Alfa Telecom Aims to Double Stake in Turkcell

In a bid to double its stake in Turkcell, the Russia based Alfa Telecom has offered $2.8 billion. This will enable Alfa to buy back a 13.8 percent stake in Turkcell. This move would give the billionaire Mikhail Fridman’s Alfa group the ability to control Turkey’s top mobile operator, Turkcell.

Reuters reported this news on 17 March. The bid is likely to meet stiff resistance from Turkish regulators, though it is at 94 percent premium. Turkish Authorities would not love to loose the control of Turkcell. Analysts hint at Ankara’s opposition in Turkcell  falling into foreign hands after a long battle between the Russians and one of Turkcell’s founders.

Alfa has been fighting with its equity partner, Turkcell founder Mehmet Emin Karamehmet, over control of the operator for nearly a decade, a tussle that has also prevented some dividends from being paid.

Last year an international arbitrator ordered Alfa to return the stake to Karamehmet’s holding company for $1.6 billion. Strapped for cash, Karamehmet’s Cukurova Holding financed the purchase with a loan from state-owned Turkish lender Ziraat Bank [TCZIR.UL] it has yet to repay.

Now, Alfa has offered to buy the shares — still held by Ziraat as collateral. Alfa already indirectly owns 13.22 percent of Turkcell, meaning the additional 13.76 percent would be enough to gain control, given Turkcell’s complex ownership structure.

The offer would likely be blocked by Turkish regulatory authorities, analysts said. “It is therefore highly unlikely, for strategic and national security reasons, that the government would let the Turkish controlling shareholder sell its stake to a Russian (or any other foreign) entity,” said Ondrej Cabejsek, an analyst at Czech firm Wood & Company Financial Services, in a note.

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Author: James

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