Interview: Turkcell's head of IR Nihat Narin

Nihat Narin has had two four-year terms in the IR team at Turkcell. The former analyst’s first spell began at the turn of the millennium, when Turkey’s leading mobile phone operator floated on the Istanbul Stock Exchange and launched an ADR program on the NYSE. To date, it is the only Turkish company on the NYSE.

Following an internal promotion in 2004, Narin moved to the internal audit division, then on to business planning, before returning to head up the IR department in 2008. He added the title of head of international media to his remit soon afterwards.

Overseeing these combined IR and news monitoring roles should be relatively easy for Narin and his seven-strong team. Second quarter revenues are up, the share price is up and the Turkish economy is looking as golden as the company’s bright yellow corporate logo, especially compared with the fading glory of many in the faltering eurozone.

Yet the company is finding itself in the headlines for other reasons, principally the battle for control of Turkcell and its boardroom being fought on a Europe-wide basis by its co-founders and majority shareholders: the Swedish/Finnish telecoms company TeliaSonera, Russia’s Alfa Group and Çukurova Group, controlled by Turkey’s richest man, Mehmet Karamehmet. Together, the trio account for roughly two thirds of the company’s investor base.

Narin is wary of saying too much on the subject of his unruly company owners, though he gives the impression that the six-year-long shareholder spat is growing tiresome for the minority investors who make up Turkcell’s 33 percent free float, 95 percent of which are international (50 percent in the UK and 30 percent in the US). For one thing, the bickering and court cases have seen a dividend moratorium endure for the past two years.

Naturally, then, the head of IR is far happier to discuss the positive questions he receives from investors, like how Turkcell can maintain market leadership, continue its revenue generation in the mobile broadband spectrum and deliver another quarter of positive growth.

Last year the company celebrated its 10-year anniversary on the NYSE and more recently the IR team has been collecting awards for its annual report. Turkcell even made its first appearance in the IR Magazine Europe rankings this year following Turkey’s inclusion in the 2012 Europe Awards research, debuting at number 302.

You are still the only NYSE-listed Turkish company. Does that mean you have to do a lot of education about Turkey when meeting with prospective investors from overseas?

Yes. We represent Turkcell and we also represent Turkey. We have that role and we are trying to do our best to execute it well. Investors ask us about the tax regime, the political situation, the fundamentals and the demography of Turkey as well as our other operations. We perceive this as a privilege but, of course, we would also like to see more Turkish companies listed internationally to represent Turkey.

Do you get many questions from IR peers at other Turkish companies contemplating a secondary listing in the US?

I know that some companies have been thinking about it. I know a lot of stock exchanges have been approaching them, too. But let’s put it this way: it’s been almost 12 years since we listed and no other company has done it so far, which I believe is due to the heavy disclosure requirements of the NYSE and the SEC.

Turkcell is still the only one to have fully implemented SOX Section 404. I used to be in charge of internal audit so I am very experienced regarding the requirements of SOX. As we all know, there are lots of companies de-listing from New York and listing in London because of these requirements.

Did Turkcell consider de-listing when SOX came out?

We didn’t think about it for even one second. We are fully compliant with SOX requirements. We may always have some challenges and weaknesses as we are operating in an emerging market, but our direction, our vision, is to increase our reporting and disclosure standards in line with the developed countries.

SOX requires much from us but in return we have gained greater discipline in the areas of reporting and auditing, which has also increased our transparency and prestige in the capital markets.

Why did Turkcell pick the NYSE in the first place?

When we had the opportunity to become a listed company on the international front, London was one option; Frankfurt was another option, as was New York. We analyzed those three and identified the NYSE as the most prestigious stock exchange.

We thought that would give us a lot of credit and a good reputation on the international front. Reputation is very important when you are trying to expand your business internationally. We could have listed on NASDAQ but it requires less filing and less transparency, and so is less prestigious.

What is it like being an IR officer in Turkey at the moment?

Investors have a great appetite for Turkey. If you look at our GDP performance, it has tripled over the past nine years, with a compound annual growth rate of 5.2 percent. If you look at the world economy, Turkey is the third-fastest-growing economy after China and Argentina, with a GDP growth of 8.5 percent in 2011.

If you look at EU levels, Turkey is the fastest-growing and fifth-largest economy in the EU (and 16th-largest in the world). In terms of demography, the population is more than 75 mn, half of which is under 30 years old. Turkey has also had great political stability over the last eight to 10 years.

What I’m saying is: this country has great potential for the future. Investors like this environment, which is why when we go to international investor conferences, we are always happy to see a great number of requests from investors.

For example, in 2009, 2010 and 2011, we met 600 investors per year on average. We participate in as many conferences as we can. In 2011 we attended many local and international conferences – that includes Europe, the US and Canada.

How is the current investor relations team different from your first stint in the field, back in 2000 to 2004?

Our team is much changed. Nowadays, it is split into three divisions: international media; disclosure and IR; and benchmark, research and analysis. That third division is crucial because we are an international company and our department has the only open window to monitor the international community.

We see thousands of international research reports, we see thousands of different investors, we see many analysts, we get a lot of in-house information that they feed us, and they tell us how we differ from the international approach – in both good and bad ways.

The benchmark, research and analysis section gathers all this information together and presents it to Turkcell’s executives, who have been known to change the business plan accordingly – provided our argument is right.

What’s next for you and your IR team?

We are using social media, so if you look at YouTube and Twitter you will see every single Turkcell disclosure on there. Our challenge now is to increase awareness – I’m sure this area has a lot of room for improvement in the future.  

One of our other goals is to expand our visibility in a different region as well. Our investors are mostly in mainland Europe, the US and the UK, so we do get a lot of demand from there, but over the last couple of years we’ve tried to regularly visit the Middle East, namely Abu Dhabi and Dubai.

We haven’t been to the Far East yet, but we are considering it. We do meet Asian investors from time to time at international conferences, but we have to go and visit them like we do in North America. We are going to open the window a little bit wider.