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TURKS SEEK TO EXPAND

“If we delivered the same quality as in the U.K. or Germany, we would have zero subscribers in two weeks,” said Hakan Uzan, chief executive officer of Turkey’s second GSM network operator, Telsim.

Speaking in Istanbul at the recent announcement of a US$500 million infrastructure contract with Motorola Inc., touted as being the world’s largest GSM (Global System for Mobile communications) contract to date, Uzan emphasized the importance of service quality: “We want each user to get the best services possible. Quality, not the number of users, is the criterion for us.”

That does not mean subscriber numbers are unimportant, of course. With 425,000 subscribers at the end of March, Telsim is predicting at least 1 million by the end of the year. Rival operator Turkcell had 1.3 million subscribers in March and is forecasting close to 2.5 million by year’s end. Turkish GSM is in expansion mode.

Telsim is 89-percent owned by the Turkish Romeli Group. Turkcell is 46-percent owned by Turkey’s Cukurova Holdings and 41-percent by Sonera, formerly Telecom Finland. Both carriers have identical deals with the state-owned operator Turk Telecom that changed radically in April when the operators each paid US$500 million to convert their revenue-sharing agreements with Turk Telecom into 25-year licenses.

Under the previous arrangement, dating back to the launch of both networks in 1994, the operators had to pay a massive 67.1 percent of their revenues to Turk Telecom. Now each operator pays 15 percent of gross revenues to the government and a mere 10-percent interconnection fee.

“I’m happy with our interconnect charges,” said Uzan, an unusual statement from a GSM operator, but an understandable one given the history of GSM in Turkey.

Freed from the shackles of the earlier arrangement, both operators now have ambitious expansion plans. Turkcell awarded a US$300 million framework agreement to L.M. Ericsson in April for a network expansion project scheduled for completion by the end of the year.

Telsim has trumped that with its record US$500 million exclusive contract with Motorola for the supply of infrastructure over the next three to five years.

Uzan claims Telsim is one to two months ahead of Turkcell in its expansion plans and highlights the size of Telsim’s investment in relation to its subscriber base. Essential to this investment was a US$610 million investment support certificate, basically an exemption from customs and import tax, granted to Telsim by the Turkish government in April.

The Motorola contract brings Telsim’s total investment in its GSM network close to US$2 billion. Return on that investment is expected within the next four to six years, according to Uzan.

The partnership with Telsim gives Motorola a degree of exclusivity that implies the replacement of base stations previously supplied by Nokia and Siemens A.G. The technical solutions to be deployed are intended first to enhance coverage and then to add capacity. They include the multi-layer capability enabled by Motorola’s M-Cell base transceiver stations and synthesizer frequency hopping solutions.

But perhaps the most noteworthy technical development involved is the deployment of Motorola’s new extended range cell technology. Recently trialed successfully by Spain’s Telef

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