UPDATE 2-Market watchdog moves on Turkcell board, dividend mooted

Tue Mar 12, 2013 8:08am EDT

(Recasts with investor view on dividend, share price)

ISTANBUL, March 12 (Reuters) - Turkey's financial industry regulator has appointed three independent directors to Turkcell's board, and a major investor said that could herald resumed dividend payments at Turkey's biggest mobile phone operator.

The Capital Markets Board (SPK) also removed three board members, it said in an e-mailed statement issued late on Monday, a decision welcomed by the main shareholders who have been at loggerheads since 2005 over control of the group.

The complex ownership dispute between Turkey's Cukurova Holding, Nordic telecoms group TeliaSonera and Russia's Altimo has left Turkcell unable to agree on its board.

It has not paid a dividend since 2009.

Shares in Turkcell rose more than four percent on the news.

"These assignments can be perceived as a signal that the government is involved in solving Turkcell's ownership dilemma," FinansInvest said in a note. Two of the new independent members of the seven-strong board are former ministers.

Cukurova welcomed the decision in a statement: "We think the new appointments will help solve the continuing disputes and deadlock in Turkcell."

TeliaSonera said it would now push for a meeting of Turkcell's owners.

"We will now focus on the actions needed to convene an AGM at the earliest possible time...so that the company can start paying dividends again, which are long overdue," CEO Per-Arne Blomquist said in a statement.

Such a move would be a big boost for Telia.

"Just getting the dividend through again, that would be a material cash injection for Telia that could be passed straight through to its shareholders, as Telia has no need to delever," said Andrew Hogley, analyst at Espirito Santo in London.

Hogley said it remained unclear how the new board members would act and said the market needed to be convinced the change was real.

The dispute between Turkcell shareholders over ownership continues at the Privy Council in London, which is hearing the case because the holding companies involved are registered in the British Virgin Islands. The council is the highest court of appeal for many Commonwealth countries.

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.

Altimo appropriated Turkcell shares pledged by Cukurova in return for a loan after the Turkish company defaulted. 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. (Reporting by Evren Ballim in Istanbul, Simon Johnson and Olof Swahnberg in Stockholm, Writing by Seda Sezer; Editing by Jon Boyle)

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