Qatar, eager to boost its footprint in Turkey, has made a takeover approach to the majority owner of Oger Telecom, which owns a controlling stake in Turk Telecom, sources familiar with the matter said.
Qatar has directly approached Saudi Oger - owned by the family of late Lebanese prime minister Rafik al-Hariri - for its approximately 55 percent stake, the sources said.
By acquiring the Oger Telecom stake, Qatar would also get Turk Telecom and its mobile unit Avea as well as South African operator Cell C in which Oger holds a 75 percent stake.
Putting a price on the entire deal is difficult because Cell C, South Africa's third largest operator, is unlisted but the Turk Telecom stake alone would be worth at least $8.6bn according to Reuters data.
Turk Telekom is one of the biggest listed companies in Turkey with has a market cap of $15.6bn.
Any deal could be complicated by Saudi Telecom Co (STC), which has a 35 percent position in Oger Telecom and first refusal should the stake come up for sale, up to a certain price.
"It's a complicated deal but the Qataris have shown their interest by going to the family straight. Going by the strength of their wallet, this is something they could pull off," one of the sources said.
"There is no guarantee that the approach will lead to a deal given heightened execution risk due to market volatility," one person familiar with the situation said.
Saudi Oger declined to comment. STC officials did not respond to requests for comment. Credit Suisse, acting on behalf of Qatar, declined comment.
"Qatar is not the only potential solution here. Saudi Oger has options with other people," another person familiar with the matter said, referring to Saudi Telecom, which he said could be forced to react.
Mandates for the transaction went out in the second half of 2010, the sources said, adding completing a deal would take time given the complexity of the ownership and transaction structure.
Saudi Oger has hired Citigroup Inc and Deutsche Bank , according to the banking sources who declined to be identified as the matter has not been made public yet.
STC, which bought its current stake in Oger Telecom for $2.6 billion in 2008, is being advised by Goldman Sachs.
Aside from STC's right of first refusal, the deal faces other potential hurdles. The sale of Oger's Turk Telecom stake and a change in control at the Turkish firm would automatically require an offer be made to its minority shareholders.
It was not clear whether Qatar would take that step nor if STC would make a counter-bid for Oger Telecom. In October, STC's international unit chief said the operator planned major acquisitions in 2012.
"At the end of the day, the Qataris and STC may end up competing for the deal. It's a complex deal and there are lots of sticking points to complete this," the source said.
Through its sovereign wealth fund, Qatar has emerged as one of the world's most aggressive investors, snapping up stakes in high-profile names such as German carmakers Porsche and Volkswagen and has bought positions in banks and high-end property in major markets.
Qatar Telecom, the Gulf state's biggest telecom operator, was not involved in the process but may take up a role once a deal is completed, the two sources said.
Qatar, the world's largest liquefied natural gas exporter, has been keen to boost its presence in Turkey, where per capita incomes are up around 40 percent over the past decade and economic growth outpaces many European neighbours.
Qatar National Bank, the largest lender in the Gulf state, is seen as a strong contender to buy, the fast-growing Turkish arm of euro zone debt casualty Dexia .
For Saudi Oger, selling its telecom unit will allow focus on its core construction business and move away from other non-core segments, the sources said. Saudi Arabia has embarked on an aggressive multi-billion dollar plan to build infrastructure and housing for its rising population.
Oger Telecom bought the 55 percent stake in Turk Telecom in 2005 for $6.5bn from the Turkish government, which still owns 30 percent of the company. The remaining 15 percent is publicly held.For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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