Turkey Faces Big Mobile ARPS Squeeze

September 25, 2009

Turkish operators see 3G as crucial. Customers using 3G tend to spend more on data, which helps compensate for declining voice ARPS. An analysis of the Turkish market in our recent Turkey Intelligence Report projects that mobile voice ARPS, squeezed by competitively priced voice tariffs, will decline over the next five years at a -18% CAGR, dragging down total mobile ARPS (see exhibit). Add to that a slowdown in subscriber growth, and operators are realizing that they need alternative revenue sources to boost their top lines. We project that data ARPS will grow 39% over the next five years.

Commercial 3G service was launched in Turkey on July 30, 2009. Soon after 3G licenses were awarded in November 2008, ZTE, Turk Telekom subsidiary Avea recruited Ericsson, Huawei and ZTE for the equipment; Turkcell, the largest mobile operator, signed up Ericsson and Huawei; while Vodafone, which is struggling in the market, selected Huawei alone. Combined the operators splashed out $3.5bn in capex, plus licensing fees amounting to almost $1.1bn. Altogether so far, 3G has swallowed almost $4.6bn. It better be worth it.

The 3G service launches got plenty of attention, with players claiming they have it all: fast speeds (Vodafone claimed 28Mbps at a press conference), vast coverage (Turkcell claimed 60% coverage of the population) and a wide bouquet of 3G-based services (mobile TV, Internet access, video calls, etc.). Operators enabled customers to preregister for the 3G services by means of an SMS message. Turkcell alone received 1m preliminary SMS-based applications; by mid-August, it said it had gained more than 2m 3G customers. (For our estimates of subscriber growth by operator, see Pyramid Research’s Mobile KPI Forecasts, Q2 2009; for projected growth in 3G subscriptions, see our Mobile Demand Forecasts, Q2 2009.)

— Sylwia Boguszewska, Analyst

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