A first commercial call made last Wednesday over the Aria network from Turkish Prime Minister Bulent Ecevit to the minister of transportation, Enis Oksuz, marked the launch of Turkey's third GSM mobile phone network. The new operator is a consortium, formed by a leading Turkish bank, Is Bankasi, and Telecom Italia Mobile (TIM), a subsidiary of Telecom Italia.
Taking less than six months to complete, the initial Is-Tim network is now available in Ankara, Istanbul and Izmir, via 800 GSM base stations and 21 relay points. The company aims to cover 50 percent of the Turkish population within two years and 90 percent of the population 2006.
According to Is-Tim general manager, Guiseppe Farina, said Turkey's mobile telephone market has 15 million subscribers, a figure which grew almost five-fold, from 1998’s 3.5 million. It is currently divided between Turkcell and Telsim, both acquired their licenses in 1998 for $500 million each. Considering it is forecasted that nearly half of the country’s 67-million residents will purchase a handset by 2005, Turkcell and Tlsim have by all means hit an early bargain.
Bearing these forecasts in mind, the market’s newcomer, registered under the name Is-Tim, set an all time Turkish record, when it bid $2.525 billion for the GSM license in April last year. Initially, the Turkish government put up for auction a fourth GSM license as well. However when Is-Tim put its cards on the table, competition from telecom giants such as Vodafone AirTouch, France Télécom and Spain’s Téléfonica, ultimately folded.
Outbidding its nearest rival by $1.35 billion, Is-Tim had not only won the license to build and operate the new GSM network for 25 years—it had also managed to clear out the ring. Given that bids in the fourth auction had to at least match the winning bid in the third, tender participators withdrew, and the auction was put off.
The long-awaited GSM license sale was completed on the 27th of October, after the Is-Tim consortium and the Turkish government finally reached an agreement on the details of the deal. Accordingly, a $500-million down payment on the deal was paid in November, the rest within three months, and the VAT on a pro-rata basis with each tranche. The government, for its part, had conceded assurances that the fourth GSM operator will be distinct from the state-monopoly Turk Telekom, to whom the license was eventually awarded, sugarcoating its upcoming privatization.
The dire financial straits in which Turkey has found itself recently, with the Lira falling over 30 percent against the dollar, surely do not make the stable economic environment into which a new GSM service would prefer to launch. However, for the Turkish government, which had initially set a reserve price of $650 million on the GSM auction, this is a well-needed windfall, estimated to ultimately reach $1.3 billion. Is-Tim is further expected to channel up to two billion dollars worth of direct foreign investment into Turkey, within the next two-years. — (Albawaba-MEBG)
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