UPDATE 1-Turkish watchdog says must approve any change in Turkcell control
* British court set to rule on Wednesday
* Ruling could strip main Turkish shareholder of stake
* Dispute has hampered Turkcell's growth (Adds quote, details)
ISTANBUL, Jan 29 (Reuters) - Turkey's telecoms watchdog said on Tuesday it would have to approve any change in control of Turkcell, the country's biggest mobile phone operator, a day ahead of a British court ruling which could leave the firm with no major Turkish shareholder.
The Privy Council will rule on Wednesday in the long-running shareholder dispute between Mehmet Emin Karamehmet, one of Turkey's most powerful businessmen, and Altimo, the telecoms arm of Russian billionaire Mikhail Fridman's Alfa Group.
Should it rule in Altimo's favour, the Russian company could be awarded Karamehmet's 13.8 percent stake in Turkcell, which also carries controlling rights through its complex management structure, stripping Turkcell of a major Turkish stakeholder.
"In the royalty contact signed between our institution and Turkcell, it says any kind of share transfer resulting in a change of control requires an approval from our institution," Turkish telecoms watchdog BTK said in a statement.
The Privy Council, the highest court of appeal for many Commonwealth countries, is hearing the case because Karamehmet holds his stake in Turkcell through his Cukurova holding company, registered in the British Virgin Islands.
The telecoms watchdog said any ruling by the British court would not alter the fact that a share transfer would need its blessing but gave no hint as to what it would do if Cukurova was stripped of its stake.
The dispute centres around a loan taken in 2005 by Cukurova from Altimo, which indirectly holds 13.2 percent of Turkcell. Nordic telecoms group TeliaSonera holds 37 percent of Turkcell while the remaining 34 percent is largely free float.
Cukurova put its stake in Turkcell up as collateral for the loan and the argument hinges on whether that loan fell into default. Altimo says Cukurova failed to pay in time, while Cukurova maintains Altimo blocked its repayment.
The dispute has left Turkcell unable to agree on the composition of its board for the past two years, and unable to distribute dividends or pursue a coherent growth strategy.
(Reporting by Asli Kandemir; Writing by Nick Tattersall)