According to Finans Invest, Turkish Wealth Fund (TVF) agreed with Cukurova Holding, Telia, Russian LetterOne and Ziraat Bank to acquire 26.2% of TCELL, according to the statement made by TVF. The Fund will appoint five out of nine Board Members of the company, thanks to its 15% privileged shares and become the controlling shareholder of the company. Meanwhile, LetterOne’s stake will increase to 24.8% from 13.2%. As announced recently, Telia will sell its 24% indirect stake will be sold to TVF for USD530mn, while Cukurova Holding’s 13.8% indirect stake will also be sold. Recall that these shares were given as collateral to state bank Ziraat.
Meanwhile all SPVs will be dissolved and TVF and LetterOne will directly own 51% of TCELL. The remaining 49% is free float. The transaction is expected to be closed in 2H20, and subject to regulatory approvals. The deal also includes a full and global settlement of the disputes and litigations in TCELL and Turkcell Holding. TVF also announced that the dividend policy will remain unchanged (at least 50% of distributable income according to Articles of Association) following the deal.
The background of the take-over is explained Ken Wieland of Lightreading.com
Nordic operator Telia Company has confirmed media speculation that it’s in discussions with Turkey Wealth Fund (TFW) to sell its indirect stake in Turkcell, Turkey’s largest mobile operator, for around $530 million.
Telia holds a 24% stake in Turkcell, via Turkcell Holding, in which it has a 47.1% stake. Çukurova Telecom Holding, a Turkish industrial conglomerate, holds the remaining 52.9%.
If Telia strikes a deal with TFW, a sovereign wealth fund, the Nordic operator will give up its stake in Turkcell Holding.
Telia’s relationship with Çukurova is not a cordial one. In fact, by the looks of it, they seem to have been getting on each other’s nerves since at least 2005.
At that time, Telia apparently signed an agreement with Çukurova to purchase its shares in Turkcell Holding. The Telia line, though, was that Çukurova reneged on that promise.
In 2011, an International Chamber of Commerce (ICC) tribunal awarded Telia $932 million in damages, plus interest and costs, for Çukurova’s failure to deliver the Turkcell Holding shares.
As far as Light Reading can determine – a Telia spokesperson had yet to confirm this at the time of going to press – Telia is still chasing that money. Çukurova, meanwhile, is doggedly seeking to overturn the ICC award.
How all this sits with Telia’s potential exit from Turkcell Holding is difficult to work out – at least from what’s in the public domain.
Turkish acrimony aside, Telia has been drawing back from the more far-flung parts of its operations for some time. After a corruption scandal at its Uzbekistan subsidiary, Telia upped sticks there in 2017.
What does TWF say?
“At completion of this transaction: TWF becomes the largest shareholder in Turkcell and gains effective control over the board of directors,” said the statement from the TWF, Turkey’s sovereign wealth fund, without referring to the ICC case.
Turkcell’s ownership has long been the subject of a dispute between its main shareholders.
“This transaction is a one-off opportunity to resolve all shareholder disputes and litigations for the benefit of Turkcell and its investors,” the TWF statement said.
It said the Turkcell Holding joint venture was effectively terminated, with Cukurova Holding exiting its indirect interest in Turkcell.
It added that LetterOne, founded by Russian tycoon Mikhail Fridman, increased its ownership and acquired, via a restructuring of its current interest in Turkcell Holding, a direct minority interest of 24.8% in Turkcell.
Baris Soydan of independent news site T.24.com.tr claims Turkcell transaction demonstrates why Turkey will never recevie foreign direct invesment. He goes on to argue that the take-over was priced 54% below the current market price of Turkcell shares, as essentially Turkey’s capital market regulator Capital Markets Board blocked all efforts by Telia to have a say in the company. It has unilaterally changed the Board of Directors of the telecoms company, appointing former AKP ministers, and the General Manager of state-owned commercial lender Ziraat Bank, Mr Huseyin Aydin. The co-founder of the telecoms giant is considered a hostage of the government of his large debt to Turkish Deposit Insurance Fund which he failed to pay several times at the deadline.
Reuters, Turkish Press sources