Altimo plans no walkout but expansion at Turkcell

ISTANBUL - Hürriyet Daily News

Turkcell should work with the government to discuss easing the tax and regulatory environment, according to Evgeny Dumalkin, vice president of Altimo. Company photo

Altimo, a 13.2 percent shareholder in Turkcell, does not plan a walkout from Turkey’s largest mobile phone operator despite lingering problems with Çukurova, because it sees a bright future with the company, according to Evgeny Dumkalkin, Altimo’s vice president.

“We are not willing to sell our stake in Turkcell, because we see its essential growth potential,” Dumalkin told the Daily News in a recent interview.

“We are long-term investors in Turkcell and we do not envisage leaving the company and selling our stake to any investor, as we see growth potential in it,” he said. “Altimo is keen to further invest in Turkcell, keeping it the Turkish national and regional champion in the telecom and technology sector. Our main investment target is the prosperity and value growth of Turkcell. Prosperity will come from the commercial success of Turkcell in Turkey and in other markets.”

‘Turkcell will remain Turkish’

Turkcell is and must remain a Turkish company with Turkish management, even though more than 75 percent of the shareholders are currently foreign, Dumalkin said, responding to a question on the “nationality” of the company. “The national identity of the company is not dictated by the shareholders’ nationality but the company’s base of operations, name, management and affiliations. Most of the mobile operators in the world which are affiliated with certain countries have majority foreign ownership. Turkcell is run by Turks, operates out of Istanbul and is listed on the Istanbul Stock Exchange [IMKB]. Altimo guarantees that it will fight to keep Turkcell Turkish, for as long as we are shareholders in the company,” he said.

Altimo wants to give Turkcell another growth impetus, Dumalkin said. “In the next five years we will position Turkcell among the 10 largest GSM companies [in the world]. An investment plan has been prepared. In the near future, we will allow Turkcell to hire thousands of new employees. Qualified employees will benefit from working abroad. A growing Turkcell will both make profit and provide high technology service. Customers will get better service for less money. We have international experience in this.”

Dumalkin did say the Russian investor has been disappointed by the cooperation of Çukurova, the founding partner. “They have breached the loan agreement they concluded with Altimo in 2005, causing Altimo to appropriate Çukurova’s interest in Turkcell, which was the collateral for Altimo’s loan,” he said, claiming that Çukurova Group used Turkcell as its own company, making related-party transactions and draining money from Turkcell.

“In July 2011 a court in the British Virgin Islands confirmed that Çukurova had defaulted several times, thus acknowledging Altimo’s right to appropriate these shares. The case will be reviewed in its final stage by the Privy Council in London, probably in the fall of 2012,” Dumalkin said.

“The Privy Council will also look into the issue of whether Çukurova must deposit cash to the court to guarantee its stake in Turkcell until the final resolution of the ‘general’ default case,” he also said.

Corporate governance

Dumalkin is hopeful that the problem will be resolved by the end of this year. This will mainly focus on dividing control of the company’s board, a dispute that also affects Swedish TeliaSonera, the third partner.

“If we win, there will be two main shareholders in Turkcell and strong minority shareholder representation (nearly 35 percent),” he wrote in an e-mail.

“We have certain arrangements with TeliaSonera to improve Turkcell corporate governance after this dispute is resolved. Specifically, we agreed to introduce three independent directors on the board of directors of Turkcell, thus leaving none of the shareholders with control over the company’s board. It is in full compliance with the newly introduced relevant regulations in the Capital Markets Law.”