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Turkcell Iletisim (TKC) Message Board

  • swu4all swu4all Nov 12, 2009 5:44 PM Flag

    TeliaSonera /Alfa Settle Dispute

    On Nov. 12, 2009, TeliaSonera, Sweden’s largest telephone company, and Russia’s Altimo agreed to combine their stakes in MegaFon and Turkcell into a new company. The new company will be listed on the New York Stock Exchange and established in a Western jurisdiction. TeliaSonera and Altimo will contribute their stakes to the venture without a premium and invite other shareholders to join them. MegaFon is Russia’s third largest mobile-phone company, and Turkcell is Turkey’s largest mobile-phone company.

    TeliaSonera aims to increase control in its partially owned holdings in the Baltics and Eurasia, while Altimo said it believes the deal will bring opportunities for expansion into other emerging markets. The agreement includes a solution to a legal dispute with Çukurova Holding over a stake in Turkcell, which will now be acquired by Altimo and merged into the new company.

    TeliaSonera and the Russian companies should have “about the same share” in the merged company, Altimo Chief Executive Officer Alexey Reznikovich said at a briefing in Moscow. An independent appraisal of both companies needs to be conducted to establish exchange conditions and complete the deal, he said.

    No banks have yet been hired to work on establishing the new venture, the companies said. TeliaSonera and the Russian investors will have an equal number of board members and there will also be independent members and an independent chairman, the companies said.

    MegaFon currently has about $2 billion in cash and Turkcell has about $3 billion in cash, Reznikovich said. The new company intends to return cash to shareholders if it does not find acquisitions or other places to invest the money, TeliaSonera and Altimo said. The Russian government is expected to approve the deal even though MegaFon is considered a strategic enterprise, Reznikovich said.

    It may take as long as two years for the new company to start operating, TeliaSonera CEO Nyberg said in an interview. First it needs to settle the dispute with Çukurova over Turkcell shares that were sold to both TeliaSonera and Altimo, he said. Those shares will belong to Altimo and then to the new company after a resolution process that may take 12 months, TeliaSonera said. In exchange, Altimo will support TeliaSonera’s move to acquire the 41.45 percent of Eurasian operator FinTur Holdings that it does not already own. The Swedish company plans to buy the stake from Turkcell at a fair market value, it said.

    Altimo and TeliaSonera together currently own about 42 percent of Turkcell and would boost their stake to 64 percent on settlement of the Çukurova dispute. Together they own about 69 percent of MegaFon, with Usmanov owning the rest.

    It sounds like Turkcell shareholders could get lots of cash, from the sale of FinTur and distribution of current cash holdings. However, itmight be two years before we see it.

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