You are at the top of the foreign investors who invested in Albania during the last few years. You began your investments with the purchase of the BKT. Could we say that your experiences with BKT had a real impact on expanding your investments in Albania? What are your comments about the Albanian market?
We entered the Albanian market in 2005, which we investigated and surveyed thoroughly from the beginning of 2000. After expanding our investments throughout the Turkic Republics and into other communities as well as the Middle Eastern market, we decided to enter the European market. This was because we believed the way to enter the global markets started with Europe. Firstly we made thorough survey and finally settled on Albania as it was the best country for us to establish our investments both in terms of population and its great marketing potential.
You know, as Çalık Group, we operate in many sectors including energy, telecom, textiles, construction, finance and media. First of all we set our sights on starting in areas that we were experienced in finance and telecom for Albania. Immediately after carrying out the necessary market research, we came to the conclusion that it would be the optimum investment for us to choose Albania now that BKT, the longest established bank of Albania, whose liquidity was one of the highest in the sense of service quality and experience. In the wake of the take-over negotiations in 2004, we bought out the majority of stocks by 2006 after signing a purchase agreement with BKT.
As you know, we also continued conducting research concerning telecom investments and accordingly, we entered the bid for the privatization of the Albtelecom and we succeeded.
We have always seen our investments in Albania as a whole. Hence, as Çalık Group, we have never adopted a strategy to operate only with a particular capital contribution. After analyzing the potential that Albania held, we decided that we made the best decision when we looked at finance and telecom sectors and our progress with Albtelecom and Eagle Mobile.
BKT has currently the strongest liquidity in the Albanian banking sector with a 1 billion dollar deposit. Its total assets were 1.2 billion dollars at the end of 2008. Furthermore, it is continuing to provide services with a total 62 branches, 10 of which recently opened in Kosovo after September 2007 as well as 52 others currently operating in Albania. It has a better management infrastructure after the purchase and the enhanced marketing of its services after being purchased by Çalık Holding, the Bank also significantly developed its entity within the Albanian economy and continues to expand its targets.
After investing more than 50 million Euros, Eagle Mobile, completed all of its substructure work in a record time of 6 months and founded 300 new base stations and reached 380 thousand subscribers in 11 months. Eagle Mobile, which is the first operator that presented the opportunities which are found in developed countries like internet EDGE which is ready for the 3G system and MOBILE TV to the Albanians with its 97 percent roaming coverage in Albania, also created a difference in the sector with its alternatives plans which appeals to everybody, meets the needs, and is flexible.
Albtelecom continuously increases its effectiveness in the market vis a vis its individual and corporate customers, by means of its superior service quality, no interruption, powerful technical substructure and special campaigns. The company is also in the position of the first operator which has the effective market power in addition to its market leadership in the fixed telecom services and its substructure in rural areas. Albtelecom increased the number of ADSL subscribers from 1,500 in August 2008 to 20,750 as of February 2009. Albtelecom, which won a lot of public tenders, increased its revenue by 14 percent in 2008.
Following BKT, you entered the privatization tender of Albtelecom and then Eagle Mobile which is the third largest GSM operator in Albania in 2005. Of course that was not so easy. You continued negotiations with the Albanian government for approximately 2 years. In this period, we know that some discussions came about. Would you tell us how this 2-year period progressed?
Çalık Group is a group which establishes its relationships in mutual trust and with respect for the laws of the governments and the other official organizations in each country it operates and makes investments in. As Çalık Group, we make our best efforts to perform all of our responsibilities and obligations in the guidelines of the laws and regulations built around the official organizations in all of the countries in which we invest and make projects in. This is also the case in Albania. Albtelecom, Eagle Mobile and BKT are in a good, reasonable and constructive relationship with all the regulatory authorities and other official organizations.
A lot is being discussed about our group in Albania during the privatization process and it can be seen how serious and important we are as investors. From the start of this privatization process to today, as Çalık Group, we established a relationship in a very serious and mutual way with the Albanian government and other governmental authorities. Recently, Albania’s transparent policies for the foreign investor to practice helped to create the situation.
We made important contributions to Albania with our investments. We presented new services to the Albanian people not only with BKT but also with Albtelecom and Eagle Mobile. We have made and are still making great contributions on the subject of creating a more competitive environment. It is very pleasant for us to make contributions and be seen and appreciated not only by the Albanian people but also by the Albanian government.
Of course both parties have had the opportunity to get to know each other in the 2-year period spent at the stage of approval. As a result of our mutual discussions, our offer was accepted and we purchased 76 percent of the shares of Albtelecom in October 2007. The privatization of the state affiliates all over the world also brought forth a lot of questions. Particularly if it was purchased by a foreign investor, then a lot of claims were put forward such as “will they make a profit and then sell it after running it for a few years”. We consider this reaction as quite normal. However, not only the Albanian government but also the Albanian people should know that we make our plans based on long periods. This can be seen in the other countries in which we operate. The Albanian government also approved the sale after seeing the way we did business in the past.
How do you evaluate your relationship with the Albanian government? Could you comment on the advantages and disadvantages of investing in Albania?
We are in very warm relationship with the Albanian government right now. You know that we celebrated the first year of Eagle Mobile. That day, the Prime Minister of Albania expressed how happy he is with Çalık Holding in Albania. We are trying to deserve the appreciation of the Albanian people by means of our products and services. We are trying to provide them with the service quality and latest technological products that are present in developed countries at the most affordable prices. We brought quality and competition. We have finalized a lot of projects which could satisfy the Albanian people also with the support of the Albanian government.
Albania is on the way of being the favorite country of foreign investors because it is the gateway from the Balkans to Western Europe. Albania has made and it is currently making great advances in order to improve the investment environment. My opinion is that these improvements will pay out in time. However, the most important subject is the success in the implementation of the mentioned reforms. The reforms will open the way of bringing more investors. Lately, the government has been satisfying the foreign investors by means of the positive steps that it has taken to improve the investment environment.
Thanks to the young population and very dynamic market in Albania, we think that great advances will be achieved after the privatizations which are made recently in the energy, telecommunication and tourism sectors of the country and thus these areas will continue to be the locomotive of the Albanian economy. We, as a group, believed in the investment potential of Albania and we make investments in both of the sectors having a great importance for us. Our investments in the banking and telecom sectors are the proof of the confidence we have for Albania.
The significant subject for the foreign investors is the investment environment of that country. The sound operation of the legal, financial and bureaucratic structure and the parameters such as the continuity of the economical and political stability in line with such operations, have vital importance for the investors. These parameters are the fundamental criteria which eliminate the risk of uncertainty. Albania has been taking very important steps recently to improve the investment environment. The positive reflections of these improvements will be seen in due time.
Economies continue to vitalize and grow with three types of expenditures all over the world: expenditures of the final consumers, expenditures of the private entrepreneurs and the governmental expenditures... We see that the final consumers and the private entrepreneurs slowed down their expenditures because of the economical slowing down and general uncertainty in the world. The government, as the only pushing power, remained in such a situation that increased the expenditure and searched to form economical vitality. In the event that the governments manage to direct the investments to the correct places, not only will the economical revival be provided but also some important services to be provided for the citizens of the country. In this respect, we attach importance on providing the state services in a faster way and with a higher quality to the Albanian people, the projects which are directed at the modernization of the state, and the projects and investments aimed at training our children and youth are prepared for the information age. These investments will be the investments which construct the future of Albania.
Today, for the Albanian people and economy, BKT, Eagle Mobile and Albtelecom are successful companies. Do you also believe this? Did you estimate such success in such a short period of time?
BKT, which has been one of the most important banks of Albania since 1920, is an organization which has already proven its success. Albtelecom, which is under government control was the landline operator and the most important internet provider in Albania, however it needed dynamism. Following the purchase, we increased the variety of the products which Albtelecom offers and we found new corporate subscribers and also increased its competitive power. Eagle Mobile became a project which we formed from scratch. After purchasing Albtelecom, we obtained a GSM license for Eagle Mobile and we made investments over 50 million Euros in a short period of time like 6 months and established 300 new base stations and reached more than 380 thousands of subscribers in 11 months.
These are surely great successes which were achieved in a short period of time. Of course we can’t say that all of them are coincidental. We make the investment decisions based on the results of the long-term feasibility studies and researches. We have reached all of our targets at present. We are establishing new targets for ourselves and we are advancing our progress in this direction.
Again some claims were put forward about the success of the activities of Albtelecom and Eagle Mobile. We were told that Çalık Group is only the temporary owner of Eagle Mobile and that they will sell it at the first chance they get. Such news still continues to appear. Could we learn your opinions on this subject? Will you really withdraw from the Albanian market?
As I already stated, we never have had such an opinion and never will. We’ve never planned a short-term investment. We always made long term plans. We take these claims as false and malicious views. We made great investments not only for BKT but also for Albtelecom and Eagle Mobile so far and we are still continuing to make them. If we had such an opinion, then you need to ask why these investments were made. We definitely do not plan to exit from a market which we newly entered and which we consider as a door opened to Europe. On the contrary, we will invest 100 million dollars in Albania until the end of 2009. Our basic strategy is to continue to grow with our different investments particularly in Albanian and in the neighboring countries.
What are your plans in the future for the Albanian market? Will you make any further investments in other areas?
It is our aim to enter the financial sector apart from banking in the following periods. We consider Albania, which has been in a rapid development process recently, as one of the countries with great importance in the Balkans or Eastern Europe. Particularly with our experiences in the energy and construction fields, we are observing the investment opportunities to contribute to the growth of Albania. Our search for presenting innovation, a better life standard and service standards for this beautiful country will continue afterwards as well.
As Çalık Group, another subject which we achieved in Albania through BKT and our telecom companies was to spread the financial services which were offered through the internet and telephone. By means of providing services which require the advanced technology usage, knowledge and experience build-up, the physical spaces will have no importance and each organization or person will be able to get access for the desired financial services anywhere.
You were listed among the leading Turkish investors as Çalık Holding in Forbes magazine. In this respect, how did the global crisis affect Turkey? Did this crisis affect your investments in Albania, if so, how?
Just like the rest of the world, Turkey also felt the influences of the global crisis. An economical shrinking and stagnation occurred. However, considering that the crisis emerged from bank credits, we realized that the banks in Turkey have a very strong structure and their inspection mechanism works very soundly. In this respect, we could say that the influences of the crisis were limited in Turkey which received a great lesson from the previous crisis. Of course the effects of the crisis are continuing and we are following them closely throughout the world as well. However, the most important characteristic of our group is that we give great importance not only on the entrepreneurship but also to risk management. Because of this reason, we already took our measures against the global crisis.
The Albanian investments are important investments which Çalık Group values greatly and planned strategically. We consider your country as a gateway which presents new opportunities to Europe. There is no postponement in our investments in Albania; on the contrary, we are trying to start them sooner. We give great importance not only technological but also on the human resources investments in both of our sectors for the Albanian people to receive higher quality services.
You have investments also in the neighboring countries such as Kosovo and Macedonia, apart from Albania. Could you give us some information on this subject? Will you make any other investments in different countries as well?
We give great importance to the finance, energy and telecom sectors, our investments of technology and human resources for the Albanian people to receive higher quality services. The investments which we made are indicators of this fact. Our research continues to making new investments in Albania and in the neighboring countries.
Albania has been taking very important steps recently for the improvement of the investment environment. I think that these improvements will give fruit more in the course of time. As Çalık Group, we are one of the important actors in the finance, energy, construction, media and textile sectors in Turkey and in the territory. Because of this reason, we will continue to evaluate the investment opportunities on the other areas in which we operate apart from telecom and finance sectors.
Another area which we are interested in is the financial sector part from banking and insurance. In the next term, we will complete the foundation of an insurance company in order to provide services in Albania and Kosovo. This also takes part among the targets of Çalık Group.