Turkey Telecommunications Report Q1 2009

Turkey Telecommunications Report Q1 2009

by Mike King

After disappointing growth of 1.7% in Q108, the mobile market has been expanding at an accelerating rate, with 2.1% growth in Q208 and 2.4% growth in Q308. With the introduction of mobile number portability (MNP) taking place in Q4, we expect to see an even greater boost to growth in the final quarter, and as such we have maintained our previous forecasts, even though on the face of it they seem slightly optimistic. Due to slightly revised population figures, we estimate that penetration reached 98% at the end of 2008, and forecast it to break the 100% barrier early in 2009. We have also extended our forecast period to 2013 as we move into 2009. We have projected that the mobile market will continue to show strong but slowing growth, and will reach 96.6mn subscribers and 127.7% penetration at the end of 2013.

While second and third ranked operators Vodafone and Avea had been leading the way in terms of net additions, market leader Turkcell is now stealing the show, with close to 60% of all net additions in the third quarter of 2008. As well as hanging on to its 55.5% share of the market, Turkcell has also succeeded in growing its average revenues per user (ARPUs) in two successive quarters. In fact, ARPUs have gone up slightly for all operators in both Q208 and Q308, but Turkcell has seen the biggest gains. All three are trying to migrate customers from prepaid to higher earning postpaid subscriptions, as is the pattern when the potential for new growth starts to tail off as penetration creeps up. Turkcell, however, has also been running campaigns focused on increasing minutes of use (MOU), as well as slightly increasing prices, and this has seen its prepaid ARPU go up significantly, thus having a big effect on the blended total.

However, with the introduction of MNP, and its slightly higher prices than its competitors, BMI suspects that tougher times may be ahead for Turkcell.Meanwhile, we have had to push back our 3G forecasts. The auction of 3G licences took place at the end of November 2008, and each of the three operators is now in possession of 3G spectrum. We expect 3G services to be launched during 2009, and would not be surprised to see Turkcell first off the mark, although Vodafone’s experience of 3G rollout and launches in numerous other markets will no doubt stand it in good stead.

In other news, the Turkish government cut the rate of private communications tax (PCT) in November 2008 as it applies to internet services, both fixed-line and mobile. Apparently, the Ministry of Finance bowed to pressure from mobile operators to cut the levies charged on internet subscriptions from 15% to 5% for fixed-line internet, and from 25% to 5% for mobile internet. This will mean an immediate cut in costs for consumers, and should help to boost internet usage and subscriptions.