This report, prepared by the U.S. Embassy’s Commercial Service in Ankara, provides an overview of the market and follow-up steps for American exporters to make sales in this dynamic market. The World Bank has revised its 2011 Turkey GDP forecast to 6.1%, up from 4.1%, reflecting the country’s rapid recovery from the global financial crisis. While the estimated global GDP growth rate remains unchanged at 3.2% for 2012-2013, the Global Economic Prospects 2011 report predicts the Turkish economy will expand by 5.1% and 5.3%, respectively, indicating a continual pattern of growth. Turkey is one of the fastest growing economies in the world, accelerating at a rate of 8.9% in 2010.
• IT Security
• Consumer Electronics
• Notebook PC’s
• Audio Visual Equipment
• Wireless equipment / services
• WiMax (awaiting law)
• 3 G related technologies/services
IPTV, WiMax, VDSL technologies and services will be in great demand. 3G related technologies and services, 3G compatible handsets, online services, content and media services, E-business, personalized services, music download, games, multi-play, video services, and other mobile entertainment, will be best prospects.
ICT Market Overview
Turkey’s Information Communication Technologies (ICT) market size is estimated to have reached $27.3 billion in 2010, with a breakdown of $20 billion in Telecommunications and 7.3 billion USD in Information Technologies. (Ref. Interpro). The Turkish ICT market continues its rise as one of the key growth markets in Turkey with an estimated growth of 8-10% for 2011, despite the economic global crisis. All figures provided in this survey are the latest available as of Fall 2011.
The ICT sector is comprised of four main categories: telecommunications, internet & broadband, hardware and software. As mentioned, the Turkish ICT market is dominated by telecommunications, constituting approximately 73 percent of the total, with the whole IT market, which constitutes the hardware and software categories, comprising the other 27 percent. The IT market experienced a double-digit growth in recent years, but the share of software and services is significantly behind Western markets and CEE countries, indicating major growth potential. Although the industry has shown slower growth than in the past (with the exception of the 2002 crisis) investors still see the Turkish ICT market as a significant growth opportunity, have increased investment in channels and local production, and have set ambitious sales targets.
Current PC penetration levels are estimated at 30%, but the Turkish Government aims for computer ownership at 51% and internet usage at 48% by 2013. Meanwhile, a survey of Turkish primary and secondary schools showed that in 40% of schools, computers are still not integrated into education. This is expected to significantly increase as the Ministry of Education plans to increase the number of computers and internet connection. Schools in remote areas are to be connected to the net through satellite with the cooperation of the Turkish satellite company, Turksat.
The large population in Turkey, as well as the growing demand for IT services and infrastructure, is expected to increase total IT spending. There has however been a recent shift in the driving forces behind the IT industry in Turkey. Although until recently the driving force behind the industry was desktop and notebook sales, the consumer electronics market has significantly caught up and increased its share in the market. The consumer electronics market in Turkey is estimated at $3 billion. While the rest of the world averaged an increase of 10% in the consumer electronics market, Turkey averaged 35% annual growth in 2010. Traditionally significant PC sales were confined to Istanbul, Ankara and Izmir, but now PC sales have received new momentum as the focus of demand has shifted towards the Anatolian region; this is expected to continue as the rate of PC penetration rises. The PC penetration has ripple effects as seen in ADSL subscriptions, modems, software and other ITC products and services. It is estimated that there are about 25 million internet users currently in Turkey, an increase of over 30% compared to last year’s internet usage.
The telecommunications sector in Turkey has grown rapidly in recent years as a result of the increase in the disposable income level and government support for liberalization and privatization of the telecommunications sector. However, Turkey still has low fixed-line, internet and broadband penetration rates compared to its European peers. The three GSM cellular operators, Turkcell, Vodafone and AVEA and the fixed line operator Turk Telekom invested in equipment and services at a total value of $2-3 billion to expand their services. Turkcell has almost 36 million subscribers (56.6 % of the total GSM cellular subscribers), Vodafone has 15 million (24.5% of the subscribers) and AVEA has 12 million almost 18.9% of the subscribers).
The total number of GSM cellular service subscribers reached almost 64 million with a penetration rate of almost 89%. The total telecom equipment and service market grew to $19.3 billion and is expected to expand in 2010 as the GSM sector is the driving force and the subscribers are expected to use more and more 3G services. The total number of 3G subscribers reached almost 6 million while 2G subscribers decreased to 58 million. Fixed line subscribers are almost 17 million, reaching almost 100% in penetration per house basis. Subscriber penetration for fixed line is 23.5% and is not expected to increase anymore due to strong competition from GSM cellular operators.
With the introduction of 3G last year; IPTV, online services, content and media services, Ebusiness, personalized services, music download, games, multi-play, video services, and other mobile entertainment, have been developing rapidly, creating new business areas and revenues. BTK (Turkish Telecom Authority) is expected to conduct tenders for WiMax licenses once they are issued.
Turk Telekom will continue to be the major buyer of fixed-line telecommunications equipment. Turk Telekom, with approximately 17 million subscribers, may invest in new technologies in 2010. Main growth came from the ADSL revenues as 29% and from the mobile revenues as 14% through AVEA. Turk Telekom introduced a new technology, which provides fixed line services through GSM mobile phones that have Wi-Fi capability. Consumers can now use both fixed line services and mobile GSM services through the same mobile phone by uploading special software. Turk Telekom will also introduce 3N technology through fixed Internet and other ISPs by using its Wi-Fi capabilities spread around the country. 3N technology will provide mobile Internet services. AVEA actually started introducing this technology through road shows. AVEA has been distributing Blackberry phones successfully in Turkey.
Turk Telekom will invest $3.42 billion thru 2010 for its Next Generation Network (NGN) project and will also replace its rural area switches with small telephone switches over 10,200 switch centers. Turk Telekom is in the process of introducing IP TV. Fixed line subscribers can now change their operators without changing their phone numbers as a result of the fixed line number portability regulation, which came into force in September 2009.
Over 40 private long distance telephone companies have been also operating over the last 5 years, mostly using VoIP via an interconnection agreement with Turk Telekom. Some of these companies have established or continue to establish their own network. GSM cell phone sets suitable for video downloading and TV broadcasting equipped with wide band Internet access will be the driving force for growth in this sector. These new technologies will be the basis for the 3G and 4G operations.
In Turkey, Northern Telecom, Alcatel, Siemens, Ericsson and NEC supply the majority of fixed lines switches, trans-multiplexers, and other telephony equipment. U.S. companies can be competitive in software programs required for customer databases, emergency call services, corporate management and intelligent network operation centers. Motorola, Nokia, Ericsson and Siemens are the main GSM switch and base station suppliers. U.S. companies can be competitive in new software products required by GSM cellular operators to provide new services to their clients and better corporate and client management. The government's E-Government projects still continue to move forward, although slower in 2011 than in recent years. The Turkish IT market is far from being saturated and still has significant growth potential as a technology driven young population continues to invest in computers, consumer electronics, software and IT services. The IT market has grown every year and even in times of global crisis the growth has only dropped slightly, a good indicator that the IT industry remains an attractive industry in Turkey. (Ref: UNDP, Harnessing ICT For Development In Turkey)
This attractive consumer electronics trend has lured many international and national electronic retail supermarkets to establish themselves in the market. German Mediamarkt, British Electro World, Turkish Teknosa, Vatanbilgisayar and Gold Bilgisayar have been competing for a number of years in Turkey.
Turkey is likely to become a key strategic country for vendors in the near future. The Turkish ICT sector is a fast growing sector with a CAGR of 14 percent between 2005 and 2009. According to BMI predictions, Turkey will be the highest growing IT market in the 2009-2014 period, followed by Poland.