ECONOMY

Tekel tobacco is losing market share

ISTANBUL (Reuters) – Turkish state tobacco company Tekel has suffered a fall in its cigarette market share to 58 percent from 61 percent last year as it prepares for privatization, Tekel’s general manager said yesterday. Turkey has extended the bid deadline for Tekel’s cigarette business to October 24 from September 26 amid strong international interest in a sell-off at the heart of the country’s ambitious privatization process. Sources say tobacco giants, such as British American Tobacco (BAT) and Altria, have shown interest in the sale, expected to fetch between $2 billion and $3 billion. Tekel General Manager Sezai Ensari told Reuters in an interview the firm was cutting its work force by 3,000 from 30,500 under a retirement program. «The gradual retirement process is… aimed at easing the way for Tekel’s new owner before privatization,» he said, adding that the cost of this process would be around 80 trillion to 90 trillion lira ($58 million – $65 million). Ensari warned against any holdup in the sale. «A delay in the privatization could create difficulties for Tekel. We will not allow any loss in the company’s value.» Besides BAT and Altria (maker of Philip Morris and Marlboro cigarettes) Japan Tobacco, Imperial Tobacco, Altadis and the Korea Tobacco and Ginseng Company have shown preliminary interest, sources have said. Revised bids are expected to be scheduled for November. A short list will then be drawn up and a winner selected or the finalists will be put through a further round of open auctions. One of the main issues for potential bidders is the state of Tekel’s production infrastructure, in dire need of modernization.