TURKEY AND TURK TELEKOM: EMBASSY ASSISTS AT&T

UNCLAS SECTION 01 OF 02 ANKARA 005536 SIPDIS USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK FCC FOR A THOMAS SENSITIVE E.O. 12958: N/A TAGS: ECPS EINV BEXP TU SUBJECT: TURKEY AND TURK TELEKOM: EMBASSY ASSISTS AT&T REF: A) ANKARA 4226 B) ANKARA 2072 CORRECTED COPY Sensitive But Unclassified. Please handle accordingly. ¶1. (SBU) Summary: Embassy helped AT&T obtain GOT regulatory approval for its merger with SBC and with researching timely resolution of problems with downed leased lines in Turkey. The Turk Telekom privatization has been delayed due to some legal attacks launched by labor unions, but all parties are optimistic that it will reach closure. Embassy seeks to build on the Telecom Regulatory Authority's interest in cooperating with the FCC. Embassy Provides Assistance to AT&T -------------- ¶2. (SBU) Embassy recently provided two instances of assistance to AT&T in Turkey, where it provides AT&T Global Network Node connectivity to multinational clients. At AT&T's request, the Embassy interceded with the Turkish Telecom Authority in July to facilitate and gain timely approval without conditions for the AT&T - SBC merger (consistent with approvals around the world). ¶3. (SBU) Responding to a second request in August, Embassy researched with Turk Telekom on how to assure timely response to domestic leased line circuits going down. Turk Telekom's Assistant General Manager Celalettin Dincer gave EconOff and Econ Assistant good news and bad news. The good news was that TT is putting in place a new IT enhanced call center system ("error-management" system; web- or telephone-based) wherein complaints would be given ticket numbers for tracking and timely resolution. (Dincer admitted that a parallel marketing system for problem resolution by wholesale customer reps had been put on hold pending the privatization of TT.) The bad-news was that the system is targeted to be completed by the end of the year, and in the meantime, there is limited centralized control and no "national champion" for domestic local circuit management. Rather, Dincer said, ISPs and other wholesale customers employ local contracts to monitor and facilitate resolution of downed circuits. Subsequently, they asked Embassy to follow up again seeking an interim national "champion" and offering to provide TT with lessons learned world-wide. Suits against Turk Telekom Privatization -------------- ¶3. (SBU) Dincer admitted that the mood at Turk Telekom was morose, as the company waited for resolution of suits filed against the privatization tender won by a consortium led by Saudi Oger Telecom (partnered by Telecom Italia and advised by BT Consulting) (Ref A). While the privatization contemplated placing some 30,000 employees elsewhere in the government bureaucracy, there was still uncertainty and stress over to whom the new management might make employment offers. Dincer commented that Oger Telcom lacked a local partner and adequate human resources and technical staff, so it might benefit the new management to keep more current TT employees. Of course, pending resolution of the suits and until the first payment is made, the new potential management cannot be directly involved with Turk Telekom. Dincer noted that the recent successful tender offering for the Turkish oil refinery company TUPRAS (in an amount over three-fold greater than the tender cancelled last year) might give detractors of the TT tender ammunition to argue for canceling and repeating (dialing for hoped for greater dollars). ¶4. (SBU) On the other hand, Privatization Administration officials are convinced that the TT privatization will move forward, citing new legislation aimed to reduce technical problems, which provided the grounds for the Danistay's (Council of State) ruling canceling the TT privatization last time. In a press conference held on September 15, Finance Minister Unakitan, who is also the Minister for privatization, said the GOT did not expect any negative Court ruling to stop the TT privatization. Moreover, the Minister said the concession agreement draft had been initialed by Turk Telecom and the Telecom Authority, and while the Danistay could offer its view, it would not have grounds to kill the deal. ¶5. (SBU) Comment: The Privatization Administration and we are still optimistic that the Turk Telekom privatization will move to fruition, but opposition from labor unions and the judiciary can still delay the process, exacerbating delays in liberalizing the key sector. We are eager to pursue contacts between FCC and the Telecom Authority (Ref B). The Turk Telekom Assistant Director thought such contacts could be useful, but pointed out that the Turkish market is quite unique, and now more appropriately targeting the European model because of prospective EU accession. However, private long distance service providers and ISP's continue to complain about the Telecom Authority not taking sufficient action against Turk Telekom's high interconnection prices. Some are losing money and may close down. FCC's advice and cooperation with the Telecom Authority may be an opportunity to provide ideas to counter these and other problems. McEldowney