Net Holding Plans Bid as Turkey Lottery Sale Re-Opened

Turkey’s Net Holding AS (NTHOL) says it’s preparing a bid for Turkey’s national lottery, or Milli Piyango, in partnership with Hitay Yatirim Holding AS and with Scientific Games Corp. (SGMS) as an operational services provider.

Net Holding will have a 90 percent stake in the group and Hitay will hold the other 10 percent, while Scientific Games will be signed as a service provider before the bid is made, Net Holding said in a public filing in Istanbul today. U.K. National Lottery operator Camelot Group Plc and Italian Lotto manager GTECH SpA (GTK) may also compete, according to two people familiar with the process, who asked not to be named because the process is confidential.

The auction for rights to operate the lottery will take place in June, with prequalification criteria to be submitted tomorrow, according to the state asset sales authority, also known as OIB. The 10-year license may fetch as much as $2 billion, said two of the people.

Net Holding climbed 2.5 percent to 2.44 liras at the close in Istanbul trading after the announcement today. The share price is unchanged this year, compared with a 16 percent increase for the Borsa Istanbul (XU100) 100.

Postponed Sale

A Finance Ministry commitment to auction the rights by January was abandoned amid political turmoil in Turkey earlier this year. The country had canceled a May 2009 attempt to auction the license after Opap SA (OPAP) and Turkcell Iletisim Hizmetleri AS (TCELL) declined to raise their bids to the asking price of $1.62 billion.

A spokesperson for Camelot, who asked not to be named citing the confidentiality of the process, said by e-mail that the company was following the Turkish sale process as it looked for ways to grow and diversify its lottery operations.

A spokesman for GTECH did not return requests for comment by e-mail and phone. An OIB corporate communications officer, who asked not to be named citing policy, declined to comment.

Investment funds and individuals could also take part in the auction in joint ventures if their stake is less than 70 percent and they have assets under management of at least $500 million, according to the bidding terms. Auction participants will need to produce a bid bond of $10 million to qualify, the terms said.

Revenue in Turkish games of chance, which include Milli Piyango and betting on horses and soccer, grew 18 percent on a year-on-year basis to 11.3 billion liras ($5.4 billion) in 2012, according to the latest data provided by the Ankara-based OIB.

Winner’s Revenue

About 45 percent of the 2.2-billion-lira revenue of Milli Piyango, which has a 20 percent market share, went to awards distributed in 2012, while the government received 24 percent in taxes and other duties. The winner of the license will get 25 percent of total revenue, raised from an earlier 17 percent, the OIB said.

Mobile phone operator Turkcell Iletisim Hizmetleri AS, which bid in the aborted 2009 auction, said in an e-mailed note that it was “following the subject” and declined to comment further.

Emma Delta, a Cyprus-based equity fund also controlled by Smejc, bought a 33 percent-stake in Greek gambling company Opap SA last year. Hellenic Lotteries SA, a consortium of Opap, Scientific Games and Intralot SA (INLOT), won a 12-year license last year to operate the Greek lottery.

(Previous versions of this story said that Petr Kellner’s PPF Group was planning a bid for the lottery. Radek Stavel, a spokesman for PPF, said the group is not participating in the bidding process.)

To contact the reporters on this story: Isobel Finkel in Istanbul at ifinkel1@bloomberg.net; Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net Benjamin Harvey, Mark Bentley

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.