Technology Turkey: Telecom and IT spending on the rise

Turkey: Telecom and IT spending on the rise

Turkcell, Vodafone Turkey and Avea, invest to upgrade to 4G networks

(AA) – Industry analysts forecast that telecommunications and information technology spending are on the rise in Turkey.

Spending on IT for telecommunications is expected to rise to $1.29 billion in 2015, up from about $1 billion in 2014, as the country’s three mobile operators, Turkcell, Vodafone Turkey and Avea, invest to upgrade to 4G networks, according to a report by global market intelligence researcher International Data Corporation released Monday.

Overall, IT spending in Turkey is expected to reach $11.7 billion in 2015, the report said, with the consumer, telecommunications, and finance sectors being the three biggest spenders.

“Turkey predominantly has 3G networks at present and 4G investments are expected to commence in 2015,” said Jebin George, author of the report.  

“A major portion of service providers’ capital expenditure is expected to be concentrated on 4G networks in the near future,” George said. “Like elsewhere in the Middle East and Africa region, telcos in Turkey are also focusing on expanding their portfolios by providing value-added IT services.” 

“The focus is expected to be on machine-to-machine infrastructure, smart solutions, and cloud computing, along with more traditional offerings, such as datacenters and disaster recovery,” George added.

Turkey’s telecoms regulator has set €2.3 billion ($2.44 billion) as the minimum price that mobile operators must pay to secure frequency bands for LTE (4G) network and services.

“Corporate spending in 2015, which is going to be accelerated after the general elections will pass in front of consumer spending. Software and services are supposed to be the highest performing technology categories within the transformation projects that have growth rates of 6.4 percent and 7.1 percent in the second half of 2015,” commented analysts at Herdem law firm in Istanbul in a note published on March 9.

Banking, insurance and securities will be investing heavily in the IT sector in 2015, spending $972 million. 

Facing heavy competition, Turkish banks are spending money at ensuring the technology they offer to their customers is second to none. That means an investment in mobile technology, and, given the sensitive information that will be accessed by this technology, there will be secondary investments made in security, according to a report by the Gartner Group released in February 2015.

“Software spending is being driven by the replacement trend from internally-developed software and other older legacies to external packages, especially from the larger banks,” Gartner Group Director Vittorio D’Orazio said. “Our regional CIO surveys have shown that banks in Turkey tend to have more internally-developed legacies.”  

The finance vertical, which includes banking, insurance, and securities and investments, will be the third-biggest vertical market in terms of IT spending in 2015, with organizations in this space investing $972.38 million to account for an 8.3 percent share of total IT spending.

“Faced with heavy competition in the sector, banks in Turkey are focusing on driving customer centricity by providing innovative solutions that leverage the latest technology advances, and mobility sits very much at the heart of these efforts,” said Nevin Cizmeciogullari, country manager at IDC Turkey, in the report. “Given the sensitive nature of the data carried by these firms, investments in mobility will have a strong focus on security.”

Turkey’s overall IT spending is expected to show positive growth over IDC’s 2014–2018 forecast period, averaging out at a compound annual growth rate (CAGR) of 3.9 percent. The consumer, communications, and finance sectors will remain the biggest IT spenders during this time, while healthcare, education, and utilities will be among the fastest growing.

Foreign direct investment in Turkey’s IT sector is expected to help support this high level of spending. The Turkish IT sector accounted for about 10 percent of total FDI in 2014, according to statistics from Ernst & Young.