February 2001
Net proves popular in Turkey but profits are elusive
Turks are responding enthusiastically to the high-pressure promotion of internet access. So far, though, there’s not much money to be made from the business. Access providers will soon have to reconsider their cultural aversion to business consolidation, or else think smaller.
Following aggressive promotion and advertising, take-up of
internet subscriptions in Turkey is booming. According to a recent
report from Istanbul-based research company IBS, last year internet
subscriptions grew by 609%, creating a penetration rate of 5.5%.
That's still modest compared with western Europe's average 21%, so
there's room for even further growth. This, however, seems to be
the extent of the good news. The internet game in Turkey up to now
has been almost exclusively one of capturing market share.
Acquisition costs, averaging $40 per subscriber, are high. Revenues
are small and no-one is making money.
Over the next 12 months the sector in Turkey is expected to
consolidate, as in other markets. This will not be easy because
mergers and acquisitions are alien to Turkish corporate culture.
The private sector is dominated by family-owned businesses and
their philosophy can be summed up by the adage: 'let it be small,
but...
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