The Turkish telecommunications market is a relative outperformer compared with its regional peers. There was strong growth in fixed and mobile broadband subscriptions, as well as pay-TV subscriptions in 2013. The mobile market is more volatile, however, with IP voice and messaging substitution beginning to take hold and putting pressure on revenues. The largest operators - Turk Telekom and Turkcell - are responding with an increased emphasis on fixed-mobile service bundles, with TV central to those offerings. This could put Vodafone at a disadvantage, as it has yet to develop its own pay-TV service for its fledgling fixed broadband business. Broadband video aside, the main catalysts for change in the Turkish market continue to be the arrival of MVNOs and roll out of mobile number portability.
- Smartphone ownership continues to grow in Turkey, underpinned by mid-range Android handsets. Turkcell reported that 24.6% of its subscription base used smartphones in Q313, compared to 28.1% at Vodafone and 33% at Avea.
- SMS IP substitution has been a negative consequence of the smartphone boom, offsetting some of the gains from mobile data revenue growth. BMI calculates from ICTA and operator data that SMS sent per subscription per month declined by more than 10% y-o-y to Q313 at both Turkcell and Avea, while Vodafone fared better with growth of 2.7%.
Key Trends And Developments
The focus of competition in Turkey has increasingly moved to the converged services market, driving operator investments. Incumbent Turk Telekom has invested in fibre to raise download speeds, and enable bundled services including fixed-line, broadband and pay-TV. Meanwhile, mobile market leader Turkcell is growing rapidly in the wireline market through its Superonline subsidiary. Finally, Vodafone, which has a presence via its acquisition of Koc.net, struck a deal in January 2014 to double its fibre optic footprint by agreeing to use infrastructure owned by the state-owned Turkey Electricity Transmission Company (TEIAS). Vodafone will pay TRY128mn (US$60mn) over 15 years to lease capacity on TEIAS' national fibre-optic network and expand its footprint by a factor of 2.5 to reach 16,000km. BMI expects operators will continue to invest in wireline infrastructure, both to tap converged services and support wireless data network expansion by providing cost-effective backhaul.
In early September 2013, Dogan Holding said it had tabled at US$742mn offer for 53% of pay-TV operator, Digiturk, beating Turk Telekom's offer of US$530mn. Dogan's offer values Digiturk at US $1.4bn. Dogan already owns D-Smart, Turkey's second-largest pay-TV operator; the telecoms sector regulator and anti-trust bodies will need to consider the offer carefully as the deal potentially puts the bulk of Turkey's pay-TV sector under the control of a single player. Turk Telekom's response is not known; the incumbent wants to expand its presence in the pay-TV market despite growing interest in its Tivibu IPTV offering.