Vodafone Turkey

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Telsim was one of the two consortia selected by state-owned local incumbent Turk Telekom to build and operate GSM system under a 15-year Build-Operate-Transfer agreement in May 1993. The other consortium was Turkcell. Under the agreement, the private operators' revenues were constrained to a 25% commission of actual revenues collected. Those commission were designed to reimburse the operators for their cost of running the cellular networks; while the state assumed ownership, determined tariffs, and was responsible for collecting customer revenues. The government changed those two BOT agreements to 25 year-licenses after each consortium committed to pay US$500 million in April 1998. Under the new arrangement, operators are allowed to keep over 75% of their revenues, but they must continue to pay 15% of revenues to the government as licensing fees, and an additional 5%-10% to Turk Telecom for interconnection charges and international long distance fees. Initially, Telsim was owned by Rumeli Holding, Alcatel, Siemens and Detecon, but Rumeli Holding (Uzan group) owned 98% of Telsim by 1998. The company launched its network in 1994 with an initial investment of US$20 million. The company invested a total of US$400 million by early 1998. Telsim had more than 360,000 subscribers by March 1998. In addition to paying its US$500 million license fee, the company signed a US$500 million expansion contract with Motorola in 1998. Telsim competed with the privately owned Turkcell (GSM 900 network) and state-owned Turkish PTT (NMT 450 network). In 2000, Telsim signed an agreement with Motorola to set up a third-generation mobile network, which was to increase its number of subscribers from then level of 5 million to 7 million by the end of 2001. Beginning early 2001, Telsim begun facing financial difficulties. In May 2001, Telsim defaulted on a vendor facility given by Motorola amounting to US$728 million. In July 2001, Nokia stopped shipments of equipment because Telsim had failed to repay US$240 million on another vendor-financing loan. The borrowings, which dated back to 1998, were backed with a 66% stake in Telsim for Motorola and a 75% stake for Nokia. Motorola and Nokia alleged that subsequently the Uzans illegally diluted the stakes to 22% and 2.5%, respectively. In 2003, Telsim was among 219 companies owned by Rumeli Holding AS, the Uzan group, that were taken over by the Savings Deposit Insurance Fund to collect the group's debt to the government. The fund managed insolvent banks and guarantees their deposits. Telsim was the largest of the companies seized. The Turkish government believed the Uzans used a double registration accounting system to siphon US$5.2 billion from a bank they owned, Imar Bankasi, an amount roughly equivalent to 2.5 percent of Turkey's gross domestic product. In August 2003, a U.S. court in New York ordered the Uzan family to pay US$4.3 billion to Motorola. The verdict, which was being appealed by the Uzans, also said Nokia should receive from the Uzans some Telsim stock, or be paid US$1.7 billion in damages. The judge issued arrest warrants for Kemal Uzan and his sons Hakan and Cem if they set foot in the U.S., saying they had committed fraud. In February 2004 the Turkish government seized 219 companies that belonged to the Uzan family, including Teslim SA. In December 2005 British group Vodafone won an auction for 100% of Telsim's shares. Vodafone agreed to pay some $4.5 billion to the Turkish government for the mobile operator. The transaction was concluded on May 24, 2006. The name was changed to Vodafone Telekomünikasyon A.S. At the end of 2005 Telsim was Turkey's second-largest mobile operator after Turkcell, with a nationwide network serving some 10.3 million subscribers in a population of 70 million. In May 2006, Vodafone completed the acquisition of Telsim from the Turkish Savings and Deposit Insurance Fund (TMSF). From March 2007, Vodafone became the official name of the project. In an auction held on Nov. 28, 2008, Vodafone and its competitor, Avea, both bid EUR250 million for the B-type licence to provide 3G services. After evaluating the bids, the Information and Communication Technologies Authority (BTK) decided to grant the licence to Vodafone. In December 2008, Vodafone signed an equipment supply contract with Huawei Technologies [China]; 3G services were expected to launch in mid-2009. In April 2009, Vodafone completed payment for, and signed the 3G license. 2014 capex from http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=35023674 2013 capex figure is missing Q4. Should be updated when available. 2012 - Wireless Intelligence 2011 capex and subscribers from 2011 annual finnacial statements http://www.vodafone.com/content/index/investors/reports/financial_results.html 2007, 2008 & 2009 capex are estimates calculated by proportionlly adjusting Vodafone regional capex by the number of Vodafone subscribers in Turkey.