Turkey entered something of a new age in its mobile market at the end of July 2009, as all three networks finally launched their 3G services. At launch, market leader Turkcell said that it saw 3G penetration reaching 20% in two years. It is unclear whether this was meant as 20% of the mobile market, or 20% of the population. In two years, these will not be far off the same thing, but in any case BMI believes that this forecast is more than a little optimistic. 20% in two years would be impressive 3G growth for any market, and the Turkish mobile market is currently undergoing something of an extended downturn.

Turkey’s mobile market contracted in both Q109 and Q209. Having ended 2008 with 65.833mn mobile subscribers, by the mid point of 2009 there were only 63.665mn mobile subscribers in Turkey. This has led BMI to downgrade our forecasts for the year, but we still expect the market to recover over the next few months, and return to its progress towards and eventually beyond 100% penetration. It has not, after all, been entirely bad news for the mobile operators, with both Turkcell and Avea being quite successful in improving their subscriber mixes. This may have had some impact on the subscriber figures, as it could have led to a few more inactive subscribers falling out of the market. MOUs have also continued to increase, so mobile users have not cut back on their mobile spending.

Vodafone continues to perform very poorly. In fact, it has seen four consecutive quarters of subscriber contractions, and has been well and truly overtaken by Avea in terms of revenues. BMI expects to see Avea overtake it in terms of subscriber figures as well in the next couple of quarters if things do not drastically improve for Vodafone.

ADSL growth and fixed-line contraction have both continued in Q209, at basically the same rate as before. Türk Telekom has yet to find an effective way to stem the flow of subscribers leaving the fixedline market. With alternative broadband technologies becoming increasingly widespread, more fibre being built, and WiMAX soon to be licensed, its job will get even more difficult as ADSL is probably one of the biggest remaining draws to fixed-line subscriptions.

Turkey is suffering at the hands of the global slowdown and financial turmoil. Turkcell reports that profits have been hit by the massive depreciation of the Turkish lira against the US dollar. BMI has forecast extremely difficult economic conditions in Turkey in 2009 and 2010, but we believe the telecoms sector will weather the storm well. We also hold that Turkey is well placed to have a strong recovery, once it starts.