Turkey approves state phone sale

Turk Telekom has more than 19 million customers

Turkish ministers have approved the $6.55bn (£3.6bn) sale of a stake in state telecoms firm Turk Telekom to a group led by Saudi-based Oger Telecom.

The disposal of the 55% stake, the largest ever sale of a Turkish public asset, marks the end of a high-profile but fraught privatisation process.

The sale was first mooted in 2001 but the process only got underway in June following lengthy legal challenges.

Turk Telekom has 19 million subscribers and dominates Turkey's landline market.

Highest bidder

Following a tender process, Turkey's Privatisation Administration decided to award the stake to the highest bidder, a consortium including Saudi Arabia's Oger Telecom and Telecom Italia.

It fought off competition from a consortium led by Etisalat, a telecoms business based in the United Arab Emirates, which bid $6.5bn.

The contract is expected to be signed by Oger Telecom and Turkish finance minister Kemal Unakitan on Wednesday, government sources told Reuters.

Every step brings us closer to a stronger and more competitive economy Privatisation Administration of Turkey

The world's 13th largest telecoms operator, Turk Telekom controls the domestic landline market despite losing its monopoly status last year.

It also owns a stake in Turkey's third-largest mobile phone business, Avea, in which Telecom Italia is a joint partner.

Domestic opposition

Turkey has pursued an ambitious privatisation programme over the past ten years, raising $10bn towards the country's stretched public finances.

However, this programme of sales has met with domestic opposition while investor apathy has repeatedly threatened to slow the process.

Financial analysts have regarded the Turk Telekom sale as a crucial indicator of the government's ability to attract foreign investment.

"Every step brings us closer to a stronger and more competitive economy," the Privatisation Administration - the agency responsible for overseeing the privatisation process - said on its website.