By Evren Ballim
ISTANBUL | Wed Sep 12, 2012 6:25pm BST
ISTANBUL (Reuters) - Virgin Mobile is in talks with Turkey's biggest mobile phone operator Turkcell about establishing a mobile virtual network operator (MVNO) partnership in the young and fast-growing market, sources told Reuters on Wednesday.
Virgin Group confirmed it was having "preliminary discussions" with various parties in Turkey but declined to comment further. Turkcell said it was open to partnerships in the field but gave no further details.
Virtual operators do not own the networks they use to provide communications services.
"Virgin Mobile wants to become a mobile virtual network operator in Turkey, so they have been talking to companies in the market. They have reached a certain level in talks with Turkcell," one source close to the matter told Reuters.
At 75 million and growing, Turkey's population is set to overtake Germany's, currently the largest in the European Union, by 2025. Per capita income has nearly tripled over the past decade, though the crisis in Europe has slowed growth this year.
Its mobile penetration was 88.5 percent at the end of June with subscribers numbering 66.14 million, according to data from the market regulator. The rate is much lower than in European Union countries, where it can be as high as 170 percent.
"We continue to look at new opportunities across Central and Eastern Europe and the Middle East. Turkey is one of those markets we are analysing and we are having some preliminary discussions with various parties," said Nick Fox, director of financial communications for Virgin Group.
"We feel Turkey would be a great Virgin Mobile market."
There are currently three mobile phone operators in Turkey: Turkcell, Vodafone Turkey, and Turk Telekom unit Avea.
The head of Turkey's Information and Communication Technologies Authority (BTK), Tayfun Acarer, told Reuters Virgin Mobile had not yet filed an application to be an MVNO operator.
Turkey takes 15 percent tax on gross sales from both mobile networks and their mobile virtual network operating partners. Industry executives say that double taxation is pulling down already squeezed margins and preventing growth.
"Double taxation does continue to be an issue," said Virgin's Fox. "In spite of this we are looking at ways to make Turkey work as a market for a Virgin Mobile launch in the future. However there are no definitive plans at the moment."
(Writing by Seda Sezer; Editing by Nick Tattersall and Hans-Juergen Peters)