GSM-based Mobile Communication in Turkey
A limited time offer! Get a custom sample essay written according to your requirements urgent 3h delivery guaranteedOrder Now
I. CURRENT AND STRATEGIC PERFORMANCE
A. Current Performance
GSM-based mobile communication in Turkey began when Turkcell commenced operations in February 1994. Turkcell then signed a 25-year GSM license contract with the Ministry of Transportation on April 27, 1998. Since then, it has continuously increased the variety of its services based on mobile audio and data communication, as well as on its quality levels and as a result, its number of subscribers. Turkcell is a regional leader by being the market leader in five countries out of nine it operates in. Turkcell’s shares have been traded on the Istanbul (IMKB) and New York Stock Exchanges (NYSE) since July 11, 2000, and it is the first and only Turkish company ever to be listed on the NYSE. Turkcell also has investments abroad. Turkcell conducts its mobile operations in growing markets like Azerbaijan, Kazakhstan, Moldova and Georgia through its subsidiary Fintur, in which Turkcell holds a 41.45% stake. KKTCell, a 100% owned subsidiary of Turkcell, was established in 1999 and operates within the framework of a revenue-sharing agreement with the Telecommunications Authority of the Turkish Republic of Northern Cyprus. Astelit, a company in Ukraine in which Turkcell holds a 55% stake, began operating in February 2005 under the brand life:).
Turkcell acquired 80% stake of Be ST from the State Committee on Property of the Republic of Belarus in 2008. Meanwhile, Turkcell’s wholly owned subsidiary in Germany, Turkcell Europe, commenced its operations in 2011. In the first quarter of 2011, Turkcell expanded its operations into nine countries by initiating MVNO services in Germany through the wholesale traffic purchase agreement signed in 2010. Turkcell, with its wide coverage area and diverse range of services abroad, is able to provide its subscribers with mobile communication services both in Turkey and around the world. Turkcell had signed 3G contracts in more than 110 countries, ranking it among the world’s top operators in terms of the provision of international data services. Turkcell also ranks among the top operators in terms of GPRS roaming, where it has signed contracts with operators from more than 165 countries. Turkcell’s Achievements Are Recognized: With its own staff, and the staff of the companies in its ecosystem, Turkcell today employs 20 thousand people. Its achievements so far have been recognized with numerous international awards and prizes.
Turkcell entered the INFO Tech 100 list in 83rd place in 2007, on which it has been listed for four years in a row. Turkcell has left behind some 10 thousand companies to make it to the list, which is compiled based on the financial data obtained from Standard & Poor’s. Turkcell won the first prize in the Best New Service category in World Communication Awards 2002, with its “GPRSLand” service. Turkcell keeps on investing in humans resources and technology, with its trained and specialized staff and was entitled to receive ISO 9001 Quality Management System Certificate in November 1999. Turkey’s first operator with ISO 9001: 2000 certificate, Turkcell, keeps on improving its services in line with the new developments. The first abutment of the “Bridge of Hearts” was built in Diyarbakır in June 2008. The “Bridge of Hearts” Project prepared jointly by the Ministry of National Education and Turkcell was kicked off with a ceremony in Diyarbakır. The Project is intended to have 100,000 students from all of Turkey’s 81 provinces visit provinces other than their own, know Turkey’s natural and cultural beauty, and build lasting friendships.
Turkcell, being aware of the uniting feature of sports, has carried out many projects and sponsorships in this field. As the main sponsor of the Turkish National Football Team and the official sponsor of Turkish National Basketball Team, Turkcell has also gained the name sponsor rights for the Turkish Super League for 5 seasons starting from 2005-2006. Turkcell believes in the importance of support to make the recent achievements of Turkish athletes permanent, and as the sponsor of 12 teams in the Turkish Turkcell Super League, Turkcell keeps on providing its support in Turkish football. Furthermore, in association with Turkish Sports Columnists Association, Turkcell holds ‘TSYD-Turkcell Sports Press Seminars’ all around Anatolia with the view of contributing to the professional competence of sports journalists working in Anatolia. An important example of Turkcell’s effort in the culture-art area, is the restoration of the Bodrum Antique Castle project in association with Ericsson Turkey.
In 1998, the project was started with the aim of developing our social values and preserving our cultural and art heritage, it was launched with the restoration of the Myndos door restoration and continued with the repair of the Ottoman Castle at the port. The third stage of the project, was selected as the restoration of Bodrum Antique Theater in June 2002, and was completed in 2003. Since 2003, the antique theatre has been hosting concerts: ‘Starry Turkcell Nights’. Turkcell has been supporting the Istanbul Film Festival held by Istanbul Culture and Arts Foundation for the past 6 years and the Jazz Festival for the past 9 years. It has also been the official communication sponsor of IKSV since 2005. In the technology sector, Turkcell has been contributing to the development of the IT and telecommunication industries in our country with the support it provides to CeBIT IT Eurasia fair. This huge organization, which Turkcell has been sponsoring for the past ten years, not only brings together the representatives of the industry on an international platform, but also plays an important role in raising the awareness of technology in the public.
B. Strategic Position
** To ensure the satisfaction of our subscribers, shareholders and employees by creating synergy with our partners while remaining a leading and trusted company. 2. Objectives
* To maintain leading position
* To achieve double digit growth in our subscriber base
* To sustain a balance between top and bottom line objectives * Retention of valued subscribers
* To maintain technological leadership in Turkey by using cutting edge network infrastructure * To be the Coca-Cola in GSM sector as awareness
* To meet the needs and expectations of our subscribers
On the regulatory front, the Telecommunications Authority recently provided an indication that the granting of third generation (3G) licenses and topics such as Mobile Number Portability (MNP), as well as the access of Mobile Virtual Network Operators (MVNO) in our market, will be among their agenda items. Although there is currently not enough clarity on the exact timing or the process by which the 3G licenses will be awarded in Turkey, it is expected to take place sometime in 2006 as per Telecommunications Authority statements. Currently, details of the MNP regulation are yet to be published by the Telecommunications Authority clarifying issues such as the method of portability and the management of related infrastructure. The details of the regulation and business model that may be applied to MVNO also remain unclear. Furthermore, a Draft Electronic Communication Law is in progress and awaiting approval from the Parliament. In its current form, the draft law grants expanded powers to the Telecommunication Authority and increases the obligations of the operators.We will continue to monitor developments on the regulatory front closely. 3. Strategies
* To provide differentiated services for different subscribers’ needs and expectation * To consider and prioritize the shareholders’ expectations during the decision making process and to encourage entrepreneurship * To drive the market in our targeted business domains proactively * To ensure continuous trust and loyalty in the community by demonstrating social corporate responsibility * To conduct effective, cost sensitive operations and timely executions 4. POLICIES
.To make US$350 million investments in infrastructure
.To continue Better Value for Money approach
.To use loyalty programs
.Churn prevention activities to retain current customers
.To concentrate on growth opportunities about young population in Turkey .To continue with new service and product offerings
.To concentrate on domestic operations as the major focus and main revenue source
II. STRATEGIC MANAGEMENT
A. Board of Directors
Board of Directors
Turkcell Board is composed of 7 members elected by the Annual General Meeting for maximum terms of three years.
The business affairs of our company are managed under the direction of the Board, which represents and is accountable to our shareholders. These responsibilities non-exhaustively include: * Building the vision of the Company, approving of local and international business strategies and determining short- and long-term goals; * Approving the Company’s annual budget and business plans and its revisions; * Monitoring the strategic and financial performance of the Company and ensuring that corrective measures are carried out as necessary; * Controlling the Company’s annual material expenditures which are not stated in the annual operating plan * Consistent with applicable law and rules, approving quarterly financial results, the audit report and amendments to the accounting policies previously adopted by the Company or any material change in the method or timing of reporting of the financial results; * Consistent with applicable law and rules, overseeing the preparation of the annual report and finalizing the same for presentation at the General Assembly of Shareholders
Board of Director Members:
| Colin J. Williams (Chairman of the Board)
Colin J. Williams was appointed as the Chairman of the Board of Directors on February 25, 2010. He also serves as a Chairman of the Audit Committee of Turkcell’s Board of Directors. He is Chairman of Clondalkin and Chair of the Audit and Remuneration Committees of Clondalkin, a consumer and industrial packaging company. From January 2001 to December 2004, Mr. Williams served as President of SCA, North America, which is active in the packaging sector, and in personal care and paper tissue products. He was a long-term board member and Vice Chairman of the International Corrugated Packaging Institution, the European Federation of Packaging, and the Federation of Paper Producers. Mr. Williams is the founding President of Propak Europe and was a board member of the Greater Philadelphia Chamber of Commerce between 2002 and 2004. From 1988 to 2001, Mr. Williams was the President of SCA Packaging, prior to which he served as the Managing Director of Bowater, a corrugated packaging company, for four years.
From 1978 to 1984, he was first the Sales Director and then the General Manager of Chicopee in the Netherlands, a non-woven fabrics company of Johnson & Johnson. Mr. Williams holds a masters degree in physical chemistry, an MBA in finance from New York University, and an honorary doctorate from Lund University in Sweden.| | Mehmet Bulent Ergin
Mehmet Bulent Ergin was first appointed as a member of the Turkcell Board of Directors on April 29, 2005. After having taken responsibility in Hochtief AG’s First Bosphorus project and Tekfen A.S.’s Iraq-Turkey pipeline project, Mr.Ergin worked in various positions at Cukurova Group Companies. He held a managerial position at Cukurova Ithalat ve Ihracat T.A.S. and as a board member in Maysan A.S., as well as Baytur Trading S.A. Currently, Mr.Ergin is the Chairman of the Board of Directors of Denizcilik Nakliyati A.S., Show T.V., and Aksam Gazetesi. Mr.Ergin majored in Civil Engineering at Robert College Turkey.| | Gülsün Nazlı Karamehmet Williams
Gülsün Nazlı Karamehmet Williams was appointed to the Board of Directors on 29 April 2010. She worked in different positions in Digiturk (Digital Platform İletişim Hizmetleri A.Ş) since 2004 after working in BSkyB England. Mrs.Karamehmet Williams is working as the Senior Vice President, responsible from the Content and is the member of Digiturk Board of Directors. She has a Bachelor of Science in Communications in Sarah Lawrence College (USA) and Richmond University (UK).| | Oleg Malis
Oleg Malis was appointed to the Board of Directors on May 22, 2006. He is also Senior Vice President of Altimo Mr.Malis began working for Altimo as Chief of the Current Project Management Unit in 2005 Between 2003 and 2005, Mr.Malis was Senior Vice President and M&A Director at Golden Telecom. Before joining Golden Telecom, Mr.Malis founded Investelectrosvyaz and Corbina Telecom. Mr.Malis holds a degree in Systems Engineering from Moscow State Aviation Technological University.| | Alexey Khudyakov
Alexey Khudyakov, age 40, was appointed to the Board of Directors on May 22, 2006 and re-appointed on April 29, 2010. He is Vice President of Altimo, a leading investor in telecoms, and also serves as non-executive Chairman and Chair of the Audit Committees of High River Gold Mines, a gold mining company. Prior to his appointment to Altimo, Mr. Khudyakov held a Vice President position with Alfa Bank, managing the bank’s direct investments in the telecom sector. Before that, he was a management consultant with McKinsey & Co. Mr. Khudyakovholds a Master of Business Administration degree from INSEAD and a Master’s degree in Applied Mathematics and Physics from the Moscow Institute of Physics and Technology.
He is a non-executive board member of Turkcell. He is also an Observer Member of the Audit Committee of Turkcell’s Board of Directors. Mr. Khudyakov was named to the Audit Committee in reliance on Rule 10A-3(b)(1)(iv)(D) under the Securities Exchange Act of 1934.| | Tero Erkki Kivisaari
Tero Erkki Kivisaari was appointed to the Board of Directors on May 14, 2007. President of the business area Eurasia as of May 1, 2007. Mr.Kivisaari was previously Chief Financial Officer and Vice President of the business area Eurasia. Mr.Kivisaari is a member of the Board of Directors of Azercell, Moldcell and the Chairman of Fintur Holdings BV board. He served as CFO of Fintur Holding B.V from 2003. Mr.Kivisaari has been the CFO of SmartTrust AB, a mobile software company owned by Carlyle Group, GE Capital, Eqvitec and Sonera Group. Before that, Mr.Kivisaari held the position of Vice President of Sonera Group’s International Operations. He has also served as an associate professor of finance at the Helsinki School of Economics. Mr.Kivisaari holds a MBA in Finance| | Karin Eliasson
Karin Eliasson was appointed to the Board of Directors on 29 April 2010. Senior Vice President and Head of Group Human Resources since 2008. Prior to joining TeliaSonera, Ms. Eliasson was Senior Vice President Human Resources at Svenska Cellulosa Aktiebolaget, SCA. She has been the CEO of Novare Human Capital AB and Vice President Organizational Development at Stora Enso AB. She holds a Bachelor of Science in Human Resource Development and Labour Relations.
A. PEST Analysis
B. Task Environment
A. Corporate Structure
(1)| KCell is 51% owned by Fintur and the remaining 49% is owned by Kazakhtelecom JSC, the Kazakh incumbent fixed-line telecom provider.| B. (2)| Azertel is 51% owned by Fintur and the remaining 49% of the shares are owned by Cenay Group, a privately held Turkish group of companies. Azercell is 100% owned by Azertel. Fintur’s effective ownership in Azercell is 51%.| C.
(3)| Gurtel is 99.99% owned by Fintur and as of December 31, 2008 Geocell is 97.5% owned by Gurtel. As of January 30, 2009, Gurtel’s stake in Geocell increased to 100%.| D.
(4)| Moldcell is 99% owned by Fintur and 1% owned by Molfintur SRL, a wholly-owned subsidiary of Fintur.| E.
(5)| On May 21, 2008, Turktell signed an agreement with Cukurova Group to acquire a 100% stake in Superonline, which is specialized in providing internet and telecommunications services, and to sell its 55% share in Bilyoner.| F.
(6)| On July 29, 2008, Beltel signed a share purchase agreement to acquire an 80% stake in Belarussian Telecom.| G. For information on the country of incorporation of our key subsidiaries, see “Item 4.B. Business Overview”. H. This excerpt taken from the TKC 20-F filed Apr 23, 2008. I. 4.C Organizational Structure
J. The following chart lists each of our key subsidiaries (including our ownership interest in Fintur) and our proportionate direct and indirect ownership interest as of April 1, 2008:
(1)| KCell is 51% owned by Fintur and 49% owned by Kazakhtelecom JSC, the Kazakh incumbent fixed-line telecom provider.| K.
(2)| Azertel is 80% owned by Fintur and 20% owned by Cenay Insaat Sanayi ve Ticaret Ltd., a privately held Turkish group of companies. Azercell is 64% owned by Azertel and 36% owned by the Ministry of Communications of Azerbaijan.| L.
(3)| Gurtel is 99.99% owned by Fintur. Geocell was 83.2% owned by Gurtel, but as of January 4, 2008, Gurtel’s stake in Geocell is now 97.5%.| M.
(4)| Moldcell is 99% owned by Fintur and 1% owned by Molfintur SRL a wholly-owned subsidiary of Fintur.| N.
(5)| All of the shares of the East Asian Consortium B.V. (“Eastasia”) were transferred to Turktell for $111 million in February 2006.| O. For information on the country of incorporation of our key subsidiaries please see “Item 4.B Business Overview”. P. This excerpt taken from the TKC 20-F filed Apr 23, 2007. Q. 4.C Organizational Structure
R. The following chart lists each of our key subsidiaries (including our ownership interest in Fintur) and our proportionate ownership interest as of February 28, 2007:
(1)| KCell is 51% owned by Fintur and 49% owned by OJSC Kazakhtelecom, the Kazakh incumbent fixed-line telecom provider.| S.
(2)| Azertel is 80% owned by Fintur and 20% owned by Cenay Group of companies, a privately held Turkish group of companies. Azercell is 64% owned by Azertel and 36% owned by the Ministry of Communications of Azerbaijan.| T.
(3)| Gurtel is 99.99% owned by Fintur. Geocell is 83.2% owned by Gurtel and the remaining by several local companies and individuals.| U.
(4)| Moldcell is 99% owned by Fintur and 1% owned by Molfintur SRL a wholly-owned subsidiary of Fintur.| V.
(5)| In August 2006, DCC and LLC Astelit merged into one company.| W.
(6)| In the Form 20-F for the year ended December 31, 2005, this subsidiary was named Hayat Boyu Egitim A.S.| X.
(7)| In the Form 20-F for the year ended December 31, 2005, this subsidiary was named Interaktif Cocuk Programlari Yapim ve Yayinciligi A.S.| Y.
(8)| In the Form 20-F for the year ended December 31, 2005, this subsidiary was named Libero Interaktif Hizmetler A.S.| Z.
(9)| In December 2006, Mapco and Turktell Bilisim merged into one company.| [. For information on the country of incorporation of our key subsidiaries please see “Item 4.B Business Overview”. . This excerpt taken from the TKC 20-F filed Apr 13, 2006. ]. 4.C Organizational Structure
^. The following chart lists each of our key subsidiaries (including our ownership interest in Fintur) and our proportionate ownership interest as of
April 10, 2006. _.
a. (1) KCell is 51% owned by Fintur and 49% owned by OJSC Kazakhtelecom, the Kazakh incumbent fixed-line telecom provider. b. (2) Azertel is 79.8% owned by Fintur and 20.2% by Cenay Group of companies, a privately held Turkish group of companies. Azercell is 64.3% owned by Azertel and 35.7% by the Ministry of Communications of Azerbaijan. c. (3) Gurtel is 99.99% owned by Fintur. Geocell is 83.2% owned by Gurtel and the remaining by several local companies and individuals. d. (4) Moldcell is 99% owned by Fintur and 1% owned by Molfintur SRL a wholly-owned subsidiary of Fintur. e. (5) On April 4, 2006, LLC Astelit announced the merger of DCC with Astelit.
The decision for the merger of DCC with Astelit was approved during the Shareholders’ Meeting which took place on April 3, 2006 in Kiev. f. In order to facilitate the diversification of our telecommunications business and the development of additional telecommunications services using advanced technologies, such as Digital television and Internet services, we formed Fintur in 2000 to hold many of our non-GSM and international GSM investments. Fintur was owned jointly with some of our principal shareholders and prior to the restructuring in 2002, we owned 25% of Fintur. The remaining equity of Fintur was owned by Sonera Holding B.V. and members of the Cukurova Group. g. During 2002, Fintur restructured its two business divisions, the international GSM businesses and the technology businesses. Under the restructuring agreement, we bought 16.45% of Fintur’s international GSM businesses from the Cukurova Group, increasing our stake in the business to 41.45%. h. 66
i. Simultaneously, Fintur sold its entire interest in its technology businesses to the Cukurova Group. We paid a total of $70.7 million to the Cukurova Group. j. As a result of the restructuring, Fintur no longer has an interest in its former technology businesses, specifically: Superonline, Digital Platform, European Telecommunications Holding E.T.H. A.G., Mobicom Bilgi Iletisim Hizmetleri A.S., Verinet Uydu Haberlesme Sanayi ve Ticaret A.S., and Topaz Telekomunikasyon Yayincilik Reklamcilik Sanayi ve Ticaret A.S.
B. Corporate Culture
* Vibrant, full-of-life. And energetic firm
* Headquartersoffer a gym and sauna for the employees
* Cafeteria provides free lunch for all employees
* Provides extensive employee training
* Creating high employee loyalty
* Accomplished company winning many award displayed in the lobby area of headquarters
A. TOWS ANALYSIS
Strengths: 1. Wide Market Presence providing international services through contracts and agreements with 639 operators in around 208 countries under gnctrkcell and IsTcell brands. 2. Strong Market Position helping it to tide over economic crisis 3. Technology Advancement of its services and products helping to maintain its position 4. Excellent branding and marketing through sponsorships of sports events/teams and CSR activities 5. Has a subscriber base of approx 35 million| Weaknesses:1. Decreasing Operational Efficiency impacting potential revenues 2. Saturation in the market in Turkey would mean limited growth
3. required funds for expansion4.incapable in cost leadership in subsidiaries markets5. operation cost is not suitable in expansion| Oppurtunities:1. Growing Data Markets across its operational geographies 2. Growing Turkey Telecom Market helping it to maximize its leadership position 3. Awards and Recognitions helping to create brand awareness4. high consumer expenditure in application stores5. increasing demand for mobile services in many developing regions in Africa and south America| Treats:1. Global Economic Slowdown impacting growth 2. Competitive Pressures causing pricing pressures3.army coup on government4.service and product imitation5.treats of suppliers exclusive agreement with competitors