Turkish privatization revenues have reached a record $16.2 billion so far in 2005, according to finance minister Kemal Unakitan, with billions more dollars in revenues still to come. The figure is all the more impressive given that Turkey had collected just $8 billion from privatization in the 20 years preceding 2002, when the Justice and Development Party (AKP) took power.
In September Koc Holding won the race to buy oil refinery Tupras, paying $4.14 billion for a 51% stake in the refiner. This gives the company a market cap of around $5.3 billion. Oil company Royal Dutch Shell was part of Koc Holding’s winning consortium.
The success of the Tupras tender is an indication of renewed investor interest in Turkish assets, and the strength of the government’s commitment to privatization. It had originally tried to privatize Tupras in January 2004, but the process was annulled by Turkey’s council of state.
Also in September, the deadline passed for bids to be received for the privatization of steel maker Erdemir. Bidding consortiums had to be formed by September 23, with bids received by September 26. Final negotiations were taking place during the first week of October. A total of 13 firms passed the pre-qualification stage.
The government plans to privatize a 49.29% stake in Erdemir, giving the company a market capitalization of about $2.7 billion.
At the same time, the government set September 19 as the final date for pre-qualification bids for cellphone company Telsim. The final date for bids is December 5, with the bid process to be opened on December 13.
According to research from the Oxford Business Group, the sale may prove controversial. Courts in the UK and US froze Telsim’s roaming and interconnect revenues there earlier this month, as they attempted to recover $4.3 billion of debt owed by Telsim to the US’s Motorola and Finland’s Nokia. “The recovery of these monies has been complicated by the fact that Telsim was taken over by the Savings Deposit Insurance Fund (SDIF) when the Uzan family [previous owners of Telsim] empire collapsed,” the report says. “Legal disputes have ensued over liability for the debts, with Motorola taking the issue to the World Bank’s International Centre for the Settlement of Investment Disputes, and concluding that the SDIF was responsible for the debt – and therefore it would have to sue the republic of Turkey for repayment.”
An agreement with Nokia was reached on August 30, although a deal with Motorola remains outstanding. This might affect the value of bids made. The government has set an expected price of $2.8 billion for the Telsim tender.
The Tupras privatization follows the sale of Turk Telekom, which was finalised at the end of August. A consortium led by Saudi Arabia’s Oger Telecom agreed to pay $6.55 billion for a 55% stake in the phone operator.
According to Unakitan, as well as the Turk Telekom and Tupras privatizations, state shares in more than 70 different companies and real estate concerns have also been sold since the AKP came to power.
