- 15 Months After Privatization of Turkish Telecom – 1
- Dr.Doany; Salaries Will Be Get An Increase In March – 2
- Dr.Doany : Oger Telecom Staff is Assisting TT Staff – 3
- Dr.Doany : 26,000 Job Applications Received for TT in a year – 4
- Dr.Doany : We Compliant With Our Concession Aggreement Obligations
- Dr.Doany : 2007 Investment Plan is 1,3 Billion YTL – 6
- Dr.Doany : Wholesale Tariff is Waiting for Approval – 7
- Dr.Doany : Our Real Competitor Is Mobile – 8
- Dr.Doany : Bed Dept Campaign Target is 35-40% – 9
- Dr.Doany : Voice Tariff Rebalancing was a Fundamental Assumption of the Business Plan – 10
- Dr.Doany : We are looking for international expansion opportunities – 11
- Dr.Doany : The projected net income is 2.92 bn YTL – 12
Question – 41 : And finally could you please inform us regarding the discussions of the last week between Trk Telekom and Telkoder?
Dr.Paul Doany : I would like to start by explaining the three public interest tests that should be considered in evaluating this matter.
Public Interest Test No. 1: this relates to the public ownership of the company. As you all know, 45 percent shares of this company belongs to the public, which means not to a specific government but to the Turkish people. If we had not rebalanced our tariffs, the total value of TT would have reduced by 20 percent, which will have a significant negative effect on the TT IPO. So, we should maintain the value of the company and increase it, if possible. It is our duty to protect the company value from decline, and increase it where possible.
Public Interest Test No. 2: this relates to the pricing of services TT offers to its customers. The Telecommunications Authority is the entity responsible to check the tariffs (in absolute, in baskets, and price cap limitations); they have correctly approved these tariffs as they should. Customers will benefit from lower national and international call charges, and in this regard we have made a dream come true by equating the local and national call prices, to better compete with mobile. TT did not change any of its tariffs since 2004 and increased the monthly rental fee and local call charges below the cumulative inflation rate for the last 2.5 years. In sum total, the average price change across the full customer base is well below the 2006 inflation (ie, below 9%). Simply compare with price increases over same period, for prepaid mobile service: the total charges went up 48% over same period.
Public Interest Test No. 3: this is about being fair to our competitors, ie, whether we are engaging in predatory prices. Until the tariff re-balancing, the alternative operators offered very high discounts to our unbalanced tariffs, as we had high margins in our national long-distance. Now we lowered our national prices to their prices. Even with the new tariffs, they we have acceptable gross margins, So unlike it is claimed, TTs new prices do not cause margin squeeze for the alternative operators. Those who are arguing that TT is killing competition are also questioning TAs decision and judgment, who have applied all the required tests to our submissions, and correctly approved them as they should.
TELKODER claims that we increased our prices where there is no competition, in order to lower our prices where we are facing competition. Of course we increased our fixed fee and local call charges, in accordance with the need to increase (eg. access deficit), and have done so responsibly (ie, in line with inflation). So their comment is irrelevant to their case. In any case, with the recent LLU regulation, they are able to compete with us also in the local, so they are welcome to benefit from our price increases. However they should make investments, and we know very well that they dont wish to invest.
I would like to say clearly that we always supported the competition – but we support real and fair competition. There will be no more easy competition.
TELKODER also claims that TTs revenues will increase by around 900 million YTL, which is not correct. Also they are saying that half of this amount will be Oger Telecoms and the Turkish people will be paying the next due instalment for the privatisation. First, as mentioned earlier, we are not balancing our tariffs to increase our revenues we are rebalancing to stop the decline and protect the company value. Trk Telekom lost 500 mln YTL voice revenue in 2006 compared to 2005. Now with the new tariffs we are aiming to protect our revenue through regaining national long distance traffic through our new competitive prices that still do not fall below alternative operators prices. In our budget we assumed that there will be an increase of 150 million YTL in the revenues if the call traffic is increased. In the best case, the revenues can increase by 250 million YTL. Second, by saying that the Turkish people will pay the privatization tender value, TELKODER is carrying this issue to a political ground. Politics is not our business and this tariff re-balancing should be discussed in terms of competition law, TA regulations, and best practise worldwide.
Trk Telekom exerted great efforts to help the alternative operators, and support the competitive environment. TT unlike the incumbent operators in Europe did not cause delays in signing the license agreements. We signed Type A license agreement with the leading alternative operators before our tariff re-balancing. There is no other operator in the world who would do this, as it is very risky and in fact unfair. But as our aim is to support competition we took a big risk and let our competitors have an easy competition for a period of time.
TELKODER disclosed commercially confidential information. They misrepresented these to public and they attacked the reputation of Trk Telekom. This is unacceptable to us, and in order to protect out rights, we will take all necessary legal actions.
In summary, TELKODER want the old tariffs to remain in effect: ie, they are saying that only their interest matters: the value of TT may be lost, and our customers should not gain any benefit from our new tariffs. This is not in the public interest on three counts.
Turkish translation of that part at Doany : Bundan Byle Kolay Rekabet Yok – 13
Whole interview as Turkish and English, will be reached at Paul Doany Interview file.