The Middle East is in the midst of a fast-based digital transformation initiative driven by an acceleration of data consumption, government-led development projects and modernisation strategies that is rapidly accelerating digital connectivity and economic development, keeping pace with a growing and data-hungry population.
The November 2022 edition of the Ericsson Mobility Report forecasts that consumer and enterprise 5G usage in MENA will grow from 24 mn to 270 mn by 2028, accounting for 31% of all mobile subscriptions, driven by greater device mobility and early large-scale deployments in markets such as Saudi Arabia, the UAE and Bahrain.
While the Gulf states have taken the lead in 5G rollout, with near-nationwide coverage, Jordan has become the next big 5G player with local MNOs frantically rolling out their 5G networks.
Overview of Jordan’s telecom market & players
There are three leading MNOs in the Jordanian market, with the leader being Zain Jordan, the local branch of Kuwait-based Zain Group, serving 3.7 mn of Jordan’s 10.5 mn population and over 50% of the cellular market. Zain acquired local MNO Fastlink in 2002 as part of its regional expansion strategy and how constitutes around 7% of the group's total subscriber base and 9% of revenues.
Zain started as the first MNO in Kuwait in 1983 and following the group’s expansion strategy now has a presence across seven MEA countries (Kuwait, Bahrain, Iraq, Jordan, Saudi Arabia, Sudan and South Sudan) as well as a 15.5% stake in Moroccan MNO INWI, serving a total of 53 mn customers. So far, Zain has been the only MNO in the market to divest its telecom towers in its regional sale and leaseback (SLB) deal with TASC Towers.
Orange Jordan takes the market’s 2nd spot behind Zain, originally under MobileCom after it was privatised in 2000 before rebranding under Orange in 2008. Orange Jordan holds around a 25-30% market share, although the MNO’s fixed market share exceeds 90%. The MNO has adopted a vision to become a digital leader in the market, strengthening its infrastructure and diversifying its B2B services in particular.
In line with Orange group's sustainability commitments, Orange Jordan has launched several clean energy projects, most notably the creation of three solar farms that generate over 60% of the company’s energy needs and reduce CO2 emissions by 50%. As nearly all sites are electrified, these solar farms supply electricity to the grid via a wheeling process, offsetting grid consumption with cheaper and renewable production.
The latest entrant into the market, Umniah is the Jordanian branch of Batelco, Bahrain’s principal MNO, which entered Jordan after acquiring a local MNO which was originally called Umniah in 2006, keeping the brand name. Since then, Batelco has invested over US$700 mn in country to build and upgrade its network to compete with its older rivals.
Despite the newest and smallest of the 3 main MNOs with a 30% market share (although holding a leading 42% share in broadband services), Umniah has rolled out a full line of services including 4G and now 5G, fibre-to-the-home connections and fintech solutions via its UWallet subsidiary. Umniah was also among the first MNOs to shut down its 2G network in the region and is growing its subscriber base very quickly.
The telecom services market in Jordan was valued at US$1.2 billion in 2022 and is expected to grow at a CAGR of 6.4% 2022-27, driven by the adoption of 5G services and investments in 4G network expansion and upgrades by MNOs. Mobile services will continue to grow, driven by increasing smartphone and internet subscriptions.
Jordan’s Telecommunication Regulatory Commission’s (TRC) ‘ICT facts and opportunities in Jordan’ report estimates that the ICT sector accounts for 3.8% of the country’s GDP.
ICT was identified as one of the core sectoral clusters for growth in Jordan’s Vision 2025 strategy, a 10-year government development initiative, which included the completion of a high-speed fibre optic network, regulation of the ICT sector and facilitating licensing to telecom companies including for infrastructure sharing, resulting in the appearance of towerco TASC Towers.
Mobile and data broadband growth has stabilised around 5% annually after a fierce turf war among the three MNOs and following a period of rapid growth. In total, the telecoms sector has invested around US$62 bn into infrastructure, but the TRC has stated that significantly more investment will be needed to get the network ready for commercial 5G use.
The journey to 5G
Back in August 2022 the Telecommunications Regulatory Commission (TRC) signed an agreement with Orange and Umniah to prepare for the introduction of 5G services, boosting competition and supporting the development of new communications infrastructure in response to growth in data demand.
The government awarded the three main competitors 5G licenses in a deal that netted around US$100 million. The Minister of Digital Economy and Entrepreneurship Ahmed Al-Hanandeh said 5G rollout will bring more foreign investments and expand Jordan’s role as a regional hub for technology startups.
However, as capital investment in the local telecommunications industry was in short supply, the government introduced a stimulus package alongside the agreement, extending the duration of the MNO licenses up to 10 years, reconciling pending issues, achieving technology neutrality and providing motivational discounts when buying spectrum, as well as providing licenses for 5G.
The government in return has asked for a 10% share of the revenues that 5G brings to the MNOs. The telcos also had to rollout quickly as they were required to deliver 5G to at least 50% of the population within four years of the license date, increasing coverage by 5% annually until 75% of more of the population is connected.
5G is set to drive technological advancements enhancing service efficiency in several key sectors including energy, health, transportation, manufacturing and education, as well as enable the development of next-generation applications, AI, IoT and automation in the sectors.
For example, enhanced rural 5G coverage could deliver up to 1.8% uplift in long-term GDP from agriculture by promoting sustainable farming methods, increasing efficiency and reduce agricultural waste by implementing 5G technolgies, according to Ericsson.
Uminah's 5G services gets it ahead of its competitors in a market with a near 100% penetration and where 4G services have been saturated. Umniah partnered with Ericsson for the first phase of the rollout, upgrading its existing 4G network and committing to investing an extra US$300 mn over the next four years in expanding their network to cover half the population.
This will allow the MNO to meet the ever-growing needs of its subscribers as well as create new business opportunities due to enhanced mobile broadband and low latency network.
Following on the heels of Umniah, Orange Jordan has now turned on its own 5G network across several areas of Amman and Irbid, becoming the first country in MENA to have Orange’s 5G service. Orange Jordan brought in Ericsson’s direct competitor Nokia into the market to supply their 5G RAN equipment to replace Orange’s entire existing RAN network, allowing Orange to run the full spread of 2G-5G technologies simultaneously to achieve more efficient site solutions across their network.
Jerome Henique, CEO of Orange MEA, highlighted the role of Orange Jordan’s 5G network in accelerating digital transformation and smart city development to support the digitisation of key industry sectors such as entertainment, health, manufacturing, education and transportation.
Orange brings a wealth of experience when deploying 5G in Jordan, having been a leader in the technology rollout in its European markets. Orange is also preparing for 5G in its other MENA markets of Morocco and Egypt, where it has run pilot tests and stand ready to deploy their 5G networks once spectrum has been allocated.
This leaves Zain Jordan lagging behind in the race to deploy 5G, despite the huge advantage Orange and Umniah have now gained in a market known for fierce competition. Zain Jordan did also sign an agreement with the TRC, following the deals with Orange and Umniah, to prepare for the MNO’s launch of 5G services.
In May, Zain signed an agreement with Nokia for their 5G RAN equipment to over 3,000 sites nationwide, the majority of these expected to be deployed this year. Zain and Nokia have previous experience working together having rollout networks in the MNO’s other markets including Saudi Arabia.
TASC Towers’ role in supporting 5G rollout
TASC Towers is presently the only towerco in Jordan having acquired Zain’s portfolio as the first of four deals in their regional sale leaseback. TASC Towers is managing all of Zain’s old sites as well as a build-to-suit program over the next 5 years and energy management services.
Opportunities for M&A growth in the market are quite slim; Orange’s ‘Lead the Future’ strategy announced earlier this year saw the group remain steadfast in their desire to retain tower infrastructure, and Batelco has shown little interest in divesting its towers and considering the MNO is backed by the Bahraini government, the group has deep pockets.
Despite this, network densification for 5G requires significant investments in infrastructure rollout and encourages infrastructure sharing to keep costs down. While legacy sharing is low at around 15-20%, TASC has been consolidating its position over the last year and has been taking over network rollout for other market MNOs as well as their anchor customer Zain.
If Orange, Umniah and Zain want to meet their 50% 5G population coverage targets, they will need to collocate on existing or newly built infrastructure to save on time and cost.
With both Umniah and Orange having launched 5G services, and Zain in the process of doing so, TASC Towers is the sole towerco in a market with three MNOs hungry for network densification. We can expect to see an increase in build-to-suit activity, especially in urban tower solutions such as monopoles, street furniture, rooftop sites and small cells to build out the 5G network architecture, as well as ongoing rollout in the lower bands in rural and remote areas.
5G rollout in Jordan is also more likely to resemble the rather controlled and limited rollouts seen in African markets, as use-cases are concentrated in the wealthier and dense urban hubs, compared to that of the Gulf states where deep pockets have financed mass 5G deployments. However, the stimulus package offered to MNOs will make the 5G transition smoother and help ease the lack of existing use-cases which commonly holds back 5G rollout.
