€970 mln 3G launch set to boost Turkish economy
An official from the tender committee cuts the ribbon holding the dossiers of the mobile operators’ bids soon before the auction for 3G licences started.
A tender for the 3G mobile communication system ended yesterday with the participation of Turkey’s three GSM operators, bringing a total of 822 million euros into the Treasury with another 148 million euros going to the Finance Ministry as the value-added tax (KDV).
This extra revenue is expected to increase confidence in Turkish markets and improve the budget balance.
Despite some pessimism that the tender would not achieve the expected returns and the prospect that it might have been postponed again due to a lack of demand, the result was a success amid the global financial crisis which has rendered it difficult for companies to find credit to finance their bids. The mobile operators that shared the 3G licenses in yesterday’s standoff announced they would pay the amount as a lump sum.
The tender marked the dawn of a new era in mobile communication technology, as the introduction of 3G will bring a number of novelties such as visual communication, watching TV on phones and much faster Internet connections.
Avea, Turkcell and Vodafone bid in the tender, which was held at the headquarters of the Science Technologies and Communication Council (BTK) in Ankara. Separate bids were held for the four separate licenses on offer.
Turkcell, Turkey’s largest mobile phone operator as measured by the number of customers, offered 358 million euros for the “Type A” 3G mobile phone license, with the highest bandwidth of the four that were auctioned (40 MHz). The company outbid rivals Vodafone, a British GSM operator, and Avea, a Turkish-Italian GSM company.
Vodafone withdrew from the auction in the first round, Avea offered 348 million euros in the second round, but withdrew in the third round. Thus, Turkcell was awarded the tender for the Type A license.
The tender will be concluded after it is ratified by the relevant authority.
In the tender for the Type B (35 MHz) license, Vodafone gave the highest bid of 250 million euros. Avea won the tender for Type C (30 MHz) license with its bid of 214 million euros. The tender for the Type D (25 MHz) license was canceled as none of the three operators submitted bids. Vodafone and Avea then won licenses for lower 3G bandwidths, with offers of 250 million euros and 214 million euros, respectively.
BTK President Tayfun Acarer said the total payment after the tender will amount to 970 million euros. He said the companies are supposed to begin 3G services within five months. "3G services will be introduced by the beginning of summer 2009," he said. Acarer noted that the 3G system will stimulate the Turkish telecommunications market. He underlined that the tender was fair and ended without any problems and sides were content with the results on their behalf. He noted that the winning companies will have to recruit more than 500 research and development engineers from Turkey over the next three years. "This fact will affect research and development studies in Turkey positively," he added.
He said the tender for the Type D license would be held again only after they get approval from the government.
Acarer further said the winning companies will be held responsible to expand 3G coverage to the whole country within the next 10 years. "I believe that the companies will offer service earlier than expected," he noted.
Companies happy with the result
Turkcell CEO Süreyya Ciliv said that they were please to support the Turkish economy. Speaking after the tender was concluded, Ciliv said this was an important step to create an extra source of funds in such a time of difficulty.
Ciliv thanked Transportation Minister Binali Yıldırım and the BTK for their efforts to hold the 3G tender. Regarding the ongoing global financial turmoil, Ciliv asserted that further investments in communications technology would help the Turkish economy overcome the negative effects of the crisis. He stressed that they will introduce 3G technology by July 2009. "We should attempt to further improve this technology. It will not be enough for the future," he said, underlining that Turkcell was always looking to develop and innovate. He also said that the 3G infrastructure will take time to establish throughout Turkey, saying they will first launch the technology in large urban centers.
Avea CEO Cüneyt Türktan said they were happy that Avea was able to get the Type C license. "This was what we were looking to get out of the tender and we are glad that we have achieved our goal," he said. Türktan said they expected to start offering 3G service soon, underlining that they had already carried out studies into infrastructure for the implementation of 3G. "We want every single house in Turkey to have access to the Internet. There are currently 67 million GSM subscribers in Turkey, why shouldn't all of them use Internet services via mobile Internet? We would like to contribute to this as much as we can," he noted. He said they would start offering 3G service by June 2009. He also stressed that Turkey was not too late in its shift to 3G technology. Current infrastructure costs, the fall in the price of mobile devices and the recent government decision to reduce the private communication tax (ÖİV) on Internet use are all facts which will encourage 3G technologies to become widespread in Turkey in a short time.
Ian Gray, the CEO of Vodafone Turkey, said yesterday that they were happy to get the "Type B" license and they were expecting to continue 3G infrastructure studies in Turkey, in conjunction with studies in other countries, underlining that Vodafone had the largest 3G network in the world. "We offer 3G service to 33 million subscribers all around the globe, and we expect to share our experience with Turkish mobile phone users," he noted. He noted that they had been conducting studies into 3G technology for a long time and they will build their new infrastructure building on the base they had established from 2006, when they first entered the Turkish market. "We will finish our studies as soon as possible. We are excited to introduce our customers the privilege of being a Vodafone customer," he added.
Türk Telekom also said they expected communication investments in Turkey to accelerate now that the tender for 3G communication has ended successfully. Releasing a written statement yesterday, Türk Telekom noted that the tender was an important step to improve the telecommunication sector of Turkey. "The Türk Telekom family constantly invests in the field of communication with the vision of developing Turkish technology and exporting it. We hope that the long-awaited 3G technology will be to the benefit of the Turkish telecommunication sector and its customers," the statement said.
Government hopeful for future
Minister Yıldırım said that the 3G tender showed that foreign entrepreneurs had no hesitations in investing in the Turkish market, which he stressed is currently a safe haven for investors despite the current financial crisis. Speaking in Antalya yesterday, Yıldırım noted that prominent international mobile telecommunications companies had decided to invest in Turkey's future and this was really encouraging. "I hope that this tender will be for the benefit of our country," he said. He also said the government was content with the amount of money bid in the tender.
3G services scheduled for June 2009
Upon the completion of the bidding, the BTK approved the tender. Later a draft for a concession agreement between the three GSM operators and the BTK will be prepared by the BTK. This agreement, an understanding between the companies and the BTK, will specify the rules under which the companies can operate, is expected to be sent before the end of December to the Council of State for an opinion from the council. The Council of State will then send the agreement to the next stage within two months. If this agreement reaches the council by the end of February 2009, it is expected that operators will be able to sign it by the start of next March.
Operators offering the next-generation service will only begin to be able to offer these services three months after the date that they sign the agreement, at the earliest. For this reason, 3G telecommunication services will only begin to be offered in Turkey next June.
Operators to receive control of networks for next 20 years
Operators that win bids for licenses in a tender for third generation (3G) mobile communication systems will also have the right to be authorized for every new type of new generation technology to be developed in this area over the next two decades.
According to information supplied by the Science Technologies and Communications Council (BTK), operators that win licenses in the tender, will not need to re-enter bidding to get licensed for new technological developments, such as the upcoming 4G system currently undergoing testing in the US. In fact, operators who acquire licenses for 3G will automatically be authorized for new generation technology over the next 20 years.
Turkey enters new era in mobile communication with 3G
The third-generation (3G) networks enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephony, video calls, and broadband wireless data, all in a mobile environment. Additional features also include HSPA data transmission capabilities able to deliver speeds up to 14.4 Mbyte/s on the downlink and 5.8 Mbit/s on the uplink. 3G networks are wide-area cellular telephone networks that evolved to incorporate high-speed Internet access and video telephony.