Turkey: Privatization Developments

The summer of 2005 has been a very busy period for the Privatization Administration (“PA”) and investors. Privatizations of several State-owned entities, including arguably the three largest of all, were conducted within a very short period of time.

TÜRK TELEKOM: The PA announced the tender for Türk Telekom on 25 November 2004 where 13 bidders, both local and international, including, inter alia, OYAK, Koç, Sabancı, Etisalat, Telefonica, Telecom Italia, Deutsche Telekom and Maxis Communications showed interest. However, soon after the completion of the due diligence exercise, Telefonica withdrew from the tender process. It was reported by the press that the uncertainty in the proposed shareholding structure of AVEA, the third GSM operator in Turkey controlled by Telecom Italia and Türk Telekom, after completion of the proposed sale of 55% of Türk Telekom’s shares, caused this leading telecom company to withdraw from the tender.

Among the 13 bidders that were pre-qualified for the tender, only four consortia, namely Oger Telecoms (Oger Telecoms LLC - Saudi Oger LTD), Etisalat (ÇETEL Çalık Enerji Telekomünikasyon A.Ş-Etisalat-Emirates Telecommunications Corporation - Dubai Islamic Bank -Abu Dhabi National Insurance Bank), Koç Holding (Koç Holding-Carlyle Group LLC) and Turktell (Turktell Bilişim Servisleri-Gen-Pa Telekomünikasyon ve İletişim Hizmetleri -Tekofaks Ofis ve Haberleşme Ürünleri Pazarlama and Kurtson Maden ve Sanayi İşletmeleri) - participated in the tender.

Finally, the bid was awarded to Oger Telecoms who proposed to pay USD 6,550,000,000 for 55% of Türk Telekom’s shares. The share purchase agreement was signed on 24 August 2005 and the parties are currently awaiting the final approval from the Council of State to the concession agreement of Türk Telekom. Following the approval, the share sale will be completed.

TÜPRAŞ: The tender announcement, for sale of 51% of Tüpraş’s shares was made on 29 April 2005. Turkish investors POAŞ, Opet, Koç Group and Oyak were interested in Tüpraş. Some foreign companies such as Repsol of Russia, PKN of Poland, IOC of India, Eni SPA of Italy, OMV of Austria and Shell, as well as some financial investors from the United States were also mentioned as interested parties.

The bid was awarded to the Koç Holding-Shell consortium, which offered USD 2,780,000,000 for 51% of Tüpraş shares. Recently, the Competition Board conditionally approved this sale and the share purchase agreement is expected to be signed shortly.

ERDEMİR: The tender for the privatization of Erdemir, Turkey’s largest iron and steel producing entity was concluded on 4 October 2005. The tender concerned the block sale of the PA’s 46.12% share in Erdemir, tied with the 3.17% stake of the Turkish Development Bank (Türkiye Kalkınma Bankası A.Ş. ). The world’s largest iron and steel manufacturers including Arcelor, Mittal Steel and Russian Novolipetsk participated in the tender. In addition to foreign bidders, local conglomerates also showed significant interest in the tender. Among these was a consortium lead by the Union of Chambers and Commodity Exchanges of Turkey. In addition, OYAK (Turkish Armed Forces Pension Fund) submitted a bid for Erdemir.

On 4 October 2005 the bid was awarded to OYAK, who proposed to pay USD 2,770,000,000 for 46.12% of Erdemir’s shares. The sale will be completed following the Competition Board’s approval of the acquisition of Erdemir’s shares by OYAK.

MERSİN PORT: Mersin Port is an important port, in terms of its hinterland and access to Mediterranean and North African countries owned. The Government included the port in its privatization program, whereby the bidders were offered the operation rights of the port for a period 36 years. The PSA-Akfen Group, formed of Turkish and Singaporean partners proposed USD 755,000,000 and was awarded the tender.

Following the award of the tender, the Union of Port Employees filed a lawsuit at the Mersin Administrative Court and requested a suspension order. This was recently rejected by the Regional Administrative Court. The Union declared that they would continue with their legal battle. The final approval for the sale is currently pending.

İSKENDERUN PORT: Similar to Mersin Port, İskenderun port is also one of the important ports of Turkey owned by the Turkish State Railway Institution, with access to the Mediterranean and North Africa. The final negotiations for the privatization of İskenderun port through block sale was realized on 9 September 2005, where the PSA-Akfen Group was awarded with the bid with a proposal of USD 80,000,000.

The Competition Board rejected the award of the tender to PSA-Akfen Group.1

KIBRIS TÜRK HAVA YOLLARI (“KTHY”): The Government proposed the block sale of 50% of KTHY (Cyprus Turkish Airlines) and announced the bid on 18 May 2005. The bid was awarded to Ada Havacılık ve Taşımacılık A.Ş. and the sale purchase agreement was signed on 9 September 2005. Final approval for the sale is currently pending.

ADAPAZARI ŞEKER FABRİKASI: The Government proposed the block sale of 95.37% of this sugar manufacturing company, whereby the bidding deadline was set as 14 July 2005. The highest bid of USD 45,750,000 was offered by ile S.S. Adapazarı Pancar Ekicileri Kooperatifi on 2 August 2005. Final approval for the sale is pending.

ETİ ALÜMİNYUM A.Ş.: Privatization of this aluminum manufacturing company was concluded on 17 June 2005. The tender was awarded to CE-KA İnşaat Makina Madencilik Petrolcülük Turizm Nakliyat Sanayi ve Ticaret A.Ş., who offered USD 305,000,000 for the entire shares of the company. The sale was approved by the Privatization High Council on 27 July 2005 and the sale purchase agreement was signed on 29 July 2005. Final approval for the sale is pending.

ISTANBUL HILTON HOTEL: This hotel was owned by the General Directorate of the Pension Fund. The Government proposed the sale of the hotel together with all its fixtures and attachments. On 11 August 2005, Ortadoğu Otomotiv Tic. A.Ş. offered the highest bid of USD 255,500,000 for the hotel. Final approval for the sale is currently pending.

BAŞAK SİGORTA A.Ş / BAŞAK EMEKLİLİK A.Ş.: The Government is proposing to privatize 56.67% of Başak Sigorta, the insurance company, and 41% of Başak Emeklilik, the pension fund block sale. The final bidding deadline for both companies was 11 October 2005, and six bids were received.

NATIONAL LOTTERY (“Milli Piyango”): Milli Piyango was included in the privatization program in 2003, and preparations for the tender process were expected to be finalized by the end of June 2004. However, there was a debate between the PA and the National Lottery Administration regarding the privatization method and the means to be used in collecting Milli Piyango’s revenues after privatization. This lead to a delay in realizing the necessary legislative amendments for privatizing Milli Piyango.

Turkish companies that have so far expressed their interest in the tender are Doğan Holding, Doğuş Holding, Alarko Holding, Park Holding, Özaltın Group (Ankara), Çukurova Holding and Sabancı Holding. The press has noted that many foreign companies are also interested in this privatization. These companies are G-Tech (current technical system provider for Milli Piyango), Lottomatica, Sisal, Tattersals/Snet, Intralot (current system provider for Spor Toto and runs the İddaa game with Çukurova Holding), Svenske Spel, UT Group and Austrian Lotteries. According to the press, the main reason behind the high interest of domestic and foreign investors is that the investor will have a right to arrange new lotteries and games, and will be able to run extensive advertisement campaigns. The market is expected to at least double its current size in a very short timeframe.


1. Please refer to our article titled Current Issues of Competition Law, for an overview of the Competition Board’s approach.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.