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Mobile Communications and Taxation in Turkey

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Mobile Communications and Taxation in Turkey = This report has been prepared on the basis of the limitations set out in the engagement letter and the matters noted in the Important Notice From Deloitte on page 1. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London, EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom member firm of DTTL. © 2012 Deloitte LLP Contents ImportantnoticefromDeloitte.........................................................................................4= MobilecommunicationsandtaxationinTurkey...........................................................2= 1.= MobilecommunicationsinTurkey..............................................................................................2= 2.= Theeconomiccontributionofmobiletelephonytotheeconomy...........................................2= 3.= TaxationonconsumersandMNOs=.............................................................................................5= 4.= Impactsoftaxationreductions...................................................................................................10= AppendixA= TheeconomicimpactofmobiletelephonyinTurkey....................13= A.1= Approachtoestimatingtheeconomicimpact=..........................................................................13= A.2= Benefitstothesupplysideoftheeconomy=..............................................................................14= A.3= Impactonemployment...............................................................................................................18= A.4= Valueaddfromtaxation=..............................................................................................................20= A.5= Overallbenefitstotheeconomy.................................................................................................21= A.6= Otherpotential=impacts...............................................................................................................22= AppendixB= TaxationonMNOsandconsumersinTurkey................................27= B.1= Mobilespecifictaxation=...............................................................................................................27= B.2= Mobilespecifictaxationonconsumers=.....................................................................................27= B.3= TaxationonMNOs.......................................................................................................................36= B.4= ImplicationsforMNOs=................................................................................................................37= B.5= Impactofchangesintaxationpolicy=.........................................................................................40= AppendixC= Methodologyandassumptions.........................................................47= C.1= Estimationoftheeconomicimpactofmobiletelephony........................................................47= C.2= Impactsofthereductionofmobilespecifictaxes=....................................................................58= = = = = = = = = = = = = = = = ©2012DeloitteLLP. = ImportantnoticefromDeloitte Thisreport(the“report”)hasbeenpreparedbyDeloitteLLP(“Deloitte”)fortheGSMAssociationin= accordancewiththeengagementletterdated1July2011,andonthebasisofthescopeandlimitationssetout below. Thereporthasbeenpreparedsolelyforthepurposesofassessingthestructureandimpactofmobile telephonyandtaxationofmobiletelephonyinTurkeyaspartofa=widerstudyontaxationofmobile= telecommunicationsservices.Itshouldnotbe=usedforanyotherpurposeorinanyothercontext,andDeloitte acceptsnoresponsibilityforitsuseineitherregard. ThereportisprovidedexclusivelyfortheGSMA’suseunderthetermsof=theContract.Nopartyotherthan theGSMAisentitledtorelyonthereportforanypurposewhatsoeverandDeloitteacceptsnoresponsibility orliabilityor=dutyofcareto=anypartyotherthantheGSMAinrespectofthereportand/oranyofitscontents.= Assetoutintheengagementletter,thescopeofourworkhasbeenlimitedbythetime,=informationand explanationsmadeavailabletous.Theinformationcontainedin=thereporthasbeenobtainedfromthe= GSMA,itsmembersandthirdpartysourcesthatareclearlyreferencedintheappropriatesectionsofthe report.Deloittehasneithersoughttocorroboratethisinformationnortoreviewitsoverallreasonableness. Further,anyresultsfromtheanalysiscontainedinthereportarereliantontheinformationavailableat=the timeofwritingthereportandshouldnotberelieduponinsubsequentperiods.= Accordingly,norepresentationorwarranty,expressorimplied,isgivenandnoresponsibilityor=liabilityisor= willbeacceptedbyoronbehalfofDeloitteorbyanyofitspartners,employeesoragentsoranyotherperson asto=theaccuracy,completenessorcorrectnessof=theinformationcontainedinthisdocumentoranyoral informationmadeavailableandanysuchliabilityis=expresslydisclaimed.= AllcopyrightandotherproprietaryrightsinthereportremainthepropertyofDeloitteLLPandanyrights notexpresslygrantedinthesetermsorinthechangeorderarereserved. Thisreportanditscontentsdonotconstitutefinancialorotherprofessionaladvice,andspecificadviceshould besoughtaboutyourspecificcircumstances.Inparticular,thereportdoesnotconstitutearecommendation orendorsementbyDeloittetoinvestorparticipatein,exit,orotherwiseuseanyofthemarketsorcompanies referredtoinit.Tothefullestextentpossible,bothDeloitteandtheGSMAssociationdisclaimanyliability= arisingoutof=theuse(ornonuse)ofthereportanditscontents,includinganyactionordecisiontakenasa resultofsuchuse(ornonuse). = ©2012DeloitteLLP. Mobile communications and taxation in Turkey Thisreportwascommissioned=bytheGSMAssociation= Figure1:Mobileand3GpenetrationlevelsinTurkey, (‘theGSMA’)toexaminetheeconomiccontribution=of 2011= mobiletelephonyandtheimpactofmobilespecific 100% taxationin=Turkey.Thereportprovidesan=analysisof 90% 80% theimpactofmobiletelephonyonTurkishcitizensand 70% theeconomyinthelastfouryears(20082011).Italso= 60% 50% describestheleveloftaxationthatappliestomobile 40% consumersandMobileNetworkOperators(‘MNOs’)in 30% 20% Turkey,evaluatingtheeffectsthatmobilespecifictaxes 10% haveontheindustryandthewidereconomy. 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Mobilepenetration 3Gpenetration Thereportsummarisesthedetailedanalysiscontainedin= = aseriesofannexesandisbasedondiscussionsanddata= Source:WirelessintelligenceandMNOs’data providedbyTurkcellandVodafone,andondiscussions undertakenwithAveaandotherstakeholders. 2. The economic contribution of mobile AdditionaldatahasbeenprovidedbytheGSMA=and telephony to the economy takenfrompubliclyavailablesourcesthatarereferenced inthereportorannexes. MobiletelephonyinTurkeygeneratessignificant economicimpactsthrough=effectsonthesupplysideof 1. Mobile communications in Turkey the=economy,=employment,=increases=in=productivity=and= benefitsgainedbyTurkishconsumers.= Turkeyhasawellestablishedmobilemarket characterisedbythreeMNOs,Turkcell,Vodafoneand InadditiontothethreeMNOs,themobile Avea,each=enjoiningamarketshareofapproximately communicationsecosysteminTurkeyisformedby= 52.8%,27.6%and19.6%respectivelyin2011. playerssuch=asequipmentproviders,typically internationalequipmentmanufacturerswithofficesin Totalmobilesubscriberswereover65millioninQ4 Turkey,andprovidersofothernetworkservicessuchas 2011,representingapenetrationof88.5%.Mobile installationandmaintenance;handsetimportersand penetrationinTurkeyincreaseduntil2008,sincewhenit distributors;airtimedistributorsandsellers,which hasslightly=fallenasaresultofmobilenumber includeahostof=retailpointsthroughout=thecountry; portability,whiletaxationonSIMcardsandconnections andsuppliersofotherservicestoMNOssuchas discouragesconsumersfromowningmorethanoneSIM advertising,accountingandothersupportservices. card.Notably,penetrationhasfailedtoreachthe100% milestonethatiscommon=inEuropean=countries. = GSMnetworkscover99%ofthepopulation.Mobile == telephony=alsoprovideswirelessdataandbroadbandto 38.2%ofthetotalmobilecustomers,with3Gservices= launchedin2009andtheexpectationfrom=theMNOs= thatLTEtrialswillberolledoutbytheendofthisyear. ©=2012DeloitteLLP. 2 Figure2:MobilecommunicationsecosysteminTurkey= Figure3:Supplysidevalueaddofmobile communications=inTurkey,TRYmillions= = Networkequipment 30,000 suppliers Supplierswithlocaloffices inTurkey(egMotorola, 25,000 Huawei,NSN,Ericsson) Localsubcontractors 20,000 workingoninstallation Suppliersof Handsetimportersand andmaintenance dealers supportservices 15,000 Anumberofinternational Legalservices handsetmanufacturershave Advertising 10,000 officesinTurkey(egHTC, Accounting services Nokia,Huawei,Blackberry, 5,000 Samsung,LG,Apple ImportersincludeBrightstar, Mobile Genpa,KVK,Telpa,Mobitel operators Othersuppliersof 0 2008 2009 2010 2011 Turkcell, capitalitems Vodafone, Computer Supply side impact Avea equipment = Motorvehicles Airtimeandhandset Furnitureandother Source:Deloitteanalysis= retailers officeequipment Wholesalers(egBrightstar, Fixedline Genpa,KVK,Telpa,Mobitel) operator Operatorexclusiveretailers Turk Tocalculatethevalueaddgeneratedbytheindustry, Nonexclusiveretailpoints Telecom suchassupermarkets, technologystores firstlythevalueaddcreatedby=themobile communicationsindustrywasestimated.Thisconsistsof thevaluecreatedbyMNOs’expenditureonwages, corporateandsocialresponsibility(‘CSR’)programmes,
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