Never-ending story over billions of future income

The dispute between the three parties at Turkcell is slowly coming to a conclusion.

The Privy Council decided the terms between the dispute of Çukurova and Altimo.

According to Reuters the ruling relates to a quarrel over a 13.8 percent stake in Turkcell that had been held by Cukurova and which is a controlling stake due to the company’s shareholder structure. Russian group Altimo had seized the shares when Cukurova defaulted on a $1.35 billion loan, but the British court has now ruled Cukurova must pay $1.57 billion – a sum which includes interest payments – to Altimo within 60 days if it wants to recover the stake.

The ruling turns the spotlight on Cukurova – holding company of the Turkish tycoon Mehmet Ali Karamehmet – and its ability to pay the sum, given it that has just suffered the seizure of some of its assets by a state fund.

Shares in Turkcell, Turkey’s biggest mobile phone operator, rose 3 percent after the announcement of the figure, which includes interest accrued over the years since the dispute began.

In the meantime TeliSonera said they welcomed the decision by the Privy Council, stating the terms under which Çukurova can recover the disputed shares in Turkcell Holding from Altimo, as it is expected to be another important step toward a long-overdue resolution of the deadlock between the shareholders in Turkcell. At the same time, before any redemption of shares can be made, TeliaSonera expects Çukurova to meet its obligations under the 2011 ICC arbitration award.

The Privy Council decision does not resolve the disputes that TeliaSonera has with Çukurova regarding those same shares. On September 1, 2011, an International Chamber of Commerce Arbitral Tribunal awarded TeliaSonera $932 million in damages, plus interest and costs, for Çukurova’s failure to deliver to TeliaSonera the Turkcell Holding shares as required under a share purchase agreement between the parties.

Why can’t these esteemed companies just sit down and come to an agreement? There are many reasons of course but the strongest one is the future growth potential of Turkcell.

According to the newly announced research by PWC, Turkey’s Internet access market will boom over the next five years with revenues increasing dramatically from $2.72 billion in 2012 to $7.25 billion in 2017. The report added that mobile Internet services would be the main driver of growth due to the mass availability of affordable smartphones and relatively low fixed-broadband penetration. The sector’s revenues will increase at a compound annual growth rate (CAGR) of 36.5 percent from 2012-17 to reach $4 billion, as subscriptions rise at a CAGR of 27.9 percent over the period to reach 47.1 million.

Turkey is also the second-largest Internet advertising market in Central and Eastern Europe, according to the report. Its online advertising spending was $601 million in 2012.

By the end of the forecast period, Turkey’s spending will have risen to $1.27 billion, a CAGR of 16.1 percent. Turkey has an advanced mobile advertising market, which is estimated to reach $82 million in 2017, up from $24 million in 2012, the report said.

Turkcell will have most of this growth.

So when there are billions of revenues to be generated it gets harder to let go of one’s privileges over the shares of Turkey’s finest.