Turkcell still hopeful as MTN waits in the wings

07 August 2004
Turkcell'sambitions to establish Iran's second GSM network were cast into doubt following its failure to sign the licence agreement during Prime Minister Recep Tayyip Erdogan's 28 July visit to Tehran. However, Turkish negotiators were back in Tehran in early August and maintain that they are close to signing.

South Africa's MTN, the second-placed bidder for the licence, is preparing to enter direct negotiations as an alternative operator.

Turkcell's failure to secure a foreign investment licence under the terms of the 2002 Foreign Investment Protection & Promotion Act (FIPPA) has been cited as the reason it has not signed the contract or paid the $300 million GSM licence fee.

Company officials say that it is only a matter of time before the the contract is signed. 'As far as Turkcell is concerned everything is going as planned,' says a spokeswoman. 'There were a lot of positive meetings. The steps towards signing a contract are continuing.'

It is unclear why the FIPPA licence has not been granted, although some Tehran-based analysts have suggested it is linked to disagreement between Ankara and Tehran on the price of Iranian gas exports to Turkey. In addition, Turkey's political relationships with the US, EU and Israel have been condemned recently in sections of the Tehran press close to powerful hardliners.

MTN, which is bidding in consortium with local private investors with strong links to Iran's telecommunications industry, extended in July the validity of its bid bond to October. If terms are agreed with the Information & Communication Technology Ministry, it could sign a licence agreement by late September.

The MTN bid entails rolling out a network that will have population coverage of more than 40 per cent by the end of the second year, including all provincial capitals, reaching nearly 60 per cent by the end of year five and 95 per cent 15 years after the network's establishment. The targets were the most aggressive set during the tender process. Its forecast of 5.5 million subscriptions by the end of year five is described as conservative. In the event of a total Turkcell pullout, MTN may have to forego FIPPA protection on its $300 million licence fee if it is to launch to deadline.

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