Telecommunication Equipment and Defense Electronics

Electronics IndustrySouth-East European INDUSTRIAL Мarket - issue 1/2015

Telecommunication equipment sector in Turkey had the second highest share after consumer electronics in production valued at USD 2.3 billion in 2012. Regarding export values, telecommunication equipment market increased by approximately 5.4% reaching USD 2.6 billion which corresponds to 38% of the export values in electronics sector.

Majority of export values belonged to the European Union Member States with 44.58%, followed by MENA with 29.49%. As it can be observed from Figure 44, significant amount of export values are comprised of cables which include telecommunication cables, energy cables, and fiber optic cables.

With the advent of new technologies and the positive effects of liberalization, the communications sector has developed immensely in Turkey. Spending on telecommunication services is expected to grow in the near future. Although voice services are expected to be part of a decreasing trend, mobile data services and fixed data services are forecasted to have CAGRs of 13.5% and 5.5%, respectively.

As of July 9, 2013, the number of firms active in the electronic communications sector was 468 and the number of permits granted to these firms were 751. As of March 2013, there were 67.9 million mobile subscribers in the telecommunications market, corresponding to an 89.8% penetration rate. There are 13.6 million landline telephone subscribers and the penetration rate is 17.9%. However, considering that in Turkey the average household size is around 3.76 people, one can conclude that  landline telephone services reach a significant proportion of Turkish citizens.

Turkish consumers are very interested in mobile communication and mobile technologies.The mobile telecommunication business has been developing rapidly over recent years. Turkish mobile phone users adapt quickly to new technologies. The number of 3G subscribers is developing and reached 43.9% of total subscribers in the first quarter of 2013. Turkish consumers’ great interest in mobile technology, particularly smartphones, has increased the product’s market volume by 23.1% in the first quarter of 2013, making Turkey the most rapidly growing country for mobile technology among 20 European countries.

Success story of Karel
Karel is one of the most important telecommunication equipment designers and suppliers in Turkey. Established in 1986 the company is a leading designer and supplier of telecommunication equipment and provider of electronic manufacturing services. Karel is Turkish market leader that exports products and technologies to more than 30 countries including developed European countries. It is a 3rd largest PBX / IP PBX manufacturer in Europe and 2nd biggest PBX / IP PBX brand in MEA Region.

Over 9.5 million people in the world communicate by using Karel systems. According to the reports of all international and national research institutes, more than 575,000 businesses are using Karel PBXs, so it is the market leader in PBXs in Turkey with its 50 % market share. Karel operates in 8 different locations such as Istanbul headquarters, and R&D Manufacturing centers located in Ankara.

1033 employees are employed in total. 10% of its consolidated sales turnover generated by the production has been reserved to R&D investments. While at the end of the first six months of 2012 R & D expenditures was TL 10.2 million, it reached TL 11.1 million at the end of six months of 2013. Sales revenue of the company reached the highest value which is USD 94.6 million in 2012. Although the share of sales revenue from telecommunication is higher than electronics for all years, it can be seen that revenue of sales from electronics is increasing over years.

Defense Electronics
Defense industry expenditures constitute a major a part of governments’ budget. According to Stockholm International Peace Research Institute (SIPRI), Turkey is in top 15 countries in defense industry expenditures. Highest defense expenditures belong to USA, China, and UK. Turkey ranks just after Canada by USD 18 billion, and has higher expenditures than some of the major European Countries such as Spain, the Netherlands and Poland.

Middle East and Eastern Europe account for 8% and 18% of world’s military expenditures respectively Turkey’s export value has been increasing gradually since 2008. In 2012, Turkish defense exports accounted for USD 1.2 billion which corresponds to an increase of 14.7% compared to the previous year.

Defense electronics has the highest share in Turkish defense industry export with 27% followed by aerospace related exports. Turkey also has a notable place in world’s rakings regarding defense exports. Between the years 2006 to 2010 Turkey was ranked 23rd consistently. Turkey has become capable to compete with global companies producing land platforms in terms of production and export of original land platform that is sub-sector of Defense Industry.

Especially wheeled and tracked armored vehicles exported by Turkey are in great demand mostly by Asian and Oceanian countries. Turkey is not only selling these products, also focusing on co-production with countries importing these products.

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