Turkish Telecommunication industry has faced structural changes in the recent years. Firstly, Mobile Number Portability was introduced in 2008 followed by fixed line number portability in 2009. Secondly, mobile operators launched 3G services in 2009 followed by a number of mobile interconnection rate reductions, LLU unbundling, naked DSL, MVNOs and so on. 

Increasing price driven competition in Telecom services especially in 2009 and 2010 has mainly forced our Telco clients to differentiate themselves in how they deal with their customers, vendors and echo system. Customer relationship management, sales force automation, marketing campaign management and order management programs has been the main differentiators for Telco operators in recent years.

We also see attractive potential for mobile broadband in Turkey, as the fixed broadband penetration is capped by PC penetration. We believe mobile internet is an important growth driver for mobile operators .We believe that smartphones are becoming the main affordable means to have access to internet and data services. With increasing adoption of these devices, we believe traffic is set to rise strongly in the CEEMEA markets. We expect growth in data to be increasingly driven by non-messaging data usage, pushed by the proliferation of smartphones. We expect pure data to contribute more than 25% of domestic revenue by 2016. The monetization will depend particularly on the pricing power of the operators. Pricing power may again diminish significantly if data pricing becomes irrational – similar to the competition seen in the voice segment post introduction of mobile number portability in November 2008.

On the other hand, traditional Turkish fixed line voice business is facing a secular decline in access lines like the rest of the world. This decline has been pretty much compensated by the growth in Turkish ADSL lines. While ADSL lines were 3 thousand in 2002, the number of ADSL lines reached 6.7 million by the end of 2011. While fixed broadband growth is now limited by slowing PC penetration, we believe that Turkish fixed line Telcos are creative to offer various new services to grow Turkish Telecom market.

Looking forward, we expect to see Turkish Telecom operators to become more sensitive to their operational costs given that Turkish Telecom industry is a matured market now. We have observed more operational cost sharing agreement among operators recently and we believe that trend will be followed by large outsourcing agreements in the operations.