Telecommunications Board of Turkey cancelled the tender for the license of the Third Generation Mobile Communication System (3G), sources said on Wednesday.

Turkcell was the only bidder in the tender held by the state regulatory body, the Telecommunications Board, for four different licences at four different frequencies that will allow operators to provide advanced services such as video telephony. Turkcell made an initial bid of 311 mln eur, which it then increased by 10 mln eur to win the licence for the top frequency of 45 MHz. With value added tax, the company will be paying the treasury some $510 mln.

Shares in Turkcell rose 5.9 percent after a trading suspension was lifted, outperforming the main index which rose 4.5 percent on the back of a U.S. rate cut.

Sources stated that Telecommunications Board unanimously decided to cancel the tender due to "lack of competition conditions" in a meeting chaired by board chairman Tayfun Acarer.

The remaining three tenders for licences at lesser frequencies were cancelled due to a lack of bidders. Vodafone and Avea, Turkey's second and third largest mobile phone operators, as well as the French operator Orange, were reported to have requested tender conditions, but none submitted a bid.

Vodafone and Avea, opposed the 3G license auction occurring at all until the country had introduced mobile number portability (MNP), claiming that the license award would further entrench Turkcell's dominant position in the market. Turkcell, which controls about 60 percent of the Turkish market, said last month that it had posted a net profit of $274 mln in the second quarter of the year, increasing its consolidated revenues by 29 pct to $1.5 bln.

"3G" is the third generation of mobile phone standards and technology, after "2G". It is based on the International Telecommunication Union (ITU) family of standards under the International Mobile Telecommunications program, "IMT-2000". 3G technologies enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephony and broadband wireless data, all in a mobile environment.

3G networks are wide area cellular telephone networks which evolved to incorporate high-speed internet access and video telephony.

It is claimed that preparations were under way for a new tender.