INTERNET MARKET in TURKEY

INTERNET MARKET in TURKEY

INTERN MARKET in TURKEY Turkey s internet market has been skyrocketing in the recent years; it is the fastest growing internet market in the region. According to Internet World Statistics, while during 2000-2007, the number of internet users grew by 208.7 % in the world and 199.5 % in Europe, it grew by 700 % in Turkey for the same period, thus making Turkey the fastest growing internet market in Europe. Today, there are around 30 million internet users in Turkey. As the number of internet user is increasing, online shopping and online advertisement are also increasing. The market for advertisement on internet was about USD 40 million, and it is expected to reach USD 200 million by 2010. By then the number of internet users will jump to 40 million, including 8 million broadband subscribers. Experts expect solid growth in demand (in volume terms) for telecommunications services, driven by growth of the population, robust economic growth and the increasing use of the Internet. Telecoms and Technology Forecast Turkeyce Unit ( EIU ) Source: Pyramid Research; IDC; Economist Intelligence Unit e-commerce By June 2007 Internet commerce was increasing but had yet to become fully established in Turkey. Although most mediumsized and large companies have websites, they are used mainly for promotion rather than commercial transactions. An exception is banking, where the main incentive is lower costs rather than increased sales. Analysts calculate that an Internet transaction costs a Turkish bank around 5% of the cost of the same transaction in a traditional bank branch. Most of the larger commercial banks in Turkey offer Internet-based banking services. Other companies offer online services. The most active are airlines and retailers of books and electrical goods, although Migros, Turkey s largest supermarket chain, also offers online services. Growth of e-commerce Sales of personal computers (PCs) grew rapidly in Turkey during the late 1990s. Sales rose to an estimated 850,000 in 2004 before almost doubling to 1.6m in 2005. There were an estimated 22m Internet users in Turkey, of which around 6m were believed to be regular users. Sources in the banking sector estimated in early 2007 that 3.5m Turks were using Internetbanking services. There around around 100 commercial Internet service providers (ISPs) in Turkey in early 2007, according to industry analysts, although the ten largest ISPs accounted for around 95% of all Internet accounts. On average, ISPs derived around 80% of their revenue from subscription fees, 10% from advertising, 3% from e-commerce, 3% from web-hosting and the remaining 4% from other sources of income. All major Turkish companies and most state institutions have their own websites.. Foreign investment There are no barriers to foreign investment in e-commerce. Indeed, the Internet in Turkey was pioneered by International Business Machines s subsidiary, IBM Turk. Nevertheless, Turkish-owned companies accounted for more than 95% of all Turkish Internet accounts in mid-2007. After several failed privatisation attempts, a 55% stake in Turk Telekom, the stateowned landline telecoms monopoly, was sold in November 2005 to a Saudi Arabian-Lebanese consortium led by Saudi Oger for US$6.55bn. http://www.invest.gov.tr 1

- List of internet companies in Turkey (all sectors), Company Contact Person Web Tel Adanet Engin Karakaya www.ada.net.tr +90 312-4673728 Akinternet Ersin Poroy www.akinternet.com.tr +90 212-2490036 Alcatel Hulya Yuksel www.alcatel.com.tr +90 216-5792000 Alcatel Murat Ege www.alcatel.com.tr +90 216-5792000 AtlasNet Erdal Tanil www.atlas.net.tr +90 212-2938055 Grid Bilisim Hakan Akan www.bnet.net.tr +90 212-2886200 Borusan Cengiz Temel www.borusan.com.tr +90 212-2513410 BursaNet Murat Yaniklar www.turkticaret.net +90 224-2248640 Cisco Mete Kabatepe www.cisco.com.tr +90 212-3350202 Corning Kablo Cemal Sadiki www.corning.com +90 262-6488007 CelikNet Erol Celik www.celiknet.com +90 312-4197488 Dogan Online Tanju Erkoc www.dol.com.tr +90 212-6770941 DorukNet Gokhan Erkman www.doruk.net.tr +90 212-2272810 Earnst&Young Kaya Kazmirci www.ey.com +90 212-3153000 EBİ Mehmet Budak www.ideefixe.com +90 212-2967500 Efesnet Bulent Murtazaoglu www.efes.net.tr +90 232-4638805 Elkotek Murat Kucukozdemir www.elkotek.com.tr +90 212-2122900 Enter Gulfem Uycan www.enter.com.tr +90 212-2844055 Equant Sadi Abali www.equant.com +90 212-3555000 Equant Targan Ozgur www.equant.com +90 222-2361030 Eso-es Net Ercan Ongun www.eso-es.net +90 212-2844055 Estore İzi Adato www.estore.com.tr +90 212-3353535 Garanti Bankasi Burak Ali Gocer www.garanti.com.tr +90 212-4783535 Garanti Bilisim Senol Karahasan www.garantiteknoloji.com.tr +90 212-3555000 IBM Turk Gulsun Emuler www.tr.ibm.com +90 212-3359900 İnfonet Kemal Ciliz www.infonet.com.tr +90 212-3565580 İnterpro Zafer Kurdakul www.interpro.com.tr +90 212-2123122 KocNet Fahrettin Yazkan www.koc.net.tr +90 216-5563006 KocNet Bulent Yildirim www.koc.net.tr +90 216-5563010 Microsoft Hakan Dulge www.microsoft.com +90 212-3265000 Mynet Emre Kurttepeli www.mynet.com +90 212-3366700 Mynet Riza Saracli www.mynet.com +90 212-3366700 Nethaber Nevzat Basim www.nethaber.com +90 216-3866880 NetOne Cem Celebiler www.netone.net.tr +90 212-3551700 Oytelnet Ufuk Yildiztekin www.oytelnet.com.tr +90 212-2749440 Porttakal Hasan Colakoglu www.porttakal.com +90 212-2920505 Rtnet Bulent Kaytaz www.rt.net.tr +90 212-2869870 Satko Mehmet Celebiler www.satko.com.tr +90 212-3551700 SBS Munir Kundakci www.sbs.com.tr +90 212-3356500 Siemens Cem Devrim www.siemens.com.tr +90 212-3171324 Superonline Savas Unsal www.superonline.net +90 212-3100000 Superonline Turker Mildan www.superonline.net +90 212-3100137 Tam Bilgi İletis Taner Kaplan www.tam.net.tr +90 216-4144000 Teknotel Alper Selcuk www.teknotel.net +90 216-4181910 Telenet İbrahim Sarioglu www.telenet.com.tr +90 216-3396904 Tepum Cem Soysal www.tepum.com.tr +90 212-3550600 Treda Gunnur Aktoros www.treda.com.tr +90 216-3630090 Turkcell Asim Ozgur www.turkcell.com.tr +90 212-3131150 TurkNet H.Y.Ziya Erdem www.turk.net +90 212-3104141 TurkNet Mehmet Ozkan www.turk.net +90 212-2810100 Unimedya Muzaffer Ozer www.unimedya.net.tr +90 232-4641798 YKB Huseyin Ozdemir www.ykb.com.tr +90 212-3397000 Yore Elektronik Tunc Ozbilgin www.yore.com.tr +90 212-2340090 Source: www.tid.org.tr Major internet service providers in Turkey Cable internet providers: ADSL providers Dial-up providers Mobile internet providers Turksat: http://www.turksat.com.tr/ Turk.Net: http://adsl.turk.net/ TTNet: http://www.ttnet.net.tr Turkcell: http://www.turkcell.com.tr/ QuicNet: http://www.tellcom.com.tr/ Smile ADSL: http://www.smileadsl.com/ SuperADSL: http://adsl.superonline.com/ TTNet: http://www.ttnet.net.tr/ http://www.invest.gov.tr 2

Technology Fast50 Turkey 2007 Winners (in Alphabetical Order) Deloitte http://www.invest.gov.tr 3

- Penetration of internet connections of private households in Turkey, Results of the ICT Usage Survey On Households and Individuals, 2007 According to the results of ICT Usage Survey on Households and Individuals carried out in 2007 by Turkish Statistical Institute, 18.94 % of households have access to the Internet at home. According to the survey results 79.39 % of households with Internet access at home connect to Internet via PC. Broadband connection (ADSL etc.) is the most widely used Internet connection types with 78.03 %. Proportion of computer and Internet use of individuals are 29.46 % and 26.67 % respectively. In the period of April-June 2007, proportion of computer use of all the individuals in 16-74 age groups is 29.46 % and Internet use is 26.67 %. At the same period, 61.11 % of all Internet users used the Internet on an almost daily basis in the 3 months preceding the survey, while 25.50 % stated they used the internet at least once a week. By considering the age group, proportion of computer use and Internet use of individuals is the highest in 16-24 age groups, followed by those between 25-34 age group. By considering the education level, proportion of computer use and Internet use are the highest for university graduates 84.86 % and 82.89 % respectively. Proportion of computer use and Internet use for students are 86.83 % and 81.89 % respectively. By considering the employment status, proportion of computer and Internet use are 54.82 % and 51.38 % respectively for employees. These proportions are 44.06 % and 41.15 % for unemployed individuals respectively. Nearly half of the internet user use Internet at home. In the period of April-June 2007, home is the place to use internet, this was stated nearly half of Internet users, namely 45.96 percent. 37.52 percent of the internet users stated that they used the internet at work and 31.21 percent of the internet users stated that they used the internet at Internet café. Searching for information and on-line services was the most frequently used functionality of the Internet. In the period of April-June 2007, 90.54 % Internet user use Internet for searching for information and on-line services, 80.74 % use for communication activities, 52.27 % use for education activities, 26.18 % use for interaction with public authorities. 5.65 % of Internet users order goods or services over the Internet in the period of April-June 2007. 28.20 percent of Internet user bought the electronic machines such as mobile phone, camera, radio, TV, DVD player, video etc. over the Internet from the June, 2006 to June, 2007. According to results of the survey, 76.49 percent of internet user is no need for ordering goods or services over the Internet. Graph 1: Proportion of computer and Internet use (%) % 40 30 29,46 37,00 26,67 33,85 Turkey 20 16,36 14,21 Urban Rural 10 0 Proportion of computer use Proportion of Internet use Source: TURKSTAT http://www.invest.gov.tr 4

- Online spending habits of private households, Online shopping in Turkey for 2007 was more than twice that of 2006, with consumers spending YTL 5.5 billion in online purchases. The popularity of online shopping is growing at an incredible rate all in Turkey, in parallel to rising computer and Internet usage. According to Interbank Card Center (BKM) data, the number of online sales transactions was 21.7 million via around 20,000 online points-of-sale (POS) in 2006. That number jumped by 150 percent in 2007 to 54.1 million transactions. Online sales transactions amounted to YTL 2.4 billion in 2006 and increased by 130 percent to YTL 5.5 billion last year. E- COMMERCE TRANSACTIONS The Number of Transactions Transaction (Million TRY) Domestic and International Transactions with Domestic Credit Cards Domestic Transactions with Domestic and International Credit Cards Domestic and International Transactions with Domestic Credit Cards Domestic Transactions with Domestic and International Credit Cards Year Domestic Int l Total Domestic Int l Total Domestic Int l Total Domestic Int l Total 2005 16.962.149 706.438 17.668.587 18.038.607 248.17 18.286.776 1.716,18 85,73 1.801,91 1319,69 68,69 1.388,38 2006 19.933.704 1.326.038 21.259.742 21.106.016 582.02 21.688.037 2.471,73 166,01 2.637,75 2282,6 130,08 2.412,68 2007 49.591.402 1.950.119 51.541.521 53.366.582 779.22 54.145.804 5.180,12 229,64 5.409,77 5345,38 191,78 5.537,16 Source: Interbank Card Center, www.bkm.com.tr Number of Registered and Active Customers Internet Banking The total number of registered retail customers that logged in at least once was 9,396,167 as of March 2008. The total number of registered retail customers that logged in at least once in one-year period was 5,224,044. In the first quarter of 2008, the number of active retail customers was 4,082,990. This number shows that 43 percent of the retail customers used internet banking services in the last three-month period. The number of active retail customers increased by 1,023,417 and 287,363 as compared to March 2007 and December 2007, respectively. The total number of registered commercial customers that logged in at least once was 1,166,429 as of March 2008, where 503,964 of them (43 percent of total commercial customers) used internet banking services during the first quarter of 2008. The total number of registered commercial customers that logged in at least once in one-year period was 610,445. Number of Customers Using Internet Banking Services March 07 December 07 March 08 Number of retail customers Active (A) (that logged in at least once in the related three-month period) 3,059,573 3,795,627 4,082,990 Registered (B) (that logged in at least once) - 8,908,956 9,396,167 Registered (C)(that logged in at least once in one-year period) - 4,920,907 5,224,044 Active (A) / registered (B) (percent) - 43 43 Number of commercial customers Active (A) (that logged in at least once in the related three-month period) 404,350 478,737 503,964 Registered (B) (that logged in at least once) - 1,131,302 1,166,429 Registered (C) (that logged in at least once in one-year period) - 588,211 610,445 Active (A) / registered (B) (percent) - 42 43 Number of total customers Active (A) (that logged in at least once in the related three-month period) 3,463,923 4,274,364 4,586,954 Registered (B) (that logged in at least once) - 10,040,258 10,562,596 Registered (C) (that logged in at least once in one-year period) - 5,509,118 5,834,489 Active (A) / registered (B) (percent) - 43 43 *Source: Banks Association of Turkey, www.tbb.org.tr As of March 2008, 43 percent of the total number of registered customers (retail and commercial) that logged in at least once was used internet banking services at least once. The number of total active customers increased by 1,123,031 and 312,590 as compared to March 2007 and December 2007, respectively. http://www.invest.gov.tr 5

Investment Transactions The total number of investment transactions performed by using internet banking services was 8 million with an amount of TRY 48,713 million in the first quarter of 2008. As of March 2008, investment funds were the largest in total volume of transactions with TRY 16,039 million, followed by foreign currency transactions, share certificate transactions and repurchasing agreements. Investment Transactions December 2007 March 2008 Net Change December 2007 Number of ( 000) (Million TRY) Number of ( 000) (Million TRY) Number of ( 000) (Million TRY) Average transactions ( 000 TRY) Investment funds 3,600 15,228 3,596 16,039-3 811 4.5 Foreign currency transactions 1,905 10,346 2,036 14,699 131 4,353 7.2 Time deposit accounts 290 4,077 329 4,564 39 487 13.9 Realized share certificate Repurchasing agreements 1,448 4,183 2,122 6,297 675 2,114 3.0 161 4,498 154 4,958-7 461 32.2 Bonds and bills 195 1,982 209 2,064 14 82 9.9 Gold transactions 17 30 35 91 18 61 2.6 Total 7,615 40,344 8,481 48,713 866 8,368 5.7 *Source: Banks Association of Turkey, www.tbb.org.tr Repurchasing agreements led to the highest average volume with an amount of TRY 32.2 thousand, followed by time deposit transactions with TRY 14 thousand, in the first quarter of 2008. The total average volume of investment transactions was TRY 5.7 thousand in the same period. Financial Transactions The total number and volume of financial transactions (excluding investment transactions) performed by using internet banking services, was 55 million and TRY 138,454 million respectively, in the first quarter of 2008. The total volume of money orders, EFT and foreign currency transfers was 82 percent of whole financial transactions. Financial Transactions March 2007 December 2007 March 2008 Number of ( 000) (Million TRY) Number of ( 000) (Million TRY) Number of ( 000) (Million TRY) Money transfers 26,615 101,559 29,335 112,693 29,854 114,044 Payments 11,709 1,913 15,393 3,400 17,465 3,967 Credit card 5,052 2,807 5,352 3,486 5,848 3,877 Other fin. 1,640 9,423 1,131 7,851 1,426 16,566 Total 45,016 115,702 51,211 127,431 54,593 138,454 *Source: Banks Association of Turkey, www.tbb.org.tr The increasing trend in the number and volume of financial transactions performed by using internet banking services continued also in December 2007 and in March 2008. http://www.invest.gov.tr 6

- Existing networks or associations that work in the internet/internet retail sector Turkish Informatics Industry Association: http://www.tubisad.org.tr Software Industrialists Association: http://www.yasad.org.tr/ Turkish Association of Electronics and Information Industries: http://www.tesid.org.tr Associations of Internet Technologies: http://www.inetd.org.tr/ Turkish Informatics Association: http://www.tbd.org.tr/ Turkish Informatics Foundation: http://www.tbv.org.tr/ Turkish Competitive Telco Operators' Association: http://www.telkoder.org.tr/ Turk Telekom (Company): http://www.turktelekom.com.tr/ Telecommunications Authority (supervisory body): http://www.tk.gov.tr/ Radio and Television Supreme Council (regulatory body): http://www.rtuk.gov.tr/ - Important trade shows and events in the internet/internet retail sector. CeBIT Informatics Fair: It is the largest and most important ICT trade show in the region which covers the entire spectrum of information technology, telecommunications, software and ICT-related services; the show is annually orginized and the next show will be held again on 7-12 October 2008 in Istanbul, Turkey: http://www.cebitbilisim.com/ Internet Conferences in Turkey: http://inet-tr.org.tr Academic Informatics Conferences: http://ab.org.tr/ Other major fairs on information technologies can be tracked at: http://www.fuarrehberi.org.tr/ http://www.invest.gov.tr 7