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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