US embassy cable - 05ANKARA6701

UNCLAS ANKARA 006701 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR LERRION 
TREASURY FOR CPLANTIER 
USDOC/ITA/MAC/RUSNAK 
DEPT PASS EXIM FOR MARGARET KOSTIC 
 
E.O. 12958: N/A 
TAGS: ECPS, EFIN, EINV, BEXP, TU 
SUBJECT: THEY SAID IT COULDN'T BE DONE - TURK TELEKOM 
FINALLY PRIVATIZED 
 
Refs:     A. 04 ANKARA 6673 
 
          B. 05 ANKARA 446 
          C. 05 ANKARA 2159 
          D. 05 ANKARA 2812 
          E. 05 ANKARA 3845 
          F. 05 ANKARA 6537 
 
1. (U) Summary: In a major step forward for economic 
reform in Turkey, the $6.55 billion sale of a 55% share 
of Telekom (TT) deal was finalized on November 14.  In a 
ceremony attended by the Ministers of Transport and 
Finance, the Saudi-owned Oger Group and TT signed the 
final concession contract, thereby completing the sale. 
The completion of the privatization marks a watershed in 
the GOT's efforts to privatize key industries since Turk 
Telekom was long considered too "strategic" to be 
relinquished by the state, especially to foreigners.  The 
final sale also bodes well for the two other large-scale 
tenders - Erdemir and Tupras - that are still in the 
process of being finalized.  End summary. 
 
2.  (U) Despite last-minute speculation that the Oger 
group would not accept changes to the concession contract 
requested by the Council of State (Danistay), the group 
announced on November 10 that the deal would go through 
as planned.  In a November 14 ceremony that included 
speeches from Oger Telecom Vice President Mohammad 
Hariri, Privatization Authority President Metin Kilci, 
Transportation Minister Binali Yildirim, and Finance 
Minister Kemal Unakitan, TT and Oger Telecom signed the 
deal.  In addition, the Oger group paid the first 
installment of $1.3 billion, 20 percent of the total 
sales price.  These funds will provide a significant 
boost to state revenues and to foreign direct investment 
in this year's balance of payments. 
 
3.  (U) In the first order of business following the 
completion of the sale, Oger Telecom was scheduled to 
announce its six representatives to serve on the new 10- 
member administration board.  Oger Telecom's Hariri 
emphasized that the group is willing to invest in TT's 
current employees and management.  In his remarks during 
the ceremony, Finance Minister Unakitan stressed the 
important message this sale sent to investors worldwide, 
that Turkey is committed and able to privatize. 
 
4.  (SBU) Comment:  It is hard to overemphasize the 
importance of the GOT finally consummating the sale of 
TT.  The sale symbolizes the GOT overcoming Turkey's 
legacy of dirigisme and economic nationalism.  For years, 
many observers were skeptical the GOT would ever 
relinquish control of this "crown jewel," and this year 
the GOT had to fight a wave of anti-privatization 
sentiment to do so.  The TT signing is also a positive 
indicator for the upcoming Erdemir and Tupras 
privatization transactions.  The major investment by a 
Middle Eastern group in Turkey also shows the increasing 
integration of Turkey into the global and regional 
economy at the same time as it seeks to join the EU. 
McEldowney