The importance of human resources
I cannot begin to explain how important Türk Telekom is to Turkey. It is not only the sole owner of more than 90 percent of fixed-line communications, it is the monopoly in broadband and fiber technologies. Every major institution in Turkey is in some way connected to Türk Telekom at some level. Some use its fixed line, some use its mobile network, some institutions have servers in Turk Telekom. If I were attacking Turkey, Türk Telekom would definitely be the first company I would like to take under control. If you have access to Türk Telekom, you can gain access to almost every major communication network within Turkey. Therefore, the news about the high-level arrests of Türk Telekom’s managers was very disturbing for me. It was disturbing not only because there would have been a huge breach in the security of communications, but it was quite bad news for the Turkish economy, which is still fragile.
On June 27, Fitch announced its ratings for Türk Telekom. It goes like this: Fitch Ratings has affirmed Türk Telekomunikasyon A.Ş.’s (TT) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at “BBB-.” The outlook is stable. Its senior unsecured debt in the foreign currency rating has also been affirmed at “BBB-.” TT is the leading operator of the fixed telecoms network in Turkey. The competitive position of the company’s mobile operations, which has the smallest market share of the three networks in Turkey, has improved following the acquisition of the important lower frequency spectrum. Spectrum payments in 2016 and 2017 mean that TT’s free cashflow (FCF) generation will be limited. We expect TT’s leverage in 2016 and 2017 to be high relative to our rating threshold, leaving TT with limited headroom. The foreign exchange risk is TT’s main credit weakness. TT has improved the competitiveness of its mobile service capability with the acquisition of 800MHz and 900MHz spectrum in the recent auction, which gives the company similar spectrum holdings in the sub-1GHz band to its competitors and removes a historical spectrum disadvantage. These low frequencies are important for providing good network coverage given the increasing focus on mobile data.
So basically Fitch was saying that even though things are proceeding acceptably, Türk Telekom has a financial risk and we know that having your high-level staff under investigation never does good for ratings.
Fortunately, Türk Telekom Consumer Business CEO Erkan Akdemir, CTO Coşkun Şahin and Technology Group COO Nazım Efe were all released yesterday.
This cleared Türk Telekom’s name, even though they laid off hundreds of people after the failed coup for possible relations to the Fethullahist Terror Organization (FETÖ).
I have known these people for years for the great work they have been doing in their careers and I would be shocked if they were really FETÖ members. The attempted coup and the organization of FETÖ reminded us once more of the importance of human resource management. If the owners of Türk Telekom had chosen to let their organization be managed according to the level of connection to FETÖ, Turkey might have lost one of its biggest assets today.