Turkish telecom market: the name of the game is intense price competition

Three years ago, when the third and fourth (and final) GSM licenses were awarded to Aria, owned by Is Bank and Telecom Italia Mobile, and Aycell, owned by Turk Telekom, it was not so bad. Back then, Turkcell and Telsim used to charge of 25 US cents per minute on average for same-network mobile calls.

After two severe economic crises and adding many more low-value customers, Turkcell’s primary tariff today is less than 15 cents per minute, and that’s not counting the various discounts, promotions, and freebies. Aria, one of the new players and ever striving to project a strong image of high-quality service, has just slashed its rates to offer the same connection for under 8 cents. One of the latest Aria TV commercials features a street corner con artist with orange-coloured playing cards tricking an increasingly frustrated audience. Orange, of course, is the brand colour of Turkcell’s pre-paid line, the Hazir Kart. The message: "They are not as cheap as they claim. We are cheaper."

The biggest discounter of all is the state-owned Aycell. Just over 3 cents will give you one full minute of Aycell-to-Aycell mobile talk. Taking advantage of its strong links with Turk Telekom, Aycell also has the cheapest calls on the PSTN network, at less than 15 cents. That figure compares very favourably with Turkcell’s standard rate of 40 cents per minute for outgoing calls to PSTN. As for PSTN itself, the state monopoly, Turk Telekom, has also halved its call charges until the middle of February. Some analysts expect Turk Telekoms’s discounts take the shape of a more permanent tariff reduction one way or another.
As Turkey approaches the deadline for total liberalization of the telecommunications market by the end of 2003, by cutting prices the big operators are raising customers’ expectations for ever cheaper tariffs.