Business Transformation

Turkcell Boss Sets Out Winning Digital Playbook

Turkcell boss Kaan Terzioglu has a suggestion for fellow operators: The data deluge swamping their networks is a commercial opportunity, not a terrifying cost.

He cites the experience of Turkey's largest telco. Over the last two years it has increased revenues by 52%, boosted its EBITDA margin by 11 points and cut churn to the lowest level in a decade.

Terzioglu believes his focus on digital services and stronger customer engagement can be replicated by other operators.

Since taking over Turkcell Iletisim Hizmetleri A.S. (NYSE: TKC) in 2015, he has pushed the creation of a range of digital services, such as streaming music, TV and cloud-based apps, as well as digital platforms and enablers.

Speaking at the Huawei Operations Transformation Forum on Monday, he said the core idea had been to increase the level of customer interaction.

Typically, operators have about 32 minutes of daily customer interaction, he says. Turkcell's aim was to "capture every other minute" by helping customers watch TV, play games or utilize different devices.

Today, the average customer also listens to 24 minutes of music, watches 57 minutes of TV and spends 31 minutes reading newspapers over Turkcell's digital platforms.

"Two-thirds of customers have a multi-play relationship with us and 77% of our revenues are created by those customers," Terzioglu said.

At the outset, he wanted to "move from being an infrastructure player to being a real digital operator focusing on the real things that the customers care [about]."

"We thought: How to stop being a company -- actually an industry -- complaining about demand growth and really turning that demand growth data consumption into something useful."

He said that while trillions of dollars of value was being created in the digital economy, telcos often "looked like people at the bus station, always waiting for the bus. The bus was coming by and passing, and the value basically disappearing before their eyes."

The first step was to refocus the company's 1,000 R&D people from playing with hardware to "focusing on digital services that our customers actually love to consume."

"We now have one trivia game at 8:30 p.m. every day that captures 600,000 people away from prime-time large screen to our small screen."

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Terzioglu says operators should not wait for 5G but should starting building out a digital ecosystem now.

This includes credentials management, which Turkcell offers to enterprise customers, and mobile payments, which already serve 20% of his 40 million customers and, he believes, have the biggest growth potential of all.

"Don't be afraid of that data consumption growth -- that's where the money is," he said.

 Turkcell has set up a new business called Life Cell Ventures to sell its digital expertise to others. It is in conversation with 30 different operators about developing a digital services business, Terzioglu said.

Robert Clark, contributing editor, special to Light Reading

James_B_Crawshaw 9/5/2018 | 12:45:41 PM
Turkcell financials 52% revenue growth and an 11 point increase in EBITDA margins is a tad misleading. 

Turkcell's revenue in lira increased 12% in 2016 and 23% in 2017 which makes for a compound growth over the 2 year period of 38%, not 52%. 

However, this simply reflects the high rate of inflation in the country. Revenue growth in Venezuela, Argentina and Zimbabwe is also high in local currency terms.

In order to see the real picture you need to convert to a stable currency like the USD. Based on the average USD/lira rate for 2016 and 2017 we get USD revenue growth for Turkcell of 3% in 2016 and 2% in 2017. 

As for EBITDA margins, these increased from 32.0% in 2015 to 35.2% in 2017 which is an increase of 3.2 percentage points, not 11. 

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