Turkish Telecom CEO Mehmet Ekinalan made explanations about Turkish Telecom’s expectations from the year 2004 and its plans for 2005. Chairman of the Board of Directors of Turkish Telecom, Erkan Akdemir and CEO Mehmet Ekinalan made a speech at the press conference that was held on February 18th, Friday at Turkish Telecom Headquarters.
At the press conference whose topic was “2004 Realizations and 2005 Expectations”, it was stated that the year 2004, being a milestone, was of the same importance for Turkish Telecom as it was for the liberalizing telecom sector. At the press conference, important statements were made about the liberalization process, LDTS market, ADSL investments and Turkish Telecom balance sheet.
In his speech in which he discussed the general outlook of the telecom market, Chairman of Board of Directors of Turkish Telecom, Erkan Akdemir, pointed out that the growth at the stable telecom market was 10%-15%, and 20% at the mobile market with regards to net profits, and total growth of the market was around 15%. Akdemir added that these figures were good considering the international telecom market.
Akdemir told that the most important development in the year 2004 was the extinction of monopoly in the stable telecom market and said, “In the year 2003, many people speculated that the liberalization was not going to be made. However, that was not the case.” Akdemir explained that the market has become reasonable only after the first year of liberalization and said, “Those who have high expectations and those who ignore how the process was realized in other countries may not agree with me.”
Akdemir pointed out that the privatization process of Turkish Telecom was still going on, and that he expects the players who may influence this process to contribute according to common sense.
“We are a Service-Oriented Company”
Turkish Telecom CEO Mehmet Ekinalan started his speech by describing the year 2004 as an “interesting” year for Turkish Telecom.
Ekinalan expressed that 2004 was the year in which liberalization had started fully, and said that Turkish Telecom had accomplished this process successfully. He explained that in recent years Turkish Telecom had acted in a state of comfort, being a technology-oriented company because of its monopolistic status in the sector however, now, especially in 2003-2004 an important transformation process was the case. Ekinalan pointed out that all their work was focused on customer satisfaction and said:
“The completion of this transformation in one day is impossible. Because we are considering a company who has 60 thousand personnel and who gives services even at the farthest places of Turkey. Of course in such a big company the transformation cannot be completed in one day. It requires a process. But we can say that this process is being realized at a fast pace.”
“We are supporting the liberalization policy whose rules were set correctly.”
Turkish Telecom CEO Ekinalan made important statements about the liberalization in the fixed line market and its policies. On the subject, Ekinalan said:
“When we consider the fixed line market, 49 new licenses were issued last year. Interconnection contracts were made with 22 of them. Among those, 5 companies have finished the tests with Turkish Telecom and started operating. What I want to point out here is that Turkish Telecom had done what it supposed to do within the framework of the competition rules. Last year, especially when we had rearranged our prices, lots of speculations were made. Turkish Telecom is going to rearrange its position according to the developing conditions. This will be a continuous way of behavior for us. So, we are supporting the liberalization policy whose rules were set correctly. Liberalization must absolutely run within the framework of predetermined rules. We neither want any unjust support, nor unfair treatment. We want to be treated with what we deserve and within an outlined set of rules. We don’t expect any special treatment. We just want a fair move.
There are problems about interconnections and the scope of the licenses. If we examine the telecommunication market, we will never see the end of problems and discussions of this type. I think we would be too optimistic if we think these kinds of discussions have or will finish. In such a big sector, discussions will always be. However, I would like to say that we now have the idea of the direction and how the sector is going to develop. We had considerable problems on this subject 4-5 years ago. Now there are not so many problems with regards to the direction to which we will proceed. The discussions are going to go on within a framework and in a decent manner.”
By defending the 5 choice price policies, Ekinalan commented that this would be appropriate for the customers and for the players who newly enter the market. Ekinalan said, “Turkish Telecom was expected to rearrange and announce its prices according to its costs. We were the first to offer different prices according to our customers’ needs.”
“ADSL Investments will Increase and Continue”
Ekinalan said that the ADSL investments that started in 2003 and continued this year are important to them. Ekinalan pointed out that the broadband investments are to be continued and he expressed that they achieved continuous efficiency in human resources.
Ekinalan reminded that they had started serving in ADSL field with their solution partners and said that their solution partners totaled 5. Ekinalan said, “Turkish Telecom is broadening its service network in Turkey with 5 companies. The point here is to maximize the customer satisfaction.”
Ekinalan explained that they were being criticized especially on ADSL, and that they were having a number of problems about their post-sales services and said, “When we examine the post-sales problems, we can say that 95% of those problems, in fact, are because of the PCs and modems of the customers. But the customers perceive this as ADSL problems.”
Ekinalan expressed that, again in order to increase customer satisfaction they were going to try to solve the problems that arise after the installation themselves and with their solution partners and that they were going to make improvements at the call centers also.
Ekinalan continued about ADSL:
“ADSL is one of the most important topics of technologic agenda of Turkey. Our aim is to expand the internet market quickly. We have provided internet access for 20 thousand schools. We are supporting the investments that the universities will make in order to widen broadband access. We also are running important projects with SMEs. One of the important projects that will expand the internet market is the e-government portal. Our ADSL ports are around 700 thousand but by the end of the year we are going to achieve 2 million ports.”
Ekinalan said that they were trying to increase the bandwidth of ADSL and that they were considering an increase to realize 512 Kbps and 1 Mbps. Ekinalan underlined that in 2003 they had 57 thousand subscribers and this increased to 455 thousand by the end of 2004, and their income was 15 quadrillion TL (nearly $11.5 million) in 2003 and this figure had increased to 146 quadrillion TL (nearly $112.3 million) in 2004.
Ekinalan reminded that the operations had started in order to establish an internet and data center in Istanbul.
Interconnection Agreement at GSM
Ekinalan pointed out that 2004 was the year of agreement and said, “We resolved our disagreement with Turkcell by conciliation. This figure was around 1.5 quadrillion TL (nearly $1,1 million). Nevertheless it was very small; we reached an agreement with Telsim and Avea. We have achieved a conciliation with our 230 thousand customers, individual and corporate, around 100 quadrillion TL (nearly $76.9 million).” Additionally Ekinalan said that Turkish Telecom had paid effort in 2004 before the privatization on the subject of conciliation and that this had paid off.
Turkish Telecom Balance Sheet:
Ekinalan announced that the company had closed the year 2004 with 2.1 quadrillion TL (nearly $1.6 million) in net profits. Ekinalan reported that Turkish Telecom’s 2004 turnover was 11.2 quadrillion TL (nearly $8.6 million), net income was 8.6 quadrillion TL (nearly $6.6 million), total expenses were 5 quadrillion TL (nearly $3.8 million) and net profit was 2.1 quadrillion TL (nearly $1.6 million). Ekinalan expressed that there are some one-time-only items within these figures, especially because of Turkcell’s collection of 1.5 quadrillion TL (nearly $1,1 million) the balance sheet figures look bigger than they should be.
If these are considered, turnover was 9.6 quadrillion TL (nearly $7.3 million), net income was 7.4 quadrillion TL (nearly $5.6 million), total expenses were 4.8 quadrillion TL (nearly $3.6 million), and gross profit was 2.1 quadrillion TL (nearly $1.6 million), net profit was 1.5 quadrillion TL (nearly $1,1 million). He stressed that the company had a successful year.
Ekinalan said that, considering broadband internet projects first, they were planning a total of 1.1 quadrillion TL (nearly $0.84 million) infrastructure investments.
Questions of the Journalists
While answering questions of the journalists, Ekinalan explained that they have reached the point of agreement with Telsim about the receivables which caused problems, and that the problematic receivables were around 300-400 quadrillion TL (nearly $230-307 million) and also they have receivables totaling 10 quadrillion TL (nearly $7.7 million) due from Avea.
On the privatization subject, Ekinalan said that 6 companies had started the information room process, in which the companies examine the information about Turkish Telecom, and also 3 companies had completed a part of the process.
Ekinalan said that Turkish Telecom had signed a contract with Microsoft about collaboration on broadband internet applications, and that they were going to receive consultancy services from Microsoft.
Ekinalan pointed out that they had started operations to separate the Cable TV after the decision of the Competition Foundation that includes the separation of Cable TV before the privatization of Turkish Telecom. He said that work is being done to have an Act issued on this matter. Turkish Telecom CEO Ekinalan said that there were technical problems in the operations at Telecom on the subject of the separation of Cable TV for the application of Competition Foundation’s recommendations, and after the Act is issued their operations were going to be completed.