Turkish Telecom Market: More Competitive with Better Networks

May 24, 2010

Although during the heat of global economic crises it is reasonable to expect organizational strategies aimed more at maintenance and stability than growth or change, mobile operators in the Turkish telecommunications market had no time to catch their breaths in 2009. As explained in Pyramid Research's report Turkey: A Strong Telecom Recovery Is on the Horizon:

• Within the last year, all mobile players, Turkcell, Vodafone and Avea, aggressively rolled out their 3G networks while simultaneously trying to adapt to the new competitive requirements established by the regulator. In particular, the availability of number portability and lower interconnection rates significantly reduced consumers’ switching costs and shifted competitive priorities from acquisitions to retentions.
• To counteract the fluctuations that a growing prepaid segment would create and to exploit the strengths of their new 3G networks, mobile operators turned increasingly to loyalty programs, such as bundling devices in exchange of long-term commitments, minutes and data rewards for extending subscriptions and offering new differentiating data services. Creating loyalty, however, has not been easy: The Turkish mobile operators want to move their subscriber base to the more lucrative postpaid segment, but in a market that shrank by 5% (approximately 4 million subscribers), along with a churn rate of 33.9%, they are finding it difficult to forego the opportunities in the indecisive and slippery prepaid segment. The Turkish mobile market therefore presents a paradoxical combination of price wars and loyalty programs.
• Despite these demand-side difficulties, the Turkish telecom sector is improving both in terms of cost management and differentiated services. All telecom operators have now both fixed and mobile infrastructures. Turkcell operates the growing fixed operator in Superonline, in which it will invest a further $340m in 2010. Vodafone acquired Borusan Telekom, a large fixed network presence, especially in the business segment.   Avea is owned 81% by Turk Telekom, the incumbent fixed operator with a near monopoly that also acquired Invitel in May 2010 to expand its bandwidth for international traffic. These synergies not only indicate reductions in operational costs, but also signal the prospects of offerings based on convergence strategies. Indeed, the growing familiarity of the Turkish market with data services will have positive implications both for fixed broadband and mobile data revenues, which we expect to grow at a CAGR of 9.2% and 11.4%, respectively, between 2009 and 2014.

— Kerem Arsal, Senior Analyst, AME

Related resources:

Turkey Intelligence Report
Country Intelligence Report published April 2010
Revenue growth will stabilize in US dollar terms at a projected 4.5% CAGR through 2014, propelled by strong demand for mobile voice and data services, as the markets for fixed voice and narrowband Internet access shrink. We forecast a 4.4% CAGR in mobile voice revenue between 2009 and 2014. Mobile data will also be gaining importance, as signaled by the enthusiasm of the mobile market toward new 3G services.

Africa & Middle East Fixed Communications Forecast
Forecast published March 2010
Pyramid Research provides the most in-depth country, regional and global forecasts available. Covering a wide array of Communications, Media and Technology segments in over 90 countries, we offer the most reliable and actionable analysis available by using our industry-unique methodology and bottom-up approach.

Africa & Middle East Mobile Operator KPI Forecasts
Forecasts published quarterly
Our Mobile Operator Key Performance Indicators Forecast products provide a complete picture of wireline voice and data communications in each of 25 African & Middle Eastern markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue - all broken down for the mobile operators in the respective markets. We believe our Mobile Operator KPI Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.