The long tale comes to an end
The ownership of Turkcell has been a disputed topic for several years. The company was not functioning properly because of this conflict and had been performing below par. Now, the Turkish Wealth Fund is stepping in and buying the disputed shares, thus ending the 15-year stalemate.
Below is a summary of Turkcell’s share history from CEO Office Notes of Telia Company.
Turkcell was founded in 1993 as a joint venture by, among others, the Finnish telecommunications company Sonera (now part of Telia Company), Swedish Ericsson and Turkish industrial conglomerate Çukurova.
In October 1999, Sonera and Çukurova entered a shareholders’ agreement providing for the establishment of a new holding company in Turkey, Turkcell Holding. Under the terms of the agreement, Turkcell Holding was given an ownership of 51 percent in Turkcell, whereof Sonera contributed shares in Turkcell representing 24 percent, yielding an ownership of 47.09 percent in Turkcell Holding for Sonera. In addition to this, Sonera kept its direct ownership of 13.3 percent.
In February 2000, Turkcell, Çukurova and Sonera created the Fintur Group of companies, through a contribution of cash and shares in mobile operators in Kazakhstan, Azerbaijan, Georgia and Moldova. Following the establishment of Fintur Holdings, Çukurova held 40 percent of the capital, Sonera held 35 percent and Turkcell held 25 percent.
In July 2000, Turkcell completed its initial public offering (IPO) with the listing of its ordinary shares on the Istanbul Stock Exchange and its American depository Shares (ADSs) on the New York Stock Exchange.
In August 2002, Sonera and Turkcell acquired Çukurova’s entire holding in Fintur Holdings. As a result of this transaction, Sonera owned a 58.55 percent interest in Fintur and Turkcell owned a 41.45% interest. The stakes have remained unchanged since then.
In December 2002, the Swedish telecommunications company Telia merged with Sonera and created TeliaSonera (named Telia Company since April 2016).
Telia Company sold 7 percent of its direct shareholding in Turkcell in May 2017 and the remaining 7 percent in September 2017. Today Telia Company holds an indirect 24 percent interest in Turkcell via Turkcell Holding.
The shareholder disputes started in 2005 when Telia Company signed an agreement with Çukurova to acquire Çukurova’s shares in Turkcell Holding in order to reach control in Turkcell. Çukurova, however, never delivered the shares and instead sold half of them to LetterOne.
And since 2005, the company had been wasting so much time, money and energy on resolving this dispute that it had to postpone many major initiatives. With this buyout, TWF will be the largest shareholder of the company with 26.2 percent. They will be able to assign five of the nine members of the Turkcell Board of Directors with its 15 percent privileged shares.
Telia will exit Turkcell by selling all its 24.02 percent indirect shares in Turkcell for $530 million. LetterOne will become the largest minority shareholder by increasing its share in the company to 24.8 percent in total. Turkcell Holding’s joint venture will end. Çukurova Holding will exit Turkcell by selling its indirect shares. four members on the board of directors will be chosen without TWF concessions, so minority shareholders will gain more power.
Turkcell’s current dividend policy will be maintained. Turkcell will continue to be the only Turkish company listed on both Borsa Istanbul and New York stock exchanges.
I do believe that with these changes Turkcell will start to perform as it should have performed.