Telia Company has reached an agreement to sell its 47.1 percent stake in Turkcell Holding to the state-owned Turkey Wealth Fund for USD 530 million. The transaction also includes a full settlement of all shareholder disputes and litigation connected to Turkcell and Turkcell Holding. As a result of the deal with all the shareholders, the state fund becomes the largest, controlling shareholder of the mobile operator.
Turkcell Holding is a privately held holding company, directly and indrectly owned by Turkish group Cukurova, Russian businessman Mikhail Fridman's LetterOne investment company and Telia Company. Its main asset is a 51.0 percent stake in the mobile operator Turkcell Iletisim Hizmetleri. Telia sold its 14 percent direct stake in Turkcell in 2017.
The Wealth Fund is already an indirect stakeholder in Turkcell, through its ownership of the bank Ziraat. The latter has a claim on Cukurova's stake in Turkcell Holding, after Cukurova defaulted on a loan to the bank.
The Wealth Fund said it will become the largest shareholder in Turkcell as part of the deal, with a 26.2 percent stake and preferred rights to name five of the nine board members. After the planned dissolution of Turkcell Holding and the exit of Curkurova from its indirect stake, LetterOne has agreed to remain the second-largest shareholder, with an increased 24.8 percent direct holding in Turkcell. Turkcell would maintain a dual listing on the Istanbul and New York stock markets.
The changes still require regulatory and shareholder approval.
The sale completes Telia's exit from Turkey and the wider Eurasian region, limiting its operations to the Nordic and Baltic regions. It also brings to an end many years of shareholder disputes over the division of dividends and control of the Turkish operator.
Telia said its the total investments in Turkcell amounted to approximately SEK 13 billion and have generated total dividends and net divestment proceeds of SEK 28 billion after tax over the last 20 years. With SEK 15 billion in net proceeds since 2002, the investment generated close to a discounted 5 percent return per year.
The sale of the final stake will still result in a book loss of SEK 3 billion, which will be booked in the second quarter of 2020. In addition, the transaction will have substantial currency effects. Due to the depreciation of the Turkish lira against the Swedish krona during the time Telia Company owned the stake in Turkcell Holding, the accumulated foreign exchange losses will be approximately SEK 17 billion and booked at closing. The company expects to close the transaction during the second half of 2020.
