Turkey’s sovereign fund exploring Turk Telekom takeover, report says

1 Oct 2021

State-owned Turkey Wealth Fund (TWF) is considering a majority takeover of fixed and mobile operator Turk Telekom (TT), according to unnamed people with knowledge of the matter cited by Bloomberg. The sources said that the sovereign fund has yet to make a formal offer to TT’s controlling banking consortium, which acquired the ownership in a 2018 debt-swap with the intention to sell to a strategic investor. The stake could be worth around USD1.6 billion based on its current market price, according to data compiled by Bloomberg, but the sources said that the two sides have so far differed on price. Bloomberg adds that international strategic investors from the Gulf region and China had previously shown interest in the TT stake but were reportedly deterred by concerns regarding the 2026 expiry date of the telco’s fixed line licence.

TeleGeography’s GlobalComms Database (GCD) says that TWF is currently allocated a 5% stake in TT, which is 55%-owned by LYY Telekomunikasyon, a Special Purpose Vehicle (SPV) formed by a group of 29 banks led by Akbank, Turkiye Garanti Bankasi (Garanti Bank) and Turkiye Is Bankasi (Isbank) following a debt restructuring deal completed on 22 December 2018. The banking group acquired the controlling TT stake from Ojer Telekomunikasyon AS (OTAS), the local holding company of Dubai-based consortium Oger Telecom, in exchange for cancelling debts. In September 2019 the group selected Morgan Stanley as financial adviser for a planned share sale to a strategic investor. The Turkish Treasury retains a 25% TT stake plus special veto power via one ‘golden share’, while 15% of shares are classed as free float on the Borsa Istanbul (BIST).

GCD adds that TWF owns a controlling 26.2% direct stake in Turkey’s mobile market leader Turkcell (acquired in October 2020) alongside 100% ownership of satellite/telecoms group Turksat, which was the country’s third largest fixed broadband operator as at end-June 2021, behind TT and Turkcell’s Superonline division. TWF’s wider asset portfolio spans eight sectors, valued at USD39 billion.

Turkey, TT Mobil (Turk Telekom), Turk Telekom