Telia agrees to sell Turkcell stake to Turkey Wealth Fund; Cukurova to exit also

Telia Company has agreed to sell its 47.1% stake in Turkcell Holding, which owns 51.0% of Turkish mobile market leader Turkcell, to the state-owned Turkey Wealth Fund (TWF) for USD530 million, the Swedish group announced last night. The transaction also includes a full settlement of all shareholder disputes and litigations connected to Turkcell and Turkcell Holding. Closing of the deal, subject to regulatory approvals and an annual general meeting of Turkcell, is expected during the second half of 2020. Telia’s CEO Allison Kirkby declared: ‘Through this divestment, we unwind a long-lasting legal deadlock; we reduce risk, improve leverage and increase liquidity which will generate better shareholder returns in our core markets.’

In a separate statement, TWF announced that it has signed contracts with Turkcell’s three largest shareholders Cukurova Group (run by Turkcell’s founder Mehmet Emin Karamehmet), Telia and LetterOne, as well as with Ziraat Bank and related parties, which will enable it to take a 26.2% stake in Turkcell, including Telia’s 24.0% indirect stake and other shares, making it the company’s biggest shareholder. Under the agreements, TWF will appoint five of the nine Turkcell board members, while LetterOne (a Luxembourg-registered company controlled by Russia’s Mikhail Fridman) will become the second largest Turkcell shareholder with 24.8% of equity, compared to its current 13.2% indirect stake. Furthermore, the Turkcell Holding joint venture will fold and Cukurova will exit Turkcell by selling its indirect 13.8% share. TWF’s statement implies that LetterOne will buy the bulk of Cukurova’s stake (11.6% out of the latter’s total 13.8%) with TWF picking up the other 2.2%. The sovereign wealth fund stated that Turkcell’s board structure will be ‘more stable and transparent’ after the transactions which will see an end to disputes dating back to 2005.

Turkcell will continue to be listed on both Borsa Istanbul and New York stock exchanges, with 49.0% of its shares currently in free float. Alongside its Turkish mobile operations, Turkcell is also the country’s second largest fixed broadband provider via its wholly-owned Superonline division, and it has operating subsidiaries in Ukraine (Lifecell), Belarus (BeST), Northern Cyprus (KKTCell) and Germany (Lifecell Europe), whilst marketing its digital platform services globally.

TWF currently owns 100% of Turkish satellite and cable broadband network operator Turksat and a minority stake in national fixed and mobile operator Turk Telekom among a portfolio including Turkish Airlines, several banks, Turkish Petroleum, TWF Mining, TWF Energy, national post service PTT and other companies.