ANKARA
In an effort to put an end to a long-running battle for control of Turkey's largest mobile phone operator, Russian billionaire Mikhail Fridman on Tuesday bid $2.8 billion to take a controlling stake.
For years, the Russian oligarch had tried to gain control of the company with a lawsuit, but this attempt finally failed.
Now, in a bid managed by his Luxemburg investment vehicle LetterOne, Fridman is offering twice the price at which Turkcell shares are currently trading to take a 13.76 stake in a joint venture holding that indirectly controls 13.76 percent of Turkcell.
Shareholders in Turkcell are fed up with the battle, which has kept the company from paying a dividend since 2010.
To succeed, the Russian billionaire's bid must be approved by both Cukurova Holding, which is controlled by Turkish financial guru Mehmet Emin Karamehmet, and the Turkish government, through the state-controlled bank Ziraat Bankasi.
But the government has made clear in the past that it does not wish to cede control of this key business to foreigners.
There is the further issue that Fridman was refused permission by the U.K. government to keep North Sea oil and gas fields, that he acquired last month with the purchase of a unit of Germany's energy company RWE. The U.K. government expressed concern that Fridman could be hit with sanctions imposed for Russia's involvement in the conflict in Ukraine.
Until now, Turkey has not implemented Western sanctions against Russia, preferring diplomatic action.
The bear and the guru will no doubt lock horns at Turkcell's annual shareholder meeting scheduled on March 26.
Fridman's Turkish subsidiary already holds 13.2 per cent of Turkcell, and Nordic telecoms group TeliaSonera has a 38 percent stake since December 2014. Turkcell’s 27.25 percent of outstanding shares are publicly traded.
"We believe in Turkcell and in its future and the price reflects our belief in the company and a fair price for control,” the spokesperson of LetterOne said in a statement on Wednesday.
“We hope the Turkish Goverment will welcome the resolution of the issue and support us as an investor if we are the purchaser,” the statement said.
The Turkish state had established a large measure of influence over Turkcell, through the Capital Markets Board nomination of five of the group’s seven directors and a $1.6bn loan from state-owned Ziraat Bank.
In July 2014, Cukurova Holding paid AlfaGroup $1.6 billion to recover a separately disputed stake after signing a loan agreement with Ziraat.
Turkcell is Turkey's largest mobile phone operator with about 35 million subscribers or about half of the entire Turkish market.
Turkcell also is a leading regional player with its approximately 71.1 million subscribers in nine countries as Sept. 2014. It is listed on the U.S. stock exchange NYSE.
