SyriaTel is owned by Syrian businessman Rami Makhlouf, and has been offering GSM services in Syria since 2001. SyriaTel has 3.47 million customers and a 55% market share in Syria. The country has a slightly lower mobile penetration compared to other operators in the region, currently standing at 33%, according to MTN, which is SyriaTel's only mobile competitor and has the highest growth potential after seeing a rise in subscribers from 1.5 million to 2.2 million at the end of 2006. ARPU levels in the country are between US$17 and US$20, but have remained relatively stable over the last few years.

Turkcell has been interested in snapping up Middle Eastern licences and stakes in operators for some time. However, the operator has expressed pessimistic views on obtaining licences in countries where larger mobile operators are more dominant. Within the Middle East, Turkcell was unsuccessful in bidding for the third Kuwaiti licence, which was recently won by STC, and also lost out on an Iraqi mobile licence this year, which saw Korek, the small Iraqi operator, win and then partner with existing player Orascom (see Kuwait: 26 November 2007: and Iraq: 17 August 2007: ). Although the operator lost in Iraq, the territory is still classed as a high-risk investment region.

Outlook and Implications

There are very few Middle Eastern mobile licences available now, as heavy liberalisation over the past few years has greatly limited the investment opportunities in the region. Last month, Kuwait offered a third mobile licence to STC, leaving Qatar, which has the final mobile monopoly in the region and is expected to award a second licence by the first quarter of next year. Even then, this could be the last available licence for 2008. Turkcell has not got the investment powers of dominant mobile operators in the Middle East, such as Etisalat and MTC, and a stake in a smaller operator would give the company a much better chance of investing in the region.

Turkcell's investment in SyriaTel will greatly benefit both operators. Turkcell has the highest market share in Turkey, but is facing competition from Vodafone and Avea, and will suffer further when mobile number portability is implemented by the regulator. The duopolistic mobile market in Syria provides Turkcell with the ideal opportunity to enter the market. Both MTN Syria and SyriaTel are in trials for 3G, and a full service launch could be as early as the first half of 2008.

While the country has all the characteristics of high-growth potential, the government has indicated in the past that it may introduce a third mobile operator. This was originally indicated early in 2007, and there have been no further developments as yet, but SyriaTel must build on its market-leading position before a third operator enters the market (see Syria: 8 September 2005: ).