JTC’s reduced profit margins result of structural reforms
Jordan Telecom’s (JTC) profit has been decreasing over the last two years. 2001 profits stood at $64.6 million compared with $83.9 million in 2000, stated a recently released Arab Advisors report. Revenues however, grew from $401.5 million in 2000 to $435.5 million in 2002.
The report reveals that the company has managed, reasonably well, its transformation from an old school monopoly operator into a player in a much more competitive market. The reduced profit margins of JTC do not necessarily show a troubled operator. The Group believes that these are the signs of the transformations that have been happening at Jordan Telecom and the CAPEX investments it has made.
“The number of local and national minutes on the fixed network has decreased between 2000 and 2001 by 2.38 percent and 6.48 percent respectively. Given the massive growth in number of mobile phones in Jordan during the same period, and the increasing intra-mobile traffic in Jordan, the decline is a very clear evidence of substantial mobile – fixed traffic substitution in Jordan.” Arab Advisors’ President, Jawad Abbassi wrote in the report.
“While the local fixed traffic volume has decreased on JTC’s network, the revenues actually increased by 8.45 percent to exceed $56 million which stems from Jordan Telecom’s tariff rebalancing.” Abbassi added.
The report shows that while PSTN national and local traffic volume is decreasing, the fixed-mobile traffic is increasing at very healthy rates. Between 2000 and 2001, fixed to mobile traffic increased by 50.5 percent and mobile to fixed traffic increased by more than 86 percent, and will grow to become one of the very important revenue streams for Jordan Telecom.
The report also explains the effect of VoIP international traffic termination in Jordan. Incoming international traffic was almost flat between 2000 and 2001 as it grew by only 1.5 percent. More importantly, 2001 was the year when, for the first time, outgoing international traffic was higher than incoming international traffic in Jordan.
“Given the growth in the subscriber bases of fixed phone and mobile phones, the lack of growth in incoming international traffic can only be attributed to VoIP traffic termination,” Abbassi noted.
“Jordan Telecom is now much less dependent on international incoming traffic. Whereas the incoming international revenues made up close to 32 percent of its total traffic revenues in 1999, they constituted no more than 20 percent in 2001 while overall revenues grew in the same period. The company is therefore much less susceptible now to the phasing out of the international accounting rates regime.” Abbassi added.
The report concludes by promising a lucrative time for Jordanian consumers. Even lower rates, attentive operators and two or three viable major operators in the country to choose from. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
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