The forces that will
shape the market over the next three years will undoubtedly be the full
liberalization of the telecommunication services sector, issuance of new
licenses for the private sector, privatization of Turk Telekom and
implementation of EU telecom directives as part of Turkey's potential
accession to the European Union.
Turkey has a large
telecommunications market, 5th largest in Europe and 12th
largest in the world. The market size is estimated to be over USD 9
billion and expected to grow to USD 16 billion in 2010.
Broadband communications services market will play an important role in
the market growth over the next several years.
Turk Telekom launched the
ADSL services in 2003 and facilitated 275,000 ports. Considering the
increasing demand, the number of ports required by the end of 2004 is
one million and by the end of 2005 two million. Distance
education, faster Internet connection, digital TV broadcasting and other
business services will play a primary role in the development of the
Many Turkish companies
are open to partnership with the U.S. companies in Turkey and in the
region. U.S. companies may receive competition from European companies,
especially Japanese, Italian, British, French and German companies.
Turkey, with its 70
million population and a potential for economic growth, will be a major
market for all kinds of telecommunications services. Full
liberalization of the Turkish telecommunications market, which has
already started, communication to/from Turkey from/to Turkish
populations living in Germany and other parts of Europe, faster Internet
requirements of the business sector, distance education development,
digital TV broadcasting and new business and marketing services will be
the important factors for the growth in the
broadband wire-line and wireless communications sector for the next
5-10 years. Turkey's unique location at the crossroads between Europe
and Asia makes Turkey the likely communications hub for the region.
Turkey is already a trading center and a leading business partner
in the Balkans, Caucasus, Central Asia and the Middle East.
Turkey has a large
telecommunications and IT market. Public Switch Telephone Network (PSTN)
revenues will approximately be USD 5 billion in 2004 and expected to
grow to USD 9 billion by 2010. Revenues from mobile
services will approximately be USD 4 billion in 2004 and expected to
grow to USD 7 billion in 2010. Therefore, the total telecommunications
market is estimated to be over USD 9 billion by the end of 2004 and
expected to grow to USD 16 billion by 2010.
Turkey had 19 million
PSTN subscribers in 2002, reaching approximately a 30 % penetration
rate, which is expected to exceed 25 million by the end of 2005 and 30
million in 2010. The reason for this big increase will be entrance of
new telephone operators into the market. The broadband
wire-line and wireless communication services market will play an
important role in the market growth as well. Wireless broadband
applications will also increase the revenues of the mobile operators.
Turkey approximately has 29 million mobile subscribers, reaching
approximately a 40 % penetration rate, and estimated to have over 45
million mobile subscribers by 2010.
The frequency band 3.5 to
3.7 GHz has been assigned to Turk Telekom, which uses this band to
provide wireless telephony in rural areas. The frequency band 24.5 to
26.5 GHz has been allocated for LMDS and is available to be assigned for
licensed operators. Telecommunications authority is
planning to issue licenses for this band. Unlicensed bands of 2.4 and
5.5ghz can be used for only individual purposes and in the individual
There is no special
tariff for broadband fixed wireless interconnection. However, all
telecommunications operators are subject to the newly published access
and interconnection ordinance, which makes all determined operators, be
obliged to interconnect, based on cost-based charging. Subject ordinance
is available at www.tk.gov.tr.
As per the
Telecommunications Law No. 4502, Turkey is moving forward with the full
liberalization of the telecommunications services market. On 17 May
2004, the independent regulatory body, the Telecommunications Authority,
issued licenses for 27 private companies to provide domestic and
international long distance telecommunications services. 7
companies received type A license, 13 received B type license and 7
received C type license. Type A licensees will be able to perform the
full range of telecom services. The next step is local
Most of these companies
will probably start their operations with Voice over IP (VoIP) and wide
band applications. Some companies have already established facilities
for data and satellite communications services as well as digital TV.
Any company, which would like to be active in the telecom sector,
needs to obtain a license from the Telecommunications Authority.
Turk Telekom currently
has revenue sharing agreements with approximately 10 regional firms to
provide analog type cable-TV services. Cable-TV subscribers reached one
million at the end of 2002. However, Turkish Government is
planning to ask these cable-TV companies, which has the concession
rights for the 10 regions, to apply for a license on the condition to
upgrade their network to digital and provide broadband services. The
market estimation is rather large when considered that 14 million TV
homes exist in Turkey. Most of these companies will
require foreign partners who can also provide financing required for
technical upgrading and the expansion of the market.
Turk Telekom launched the
ADSL services in 2003 and facilitated 275,000 ports. Considering the
increasing demand, the number of ports required by the end of 2004 is
one million and by the end of 2005 two million. Turkish
Government asked Turk Telekom, as part of the liberalization to deploy
some of its ADSL capacity to the private sector Internet Service
Providers (ISPs). Turk Telekom’s ADSL subscriber target is on million
and plans to have a capacity of two million ports. ADSL
will allow video applications as well as data services, Internet
connection. DSL will increase the revenues of the telecommunications
market in Turkey.
Turkey currently has
approximately 4.5 million Internet subscribers. Distance education,
faster Internet connection, digital TV broadcasting and other business
services will play a primary role in the development of the market.
Depending on the market
conditions, the Telecom Authority may issue a tender for the license of
third generation GSM (3G or UMTS) services. Preliminary process started
with participation of regulators, operators, manufacturers and
distributors in the National UMTS Coordination Committee in 2002.
The other new application will be electronic signature.
Turk Telekom (www.telekom.gov.tr)
has a fixed line subscriber number of almost 19 million. It has a high
digitalization rate (digitalization is almost 100 percent in switches
and 96 percent of its transmission lines). The fixed line
density is approximately 30 percent. Turk Telekom also has the only
Internet backbone structure of Turkey named as TTnet. More
than 50 private Internet service providers are using this backbone.
Turk Telekom's revenues
including mobile and satellite communications were approximately USD 6.5
billion and made a profit of over USD 1 billion in 2003. Turk Telekom
is estimated to be 13th largest telecom company in the
world. Turk Telekom owns and operates three satellites.
However, Turkish Government will soon separate satellite communications
from Turk Telekom and establish a new company for that purpose. Turkish
Parliament is currently discussing a draft law, which will enable
selling over 51 % of Turk Telekom to foreign companies.
Turkey has three cellular
service operators, Turkcell, Telsim and TT-TIM (merger of Aria and
Aycell). The brand names of Aria and Aycell still exist and the merger
made no difference to the subscribers. Turkcell dominates
the mobile communications market over 19 million subscribers. Telsim's
subscriber estimate is over 6 million. Aria and Aycell has
over 4 million subscribers. Turkcell and Telsim operate at 900 MHz GSM
systems. Aria and Aycell operates at 1800 MHz GSM
Telecommunications Terminal Equipment” Regulations, prepared for the
purpose of adaptation of European Parliament and Council’s No. 1999/5/EC
R&TTE directive, were published in the Official Gazette No. 25105 dated
May 11, 2003. The regulations enforce only the importation of wireless
and telecommunications terminal equipment with the CE certificate from
the date of May 11, 2004. Domestically manufactured
wireless and telecommunications terminal equipment will have a one-year
phase-in period. From May 11, 2005, no more equipment will be in the
Turkish market without European conformity attestation-CE mark.
This regulation is applicable to wireless communications
equipment at the frequency range of 9 kHz to 3000GHz; and
telecommunications terminal equipment, which is or will be connected to
the public telecommunications network directly or indirectly. Turkey
has also adopted the low voltage and the EMC directive for electrical
telecommunications law is currently being discussed at the Parliament,
which will allow sale of more than 51 percent of the shares of Turk
Telekom to foreign companies. The new law also permits separation of
satellite communications network of Turk Telekom, which will be kept as
public. It defines possibility of selling shares of
communication companies (referring to Telsim), which may be under the
Savings and Deposit Insurance Fund (TMSF), to
The Telecom Authority
has issued regulations related to electromagnetic field limits, price
ceilings for Turk Telekom tariffs, allocation of first three digit
numbers, licensing, roaming, etc. The Authority is also working on
issuing regulations for broadband and interconnection along the lines of
EU directives. Turkey being a member also follows
regulations issued by ITU, ETSI, and CEPT.
The telecom laws:
Law No. 4502 dated
January 27, 2000: This law established an independent regulatory body
named the Telecom Authority (TA), and defined its roles and duties as
well as duties of the Ministry of Transport and Communications. TA
consists of five board members having been nominated by the Minister of
Transportation and Communications and appointed by the Council of
Ministers. Turkish Government plans to increase the number
of board members to seven. The TA is charged to implement and
administer telecommunications regulations. TA is
responsible for issuing new telecom regulations to prevent unfair
competition and continuity of telecom services. One of TA's main
responsibilities is to issue telecom licenses and plan and manage radio
Law No. 4673 dated May
12, 2001: This law mainly describes the rules and regulations to be
followed in privatizing Turk Telecom. The law specifies that the
Turkish Government can privatize 99 percent of Turk Telekom (except one
percent of golden share). With this one percent, Turkish
Government will have a representative from Turkish Treasury in the Board
of Directors. Turk Telekom and Turkish Postal Services Personnel will
be able to buy 5 percent of the shares. Small investors
will buy 5 percent of the shares. The law also specifies that Turkish
Government must carry out a block sale first.
The full texts of these
laws are available at www.tk.gov.tr
in English as well as Telecommunications Regulations issued by the
Following is the market size estimates for this sector:
a. Total Market Size
b. Total Local Production
c. Total Exports
d. Total Imports
e. Imports from the U.S.
Estimated Growth Rate Next 3 Years: 150 %
Note: The above statistics are unofficial estimates.
Exchange Rate used: 1$ = TL 1,500,000
revenues are lower than that of Europe. While per capita monthly mobile
subscriber revenue is USD 29-30 in Europe, it is USD 11-12 in Turkey.
One of the main reasons for less revenue is the high tax imposed
on cellular revenues by the Government. Turkey implements a 66 percent
of tax on mobile communications while this figure is 20 percent in Italy
and Germany, 18 percent in Greece, 23 percent in Spain, 19.6 percent in
France and 17.5 percent in UK. Depending on the
improvement of the economic situation of Turkey, the Government may
lower the taxes from 2005.
Introduction of broadband fixed wireless services in the cellular
services will increase the revenues.
Prices for satellite
communications services have gone down so much in the world that Turk
Telekom's recent policy is to decrease its exposure in the satellite
business. Therefore, Turk Telekom decided to separate its satellite
network and services. A new company will be established to provide
satellite telecommunications services with the existing three Turkish
satellites and their satellite ground stations.
On the other hand, Iraq
will require satellite communications services. Turkey is playing an
important role in this business. GlobalStar is already
providing mobile satellite communications services in Northern Iraq.
U.S. firms face tough
competition in Turkey. Major competition is with the major European
firms, Chinese and Korean firms.
The Turkish market is a
venue where the first comer often wins the contract, a market that is
potentially open to innovation (ready to pay more for more advanced
products), but more often, a market where price is as important as the
quality. Personal contact and good relations with the customer are very
important. A good reputation for quality is essential.
Customers tend to look
for established after sales service and maintenance. Such after sales
service can be provided through a Turkish company, which can also
provide the warranty service. Promotion through seminars,
shows, fairs and factory visits are key competitive factors.
A common method of
marketing is for a company to employ an extensive media advertising
campaign. Selecting and appointing dynamic agents or opening local
offices with personnel who will actively pursue opportunities and
maintain close contact with customers to follow up their needs are other
important competitive factors.
The U.S. supplier, having
calculated attractive price and financing terms, must then secure top
representation. In Turkey, personal knowledge of the market and its
trends based on personal relationships is all-important.
Thus, we cannot overemphasize the importance of a strong representative
or consultant. The fact that Turkey's per capita income is
approximately $4,000 per year should not obscure the fact that with the
necessary inputs, Turkey is capable of virtually any level of high-tech
Land Line Operator
Turk Telekom is under a mandated privatization program. Foreign
consultants are reevaluating the value of Turk Telekom.
Previous studies showed that Turk Telekom assets are assessed at over
USD 10 billion. Turk Telekom is currently increasing its revenues by
continuing operating cost reductions. Last year, Turk Telekom reduced
the number of employees by 7,500 through retirement of employees.
Turk Telekom’s revenues reached USD 6.5 billion in 2003 and had a
profit over USD 1 billion. Minister of Transport and Communications Mr.
Binali Yildirim announced that there are 11 companies interested in the
Turk Telekom’s privatization. He also commented that the
new law to be passed would increase the value of Turk Telekom, as it
will allow the sale of more than 51 % of Turk Telekom’s shares to
foreign companies. Additional information on the privatization of Turk
Telekom can be viewed at www.oib.gov.tr.
Cell Phone Operators
Cukurova Holding owns a
majority of the shares of Turkcell while Finnish operator Sonera owns
approximately 37 percent. The Turkish Government currently manages
Telsim, the second largest cellular operator, as the company owner’s
were insolvent and the GOT assumed the debts of Imarbank.
Likewise, Motorola and Nokia have disputes with Telsim on Telsim’s
alleged failure to reimburse monies owed to the two firms. Hopefully
this situation may be resolved once the shares of Telsim are sold to
other parties. Telecom Italia Mobile (TIM) owns 40 percent
of TT-TIM while Turk Telekom owns 40 percent and Turkiye Is Bank owns
the remaining 20 percent. TT-TIM operates both Aria and Aycell GSM
New Telephone Operators
Telecommunications Authority Chairman and
President Omer Arasil and Minister of Transport and Communications
Binali Yildirim, at a ceremony held in Ankara on 17 May 2004, announced
and issued over 27 licenses to private sector companies for the domestic
and international long distance telecom services. These companies can
now build their own infrastructure. They will be able to
send their telephone traffic through domestic or international operators
as they like. Every operator must pay 0.5 percent of its revenues to
the Telekom Authority every year and pay the following fees for once to
obtain the license:
Type A License Fee $300,000
Type B License Fee $135,000
Type C License Fee $ 70,000
Note: These amounts are not net amounts and may change depending on the
foreign currency exchange rates.
Seven of these licenses were Type A licenses and were given to Borusan
Telekom, Dogan Iletisim, Eser, Global Iletisim, Koc.net, Sabanci Telekom
and Superonline. Type A licensees will have the full rights of
providing all types of telecommunications services. They
are obliged to provide connections to all cities in Turkey and the whole
world. Consumers will be able to select any of these licensees for
their long distance calls. If a subscriber makes a long
distance call, Turk Telekom is enforced to automatically connect the
subscriber to its operator. Type A license also covers the rights of
Type B and Type C license.
Thirteen licenses were issued as type B licenses and were handed over to
AKCELL, Atlas On line, Deltakom, GISAD, INKO Iletisim, KAYA Telekom,
L.D.T.S., MEGA, Mor-Tel, Net Iletisim, SGS Telekom, Turkonet and VIANET.
These companies will be able to give an operator number to its
subscribers through which operators will be able provide long distance
services to its subscribers. This type of license also
covers C type license.
Seven licenses were issued as type C licenses and were awarded to Ikon,
Interkom, Isnet, Televersal, Telnet, TSM and UTH. C type operators will
provide calling card type services.
Turkey will try to adapt
most of the European Laws in telecommunications by the end of 2004.
These new regulations will probably appear at the
www.tk.gov.tr web site for public
debate and comment before they are issued. Current regulations can be
found in the same web site.
The Turkish Government
has passed a new public procurement law last year and amended it this
year. The same law created the Public Procurement Authority (PPA) to
oversee and enforce procurement regulations. These laws
and regulations can be found at the
In allocation of the
frequencies, Turkey follows European standards. The Telecommunications
Authority manages and regulates frequency allocation for
telecommunications purposes. The National Frequency plans
are available at
www.tk.gov.tr/index6.html, and are only available in Turkish.
For radio and TV
broadcasting, the Radio and TV High Council (RTUK) allocates
frequencies. The RTUK has to cooperate with the Telecom Authority in
certain frequency allocations to the radio and TV broadcasters. The
Radio TV Law (No. 3984 dated April 13, 1994) specifies that foreign
investors may own a maximum 20 percent share in television channels and
For further information,
for Telecommunications Equipment:
In order to obtain an
import license for any radio and telecommunication terminal equipment, a
foreign company should appoint a local agent or a distributor in Turkey.
This agent or distributor should apply to Telecommunications Authority
by an application letter with the attachment of the Type Approval
Certificates and test reports in accordance with the R&TTE Directive and
detailed technical documents of the equipment and original proforma
invoice. Telecommunications Authority does not accept direct application
by a foreign company in accordance with the existing national
Tariffs & Other
On January 1, 1996, Turkey and the European Union (EU) formed a customs
union. The agreement covers industrial products and processed
agricultural goods. The Republic of Turkey adopted the
EU’s common external tariff (CCT), resulting in lower duties for imports
from third countries, including the United States. The union
establishes zero duty rates and no quotas for non-agricultural items of
EU and European Free Trade Association (EFTA) origin. The
current import regime is organized in five chapters that list more than
20,000 items, identified with 12 digit harmonized tariff system numbers.
As a result of its accession to the European Customs Union, the average
duty rate for imports from the European Union and EFTA countries has
dropped from approximately ten percent to zero. For products imported
from third countries, including the United States, the average duty rate
has dropped from ten percent to approximately 2-4 percent.
Turkey has reserved some exempted categories for sensitive products with
tariffs on these items generally much higher than the CCT. Some
agricultural goods will remain protected by steep tariffs until the next
WTO round is concluded. When the European Union applies
further Uruguay Round reductions, Turkey's average rates for third
countries (including the U.S.) will be lowered to 3.5 percent.
Turkey is a member of GATT/WTO and regulates its customs practices in
line with GATT requirements. In 1989, Turkey, along with the United
States, converted to the new GATT Harmonized System.
Investment incentives are
available in Turkey. Incentives usually provide customs duty exemption
(zero) imposed on the investment equipment and a tax holiday until some
percentage is obtained as revenue after the start-up of operation.
Incentive certificates can be obtained from the Undersecretariat
of Treasury, Foreign Investment General Directorate.
According to Turkish
Government's macroeconomic policies, foreign investment plays an
important role in enhancing country's competitiveness in a global market
economy. Turkish Government passed a new foreign investment law and
considerably decreased the steps of establishing a foreign investment
company. A much shorter period is required now to establish a company.
For further information, please look at
The marketing of most
products in Turkey is done primarily through foreign suppliers' agents
or representatives. Representatives play an essential role in the
promotion and marketing of the products of the companies they represent.
Through contacts, agents can provide important, timely
information not available through official sources. In Turkey,
agency/representation/distributor agreements are private contracts
between agents and their foreign suppliers. There are no
unusual regulations, which govern commission rates, termination, etc.
For product distribution,
one should look for medium to large size companies which are presently
in the telecommunications field, and which have sales and after sales
network throughout Turkey.
In government tenders,
state organizations in particular attach great importance to the way
proposals are prepared and to their adherence to administrative and
technical specifications. Generally, the validity of the proposal must
be 3-6 months from the bid date and thus the same validity is to be
given for the bid bond. The bid bond is usually 3 percent
and the performance bond is 6 percent of the contract amount. All bonds
have to be counter-guaranteed by a Turkish national bank.
The bidder must submit
the bid bond together with the bid; otherwise the proposal is rejected.
All government tenders are announced in the Official Gazette, "Resmi
Gazete", usually 1-1.5 months before the closing date.
Most of the time, compliance statements for administrative and technical
specifications are required. In compliance statements some
counter-proposals can be made.
In some government
tenders, the finance credit can be an important factor. Credit terms and
conditions, i.e., providing a grace period, low interest rate, longer
repayment period, can offer a decisive advantage.
The following exhibition
is held annually and is appropriate for the promotion of exports to
Eurasia 2004 (August 31 - September 3, 2004)
CeBIT Bilisim Eurasia
2004 is the largest and the most important ICT Trade show in the region,
which covers the entire spectrum of information technology,
telecommunications, software and services. Over 800 companies exhibit
the very latest integrated technology solutions, informing and
influencing more than 160,000 visitors from over 65 countries.
Appealing primarily to business, CeBIT Bilisim Eurasia provides
the scale, scope and quality from which professionals can make smart,
well-focused and profitable decisions. For more information on
exhibiting at CeBIT Bilisim Eurasia or to register to attend, please
register, or contact:
U.S. Commercial Service Ankara
American Embassy, 110 Ataturk Bulvari, 06100 Kavaklidere, Ankara -
Phone: +90 (312) 455-5555 Ext. 2567
Fax: +90 (312) 467-1366
Contact: Ihsan Muderrisoglu, IT Specialist
Phone: +90 (312) 455-5555 Ext. 2570
Fax: +90 (312) 467-1366
Please note that an
American Pavilion will be established at the show and U.S. Department of
Commerce endorsed the show as an International Buyer Program this year.
Yesilirmak Sokak No. 16
06430 Demirtepe, Ankara, Turkey
Tel:  (312) 550-5100
Fax:  (312) 550-5151
(Ministry of Communications and Transportation)
Bahcelievler Son Durak
Emek, Ankara, Turkey
Tel:  (312) 215-8316
Fax:  (312) 212-4187
Activity: Construction of harbors, airports, and
railways, establishes telecommunications policy and monitors telecom
Turk Telekom A.S. (TTAS)
(Turk Telecommunications, Inc.)
Samsun Yolu Kavsagi
06103 Aydinlikevler, Ankara, Turkey
Tel:  (312) 555-1000
Fax:  (312) 313-1919
Contact: Mr. Mehmet C. Ekinalan, Vice Chairman and
Tel:  (312) 313-1121
Fax:  (312) 313-1919
Turkiye Radyo ve Televizyon Kurumu, Genel Mudurlugu (TRT)
(General Directorate of Turkish Radio and Television)
Turan Gunes Bulvari
06109 Oran, Ankara, Turkey
Tel:  (312) 490-4491
Fax:  (312) 490-4494
Activity: Television and radio broadcasting
Huseyin Rahmi Gurpinar
Caddesi, N 2
06680 Cankaya, Ankara,
Contact: Ms. Hande
HAZINE MUSTESARLIGI (Undersecretariat
YABANCI SERMAYE GENEL
MUDURLUGU (Foreign Investment General Directorate)
Ismet Inonu Bulvari
06510 Emek, Ankara,
Tel: (90)(312) 212-8914
Fax: (90)(312) 212-8916
Contact: Ms. Melek Us,
Director General, Foreign Investment
The Private Sector Contacts:
Turkcell Plaza, Mesrutiyet Caddesi, N 153
80050 Tepebasi, Istanbul
Tel: (212) 313-1501 or 313-1000 Ext. 153
Activity: The largest
cellular service provider
Contact: Baris Oney,
Assistant to the CEO
IS-TIM Telecommunications Services, Inc.
Abdi Ipekci Caddesi, No. 75
34367 Macka, Istanbul
Tel: (212) 460-1112
Fax: (212) 241-6448
Yusuf Ata Ariak,
Anadolu Bulvari, 11.
06510 Sogutozu, Ankara,
Tel: (312) 286-8640
Fax: (312) 287-3019
Members of TELKODER: AT&T
Turkiye, Comsat, Eser Telekom, GlobalStar Eurasia, Infonet, Kocnet,
Miltel, Oytelnet, Sabanci Holding and Satko.
Turkish Electronics & Information Industries Association
Bagdat Caddesi, No. 477/4
81070 Suadiye, Istanbul
Tel: (216) 386-0909 or 302-4594
Fax: (216) 386-0910
Contact: Dr. Fikret Yucel, Chairman
1010 Vermont Avenue,
N.W., Suite 1020
Tel: (202) 783-0483
Fax: (202) 783-0511