October 13, 2011 / 5:30 AM / 6 years ago

UPDATE 2-Turkcell fails to hold key votes at EGM

* Shares steady on hopes for solution to boardroom battle

* Capital Markets Board decision seen positive

* EGM fails to vote on dividend (Adds analyst comment, share reaction)

By Daren Butler

ISTANBUL, Oct 13 (Reuters) - Turkey's biggest mobile phone operator, Turkcell , failed to hold key votes on board changes and its dividend at an extraordinary general meeting late on Wednesday, although investors remained hopeful that a long-running dispute between key shareholders will now be resolved.

Last year, TeliaSonera and Russia's Altimo forced Mehmet Emin Karamehmet, chairman of Turkey's Cukurova Group, to stand down as chairman of Turkcell , the company he founded in 1994, and are now trying to oust his replacement and change the board structure.

But a decision by Turkish regulator the Capital Markets Board on the eve of the EGM delayed any progress as it set new rules raising the number of independent members required on company boards.

Turkcell shares were down 0.2 percent at 8.58 lira by 0924 GMT, recovering from an initial loss of 1.4 percent and having risen 4.6 percent on Wednesday.

"This EGM showed one more time that Teliasonera and Alfa are determined not to release dividends without changing the chairman," Oyak Securities said in a daily note.

A new EGM was expected to be held soon to seek approval for the election of at least three independent board members in line with the Capital Markets Board decree.

"The new regulation is positive for Turkcell in the longer term, as it is a solid step towards a solution among shareholders regarding the board structure," Oyak said.

Turkcell said in a statement on Thursday that the bid to change the board at the EGM did not comply with the Capital Markets Board decision.

"The shareholders, who were present, expressed the wish that the board of directors implement the legislation, dated October 11, 2011 with regards to corporate governance principles as soon as possible," it said.

The balance sheet and profit and loss statements relating to fiscal year 2010 were not approved at the meeting, it added.

The three main shareholders each have two seats on Turkcell's seven-member board. Chairman Colin Williams is the designated independent board member, but TeliaSonera and Altimo want him replaced as they say he sides with Cukurova.

TeliaSonera has the largest direct and indirect stake in Turkcell, with a 37 percent share.

Altimo, the telecoms arm of Russia's Alfa Group, has an indirect stake of 13.22 percent.

While Cukurova owns just 14 percent of Turkcell, its stake carries controlling rights because of the management structure.

Editing by Greg Mahlich

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