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Turkcell ownership row may inch towards resolution with UK ruling
May 9, 2014 / 10:06 AM / 4 years ago

Turkcell ownership row may inch towards resolution with UK ruling

ISTANBUL, May 9 (Reuters) - A British court said it would announce next Tuesday a long-awaited decision in a dispute over the ownership of Turkish mobile phone operator Turkcell , between its major shareholders Cukurova and TeliaSonera.

The ruling could bring forward a resolution of the row, which has hobbled Turkcell’s development for years because it has been unable to agree the make-up of its board or pay dividends, but it is only one part of a web of related legal disputes affecting Turkey’s biggest cell phone operator.

Cukurova had reached an initial agreement in 2005 to sell its 52.91 percent stake in Turkcell Holding, which has a controlling stake in Turkcell, to TeliaSonera.

But the deal was never executed and the shares were not transferred, prompting TeliaSonera to turn to the International Chamber of Commerce in Geneva, which ordered Cukurova to pay $932 million in damages.

Pursuing its legal efforts, TeliaSonera last year secured an order freezing Cukurova’s assets until it paid the damages, though that order was last month overturned by a U.S. appeals court.

The UK Privy Council said in a statement on Friday it would rule on whether the Geneva tribunal had the jurisdiction to make the demand for damages, which Cukurova disputes.

The Privy Council is involved because Cukurova Finance International is registered in the British Virgin Islands, part of the British Commonwealth, a grouping of countries which are mostly former territories of the British Empire. The council is the final court of appeal for some Commonwealth countries.

Turkcell declined to comment.

The ownership dispute is complicated by a separate but related case involving fellow Turkcell shareholder Altimo, an arm of Russian oligarch Mikhail Fridman’s Alfa Group.

Instead of selling to Telia, Cukurova took out a loan from Altimo secured against its Turkcell stake. But it then defaulted on the loan, prompting Altimo to appropriate the holding.

A ruling by the Privy Council in Cukurova’s favour - that the International Chamber of Commerce has no jurisdiction in the case - could be a boost for Cukurova, because it would remove the damages award and free its hand to find financing to repay the Altimo loan.

Cukurova has been ordered to pay around $1.6 billion to Altimo to recover its Turkcell stake. (Writing by Seda Sezer; Editing by Nick Tattersall and David Holmes)

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