Turkcell’s Decade-Long Ownership Feud May Be Near Resolution

  • Court says Cukurova must either sell stake or buy out L1
  • L1: Breakthrough would let Turkcell be managed ‘in normal way’

Turkcell Iletisim Hizmetleri AS, Turkey’s biggest wireless carrier, could soon see a decade-long ownership dispute resolved, after an arbitration court said one of its shareholders will have to buy out the other or sell its own stake.

The decision by the London Court of International Arbitration gives Mehmet Emin Karamehmet’s Cukurova Holding AS 60 days to decide whether to sell its 13.8 percent stake in Turkcell to LetterOne, the investment company backed by Russian billionaire Mikhail Fridman, for $2.8 billion, or to buy Letter One’s 13.2 percent Turkcell stake for $2.7 billion, according to an e-mailed statement from LetterOne.

The price tag in the LetterOne statement implies a $20.3 billion overall value for Turkcell, almost triple its market value of $7.7 billion. Turkcell advanced 1.1 percent to 10.47 liras 4:27 p.m. in Istanbul. The stock has gained 5.8 percent this year.

Turkcell’s owners have been feuding since 2005, when Fridman’s firm acquired a small stake, seeking to boost ownership to control. Shareholders have filed lawsuits in various jurisdictions, fighting over board representation, the size of the dividend and other issues. This year Turkcell failed to pay a dividend because of the dispute. Alfa Telecom Turkey Ltd., LetterOne’s unit in Turkey holding the Turkcell stake, formally bid to buy out the Cukurova stake for $2.8 billion in March 2015.

“We have for some time been trying to find a resolution to this decade-long deadlock between shareholders so that Turkcell can be managed in a normal way,” Alexey Reznikovich, managing partner of LetterOne’s L1 Technology unit, said in the statement.

The mechanism by which one co-owner either buys out the other or becomes the seller is nicknamed “the Russian roulette” in Moscow media, in honor of the lethal game that involves a revolver and one bullet.

A Cukurova official said the company declined to comment. Sweden’s Telia AB owns 38 percent of Turkcell. LetterOne declined to comment on whether any takeover of Turkcell stake would trigger a tender call to other investors.

The 60-day period started on July 29, a LetterOne lawyer said. Cukurova then has 14 days to implement its decision to buy or sell.

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