Debt-ridden Türk Telekom may be sold; Chinese firm interested

Tatwah Smartech Co. of China is among firms in talks to buy a special purpose vehicle that was formed to own a majority stake in indebted Türk Telekom.

Tatwah is among parties that are negotiating to buy the 55 percent stake in Türk Telekom, Turkey’s biggest landline phone company, via the vehicle after banks acquired the shares from its owner Saudi Oger because of unpaid debts, according to Bloomberg.

The talks are continuing and no final sale agreement has been reached, the newswire said, citing four people with direct knowledge of the matter. Tatwah, a producer of electronics, has an enterprise value of $1.9 billion compared with Türk Telekom’s $5.4 billion, it said.

Türk Telekom announced last month that the 55 per cent owned by Oger would be turned over. The company is surrendering the stake after failing to make repayments on a $4.75 billion loan taken out in 2013.  Since buying Türk Telekom for $6.6 billion in 2005, Oger raised $1.9 billion in an IPO of the company in 2008.  Türk Telekom’s shareholders have also earned billions of dollars in dividends.

Most of the debt is owed to local banks. The repayment failure has added to concern about the mounting debt of Turkish firms, which have some $220 billion in unhedged foreign currency loans. A slump in the lira’s value of almost 40 percent this year has exacerbated those concerns, as has the impact of non-repayment on the nation’s banks.

Turkish banks Akbank, Isbank and Garanti have the largest exposure to the $4.75 billion loan.

The Turkish state owns about 30 percent of Türk Telekom through the Treasury and the Turkiye Wealth Fund, chaired by President Recep Tayyip Erdoğan. The remaining 15 percent is floated.

Türk Telekom’s shares fell 0.5 percent to 3.68 liras on the Istanbul Stock Exchange. The main banking index climbed 2.2 percent to 113,727 points, with Garanti rising 3 percent and Isbank 2.9 percent.