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Turkey is planning to extend the main license of Turk Telekom after the nation’s sovereign wealth fund obtained a controlling stake in the telecom giant, paving the way for a possible stake sale.

Turkey Set to Borrow Around $1.6 Billion for Turk Telekom Buyout

The sovereign wealth fund, formally known as Turkiye Varlik Fonu Yonetimi AS or TVF, is working on the extension with regulators and the ministry of communications, according to people with direct knowledge of the matter.

A renewed license beyond 2026 February expiry would boost the company’s value and could be followed by a secondary public offering or a direct stake sale, the people said, asking not to be identified as the deliberations are confidential. 

Turk Telekom declined to comment. TVF and the ministry weren’t immediately available for comment.

The planned licensing serves the TVF objective to raise Turk Telekomunikasyon AS’s market capitalization after it fell behind competitors since going public. The company’s enterprise value is 3.9 times its earnings before interest, tax, depreciation and amortization, compared to 5.8 for peers in Europe, according to data compiled by Bloomberg. 

A restructuring of the operator to separate the wholesale arm that owns Turkey’s largest fiber network of more than 360,000 kilometers from the retail business is also being studied, said the people. 

In January, TVF chief executive Arda Ermut said they were weighing whether to establish a separate infrastructure company to offer equal access to all operators.

“One of the most important motivations for the acquisition of Turk Telekom by Turkey wealth fund is to speed up infrastructure investments and to create an environment to the benefit of all operators in the sector,” the wealth fund said in response to Bloomberg’s questions. 

The wealth fund, headed by President Recep Tayyip Erdogan, also bought a controlling stake in Turkey’s biggest telecom operator Turkcell Iletisim Hizmetleri AS in 2020, marking the biggest step in a the re-nationalization of the country’s telecommunications industry. 

Vodafone Group Plc’s local business is the only domestic operators left in private hands. TVF, which also owns companies such as Turkish Airlines, state pipeline company Botas and state oil and gas producer TPAO, is exempt from antitrust regulations. 

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