3G in Turkey
Regulator
to nullify Turkcell’s 3G award, says ministry spokesman.
Turkey’s Telecommunications Board will meet next week to
discuss whether to approve the award of the country’s first
3G licence to mobile market leader Turkcell, which was
granted on 7 September. Turkcell bid EUR321 million (USD440
million) for the ‘A’ class concession, including 45MHz of
UMTS spectrum, but it was the sole participant in the tender
after domestic rivals Avea and Vodafone pulled out,
complaining that mobile number portability should be
introduced before 3G licences are granted to avoid giving
Turkcell an unfair competitive advantage. An official from
the Ministry of Transport and Communications told local
newspaper Dunya that he believes that the regulator will not
approve the award, on the grounds of there being only one
bidder, and that even if the Board does OK the tender, the
Council of State is likely to block the deal on competition
grounds.
Telegeography
Turkcell outlines 3G
expectations
License bid process will mean no rollout till mid 2009
Turkcell will not start investment in its 3G network until it has gone fully
through the license approvals process, according to Koray Öztürkler, the Turkish
operator’s Chief Corporate Affairs Officer.
With the tender process now scheduled to begin on 28th November, and a judicial
approvals process that can take up to 90 days, that means that investment in the
network will not be begin until well into 2009.
The operator will not divulge its investment plans for 3G rollout until the 6th
November, the day after its Q3 results announcement. Its license commitment will
be to cover 50% of the country by population within three years. Öztürkler said
that the operator can achieve more than this by covering Turkey’s eight largest
cities.
The operator will jump straight to HSPA coverage, he said, offering a broadband
alternative to fixed line services.
Turkcell bid last year for a license, only to see it withdrawn as it was the
only bidder. Vodafone and Avea refused to take part in the bidding process until
Mobile Number Portability was enabled.
Last year the company bid €511 million, including tax, for the license. There
are four types of license available, offering 40, 35, 30 and 25MHz of spectrum
in each license respectively. With the A license (40MHz) this year set at a
reserve of €285 million, the operator does not expect to be paying above its
previous bid this year.
But Öztürkler said that the company had benefited in one way from the delay, as
it was able to benefit from reduced infrastructure costs, as well as improved
interoperability.
“There are some significant technical improvements and we have been able to move
away from a single vendor model. This year we made the choice to replace our
single vendor supplier, Ericsson, with Huawei, especially in the North of the
country and he Black Sea region,” he said.
In a wide ranging interview, Öztürkler covered several other areas.
On Number portability:
Turkcell will use the introduction of mobile number portability to its
advantage, Öztürkler said, and will aim to use its band power and marketing
presence to lever customers away from Turkey’s other two operators. The company
held a MNP day internally to make sure its employees understood the ethics
around MNP.
On the Competitive situation:
“I don’t believe Vodafone has any advantage in its technology, service offerings
or speed of infrastructure investment. Two months ago, Vodafone said it would
bring the iPhone to Turkey. At that point Turkcell was not involved in a contact
with Apple, but we talked to them, and Apple realised they could not overlook
Turkcell. We explained our strength, and made and agreement for the iPhone. Now
you will find it difficult to find an iPhone in one of our stores, because they
have proved so popular. This is not a situation you will find with our
competitors. Operators can’t differentiate around the iPhone, but we can
differentiate around our brand, our marketing power and our PR power. In ten
days we sold 15,000 iPhones, and that was in a holiday week.”
On Macro Economic Conditions:
Turkcell has $3 billion net cash resources, making it unusual in having no debt,
beyond $600 million consolidated debt from its subsidiary businesses. Only Zain,
of its like for like rivals, is not in a negative cash position. It means the
company can finance mergers and acquisitions going forward. It is to be hoped
the current market conditions don't reach down to the street, but Turkcell is
well placed if there is a consumer slowdown.
On the BeST acquisition:
The company will import the Life brand from Ukraine, where it has had great
success. Earnings per capita are higher in Belarus than in Ukraine, so there is
potential for ARPU growth. The investment required will not be in the
multi-billion dollar realm. At purchase, €500 million was floated as a number
over ten years to meet its investment need.
On regulation and government:
Parliament is soon to approve a law allowing Turkish companies to buy back their
own shares, which could be an attractive investment option for the operator.
The operator is also lobbying for Turkey’s punitive value added sales tax laws
to be reformed. Consumers pay 42% tax on value added services items, with
operators paying another 15% tax. At the very least the operator wants the tax
regime brought level with the fixed operators. It wants Government to understand
that if taxes are brought down, not only will it stimulate usage, increasing the
overall take, but is more likely to result in less tax avoidance.
Keith Dyer
Mobile Europe, 22 October 2008
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