News: The General Directorate of the Post and Telegraph Organisation (PTT) has announced the launch of a mobile operator, PTTcell. The latter is to provide a cheap service. Transport Minister Binali Yldrm said that the project was not for profit, but rather was a public service project that was initiated through the Universal Service Fund. PTTcell will use Avea's network via a revenue-sharing agreement. The operator is targeting 1.5mn subscribers in the first year and 5mn by the end of the second year.
Our View: PTTcell is targeting the prepaid segment and has aggressive offers: TRY 20 for 200 off-net and 3,000 on-net minutes. Turkcell's similar offer is TRY 20 for 200 off-net and 200 on-net minutes. This is a marketing ploy on PTTcell's side, as people usually do not talk as much, while on-net traffic costs almost nothing to carry. However, it might work and attract consumers.
Importantly, PTTCell has a strong distribution network of about 5,000 branches. Its subscriber target corresponds to a market share of over 7%. For Avea, this is the way to target lower end customers and not decrease prices, in our view.
We think the news is negative for Turkcell, given the aggressive offers and strong distribution, although it would mostly affect the low-end segment. If Vodafone starts losing customers, then APPM across the market is likely to decrease, in our view.
Source: bne