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Telsim fetches $4.55 billion on Vodafone bid |
Clearday
Joined: Sep 21, 2004
Posts: 95
From: Istanbul, Turkey
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Below-estimate bid still boosts Turkish drive to bring in more foreign investment as major economic indicators continue to shine
ISTANBUL – TDN with wire services
British-based mobile telecoms giant Vodafone won an auction yesterday to buy Turkey's second largst mobile phone operator, Telsim.
Vodafone submitted the highest bid of $4.55 billion in an open auction, topping second-place MTC of Kuwait. Turkey's Savings Deposit Insurance Fund (TMSF) had set a minimum sales price threshold of $2.8 billion.
The successful bid gave a fresh lift to the European Union candidate country's campaign to attract more foreign investment.
Vodafone said it intended to invest approximately $1 billion in additional short-term funding for Telsim, which was expected to make a net loss in the short to medium term.
Turkey's formerly moribund privatization program, a key component of its $10 billion standby accord with the International Monetary Fund (IMF), has developed momentum in 2005, pulling in more foreign investors as the economy hums. The start of long-delayed EU entry talks in October has also helped Turkey project the image of a more stable economy attractive for large, long-term investments.
Of the six participants in yesterday's tender, Russia's Sistema and the United Arab Emirates' telecoms group Etisalat were eliminated before the open bidding began because they had submitted the lowest offers.
The other firms vying for Telsim were Egypt's Orascom and Emaar of Dubai.
Telsim has nearly 9.5 million subscribers in Turkey.
Vodafone, which expects the deal to be completed in the first quarter of next year, said the Turkish market has potential for significant further growth. Turkey has a fast growing and young population that is expected to grow at an annual rate of 1.4 percent up to 2010 and is projected to be greater than Germany's by 2017.
The other players in the Turkish market are Turkcell, which has nearly 27 million subscribers, and Avea, a partnership between Turk Telekom and Telecom Italia Mobile, a Telecom Italia subsidiary, which has about 6.5 million users.
"We are delighted to have won the tender for Telsim," Vodafone Chief Executive Arun Sarin said in a statement. "With a population larger than every European country except Germany and a penetration level of approximately 53 percent, the Turkish market represents a major growth opportunity."
Vadafone, Welcome to Turkey.
regards,
CDTRF
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Clearday
Joined: Sep 21, 2004
Posts: 95
From: Istanbul, Turkey
PM, WWW
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British-based Vodafone won an auction on Tuesday to buy Turkey's second-biggest mobile phone operator, Telsim, in a fresh boost for the European Union candidate country's drive to attract more foreign investment.
Vodafone made the highest bid of $4.55 billion in an open auction tender, beating Kuwait's MTC into second place. Turkey's Savings Deposit Insurance Fund (TMSF) had set a minimum sale price threshold of $2.8 billion.
For Vodafone the deal gives it a business in one of Europe's biggest mobile phone markets, with substantial growth prospects.
Shares in Turkey's biggest mobile operator, Turkcell, sank on the prospect of increased competition from Vodafone, the world's largest mobile phone company by revenue.
Vodafone said it would have to spend around $1 billion in additional short-term funding for Telsim, which was expected to make a net loss in the short to medium term.
The purchase would dilute Vodafone's adjusted earnings per share in that period, but it was not expected to have any impact on the group's share buyback program or its credit rating.
Vodafone said it expected to complete the deal in the first quarter of next year.
Of the six participants, Russia's Sistema and the United Arab Emirates' telecom group Etisalat were eliminated before the open bidding.
The other firms competing for Telsim were Egypt's Orascom and Emaar of Dubai.
Economists' reaction to the result was subdued.
"The winning price is at the low end of expectations, which had been for $5-7 billion," said London-based analyst Tim Ash of investment bank Bear Stearns in a note to clients.
"Given commitments to creditors, the Turkish Treasury will probably walk away with just $2-3 billion from the deal. Net-net, slightly disappointing, but at least it marks another privatization deal done," he said.
Turkey's once-shaky privatization program, a key plank of its $10 billion standby agreement with the International Monetary Fund (IMF), has gathered steam in the past year, drawing in more foreign investors as the economy booms.
The start of long-delayed European Union entry talks in October has also helped Turkey project the image of a more stable economy attractive for large, long-term investments.
Growth potential:
Telsim had 9.76 million subscribers as of Tuesday, according to a statement made during the auction, out of a total population of around 72 million people.
"With a larger population than every European country except Germany and a penetration level of approximately 53 percent, the Turkish market represents a major growth opportunity," Vodafone Chief Executive Arun Sarin said in a statement.
Turkey has a fast-growing and young population, which is expected to grow at an annual rate of 1.4 percent up to 2010 and is anticipated to be greater than Germany's by 2017.
The cost of protection against default on Vodafone bonds edged slightly higher and its shares slipped following news of its $4.55 billion purchase, but some in the market were unmoved. "It is a little bit above what some thought they would pay but it is not worth pulling out of the stock," a trader said.
Including Telsim, Vodafone is expected by ABN AMRO to have net debt of 20 billion pounds by the end of March.
Turkcell:
The other players in the Turkish market are Turkcell, which has nearly 27 million subscribers, and Avea, a partnership between Turk Telekom and Telecom Italia Mobile, with about 6.5 million users.
Shares in Turkcell, the largest mobile operator in Turkey, were down 6.4 percent at YTL 8.10 in late trade on worries Vodafone would sharply raise competition.
"There is an expectation that Vodafone will increase its market share and competition through new subscribers," said Gulizar Ozdemir Turk of Alan Yatirim.
Turkey sold Telsim after seizing the asset from the Uzan family when the collapse of the family's Imar Bank in 2003 left the government with debts of $6.5 billion.
Telsim also owes up to $700 million to the Turkish Treasury, Telecommunications Board and Finance Ministry.
regards,
CDTRF
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Posted: 2005-12-14 14:54
