Turkcell Achieves 14% Y/Y Subscriber Growth in 2006

Turkcell announced a 14% increase in its overall customer base to 31.8 million in Turkey at the end of 2006, from 27.9 million subscribers in the same period last year. Of the current total subscriber base, 5.8 million were post-paid subscribers and the remainder—26.0 million—were prepaid subscribers. Total annual churn rose from 10.1% as of 31 December 2005 to 14.7% a year later, as a reinvigorated Telsim, under the ownership of Vodafone, strengthened its brand and services in the Turkish market. Telsim added 870,000 customers in the third quarter of 2006.

Oulook and Implications

• Turkcell Dominant in a Growing Market: At the end of September 2006, Turkcell's market share was 61% to Telsim's 24% and Avea's 15%. Telsim and Avea will benefit from new ownership (in the shape of Vodafone and the Oger Telecom-controlled Turk Telekom), but Turkcell will continue to benefit from the organic growth potential in the mobile market. Real GDP growth will push mobile penetration from an estimated 69% at the end of September 2006.
• Turkcell's Strategy for 2007: Turkcell has highlighted a number of objectives for 2007, including delivering growth from under-penetrated regions and segments. The operator is taking an increasingly segmented approach to customer acquisition and retention: a low-end strategy is essential for increasing penetration among low-income groups. According to Global Insight’s data, 45% of all households earned US$15,000 or less. The operator will also be ramping up its mobile data offerings to build upon the 13% of service revenues generated in the third quarter of 2006. Currently, about one-half of data revenues are generated from non-SMS services, including RingBackTone, which notched up 2.7 million subscribers in 18 months, and its WAP portal, which attracted 2.4 million subscribers.