TURKEY: Court gives go-ahead to telecoms sale

31 January 1997

The Constitutional Court has ruled in favour of the planned privatisation of Turk Telekomunikasyon (Turk Telekom). The government hopes sales of stock in the company will raise $3,500 million this year. The sale is the linchpin of its privatisation drive, which has been bogged down by a series of court challenges inspired by the political opposition.

News of the ruling boosted confidence on the Istanbul Stock Exchange even further, after the National-100 share index hit another record high of 1,228 on 21 January. The main index jumped by 4.2 per cent on 23 January when the ruling was given.

The court case was brought against clauses in the Telephone & Telegraph Law which permit the government to set the number and price of shares to be sold. The positive ruling will now allow the first tranche of up to 15 per cent of the company to be sold by the end of this year. The government may issue convertible bonds ahead of the sale.

The government hopes to raise $5,000 million from other sell-offs this year. This hope was boosted by the submission on 20 January of a bid for state-owned Etibank by Dogan Kumascilik Teks. The bid of $185 million was the highest received. The sales of about $765 million in other state assets, including ports and cement plants, are awaiting official approval. Bids were also due on 27 January for the block sale of 30-40 per cent of the state's 51.66 per cent share in the Eregli Iron & Steelworks (Erdemir) on the Black Sea. The sale is expected to raise $300 million-400 million. The government will start work on sales of refined oil products distributor Petrol Ofisi and refineries run by the Turkish Petroleum Refineries Corporation in March with the aim of raising another $2,000 million-3,000 million.

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