Türk Telekom ‘in talks for $500-mln loan before year end’

DUBAI/LONDON - Reuters

Turkey’s largest fixed-line operator, Türk Telekom, is talking to banks to raise a loan worth up to $500 million, which it plans to close before year-end, banking sources said on Oct. 26.

The five-year deal will be syndicated with a club of regional and international banks, and is being coordinated by Bank of America Merrill Lynch, the sources said.

Türk Telekom is expected to close the deal after Turkey’s second general election on November 1, three sources said, asking not to be identified as the information is private.

An election was called after a hung parliament resulted following June 7 elections.

Türk Telekom declined to comment.

The company is discussing the issuance of a euro bond following the loan, mimicking Turkish mobile operator Turkcell’s recent fundraising, the bankers said.

Last month, Turkcell, the country’s biggest mobile operator, raised $500 million and 445 million euro in loans, and also separately garnered 1.25 billion euros in a loan from the China Development Bank.

Turkcell then tapped the bond market and raised $500 million in 10-year bonds, becoming the first corporate issuer from Turkey to raise funding from the international bond market in more than a year.

The fundraising exercises reflect a general trend across the telecoms sector as companies look to shore up balance sheets ahead of acquiring 4G licenses, a second banker said.

Türk Telekom said this month it would raise the paid-in capital of its mobile phone unit Avea to help it pay fees for 4G frequencies acquired in a tender in August.

Turkey’s mobile phone industry is a growth sector servicing a young and data-hungry population with nearly 80 million consumers.

Fellow firm Slovak Telekom is also in the market for a syndicated loan, although discussions are at an early stage, the third banker said.

Türk Telekom was last in the market in June when it signed a $150-million, 10-year loan with HSBC, Mizuho, BNP Paribas and Swedish export credit agency EKN.

Prior to that Turkcell signed a $600 million-equivalent loan in March 2012.