GSM firms plan to invest further in Turkey
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by Sevda Yüzbaşıoğlu - Referans
Oluşturulma Tarihi: Mart 05, 2009 00:00
ISTANBUL - Competition among the three giants of Turkey’s mobile communications industry is becoming more fierce this year. Encouraged by increasing contracts, operators are planning to invest a total of $2.8 billion in 2009.
The mobile communications industry in Turkey, which has reached a volume of $35 billion, is getting ready to play a leading role in the country's economy.
Global System for Mobile communications, or GSM operators are planning to invest $2.8 billion this year. The investments will also open employment for hundreds of people. The number of cell phone users in Turkey reached 65.82 million by the end of 2008. Satisfied with demand, all three GSM operators in Turkey are one after another announcing annual investment budgets and strategies.
Turkcell, the country's largest mobile-phone operator, announced it was planning to invest $1.6 billion in growth. The firm is also considering creating 1,000 new jobs. Meanwhile, Vodafone, which entered Turkey’s GSM market in 2007 after purchasing GSM operator Telsim for $6 billion, is planning to invest 1.3 billion Turkish Liras, or approximately $800 million, this year. Türk Telekom’s Avea mobile-phone unit plans to invest as much as 465 million liras, or $268 million, while increasing revenue this year, Avea Chief Executive Officer Cüneyt Türktan said yesterday.
Rising competition
The competition between the GSM operators is expected to get fiercer with the introduction of the Third Generation, or 3G, to Turkey this year. Turkcell, which has a market value of $35 billion, has 37 million customers, and that constitutes about 56 percent of the market. On the other hand, Vodafone and Avea have 16.7 million and 12.2 million users respectively.
The GSM industry, which ended last year with 20 percent growth, has nearly a 5 percent share in the country’s gross national product, or GNP. The sector’s growth will continue this year, according to GSM operators. Number portability, which was launched late last year, has started a whole new level of competition. With new tariffs offered, 1.6 million people subscribed to Turkcell last year, while Avea grabbed 2.3 million new users. Vodafone, on the other hand, lost 600,000 users in the last quarter and gained only 200,000 new users.
The telecommunications sector, which behaves relatively independently from the rest of the Turkish economy, will be affected less from the crisis, compared to other industries that are in distress, according to analysts.
GSM has a bright future in Turkey, said Nergis Kasabalı, vice managing director at Ata Yatırım, which conducts research for the industry. "Mobile phone use has reached a certain saturation. Last year, market penetration reached 92 percent with number portability and double card use. We expect its rise to 95 percent this year. However, it is 3G investments that are likely to spur the industry further. Innovative investments will speed up."
Meanwhile, competition in the industry is likely to climb also with the opening of fixed lines and local calls to competition. The industry will see new activity with the inclusion of the Mobile Virtual Network Operators, or MVNOs, which will offer services using the networks of other operators without having a GSM infrastructure themselves. Technology-based products and broadband use levels are expected to rise, also.
Vodafone is to increase its number of stores to 900, creating 500 new jobs, said Serpil Timuray, the new chief executive officer of Vodafone Turkey.
This year will mark a turning point for the firm, Timuray said. Noting that the number of networks had doubled and service area had reached 96.6 percent, she praised Vodafone’s performance in Turkey as a model of foreign investment. However, the company has shown a performance below its expectations in some areas within its first two years, which still does not affect the firm’s investment schedule, she said.
Concerning the nomination of a Turkish executive, she said the new team aimed to address "both the hearts and minds of consumers." Within the framework of a new organization in the company, all units will be revised, Timuray said, adding that innovation would loom large within the scope of 3G activities. The firm plans to have 5,000 staff, she said.
It is crucial to keep price competition at a certain reasonable level for the future of the industry, Timuray noted. Other GSM operators make cross-subsidies, she said. However, Vodafone has applied to the Competition Authority concerning the issue. Timuray also refuted claims concerning a possible handover of Vodafone Turkey, noting that if it were the case, the firm would not be keeping up with such an investment budget.
Global System for Mobile communications, or GSM operators are planning to invest $2.8 billion this year. The investments will also open employment for hundreds of people. The number of cell phone users in Turkey reached 65.82 million by the end of 2008. Satisfied with demand, all three GSM operators in Turkey are one after another announcing annual investment budgets and strategies.
Turkcell, the country's largest mobile-phone operator, announced it was planning to invest $1.6 billion in growth. The firm is also considering creating 1,000 new jobs. Meanwhile, Vodafone, which entered Turkey’s GSM market in 2007 after purchasing GSM operator Telsim for $6 billion, is planning to invest 1.3 billion Turkish Liras, or approximately $800 million, this year. Türk Telekom’s Avea mobile-phone unit plans to invest as much as 465 million liras, or $268 million, while increasing revenue this year, Avea Chief Executive Officer Cüneyt Türktan said yesterday.
Rising competition
The competition between the GSM operators is expected to get fiercer with the introduction of the Third Generation, or 3G, to Turkey this year. Turkcell, which has a market value of $35 billion, has 37 million customers, and that constitutes about 56 percent of the market. On the other hand, Vodafone and Avea have 16.7 million and 12.2 million users respectively.
The GSM industry, which ended last year with 20 percent growth, has nearly a 5 percent share in the country’s gross national product, or GNP. The sector’s growth will continue this year, according to GSM operators. Number portability, which was launched late last year, has started a whole new level of competition. With new tariffs offered, 1.6 million people subscribed to Turkcell last year, while Avea grabbed 2.3 million new users. Vodafone, on the other hand, lost 600,000 users in the last quarter and gained only 200,000 new users.
The telecommunications sector, which behaves relatively independently from the rest of the Turkish economy, will be affected less from the crisis, compared to other industries that are in distress, according to analysts.
GSM has a bright future in Turkey, said Nergis Kasabalı, vice managing director at Ata Yatırım, which conducts research for the industry. "Mobile phone use has reached a certain saturation. Last year, market penetration reached 92 percent with number portability and double card use. We expect its rise to 95 percent this year. However, it is 3G investments that are likely to spur the industry further. Innovative investments will speed up."
Meanwhile, competition in the industry is likely to climb also with the opening of fixed lines and local calls to competition. The industry will see new activity with the inclusion of the Mobile Virtual Network Operators, or MVNOs, which will offer services using the networks of other operators without having a GSM infrastructure themselves. Technology-based products and broadband use levels are expected to rise, also.
Vodafone is to increase its number of stores to 900, creating 500 new jobs, said Serpil Timuray, the new chief executive officer of Vodafone Turkey.
This year will mark a turning point for the firm, Timuray said. Noting that the number of networks had doubled and service area had reached 96.6 percent, she praised Vodafone’s performance in Turkey as a model of foreign investment. However, the company has shown a performance below its expectations in some areas within its first two years, which still does not affect the firm’s investment schedule, she said.
Concerning the nomination of a Turkish executive, she said the new team aimed to address "both the hearts and minds of consumers." Within the framework of a new organization in the company, all units will be revised, Timuray said, adding that innovation would loom large within the scope of 3G activities. The firm plans to have 5,000 staff, she said.
It is crucial to keep price competition at a certain reasonable level for the future of the industry, Timuray noted. Other GSM operators make cross-subsidies, she said. However, Vodafone has applied to the Competition Authority concerning the issue. Timuray also refuted claims concerning a possible handover of Vodafone Turkey, noting that if it were the case, the firm would not be keeping up with such an investment budget.