Türk Telekom to take hard line on spending, CEO says

ISTANBUL

Türk Telekom has no plans to take on new debt and aims to keep capex spending to a minimum under a new five-year strategy, its chief executive told Reuters, as it focuses on paying out dividends.

The plan comes as ongoing concerns about Türk Telekom’s top shareholder, the Saudi-backed Oger Telecom, have cast a shadow on Turkey’s largest fixed-line operator.

Oger has missed the last three payments on a $4.75 billion loan, while the Turkish government wants to see Türk Telekom, the operator of the national telecoms grid, owned by a financially stable company, sources have told Reuters.

“We are not going to borrow for our business plan,” Türk Telekom Chief Executive Paul Doany told Reuters in an interview on Dec. 7.

“I need the right capex on the fixed line. I have to be very efficient, cost effective,” said Doany.

The CEO said Türk Telekom has aimed to keep its net debt at two times EBITDA (earnings before interest, tax, depreciation and amortization) as it seeks to continue to pay out dividends.

“Ideally [the net debt to EBITDA ratio] would be 1.5 and maximum 2.5, if you are a dividend-paying company,” he said.

“We need to be a dividend paying company,” Doany added.

Meanwhile, taking the CEO position at Türk Telekom for the second time in September 2016, Doany shared the hints of the five-year strategy plan prepared during the press conference held to mark his first year at the company on Dec. 7.

Türk Telekom has prepared a five-year strategic plan with confidence in itself and the country, at a time when most telecommunication companies prepare strategy plans for three years, he said.

“Within the scope of the five-year strategic plan where we set sustainable and realistic targets in accordance with the conditions of Turkey, the sector and Türk Telekom, our company will focus on two important areas. On one hand, we aim to continue our profitable growth in the market, with our new products and services touching everyday lives of every individual in our country. On the other hand, we intend to lead the digital transformation of Turkey’s best companies with our high value added solutions that we have developed with our investments in future technologies,” said Doany.

Within the 12-month process that covered September 2016-2017, the company reached 40.5 million subscribers by gaining record high annual net subscriber additions of two million since the initial public offering, he added.

“We realized our infrastructure investments take advanced technology to remote corners of the country and focused on new generation technologies with our R&D activities on one hand and invested in young companies with growth potential on the other hand. Our primary objective is to continue our growth by adding value to Turkey,” said the CEO, according to a release by the company.