SUBSIDY PROJECT-YILMAZ NURI ALTUNTUG - _üç_

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THE REPUBLIC OF TURKEY
BAHÇEŞEH R UNIVERSITY
THE GRADUATE SCHOOL OF SOCIAL SCIENCES
stanbul, 2013-05
STANBUL, 2013
THE ANALYSIS OF DEVICE SUBSIDY ON TURKISH
TELECOMMUNICATION MARKET
CAPITAL MARKETS AND FINANCE PROGRAM
GRADUATION PROJECT
YILMAZ NURI ALTUNTUG

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stanbul, 2013-05
Advisor: Asst. Prof. EM N KÖKSAL
STANBUL, MAY 2013
CAPITAL MARKETS AND FINANCE PROGRAM
GRADUATION PROJECT
YILMAZ NURI ALTUNTUG

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This project has been found adequate and successful in terms of quantity and quality as
a Graduation Project
------------------------------------- -------------------------------
Advisor of the Project Member of the Commission
Asst. Prof. EM N KÖKSAL Asst. Prof. HAKKI ÖZTÜRK

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ACKNOWLEDGEMENT
I am grateful to my professor for his support and trust on this project. I would like to
express my sincere gratitude to my project supervisor Asst. Prof. Emin Köksal for his
inspiration in the selection process of project topic and his guiding and help throughout
the project.
Yilmaz Nuri ALTUNTUĞ

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ABSTRACT
THE ANALYSIS OF DEVICE SUBSIDY ON
TURKISH TELECOMMUNICATION MARKET
Yılmaz Nuri Altuntuğ,
Capital Markets and Finance
Project Supervisor: Asst. Prof. Emin Köksal
May 2013, 49 pages
Rapidly growing telecommunication sector witnesses significant improvements in terms
of the usage of smart devices and entrance of those devices into our lives in Turkey in
last years. Emerging Turkish device market closely followed by mobile operators and
device manufacturers is substantially competitive. Willingness of the manufacturers to
launch more smart devices and the encouragement of the operators for more data usage
and smart device usage are principal factors that trigger the competition in this emerging
market. The rising trends in Turkey, the methods applied as worldwide marketing ways
of devices in developed markets, and the developments on abroad that we might face in
Turkey will be evaluated in this project. The idea observed that existing device
campaigns do not have sufficient time yet to measure the profitability, those campaigns
might be enough for consumers and manufacturers by now but in the near future
campaigns increasing the usage of data will take the place of current campaigns. When
it is considered what happens in developed markets in terms of profitability, we can
predict that profit satisfaction is not possible for carriers in the long term. In the light of
information that is mentioned below, we can highlight the substantially rising
importance of data usage and due to this reason the importance of data revenue in terms
of operators so as to preserve their profit stability when we evaluate the different
improvements that happen in the number of markets all around the world. The roles of
education campaigns, content and application upgrades in order to enhance the usage of
data are highly supported. As a result, increasing costs of smart devices will reduce the
profitability of operators, and it is determined that just as in foreign markets, “bring your
own device” campaign will be a new method applied in Turkish device market as well.
Keywords: Subsidy, Smart Device, Data Usage

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ÖZET
TÜRK YE TELEKOMUN KASYON PAZARINDA C HAZ DESTEK ANAL Z
Yılmaz Nuri Altuntuğ
Sermaye Piyasaları ve Finans
Proje Danışmanı: Asst. Prof. Emin Köksal
Mayıs 2013, 49 sayfa
Türkiye’de son yıllarda hızla gelişen Telekomunikasyo nsektörü akıllı cihazların
hayatımıza girişi ve kullanımı açısından önemli gelişmelere sahne olmaktadır. Mobil
operatörlerin ve akıllı cihaz üreticilerinin yakından takip ettiği bu piyasa oldukça
rekabetçidir. Üreticilerin daha fazla sayıda akıllı cihazi piyasaya sürme isteği,
operatörlerin müşterileri daha fazla data kullanımına ve bunun sonucu olarak cihaz
kullanımına teşvik etmesi gelişmekte olan bu piyasadaki rekabetin başlıca faktörleridir.
Türkiye’de yükselen trendleri, cihazların pazarlamasında dünya genelinde uygulanan
yöntemi ve yurt dısındaki gelişmiş piyasalardaki gelişmelerden yola çıkarak Türkiye’de
yaşanabilecek ihtimalleri bu projede değerlendiriyor olacağız. Mevcut cihaz
kampanyalarının kârlılığı ölçmek için yeterli süreye henüz sahip olmadığını, şu an için
üretici ve tüketiciler için gerekli olsa bile ilerleyen dönemlerde yerini data kullanımını
artıracak eğitim kampanyalarına bırakacağını gözlemlemekteyiz. Gelişmiş piyasalarda
yasananları gözönüne aldığımızda uzun dönemde operatölerin bu yöntemle karlılık
açısından tatmin olmayacaklarını öngörebiliriz. Data kullanımının öneminin gün
geçtikçe arttığını ve buna bağlı olarak data gelirlerinin de operatörlerin kârlıllığını
koruyabilmeleri açısından ne kadar önemli olduğunu dünyadaki çeşitli piyasalardaki
gelişmelerden yola çıkarak belirtebiliriz. Bu süreçte data kullanımını artırmayla ilgili
eğitim kampanyalarının, icerik ve uygulama güncellemelerinin rollerinin oldukça fazla
olduğu desteklenmiştir. Sonuç olarak; Türkiye cihaz piyasasında da artan akıllı cihaz
maliyetlerinin operatörlerin kârlılığını oldukça azaltacağını ve tıpkı yabancı piyasalarda
olduğu gibi “Kendi cihazını getir” yönteminin uygulanan yeni bir kampanya metodu
olacağı belirtilmiştir.
Anahtar Kelimeler: Teşvik, Akıllı Cihaz , Data Kullanımı

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TABLE OF CONTENTS
FIGURES ....................................................................................................................vii
ABBREVIATIONS.....................................................................................................viii
1. INTRODUCTION .................................................................................................. 1
2. THE SMARTPHONE SUBSIDY............................................................................ 3
2.1 THE IMPACT OF SMARTPHONE SUBSIDIES ON MARKETS.................. 4
2.2 THE POINTS THAT OPERATORS CAN ATTRACT ATTENTION TO
THE SUBSIDY ISSUE.............................................................................................5
2.3 THE AFFECTS OF LOWERING AVERAGE SUBSIDY EXPENDITURE.... 6
2.3.1 The Importance Of Segmentation For Operators ................................... 6
2.3.2 Negotiations With Oems Come Into Question........................................ 7
2.3.3 What are the options to decrease subsidy costs: share it!........................ 8
2.3.4 What Is Good For Subscriber Acquisition Cost...................................... 9
2.3.5 Introduction Of The Sim-Only Model..................................................... 9
3. THE REASON OF DELAYING UPGRADES.......................................................11
3.1 DISCOUNT OPTIMIZATION ......................................................................11
3.2 MANAGING THE ECONOMICS OF DATA................................................12
3.3 THE EFFECT OF SUBSIDY COST ON MARGINS.....................................12
3.4 WORLDWIDE-KNOWN MOBILE OPERATORS CUTTING DOWN ON
SUBSIDIES AND CHANGING THE WAY OF SUBSIDY.............................13
3.4.1 Increasing Importance Of Data Gains ..................................................13
3.4.2 Is The New Finance Programme Going To Take The Place of Subsidy 15
4. WHAT IS THE RISING TREND IN TURKEY.....................................................17
4.1 REFLECTIONS OF DEVICE MANAGEMENT IN TURKEY WITH FIGURES
FOR SUBSIDY ANALYSIS ...........................................................................18
4.2 TURKCELL ...................................................................................................25
4.3 VODAFONE...................................................................................................28

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4.4 AVEA .............................................................................................................31
4.5 EXCLUSIVE CHANNELS .............................................................................33
4.6 GENERAL VIEW OF WHOLE DEVICE MARKET WITH THE FIGURES
OF JANUARY 2013 .......................................................................................42
5. CONCLUSION.................................................................................................45
REFERENCES ............................................................................................................48

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FIGURES
Figure 4.1 : Quantities of Devices Sold .........................................................................20
Figure 4.2 : Turnover of the Sales of Devices(Euro).....................................................21
Figure 4.3 : MOBSM Device Market ............................................................................22
Figure 4.4 : MOBSM Device Market – Turnover (Euro)..............................................23
Figure 4.5 : Distribution of Device Sales Channels (2012 -2013)................................ 24
Figure 4.6 : Quantities of The Sales of Turkcell Branded Devices ...............................25
Figure 4.7 : Turkcell Smartphone Device Sales............................................................26
Figure 4.8 : Turkcell – Quantities of Device Sales.......................................................27
Figure 4.9 : Quantities of The Sales of Vodafone Branded Devices ............................28
Figure 4.10 : Vodafone Smartphone Device Sales .........................................................29
Figure 4.11 : Vodafone – Quantities of Device Sales....................................................30
Figure 4.12 : Avea - Devices Sales on Sales Channels...................................................31
Figure 4.13 : Avea – Quantities of Device Sales ...........................................................32
Figure 4.14 : The Rates of Device Sales According to Exclusive Channels ..................33
Figure 4.15 : The Market Rates of Device Sales In Terms of Manufacturers
(MOBSM) ................................................................................................34
Figure 4.16 : The Rates of Turnovers In Terms of Manufacturers (MOBSM)...............35
Figure 4.17 : Smartphone – Manufacturers’ Device Market ..........................................36
Figure 4.18 : Smartphone – The Turnover Rates of Manufacturers ...............................37
Figure 4.19 : Prices of Devices (MOBSM).................................................................... 38
Figure 4.20 : Prices of Smartphone Devices...................................................................39
Figure 4.21 : Touch - Operated Device Sales (MOBSM)...............................................40
Figure 4.22 : 3G & 2G (MOBSM)................................................................................. 41
Figure 4.23 : SM Operating Systems..............................................................................42

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ABBREVIATIONS
ARPU : Average Revenue Per User
EBITDA : Earnings Before Interest, Taxes, Depreciation and Amortization
EDGE : Enhanced Data rates for GSM Evolution
GPRS : General Packet Radio Service
GSM : Global System for Mobile Communication
HSPA : High Speed Packet Access
MOB : Mobile Phone
OEM : Original Equipment Manufacturer
OPEX : Operational Expenses
OTT : Over the Top
SAC : Subscriber Acquisition Costs
SM : Smartphone
SRC : Subscriber Retention Costs

1. INTRODUCTION
Telecommunication is one of the most developing sectors. There are countless
improvements that people witness. The entrance of smart devices such smart phones,
mobile PCs, tablets and so on is much faster than expectations and now those devices
are clearly inseparable parts of people’s life.
Smart phones are one step ahead of other smart devices when the usage of the devices
considered. This is a specific sign that indicates smart phone penetration is more than
others. Excessive usage of smart phones is the point that triggers smartphone subsidy.
The meaning of device subsidy is financial support or assistance for devices. This is a
great expression to support the feeling of operators against that much demand for using
those devices. Carriers look ready to support their customers so as to increase smart
phone penetration because they know that they could be able to reimburse what they
sacrifice for as number of attention grabbing smart phones come out each day.
On the other hand, it is not the only option that works for carriers, data usage, contents
and applications are other factors that encourage smart phone penetration by attracting
customers’ attention and there is no need to say that operators use those components to
make more profit. However, there are some obstacles that operators need to solve
smoothly because those notions are also important for sustainability. Subscriber
acquisition cost and subscriber retention cost are the notions that explain gaining of
customer and retaining of them respectively. Increasing costs of smartphones make
acquisition and retention hard for carriers. This requires market segmentation carefully
as reaching the end-user started being crucial and good negotiation skills with the
manufacturers so as to strict margin less.
Operators need to increase data revenue by fostering customers use more data. Data
usage, contents and applications are the factors to build up increasing data revenue but,
it is not easy to support them for carriers as they have some requirements. For example,
increasing the usage of data is not simple as it needs education campaigns and backing

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up nascent customer awareness. On the other hand, applications and contents live with
upgrades and the upgrade is the thing that take customers attention to other sides easily.
This means that upgrade is a positive improvement but it is what makes retention hard at
the same time. Delaying upgrades or sharing the cost of subsidy with other means such
facebook, e-bay and game producer so on might be good for cutting down on subsidy
costs.
It is observed that increasing subsidy costs restrict margin and in the light of this news
actions that world-wide known companies do are evaluated with the reason of change.
During this change that is shown by operators what type of key factors enhance its
importance will be seeing. Without doubt, operators come to the pitch with new offers in
their pocket against decreasing smart phone subsidy and this new way indicate us device
and service will not be together anymore.
In the light of information above, the rising trends and the reflections of analysis
evaluated in accordance with the conditions of Turkey and it is commented that what are
the possibilities that might be faced in Turkey in the end. In this project, aimed at
providing detailed information about current subsidy conditions and the possibilities of
nascent developments that will be likely to take subsidy’s place are investigated
tactfully.
As a result of this, the direction of device subsidy is assessed by taking the reflections of
the improvements that happens different parts of the world related to subsidy issue and
in the light of recently updated figures of Turkish device management market into
account so as to analyze the device subsidy in Turkish device market.

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2. THE SMARTPHONE SUBSIDY
The issue of smart phone subsidy is getting more important for executive managers. The
increasing smart phone subsidy issue spreads much-anticipated yet unrealized data
revenues. Also, wide-spread use of such incentives that take place on the bottom lines of
telecom companies is getting really worrisome in the near future.
Some of high ranking European executives delivered their opinions in a negative way in
terms of subsidy issue in Europe. After the United Kingdom’s four main operators
released their latest financial results in August 2012, the CEO of O2 Ronan Dunne
declared that the existing subsidy model “needs a big change permanently” so as to
protect stability operators’ margins.1
Subsidies were enhancing the responsibilities of
operators as financially and it wasn’t a good signal for the industry according to
executives.
In Asia, there are two giant telephone company that attracts analysts attention in terms
of results. One of them is China Unicom, the company announced as percentages of 2
decrease in quarterly net profit as their changing handset spending by as percentages of
15 in the first half of 2012.2
The other one is China Mobile without doubt. This operator
was the only one that has no suffer because of subsidy losses. The attention grabbing
side related to this operator was the carrier does not offer Apple’s iPhone. This news
puts the reality of increasingly heavy costs of subsidies for operators as a sample.
1
Dunne, R., 2012, DunneSubsidies ‘NeedtoChange’ ,
http://www.mobiletoday.co.uk/News/22269/Dunne__Subsidies_%E2%80%98need_to_change%E2%80%
99.aspx [accessed 18 March 2013]
2
Chyen, L., Leung, A., 2012, Chine Unicom Q2 net slips as handset subsidies rise,
http://www.reuters.com/article/2012/08/23/chinaunicom-earnings-idUSL4E8JN22T20120823
[accessed 22 March 2013]

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The situation was not so different in the states when we consider the launch of iPhone 5.
We are able to observe negative impact of iPhone subsidies on carriers’ margin. AT&T
and Verizon are the best references to explain the truth.3
In Turkey, it might be early so as to evaluate the market as Turkish market is emerging
one. Turkey is likely to face this inevitable end if the market does not take a lesson from
the reflections of developed markets.
2.1. THE IMPACT OF SMARTPHONE SUBSIDIES ON MARKETS
In this part, we will handle the data so as to understand the meaning of smartphone
subsidies and their relative impact on market performance.
Subsidy expenditure among worldwide operators over the past two years has risen
significantly by being about 18% of revenue. During this period, this increase on
subsidy expenditures cause carriers forwent some of EBITDA margin. We still do not
know a direct line of cause and effect between subsidy increases and decreasing margins
because of the number of variables affecting profitability, there is no need to discuss the
importance of subsidies is, both as an enabler and as a cost item for operators.
I strongly believe that change in margin are directly related to the change in subsidy
costs, and many other variables will also play a role for this change. However, the
impact of subsidies on performance cannot be assessed by simply extrapolating short-
term implications; subsidies stimulate smartphone penetration, which means higher
mobile data adoption, thereby lifting ARPU, and a shift towards lower churn rates.
On the other hand, if exclusivity agreements are reached, being the sole provider of
certain devices may also improve an operator’s positioning because this time carriers
3
Gara, A., 2012, Why Telecom Investors Should Be Wary of Record Iphone 5 Sales,
http://www.cnbc.com/id/49061053 [accessed 22 March 2013]

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might have a right to say something about cost of the devices. For example; let’s say
Avea is the sole provider of Samsung S4 and can market the device 500$ instead of
440$. If the carrier was not a sole provider of the device the carrier was going to be in
need of lowering the price of the device. If Avea would be a sole provider of the device
they can keep the sale-price of the device around 500$ by making successful education
campaigns not suffering because of subsidy incentives and this way they will no need to
forgone their EBITDA margin.
2.2. THE POINTS THAT OPERATORS CAN ATTRACT ATTENTION TO
THE SUBSIDY ISSUE
Some of high ranking executives think that device subsidies should find an industry-
wide end immediately. We will see that subscriber figures do not agree this idea
especially over the short term. Everything should be carefully assessed that aimed at
modifying subsidy policies. Telefonica and Vodafone affected heavily by cutting down
on subsidies. The reflections of the results on customer numbers are really devastating:
Vodafone lost more than 600,000 subscribers. Telefónica shed 930,000 subscribers.
Orange mobile was the profitable one by not following subsidy cut method and
increased its base by 135,000 customers during this period.4
As a result of those facts, Vodafone reintroduced subsidies in the form of a summer
promotion. We understand that a radical move away from subsidies is neither realistic
nor advisable for operators around the world. While operators try to reduce the impact
of device subsidy on bottom lines they should take the measures in accordance with
negative possibilities.
4
Arantxa, A., 2010, Yoigo y Orange lasoperadorasque mas portabilidadesrealizan,
http://www.muymovil.com/2010/04/08/yoigo-y-orange-las-operadoras-que-mas-portabilidades-realizan

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2.3. THE AFFECTS OF LOWERING AVERAGE SUBSIDY EXPENDITURE
2.3.1. The Importance of Segmentation for Operators
Operators need to reach a big part of mobile Internet users in their base in order to
monetize data networks. Expensive devices are not the only barrier to usage. 30% of the
people who do not currently own a smartphone expressed no intention of purchasing one
because they “do not need it”.5
This information plays a vital role for operators so as to
separate their customers and understand them better. This way operators might
understand the ones and their consumption tendency who may be unable to afford a
smartphone from those who are not yet ready to embrace the service. The change of
marketing device subsidies should change a way by applying successful education
campaigns to not suffer from losses because of device subsidy.
This way telecommunication companies do not need to spend more money than they
need to spend. Rogers Communications’ Nadir Mohamed recently commented that they
were looking at ways to reduce the amount of money spent “getting smartphones into
the hands of customers who don’t use a lot of data.6
For this 30% of the people
companies should not offer sophisticated smartphones, as result of this they will be
affected less by increasing smartphone costs.
In developing markets, device affordability is a path that is hard to pass as customer
economics are limited. For this reason, operators should define their device portfolios
with additional care to ensure an effective mix of high- and low-end smartphones as
well as cheaper data-enabled feature handsets for those who are not ready or for whom
subsidies do not pay off.
5
Renesse, R., Scott, M., 2012 Smartphones and apps: consumer perception versus reality,
http://www.analysysmason.com/Research/Custom/Webinars/Smartphones-and-apps-webinar-
Apr2012/Slides/ [accessed 01 April 2013]
6
Ladurantaye, S., 2012, Telcos look to cut smartphone subsidies,
http://investdb2.theglobeandmail.com/servlet/story/GAM.20120426.RBPRICEYPRINTATL/GIStory/[
accessed 4 April 2013]

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Companies need to take other components into consideration such as EDGE/3G/HSPA
data usage, ARPU levels to maximize value-creation over the long term. Also, the
achievement of GPRS/EDGE networks is important to leverage mobile internet
penetration. As we understand above, operators check every details that enable them to
achieve profit maximization out those components are directly related to retention and
acquisition issues of subscribers. Every point that operators overlook will cause an
increase on costs and profit limitations.
2.3.2. Negotiations with Oems Come into Question
Operators need to build up their strength when it comes to negotiations with original
equipment manufacturers. Especially with their great leadership in the smartphone
segment by generating about billions USD in mobile device sales Apple and Samsung
are the ones that attract most of the attention in this case for operators.
It is time for telephone companies to stand together and seek more favorable conditions.
Price, minimum unit commitments, commercial support and so on should be assessed by
those companies tactfully. Smaller operators need to pursue strategic procurement
partnerships. For having more favorable device pricing is important for telephone
companies. In a result of this, carriers are agreeing on worldwide agreements, gathering
the purchase orders of several operator companies. This is why building up their
negotiation skills with vendors are crucial for them.
In Turkey, Avea and Vodafone are the operators that need to carry out the point of
establishing successful partnerships in terms of device sales figures as they share
relatively small portions of the market share. Especially Avea has more disadvantages
when compared to the Vodafone cause Vodafone runs its business in world-wide scope
and being a well-known company all around the world makes Vodafone more powerful
when it comes to negotiation with OEMs.

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2.3.3. What are the options to decrease subsidy costs: share it!
Operators could share subsidy costs by establishing new alliances and creating new
business models together with third parties. Facebook, Twitter, E-bay, Amazon,
newspapers and game producers might be willing to establish that kind of partnerships.
This way, they are not just going to advertise a product, they will reach number of
several consumers and have chance to attract different type of customers’ attention
related to their know-how area.
Game producers might be a good choice for them while the game company advertise of
their best-selling game ready to be played, they can work for operators at the same time
by giving a place for the carriers’ devices/products or doing initial advertising for the
company and its products. Facebook and Twitter shortcuts pre-installed on feature
phones (for free) by vendors or operators are an obvious example. However, even
everything looks ok from the frame of those social media giants the balance of power
could shift to the benefit of operators if they or smartphone manufacturers call on them
to share the cost of subsidies, bringing an end to their free ride.
Nowadays, operators that take place in Turkey do some campaigns by using social
media’s power on their national commercials pushing their customers to increase the
usage of smart devices by explaining how it easies their life with those devices. It is a
smart way of setting the stage for sharing subsidy costs.

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2.3.4. What is Good for Subscriber Acquisition Cost?
The issue of subscriber acquisition cost is climbing to the top of urgent action needed
issues. Handset-leasing model is an acceptable model to reduce SAC for operators.
Customers can rent their handsets in accordance with the duration of their contracts and
in the end they return the device or pay a real price.
This idea brings “BYOD” method to mind which we will give place in the next parts.
Subscribers pay only monthly subscription fee with bring your own device program.
There is no need to pay anything for a device in this way. It is a specific signal that the
perception of device campaigns is changing and started to be evaluated separately from
contracts. There are several examples that lighten us up; with its phone-recycling
programme through several European operator companies, O2 has committed to their
customers receiving cash or store credit in case they return their old handsets. The other
attention grabbing offer was from AT&T. The company offers a refurbished iPhone 4S
for 149.99 USD for subscribers with a two-year contract, this way AT&T was offering
for a subsidized a new device by saving almost 400 USD.
As the Turkish market is emerging one, in my opinion this is not a suitable time for this
programme. The market needs more time for customers to get used to smart devices
increasingly and for operators to analyze their customer habits in a healthier way. There
is a possibility to apply this leasing model in Turkey as a part of device subsidy if the
prices of smart devices continue to increase in next period.
2.3.5. Introduction of The Sim-Only Model
The sim-only model represents “no obligation” phone deal that comes with an agreed
monthly fee, but does not include a subsidized handset. In this programme, customers
bring their existing phones and receive a discount on their subscription fee. Free mobile
succeeded in winning more than 5% market share by offering the sim-only model to its

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customers. This model is seen on 27% of postpaid subscribers in France.7
In my
opinion, this method helps a lot to lower SAC cause the responsibility of the operators
will decrease financially. Turkish operators can embrace this model in the future when
the limit of using smart devices reaches the expected levels. Actually there some
campaigns that reminds us the sim-only model but, most of them are device supported
ones.
7
Schechner, S., 2012, Iliad Nabs 5.4% of France's Mobile Market,
http://online.wsj.com/article/SB10000872396390444914904577622822655324242.html [accessed 29
March 2013]

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3. THE REASON OF DELAYING UPGRADES
Renewals and upgrades make up a big part of subsidy costs for operators, when we look
at from distance we suppose that new customer activations play an important role for
this case but, the result shows different parameters at least in developed markets.
Operators tendency to keep their customers in the same position in accordance with the
duration of their contracts so understandable. This is why operators try to evaluate to
increase improvements on their bottom lines to delay upgrades.
Operators can specify another strategy that persuades customer who is keen on waiting
for a renewal by offering discounts from monthly subscription fee. This way they will
be extending the lifetime of their smart devices and also managers place less importance
on upgrading devices in this uncertainty.
3.1. DISCOUNT OPTIMIZATION
Generally, operators subsidize the devices to customers according to their contract term
and get monthly subscription fee for each month when operators net off their main
investments from the collected amounts the remaining part makes up their profit. This
model is regarded as a big risky model for operators as customers do not fulfill their
commitments in accordance with their contracts. Regulations and rules are not sufficient
for operators so as to look for their rights and when we think of the number of this issue
it makes the situation harder.
Operators offer discounts on monthly subscription fee as a way of reducing the cash risk
for themselves. The monthly discounts that operators offer provide convenience for
carriers to generate customer loyalty So as to offer interest-free credit lines for
smartphone purchases or provide payment installment plans operators cooperate with
consumer credit providers.

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3.2. MANAGING THE ECONOMICS OF DATA
Managing the economics of data and successfully monetize opportunities are crucial
factors for operators. Those factors should be attention grabbing offers to consumers and
workable as a sustainable business model. Transparent pricing models for consumers
structure enables operators to monetize the data opportunity.
Operators are always looking for functioning models that enable to wipe-out negative
affect of device subsidy on their bottom lines throughout the world. Most of the
operators have wait-and-see stance at the moment but, there are a few of them which
have already taken some measurements like Vodafone and Telefonica in Spain.
Operators that operate in Turkey should achieve a great deal of income from data
revenues and then use it in favor monetizing opportunities. Even in this point the
importance of education campaigns for more data usage can easily cross our minds as
those campaigns trigger the data usage.
3.3. THE EFFECT OF SUBSIDY COST ON MARGINS
In this part we are going to take a look at relationship between smartphone subsidies and
operator margins deeply. Operators are trying to increase smartphone penetration but it
triggers to restrict margins on the other hand. Besides, data revenue increases its
importance as the impact of voice revenue declines.
We observe that the effect of discounted handset pricing is a factor that terminates the
benefit of higher sales and upgrade volumes largely. We already know that renewals and
upgrades make up a big part of subsidy costs for operators as a result of this discounted
handset pricing will affect margin badly.
The increasing smartphone penetration provides customer retention on long-term and an
increase on mobile data revenue by enabling an increase on data usage due to the
increased handset subsidy costs which aimed at acquiring new customers and retaining
existing customers.

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3.4. WORLDWIDE-KNOWN MOBILE OPERATORS CUTTING DOWN ON
SUBSIDIES AND CHANGING THE WAY OF SUBSIDY
3.4.1. Increasing Importance Of Data Gains
Some of European countries started to cover the declining voice revenues with data
revenues. This means price stabilization but, work for acquiring new customers and
activities for retaining existing customers keeps on restricting operators’ profits. In the
light of those datas, operators will try to reduce the high level of subsidies. Some of
them are planning to terminate the practice of subsidizing smartphones for new
customers. Their new method is offering free financial tables to purchase a new device.
In the part of USA, we have been witnessed number of news about T-Mobile's plans for
the future. The most attention striking one was which announces that T-Mobile USA
will terminate subsidizing smartphones with 2-year contracts since the beginning of
early 2013. The company will instead free finance programmes for the purchase of new
handsets at full price or on installments. It indicates that devices and services will be no
longer take place together in all-you-can-eat packages of the carrier.
Without doubt, ownership for the long-term contract period will decrease. We will
observe this decrease even when buying a device with monthly installments. The notion
of “winning it while buying it” will nascent in terms of consumers for a longer period of
time as well and we will face the importance of data usage again for gaining more data
revenue as the devices and services will be completely separated.
The market of the USA is a way ahead of the market of Turkey and relatively the market
of Europe.. Already we call it in the developed markets when we evaluate consumers,
economic stability and the power of original equipment manufacturers and operators so
on. Even all powerful components are together in the states if the market suffer from
subsidies I believe the market of Turkey will meet this situation in the near future.
However, offering this type of plans and separating devices and services will be

14
inevitable end in this area as well. We have already started to hear the reflections of it in
Europe zone.8
Another one of the most beautiful examples for data gains is the story of Vodafone. In
the UK data revenue showed substantial increase after several years of declining data
costs for users due to all-include packages. Reaching the mobile data was much cheaper
than it was used to be and declining cost of data triggered an increase of data usage. As
a result of this, data costs were started to cover the revenue gap against declining voice
revenues. Data revenue at the operator showed substantial increase by 20.3% and this
result was extremely sufficient to cover the decline in voice revenues.
The operations of the company showed similar success stories in Germany, Spain and
Italy as well. Even though, the figures of the revenues indicate that increase on data
revenues not sufficient to compensate whole drop in voice revenue the result was
promising. Also, observing increase on total service revenue was another driving force
for the operator.
All of those promising improvements brought the good news with them that the share of
data revenues jumped by 2,8% and reached the level of 15% when compared to the
figures of 2010.Smartphone penetration and the ratio of its customer base shows a great
deal of increase. Vodafone had announced the “Data Test Drive” campaign by offering
more than 20 type of different smartphone against increasing data revenue. This was not
an offer to oblige customers to accept the recommendation it was a little bit waiting for
signing up of better tariffs by experiencing the usage of data.
In the same region in Europe, that kind of promotions and day-by-day increasing device
subsidies might also threaten the growth of data revenue as subscriber retention and
acquisition costs rise with an increasing usage of data. This information needs to take
8
Martonik, A., 2012, T-Mobile to stop subsidizing handsets in 2013, http://www.androidcentral.com/t-
mobile-stop-subsidizing-handsets-2013 [accessed 15 April 2013]

15
into account so as not to affect margins badly. This is one of the main reasons for
European operators look to cut smartphone subsidies to preserve data gains. 9
3.4.2. Is The New Finance Programme Going to Take The Place of Subsidy?
Mobile phones have showed a big change over the last years, but the business model of
mobile phones has not. Customers were buying multifunctional smart phones for two
year contracts and then standing head to head with unstable and surprisingly costly bill.
Because of this reason, customers was admiring manufacturers while they hate operators
as devices are great, the billing system is terrible.
Besides, marginal cost of serving an additional customer is much less than fixed costs.
So, operators need to challenge to sign up as many customers as possible. Actually, they
have been successful for doing this by offering discounted price of the latest gadgets.
Customers looked really cheerful when they got on their sophisticated devices but, this
is not going to last for a long time. They were going to realize the truth when high bill
comes and they understand they have been ripped off.
This plot was working well for some operators but some of them were already made the
decision to change the situation and being in the competition in more challenging way.
Their way is to sell devices and smartphones without subsidy. They know that will make
the device a lot more expensive but the plan that is made with a subsidized smartphone
is very similar to mortgage system. Customers were paying lower monthly costs but in
the end total costs were going up and customers had to pay all it off.
Smartphone owners are likely suffer from rapid depreciation as technological
improvements go further like crazy. Paying the full monthly bill, saving on a cheaper
phone, and changing it as you wish is more sensible than relying on one long-term
9
Dewar, C., 2012, European operators look to cut smartphone subsidies to preserve data gains,
https://wirelessintelligence.com/files/analysis/?file=2012-03-22-european-operators-look-to-cut-
smartphone-subsidies-to-preserve-data-gains.pdf , [accessed 28March 2013]

16
contract like locked out of heaven. It is extremely hard for making customers do this
sensible thing. Decreasing subsidized phones were risky for a company but they were
going to offer official Apple support in their network for Apple users as well.
The company that was announced as such a big game-changer is T-Mobile. The
company knew that customers were going to realize that this deal was much better and
they were right. T-Mobile offer a new financial method with this way which requires
customers to buy a phone full-priced or bring your own device which is a model that
European and all international users will be familiar with. In the end customers will get
around 20 USD or 30 USD cheaper service prices for each month. They also declined
that 80-percent of new acquisitions were on new finance programme recently. This
means that what the operator does is not a big change for T-Mobile.
As I mentioned above, we observe that new financial plans will take the place of
subsidies once the awareness of the customers, impact of education campaigns and the
usage of data such applications and contents increase. There are some factors that are
going to prepare substantial decrease on subsidy.

17
4. WHAT IS THE RISING TREND IN TURKEY?
Mobile phones which are one of the most accessible versions of the technology users
has become an integral part of everyday life. In Turkey, mobile phone market has more
than 10 million of a sales volume and it keeps the rate of growth by increasing. Growth-
promoting factors can be divided into two options:
One of these is the willingness of the manufacturers for supplying new featured phones
at least each two years, it is one emerging trend in renovation. Through emerging
technology with each passing day, manufacturers has begun to bring consumers a new
generation of mobile phones in more frequent intervals by improving the functions or
adding new functions to the current products.
Trend in the transition of using "Smart Devices" is rapidly developing in our country is
a major factor in supporting the growth of the market.
Through smart devices many functions has entered into mobile phones. Game, photo,
video, web, social media, traffic, health and such functions cater for different needs of
smart device users and facilitate users' daily idle times (for example, by bus to work / go
to school).
One of the main reasons for this rapid change of using smart devices can be defined as
the desire to reach "Internet" anywhere on mobile. The Internet and smart phones are
becoming an important source of information because users access to information via
those means in more practical way everyday life. Especially in big cities, the increasing
pace of everyday life makes smart device consumers’ desire increase for using those
devices to evaluate their time more effectively.
On the other hand, a large touch-screen devices, is the new increasing trend. Touch-
screen is no longer considered as a luxury, even on a mid-range phone this feature can
be found easily. Touch screens are preferred because of being user-friendly and having
better design.

18
In parallel with the increased use of smart phone, mobile data traffic has also increased.
Mobile data traffic in the world in 2011, compared to 2005 increased by 8 times. The
number of devices connected to internet, mobile (smart phones, mobile PCs, 3G modem
cards and tablets) has been passed the number of people on earth in 2012. In 4 different
smart devices for accessing internet on mobile, smart phones are expected to have the
highest share (48%) of equipment in 2016. Operators in the smart phone market have
begun to take place with their own-branded devices on the market with an attractive
began to grow.
Tablets are the devices that we will face in the coming period more than any other
device in our daily life. Tablets came into our lives in the last quarter of 2010, are
rapidly increasing. A tablet that uses 517 MB of data per month on average in 2011, will
use 4.2 GB of data per month by the year 2016.
4.1. REFLECTIONS OF DEVICE MANAGEMENT IN TURKEY WITH
FIGURES FOR SUBSIDY ANALYSIS
The mobile phone market volume is 1,078K in units, the volume of turnover is 343
million Euros.
When compared the results with the previous month’s, the mobile phone marketgrew6%
in terms of units, while turnover grew by as percentages of 13.
In comparing the results of the previous year, the market grew by as percentages of 77
in terms of turnover and as percentages of 23 in terms of units.
The distribution channels of devices based on units sold:
i) 68 percent of the operator dealers (50 percent of small-franchisees, 32 percent of
Turkcell, Avea 8 percent of, 9 percent of Vodafone).
ii) 22.4 percent of the technology markets,

19
iii) 8 percent of hyper / super / DIY (do-it-yourself) stores and multi-storey shops
Looking at the breakdown of the devices sold in brand ranking,
i) Samsung's (The leader of the market) share decreased 0.2 points (49 percent)
over the last month, Apple's share increased by 3 percentage points (10 percent),
while the share of Turkcell's shows 3.8 percent decline.
ii) In whole market the best-selling first 3 devices are Galaxy Ace, iPhone 5 and
Galaxy Y S5360.
iii) Sales for iPhone5 is remarkable in January 2013.
200-300 euro price range devices sold most in the market with a share of 22 percent,
while devices sold over 500 euro take second place with a share of 21 percent.
Devices sold;
i) 66 percent of Smartphones
ii) 34 percent of Mobile phones
Smartphone devices;
i) Sales volume of Smartphones increased to 66 percent and the turnover rate of
Smartphones is 88 percent.
ii) According to the previous month in the Smartphone market, Samsung and
Turkcell's shares dropped 2 points and Apple's share increased by 4 points while
Nokia's share remained constant.
iii) 68 percent of the devices sold in January 2013 are 3G-featured phones.

20
Figure 4.1: Quantities of Devices Sold
http://www.gfk.com/gfkturkiye/
According to figure 4.1; 1,079 devices were sold in the market. Compared with the same
month of the previous year sales increased by 23 percent and in comparison to the
previous month sales increased by 5 percent.

21
Figure 4.2: Turnover of the Sales of Devices (Euro)
According to figure 4.2; € 343 million turnover has been achieved from the sales of
devices. Compared with the same month of the previous year the turnover increased by
77 percent, while an increase of 14 percent was observed in comparison to the previous
month.

22
Figure 4.3: MOBSM Device Market
According to figure 4.3; 66 percent of devices sold are Smartphones.

23
Figure 4.4: MOBSM Device Market – Turnover (Euro)
According to figure 4.4; 88 percent of income is derived from smart devices.

24
Figure 4.5: Distribution of Device Sales Channels (2012 -2013)
i) According to figure 4.5; 49 percent of whole sales in unit terms and 51 percent
of turnover was made by mobile operators.
ii) The sales of distribution that comes from Operators and franchisees shows that
Avea has share of 8 percent.

25
4.2. TURKCELL
Figure 4.6: Quantities of The Sales of Turkcell Branded Devices
According to figure 4.6; Device sales increased by 58 percent compared with the
previous year in January 2013.
i) Turkcell-branded unit sales decreased by 8 percent compared to the previous
month and decreased by 5 percent compared to the same period last year.
ii) Turkcell-branded device sales made up 15 percent share of total Turkcell sales
channel in January 2013.

26
Figure 4.7: Turkcell Smartphone Device Sales
According to figure 4.7; 84 percent of devices sold in Turkcell channel are smartphone
devices in January 2013.
Feb’12 Mar’12 Apr’12 May’12 Jun’12 Jul’12 Aug’12 Sep’12 Oct’12 Nov’12 Dec’12 Jan’13

27
Figure 4.8: Turkcell – Quantities of Device Sales
According to figure 4.8; Apple's share increased up to 20 percent when we consider the
whole-sale of Turkcell sale channel.
NOKIA : %17
Dec12 vs Jan13: -1p
Jan12 vs Jan13: -18p
Samsung : %42
Dec12 vs Jan13: -3p
Jan12 vs Jan13: +18p
Apple : %20
Dec12 vs Jan13: +8p
Jan12 vs Jan13: +4p
Turkcell : %15
Dec12 vs Jan13: -1p
Jan12 vs Jan13: -1p

28
4.3. VODAFONE
Figure 4.9 : Quantities of The Sales of Vodafone Branded Devices
i) According to figure 4.9; the total sales of the device shows a 10 percent increase
compared to the last year in January 2013.
ii) 8 percent of the devices sold in January 2013 are Vodafone branded devices on
Vodafone sales channel.

29
Figure 4.10: Vodafone Smartphone Device Sales
According to figure 4.10; 73 percent of devices sold in Vodafone channel are
smartphone devices in 2012.
Feb’12 Mar’12 Apr’12 May’12 Jun’12 Jul’12 Aug’12 Sep’12 Oct’12 Nov’12 Dec’12 Jan’13

30
Figure 4.11: Vodafone – Quantities of Device Sales
i) According to figure 4.11; the rate of Apple branded device sales show
continuing increase on Vodafone sales channel.
ii) Vodafone-branded device sales have decreased over 8 percentage points of share
compared to the same period last year.
NOKIA : %20
Dec12 vs Jan13: 0 p
Jan12 vs Jan13: -18p
Samsung : %51
Dec12 vs Jan13: -5p
Jan12 vs Jan13: +22p
Apple : %16
Dec12 vs Jan13: +7p
Jan12 vs Jan13: +6p
Turkcell : %8
Dec12 vs Jan13: 0p
Jan12 vs Jan13: -8p

31
4.4. AVEA
Figure 4.12: Avea - Devices Sales on Sales Channels
According to figure 4.12; Smartphone sales show substantial increase by 300 percent
while there is a big decrease observed by 69 percent on mobile phone sales
Smartphone sale-rate has increased to 71 percent from 16 percent of share in one last
year in the total share of the device sales.

32
Figure 4.13 : Avea – Quantities of Device Sales
According to figure 4.13; 9 percent of the devices sold in January 2013 are Avea in
Touch on Avea sales channel.
NOKIA : %22
Dec12 vs Jan13: -1 p
Jan12 vs Jan13: -44 p
Samsung : %53
Jan12 vs Jan13: +26 p
Apple : %9
Dec12 vs Jan13: +3 p
Avea in Touch : %9

33
4.5. EXCLUSIVE CHANNELS
Figure 4.14 : The Rates of Device Sales According to Exclusive Channels
According to figure 4.14; Avea total sales and smartphone sales increased by 1
percentage point compared to the previous month, Vodafone has dropped 1 percentage
point. Turkcell's share of total sales has dropped 1 percentage point while the share
smartphone of sales has remained constant.
Distribution Channels of Total Sales Distribution Channels of Smartphone

34
Figure 4.15: The Market Rates of Device Sales In Terms of Manufacturers
(MOBSM)
According to figure 4.15; Apple's share increased by 3 percentage points while
Samsung's share has remained constant in January.
Samsung : %49
Dec12 vs Jan13: -0,2 p
Nokia : %25
Apple : %10

35
Figure 4.16 : The Rates of Turnovers in Terms of Manufacturers (MOBSM)
According to figure 4.16; Apple's share of turnover is 27 percent in January 2013
NOKIA : %14
Samsung : %46
Apple : %27
Turkcell : %3
Dec12 vs Jan13: 0 p
Jan12 vs Jan13: 0 p

36
Figure 4.17: Smartphone – Manufacturers’ Device Market
According to figure 4.17; Apple gains some shares due to loss of share of Samsung
while the share of Nokia remained stable.
NOKIA : %12
Dec12 vs Jan13: 0 p
Samsung : %53
Apple : %15
Turkcell : %6

37
Figure 4.18: Smartphone – The Turnover Rates of Manufacturers
According to figure 4.18; Apple’s smartphone turnover rate has achieved to 31 percent
of total.
NOKIA : %9
Samsung : %46
Apple : %31
Turkcell : %3

38
Figure 4.19: Prices of Devices (MOBSM)
According to figure 4.19; 200-300 Euro price range devices sold most in the market
with a share of 22 percent.
Devices sold over 500 euro keep on growing its share in the market.

39
Figure 4.20 : Prices of Smartphone Devices
According to figure 4.20; the price range of the devices that are cost more than 700
euros were sold more than other devices with the rate of 21,4 percent when we consider
the smartphone sales.

40
Figure 4.21: Touch - Operated Device Sales (MOBSM)
According to figure 4.21; Samsung branded devices make up 56 percent of touch-
operated device sales.
Apple has a noteworthy increase of 4 percentage points compared to the previous
month.

41
Figure 4.22: 3G & 2G (MOBSM)
According to figure 4.22; 68 percent of the devices that were sold in this month were 3G
featured devices.
3G
Aug’12 – 1 p
2G
Aug’12 – 3 p

42
Figure 4.23: SM Operating Systems
According to figure 4.23; IOS operating system has an increase of 4 percentage points
compared to the previous month.
4.6. GENERAL VIEW OF WHOLE DEVICE MARKET WITH THE
FIGURES OF JANUARY 2013
1078 K devices sold in whole market. The device sales showed 6% increase in
compared to the previous month.
i) Looking at all brands in the market-based sales Samsung lost 0.2 points
compared with the last month and has 49% share in the market, continues to
lead. Apple's market share rose 3 percentage points, and its share in the market
increased to 10 percent. Turkcell's market share remained stable, and covers 4%
of whole market. (T21 34K sold last month, down 14 percent).
ii) Smartphone sales rates have been 66 percent of all sales by increasing 3
percentage points. Samsung's share fell to 53 percent, down 2 percentage points.
Apple keeps on its continuing growth in this month as well, and has the share
ANDROID : %70
IOS: %15

43
of 15 percent. The launch of the Apple iPhone 5 has been very effective in
increasing the share of Apple in the market.
iii) 32 percent of total sales and 40 percent of the Smartphone sales were made by
Operators.
iv) In the brand ranking “Operator-Smartphone” Samsung-branded devices were
sold the most by all of the operators.
v) In whole market the best-selling first 3 devices are Galaxy Ace, iPhone 5 and
Galaxy Y S5360. T21 has a rank of 5.
Avea
i) The device sales have been 55K by showing 4 percent increase in unit sales.
ii) Smartphone sales have been 39K by showing 11 percent increase. Smartphone
sale-rate has increased to 71 percent from 16 percent of share in one last year in
the total share of the device sales.
iii) The launch of Avea in Touch shows its effect in January as well. AveainTouch
sales rates have been 9 percent of all sales by increasing 1 percentage points.
Turkcell
i) The device sales have been 235K by showing 1 percent increase compared to the
last month.
ii) Smartphone sales have been 197K by showing 3 percent increase.
iii) Apple's share increased by 8 percentage points and it makes up 20 percent of
Turkcell sales-channel.
Vodafone
i) The device sales have been 66K by showing 7 percent decrease in unit sales.
ii) Smartphone sales have been 48K by showing 2 percent increase.
iii) Apple's share increased by 7 percentage points and it makes up 16 percent of
Vodafone sales-channel

44
In the light of figures and evaluations that I researched above by stating rising trends
and giving the updated figures that are belong to device management in device market
we can observe that there is an emerging device market day by day. Carriers will be
more keen on entering into rivalry with each other in the near future as the technologic
developments increase their acceleration gradually on behalf of smart devices. We will
be observing the growth of Turkish device market and those improvements will enable
people using more smart devices. Without doubt people and carriers will be asking for
taking more places in this world. I regard consumers more lucky ones than carriers even
though they both look like happy from this development. European countries, the States,
Canada and such countries are way ahead of Turkey in this market and figures will
develop by showing substantial increases considering the usage of data and expenditures
for this business. There is a long way to go in smart device market. Those improvements
might satisfy operators and customers in short term but I believe that marketing styles of
smart devices will take a different path and will not satisfy carriers for long terms. We
will see the reflections of this idea in the next chapters of my project. On the other hand,
it has not been enough time to evaluate profitability for carriers yet as terms of contracts
more or less two years and this is an emerging market in Turkey.

45
5. CONCLUSION
In this study, the rising trends in Turkey, the methods that are admitted by authorities as
worldwide marketing ways of devices in developed markets, and the developments on
foreign resources that we might face in Turkey against rapidly growing Turkish device
market are presented. The information that is aiming to provide current conditions of
Turkish device market in terms of device subsidy issue by showing the pros and cons of
foreign markets up is intended to be informed customers. In the light of facts, the
reflections of this information are evaluated by comparing foreign resources and current
conditions of Turkish device market. It has not been sufficient time to assess existing
device campaigns, but a strong possibility which is stated that in the near future
campaigns increasing the usage of data will take the place of current campaigns. The
method of “bring your own device” is considered strongly as a way that will be applied
in the future.
Operators that are having the advantage of being the market leader take advantage of
moving away from subsidies and doing activities to increase the value of other
components such branding, service quality, and so on. Operators which keep on
sustainability on their margins have more place to pay less attention subsidy cuts.
Operators which have the shortage of cash and face with the bad sides of economic
stagnation are more likely to oblige to take extremely cost-cutting measures.
Operators are always willing to protect and increase their market share. Carriers know
that to cut down on subsidy levels is risky in competitive markets. Especially in
emerging markets this could be riskier and more tragic cause in that type of markets
there are some disadvantages on acquiring new customers as much as there are some
positive side of it. Customers might not be willing to change their operators in the short
term and it might require new and permanent updates which increase subsidy costs even
if they want it. At the same time, the leader of the market has the chance of controlling

46
subsidy costs by showing its tendency. Although can create business models that could
be an example for competitors to follow suit.
Data adoption is still new and the carriers are in need of completing the capacity that
customers do not use and to fill this gap operators might be obliged to foster device
subsidy. So as not to jeopardize the returns of long-term contract pricing services which
are not sufficient carriers need to foster penetration. Increasing smartphone penetration
provides convenience for carriers to enhance activities that foster data usage instead of
struggling for the adoption of 3G devices. Education campaigns, the number of
increasing content and applications also upgrades on them are the means that support
data usage.
All of those expressions above highlight the importance of subsidy strategies and we
observe that education campaigns, contents and applications and so on play vital role for
the carriers if they do not want to restricts EBITDA margins.
When we take the developments and analysis into consideration in terms of device
subsidy, Turkcell has more advantage than its competitors as being a market leader. The
carrier has a chance to postpone subsidy cuts and can focus on smartphone penetration
to increase data usage through education campaigns and such activities. Applying this
method will be healthier for operators in long term subsidy activities otherwise they are
going to have a hard time against increasing cost of smartphone devices. If they can’t
take the required action on time they might face the situation of subsidizing handsets as
the carriers do in the States and Europe. Device subsidy and campaigns are essential to
increase smartphone penetration and essential for carriers in Turkey to achieve more
subscribers and retention of existing ones. I believe that the concept of “retention of
existing subscribers” will be more important in the near future when we think of
increasing cost of smartphones. Unless education campaigns for more data usage give
expected result the way of marketing smartphones will change. It is not the time yet to
evaluate profitability related to this issue in Turkish device market due to long term

47
contracts but the reflections of developed markets’ figures show that this way will not
satisfy operators in terms of profitability.
As a result of this, “bring your own device” program will be a new model that is going
to be applied by operators. Subscribers are going to pay only monthly subscription fee in
accordance with bring your own device program. There is no need to pay anything for a
device in this way. It is a specific signal that the perception of device campaigns is
changing and started to be evaluated separately from contracts. According to statements
above, when the costs push carriers sacrificing EBITDA, BYOD will be the model that
is going to be applied by operators.

48
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change%E2%80%99.aspx [accessed 18 March 2013]
Chyen, L., Leung, A., 2012, Chine Unicom Q2 net slips as handset subsidies rise,
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Martonik, A., 2012, T-Mobile to stop subsidizing handsets in 2013,
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April 2013]
Dewar, C., 2012, European operators look to cut smartphone subsidies to preserve data
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March 2013]
Arlorio, A., The Smartphone Subsidy Conundrum, 2012,
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