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January 28, 2013 6:59 pm
Turkey’s biggest corporate feud could be resolved this week when the UK Privy Council rules on the ownership of the controlling stake in Turkcell, the country’s principal mobile company.
At loggerheads in the dispute over the group – which has a $15bn market capitalisation – are Mehmet Karamehmet, one of Turkey’s richest men, who helped found Turkcell, and Mikhail Fridman, the tycoon who heads Russia’s Alfa Group.
The fight, over whether Mr Karamehmet’s Cukurova group defaulted on a $1.4bn loan from Alfa and so whether Alfa was therefore justified in laying claim to control of a 51 per cent stake in Turkcell, has lumbered on since 2007.
All sides say they hope the issue will be laid to rest by Wednesday’s decision by the Privy Council, which has final jurisdiction because the Cukurova subsidiary that borrowed the funds from Alfa is incorporated in the British Virgin Islands. Analysts say that, no matter who wins, Turkcell stands to benefit after years during which it was paralysed by the shareholder fight and by several accompanying disputes.
“Essentially there has been no functioning board and no significant decisions in the past three years,” said Alexander Kazbegi of Renaissance Capital, the investment bank.
The group, which has TL6.5bn ($3.7bn) of gross cash, has not paid dividends for three years; Mr Kazbegi and other analysts estimate accumulated payment for 2010-12 would exceed TL3bn.
The dividends have been halted by a boardroom fight that has paralleled the ownership dispute, with Alfa and its ally TeliaSonera, the Nordic telecoms group, alleging Colin Williams, Turkcell’s chairman, is too close to Mr Karamehmet, despite their protestations that he is independent.
At present, Mr Williams has the casting vote on the board, but board changes have in effect been forestalled by new corporate governance rules issued by the Turkish government, which has indicated nervousness about Turkcell falling into foreign hands and whose regulatory role remains important.
Alfa and TeliaSonera insist Turkcell will remain Turkish even if they gain control, while several people involved in the dispute express hope a compromise will be reached in the boardroom once ownership claims are finally resolved.
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