The Privatization of ANT: Simulation and Final Discussion Telecomunicações: Desafios e Oportunidades para Novos Negócios Paul Vaaler Lee McKnight Burkhard Schrage Lisbon, May 15, 2003

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

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. I would say evaluation process instead of introduction to the first module

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 I would say evaluation process instead of introduction to the first module

The Privatization of Anatolia National Telekom: What Did Happen?

Managing Value Expectations

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.

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.

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.

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.

Missed Window of Opportunity Process halted (1) Elections halted (2) halted (3) Nothing done

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: paul.vaaler@tufts.edu Lee McKnight: lmcknigh@syr.edu Burkhard Schrage: bschrage@dem.ist.utl.pt