Telecom Italia To Invest $200 Million In Turk Telekom Consortium

MILAN -(Dow Jones)- Telecom Italia SpA (TIT.MI) said late Friday it will initially invest $200 million in the consortium that won the bidding for Turkish telecommunications operator Turk Telekom.

Turkey Friday concluded the contest for the privatization of a 55% stake in Turk Telekom. Oger Telecom, a newly-created joint venture controlled by the Saudi-Lebanese group Saudi Oger Ltd., through an investment vehicle, won the contest with an offer of $6.55 billion.

The recently-formed joint venture includes Telecom Italia, which - through Tim International - will initially invest $200 million. The partnership between Saudi Oger and Telecom Italia will focus on the mobile business, given that Oger Telecom - as announced separately - will continue its cooperation in fixed-line telephony with BT Group PLC's (BT) BT Telconsult.

Once the closing of the privatization takes place, Telecom Italia and Oger Telecom will sign a four-year technical assistance agreement with Avea, the Turkish mobile operator in which Tim International has a 40% stake, Turk Telekom has 40% and local bank IsBank has 20%.

The agreement with Saudi Oger establishes also that the stake in Avea held by Tim International can be transferred to Turk Telekom, with a partial reinvestment of the gains from the sale in Oger Telecom shares, or directly conferred to Oger Telecom.

The total value of Avea shares held by Tim International is between $400 million and $600 million, on the basis of pre-defined share-swap parameters.

A listing of Oger Telecom on the Dubai DIFX stock exchange is expected to take place in the next three years, with the possibility of Tim International participating pro quota in the initial placement.

If Oger Telecom is not listed on the terms established, Tim International will have a put option towards Saudi Oger for the Oger Telecom shares which it received for the sale of Avea plus $50 million worth of additional Oger Telecom shares subscribed in the initial transaction.

In turn, if the put option is not exercised by Tim International, Saudi Oger can exercise a call option on the same shares.

Tim International's participation in Oger Telecom is the basis of possible future cooperation with the Saudi Oger Group in the telecommunications sector.

(END) Dow Jones Newswire"

Posted to the site on 4th July 2005