Turk Telecom Privatisation Succeeds

19/07/2005

After seven tries, the Turkish government has finally sold a majority stake in Turk Telecom. The buyer is a consortium led by Saudi Arabia's Oger Telecom.

By Allan Cove for Southeast European Times in Ankara -- 19/07/05

The opposition of unions and NGOs made the privatisation of Turk Telcom difficult. [Turk Telecom]

Turk Telecom, which has become an important symbol of Turkey's efforts at privatising state firms, has finally been sold. Four separate consortia participated in the tender, which was ultimately won by a consortium led by Saudi Arabia's Oger Telecom. The winning bid totalled $6.55 billion. Following approval from Turkey's competition agency and the cabinet, the sale of the 55 per cent stake in Turk Telecom became final.

Oger Telecom, which is owned by the family of assassinated former Lebanese Prime Minister Rafik Hariri, has formed a consortium that includes Telecom Italia as a minority partner, and BT Group PLC's international consulting arm, BT Telconsult, as a co-operation partner.

It was the Turkish government's seventh attempt in a decade to sell the firm. Earlier attempts ran into resistance from labour unions, which were concerned about jobs, and from the military, which raised questions about the national security implications of selling a state asset to a non-Turkish company. Sale of the firm, which lost its monopoly status last year but still controls the landline market, was also cancelled a few times by the government because offers were considered too low.

The 1 July auction was broadcast live on Turkish television. Two bidders -- a group of Turkey's Koc Holding and the US-based Carlyle Group, and a consortium led by a unit of mobile operator Turkcell Iletisim Hizmetleri -- withdrew early on. After seven rounds, the Oger group finally outbid its remaining rival, a consortium headed by Etisalat Emirates Telecommunications Corp. The final price was significantly higher than the $5.65 billion initially offered by Oger.

With 19 million subscribers, Turk Telekom is the world's 13th largest telecom enterprise. As part of an agreement between Turkey and the IMF, which has loaned the country $33 billion since 1999, the firm was to sell assets and use the proceeds to reduce debt. Two other major state enterprises, the oil-refining company Tupras and the steel mill Erdemir, are also slated for privatisation this year. An attempt last year to privatise Tupras failed when Turkey's top administrative court canceled the $1.3 billion sale, alleging irregularities.

So far, the privatisation process has yielded only $1 billion in revenue for Turkey during 2005. Although the government must push ahead to meet its IMF committments, the sale of state assets continues to be a touchy issue. The sale of Turk Telecom, which employs around 56,000 people, spurred a number of worker protests around the country, leading Oger Telecom CEO Muhammad Hariri to announce no jobs would be cut.