Istanbul: Turkcell Iletisim Hizmetleri, Turkey's biggest mobile phone company, said the telecommunications regulator is to blame for lower profit growth and the underperformance of its shares after cutting some charges Turkcell is able to make on mobile phone calls.

Turkcell's shares have dropped this year in Istanbul as landline monopoly Turk Telekomunikasyon and the main ISE National 100 index climbed, partly due to the regulator's interference in pricing, chief executive Sureyya Ciliv said in an interview.

The regulator "is meddling with mobile competition while fixed-line competition doesn't exist at all", Ciliv said aboard a plane to Paris from Diyar-bakir to show how much faster his company's so-called third generation mobile services are than those provided by Orange, SFR and Bouygues Telecom in the French capital.

Growing competition

Turkcell, part-owned by Teliasonera AB, is seeking ways to increase revenue as it faces more competition in Turkey from Vodafone Group and Avea Iletisim Hizmetleri, majority owned by Turk Telekom. Mobile-SIM card penetration fell to 86 per cent of the population at the end of March from 88 per cent at the end of 2009, according to the market regulator.

Turkcell shares have lost 17 per cent since the start of the year. Turk Telekom rose 21 per cent and the main ISE National 100 index climbed 14 per cent.

Foreign funds who hold about 95 per cent of traded Turkcell shares were "surprised" when the regulator cut mobile phone call termination rates in April, Ciliv said, labelling the decision as "unpredictable".

Turkish phone companies were ordered to cut the fees they charge each other for completing calls on their networks by an average of 52 per cent and tariff ceilings by 38 per cent. The regulator in Ankara should focus more on fixed-line phone competition than the mobile segment, he said.

Ciliv said mobile phone penetration will fall to 84 per cent by the end of this year and stabilise at that level before it starts picking up.

Sixteen million users changed their mobile provider under a mobile phone number protability plan since it took effect in late 2008. "No one has carried its fixed line number because there is no other alternative fixed-line operator."

"We also invested heavily on 3G infrastructure and this is also giving an adverse effect on our profitability," Ciliv said. The company planned $1.5 billion [Dh5.5 billion] of investment this year, including $650 million for mobile operations in Turkey, $340 million for its fibre optic line operator and internet service provider Superonline and $400 million for Ukrainian and Central Asian units.

Growth forecast revised

Another factor that impacted the share price performance is the "concerns in investors over price competition" in the market after the reduction by the watchdog of the price each operator charges others, Ciliv said. Turkcell had to revise its lira-based growth forecast for 2010 from 10 percent following the decision to "between one and five per cent", he said.

"Other operators focused more on getting market share than profitability," he said.