And promises to pump in another billion in the short term
Vodafone has agreed to acquire Telsim, the number two mobile operator in Turkey, from the Turkish Savings Deposit and Investment Fund (“SDIF”) for $4.55 billion.
Although it has paid slightly over the expected sum, Vodafone has been attracted by the size of the Turkish market (its population will be bigger than Germany’s by 2017) and the relavtively low level of penetration (53%) compared to other European markets.
It also considered the Turkish operator to have been under-managed and lacking in investment. Vodafone said that it expects that over the short term Telsim will require approximately USD 1 billion of additional funding, and it expects Telsim to make net losses in the short to medium term as it invests in the network.
Vodafone said Telsim had achieved 3% revenue growth in the first seven months of 2005 compared to the same period in 2004, bringing its total customer numbers to approximately 9 million.
Commenting on the transaction, Arun Sarin, Chief Executive of Vodafone, said, “We are delighted to have won the tender for Telsim. With a larger population than every European country except Germany, and a penetration level of approximately 53%, the Turkish market represents a major growth opportunity. Our extensive operating experience and unique set of products and services positions us to compete effectively in such a youthful market and deliver a superior mobile experience to Turkish customers.”
The transaction is subject to approval from the SDIF Board and Turkish regulatory, legal and competition authorities. Vodafone expects the transaction to close in the first quarter of calendar year 2006.
Vodaone has taken on none of the liabilities due to Nokia and Motorola, which have been in dispute with the operator.