Bloomberg News

Turk Telekom Looks at Acquisition Opportunities in Region

April 24, 2012

Turk Telekomunikasyon AS (TTKOM), Turkey’s biggest phone company, is looking for acquisitions as it seeks to expand in markets such as entertainment and education, group Chief Executive Officer Hakam Kanafani said.

“Our eyes are open for any opportunities in the region,” Kanafani said in an interview. “But this is a sellers’ market where assets are highly leveraged and we are not under pressure to buy assets that don’t justify price.”

Turk Telekom is watching opportunities in eastern Europe, the Middle East and near Asia, the group CEO said. The Ankara- based company, which already offers Web-based television services through its Tivibu unit, plans further growth in “different vertical markets” such as education, health care and entertainment, he said.

Turk Telekom, with mobile unit Avea Iletisim Hizmetleri AS and internet service provider TTNet, competes with Turkcell Iletisim Hizmetleri AS (TCELL), majority owned by TeliaSonera AB (TLSN), and Vodafone Group Plc. (VOD) Mobile penetration in the country rose to 89 percent last year from 85 percent a year before, according to the market regulator.

Turk Telekom bought units of Hungary’s Invitel Holding A/S for about $275 million in 2010 to extend its fiber network from the Middle East to Germany. It’s seeking assets “that will have synergies with Turkey,” Kanafani said.

Product Mix

The company will continue to boost the share of revenue it gets from mobile and broadband services, Kanafani said. Turk Telekom got 25.1 percent of its sales from wireless units last year, up from 23.7 percent in 2010, according to data collected by Bloomberg.

“Revenue stream will continue flowing from low-growth areas such as fixed-line to high-growth segments like mobile and broadband,” the CEO said.

TTNet increased Internet service sales 18 percent in 2011 and revenue at mobile unit Avea advanced 16 percent, compared with a 10 percent gain by Turk Telekom group, Kanafani said. Fixed-line services rose 5.5 percent not including the Hungarian acquisition, now called Pantel.

Turk Telekom has raised its stake in Avea to 90 percent after partner Turkiye Is Bankasi AS (ISCTR) and some of its units declined to contribute to a capital increase completed earlier this year, Kanafani said.

Saudi Oger Ltd, owned by the Lebanese Hariri family, is committed to its Turk Telekom investment through Oger Telecom Ltd., Kanafani said. The Turkish government sold a 55 percent stake in the phone company to Dubai-based Oger Telecom in 2005.

Turk Telekom hasn’t revised guidance for this year of 6 percent to 8 percent sales growth, 2.4 billion liras ($1.34 billion) of investment and a margin for earnings before interest, taxes, depreciation and amortization in the “low 40 percents,” Kanafani said.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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