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At the crossroads of the world’s communications

Article - October 10, 2011
Türk Telekom Group is very well positioned to sustain its momentum and continue to build on its recent growth in 2011

The telecom industry is one of the very few industries that has witnessed technological improvement during the worldwide recession, thanks to huge growth in high-speed mobile internet traffic and constant technological advancement. And Türk Telekom, Turkey’s leading communication and convergence technology group, has experienced this growth at full capacity.

Turkey is one of the fastest growing economies in the world and has one of the largest telecoms markets in the EMEA (Europe, the Middle East and Africa) region.

This comes down to a few key factors; the youth of Turkey – 50 per cent of the population are under 25 years of age – followed by heavy research and development investment to keep the company abreast, if not ahead, of its competitors and lastly, a dynamic workforce. Türk Telekom currently has more than 34,000 employees and is one of the biggest employers in Turkey.

Türk Telekom has been the major communication network in Turkey since 1840. The fast growing company provides integrated telecommunication services ranging from PSTN and GSM to broadband internet. As of March 31 2011, Türk Telecom Group companies have 16.3 million fixed access lines, 6.5 million ADSL connections and over 11.5 million mobile subscribers.

Türk Telekom has been listed on the Istanbul Stock Exchange since May 2008. Apart from 81.4 per cent shares in Avea – one of the three GSM operators in Turkey – Türk Telekom owns wholesale data and capacity service provider company Pantel International AG and its subsidiaries, as well as online gaming company Sobee. The group also holds 99.9 per cent of broadband provider TTNET, convergence technologies company Argela, IT solution provider Innov, online education company Sebit AS, and call centre company AssisTT.

The 2008 public offering of 15 per cent shares of Türk Telekom was the seventh biggest public offering in the world and the largest ever in Turkey.

Chief executive officer Gökhan Bozkurt talks in depth about the company’s future plans, its success so far and how the company aims to keep striving forward in difficult economic times.

Do you see Vision 2023 (the Turkish National Technology Foresight Programme) attainable for the country and what role will the ICT sector play in achieving it?

Turkey, as one of the fastest growing emerging markets, has a young workforce and a resilient banking and financial sector, as well as robust macroeconomic fundamentals. Hence, with its thriving manufacturing, tourism, services and financial sectors, Turkey stands as one of the most attractive emerging markets with a fast growth potential.

The ICT sector will be one of the main driving forces behind this growth. We believe that the telecommunication infrastructure and information technology are very critical elements for Turkey’s competitiveness. At Türk Telekom we work very hard in all these areas.

How is Turkey’s young population pushing the market forward?

Turkey has a population of more than 70 million, with half being under 25 years old, so obviously a promising young generation brings competitive advantages to Turkey’s IT industry.

In the last couple of years, the growth in demand for data and broadband services has been significant. We expect this trend to continue as the PC penetration increases. Convergence is also one of the main trends in the sector.




How will continuous investment transform the sector in Turkey and Türk Telekom’s position at a regional and at a global level?

Turkey’s geographical location offers a great opportunity to the IT and telecommunication sectors to become the new hub in between the East and West. We believe the region is very important for the new so-called ‘Digital Silk Road’ connecting the Middle East, Europe and Asia.

In the first half of 2010, the Türk Telekom Group took a historic step for the Turkish telecommunication sector by agreeing to acquire 100 per cent shares of Invitel International, which is one of the leading independent wholesale data and capacity service providers in Europe. It has 27,000 kilometres (16,777 miles) of fibre-optic network across 16 countries. Invitel International has been renamed Pantel.

This acquisition has enabled Türk Telekom to become a serious hub connecting the data/broadband traffic in Central and Eastern Europe, Turkey, the Middle East and Asian markets to Western Europe and the US.

We also recently signed a network agreement called JADI Link which connects Jeddah, Amman, Damascus and Istanbul. The fibre-optic line that will pass through Turkey, Syria, Jordan and Saudi Arabia respectively will offer an important alternative in providing internet, data and partial voice communication via Turkey to South Asia and the Middle East with Europe and the US.

How would you define your innovation philosophy in a sector where inspiration is vital?

Innovation is everything, but not only for our sector; this motto is valid for every sector. A company that wants to differentiate itself from its competitors and to create more value for its customers and shareholders must embrace an innovative culture in all aspects of business. Therefore, the role of management is to create an ecosystem and tools to formalise ideas into business values. 

After the innovation culture, R&D (research and development) is the second most important operation. We need R&D in order to be in a position to follow the technology but also to lead it. In line with our vision to export Turkish technology all over the world, we attach great importance to our R&D activities.

We conduct our R&D activities both in Türk Telekom and also through the group’s technology companies. Group companies including Argela, Innova, Sebit and Sobee are operating as R&D units of the Türk Telekom Group. These companies play a significant role in the development of Turkish technological power and the export of convergence technologies.

Is there potential for selling Turkish telecom technology outside of Turkey?

In addition to contributing to the development of local technologies, we operate with the vision of contributing to a country which not only imports technology, but also produces and exports technology. At Türk Telekom, our aim is to produce and export worldwide convergence technologies developed by Turkish engineers and we continue our operations accordingly.

What is Türk Telekom’s contribution to developing Turkey’s ‘intelligence capital’?

We believe education, telecommunication infrastructure and IT are very critical elements for Turkey’s competitiveness. We work very hard in all these areas. In today’s information-driven society, we focus on making the internet available for everybody as we believe this is critical for the modern world.

Türk Telekom supports education with Türk Telekom schools and its education products. Thousands of students and teachers use Vitamin, the online education software developed by one of our group companies. Türk Telekom Group invested about TL 9 billion (£3.45 billion) in the last five years to improve Turkey’s fixed and mobile networks, which are fundamental for high quality and reliable communication and IT services.

In terms of brand value, what associations would you like come to people’s minds when they see the name Türk Telekom and how does it add value to Turkey?

In 2010, we succeeded in coming out on top once again in the Turkey’s Most Valuable Brands survey organised by Brand Finance, one of the UK’s leading brand valuation companies. We joined the survey for the first time in 2009 and came out on top with our brand value of £1 billion. We continued this achievement in 2010 and became Turkey’s Most Valuable Brand once more with our brand value of £1.06 billion.

In the Digital Lovemark 2010 survey conducted by Ipsos KMG, a leading company in sample-based market research, Türk Telekom was selected as the most popular brand among consumers, now for two years in a row. We have also won the Best Innovation Award in the Best Business Awards, one of the most prestigious awards in the UK.

Can you share with us your expectations for 2011 and possible opportunities for institutional and UK investors?

This year Turkey is expected to continue with its success story by displaying sustainable growth and lowering its fiscal deficit and debt burden even further.

In addition, Turkey stands as a candidate for becoming an investment-grade country by 2012 at the latest. However, there are certain outside risk factors. Oil and other commodity prices may pose some risk to Turkey’s external balances and inflation along with the economic recovery.

Nevertheless, Turkey’s proactive central bank, which has committed to contain the risks regarding price stability and financial stability, may help alleviate these risk factors.

We have a sustained dividend policy and our robust revenue and strong cash flow capacity enables investment in promising segments and continuous growth.

Our shareholder base includes about 200 institutional investors from all around the world. We follow best-in-class corporate governance and investor relations practices, and we continue to attract significant interest from the global investment community.