Wireless phone giant Vodafone is making a $4.55 billion push into Turkey as the company caps a year full of acquisitions.
The company — which also jointly owns Verizon Wireless with Verizon Communications
— announced the acquisition of Telsim, Turkey’s second-largest mobile operator.
“With a larger population than every European market except Germany, and a penetration level of approximately 53 percent, the Turkish market represents a major growth opportunity,” Arun Sarin, Vodafone CEO, said in a statement.
The company expects to pump $1 billion into Telsim in the short term. The deal is subject to Turkish regulatory, legal and competition approvals as well as the board of directors for Telsim’s owners, the Turkish Savings Deposit and Investment Fund.
The deal is expected to close in the first quarter of 2006.
Telsim has approximately 9 million customers to its service with more joining every day; the mobile operator is the second largest in Turkey behind TurkCell, which has approximately 26 million customers.
But while it enjoys the number 2 status in the country, its business operations made it ripe for acquisition, according to Vodafone officials. Telsim has historically been under-managed, officials said, and suffered from under-investment in the network and with its customers.
As part of the $4.55 billion price tag, Vodafone is expected to pay a value-added tax (VAT) of $400 million, which will be recoverable against Telsim’s future VAT liabilities.
Vodafone expects to leverage its GSM
Vodafone has been busy in 2005, acquiring or shoring up its ownership stake in a number of ventures throughout Europe and Asia, including:
- A 10 percent stake in India’s leading mobile operator, Bharti Tele-Ventures, for $1.4 billion
- A 79 percent control of Romanian operator MobiFon
- Complete control of Oskar Mobil in the Czech Republic
- An increased stake in South African mobile operator Vodacom
Company officials said they are always looking for the best way to grow in markets with a lot of potential, which includes acquisitions.
“Either increasing our stake or taking control of businesses within those markets allows us to benefit from the growth in that mobile market,” a Vodafone spokesperson said. “It comes down to the individual opportunities that one gets in some markets. If you start from scratch you normally need to get a license; you can’t just turn up in a country and start sticking down your base stations.”