Turkcell Iletisim Hizmetleri AS (TCELL), Turkey’s largest mobile phone company, plunged after a U.K. court reached a split decision in a case concerning the company’s long-running shareholder dispute.
The stock dropped 6.8 percent to close at 11.05 liras in Istanbul, the lowest level this year. Turkcell had earlier retreated as much as 8 percent.
The U.K.’s Privy Council in London ruled today that Russian billionaire Mikhail Fridman’s Alfa Group acted legally when it decided to seize an extra 13.7 percent of Turkcell from Cukurova Holding AS for unpaid debts. It qualified that ruling by saying Alfa must offer compensation for the seizure, with additional court proceedings required to set an amount, prolonging uncertainty that has prevented dividend distribution at the company since 2010.
“The expectation was that Turkcell would restart distributing dividends” after a clear victory for Alfa, Atinc Ozkan, an analyst at Credit Suisse Group AG in Istanbul, said in a phone interview today. Instead the verdict has created a risk for Alfa that’s magnified by a statement by Turkey’s telecommunications regulator yesterday that any management change at Turkcell would require its approval, he said.
Cukurova, Alfa and Sweden’s TeliaSonera AB (TLSN) have been fighting a three-cornered battle for control of Turkcell for almost a decade. While TeliaSonera is the largest shareholder with 38 percent, Cukurova has sought to retain control via a complex ownership structure even as its stake has slid to 13.8 percent.
The stock’s decline today was “unwarranted,” according to Murat Ignebekcili, an analyst at Istanbul-based Burgan Securities.
“The market may think this decision increases the uncertainty; we think not,” he wrote in an e-mailed report today. “We expect a resolution to the shareholder conflict before the end of the first half 2013, and the keenly-awaited dividend payout to take place in the second quarter 2013 or in the third quarter 2013.”
Turkcell reported net income of 571.5 million liras ($323.1 million) in the third quarter last year, up 6.3 percent from a year ago, according to data compiled by Bloomberg. The company will probably report fourth quarter net income of 535 million liras, according to the average of three economist estimates on Bloomberg.
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