Turkish telecom industry

Published: 03rd September 2006
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Turkey's young population (23% of population is under 15) and rapidly modernizing economy (In 2005, growth was above 7%) has made it an enormous market for telecom services. The country is still following up the process of EU membership, and the stable economy makes it less risky for the key players to invest in Turkey's telecom industry.
Number of fixed telephone subscribers has been increased from 18,395,171 to 18,914,857 from the year 2000 to 2002. While the penetration rate for landlines is 28%, the rate for mobile telephone subscription is more than 56%.
Following the liberalisation of Turkish telecom industry in 2004 January 1st, monopoly rights of government-owned Turk Telecom has expired. Major industry players emerged in the market. The regulatory body, Telecommunications Authority (TA) has issued "Long distance telecom services" licenses for more than 30 companies. An unexpected practice of regulation of the institution has made it difficult for the companies. Since TA is affiliated with Ministry of Transportation, and Turk Telecom has been transferring a significant amount of funds to the national treasury, the way TA was performing regulation was found biased and objectiveness of the institution was questioned by many industry experts.

On the other hand, block sale of 55 per cent of shares of Turk Telekom to Oger Telecom for $6.55m by far represents the largest privatization to-date. Turk Telekom is the world's 13th largest telecom, with some 19m subscribers. The other major development in the industry is the purchase of Turkey's second largest mobile phone group Telsim, by Vodafone. The auction was won with a bid of 2.59bn.

Turkey boasts the 13th largest telecom market in the world and the 5th largest in Europe. The bureaucratic tradition makes it almost necessary for foreign investors to team-up with local experts.

Ekim Kaya is the Editor in Chief of Telecom Turkey.

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