Turkey will sell a 6.68 percent stake in Turk Telekomunikasyon AS, the country’s biggest telephone company, through a secondary offering by the end of this year as it boosts asset sales to plug its budget deficit.
The majority of shares will be sold to international investors and an additional share sale option could be exercised, the government said in a decree published in the Official Gazette today. Turkey’s Treasury own 31.68 percent of the Ankara-based fixed-line, mobile and broad-band operator.
Revenue from the sale, which would raise about 1.76 billion liras ($1 billion) at today’s share price, will go to the Treasury, which is selling assets to increase revenue. The budget deficit was 28.8 billion liras in 2012, higher than the initial target of 21.1 billion liras. The government plans to increase domestic borrowing by 47 percent this year before elections in 2014.
“Based on favorable market conditions, we believe the SPO will be completed quickly,” Erkan Savran, head of research at Istanbul-based brokerage house Ak Investment, said in an e-mailed report today. The company has “strong fundamentals” and will pay a dividend by end-May to stave off any initial sell-off in shares, he said.
The shares fell as much as 3.1 percent to 7.46 liras by 11:42 a.m. in Istanbul today, the biggest drop since Nov. 6. Turk Telekom is up 9.8 percent this year.
The company first went public in 2008 when the government sold a 15 percent stake for $1.9 billion. The timing of the second sale will depend on market conditions, according to the declaration in the Official Gazette. The company will offer 10 percent of the planned sale amount to employees, postal services company PTT and small investors, it said.
The SPO will follow the secondary offering in state-run lender Turkiye Halk Bankasi AS that raised $2.5 billion deal in November, the largest ever in Turkey. That boosted prospects that Turkey will boost privatization revenue this year after missing its revenue target of 10 billion liras ($5.56 billion) last year, Finance Minister Mehmet Simsek said Nov. 19.
The government’s asset sales agency, known as OIB, hired a consortium of Barclays Bank Plc, Garanti Yatirim Menkul Degerler AS and law firms Chadbourne & Parke Danismanlik and Cigdemtekin Sahbaz Avukatlik Ortakligi to manage the sale, Turk Telekom said Oct. 19.
Turkey sold 55 percent of Turk Telekom to Oger Telecom Ltd., a Dubai-based investor owned by Saudi Oger Group, for $6.55 billion in 2005, in the biggest government asset sale in Turkish history.