Turkey Wealth Fund to acquire majority stake of Türk Telekom

ISTANBUL

Turkey Wealth Fund has struck an agreement with LYY Telekomünikasyon Corporation, a joint venture established by creditor banks, to acquire 55 percent of Türk Telekom shares for $1.65 billion.

“This acquisition demonstrates TWF’s trust not only to the attractive long-term outlook of Turkish telecommunication industry but also to the sustainability of Türk Telekom’s strong market position, brand value, asset base, outstanding human resources and diversified business model resulting in strong financial and operational performance,” the sovereign wealth fund said in a statement on March 10.

In a statement on the subject, TWF CEO Arda Ermut said: “As TWF, we focus on creating value in line with our mission as an asset-based development fund. Our primary goals include maximizing the value of our assets and supporting the emergence of regional and global leading companies from Turkey. Türk Telekom is such a company that aligns with our strategies and objectives with its potential and brand value.”

“As TWF, we aspire to add additional value to the telecommunication sector by contributing to the digitalization process while further strengthening our country’s technological infrastructure,” he added.

Türk Telekom said in a statement to the Public Disclosure Platform (KAP) that “the share transfer process will follow the necessary legal approvals and the completion of prerequisites listed in the share transfer agreement.”

The fund’s portfolio includes 28 companies in seven sectors, two licenses and 46 real estate properties. State lenders Ziraat Bank, HalkBank and VakıfBank, the country’s stock exchange market Borsa Istanbul, Turkish Airlines, GSM giants Turkcell and Türk Telekom, and natural gas firm Botaş are among them.

TWF also owns the majority of the shares of the Istanbul Finance Center project. The construction of the IFC in the country’s metropolis and commercial hub is expected to be completed this year.

Türk Telekom, a prominent telecommunications firm, had 14.1 million broadband customers as of the end of September 2021. The number of fiber subscribers jumped 67 percent to 8.8 million in the first nine months of last year. Mobile customers, meanwhile, stood at 23.9 million.

Türk Telekom racked up nearly $2.5 billion in revenues in the January-September 2021 period, posting an annual increase of 18 percent.

The company’s earnings before interest taxes depreciation and amortization (EBITDA) hit 12.1 billion liras ($1.2 billion) in the same period, while its EBITDA margin was 49.6 percent.

Türk Telekom’s net profits in the same period reached $443.5 million. “Our 353,000 kilometer-long fiber network spanning all over Turkey constitutes a strong leverage for future technologies,” Türk Telekom CEO Ümit Önal said recently.

Türk Telekom and Chinese giant Huawei have signed a memorandum of understanding (Mou) to collaborate to develop the fifth-generation (5G) technology standard for broadband cellular networks in Turkey.

OTAŞ, a unit of Dubai-based Oger Telecom, had taken out a $4.75 billion loan in 2013 to acquire 55 percent of Türk Telekom but failed to repay.

The creditor banks, including Akbank, Garanti BBVA and İşbank, in 2018 set up a special purpose vehicle for the shares of Türk Telekom that were given as collateral for the loan.