Sweden’s Telia Has Another Problem at Turkcell: Free Speech

Updated on
  • Telia says it has limited influence over policies in Turkey
  • Telia owns largest stake in Turkey’s premier mobile operator

For Swedish phone company Telia AB, its more than decade-long headache in Turkey is getting a little bit worse.

The Stockholm-based operator has been traveling to courts around the world to fight its partner in Turkey over their joint ownership of Turkcell Iletisim Hizmetleri AS, the country’s largest mobile company. Now it’s a disgruntled spectator as Turkcell faces accusations that it’s become a tool of government censorship by regularly blocking internet access to its 35 million customers.

That prompted Telia to include freedom of expression concerns in a white paper it published about its challenges with regards to Turkcell on Sept. 27. Telia has an “active dialogue" with Turkcell’s management on its approach to privacy and freedom of expression issues, the report said without going into details on how they’re being addressed.

“It is of course a problem that we view as very serious," Johanna Hansson, a spokeswoman for Telia, said by e-mail on Dec. 9. But, she added, “our ability to influence is limited as we currently don’t sit on the board of Turkcell."

Turkcell says it has no choice but to do as Turkish authorities request.

“We are obligated, like all other operators, to act on decisions communicated to us in line with our legal responsibilities," Turkcell said in an e-mailed response to questions on Dec. 13. The company added that it’s committed to democracy, human rights and freedoms, citing as an example its refusal to deny service during a July 15 coup attempt against the government.

Foreign Investments

Telia, the former Swedish monopoly that’s still part government-owned, has faced criticism from human rights organization Amnesty International over some of its foreign holdings, including Turkcell. Amnesty in July said Turkcell’s Belarus unit impeded freedom of speech by granting the government “nearly unlimited access to their customers’ communications and data." Allegations by authorities in the U.S., Netherlands and Sweden that Telia paid bribes to enter Uzbekistan in 2007 complicated its plans to sell units in former Soviet republics and concentrate on the Nordic and Baltic regions instead.

Telia registered about $761 million worth of Turkcell shares for possible sale earlier this month. That move wasn’t related to the concerns about freedom of expression in Turkey, Hansson said. Since Telia signed the deal to acquire a majority stake in 2005, Turkcell’s market value has declined by more than half in dollar terms. The Borsa Istanbul 100 Index has dropped about 25 percent over the same period.

Turkcell shares fell as much as 0.9 percent to 8.97 liras at 2:30 p.m. in Istanbul on Thursday, the lowest since Dec. 2. The company has been steadily losing market share to competitors Vodafone and Avea, dropping to 44 percent as of the third quarter this year from 48 percent in 2015, according to data from the communications regulator.

‘Delete the App’

Among users in Turkey, Turkcell has a reputation for rapidly cutting its customers off upon government requests or court orders that frequently target communication platforms including Twitter, Facebook, Reddit, YouTube and Wordpress. That’s made web surfers in Turkey savvy about circumventing restrictions by using services such as VPNs, or virtual private networks, which can mask users’ locations.

When a Bloomberg reporter tried to access social media sites during the latest crackdown, following arrests of Kurdish lawmakers on Nov. 4, Turkcell cut his internet off completely. It was restored only after a call to Turkcell’s technical service, which demanded that a VPN application be deleted from the phone entirely.

Turkcell operates in a country with one of the world’s worst records on freedom of expression. Turkey has more journalists in jail than any other country, according the Committee to Protect Journalists. More than 100,000 websites are blocked, and Freedom House downgraded the country’s ranking on Internet freedom to “not free" this year, citing repeated blocking of social media sites and network shutdowns.

Board Seats

Telia won an arbitration case against Turkcell co-owner Cukurova Holding AS in Geneva in 2011. That case was based on Telia’s allegation that Cukurova didn’t abide by a previous agreement to sell it a controlling stake, and instead sold shares to LetterOne Investments, owned by Russian billionaire Mikhail Fridman. Cukurova never paid the amount ordered by the Geneva tribunal: $932 million, plus interest and costs, and Telia has opened cases pursuing collection in multiple jurisdictions around the world since.

A year after that decision, the Turkish government introduced a regulation that kicked the Swedish company off Turkcell’s board, even though it owns the largest stake. All seven current members of the board have been appointed by a government regulator. Two of those, Jan Erik Rudberg and Erik Belfrage, are Swedish. Rudberg worked for Telia from 1994 until 2003, according to details on the Turkcell website.

Read More: Turkcell Feud Unresolved as Fridman Buyout Option Expires

Court Orders

Turkcell has itself instigated some of the content-blocking requests, seeking court orders to censor 862 tweets amid criticism of its sponsorship of students for a pro-government educational foundation involved in a pedophilia scandal, according to the Freedom House report. Twitter refused to comply and said it would appeal to a higher court. “Turkcell continued to call for the removal of hundreds, and later thousands of additional tweets" before ultimately suing Twitter for damages, Freedom House said.

Telia says that its current efforts to influence Turkcell policies are limited to shareholder advocacy. Eventually it hopes to be part of the decision-making process again.

“The situation has not always been what it is today with an ownership deadlock and a board appointed by the Turkish Capital Markets Board," said Hansson, the spokeswoman. “Telia Company is, together with the other major shareholders, working hard to solve the situation in order to, among other things, go back to having a board that is appointed by the owners and not the Turkish authorities."