20% of Turk Telekom is to go on the block in international tender

The state minister responsible for privatisation in Turkey, Yuksel Yalova, has set a date for the block sale of a 20% stake in Turkey’s fixed-line monopoly, Turk Telekom.

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By  Peter Conmy Published  August 5, 2000

The state minister responsible for privatisation in Turkey, Yuksel Yalova, has set a date for the block sale of a 20% stake in Turkey’s fixed-line monopoly, Turk Telekom.

The Turkish Privatisation Administration (PA) announced the tender for the sale of the stake to a strategic partner, on behalf of the Turk Telekom Tender Committee, on June 13 at a news conference in Ankara.

The government also plans a public offering of another 5% stake next year to Postal Administration and Turk Telekom employees while a further 14% stake will be sold in international capital markets.

Strategic investors have been invited to tender sealed envelope bids no later than 4.00pm, Ankara time, on September 15. The two best bidders will then be invited to an open-forum auction.

Interested investors must pay US $15,000 and sign a confidentiality agreement to obtain the bidding specifications. A deposit of a US $100 million bond is required to submit a bid and the winner of the stake will be required to provide a performance bond of 6% of its final bidding price.

Turk Telekom has a paid-in capital of TL 350 trillion (about US $570 million) but in 1997 the government approved a valuation of US $10 billion for Turk Telekom. But the government expect the sell-off to generate US $2.3 billion.

High Sale Price

Some government officials expect a higher sale price and PA chairman, Ugur Bayar, said the figure would be much higher now that Turk Telekom has: changed into a joint stock company, an independent regulation board has been established and a mobile phone licence has been awarded to the fixed-line monopoly.

The committee will announce its decision to the Competition Board and then to the Turkish Cabinet. Yalova said, “the block sale involves an interactive process and exchange of information and documents between prospective bidders and the tender committee.”

Under a Council of Ministers decree, strategic investors are defined as “an international basic telecommunications operator, a group of telecommunications operators containing at least one such international basic telecommunications operator or a consortium of investors in which basic telecommunications operators hold a majority interest.”

Through the privatisation the strategic investor will be required to “provide knowledge, expertise and assistance to effect the further transformation of Turk Telekom into a modern, efficient, commercially driven operator in return for appropriate management rights.”

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