Major interest in imminent Turk Telekom sale

13 Jan 2005

European telecoms heavyweights Deutsche Telekom and Telefónica are amongst the companies to have declared their interest in the sale of a 55% stake in Turkey’s state-owned incumbent Turk Telekom. The deadline for taking part in the tender expired on 11 January and, for those that pass the subsequent beauty contest, bids for the USD2 billion stake are due in by 31 May. Other participants include Telecom Italia, Belgacom, Suudi Oger (Saudi Arabia), Dubai Islamic Bank, Maxis Communications (Malaysia), Turktell Bilisim (a subsidiary of Turkcell) and, interestingly, rival Turkish companies Koc Holding and Sabanci Holding bidding for the stake through a joint venture.

The sale of a stake in Turk Telekom has been on the cards since mid-1996: the government’s initial plan was to offload 39% of the company in 1999 – 20% to a strategic investor and 19% via an IPO. At that time Telecom Italia and Telefónica expressed interest, as did US-based SBC Communications, but all eventually declined to enter a tender process until the formation of an independent regulator (the TA, eventually launched in 2000). Turk Telekom was converted into a joint stock company on 29 January 2002 in readiness for privatisation, and since then its sale has been repeatedly delayed. This most recent tender was launched in November 2004.

Potential foreign investors in Turk Telekom have been attracted by the huge potential for growth in the country’s telecommunications industry which serves a population of almost 70 million, in a nation situated in a unique position at the crossroads of Europe and Asia, making it an obvious communications hub for the entire region. Added to this are the vast revenues to be gained from the operator’s core telephony business, making the 55% block sell-off hard to ignore for major international telcos.

Turk Telekom currently has around 19 million subscribers. Revenues for the year 2003 were around USD4.8 billion, up from a figure of USD3.6 billion in 2001. Although its monopoly officially ended on 1 January 2004 with the Turkish telecoms market liberalisation, it remains the dominant operator in the wireline market.

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