Vodafone Group Plc (VOD), the largest wireless carrier in the world by revenue, is reportedly buying the entire stake in the Turkish fixed-line voice and Internet service provider Borusan Telekom. However, the UK-based telecom titan has not provided financial details of the deal. The acquisition is subject to the approval of the Competition Board and the Capital Markets Board (“SPK”) of Turkey.     
 
The enterprise focused Borusan Telekom is a subsidiary of Borusan Holding, one of the largest industrial conglomerates in Turkey. Borusan Telekom has a leading share in the enterprise fixed-line telecom market and has more than 3,000 corporate customers. The operator had gross assets of $18 million and net revenues of $70 million at the end of 2008.

Vodafone entered the Turkish wireless market in 2005 by acquiring Telsim, the second largest mobile operator in the country, for $4.5 billion. The company is operating 3G services in Turkey in collaboration with Huawei Technologies. Vodafone is currently the second largest wireless operator in Turkey with roughly 15.6 million mobile customers and 24.5% market share.
 
However, Vodafone Turkey is currently suffering from underperformance as evidenced by a decline in service revenue due to competitive and regulatory factors. The company contends with termination rate (inter-operator fees) cuts and is facing stiff competition from Turkcell (TKC), the largest mobile operator in Turkey. To boost performance, Vodafone is improving network quality, strengthening distribution network and rolling out more competitive services.
 
The acquisition of Borusan Telekom will give Vodafone a stronger foothold in the corporate telecom market in Turkey. Besides, it will yield the company access to the Turkish operator’s fiber-optic network, which will boost network speeds and quality.
 
The addition of Borusan Telekom’s fixed-line voice and Internet businesses will enable Vodafone to offer bundled services (combining wireless with fixed voice and broadband Internet), thereby strengthening its competitive position against other leading mobile operators in Turkey such as Turkcell and Avea. Moreover, the acquisition will help Vodafone improve its 3G services in Turkey.

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