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New data from Wireless Intelligence forecasts that combined WCDMA and WCDMA-HSPA connections in Turkey will reach nearly 30 million by the end of 2013, accounting for over a third of the country’s total mobile connections by this point. The forecasts suggest that Turkey’s new high-speed networks, which were switched on last week by all three of the country’s mobile operators, will experience strong growth over the next four years due to high demand for mobile broadband and mobile Internet services, supported by a mature WCDMA infrastructure and devices market.

The three mobile operators – Turkcell, Vodafone Turkey and Turk Telekom’s Avea – won WCDMA licenses in a government auction last November. Turkcell submitted the highest bid – EUR358 million – to secure the highest-frequency ‘A-Type’ license, while Vodafone and Avea bid EUR250 million and EUR214 million, respectively, for licenses in lower frequencies. All three bids surpassed the government’s reserve price for the licenses, though a fourth license was cancelled due to lack of interest. The successful completion of the auction brought an end to a long – and often controversial – auction process; an earlier auction two years previously had been boycotted by Vodafone and Avea and cancelled.

The delay in obtaining the spectrum has meant the operators have had sufficient time to build-out their new networks to large swathes of the country. Market-leader Turkcell says it commercially launched its new network simultaneously in 81 provinces in Turkey last week, providing instant coverage across an estimated 60 percent of the population. The operator also plans to upgrade to HSPA+, offering theoretical peak download speeds of 21Mb/s, and begin LTE testing later this year.

Number-two player Vodafone Turkey, which is using a new brand ‘3G+’ to promote services on its new network, also boasts 60 percent population coverage at launch and has earmarked TRY1 billion (US$675 million) for investment in WCDMA this year. Both Turkcell and Avea plan similar levels of investment.

The networks launch with a number of new WCDMA-based products and services ready to go. Turkcell, for example, launched 30 new products last week to support its new network, including embedded laptops, netbooks, mobile TV and video calling. It also said it has around 3 million WCDMA-enabled handsets currently on its network as well as 21 million devices that support mobile Internet.    

However, recent regulatory movements – most notably a 28 percent reduction in mobile termination rates in 4Q08 – have impacted profitability at the Turkish operators. As we discussed in an earlier edition of Snapshot, Vodafone Turkey has been hardest hit, and recorded a 11.2 percent drop in service revenue in 2Q09. As a result of such pressures, all three players have hinted recently that they are in favour of network sharing as a way to keep down costs during rollout of the new networks. But WCDMA network-sharing is complicated by the fact that the operators have already made separate deals with equipment suppliers. Ericsson struck a deal with Turkcell in March to become its main WCDMA network supplier, while Avea said in April it had picked Ericsson, Huawei and ZTE to supply WCDMA infrastructure. Vodafone Turkey signed a similar deal with Huawei last December.  

Turkcell is the clear market leader in Turkey with over 36.6 million connections in 2Q09, an approximate 57 percent market share. Vodafone is second on 15 million (23 percent) and Avea is third on 12.4 million (19 percent). However, the market has been volatile in recent quarters following the introduction of mobile number portability in Q408. Our forecasts suggest that market shares for combined WCDMA and WCDMA-HSPA connections by the end of 2013 will be broadly in line with current trends; Turkcell on 54 percent, Vodafone on 25 percent and Avea on 21 percent.

Matt Ablott, Analyst, Wireless Intelligence

“Turkey’s late migration to WCDMA, while not deliberate, has given it a number of advantages, including access to a mature equipment market and a high-installed base of compatible devices (Turkcell began offering Apple’s iPhone 3G last year). Moreover, the three operators have been able to rollout WCDMA and WCDMA-HSPA simultaneously, and future network migrations are already in the pipeline. At a time when connections growth appears to be slowing (or even declining in some cases), the success of value-added services on the new networks will be vital for sustaining ARPU over the next few years. Mobile broadband should be a key focus in a market with a relatively underdeveloped fixed-line infrastructure and low fixed-line broadband penetration; Turkcell has explicitly said that it intends to set its mobile Internet prices at a lower price-point than the fixed-line alternatives, and has launched a range of embedded laptops and netbooks targeting this market. For Vodafone, the rollout of its WCDMA network could provide an important stimulus at a subsidiary that has struggled in recent quarters.