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Telecommunications Vodafone's Turkish delight
Telecommunications Vodafone's Turkish delight | Vodafone's Turkish delight |
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| by Stuart Corner | |
| Sunday, 28 May 2006 | |
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Closure of the purchase, from the Turkish Savings and Deposit Insurance Fund, delivered a $US410 windfall to one of Telsim's key suppliers, Motorola and $US341 to another, Nokia, as settlement, of respectively, a fraud case and payment default. Telsim is the number two GSM operator in Turkey, with around nine million customers and approximately 21 percent market share. In 2004 it generated revenue and EBITDA of $US712m and $US87m respectively. At the time Turkey represented the fourth largest market in which Vodafone operates and with a young and growing population a particularly attractive market, according to Vodafone. With approximately 47 percent under the age of 25, Turkey's population is expected to be greater than Germany's by 2017. Telsim is also growing rapidly. Its revenue in the first seven months of 2005 was approximately equal to its 2004 revenues. Customer growth in the 12 months to 30 June 2005 was 53 percent, 2.8 million net additions, taking its total to around nine million. However Vodafone said at the time it announced the deal that the business had been "historically under-managed and [had] suffered from under-investment in its network and customer propositions". Vodafone anticipated investing around $US1 billion "over the short term" in the operations and network of Telsim in order to "deliver a superior product and service offering to the Turkish market". Motorola's $410 cash payment was to settle a massive fraud perpetrated against the company by Telsim and its former owner, the Uzan family. Following receipt of its settlement payment, Motorola said it would dismiss all its outstanding claims against Telsim, the Turkish Government and other parties, but that it would continue to pursue the Uzan family, "except in Turkey and certain other agreed upon countries", to enforce previous judgements. Nokia's claims arose from Telsim's default on its repayment obligations under a loan facility related to network equipment delivered in 2000. In February 2004, the Arbitral Tribunal in Zürich approved Nokia's claim against Telsim. Nokia agreed to settlement on the successful sake of Telsim's assets.
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