| Babur Ozden | ||||||
Babur Ozden is probably the best-known name in the Turkish internet sector. In the past six years the 40-year-old University of Texas graduate has created two of the country’s top three internet service providers (ISPs), which together account for nearly half of total subscriptions.
Between 1994 and 1999, Ozden was chief executive officer of Superonline – owned by a clutch of companies in the Karamehmet family – which he created from scratch to become the market leader. In September last year, he went over to the Dogus group with Superonline’s management team to establish Ixir, which is now in third place after Superonline and e-kolay.
Ozden is proud of Ixir’s success, which owes a lot to an amusing, unusual and costly advertising campaign that featured two street vendors, one selling chestnuts and the other kokorec (intestines roasted on a skewer and sold in slices), who get hooked on the internet.
“In five months, from nowhere, we launched a major ISP,” says Ozden. “In the second five months we became number two. [IBS research places Ixir in third place]. This is a world record. My target is to become the first, not in subscriptions but in revenue.”
But it is not a good year for growth. Ozden believes that worldwide IT companies are being put to the “Darwinian test” and that “80% of American internet firms will not be in existence in 2002.” Some analysts believe that this prognosis is as valid for Turkey. In the second year of a strict stabilization programme, the economy is expected to contract sharply, causing many businesses to fail.
“Last year computer ownership grew more than it did in the previous four years,” says Ozden. “In Turkey, people buy computers for their homes with the purpose of accessing the internet. If, as most people expect, there is an economic crisis, people will postpone their plans for buying new PCs. We are ready for the worst but also ready for a rebound.”
Ixir has cut its workforce by one-third. The company has halted its own advertising campaign and is aware of the fact that advertising revenues will contract.
Ozden believes that if there is consolidation it will be because parent companies’ ability to finance ISPs will diminish, not because ISPs don’t make money. “Everyone knows that ISPs don’t make money in two to three years,” he says. “If the market is doubling every year the object is to make investments to accommodate this growth, not to make profits.” As long as growth is this big, emphasis will remain on building infrastructure and catching a bigger part of the market. For profits, it is necessary to look six to seven years ahead.
“In any case we have never seen consolidation in this country,” says Ozden. “The probability that there will not be one [in the internet sector] is very high. For everyone this is a very new business. Most companies have entered in 1999. No-one is ready to quit after such a short time. My opinion is that to survive the crisis – if there is going to be one – companies will chose to become smaller rather than to merge.
Last summer, Ixir gave a mandate to JP Morgan to find a strategic partner and to conduct an initial public offering. Ozden and his management team went on a roadshow. But plans had to be shelved indefinitely when the economy slid into a crisis that forced the IMF to come up with a $7.5 billion emergency aid package in December to avert a disaster.
