive factors are identified in the local market as follow: quality, after-sale services, price of products, and marketing capabilities.
 
Based upon the figures of Department of Statistics (DoS) of Jordan and discussions with the experts in the industry, the best sales prospects in the local telecommunications equipment market are identified as follow: telephonic or telegraphic switching apparatus, other apparatus, for carrier current line systems, including digital machines, communication machines for wired telephones and telegrams system, parts of a kind used for electrical apparatus for line telephony or line telegraphy, including such apparatus for carrier - current line systems, transmission apparatus for radio-broad casting or television, cellular transmission apparatus, parts suitable for use with the transmission apparatus for radio-broadcasting, telephone exchangers, voice mail systems, voice over internet protocol, data switchers, mobile phone handsets, call centers, and Bluetooth.
 
 
It would be worthy to mention that there are no significant tariff barriers impeding the export of telecommunications equipment into Jordan. Telecommunications equipment imported into Jordan are subject to custom duties that range between a low of 0% and a high of 30%. In addition, a value added tax of 16% is applied to the sales of imported products in the local market.
 
The U.S. suppliers are strongly recommended to have an agent or distributor in Jordan rather than distributing their products through one agent in the region. By doing so, they will form better understanding of the local market’s needs in a way that enable them to know how to effectively compete in and penetrate the market. Also, the U.S. suppliers will be able to establish good connections and relationships with the market participants which may result in gaining extra market share for the U.S. products. On the other side, the local agent or distributors, in turn, will receive more technical and marketing support from the U.S. suppliers.
 
Letter of Credit (L/C) is one of the most frequently used financial instruments and it is preferable by the local distributors when dealing with the foreign manufacturers of telecommunication products. A grace period from 30 days to 90 days is given to the local distributors to settle their accounts following the date of invoice. Additionally, the suppliers mostly provide a one year warranty against manufacturing defects under normal conditions to the local distributors.
 
Active organization of or participation in trade shows are the most effective promotional tools to market U.S. telecommunication equipment. The Middle East Technology Show (METS) is the most important trade show held in ICT sector in Jordan. With regard to new product launches, the U.S. suppliers are highly recommended to invite representatives from both public and private sector into a reputable hotel where a dynamic presentation on the products is carried out by the experts to the potential end users.
 
A new promotional tool that could be used by the U.S. suppliers is to invite a selected group of the local first class distributors to their factories and provide them on-site training about their products. Seminars, workshops, on-site product demonstrations, and brochures are other useful techniques that could be used by the U.S. suppliers to market their products in the Jordanian market.