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. With an estimated average growth rate of 9% for the past 3 years, with an expected growth rate similar for 2013, Turkey ranks as one of the fastest growing markets in the world. With a population of 75 million and half of the population being under 30 years of age, the market is ideal for targeting ICT services and products.
• IT Cyber Security
• Consumer Electronics
• Notebook PC’s
• Audio Visual Equipment
• Wireless equipment / services
• 3G and 4G related technologies/services
• Telecomm services
• Content and media
• Fiber Optic Solutions
• Smart Phones
3G/4G related technologies and services, online services, content and media services, Ebusiness, personalized services, music/video downloads, games, multi-play, and other mobile entertainment services will be best prospects.
ICT Market Overview
Turkey’s Information and Communication Technologies (ICT) market size reached $34 billion in 2011, with a breakdown of $25 billion in Telecommunications and $9 billion in Information Technologies. (ref. Interpro). The Turkish ICT sector continues to be one of the key growth sectors in Turkey with an estimated growth of 8-10% for 2012, despite the ongoing economic global crisis.
Internet in Turkey
( ref: www.btk.gov.tr - BTK (Turkish Telecom Authority) / (www.agentschapnl.nl) According to the April 2011 BTK (Informatics Council of Turkey) survey , “Household Information Technology Usage”, 42.9 % of households have internet access throughout Turkey.
• There are over 16.68 million internet subscribers as of first quarter 2012.
• There has been an increase in internet subscriptions of 18.2% compared to the last trimester. The growth rate of the number of total internet subscribers has been rapidly growing and stands at 81.2%.
• In the last quarter 2012, the number of xDSL subscribers was 6.7 million subscribers with a 0.6% decline compared to the previous quarter.
• The OECD recently called for more initiatives to increase public use of ICT, with research from Eurostat showing that Turkey is among the countries in which internet access is low. The research found that only 39% of Turks had computers at home and that Turkey was below the EU average in terms of computers per household and internet access. (www.agentschapnl.nl)
• Although other operators in Turkey are providing ADSL services, they are reliant on the incumbent Turk Telekom's ADSL infrastructure (service provided by another Turk Telekom company- TTNET). (www.agentschapnl.nl)
A significant increase is expected in PC usage as the Ministry of Education plans to increase the number of computers and internet connections. The National Fatih Project is one such development project to provide schools with 2 million tablets, thousands of smart boards and high speed internet connection, project is worth an estimated $5 billion. Schools in remote areas are to be connected to the net via satellite with the cooperation of the Turkish satellite company Turksat.
The Turkish IT services market is expected to grow at a 14% over 2012-2016. The Turkish IT market is projected to achieve an compound annual growth rate (CAGR) of 16% during 2012-2016. Computer penetration is expected to pass 50% by 2016. Turkish spending on all categories of IT services is projected at US$1.5 bn in 2013. Banks and Telco’s are expected to be among the lead organizations spending on new IT platforms (www.agentschapnl.nl).
There has, however, been a recent shift in the driving forces behind the IT industry in Turkey. Although until recently the the industry was focused on desktop and notebook sales, the consumer electronics market has significantly caught up and increased its share of 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 in 2011, the Turkish market averaged 30% growth..
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 sales rises. The PC sales have ripple effects increasing the sales of other items such as ADSL subscriptions, modems, software and other IT products and services.
Turkey's computer hardware sales are projected at $6.1 bn in 2013 and are forecasted to reach around $10.6 bn in 2016. The market is forecast to remain in positive growth territory in 2012, with revenue forecast to grow at a 17% CAGR in 2012-2016.
The software market in Turkey is projected at $933 million in 2012 and is forecast to reach $1.5 bn in 2016, with an expected growth rate of 13%. However, much will depend on the success in bringing down illegal software use, which at 65% is nearly twice the global average.
In the telecommunications market, as of March 2012, there are 65.8 million mobile subscribers, corresponding to 88% penetration rate. In the first quarter of 2012, 64% of mobile subscribers are prepaid subscribers; and the rate of invoice subscribers have increased from 32.7% to 36.4% last year. The number of total subscribers of GMPCS (Global Mobile Personal Communications by Satellite) mobile phone service is 5,326. As the first-trimester of 2012 ends,; Turkcell has 52.50%, Vodafone has 27.83% and Avea has 19.67% share of the mobile telecom market.
As per the report of the Informatics Council, in the first quarter 2012, the number of calls were 14,023,844; and total call time was 19,538,608 minutes. In the first quarter 2012, total mobile traffic volume has been 39.08 billion. When traffic data in the first quarter 2011 are compared with the previous trimester, it shows that total traffic grew by 1.5%; compared with the same period last year and that the annual growth rate is 15.1%. (www.btk.gov.tr)
The breakdown of subscribers are as follows: Turk Telekom has 14.83 million fixed-line telephone subscribers as of the first quarter 2012, a decrease from previous high of 17 million fixed line subscribers. This suggests a significant loss of market share to gsm operators, 6.5 million ADSL lines and 13 million GSM mobile subscribers via AVEA. Turk Telekom owns 99.9% of TTnet, Argela, Innova, Sebit, Sobee ve AssisTT. Turk Telecom also owns 81% of AVEA, one of the three GSM mobile operators in Turkey. And they have a minority share of ALB telecom in Albania. 55% of the shares of Turk Telekom belong to Ojer Telecom Inc. and 30% belongs to the Turkish Treasury. The remaining 15% is floated on the Istanbul Stock Exchange (IMKB). The value of Turk Telekom was over $15 billion in 2011.
The total number of GSM cellular service subscribers reached almost 65 million with an approximate penetration rate of almost 89%. The total telecom equipment and services market grew to $20 billion and is expected to expand in 2012 as the GSM sector remains the driving force as subscribers are expected to use more and more 3G services. The total number of 3G subscribers reached 35 million. Fixed line subscribers are almost 15 million, reaching almost 100% of the households.
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 $3 billion to expand their services. Turkcell has almost 36 million subscribers (56.6% of total GSM cellular subscribers), Vodafone has 15 million (24.5% of subscribers) and AVEA has 12 million (almost 19% of subscribers). Turk Telekom, Turkcell, Vodafone and Avea have all increased their revenues. Turk Telekom’s total net sales revenues was 22.4 billion TL (12.4 billion dollars) in 2012. Other operators’ revenues were 5.66 billion TL ($3.1 billion) in 2011 and total industry revenues reached 28 billion TL ($15.5 billion).
In 2011, Turk Telekom’s investments increased by 24.77%, Turkcell’s by 14.75% and Vodafone’s by 23.34% compared to 2010. Avea’s investments were decreased by 4.64% compared to the previous year. In the first quarter of 2012, total investment amount of the four large operators have been approximately 760 million TL ($422 million).
Turk Telekom seems to be the most profitable operator of the industry. Turk Telekom’s EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin is 51.1%. It is followed by Turkcell with 29.3%, Vodafone with 17.0% and Avea with 9.91%. While mobile call traffic is increasing every year, fixed call traffic is decreasing. Talk time in 2010 was 149.5 billion minutes, and increased to 168.9 billion minutes in 2011. 147.1 billion minutes out of a total of the 168.9 billion minutes consisted of mobile traffic.
36,980 people are employed in this industry. The number of Turk Telekom employees is 24,148, the number of employees of mobile operators is 8,377 and the number of employees of other operators is 4,455. In other words, Turk Telekom has the 65.30% of industry employees, mobile industry has 22.65% and other industries have 12.05%. (Ref: ICT Magazine )
Subscriber penetration for fixed lines is 23.5% and is not expected to increase due to hard competition from GSM cellular operators. With the introduction of 3G, IPTV, online services, content and media services, E-business, personalized services, music download, games, multi-play, video services, other mobile entertainment and soon 4G, the services segment has been developing rapidly, creating new business areas and revenues.
Turk Telekom will continue to be the major buyer of fixed-line telecommunications equipment and technology. Turk Telekom’s main revenue growth came from ADSL revenues (29%) and from mobile revenues (14%) through AVEA. Turk Telekom introduced a new technology which provides fixed line services through the GSM mobile phones that have Wi- Fi capability. Consumers can now use both fixed line services and mobile GSM services through 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.
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 networks. BTK (Turkish Telecom Authority) has registered over 60 million GSM cellular phone handsets in Turkey. BTK estimates that Turkey imports approximately 10 million mobile handsets every year. Many subscribers continuously change their cell phones with new models sustaining consistent growth in the handset market. Apple’s Iphone has been extremely successful in the market in the past two years.
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 enhanced 3G and 4G operations.
In Turkey, Northern Telecom, Alcatel, Siemens, Ericsson and NEC supply 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 most of the projects have been completed. The Turkish ICT market is far from being saturated and still has significant growth potential as the technology driven young population continues to invest in computers, consumer electronics, software and ICT services. The ICT market has grown every year and even in times of global crisis the growth has only dropped slightly, a good indicator that the ICT industry remains an attractive industry in Turkey. (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.