Turk Telekom Profit Drop Adds to Woes of Parent’s Missed Payment

  • Third-quarter profit less than a tenth of average estimate
  • Results raise concern on future dividend payments: analysts

Turk Telekom’s profit declined for a third successive quarter, adding to its parent’s challenges as it seeks an extension on a missed loan payment.

Turkey’s biggest phone company reported net income of 8.68 million liras ($2.82 million), down from 248 million liras in the second quarter and less than a tenth of the average analyst estimates of 87.5 million liras. Earnings were hurt by a depreciation of the lira against the dollar and euro, the company, formally known as Turk Telekomunikasyon AS, said in a statement Wednesday.

The company’s majority owner, Ojer Telekomunikasyon AS, missed a payment last month on a $4.75 billion syndicated loan. The company is said to have sought an extension on the payment until the end of October from 29 lenders, including international and Turkish banks, four people with knowledge of the matter said this week. One person said the missed payment was $290 million.

The earnings results will “likely point to lower dividends,” Trieu Pham, a credit an analyst at MUFG Securities in London, said by e-mail. That’s an added concern for Ojer and its creditors and “will be a topic in the renegotiation of the loan.”

Turk Telekom this year paid out total dividends of 841 million liras, or 93 percent of 2015 profit, down from 1.84 billion liras a year earlier, according to its website. The lira lost 8 percent against the dollar in the past 6 months, the biggest depreciation in major emerging markets, according to data compiled by Bloomberg.

The results “will raise concerns about the dividend payout for 2016,” Behlul Katas, an analyst at Deniz Invest in Istanbul wrote in an e-mailed note. “The lira’s ongoing weakness dampens the outlook for 4Q16 net income as well.”

Ojer -- a unit of Dubai-based Oger Telecom, which is owned by Saudi Oger group and Saudi Telecom Co. -- owns 55 percent of Turk Telekom.

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