Mobile penetration reached 90.6% at the end of 2012, indicating significant growth potential over the medium term - in contrast to saturation across much of the region. There is also growth potential in the mobile and fixed broadband segments, particularly as a result of demand for smartphones and higher capacity fixed services bundled with TV services. Although there are strong growth prospects for much of the market, we highlight a number of changes that could disrupt the continued improvement of financial performance by operators including the arrival of MVNOs and mobile number portability.
- Monthly blended ARPU continued to increase in 2012, with the market share weighted average up 10% y-o-y to TRY21.86 in Q412. All three operators reported increases in ARPU, in stark contrast to declining ARPU across the rest of the region.
- Decline in the fixed-line sector accelerated in 2012, with total subscriptions down 8.9% y-o-y to 13.86mn at the end of 2012, according to regulatory data.
- Smartphone ownership continued to increase as Turkcell and Vodafone reported that 17.7% and 18.9% of their respective subscription bases were smartphone users at the end of 2012, up from 11% and 14.5% at the end of 2011.
Key Trends And Developments
The absence of independent MVNOs in Turkey has resulted in a steady stream of rumours about planned launches in recent years, including most notably the reports that Virgin Mobile was preparing to enter the market. We believe Virgin will still look to enter, but may now wait to judge the success of PTTcell, the MVNO from Turkey's Postal and Telecommunications General Directorate (PTT), which will reportedly launch in May 2013. PTTcell will initially offer prepaid services via 200 PTT branches before a nationwide retail expansion. The PTTcell network will run on Avea's network and is partially funded by the government's Universal Service Fund on the basis of an initiative to enhance rural mobile uptake. PTTcell is targeting a subscriber base of 1.5mn after one year and 5mn after two years. The creation of a vibrant MVNO market would have the effect of increasing subscription growth but place downward pressure on prices.
Turkish operators have also begun to see the potential of expanding their horizons internationally. In September 2012 Turkcell Superonline lifted boundaries between countries in the region, creating what it called 'internet without a visa' through signing direct access agreements - an initiative developed with Tata Communications, Deutsche Telekom and Inteliquent as it looks to become a regional internet traffic transport hub. Meanwhile, both Türk Telekom and Turkcell have also looked at expanding retail operations internationally by placing non-binding bids for OTE-owned Bulgarian mobile operator Globul in November 2012.