Turkcell Buys Controlling Stake in Belarus Mobile Operator

Turkey's Turkcell has announced that it is buying an 80% stake in Belarusian Telecommunications Network (BeST) for US$500 million with a potential US$100 million when the company breaks into profit. The payment is expected to be realized in 3 tranches of which US$300 million is expected to be paid on the closing date, which is expected to be 30 days after the signature date and additional US$100 million tranches are expected to be paid on December 31, 2009 and 2010 respectively. The additional payment of US$100 million is to be made when BeST records a full-year positive net income for the first time.

Turkcell also says that it anticipates CAPEX of around US$500 million over the next ten years.

Last year, Belarussian President Alexander Lukashenko had said that the government would sell the GSM network operator and was seeking bids of around US$500 million.

Late last year, Telekom Austria paid EUR730 million (US$1.04 billion) to acquire a 70% stake in the Belarus GSM network operator, MDC. According to statistics from the Mobile World, MDC ended last year with some 3 million customers - compared to 181,000 subscribers for BeST. Based on the enterprise price paid by Telekom Austria - on a per customer basis the most that BeST should be worth is just US$72 million.

Turkcell CEO Sureyya Ciliv noted that "The acquisition of BeST represents an opportunity for Turkcell to gain access to a market with a growth potential. Belarus is an attractive emerging market within Turkcell's growth geography with its young and well educated population and steadily growing economy. We are also happy to be starting our operations with an already established third operator in Belarus. We believe we can use our complimentary skills we gained in Ukraine and CIS very effectively in Belarus to differentiate BeST as soon as possible."

There is a 5-year lock up period for the remaining 20% shares, which are held by the government.