Speaking to the press at the GSM Association’s Mobile World Congress in Barcelona, Turkcell CEO Süreyya Ciliv stated that Turkcell would have to reassess many of its investment goals because of the Telecommunications Authority’s (TK) decision to reduce the termination rates -- or the rates charged by operators to other operators when customers make calls between their networks -- by nearly 50 percent this year. The authority’s decision will bring down termination rates between mobile operators on April 1, 2010 by 50 percent, while keeping the termination rate charged by Turkey’s landline operator Türk Telekom the same as it has been for two years.
“This was a surprise for all of us” said Ciliv, adding that Turkey now had termination rates between mobile operators lower than 26 nations in the EU and that a decrease in the rate between mobile operators but not for landlines was creating confusion.
“We’re one of the biggest investors in Turkey in all sectors … but reducing the income we can collect through an unexpected decrease like this does not make it easy to do business in Turkey,” Ciliv said. “Our whole investment plan will have to be re-evaluated because of these decreases. A serious drop in a serious source of income for us is worrying our entire executive board. … Low termination rates will significantly affect this sector’s profit levels.”
Citing high licensing costs, Ciliv stated that Turkcell has to provide service under these conditions and still be able to recuperate investment costs. He did add, however, that the timing of the announcement was slightly better than in previous years: “Before, they used to make these decisions retroactively; they would change these prices on April 30 and then tell everyone that it would go into effect on April 1 of the same year. That was disastrous. … In Europe, however, they tell the sector five years in advance, at least of the direction of the change.”
