Turkcell ‘should’ resolve problems

Güneş Kömürcüler ISTANBUL - Hürriyet Daily News

DAILY NEWS photo, Hasan ALTINIŞIK

The Turkish state may intervene to resolve Turkey’s biggest mobile operator Turkcell’s managerial problems. “The Turkish government would prefer the Turkcell shareholders to agree among themselves but the capital markets board could take steps if they failed to do so.” Deputy Prime Minister Ali Babacan said during a live interview with a Turkish broadcaster yesterday.

Babacan underlined that Turkell was not a state-run company. “Therefore it appears that Turkcell needed to resolve its managerial problems at first glance without state intervention. The state, however, is interested in the company a lot as Turkcell is a publicly traded company. We need to protect the rights of small investors. Secondly, Turkcell operates in the telecom industry, which is regulated strictly by the state. Lastly but not least importantly, Turkcell is the market leader and quite big in global terms,” Babacan said.

The company’s annual general meeting could not be convened on May 22 due to the lack of a quorum amid continuing disagreements between shareholders. Turkcell was able to agree neither on new members of the board nor on dividend paying.

“Turkcell partners should resolve their problems and appoint their board members as soon as possible, which is our first preference. If not, we will not allow Turkcell to be without a board. If they do not resolve the issue the state will certainly intervene until the partners agree,” Babacan added.
Turkey’s Capital Markets Board (SPK) had previously appointed three independent board members, including two former ministers, to Turkcell, following a long-running shareholder dispute.

Dispute between partners

The Nordic TeliaSonera has the largest direct and indirect stake in Turkcell, amounting to 37 percent, but Turkish Çukurova controls Turkcell through a complex shareholder structure.

TeliaSonera’s dispute with Çukurova dates back to 2005 when the Swedish group agreed to buy Çukurova’s stake in Turkcell for $3.1 billion.

Çukurova backed out of the deal, leaving TeliaSonera to try and force it to cough up the shares and seek damages. Çukurova’s efforts to keep itself afloat and regain full control of its stake in Turkcell are now in limbo after a handful of international court rulings.

The 13.8 percent stake in Turkcell was seized by Russia’s Alfa Group, another major player in Turkcell, after Çukurova defaulted on a $1.7 billion loan. A London court in January ruled Çukurova could recover the stake if it repayed Alfa, including interest, but any signs of further weakness in the company’s finances may increase the likelihood it will not be able to do so.