Turk Telekom Stake Sale to Hinge on License Extension

Written by
Ercan Ersoy
Written by

Ercan Ersoy

Twitter
WhatsApp
Facebook
Reddit
Email

(Bloomberg) --

A majority stake in Turkey's biggest phone operator is attracting potential buyers even though its license expires in six years and there is no government decision on whether it will be renewed, according to people with knowledge of the matter.

Investors from the Persian Gulf have expressed interest in the 55% stake held by banks, the people said, asking not to be identified because talks are private. But concern that the government has not yet decided whether to lengthen Turk Telekom's license is hindering formal offers because there may not be enough time for a purchaser to recoup their investment through dividend payouts, they said.

The government is wary of extending Turk Telekom's license because doing so could encourage Turkcell Iletisim Hizmetleri AS and Vodafone Group Plc's Turkey unit to demand the same treatment when their licenses are up, the people said. 3G and 4G licenses for all operators expire in 2029, while Turk Telekom's landline and 2G licenses end in 2026.

Turk Telekom has an enterprise value, a gauge for deals that includes market value plus net debt, of $7.2 billion based on Wednesday's share price, according to data compiled by Bloomberg. That would make a 55% stake worth almost $4 billion. The stock has gained about 50% over the past 12 months. Turkey's Treasury holds 25% stake at the company while the government's wealth fund, TVF, holds 6.7%. The remainder is trading on Borsa Istanbul.

Turkey's Ministry of Treasury and Finance declined to comment. Turk Telekom, formally known as Turk Telekomunikasyon AS and LYY Telekomunikasyon AS, the special purpose vehicle created to hold the shares owned by the banks, declined to comment.

About 20 lenders took over the holdings in Turk Telekom in 2018 after one of the Ankara-based operator's former owners, Lebanese Hariri family's Oger Telecom Ltd., failed to pay an installment on a $4.75 billion loan.

Akbank TAS is the biggest shareholder in LYY with 35.6%, followed by Turkiye Garanti Bankasi AS with 22.1% and Turkiye Is Bankasi AS with 11.6%.

Turk Telekom shares closed 3.8% lower at 7.83 liras in Istanbul on Wednesday. Akbank rose 3.5% and Garanti climbed 1.7%, both off their sessions highs, while Isbank dropped 0.2%.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, ;Onur Ant at oant@bloomberg.net, ;Benjamin Harvey at bharvey11@bloomberg.net, Vernon Wessels, John Bowker