Case Study: Turkcell
Turkcell is the biggest telecommunication operator, which started its activity in the middle of the 1990s in Turkey. At present, the company is successful in its activity, namely the provision of innovative telecommunication services for the Turkish population. Charles Berger-Oracle (2013) states that Turkcell was the first company in Turkey which provided mobile communication systems for the society.
Turkcell ?leti?im Hizmetleri A.?. is a leading provider of mobile communications in Turkey with more than 34 million subscribers. Established in 1994, Turkcell created the first global system for a mobile communications (GSM) network in Turkey. It was the first Turkish company listed on the New York Stock Exchange. (Berger-Oracle, 2013)
Turkcell is a public company rendering telecommunication services and is, therefore, regulated by the appropriate law of Turkey. The law № 406 regulating the activity of telecommunication services in Turkey for more than 80 years was implemented by the new provisions and resulted in the updated version of the Electronic Communication Law № 5809. The updated version of the law was under the political influence as it should correspond to the legislature of the European Union (Deliveli & Kayikci, 2010).
There are three largest GSM operators in Turkey, namely Turkcell (900 MHz), Vodafone (900 MHz), and Avea (1800 MHz). In fact, Turkcell is the biggest cell operator in the country. Apparently, the owner of 51% of shares Turkcell Holding belongs to ?ukurova Telecom Holdings (53%) and the Swedish-Finnish TeliaSonera (47%). The Turkcell’s 13.07% and 13.07% of shares belong directly to ?ukurova Group and TeliaSonera respectively. Moreover, another 8.2% of the company’s stocks are under control of the Nadash International Holdings and Henri Services Limited of the Russian businessman Alexander Mamut. Furthermore, the Russian Altimo Company controls 4.99% of Turkcell’s stocks, while about 23.4% of the Turkcell’s shares are in a free circulation. Muzaffer Akp?nar is the general manager of the company. The motto of the company is “Connect to life by Turkcell”. The company started its activity in 1994, establishing a leading market position. However, in order to support the same position in the market, it is necessary to develop, deploy and control new services. Moreover, the company has to follow two different accounting standards, namely US Generally Accepted Accounting Principles (GAAP) as the company is quoted on the NYSE and the Turkish SPK System as it is listed in the Istanbul Stock Exchange.
According to the data provided by Reuters (2014), the citizens of Turkey spent more than $32 billion for mobile and communication services in 2013. The considerable part of this sum (80%) belongs to the share of four largest communication companies of the country, namely Turkcell, Vodafone, Avea and T?rk Telekom. In 2013, the cumulative income of the sector of communication increased by 7.26%. Turkcell received the biggest profit constituting 28.25%, followed by T?rk Telekom’s 22.41%. The third place was taken by the Vodafone Company, the annual profit of which increased by 17.76%. Turks are known for the addiction to mobile phones, spending more than six hours a month (the first place in Europe) on speaking on mobile phones. In 2013, they spent about 186 billion minutes on speaking via mobile phones, which is 14% more than in 2012. At the same time, because of the emergence of mobile services such as exchange of the text and multimedia content, the popularity of SMS services decreased (Reuters, 2014).
The company has a high level of social responsibility. In fact, it supports its employees in all possible ways. Thus, the headquarters of the company is located in Istanbul, Istiklal Caddesi (Taksim). The building of the headquarters has a gym, a cafeteria and a sauna at the disposal of all employees. Moreover, the company gives special discounts in the nearby shops for its employees.
There are four key priorities for the company, which are proactive approach, result orientation, minimum hierarchy, full accountability and simplicity. The company supports two main directions of the development of employees, namely high employee loyalty and extensive employee training. Once a year in Istanbul, the Turkcell Company holds an informational day for its employees aimed at increasing the overall level of education. Moreover, it provides different training programs on individual development as well as conferences and computer and language training. Furthermore, the part of Turkcell’s philosophy includes customer support management as well as social responsibility. Charlie Berger-Oracle (2013) enumerates the awards of Turkcell
“Turkcell has received Institute of Public Relations (IPR) excellence awards in the category “Corporate Social Responsibility”. Turkcell also achieved the Crystal Obelisk Award for the same project from the Foundation of Women Executives (WERP) in New York” (Berger-Oracle, 2013).
The company provides mobile connections, Internet and communications services in Turkey. There are two variants of services, namely prepaid and contract. The main services the company offers are voice services. The covering of the Turkcell operator is recognized as the best in Turkey. Its network extends on the whole territory except for several rather small dead zones in remote mountainous areas in the eastern part of the country. Moreover, according to the data provided by Reuters, in 2010, the company “launched the third generation (3G) of roaming services in different locations globally. What is more, the company provides such services as Videocalls, Mobile TV, Video Surveillance, Video Chat and Video Messaging” (Reuters, 2014).
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Except the above-mentioned technological facilities of the company, there are also such features as the provision of links to the Turkish mobile websites. The Turkcell’s customers use the internet content adaptation functions called “Turkcell-im”. It helps to adapt the usual web pages to the customer’s desires, thereby giving an internet experience. Turkcell provides a wide range of services such as “T?kla konu?” (Click-to-Call), “Kim aram??” (Who called), Mobil TV, and a music platform GncPlay, among others. Moreover, Turkcell uses location technologies and offers the information about the nearest gas stations, police departments, drugstores, cafes and supermarkets (Reuters, 2014).
Identify the Key Factors of Success in this Industry
The market of mobile communications in Turkey is one of the most dynamically emerging markets and has quite good prospects in spite of the fact that it is close to saturation by the number of subscribers. The mobile operators of “the big three”, namely Turkcell, Vodafone and Avea, realized the senselessness of the policy of involvement of subscribers at any cost and stake with regard to communication quality and additional services. Vodafone decreased its share in the market at the end of 2013. The company takes the second place after Turkcell and is followed by Avea. Many players in the market connect the beginning of a struggle for new subscribers with the attempts of Vodafone to return its share in the market. Turkcell is the only company which continued to grow aggressively during the whole 2013 year. Its share in new mobile connections made nearly 60%. However, this growth is connected mainly with the inflow of the mobile Internet subscribers but not the “low budget” users of voice communication who are in search of the cheapest tariffs.
The reduction of the tariffs is not caused by the desire of authorities but by competition. The preservation of growth rate of subscriber base, traffic, profit on roaming, interconnection and other profitable directions of business do not bring the expected profitability. In fact, it is possible to increase the profitability of business only by the decrease in expenses. At present, each operator incurs expenses for the construction of the base stations (BS), obtaining permissions for the land and electricity supply. Thus, the capital expenditure for creation in the region of three-five and more parallel infrastructures was actually shifted onto subscribers, which means it was added to tariffs which end users pay. At present, operators are ready to build uniform infrastructure and reduce own expenses, which will become profitable in the future. Having united, the Turkish operators can lower the expenses connected with the expansion of 3G and LTE networks.
The leaders of the telecommunication industry in Turkey have understood which factors can make their business profitable. Therefore, Internet companies together with mobile operators begin to cooperate, develop similar directions and receive profit at the expense of them. Internet companies create the products replacing SMS and voice services, and operators start such services as Instant Messaging (instant messages exchange system), VoIP (voice transfer system by Internet) and e-mail. The search is the only service, with regard to which Turkish operators have not reveled themselves as independent players yet. Meanwhile, search and cartographical services are simply the area on which long-term partnership could develop. Owing to the mobile payment services, the mobile operator can provide continuity of a chain from the delivery of the advertising message to the subscriber up to the fact of purchase. The operators occupying a good strategic position in the market began to provide the service of a broadband Internet access on their own behalf and under own sub-brand. It was made in order to take the broadband access arising in regions under control and to add the list of services by those the tariffs for which are not regulated by the state.
The formation of fair competition in the market became the main stimulating and regulating factor in the development of the mobile communication market. In the struggle for operators, subscribers do not only seek to expand a cover zone and to offer a full range of services, including mobile content but also constantly improve the tariff policy, being guided by different categories of subscribers.
The strengths of Turkcell are as follows:
- Turkcell is the leader of mobile communications in Turkey. The subscriber database is composed of 7.6 million people;
- Big coverage area. Apparently, this strength can be characterized by two parameters, namely А. Quality - subscribers can use communication services, moving practically across the whole territory of Turkey; thus, mobility is realized. B. Geographical position - The coverage zone includes almost all settlements, which increases a number of potential consumers. In many Turkish settlements, Turkcell is the only one available mobile communication operator;
- High quality of services, including a small share of failures and errors of a network, as well as simplicity and congestion means;
- A continuous introduction of new services and technologies. In fact, this indicator is especially important for the “advanced” users needing data transmission and Internet access. There is also an increase in subscribers’ demand for information and entertaining services.
- Image of brand. Turkcell is a prestigious operator in Turkey. Commercials position the Turkcell’s subscribers as successful and active people building a new life (Murphy, 2009).
Key benefits of Turkcell:
- Reduces business process modeling time by 40%;
- Saves 30% in labor efforts;
- Provides compatibility with other software;
- Increases specifications for projects in a single modeling tool;
- Synchronizes with Microsoft Word for business process modeling (BMP). (Sybase, 2014).
Among the weaknesses of Turkcell, there are the following points:
- The uniformity of advertising for all segments of customers. The emotional coloring of image information in advertising vents a tariff essence, namely the information about tariffs and additional conditions;
- Big expenses on the network service. A bigger zone of network coverage requires a bigger quantity of base stations that involves additional expenses on installation and maintenance of these stations;
- High prices. The prices of voice services are higher than those of competitors;
- The low value of innovations for consumers. There are no justifications to introduce new services and unavailability of the most of subscribers to estimate new opportunities and, respectively, to incur additional expenses for them.
- There are not enough service centers. The lack of official representative offices involves the inconvenience of subscribers in case of a need of service, which cannot be provided by dealers.
With regard to the analysis of strengths and weaknesses, it is possible to make a conclusion that Turkcell achieved success in the market of mobile communications in Turkey since it was the first company which made services of cellular communication available to a wide range of the Turkish population. Consequently, it raised the leadership of the company in the segment. Watching the development of the market, the company optimized tariff plans and actively expanded a network area of coverage in the process of appearance of competitors.
What can Turkcell do to Differentiate Itself?
The active development of the market of communications leads to the emergence of new opportunities for the consumers of services. The subscribers benefit from the new services, expansion of opportunities of a choice of suppliers and cost reduction of services. At the same time, fast growth rates of the market create a number of problems for mobile operators, namely profitability of services decreases, the subscribers’ migrations increases, the cost of involvement of new clients grows, requirements for the infrastructure of a network and business in general increase, and the market of services approaches to saturation, among others.
It is necessary to note that the concept “mobile services” becomes more capacious. Thus, along with the opportunities of voice communication and data transmission, it began to include the provision of access to information resources. Turkcell providing the services of speech and video connections, data transmission and access to various information resources became the content-provider.
In the conditions of a critical and continuingly aggravated competition, Turkcell, first of all, should provide its steady functioning and further development. In fact, it is the pledge of the high level of competitiveness of the operator. In order to differentiate itself from the other two mobile operators, Turkcell should take such measures as the development and implementation of the information systems of business management and popularization of additional services on GPRS platform, among others.
There are two main possibilities for Turkcell to differentiate itself from the other mobile operators:
- The establishment of new mobile and informational services, targeted at the new market segments and social groups. Moreover, special offers can be given to the youth, students and senior people;
- As the Turkcell’s network capacity comprises 900 MHz, the company can increase its capacity, following the example of its competitor Avea. As a result, this increase can promote the further sale of the excessive capacity. At present, the company cannot fulfill this option as it provides the services at GSM 900, and the networks are overloaded (Accenture, 2007).
The analysis of the market of mobile communications services in Turkey showed a high level of competition in comparison with the average in the south-eastern Europe. It is caused by the presence of two more competitors in the market. In the conditions of such a cruel competition it is necessary for Turkcell to watch the changes in consumer preferences. The information management systems of business will become excellent assistants for it. The analysis of the company’s position in the market showed that Turkcell is the leader of the mobile and communication services in the market.