Turk Telekom bids for remaining 10% of Avea

Turk Telekom confirmed this week that it has submitted a non-binding offer for the 10 per cent of mobile operator Avea that it does not already own.

Reuters noted that the move to buy the stake, which Turk Telekom said had a nominal value of $300 million (€277 million), would enable the incumbent fixed operator to avoid having to float the market's third-largest mobile player.

Turk Telekom already owns 90 per cent of Avea, with the other shares currently in the hands of IS Bank and other investors. Reuters reported that IS Bank has the right to demand an IPO, but weak earnings at Avea could prove an obstacle here.

"Even if Avea is advancing towards profitability, right now it is still not profitable," Toygun Onaran, an analyst TEB Invest, told Reuters. "It is logical for IS Bank to want to offload the shares."

Onaran also noted that the valuation of the 10 per cent stake at $300 million would give Avea a company value of $3 billion, which he said is "very high". He estimated Avea is worth 40 per cent of that.

Avea competes on the Turkish mobile market with Turkcell and Vodafone Turkey. The three companies are expected to take part in an auction of LTE frequencies in May, and have been asked by Communications Minister Feridun Bilgin to get their networks ready for 4G services by the end of 2015.

Mobile subscribers in Turkey should then be able to subscribe to LTE or 4G services from the first day of 2016, according to Bilgin.

However, President Tayyip Erdogan recently threw a spanner in the works by suggesting that Turkey should forget about 4G and instead look ahead to 5G.

"Within two years Turkey will be on 5G. Otherwise, it will be a garbage dump with 4G. Let's be patient and jump from 3G to 5G. Can we do this? We definitely can," Erdogan said, according to Reuters.

The English language publication Hurriyet Daily News noted that the president's remarks have puzzled the industry somewhat, given that 5G is still some years away and standards have not yet been defined. Most commercial launches are not expected to take place until 2020-2022.

The paper said companies interested in bidding for 4G licences are now in the preparation stage.

"These companies will be closely following what the BTK [Information and Communications Technologies Authority] says about the tender after President Erdogan's 5G announcements," sources told Hurriyet Daily News.

For more:
- see this Reuters article
- see this separate Reuters article
- see this Hurriyet Daily News article

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