Kaan Terzioglu, Turkcell’s CEO, was in a pensive mood on his fifth day on the job. He had just received his first WhatsApp call, which highlighted the challenge his company – Turkey’s largest mobile telecommunications provider – was facing from over-the-top (OTT) service providers.
Of Turkcell’s 35 million mobile subscribers, 10 million were WhatsApp users. The 4.5G spectrum auctions, where the company would be competing against Vodafone and Turk Telekom, were approaching in August 2015. Turkcell needed to decide whether to bid aggressively to maintain its market leading position or to bid less aggressively to acknowledge a more competitive and less profitable future.
Turkcell had remained solidly profitable and its revenues in Turkey had increased by 10% from the first quarter of 2014 to early 2015. Voice revenues in Turkey had dropped by 4%, though an increase in data revenues of 46% had more than counterbalanced this.
Intense competition with Vodafone and Turk Telekom made it difficult to increase prices. Turkcell faced significant internal challenges. Mobile and fixed-line communications were run by separate subsidiaries, which made it difficult for Turkcell to present one face to the consumer and react effectively to the converging telecom market. The organization was top-heavy with too many managers at all levels. Despite all this, the feeling within the company was that there was no compelling need for change because it was number one among mobile telecom operators and profitable. Turkcell’s international operations had been hit by currency devaluations in Ukraine and Belarus. They were a mixed bag including both subsidiaries and minority stakes.
As the new CEO, Kaan Terzioglu knew that he had a window of opportunity to make significant changes. He wondered where he should start.
Learning objectives for case (A):
- How corporate executives can determine what the digital future of their business is
- How companies can embark on a digital business transformation to achieve the digital future of their business