(Recasts, adds details and comment)
By David Dolan and Can Sezer
ISTANBUL Nov 29 The decade-long struggle over
control of Turkcell, Turkey's top mobile network
operator, took another turn on Tuesday when Russian billionaire
Mikhail Fridman said he was unable to buy a disputed stake from
his Turkish rival.
Turkcell has been hampered by the protracted feuding between
three of its shareholders - Fridman, the company's founder
Mehmet Emin Karamehmet and Sweden's Telia Company.
The legal battle has generated its own lengthy Wikipedia entry
and been compared by one legal observer to a low-budget horror
movie for its seemingly "inexhaustible supply of sequels".
Under a London court decision handed down in August,
Fridman's LetterOne Technology investment business had a right
to buy out the stake owned by Karamehmet's Cukurova Holding
conglomerate. On Tuesday LetterOne said it had been prevented
from doing so by an injunction in the British Virgin Islands
which barred the transfer of the shares.
"There is therefore no legal means to purchase these shares
and reinstate good corporate governance at Turkcell," LetterOne
said in a statement.
The injunction was granted after Cukurova refused to pay an
outstanding debt to Telia, which with interest is now worth $1.1
billion, according to LetterOne.
LetterOne indirectly holds 13.2 percent of Turkcell, while
Karamehmet's Cukurova indirectly holds a 13.8 percent stake.
Telia owns 37 percent. As part of Turkcell's labyrinthine share
structure, Fridman's interests are held through a subsidiary
Alfa Telecom Turkey.
Cukurova declined to comment.
However, a person familiar with Cukurova's thinking said it
and Alfa were "back to square one". The person also said
LetterOne's reason for not buying the stake, the injunction, was
an "excuse" and it should not have prevented the transaction.
A LetterOne spokesman could not be reached for a response.
The London tribunal had set a deadline of Nov. 18 for
Cukurova to choose to buy Fridman's shares for $2.7 billion, or
sell its own stake to Fridman for $2.8 billion. After Cukurova
did not make a decision by the deadline, the option to buy
passed to Fridman.
But those price tags carry a hefty premium to current market
prices, given that the entire company is worth around $6.2
billion, according to Thomson Reuters data.
Shares in Turkcell were down 3.5 percent at 9.35 lira by
1415 GMT, making them the biggest single drag on Istanbul's BIST
100 index, which was down 0.7 percent. Investors have
been frustrated by the deadlock, which even prevented annual
general meetings from being held and dividends paid out.
Turkcell paid out dividends for the first time in years in
2015, with LetterOne receiving nearly $200 million, according to
The dispute started when Fridman's Alfa seized Karamehmet's
stake, saying Cukurova had defaulted on a 2005 loan agreement
for which the shares were pledged as collateral.
The injunction preventing the transfer of shares was granted
for the benefit of Telia, following a separate international
arbitration case in 2011, LetterOne said.
(Additional reporting by Birsen Altayli and Daren Butler;
Editing by Nick Tattersall, Greg Mahlich)