It is springtime for TeliaSonera
The company name TeliaSonera was not known to many in Turkey until their dispute with Çukurova Group. Lately they are making international news with strategic acts of putting their house in order.
The latest news about TeliaSonera came from Russia. MegaFon’s shareholders, TeliaSonera, AF Telecom and Altimo, have resolved the governance disputes in Russia’s second-largest mobile operator. The company paid a dividend of $5.15 billion, and it will pursue an initial public offering (IPO). AF Telecom got the majority control in MegaFon, Altimo left and TeliaSonera reduced its ownership while keeping a long-term strategic ownership. Altimo has sold its shares in MegaFon to AF Telecom and to a subsidiary of MegaFon, and TeliaSonera has sold all its shares in Telecominvest to AF Telecom. TeliaSonera further aims to keep a long-term ownership of 25 percent plus one share in MegaFon after an IPO.
As part of the agreement, AF Telecom acquired TeliaSonera’s shares in TCI for $1.45 billion (approximately SEK 9.8 billion). TeliaSonera is expected to receive 20 percent of the proceeds, approximately SEK 2.0 billion, at closing with the remaining amount to be paid in four equal annual installments plus interest.
TeliaSonera is expected to book a capital gain of SEK 4.4 billion in the second quarter of 2012 in connection with this sale.
Altimo sold its 25.1 percent ownership in two parts; 14.4 percent to a subsidiary of MegaFon for $2.16 billion while the remaining 10.7 percent was sold to AF Telecom for $1.61 billion. TeliaSonera has also agreed to pay $200 million to Altimo in order to complete the transaction. In total, Altimo received $5.2 billion including dividends from MegaFon.
Following these transactions, TeliaSonera owns 35.6 percent, AF Telecom 50 percent plus one share while MegaFon, through its subsidiary, owns the remaining 14.4 percent.
I had written an article about what was happening around Turkey and said that we must know what is happening around Turkey to understand what is going to happen in Turkey. TeliaSonera’s latest moves in Ncell and MegaFon ensure that they are much more comfortable to tackle issues in Turkey. You can feel that in TeliaSonera’s Lars Nyberg’s and Altimo’s Michail Fridman’s words.
“As Altimo exits MegaFon, we will continue our partnership with intensified focus on resolving the ownership disputes and establishing a good governance structure in Turkcell. Once this has been achieved the board can focus entirely on developing Turkcell’s potential by growing the business, both in Turkey and abroad,” says Lars Nyberg.
Michail Fridman comments that “Altimo has taken this opportunity to fully realize the value of its investment in MegaFon. However, our partnership with TeliaSonera will continue with regards to Turkcell. We expect the dispute with regards to the ownership of Cukurova’s remaining stake in Turkcell to be resolved in the Privy Council later this year. If our position is confirmed in court, we will establish a governance structure whereby none of the major shareholders can block majority decisions and will focus on developing Turkcell into a world-class telecommunication company.”
It is still not known how the process in Turkcell will be established. The sides will select their candidates for the board and the government will accept or reject the names. After that it will be hoped that the board will function as it should be. But first of all Çukurova, Altimo and TeliaSonera will have to sit down and solve their issues in governance and ownership. It is the most difficult part. Aligning interests is the hardest thing to do. Hopefully one day we will be able to report that the issues are solved and Turkcell is marching faster.