Telecom Operators

STC emerges as frontrunner in bid to acquire 55% stake in Turk Telecom

Saudi Arabia’s telecommunications incumbent Saudi Telecom Company (STC) has emerged as the frontrunner to acquire a 55% stake in Turk Telecom - in a deal reportedly worth around $3.9 billion. Oger Telecom is the majority shareholder in Turk Telecom, but it is currently in dire straits financially - and is willingly to sell off its stake in the Turkish operator.

Sources close to both STC and Oger Telecom have claimed negotiations between the two organizations is on-going, but noted that Turkey’s government may be forced to step in if a deal between both parties is not agreed. Turk Telecom was formerly state-owned before it was privatized in 2005.

It has been reported that creditors are increasing their pressure on Oger Telecom to sell in an effort to stem its financial crisis, which has resulted in the company missing two instalments in the repayment of a $4.75 billion loan it secured in when refinancing its existing debt.

In January, it emerged that STC was mulling offer a potential move to take a direct stake in Oger Telecom who had blamed their disastrous financial performance on the strength of the Turksih Lira, which lowered dividends the company received from its stake in the Turkish telecommunications firm.

While it has been suggested there are a string of companies interested in the 55% stake, only STC entered into negotiations with a’ clear interest’ in making the acquisition. Industry commentators have suggested that if a deal between STC and Oger Telecom can’t be finalized then Turkey’s government may use a public institution to acquire the stake. 

A source close to the Turkish government stressed the importance of Turk Telecom as a company and declared that a public institution would come to the rescue if needed, the source said, “Turk Telekom is a strategic and important company. It will not be left to its fate for sure. Public institutions would intervene when needed and this option is still a matter of consideration.”

When contacted both STC and Oger Telecom declined to comment on the speculation regarding the alleged negotiations. Oger’s parent company is owned by Saudi Arabian construction colossus Saudi Oger, which also is facing a multibillion-dollar debt restructuring. Oger Telecom’s creditors have expressed that they would like to see the deal completed by September.

Turkey’s treasury sent a direct letter to Oger earlier this year after it failed to meet the two debt payments. In July the government asked some banks to find prospective buyers for the stake.