Turkey: FTTH Deployments Drive Broadband Growth as Operator Competition Heats Up

Summary As the Turkish economy rebounds from the global recession, we believe that growth will be propelled by strong demand for mobile data services. Also, with alternative operators emerging in the fixed segment, we expect the market for VoIP and fixed broadband services to accelerate. Compared to our previous report, these growth areas balance our growing pessimism on the revenue potential of circuit-switched voice and the downward revision of pay-TV segment revenue. Key Findings As the Turkish economy rebounds from the global recession, we believe that growth will be propelled by strong demand for mobile data services. Also, with alternative operators emerging in the fixed segment, we expect the market for VoIP and fixed broadband services to accelerate. Compared to our previous report, these growth areas balance our growing pessimism on the revenue potential of circuit-switched voice and the downward revision of pay-TV segment revenue. In the voice segment, we expect circuit-switched revenue to decrease at a CAGR of -10% through the forecast period, as traditional voice services will begin to be partially compensated by VoIP. We project that VoIP revenue will grow from an estimated $68m in 2012 to $362m in 2017. For mobile data, a CAGR of 11% is expected during the next five years. This growth will be bolstered by the increased consumption of 3G and mobile broadband services. Fixed broadband growth, which stalled in 2012 with stagnating DSL subscriptions, will return to growth once again with new FTTH networks and competitive deals. Between 2012 and 2017, the annual size of the broadband Internet market is expected to increase by an estimated $500m to reach $2.5bn. The pay-TV segment will grow at a CAGR of 10% despite a slight drop in 2012 due to match-fixing allegations that led to canceled Digiturk subscriptions by some football fans. Synopsis NA