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The Privatization of ANT:Simulation and Final Discussion
Telecomunicações: Desafios e Oportunidades para Novos Negócios
Paul VaalerLee McKnight
Burkhard Schrage Lisbon, May 15, 2003
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The Privatization of ANT: Tentative Schedule
9:00 Short introduction
9:30 Intra-group discussions
10:00 Negotiation between players
12:00 Deadline for deals, presentation
12:30 Debriefing
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The Privatization of Anatolia National Telekom
• General instructions in course packet• Confidential instructions for six parties
– Selling Parties• ANT• TAD• CORA
– Buying Parties• BOW• NALI• EUTEL
• Excel file ANTValue on course website: http://in3.dem.ist.utl.pt/master/telecompolicy
• Use of software “CrystalBall” is optional. See with Burkhard Schrage if you want to have a copy.
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The Privatization of ANT: Tentative Groups
TAD
Barbara Espirito Santo
Luiz Jose Moutinho
Antonio Amaral
Joao Silva
ANT
Anastacia Rodrigues
Hugo Valente
Joana Mendonca
Antonio Varanda
CORA
Antonio Baltazar
Duarte Trindade
Pedro Leal
BOW
Jose Vasconcelos
Teresa Marais da Costa
Miguel Preto
EUTEL
Francisco Freitas
Patrick Montgomery
Pedro Faria
NALI
Miguel Carvalho
Artur Marques
Allen de Vasconscelos
Luis Palma
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The Privatization of Anatolia National Telekom:
What Did Happen?
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Managing Value Expectations
Date Value ($bn) Source Who?Jan-95 30.0 TBN Member of ParliamentJun-95 20.0 FT Bankers expectAug-95 35.0 TBN Advisor to governmentJan-97 9.4 FT Government hopesJan-97 10.3 FT Privatization officialsJan-97 20.0 MEED Government plansFeb-97 9.0 FT n/aJun-97 10.0 FT GSJun-97 10.0 FT Government approvesJun-97 40.0 Economist n/aMay-98 13.0 GS StudyJun-98 20.0 Economist n/aMay-00 30.0 FT Central Bank GovernorMay-00 19.0 FT Analysts estimateSep-00 8.0 TBN Investors think
Median 18.9 Standard deviation 10.4
MEED Middle Eastern Economic Digest
TBN Turkish Business News
FT Financial Times
sourced from Internet Securities, April 2, 2001
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Highlights 1998 - 1999
• Privatization attempt stalled in early 1998– Political considerations: new elections in 1999.– Privatization idiosyncratic factors: more than 30
national telecoms were privatized during 1998/99. Turkey did not have a regulator yet.
• 1999: Focus on other, small privatizations. Defining regulatory and legislative framework. Installation of an embryonic regulator.
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Highlights 2000
• Appointed new financial advisors in June 2000.• Deadline August 15, 2000. No foreign investor even purchased
bidding documents. Five local groups did, but did not visit the data room.
• December 2000– Strategic stake increased to 35% from 20%. – Strong management rights attached to the stake
• Day to day run by strategic investor.• Strategic decisions by board of directors, where government has a seat.
– Other deal-sweeteners:• GSM license (approx. value of $2.5bn).• Monopoly in wireline telephony until 2004.
– New bids invited until mid-May 2001.
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Highlights 2001
• Road show was kicked off in January, but was halted before seeing London investors.
• ”Hard” IMF deadline for mid-May postponed sine die.
• End of March Supreme Court ruled privatization as “illegal”. Privatization has to go through another legislative process.
• IMF is now thinking of a 51% public offering.
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Foreign Investors’ Concerns
• Market timing, both Turkey and telecom sector.• Capital constraints of likely investors. European
telecoms spent $175bn in UMTS licenses.• Serious doubts about corporate governance
mechanisms.• Low profitability per line compared to other
telecoms. Low wireline growth expectations.
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Missed Window of Opportunity
Istanbul Stock Exchange Returns 1998 - 03/2001 in US$
---
200
400
600
800
1,000
1,200
1,400
Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01
Process halted (1)
Elections
Process halted (2)
Process halted (3)
Not
hing
don
e
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Telecomunicações: Desafios e Oportunidades para Novos Negócios
• Thank you very much!• We enjoyed participating in the seminar, and
please do not hesitate to contact us should you have any questions. Enjoy the last session with Prof. Sirbu in two weeks from today.– Paul Vaaler: [email protected]– Lee McKnight: [email protected]– Burkhard Schrage: [email protected]