Independent Evaluation - Home > Search

Implementation Completion Report (ICR) Review - Jordan Telecomm


  
1. Project Data:   
ES Date Posted:
08/09/2000   
PROJ ID:
P005322
Appraisal
Actual
Project Name:
Jordan Telecomm
Project Costs(US $M)
 222.62  282.84
Country:
Jordan
Loan/Credit (US $M)
 20  15.4
Sector, Major Sect.:
Telecommunications & Informatics,
Telecommunications & Informatics
Cofinancing (US $M)
 131.2  114.7
L/C Number:
L3738; LB107      
   
Board Approval (FY)
  94
Partners involved
EIB, JBIC (Japan), ODA (UK), BITS (Sweden), Eruobond 
Closing Date
09/30/1999 01/31/2000
         
Prepared by: Reviewed by: Group Manager: Group:  
Kevin Warr
Alain A. Barbu Alain A. Barbu OEDST

2. Project Objectives and Components:

a. Objectives
The project had four objectives, all geared toward improving the efficiency of Jordan's telecommunications service:

  1. Develop a market-oriented sector policy and a transparent regulatory framework;
  2. Commercialize and privatize the Jordan Telecommunications Corporation (JTC);
  3. Encourage private investment in the sector;
  4. Enhance service quality, expanding network capacity and increase coverage.

b. Components
Sector Restructuring Component

  • Institute legal changes to provide a robust legal foundation for the sector in line with the new sector policy;
  • Establish a Sector Policy Division at the Ministry of Posts and Communications;
  • Establish an independent regulatory office to be staffed with trained professionals;
  • Initiate commercial management and organizational development of JTC; and
  • Develop a strategy and an action plan for the privatization of JTC.
Physical Component
  • Install 225,172 additional lines of switching equipment (20 new main exchanges, 80 new remote subscriber units, the expansion of one existing main exchange and 24 remote sites);
  • Install microwave and optical fiber junctions to provide links between remote subscriber units and corresponding main exchanges;
  • Install associated local networks for the connection of subscribers;
  • Install power and air conditioning equipment;
  • Construct buildings;
  • Provide specific initial training for operation and maintenance of switching and transmission equipment;
  • Create an initial spare parts stock;
  • Provide consultant services for assistance in project management and supervision of implementation; and
  • Procure additional optical fiber, copper cables and cable accessories (this component replaced a computerized customer care component, following a formal reallocation of disbursement categories in March 1999).

c. Comments on Project Cost, Financing and Dates
The total cost of the project was US$282.24 million, which was US$60.22 million over the appraisal estimate. The Bank provided financing in the amount of US$20 million, of which US$15.4 million was disbursed as of June 28, 2000. EIB provided financing in the amount of US$55 million; JBIC provided financing in the amount of US$ 15.6 million; ODA provided financing in the amount of US$6 million; BITS provided financing in the amount of US$2 million and US$36.1 million was provided by Eurobonds. The borrower provided US$71 million. The closing dates of the Bank loan and the JBIC loan were extended by 4 and 6 months, respectively in order that JTC might use balances that remained undisbursed due to delayed procurement. The undisbursed balance of the Bank's loan, US$4.6 million, has been canceled. The project closed on January 31, 2000, which was 16 months later than expected.


3. Achievement of Relevant Objectives:

Develop a market-oriented sector policy and a transparent regulatory framework: This objective was achieved. The Government's telecommunications sector policy, as agreed and discussed with the Bank during project preparation, was issued in early 1995. The Telecommunications Law was ratified by the Jordanian Parliament in September 1995 and became effective on October 1, 1995. In November 1995, the Telecommunications Regulatory Commission (TRC) was established as an independent statutory agency for regulating and monitoring the telecommunications sector. Commercialize and privatize the Jordan Telecommunications Corporation (JTC): This objective was achieved. After an unsuccessful attempt at privatization in March 1998, the Government re-launched the bidding process in April 1999 which successfully resulted in the receipt of three competitive bids from reputable operators. On January 23, 2000 the privatization transaction was completed, and 40 percent of the Company's shares, with management control, were sold to the Joint Investment Telecommunications Company (88 percent of which is owned by France Telecom and 12 percent is owned by the Arab Bank).
Encourage private investment in the sector. This objective was achieved. The sector reform measures carried out under the project have paved the way for private investment in the sector. Specifically, the new Telecommunications Law, which allowed for the corporatization of the Jordanian Telecommunications Company (JTC) and the establishment of a regulatory authority, was approved by Parliament in September 1995. The Telecommunications Policy Department (TPD) was established within the Ministry of Posts and Communications to provide forward-looking, long range policy advice to the Government. The Telecommunications Regulatory Commission (TRC) was established and staff were hired and trained. During the life of the project, TRC built its credibility by issuing more than 16 licenses, covering the various market segments, in a transparent manner. The Government's sector policy, which promoted competition and private provision of services, was issued in 1995 and the privatization of JTC was successfully completed in January, 2000.
Enhance service quality, expanding network capacity and increase coverage: This objective was achieved. Telephone service coverage was expanded to 25 new primary areas and 356 new villages. Teledensity (main lines per 100 inhabitants) increased from 7.7 in 1994 to an estimated 17.1 in 2000. Installed switching capacity increased from 320,000 in 1994 to 840,000 in 1999, and the number of users and connections almost doubled from 287,000 subscriber lines in 1993 to 565,000 subscriber lines in 1999. A broader range of services is now available to customers on a competitive basis, including internet, paging, cellular and pay phones The cellular market is growing rapidly. Jordan's sole cellular provider has increased its subscriber base from 11,500 in 1995 to more than 150,000 by April 2000, and it is expected that the number of subscribers will double when JTC's Mobilecom begins operating at the end of 2000. The project achieved or surpassed many of the original performance indicators outlined in the Staff Appraisal Report.

4. Significant Outcomes/Impacts:

Beyond JTC, foreign interest in the Jordanian telecommunications sector has included the sale of a 51 percent stake in two local Internet Service Providers to the Bahrain Telecommunications Company and the sale of a 20 percent stake in Maktoob.com, the leading Arabic language communications server to Egypt's EFG-Hermes. Jordan's IT conference in March 2000, attracted over 100 international and 50 local companies, including Microsoft, which expressed interest in working with the Government in developing a computerized network connecting government departments.
  • New employment opportunities were generated through the development of new services and the addition of new service providers in the various market segments. JTC's cellular subsidiary, Mobilecom, will create 350 jobs alone in its first year.
  • A significant share of the project's economic benefits were realized by rural and low-income communities. By project closing, JTC had expanded its geographical coverage to include 356 new villages. In rural areas manual service was replaced by remote digital line units and, as a result of exchange modernization, new value-added services were introduced for the first time to rural customers. Through tariff reduction, telecommunications services became more affordable for all consumers. Competition in the mobile sector has already resulted in an average 30 percent reduction in cellular tariffs.
  • Resource mobilization was one of the main economic benefits of the project. The US$50 million Eurobond issue helped to mobilize private sector finances from the local and international markets that would have been otherwise placed in bank accounts or invested abroad.

5. Significant Shortcomings (include non-compliance with safeguard features):

The Government's actions in terms of the cellular market may have adversely impacted the level of competition in Global Mobile System service in the sector in the long run. A more consistent sector policy may have helped to avoid delays in the reform and to increase private investment in the sector.
6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
Highly SatisfactoryHighly Satisfactory
Institutional Dev.:
SubstantialSubstantial
Sustainability:
Highly LikelyHighly Likely
Bank Performance:
SatisfactorySatisfactory
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

Any privatization transaction should be preceded by a well designed public relations campaign and involvement of all current and potential stakeholders in the sector. A consistent sector policy and strong display of Government commitment is crucial in attracting private investors.
      • The efficient implementation of different financial instruments, in particular the bond issue, not only ensured the investment program financing, but more importantly, stimulated the enhancement of financial management skills and positive evolution of JTC corporate culture. The project provides an excellent example for the use of a World Bank guarantee in the telecommunications sector.

8. Audit Recommended?  No

          Why?  

9. Comments on Quality of ICR:

The ICR is satisfactory. It is well-written and clearly covers the important issues relating to the project. Of particular note is the extra effort taken to calculate the FRR and ERR, given the absence of the basis for the SAR calculations. Moreover, the Lessons Learned section is insightful and useful.

© 2012 The World Bank Group, All Rights Reserved. Terms and Conditions