11 Jan 2010Turkey Broadband Overview

Turkey’s telecommunication sector was liberalised on 1 January 2004. Since then, new price control regulations coupled with the entry of new players has increased competition leading to a reduction in tariffs. Turkey’s preparation to join the European Union is an important incentive to make its telecommunications sector more competitive and dynamic. This has encouraged changes in the telecommunications regulatory regime following the guidelines set out in the EU 'acquis’ for candidate countries. However, significant progress still needs to be achieved, particularly in relation to the regulation of the former state-owned incumbent operator Turk Telekom (TT) and the cable companies.

Along with the increase in mobile phone use, a downward trend in fixed line penetration can be observed. By the end of June 2009, Turkey had about 17 million fixed line subscribers while penetration fell to 23.9 per cent from 27 per cent five years ago. In the same period, TT’s share of the fixed network traffic was still very high at 96.14 per cent, having fallen only by 0.54 per cent in the last 12 months. In Q209, 91 per cent of revenue from telephony services provided in the country was earned by Turk Telekom, with only 9 per cent shared by alternative operators.

The incumbent Turk Telecom provides landline, mobile and Internet services. It launched ADSL services in 2003, and currently offers Internet services in selected regions through its subsidiary TTnet. In 2005 in a drive for privatisation, the government sold a 55 per cent stake of TT to the Saudi-owned Oger Group. One of the key benefits of TT’s privatisation is the fact that it has lost the special status of a state-owned company and as a result is obliged to follow the same regulations as any other Turkish telecoms operator. This is expected to lead to a more competitive market and help accelerate the deployment of new technologies and services. Nevertheless, TT is likely to remain aggressive within the telecoms marketplace and in the regulatory process as it tries to maintain its leading position.

At the end of June of 2009, there were 63.6 million mobile subscribers in Turkey which resulted in 89 per cent penetration rate. The year-on-year growth was only 2.3 per cent compared to 18 per cent in the previous 12 month period. Having peaked at 92.1 per cent at the end of 2008, the mobile penetration rate showed a slight downward trend since. Three mobile operators, Turkcell, Vodafone and Avea, dominate the mobile telephony market.

At the end of Q209, Turkcell reported 36.3 million subscribers, continuing to hold a 57 per cent market share. Vodafone was the second biggest provider with a subscriber base of 14.9 million. However Vodafone’s market share fell in the last 12 months by 2 per cent to 23 per cent following a loss of 2.4 million subscribers. Avea, which is 81 per cent owned by TT, also lost 200,000 subscribers between Q209 and Q109 and ended the period with a 19 per cent market share.

The three mobile operators are trying to find new sources of revenue in anticipation of the difficulties associated with increasing subscriber numbers in the saturating market. All three won 3G licences in December 2008 and launched 3G services at the end of July 2009. Avea allocated TRY 1 billion to be spent mostly on 3G network development during 2009. Vodafone followed the suit with a TRY 1.3 billion investment allocation. At the end of 2009, there were already about 2 million active 3G users in Turkey, with Turkcell boasting sales of about 200,000 VINN modems and netbooks since the launch of its 3G service.