A Turkish government regulator plans to appoint a majority of the board members of Turkcell, the country’s leading mobile group, even though Sweden’s TeliaSonera, the biggest minority shareholder, has labelled such a move a virtual “nationalisation”.
Vahdettin Ertas, the chairman of Turkey’s Capital Market Board, told the Financial Times that continuing disagreements among Turkcell’s major shareholders left the regulator with little option but to appoint two more directors to the company’s seven-member board. Together with the three independent directors already named by the CMB, this would give the regulator a majority of board seats at Turkcell.
He added he was considering acting “in a short time”, despite a UK court this week issuing a ruling that could end a six-year battle over the control of Turkcell. The Privy Council said Turkey’s Cukurova could regain the controlling stake in the operator from Alfa, the Russian group, if it paid $1.56bn for the shares within 60 days.
But Mr Ertas said he intended to act “earlier than the 60-day deadline”, noting that because of the rift, Turkcell had not paid a dividend since 2010 – the amount accrued is close to $3bn – and that some directors’ terms had expired.
“We are facing a company that does not have a board of directors and which cannot hold a general assembly,” he said adding that the CMB would appoint directors only until permanent replacements were appointed by shareholders.
“If our aim was to have control of the company, we would ask the directors to stay two or three years,” he added, arguing that if his institution did not use its powers, shareholders could apply to the country’s commercial court for Turkcell’s dissolution.
The CMB’s move, under powers of a new law that the Turkish parliament is expected to approve imminently, comes amid increasing scrutiny of the relationship between various Turkish regulators, and the country’s government.
A broadcasting watchdog has fined television stations that screened extensive footage of anti-government protests, and the CMB and the banking regulator have opened probes into sales of shares and the Turkish lira in the wake of government warnings against speculators. Two of the three independent directors already named by the CMB to the Turkcell board are former government ministers.
Mr Ertas said those appointments showed the importance the CMB gave to Turkcell. “They are internationally known people,” he said, stressing the CMB’s role as an independent institution.
People close to Turkcell argue that the government has long been reluctant to cede greater control of the company to Alfa and has an uncomfortable relationship with Mehmet Karamehmet, the tycoon who heads Cukurova, many of whose assets were recently seized by a state savings deposit insurance fund, under provisions of Turkish law.
After three years of deadlock between Cukurova and the alliance formed by Alfa and TeliaSonera, Per-Arne Blomquist, the chief executive of the Nordic group, said that excluding directors nominated by shareholders would be “a clear negative” to foreign investors.
“Any attempts to ‘nationalise’ the company, by excluding TeliaSonera from the board and appointing a board which solely consists of CMB appointed members, are unacceptable and against the Turkish Commercial Code as well as international investment treaties,” he said in June.
On Thursday Alfa added: “We urge the government not to rush with changes to the board . . . since very soon the shareholders status in Turkcell will be clarified once and for all.”
But Mr Ertas said the CMB had been unfairly treated. “We exist to protect investors’ rights,” he added. “We have another 419 companies listed on the Borsa Istanbul [stock exchange] and we haven’t used those powers for those companies. If Turkcell took the necessary actions, we wouldn’t take these actions.”
Cukurova did not respond to a request for comment, while Turkcell declined to comment.
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