Turkcell Iletisim Hizmetleri A.S., the largest of Turkey’s two Global System for Mobile communications operators, is planning a $200 million debt issue to finance continued expansion of its network and future introduction of wireless data and Internet access services.
By the end of November, Istanbul-based Turkcell had about 5.3 million subscribers, representing a 68-percent market share, said Fitch IBCA, London. Overall mobile phone penetration in the country had doubled to more than 10 percent from 5.5 percent at the end of 1998.
Fitch assigned a speculative grade rating of B+ to the senior secured notes due 2005, which Cellco Finance N.V., Turkcell’s financing vehicle, will issue, and Turkcell will guarantee.
The proposed debt issue received BB- and B1 ratings from the London-based analysts of Duff & Phelps Credit Rating Co. and Moody’s Investors Service, respectively. Moody’s also noted that Turkcell recently arranged a $550 million senior secured bank credit facility.
“[Our] rating takes into account that Turkcell currently benefits from limited competition, but (it) also factors (in) expectation that a third and fourth GSM 1800 license will be awarded” during early 2000, Moody’s said.
The federal government plans to give the first of the two new GSM 1800 licenses to Turk Telekom, the federally owned carrier that today has about 125,000 subscribers to its analog cellular service. The second will be awarded to a new entrant.
“While Fitch IBCA considers it highly unlikely the Ministry (of Communications and Transportation) would take actions specifically prejudicial to Turkcell, there is some uncertainty about the future competitive and regulatory environment after the privatization of Turk Telekom,” the rating agency said.
“Turk Telekom may become a more formidable competitor if an international investor begins to shape strategic direction.”
Turkcell is owned 50.46 percent by Cukurova Group Holding, a family-owned company that is Turkey’s largest conglomerate. Sonera, Finland’s largest telecommunications company, owns 41 percent.
Duff & Phelps said its rating on the proposed notes issue reflects the Turkish government’s efforts to seek a strategic partner for Turkcell and the carrier’s plans to go public. In early June, Turkcell said it hoped to sell an initial public offering of stock in the United States by year-end, but that had not happened as of mid-December.
