FOCUS: Yandex business in Turkey seen likely to survive Moscow-Ankara clash

By Yekaterina Yezhova

MOSCOW, Dec 7 (PRIME) -- A raft of Moscow’s sanctions for Ankara for the downing of a jet fighter could spare Russian Internet giant Yandex that holds 7% of the Turkish search market. Analysts said the Internet industry is a sort of a safe haven amid the ongoing dispute, and Yandex could mothball the project in case of further aggravation of the situation.

“I think the worst possible impact that could hit Yandex regarding the Russia-Turkey stand-off is that the company could shelve its local project until the situation becomes clear. Moreover, the industry of Internet search is somehow beyond the sanctions and hot disputes. I don’t think analysts add any risks to Yandex’s securities at the moment,” Vladimir Bespalov, an analyst at VTB Capital told Russian Connection.

In June, Arkady Volozh, general director and co-founder of Yandex, said the company had no intention to leave the Turkish market and was looking for a partner. The company was interested in local or international firms that could be helpful with expertise, rather than with money.

Yandex entered Turkey in 2011, and Volozh said then that the company wanted to gain 10–20% of the search market to run a fully-fledged business and sell advertisements.

Yandex is a multinational company headquartered in Amsterdam and stocks traded on Moscow and New York floors. “Besides, Yandex continues working in Ukraine. It gives us a reason to believe that the dispute won’t affect the company,” Alexander Kopytov, an analyst at the asset management department at KIT Finance Broker, said.

In August, the company signed a sponsorship agreement for one year with Turkish soccer team Fenerbahce. The deal, under which the Istanbul club carries the Yandex logo on the front of its playing shirts, improves brand awareness, Kopytov said. The company raised its share on the local search market to 7% in September from 4.2% in June, he said.

Sergei Ilyin, an analyst at investment company Premier, estimated that the Turkish business brings Yandex less than 2% of revenue and does not generate a cash flow. “It’s a potentially promising market with a soaring growth from a low base,” he said.

The analyst was less optimistic than his colleagues about the impact on Yandex, which still could suffer since the success of the search engine depends on loyalty of users. “Possibly, it would be forced to sell the asset. If there are no direct restrictions, it would be still difficult to develop the business in the current conditions unless worsening of relations stop,” he said.

“Yandex would hardly face any financial losses from the project since it has not brought any tangible revenues. The reputation of the company, however, could be hit as it’s one of the most promising points of growth.”

The Internet giant declined to comment.

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