Turkcell deal for Vivacom "nearly done"

16 March 2012 | Kavit Majithia

Vivacom, the Bulgarian telecoms operator, has exclusively told Capacity magazine it expects to be acquired by Turkcell in the next two weeks.

News regarding Turkcell’s interest in Vivacom broke in the national press two weeks ago, and the Turkish company confirmed circulating rumours through a press statement last Wednesday. Two other prospective bidders had also been rumoured, which have now been confirmed to Capacity as financial institutions.

Vivacom senior manager, wholesale, Milen Ninov, told Capacity yesterday evening a bid in the region of $1.4 billion had been made, and the company expects financial advisory firm Morgan Stanley to make its final recommendations regarding the acquisition in the coming days. Ninov said: “The figure (of $1.4 billion) touted by the press is correct, and with two other bids made by financial investors, we believe an acquisition is more beneficial than an internal restructuring.”

Last week, Capacity reported that the credit agency Fitch Ratings had questioned the premise behind Turkcell’s interest in Vivacom, considering its high debt and the small operating market of Bulgaria. Fitch said such an acquisition would have a detrimental effect on Turkcell’s credit rating.

Ninov believes that while these concerns are valid in the short term because of a low dividend payment to shareholders, it will not be a factor in the long term because of the company’s high subscriber penetration. “There is a lot of interest in Vivacom and for good reason. An acquisition by a major player like Turkcell will only have a positive effect.”

An official statement from Turkcell did not confirm a bid had been made, but commented that it was “the job of credit agencies to judge market trends”.