(Adds comments from Telia, background on dispute, shares)
ISTANBUL/STOCKHOLM, June 18 (Reuters) - Swedish telecom company Telia on Thursday agreed to sell its stake in mobile operator Turkcell Iletisim to the Turkey Wealth Fund for $530 million, marking its exit from the region.
Telia’s exit comes less than two months after Allison Kirkby took the helm as chief executive officer.
Kirkby said the transaction was unlocking a long-lasting deadlock, reducing risk, improving leverage, increasing liquidity and providing fresh shareholder returns.
“And so a new chapter of Telia can begin,” she told a telephone news conference.
Investors are hoping that Kirkby, a former CEO at rival telecom operators Tele2 and TDC, can boost returns at Telia, whose shares have underperformed its rivals for many years.
Telia had said in March it no longer expected to reach its 2020 forecast for core earnings and cashflow due to effects from the coronavirus outbreak hitting its TV & Media business.
The company also said its board had decided to cut its dividend proposal to 1.80 crowns per share from 2.45 crowns previously.
“It will be a board decision what we want to do with dividend,” Kirkby said on the conference call.
Analysts at DNB said the exit was positive, as it allowed Telia to focus on its core Nordic and Baltic operations.
“But the price is less than 50% of market cap which is low,” the bank said in a note.
Telia had a 47.1% holding in Turkcell Holding, which owned 51% of Turkcell Iletisim. Turkish firm Cukurova and LetterOne, founded by Russian tycoon Mikhail Fridman, also owned stakes in the holding company.
The Swedish company started retreating from central Asia in 2015 after its former management became embroiled in a bribery scandal in Uzbekistan.
A dispute between Telia and Cukurova over a share sale to control Turkcell started here in 2005 and later snowballed into litigation and led to corporate governance difficulties.
The sale is expected to result in a capital loss of 3 billion Swedish crowns ($322.15 million), Telia said in a statement.
The Turkey Wealth Fund said that as part of a series of agreements, the Turkcell Holding joint venture was effectively terminated, with Cukurova exiting its indirect interest in Turkcell.
LetterOne has acquired a direct minority interest in Turkcell and the wealth fund becomes the largest shareholder with effective control over the board of directors, ending a long-running dispute between its main shareholders.
Telia shares, which were down 31% over the past five years versus a 34% gain for rival Tele2, were up 0.7% in early trade on Thursday.
Turkcell shares rose 5.8% in Istanbul on Thursday morning. ($1 = 9.3123 Swedish crowns) (Reporting by Daren Butler in Istanbul and Helena Soderpalm in Stockholm; Editing by Sandra Maler/Cynthia Osterman/Jane Merriman)
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