Former Microsoft Exec Leading New Tech Giant

A senior executive at Microsoft for 10 years in the U.S. and Turkey, Sureyya Ciliv has learned plenty about launching new products and defending market share.

Now he's putting that know-how to good use at Turkcell, Turkey's biggest wireless phone company.

Ciliv joined Turkcell TKC as chief executive in January, returning once again to his home country, which now has a strong economy and a big appetite for wireless services.

Turkcell holds about 60% of Turkey's wireless market, with 33.8 million subscribers. The U.K.-based Vodafone is a distant second, with a 26% share, says Informa.

Outside Turkey, Turkcell has a fast-growing business in Ukraine and owns stakes in wireless firms in Kazakhstan, Azerbaijan, Moldova and Georgia.

Now it's eyeing "smart" acquisitions as it seeks new growth opportunities.

Turkcell's U.S. shares, traded on the New York Stock Exchange, have jumped more than 70% this year.

Ciliv recently spoke with IBD about mounting competition and the company's growth plans.

IBD: What did you learn during 10 years at Microsoft MSFT?

Ciliv: I worked for some great leaders at Microsoft -- Jeff Raikes, Steve Ballmer and Kevin Johnson.

I'm a product of Microsoft culture. I believe in open, direct and respectful communication; being self-critical in how we can improve; and our most important asset is our people.

Everyone at Turkcell has an important role to play. I want to empower people, motivate people to feel like they own the company.

Execution is critical, (as is) setting clear goals.

IBD: Microsoft has had a dominant market position. Turkcell has a 60% share in wireless. What lessons can you apply from Microsoft?

Ciliv: Our job is to defend market share but also add new businesses to grow.

At Microsoft, there was a Windows business to defend. But, around Windows, Microsoft built some new products like Office, exchange server and others.

We are applying a similar model. In the center is Turkcell in Turkey. We want to grow that business.

There is convergence happening. The computing industry is merging with communications.

Today, cell phones are not just little phones -- they are little computers.

And convergence is creating new applications, like mobile advertising, mobile media, financial services, health care applications.

We are also growing our business outside Turkey.

And we're investing in new areas and technologies, including Internet broadband access.

We don't see ourselves as just a (wireless) company; we see ourselves as a technology company.

IBD: How has Turkey changed?

Ciliv: There has been very visionary leadership in the government. As a result, Turkey has enjoyed very strong economic growth the past five years.

Foreign investment has increased twentyfold. Income per capita has doubled. Inflation has come down from 150% to 7% right now.

Turkey is definitely trending in the right direction.

Our subscriber base continues to grow. We also see a lot of opportunity in increased minutes of usage.

IBD: How is Turkcell handling tougher competition from Vodafone and the No. 3 player, Avea, now controlled by Saudi Oger?

Ciliv: Competition has increased, but Turkcell's performance has also increased.

In 2006, Turkcell's revenue rose 4%, after Vodafone enters the market and Turkish Telecom (Avea's owner) gets acquired by Saudi Oger.

Turkcell's revenue growth then increases 14.4% in the first quarter (of 2007) and in the second quarter 29%.

How did this happen? Turkcell has by far the best network coverage and highest-quality network.

We have 13,000 base stations; our competition has half of that or less. We also offer, in most cases, the lowest cost of communications, the most advantageous pricing, for the biggest users.

IBD: What countries has Turkcell targeted for expansion?

Ciliv: We are in six countries, four through Fintur, in which we own 42% (a joint venture with TeliaSonera). Those four countries are Kazakhstan, Georgia, Azerbaijan and Moldova.

We do not consolidate those countries (in financial results). In addition, we are 55% partners in Astelit (a Ukraine wireless firm, 54% owned by System Capital Management).

We like Ukraine very much. It is very fast-growing. I believe they are just three or four years behind Russia in their economic boom.

We love being in Ukraine and are going to invest more there. It's our second-largest market after Turkey.

IBD: About three-fourths of Turkey's people now have cell phones. Is a maturing home market one reason Turkcell is eyeing other countries?

Ciliv: We are very bullish about growing our revenue in Turkey. Our average revenue per subscriber is increasing, and we're excited about convergence.

We have relatively low MOU (minutes of use) that we can increase.

Research shows ARPU is in direct correlation with GDP per capita of a country.

We are optimistic about Turkey's economy, that people will spend more on communications.

IBD: Does Turkcell have the financial muscle to compete with other regional players, like Egypt's Orascom, Russia's VimpelCom VIP and Mobile Telesystems MBT, or Kuwait Mobile Telecom?

Ciliv: We want to invest our capital wisely. We have a lot of opportunities.

We have a history of being shrewd, not being careless about investments.

We are more focused on buying a valuable property at a good price than winning a tender. You could win the battle but lose the war if you overpay.

Financially we are very strong with a good balance sheet. We'll have more than $2 billion in cash and we have a $3 billion credit facility.

We feel good about the Ukraine. We are looking for similar value opportunities.

In the next six to 12 months, you are going to see us make some smart acquisitions.