Fitch Ratings questions Turkcell’s interest in Vivacom

08 March 2012 | Kavit Majithia


Turkcell’s confirmed interest in acquiring a 94% stake in Bulgarian operator Vivacom would have a detrimental effect on its credit rating, Fitch Ratings said late yesterday evening.

Fitch’s assessment appears to be based on the largely competitive landscape Turkcell will enter, with three other unconfirmed groups expressing an interest in a possible acquisition of Vivacom. “The cash outflow at the high end of this range related to such an acquisition would pressure the company’s credit profile,” said Fitch.

The credit rating company further expressed concerns over Vivacom’s existing financial profile, stating an acquisition of the company would constrain Turkcell’s liquidity position considering the need for “above average capital expenditure investment over the mid-term”.

Media reports had been circulating throughout last week regarding a possible bid by Turkcell for Vivacom, with valuations of up to $1.4 billion being cited, and its interest was only confirmed on Tuesday. Turkcell has since argued Fitch has made its announcements based on an over exaggeration of what it was willing to pay.

Sources close to the matter told the Financial Times that Turkcell is unlikely to bid even as much as $1 billion for the company, considering Vivacom’s small operating market and high penetration.

Fitch hit back: “(We) will take rating action if necessary once any signed offer, detailing the actual purchase amount and how this will be funded is in place or likely to be put in place.”

Turkcell’s present rating is classed at BBB, reflecting a medium class company that is deemed satisfactory at the moment, based on both foreign and local debt.