Turkish Operators Launch 3G Services

Turkcell, Vodafone, and Avea have now launched 3G mobile services (30 July 2009) in Turkey; customers will simply be able to access the new services by simply sending a text message to their operator Dunya reports. The three operators went through an arduous process before the licences were awarded; in September 2007, the 3G licence award was cancelled as Vodafone and Avea boycotted the process as the regulator failed to implement mobile number portability (MNP); the two smaller operators, Vodafone and Avea feared Turkcell would have an even greater advantage as at the time it has a market share of between 65—70% causing its customers to keep services with the operator so not to lose their number (see Turkey: 19 September 2007: 3G Licence Award Cancelled in Turkey).

Once MNP was implemented in November 2008, (see Turkey: 10 November 2008: MNP Launched in Preparation for Turkish 3G Licence Awards) the second 3G licence award soon went ahead in December 2008, with all three operators winning various capacities in the 3G spectrum. Turkcell, the largest mobile operator in Turkey, announced that it was granted the licence providing the widest frequency band, with a bid of 358 million euro (US$454 million). Vodafone secured the 3G licence on the second-widest frequency for 250 million euro. Avea, owned by fixed-line operator Turk Telekom, won the third-widest frequency with a bid of 214 million euro. A fourth 3G licence was cancelled due to lack of bids, but the lower frequency licence may still be auctioned off at a later date or distributed between the existing Turkish operators.

Outlook and Implications

• Competition Moves to 3G: There were approximately 65.4 million mobile subscribers in Turkey at the end of September, a penetration rate of around 85%. With a relatively high mobile penetration rate and intense competition, the three existing mobile operators in Turkey are all keen to offer advanced mobile data services in order to attract customers and generate additional revenues. The operators could primarily target business customers and the youth segment with their initial 3G offerings. Now with the availability of MNP, Vodafone, and Avea should be in a better position to compete with Turkcell, which itself is also gearing up to fight off increasing competition. At end-September, Turkcell reported 36.3 million mobile subscribers, with the largest market share of 55.5%. Vodafone, with 17.4 million mobile subscribers at end-September, had a market share of 26.6%. This leaves Avea, which had 11.7 million mobile subscribers at end-September, with a market share of 17.9%.
• 3G Growth Prospects: With three mobile operators now in the market, and penetration levels not far off 100%, operators need to implement value-added services on their network to prevent the decline in ARPU levels typically faced by most operators in competitive markets. Turkey has one of the highest percentages of youths in its population who are keen to take advantage of value-added services such as music download and Internet services. The 3G technology will increase the speed of the current internet connection in Turkey by 10 times, shortening the time to download a movie from 7.5 hours to 6.5 minutes. The already high number of 3G handset owners shows a potentially successful start to new services at the end of the month (see Turkey: 22 July 2009: Turkey's 3G Mobile Phone Usage Reaches 4 mil.) . Business customers on the move will also make up a significant percentage of the initial users of the services available. Already the business handset sector such as the BlackBerry as taken off in the country and is now heavily relied on.