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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.

David Tonge

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 let it be mine'.

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