Key Facts

The Turkish State’s Savings Deposit Insurance Fund (TMSF) took over Telsim, then Turkey’s second mobile operator, in 2004 subsequently offering Telsim for sale by auction.



Strategic advisory, Economic modelling, Business case, Technology assessment


Telsim, Turkey’s third mobile operator with extensive fixed and mobile network assets, was taken over by the Turkish State’s Savings Deposit Insurance Fund (TMSF) in part because of Telsim’s default on multi-billion dollar loans made by Motorola and Nokia. The TMSF offered Telsim for sale by auction with interested entities able to undertake due diligence prior to bidding.

Piran’s client – a private equity house in collaboration with a Turkish electronics retailing conglomerate – was interested in acquiring Telsim, but needed to understand the company’s tangible and intangible assets and likely investment needs to determine an appropriate valuation ahead of the public auction.


Piran, working with a boutique strategic advisory consultancy, undertook the technical and commercial due diligence of Telsim’s assets including on-the-ground evaluation of Telsim operations in Ankara, Izmir and Istanbul, reviewing data room artefacts and operations. The team included commercial, technical, marketing, logistics, billing, and IT experts.

Piran led the development of the overall financial model to determine a range of valuation scenarios. The under-pricing of tariffs, coupled with years of under investment in Telsim’s network, meant that network call quality was poor and in breach of the Turkish Telecommunication Authority’s requirements. As well as any auction price paid, it was clear that any new investor would also need to invest substantially in the infrastructure to recover quality whilst addressing high levels of pre and post-paid customer churn. The planned auction of 3G licences in 2007 would also require a further cash injection.

The overall due diligence report and business model, setting out a 10-year roadmap with base case and upside scenarios was presented to the clients. This identified the steps any new owners would need to undertake to regain and grow Telsim’s ‘fair’ market share.


The auction was eventually won by Vodafone for US$4.55b (compared to the reserve price of US$2.8bn), facing competition from Kuwaiti, Emirati, Egyptian and Dubai-based mobile operators, and investors. Analysts at the time noted that while Telsim appeared an attractive strategic asset the acquisition looked “very, very expensive” despite the growth opportunity of Turkey’s market with a valuation at four to five times sales.

Although our client was unsuccessful, the final bid was close to the top-end of our investment scenarios.