(Bloomberg) -- Turkey expects to renew Turk Telekom’s main operating license next year, according to the nation’s transportation minister, removing an uncertainty that has hit the telecom giant’s shares.

“We have a forecast to renew the concession in 2024,” Abdulkadir Uraloglu, the minister for transportation and infrastructure, said in an interview in Ankara on Tuesday. “That’s needed to open the path for the company to invest.” The extension will “probably be 25 years,” he said.

Government officials are currently “making calculations” on what Turkey will get from the renewal and as soon as this is done, “the process will be carried out,” the minister said. 

The company’s current license is set to expire in February 2026. An extension would help the sovereign wealth fund’s objective of raising Turk Telekom’s market capitalization after it fell behind competitors. A renewal could also be followed by a secondary public offering or a direct stake sale, Bloomberg previously reported. 

“An extension should increase predictability for both stock investors and would-be strategic investors,” said Cemal Demirtas, head of research at Istanbul-based Ata Invest. “The current ambiguity is one factor in the stock price.”

What Bloomberg Intelligence Says...

Turk Telekom’s fixed-line concession agreement may be extended for another 25 years, based on comments by minister, which helps address a key uncertainty facing the incumbent, in which the government has an 85% stake. The agreement regulates the provision of telecom services after the carrier’s privatization and would expire by 2026 in the absence of an extension, requiring the transfer of certain infrastructure assets to the state.

- Erhan Gurses, industry analyst. 

Turk Telekom climbed as much as 4.6% before trading 2.6% higher at 23.66 liras as of 1:43 p.m. in Istanbul. The shares have dropped 3.7% so far this year, compared with a 46% gain in the benchmark Borsa Istanbul-100 index. 

Turkey’s sovereign wealth fund, known as TWF, acquired the majority of Turk Telekom in 2022 after creditors seized the asset when its former owner defaulted on a $4.75 billion loan. TWF, led by President Recep Tayyip Erdogan, currently owns about 62% of the company.

Speaking on an earnings call earlier this month, Turk Telekom Chief Executive Officer Umit Onal said he expected “concrete progress” on the license extension next year.

(Updates with prices in sixth paragraph.)

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