November 24, 2017 / 9:19 AM / 24 days ago

Turkcell sees potential to double user count within 2-3 years

ISTANBUL (Reuters) - Leading Turkish mobile phone operator Turkcell TCELL.IS sees the potential to double its user count and data consumption in the next 2-3 years as it looks to maintain sales growth above the rate of inflation, its chief executive Kaan Terzioglu told Reuters.

The company, currently working on a new three-year strategy, aimed to achieve such growth by focusing on extending digital services and e-commerce, he said in an interview.

“I see user count and consumption potential doubling in the next 2-3 years,” Terzioglu said, pointing to the increasing use of its exclusive digital services including messaging, music and video streaming applications.

While almost 80 percent of Turkcell’s 37 million customers have higher bandwidth LTE service-compatible data lines, only half have the smart phones needed to use higher data consuming data services, such as video and music efficiently, he said.

Turkcell has been hampered in recent years by a feud between three major shareholders: Cukurova, owned by Turkcell founder Mehmet Emin Karamehmet, Russian billionaire Mikhail Fridman’s Alfa Telecom and Sweden’s Telia Company.

Two weeks ago, two sources close to the matter told Reuters Alfa Telecom was interested in increasing its stake in Turkcell by buying out Turkish firm Cukurova, which missed a recent debt repayment and could consider offers.

Despite the dispute, Turkcell aims a 21-23 percent rise in sales this year, having achieved an increase of 29 percent to 13 billion lira in the first nine months of the year. Sales in 2016 had grown a lower 10 percent.

Terzioglu said that when the company forecast annual growth above 10-14 percent two years ago, “they didn’t believe it and our shares fell”.

“Now I can say the same thing. The telecom sector has to maintain growth above inflation,” he said.

Turkcell has introduced subscription based products such as Bip for online messaging, Fizy for music, and TV+ for video streaming in an attempt to boost growth and its market share.

Turkcell’s churn rate, showing how many customers abandon its services, was 4.2-5.6 percent since the 2016 third quarter when it began marketing digital services aggressively, he said. Previously the rate was some 6.9-8 percent.

Turkcell’s average revenue per user (ARPU) was up at 32.8 lira at the end of the third quarter, maintaining growth of around 11-17 percent each quarter this year.

Writing by Ezgi Erkoyun; Editing by Daren Butler and Dominic Evans

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