In Turkey stock exchange or business world, disappointed with the Telsim bid. From one hand, Turkish business world was holding stocks of 3 telecom giants at the beginning of 2005, but at the end of the year there are only minority shares left. And on the other hand, the disappointment that is a result of the non-reached $5 – 5.5 billion price for Telsim which was expected… That is the outlook from Turkish side nowadays.
If you take a look at the English papers, Vodafone is criticized for giving a high a price for the tender.
For example, in the news about the tender which hit the headlines in Financial Times’s Companies&Markets addition, it’s told that there will be a reduction in Vodafone’s next five years revenue due to this capture, although it will have a positive effect in it’s growth profile. There are also some notes, that bankers have warned Vodafone officers not to pay more than $3 billions for Telsim. Some other English newspapers like Independent and Guardian have also commented that the price was “too high”.
Though, it’s not the only tender that Vodafone has taken in 2005. Even more, 2005 has been a pretty busy year for Vodafone. Here are some successful bids that Vodafone has been into:
- Has paid $1.4 billions for 10 percent shares of an Indian mobile operator, Bharti Tele-Ventures, which has a 22 percent of market share and 15.1 million subscribers;
- Has overtaken 79 percent of Romanian Mobifon (price is not declared);
- Has overtaken Oskar Mobil of the Czech Republic;
- Has risen it’s shares in South African mobile operator, Vodacom.
Let’s take a closer look to that “high” price comment of the English newspapers. Vodafone has paid $4.55 billions for getting a hundred percent of Telsim, which has 10 million subscribers, and when it’s compared with $1.4 billion for 10 percent shares of an Indian mobile operator, Bharti Tele-Ventures, which has a 22 percent of market share and 15.1 million subscribers, can you tell that Vodafone has overprized? I certainly know that these two compared companies have totally different circumstances, and national happenings but this kind of a “simple analysis” would not be so pointless…
When we turn into the Turkish point of view, if you consider that Arab capital, which is petrol-rich and therefore who have infinite seemed cash limit have participated in the tender with 5 firms, it wouldn’t be so odd if an Arabic company have been the successful bidder. It was assumed that Orascom or Eti-Salat would take the tender. The latest news about the firms were that Orascom was getting into an investment in Iraq and Eti-Salat had withdrawn its offer in Pakistan tender.
That has been the breaking point according to the comments. Since the offer that was given to Pakistan Telecom had caused some unrest in the group, it was obvious that they were stepping sure-footed. This let them out of tender later. However, the predictions were all over them. The price was expected to reach $5.5 billions. The main disappointment felt by Turkish side during the tender was due to this.
But Vodafone had already declared the price they would offer. As vice-president Horn-Smith told in a statement during his unexpected, immediate trip, that they would give the highest “economic” price to Telsim, wasn’t also he telling almost the exact prize? Take a look at our news on the date estimated price was declared. There, it was told that normal price will flow about $4.5 billions ($500 per subscribers) clearly.
As a result it was obvious that there would be such a price about $4.5 billions. But it was expected that the price would rise to 5 and even to $5.5 billons after a competitive struggle between the Arabic and Russian capitals. And Vodafone was not even taken seriously, although it was clear that the company was interested in the tender process for over a year just because of the comments that Vodafone was liable to render account to its share holders and could not afford a high price. This may be was one of the main factors affecting the tender result.
I will inform you about a brief assessment of Turkish mobile sector in an other article.
For the other news and information about Telsim bidding click to TMSF – Telsim Satışı.
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