TeliaSonera, Altimo Seek Turkcell Chairman’s Ouster Next Week
TeliaSonera AB (TLSN) and Altimo said they want to oust Chairman Colin Williams from the board of Turkcell Iletisim Hizmetleri AS, Turkey’s biggest mobile-phone operator, at next week’s shareholders meeting, arguing he’s hampering the company’s growth by favoring its founding shareholder.
Williams is “siding all the time” with Cukurova Holding AS, TeliaSonera Chief Executive Officer Lars Nyberg said today in an interview in Istanbul. “We don’t want a non-independent chairman siding with Cukurova Holding and blocking the company.”
TeliaSonera, Sweden’s biggest phone company, and Altimo, controlled by Russian billionaire Mikhail Fridman’s Alfa Group, are battling Istanbul-based Cukurova over control of Turkcell. Williams, appointed as an independent board member in 2006, replaced Cukurova Chairman Mehmet Emin Karamehmet as Turkcell’s chairman in February 2010. TeliaSonera said last month that Williams has failed to maintain his impartiality.
“Williams must be replaced and stay out of Turkcell’s board in order for the company to progress and seize growth opportunities outside Turkey,” Mustafa Kiral, in charge of mergers and acquisitions at Altimo, said in an interview late yesterday. Altimo is Alfa Group’s telecommunications-investment vehicle.
No one answered telephone calls to the offices of Williams and Karamehmet seeking comment. No one was available to comment in the Turkcell press office.
Cukurova can determine the meeting’s outcome with the votes cast by Turkcell Holding, which owns 51 percent of Turkcell and is majority-owned by Cukurova Telecoms Holding, with TeliaSonera as the minority partner. Altimo owns a minority stake in Cukurova Telecoms, which is controlled by Cukurova Holding.
In addition to seeking Williams’s removal, TeliaSonera and Altimo want more independent directors to reduce Cukurova’s influence on the board, where each of the three main investors have two representatives. Turkcell should heed Turkey’s Capital Markets Board, the securities regulator, which told the company it should have at least two independent board members because 34 percent of its shares are freely traded.
“We want nobody to have sole control over Turkcell,” Nyberg said. “If there’s a disagreement among the shareholders, there should be enough independent board members to swing the vote.”
The board “should be controlled by independent members and the chairman should be independent too,” Kiral said, adding there should be three independent members. Altimo has as many as nine potential candidates for the independent board seats, he said.
The deadlock on the board has meant some decisions couldn’t be made regarding Belarus and Ukraine operations, leading to “poor financial performance” in those countries, Nyberg said.
“Turkcell needs to grow through international acquisitions to add value to its market capitalization, which should be at least $20 billion instead of $13 billion now,” he said. “Turkcell would have been more successful if the board hadn’t been blocked and could instead take action.”
Turkcell shares fell 0.2 percent today in Istanbul, bringing its decline this year to 15 percent.
Altimo’s indirect stake in Turkcell is equivalent to 13.2 percent of the company’s capital. TeliaSonera’s direct and indirect holdings are equivalent to a 38 percent stake.
“We want excellence and execution at the board level in Turkcell,” Nyberg said. “Our No. 1 priority is to have a chairman with global experience and with insight that he could give to the company for its future.”
Cukurova’s Karamehmet founded the mobile operator in 1994. He was replaced as chairman after an Istanbul court sentenced him to 11 years and 8 months in jail for loans made to Cukurova by Pamukbank TAS, a lender he owned before it was taken over by the government in 2002. The case is pending appeal.
“There are some growth opportunities for Turkcell in the Balkans, Africa and Middle East,” Kiral said. “But because the board can’t take decisions, some of the opportunities have been missed.”
Turkcell’s 5 billion-lira ($3.3 billion) cash position as of the end of 2010 would easily allow for acquisitions, Kiral said. Turkcell plans to use its cash to fund purchases, a share buyback and an increase in dividend payments, CEO Sureyya Ciliv said in an interview on Feb. 24.
Altimo is happy with Ciliv and would continue with him once the board chairman is replaced, Kiral said.
TeliaSonera has sued Williams on the grounds that he has refused to allow it to address shareholders at the April 21 annual meeting, Nyberg said. Its attempts to add independent board members have been blocked by Williams and controlling shareholder Cukurova Holding, he said.
TeliaSonera made inaccurate statements about Williams’s stance on governance issues, “including the proposed increase in the number of independent directors on the Turkcell board and proposals to change the current board’s composition,” Williams said in an e-mailed statement on March 29. “I will strongly contest those allegations, as well as any suggestions that I have acted unlawfully,” he said.
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