The story of “Türk Telekom”, the flagship of Turkey’s communication sector
TÜRK TELEKOM is the flag ship of the communication sector in Turkey. The company which was run by the state until November 2005 was privatized by the government at that time and Saudi Oger Group which offered the highest bid for a 55 percent share received the operating rights of Türk Telekom – worth 25 to 30 billion dollars at the time – for 21 years for US$ 5 billion, only. It should be noted at this point that Turkey’s total external debt did not exceed US$ 26 billion at the time of this transaction.
In order to pay the privatization money, OGER group wanted to borrow from Turkish banks by showing TURK TELEKOM shares as collateral. The government in office at the time (AK Party) stepped in and the credit was granted.
Over time, the company sold its fixed assets, immovable assets (buildings etc.) and land and put the money in the safe. The company distributed these monies as profit share rather than making the necessary infrastructure investments required by the tender specifications.
The company got back the amount of money to cover all the loans it got from the banks, in 9 years only. Turk Telekom continued to make money, the media continued to receive advertisement orders from the company and the management continued to pay inflated salaries to acquaintances. Moreover, the management also wanted to restructure the credit the company had received. The company received a new loan of 4 billion 750 million dollars in 2013 to replace the old credit. However it did not pay back the loans worth US$ 5.7 billion.
The question forwarded by many at this point was “What did the Turk Telekom executives appointed as reps by the Treasury do to protect the public rights as all this happened? Obviously, this is the picture which describes the situation TURK TELEKOM, one of Turkey’s most valuable companies and the flag ship of the communication sector has been put in by unqualified executives.
The company’s stock market value has declined to approx. US$ 4 billion, today. The market value of stocks owned by OGER group which leased the company for 21 years has gone down to US$ 2.2 billion. That is only 8 years before the end of the contract. If we should deduct the past years, the current value of the transferred shares is around US$ 900 million.
After all this explanation, one cannot help saying “WHAT A DEAL”.
Source: Sözcü (Murat Muratoğlu) – June 6 (18)
