TeliaSonera AB (TLSN), the biggest shareholder in Turkcell Iletisim Hizmetleri AS (TCELL), said any move by the Turkish market regulator to “nationalize” the phone company by appointing the entire board would be unacceptable.
“Any attempts to nationalize the company by excluding TeliaSonera from the board and appointing a board which solely consists of regulator-appointed members, are unacceptable,” Per-Arne Blomquist, chief executive officer of the Swedish company, said today in an e-mail.
Blomquist’s comments came as Turkcell failed again today to convene a shareholders’ meeting because it lacked a quorum. The other two major partners -- Altimo of Russia, controlled by billionaire Mikhail Fridman’s Alfa Group, and Cukurova Holding AS of Turkey, owned by Turkcell founder Mehmet Emin Karamehmet - - couldn’t agree on the proxy to represent them, Blomquist said. An attempt to meet last month also failed.
Shareholders intend to discuss paying dividends from 2010, 2011 and 2012 profits, which were blocked by TeliaSonera and Altimo in an attempt to force Chairman Colin Williams from the board. The investors contend he hampered Turkcell’s growth by favoring Karamehmet. The regulator appointed three independent board members in March to help resolve board disputes.
Turkcell, in which TeliaSonera has a 38 percent stake, fell as much as 3.7 percent in Istanbul and was down 2.3 percent at 10.65 liras as of 4:06 p.m.
“We have no doubt that the capital markets board will come up with a fair solution,” Blomquist said. “One must not forget that the second largest shareholder group in Turkcell is the free float, represented by Turkish and international investors.”
About one-third of Turkcell shares are traded in Istanbul and New York.
“Since today’s general assembly failed to convene, now we expect the capital markets board to move in to appoint at least two board members to gather a quorum,” Mert Bostanoglu, an analyst at Istanbul-based Ata Invest, said in an e-mailed note today.
The Turkish parliament is debating a draft law that would enable the Capital Markets Board, the Ankara-based regulator known as SPK, to use a new mechanism to intervene in a listed company if it can’t convene two successive shareholders meetings, SPK Chairman Vahdettin Ertas said in an interview June 18. The mechanism would be called the Investor Compensation Center.
The law will also enable SPK to appoint board members should the company fail to do so within 30 days after a member’s term expires, Ertas said. “The law doesn’t aim at a particular company,” he said.
TeliaSonera, Altimo and Cukurova have been fighting for control of Turkcell for almost a decade.
The deadlock was primarily caused by a pending decision at London’s Privy Council in a dispute over Cukurova’s outstanding debt of $1.35 billion to Altimo against a pledge of a 13.7 percent Turkcell stake, Blomquist said. The Privy Council is expected to decide on the amount of interest Cukurova will be required to pay.
Assuming the Privy Council makes its final decision by the fall at the latest, the gridlock on ownership structure and dividend distribution will probably end this year, Bostanoglu said.
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