Turkcell Plans Overseas Expansion to Beat Slowing Sales in Turkey
June 30 2016 - 10:04AM
Dow Jones News
By Yeliz Candemir
ISTANBUL--Turkey's biggest mobile phone operator, Turkcell,
plans an ambitious global buying spree to offset slowing growth in
its home Turkish market.
The Istanbul-based company, formally known as Turkcell Iletisim
Hizmetleri AS, aims to boost revenues by expanding along an arc
encompassing North Africa, Eastern Europe, the Middle East and
Central Asia, Chief Executive Kaan Terzioglu said in an
interview.
Turkcell now gets 91% of its revenue from its domestic market.
But while Mr. Terzioglu projects 10% annual growth in Turkey in the
next three years, he said acquisitions abroad would shrink domestic
contribution to total revenue to 60%. The company projects growing
international sales--now 7% of the total--to make up the lion's
share of the remaining 40%.
"Our first priority markets are the Balkans and the Middle East,
particularly ...Iraq, Iran and, in the future, Syria, though I
don't know when," Mr. Terzioglu said in an interview. "Africa is
also an important market."
"Turkey is a very big market," he said, but no longer enough.
"We must position ourselves as a regional player in mobile, and a
global player in digital services."
Turkcell and other mobile operators face slowing growth in
Turkey after two robust decades. There are now has 74 million
subscribers in a country of 79 million people. Turkcell's revenue
grew 22% in the decade following its 2000 public listing in
Istanbul and New York, then slowed to 7.4% in the past five
years.
While Turkcell still outpaces its international peers, whose
revenue growth has averaged 4.5% over five years, "the company's
earnings may be peaking and the market expects a decline in its
growth expectations," according to Canada-based company data and
analysis provider Capital Cube.
Mr. Terzioglu, who spent 13 years as an executive at Cisco
Systems, Inc., has overseen average growth of 7% in annual sales
since taking over at Turkcell in April 2015.
Turkcell's new investments would build on its operations in
Ukraine, Belarus, Germany, Azerbaijan, Kazakhstan, Moldova and
Georgia.
In Iran, Turkcell's mobile messaging app BiP has reached 33,958
downloads, the CEO said. With the lifting of international
sanctions on that country, he wants to reach 300,000 downloads as
soon as possible.
"We may popularize BiP by signing a virtual operator agreement
with one of the operators in Iran," he said.
The biggest part of the planned expansion is an overture to
Sweden's Telia Company AB, which owns 38% of Turkcell. The Turkish
operator offered in September to acquire controlling stakes in two
of Telia's Eurasian operations. At the time, Telia chief Johan
Dennelind valued the company's total Eurasian assets at 20 billion
kronor ($2.45 billion).
One Telia asset Turkcell wants is the Netherlands-based Fintur
Holdings B.V. Acquiring it would turn the Turkish mobile operator
from a minority shareholder to outright owner, giving it full
control over Fintur's operations in Azerbaijan, Moldova and
Georgia.
Write to Yeliz Candemir at yeliz.candemir@wsj.com
(END) Dow Jones Newswires
June 30, 2016 09:49 ET (13:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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