TeliaSonera says wins court victory in Turkcell dispute

ISTANBUL, March 11 Mon Mar 11, 2013 11:42am EDT

ISTANBUL, March 11 (Reuters) - A court in the Caribbean has ruled in favour of Sweden's TeliaSonera in a case relating to a long-running dispute over the ownership of Turkish mobile phone company Turkcell, Teliasonera said on Monday.

The Eastern Caribbean Supreme Court has imposed restrictions on locally-registered units, in which Turkcell shareholder Cukurova Holding owns stakes and through which the latter exerts its control of Turkcell, the Swedish company said.

The ruling means the units, in particular British Virgin Islands-registered Cukurova Telecom Holdings Ltd, which controls Turkcell and in which Cukurova has a 51 pct stake, are prohibited from any deal affecting the ownership of the stake until the next hearing on March 26.

Cukurova was not available for immediate comment.

The ruling is the latest victory for TeliaSonera, whose dispute with Cukurova dates back to 2005 when the Swedish group agreed to buy the latter's stake in Turkcell, Turkey's biggest mobile-phone operator, for $3.1 billion.

Cukurova backed out of the deal, leaving TeliaSonera to try and force it to cough up the shares and seek damages.

The Paris-based International Chamber of Commerce, which arbitrates in corporate disputes, in September 2011 awarded TeliaSonera $932 million, plus interest. But the Turkish company has not paid out and the dispute rumbles on.

TeliaSonera has the largest direct and indirect stake in Turkcell, amounting to 37 percent, but Turkcell is controlled by Cukurova through a complex shareholder structure which includes the Caribbean entities covered by the latest court ruling.

The row has left Turkcell unable to pay dividends or pursue a coherent growth strategy for several years.

Despite having agreed to sell its stake to TeliaSonera, Cukurova instead pledged the shares to Russian telecoms group Ultimo in return for a loan. Altimo then appropriated the Turkcell stake after Cukurova defaulted on the loan.

Altimo and TeliaSonera joined forces against Cukurova in 2009, saying they would set up a joint holding company to run their assets in Turkey and Russia, where they have 90 million subscribers.

Britain's Privy Council ruled on Jan. 30 that while Altimo had been entitled to take over the stake, Cukurova also had the right to recover it if it paid the outstanding loan plus interest and costs.

The Privy Council, the highest court of appeal for many Commonwealth countries, is hearing the case because the holding companies involved are registered in the British Virgin Islands. (Reporting by Evren Ballim; Writing by Seda Sezer; Editing by David Holmes)