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- Message of caution for mobile phone operators -
As competition hots up, providers are improving the services they offer existing customers to ensure loyalty

After last year’s huge growth in telecommunications, Turkey has been forced to adjust to changing times. The domestic economy is expected to shrink by three per cent in the coming months while the Turkish lira has lost 40 per cent of its value since it had to be floated in February. Turkcell, the country’s leading GSM operator, which boasts around 10 million customers in a total market of around 16 million users, is adopting new strategies to adapt to new circumstances. Chief executive Cuneyt Turktan says the company is no longer concentrating on expanding its customer base but on providing a new range of services to existing customers. “We are confident that the superiority of our infrastructure, the quality of our services, the effectiveness of our customer retention programme and the power of our brand will help to move us forward despite the volatile economic environment,” says Mr Turktan. Turkcell has already spent a total of $3.5 billion in investments.

“We have been preparing the base for the new technologies to be applied. We have formed a Turkcell group in addition to the Turkcell company, and we have established an internet company within that group, Superonline, which is one of the major ISPs within Turkey. “We have already invested in WAP [wireless application protocol] technology and we are now moving into GPRS [general radio packet service]. We are constantly keeping up to date.” The success of future offerings such as GPRS and mobile internet access depends on the manufacture of affordable phones capable of offering these technologies, Mr Turktan adds. Turkcell is also investing in digital TV through Digiturk, the major digital television company in Turkey. “The reason we are investing in these companies and these technologies is related to TMT convergence,” says Mr Turktan. “At the end of the day, cellular handsets will be used for mobile internet, video applications and for everything else.

The convergence is occurring, but at the same time there is a transformation going on with regard to current technologies, mindsets and business plans.” One area where further growth can be achieved is abroad, particularly in the central Asian states, once part of the Soviet Union, such as Georgia and Kazakhstan. “We are strengthening our position as a regional player,” says Mr Turktan. The European Bank for Reconstruction and Development plans to arrange a $50 million loan for Azercell Telecom, the largest cellular telecoms company in Azerbaijan. Founded in 1996 as a joint venture between the Azerbaijan ministry of communications and Turkcell, Azercell has 380,000 subscribers. The EBRD loan will be used to help finance a $144 million, three-year, network development programme. About $2 billion was spent on hand-sets in Turkey last year. The country’s largest dedicated retailer, KVK (Mobil Telefon Sistemleri), sold around three million cellular phones. In total, more than eight million new GSM subscribers signed up in 2000. Although sales of mobiles have slowed, KVK has set itself two separate sales targets of 3.5 million or 4.5 million phones this year, depending on future developments in the sector and the overall economy.

The company forecasts that the market will continue to expand, predicting a total of 13 million phone sales in 2001, with some of this growth being achieved in lower income groups. KVK reckons that as many as three million sales will be of replacement, second or upgraded models. Founded in 1993, KVK has grown to 150 franchised shops and now employs 280 people. The company sells several international brand names, as well as having an exclusive partnership and distribution agreement with Turkcell. In the past four years, KVK has opened up new subsidiaries in Moldova, Kazakhstan and Georgia. KVK general manager Muzaffer Akpinar says: “Our market is not characterised by many large corporations, but rather small to medium-sized enterprises (SMEs). These business owners are obliged to run every aspect of their companies and GSM enables them to keep in contact wherever they are. Turkish people enjoy communicating. It is typical of our Mediterranean culture, and the same phenomenon has taken place in Italy as well,” says Mr Akpinar.