Turkcell spends US$500M on Belarus acquisition

Having pulled out of the bidding for a Bulgarian mobile licence, Turkcell has instead splashed out US$500 million on purchasing an 80 per cent shareholding in Belarus's state-owned mobile operator BeST. However, the deal called for Turkey's leading cell phone operator to invest more than this initial commitment. The company will be required to pay an extra US$100 million when BeST makes a full-year positive net income for the first time, and sink another US$500 million into infrastructure development. This exposure is balanced by Turkcell only needing US$300 million upfront, with an additional US$100 million being paid in 2009 and 2010.

The Belarus government is keen to conclude the deal given that its neighbour Russia significantly raised gas prices earlier this year, and has already sold 70 per cent of the country's second largest mobile operator, Velcom, to Austria Telecom. The government also owns a 51 per cent stake in the largest operator MTS Belarus, in which Russian MTS holds the remaining 49 per cent.

BeST is the third largest mobile provider in Belarus behind MTS Belarus and Velcom, with around 195,000 customers at March 2008, a market share of less than three per cent.

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