China's Tatwah among companies in talks to buy Turk Telekom owner

[ISTANBUL] China's Tatwah Smartech Co is among parties in talks to purchase a special-purpose vehicle established to own a majority stake in Turk Telekom, Turkey's largest phone company, according to four people with direct knowledge of the matter.

The discussions are ongoing and no final agreements have been reached on a sale, the people said, asking not to be named because the talks are private. Tatwah didn't immediately respond to requests for comment made after work hours in China. The three largest Turkish banks that would be selling stakes also didn't comment.

The special purpose vehicle was created by Turkish banks to control the shares as part of a Turkish government-backed solution after Turk Telekom's owner failed to make payments starting in 2016 on its US$4.75 billion in loans. The loans were taken out in 2013 by Ojer Telekomunikasyon AS, or Otas, to fund its acquisition of Turk Telekom.

A sale to Tatwah is one of several possible solutions being considered, according to one of the people. Tatwah is a producer of radio-frequency identification products and semiconductor devices that's listed on the Chinese exchange. It has an enterprise value of US$1.9 billion, compared with Turk Telekom's US$5.4 billion.

Shares in Turk Telekom rose 4.9 per cent in Istanbul on Thursday to 3.88 liras per share, their highest level in more than three months. The Turkish banking index also gained, rising 1.9 per cent as of 2:40 p.m. in Istanbul. The lira extended its advance, rising 1.1 percent to below 6.05 per dollar from its previous close at 6.11.

Spokesmen for Akbank TAS and Turkiye Is Bankasi AS declined to comment on the possible acquisition. A spokesman for Turkiye Garanti Bankasi AS didn't immediately respond to a request for comment on Thursday. The three banks hold the largest exposure to the Turk Telekom loan.

BLOOMBERG