Turkey Wealth Fund (TWF) said Thursday it signed a deal with LYY Telekomünikasyon to purchase 55% of shares in Türk Telekom.

The purchase of the shares was valued at $1.65 billion, the wealth fund said, adding that 2021 dividends for the shares would be paid to LYY.

The transaction needs approval by regulators, it said in a press release.

OTAŞ, a unit of Dubai-based Oger Telecom, had taken out a $4.75 billion loan in 2013 to acquire 55% of Türk Telekom but failed to keep up payments on what was Turkey's largest corporate loan at the time.

The creditor banks in 2018 set up a special purpose vehicle for the shares of Türk Telekom that were given as collateral for the loan.

The banks involved included Akbank, QNB Finansbank, Garanti BBVA and İşbank among others.

The TWF was set up in 2016 by the government to develop and increase the value of Turkey's strategic assets and provide resources for investment.

The purchase reflects the wealth fund's conviction in the long-term outlook of Turkey's telecommunication sector.

"As (Turkey's Wealth Fund), we believe that we will add extra value to the telecommunication sector by contributing to the digitalization process while focusing on efforts to further strengthen the technological infrastructure of our country," said CEO Salim Arda Ermut in the press release.