In 2007, the total number of GSM cellular service subscribers approached approximately 60 million with an approximate penetration rate of 85%. The total telecom equipment and service market grew to $18 billion and is expected to expand by 17% in 2008. Fixed line subscribers are approximately 19 million, reaching almost 100% penetration per house basis.
The three GSM cellular operator, Turkcell, Vodafone and AVEA and the fixed line operator Turk Telekom will invest in equipment and services at a total value of $3-4 billion in 2008. GSM operators will be deploying new IP type of switches to increase number of subscribers. Turkcell has approximately 64% of the GSM market, Vodafone approximately 21% and AVEA 15%.
In 2008, Telecommunications Authority (TA) will announce tenders for number portability, 3.5G third generation GSM cellular systems, and WiMax services. The 3.5G licenses will be given for 1900 MHz. When 3.5G is launched in Turkey, GSM operators estimate that 48% of the subscribers will use the handsets as video telephone, 47% as mobile Internet, and 38% as mobile TV. Program and software developers, service companies with special TV and video broadcasting over the 3.5G cell phones will be able to obtain great business in Turkey during the next 5 years. For commerce, with the introduction of the mobile signature, customs formalities will be completed much quickly.
Ojer Telecom (a JV between Saudi Oger and Telecom Italia) owns 55% shares of Turk Telekom. In 2008, Turkish Government will additionally privatize 15% shares of Turk Telekom through public offering. Turk Telekom’s business development continued and will continue in 2008 spreading the usage of high speed internet throughout the country.
Turk Telekom will continue to be the major buyer of fixed-line telecommunications equipment. Turk Telekom with approximately 20 million subscribers may invest in new technologies in 2007. Turk Telekom plans to expand its ADSL backbone, therefore, will continue to purchase new ADSL equipment.
Turk Telekom will invest $3.42 billion thru 2010 for its Next Generation Network (NGN) project and will also replace its rural area switches with small telephone switches over 10,200 switch centers. Turk Telekom is also planning to establish IP TV and number portability.
Over 40 private long distance telephony companies have been also operating over the last 3-4 years, mostly using VoIP via an interconnection agreement with Turk Telekom. These companies continue establishing their own networks. If the Telecommunications Authority (TA) improves the interconnection agreements with Turk Telekom for these companies, their investment and competitiveness will continue.
Vodafone and AVEA are expected to make significant new investments in 2008 and also increase promotions to expand their subscribers. If the TA proceeds with the number portability license tender this year, the competition between the GSM operators will greatly increase and shares of Vodafone and AVEA in the market would considerably raise.
Turkcell is the largest GSM cellular operator in Turkey. It has over 35 million subscribers. Their founding shareholders are Sonera Holding, formerly known as Telecom Finland Ltd. and is currently owned by TeliaSonera, Çukurova Group and MV Holding. 23.4% of Turkcell shares are publicly traded in Istanbul and New York Stock Exchanges.
AVEA is the third largest cellular phone operator, having approximately 8 million subscribers. Turk Telekom owns 81% of the shares of AVEA and the Turkiye Is Bank owns the remaining 19%. AVEA operates at 1800 MHz GSM frequency, and Turkcell and Vodafone operate at 900 MHz GSM systems.
The above mentioned investments are inevitable as the number of subscribers in mobile telephony increased three times while the fixed line subscribers remained constant during the last five-year. TA has registered 59 million GSM cellular phone handsets and Turkey imports approximately 10 million mobile handsets every year. Many subscribers continuously change their cell phones with new models sustaining consistent growth in the handset market.
Turkish GSM companies will widely implement new services such as Multimedia Messaging Service (MMS), Mobile Video Streaming (MVS) and other new features by moving forward to the 3G technologies. These services, new GSM and fixed telephony players multiplied by the competition introduced through the new long distance telecom companies will boost the telecommunications services market in Turkey.
GSM cell phone sets suitable for video downloading and TV broadcasting equipped with wide band Internet access will be the driving force for growth in this sector. These new technologies will be the basis for the 3G and 4G operations.
The private sector may make major investments on the establishment of new fiber-optic networks, VoIP Equipment and Wireless Local Loop networks. Due to its strategic location in Eurasia, between Europe and Central Asia and Middle East, Turkey has the potential to become a major hub for the distribution of telecommunications equipment in the region.
In Turkey, Northern Telecom, Alcatel, Siemens, Ericsson and NEC supply majority of the fixed lines switches, trans-multiplexers, and other telephony equipment. U.S. companies can be competitive in software programs required for customer databases, emergency call services, corporate management and intelligent network operation centers. Motorola, Nokia, Ericsson and Siemens are the main GSM switch and base station suppliers. U.S. companies can be competitive in new software products required by GSM cellular operators to provide new services to their clients and better corporate and client management.