IR Magazine sits down with one of Turkey’s most innovative IR teams
In December, Turk Telekom worked with the Turkish Investor Relations Society to put on a new conference called the IR Summit – just one of a number of innovative projects the company’s IR team has been involved in over the last couple of years. Here IR Magazine hears from head of IR Onur Oz about how the company is pushing IR forward in Turkey.
What were the key takeaways from the IR Summit?
The event helped establish closer collaboration between the IR professionals in Turkey. People met with each other, exchanged ideas and found it very useful. It was oversubscribed – there were many people who couldn’t get in. Delegates agreed there should be more events like this where different groups of people come together and discuss investor relations.
We discussed the prospects for investment in Turkey. Turkish companies are getting a lot more attention from around the world, so this increased demand is leading to more expectations in terms of IR activities. It’s putting more demand and pressure on services like investor relations, magnifying the importance of it.
The IR Summit took place in Istanbul in December
Explain how you have increased disclosure for investors interested in socially responsible investment (SRI)
We have been working on two important issues in order to increase our attractiveness to SRI investors. The first is our Carbon Disclosure Project (CDP) disclosure, which we have been reporting since 2010. We are the first and only company that regularly reports to CDP for the last three years in the telecommunications sector in Turkey.
We also have a new section about CSR on our website, where we put information about carbon disclosure, as well as corporate governance practices. We think this disclosure makes us more attractive to SRI investors. We are already a very responsible and sustainable company, and think appealing to the SRI investors will make our investor universe more diverse.
The CSR section on Turk Telekom's website
We are receiving inquiries from large funds about our social responsibility practices. We also receive questions from brokers who want to create SRI indices, so [our work in this area] is helping to attract interest from both investors and brokers.
You measure your performance in corporate governance. Why do you do this?
We get ourselves rated in corporate governance as we think we have exemplary governance practices. The ratings company that does this is incorporated by the Capital Markets Board of Turkey. The first time we received an 8.01 out of 10 average rating. In the last four years, we have consistently improved our rating, reaching 8.8 in 2012.
We have made a lot of good strides in this area. Why do we do this? We know that if companies have good corporate governance practices, it will affect their operational results in a very positive way.
It also gives us a very prestigious standing in the eyes of the public and investors. It makes us attractive to the SRI investors; governance is something they put a lot of emphasis on. But it’s not just about SRI investors: for the whole investment community, a company with good corporate governance is always a premium company compared with those that don’t have good governance.
We are also saving as a result of what we do in terms of listing fees on the Istanbul Stock Exchange. It knows the importance of corporate governance and offers an incentive scheme, giving big discounts to companies that are rated seven or more out of 10. Our savings as of 2012 total 1.3 mn Turkish lira ($737,000).
You held a draw giving individual investors the chance to meet management. How did it work?
We held a draw to pick up to 10 private investors to meet the management team. The eligibility criterion was keeping at least one share of Turk Telekom since our IPO. We really wanted to show that at Turk Telekom each and every investor is valuable, and demonstrate our appreciation of investors’ commitment to our company. The event took place in the winter of 2011. We’re thinking about making it an annual event.
How involved is the IR team in the Turkish government’s plan to sell another stake in Turk Telekom?
When the government decided to do a secondary sale, the fact that our IR department is very active and transparent in terms of making the company known to the public has been an advantage to everyone party to the project.
That’s why the government officials and the advisers who are running the secondary sale have been working with the IR department on preparation of documents, organizing investor meetings, everything that needs to be known by the investors for this sale to be smooth and efficient.
In terms of the size of the sale, the government has previously announced plans to sell 6.68 percent of the total company, which will bring the government’s ownership down to 25 percent. The method of sale is determined to be a secondary public offering.
What is the biggest challenge you have faced in IR over the last year?
The exponential increase in the investor demand in both Turkey and our company. When you look at the number of meetings we have been holding with investors, you will see it has been increasing consistently; we had more than 370 meetings in 2012, and visited close to 30 cities to meet investors.
Investors are looking for places where the macro indicators are solid, and when they look around, they don’t find many options, but Turkey is considered to be consistent in this area. The country has had impressive GDP growth and solid numbers on inflation and unemployment. Because of this very positive macro-environment and population dynamics – we are adding 500,000 households every year – Turkey is getting more and more attractive to investors.
Is the perception of IR changing in Turkey?
I think there is gradual improvement. When public companies were first required to have investor relations departments, very few companies understood the importance of IR, and many set up departments with one person. But companies are beginning to realize that good IR adds more value to the stock because it makes the company better understood by investors.
Events like the IR Summit are helping to draw attention to the benefits of IR. We think companies are realizing this more and more, and are hiring more IR professionals. It’s a hot job in Turkey right now.