 Turkey: Telecoms and technology background
FROM THE ECONOMIST INTELLIGENCE UNIT
According to the Turkish Electronics and Information Technologies Association (TESID), the total information and communications technology (ICT) market, including telecommunications carrier services, was worth US$13.2bn in 2004, up by 14.8% compared with 2003, continuing the robust recovery under way from the 2001 financial crisis and recession.
Fixed-line phone penetration is low, at about 26 per 100 population, as is Internet penetration, at just 20 per 100 population, compared with around 50 per 100 in most west European countries. Digital subscriber line (DSL) and cable modem broadband Internet connections are available, but numbers of subscribers are low and are growing only slowly.
The mobile telecoms market has experienced rapid growth and is competitive. Since the launch of the first two mobile-phone operators, Turkcell and Telsim, in 1998, subscriptions have risen sharply, reaching a penetration rate of about 40 per 100 population in 2003, 50 per 100 in 2004, and an estimated 60 per 100 in 2005, according to Pyramid, a telecoms consultancy. In early 2004 the third- and fourth-largest GSM (Global System for Mobile Communications) operators, Aycell and Is-Tim, merged to form Avea. Although demand is good, most mobile-phone operators are in poor financial shape, still suffering the fallout from the global crash in technology stocks and Turkey’s 2001 financial crisis.
The monopoly of the state-owned Turk Telekom (TT) over the provision of fixed-line services ended at the beginning of 2004. However, the Telecommunications Authority established in 2000 is not fully independent and has failed to act decisively to deal with disputes in the sector, for example by imposing roaming agreements on mobile operators to allow late entrants to gain a foothold in the market.
In August 2005 the Authority could do more than put pressure on Turk Telekom to reduce interconnection costs for rival long-distance operators who have recently obtained licenses. Also, as of early 2006 local loop unbundling had not yet begun and mobile number portability was not possible. In late August 2005 the long-awaited privatisation of TT was finally realised with the block sale of 55% of the company to an international consortium, Oger Telecoms Joint Venture Group, comprising Oger Telecoms, Saudi Oger and Telecom Italia, for US$6.55bn, which will be paid in instalments.
Although there is a significant information technology (IT) skills base in Turkey, it tends to be used as an assembly shop by multinationals. Across the Middle East, IT hardware typically accounts for more than 50% of all IT spending, compared with around 33% in western Europe.
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SOURCE: The Economist Intelligence Unit
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