Turkey Sells Licenses for $3.8 Billion for Fast Mobile Internet

Turkey sold wireless licenses that will enable faster Internet services for consumers for 3.36 billion euros ($3.83 billion) to carriers Turkcell Iletisim Hizmetleri AS, Vodafone Group Plc and Turk Telekomunikasyon AS.

The three companies bought 20 packages of frequencies in the 800, 900, 1,800, 2,100 and 2,600 megahertz bands in a series of auctions held in Ankara, Deniz Yanik, deputy head the telecommunications regulator, said at a meeting on Wednesday. The operators will also pay 18 percent in value-added-tax on the winning bids, which compared with an initial estimate of 2.3 billion euros for the entire spectrum.

The service, an upgraded version of so-called fourth-generation, or 4G, technology, will start in Turkey from April 2016, according to the regulator, supporting Internet speeds in excess of 1 gigabits per second, compared with about 100 megabits for current 4G.

“The total cost of $3.8 billion meets expectations and is in line with costs incurred in previous spectrum auctions,” Bloomberg Intelligence analyst Erhan Gurses said in an e-mail. The investment will pressure the finances of the winners, he said. The lira has lost 16 percent against the euro this year.

Turkcell, which said on Tuesday that it will borrow as much as $3 billion for investments including license fees, will pay 1.62 billion euros for the licenses it won. Avea, the mobile unit of Turk Telekomunikasyon, will pay 955 million euros and Vodafone will spend 778 million euros.

The auction was postponed from May 26 after President Recep Tayyip Erdogan said Turkey should catch up with more advanced technologies than 4G. The regulator’s board must approve the sale.

Carriers will have to source an increasing amount of equipment from local manufacturers, according to the license terms.

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