Turkey Wealth Fund signs deal to buy 55 percent of Türk Telekom’s shares

Duvar English – Reuters

The Turkey Wealth Fund said on March 10 that it signed a deal with LYY Telekomunikasyon to purchase 55 percent of Türk Telekom’s shares.

With the latest deal, the Turkey Wealth Fund now controls shares in two of Turkey’s largest telecom companies, including Turkcell.

The purchase of the shares was valued at $1.65 billion, the Wealth Fund said, adding that 2021 dividends for the shares would be paid to LYY.

The transaction needs approval by regulators, it said in a press release.

OTAS, 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 keep up payments on what was Turkey’s largest corporate loan at the time.

The creditor banks in 2018 set up a special purpose vehicle for the shares of Türk Telekom that were given as collateral for the loan.

The banks involved included Akbank, QNB Finansbank, Garanti BBVA, and İş Bankası among others.

Turkey's Wealth Fund was set up in 2016 by the government to develop and increase the value of Turkey's strategic assets and provide resources for investment.

The purchase reflects the Wealth Fund's conviction in the long-term outlook of Turkey's telecommunication sector.

"As [Turkey's Wealth Fund], we believe that we will add extra value to telecommunication sector by contributing in the digitalization process, while focusing on efforts to further strengthen the technological infrastructure of our country," said CEO Salim Arda Ermut in a press release.

The purchase drew reaction from opposition figures, with main opposition Republican People’s Party (CHP) group deputy chair Engin Altay questioning where the wealth fund found the money to buy the stake.

Altay asked Vice President Fuat Oktay in a motion about the purchase by the Turkey Wealth Fund.

He added that Türk Telekom had been nationalized again and recalled the debts the Hariri family, which owns Oger Telecom, failed to pay off to Turkish lenders.

Altay asked whether the Turkey Wealth Fund would be paying for the purchase up front or in installments.

“The Turkey Wealth Fund, which has been presented as producing resources, has become an institution that does not produce resources but more debts with the transactions it has carried out in the recent period,” he added.

Meanwhile, CHP group deputy chair Özgür Özel also criticized the purchase, saying Türk Telekom had belonged to the state before it was privatized in 2005.

“In the meantime, it made the Hariri family rich! The things they stole became a burden on the people. As if that wasn’t enough, 25 million Turkish Liras came out of the people’s coffers. What a story,” he said in a tweet on March 10 about the latest purchase.