Alfa Telecom Confirms Bid For Turkcell Stake

LONDON (Dow Jones)--Alfa Group's (ALFAGP.YY) telecommunications arm has made a formal bid for a stake in Turkish mobile operator Turkcell Iletisim Hizmetleri AS (TKC), Alfa Telecom Chief Executive Alexey Reznikovich said Friday.

"We are interested in Turkcell and have studied this opportunity very closely," Reznikovich said in an interview with Dow Jones Newswires.

The telecommunications arm of Russian financial and industrial holding group Alfa views Turkcell as a "very successful and attractive company," he said. Reznikovich declined to give details of the bid.

There has been plenty of speculation that Alfa would bid for Turkcell after the company said it would trump an offer from Swedish telecoms operator TeliaSonera AB (TLSN.SK).

TeliaSonera reached an agreement in March to buy 27% of Turkcell from Turkish company Cukurova for $3.1 billion, aiming to increase its stake to 64.3%. That agreement, though, has been jeopardized by Alfa's offer, and TeliaSonera has said it will pursue legal action.

Alfa Telecom's CEO wouldn't say how long he expects it to take to resolve the situation. "We will have to wait and see what the sellers decide to do," he said.

Alfa is already mired in a dispute with TeliaSonera over ownership of Russian mobile operator OAO Megafon (MGF.YY). Alfa purchased a 25% stake in Megafon in 2003, despite owning 33% of Megafon rival OAO Vimpel Communications (VIP).

Megafon's other shareholders -- TeliaSonera, Russian holding company OAO Telecominvest (TCIV.YY) and the IPOC International Growth Fund -- have joined forces against Alfa.

Reznikovich, who took the CEO role at Alfa Telecom two weeks ago, said that as Alfa's investment in Megafon is financial, and not strategic, he doesn't see any downside for Megafon's other shareholders. "We hope common sense will prevail," he said.

Alfa is also embroiled in a row with Norwegian telecoms company Telenor ASA (TELN), which owns 27% of Vimpelcom. The disagreement revolves around whether Vimpelcom should buy Ukrainian RadioSystems, which operates a wireless service under the WellCom brand. Telenor opposes the move.

Reznikovich reiterated Alfa has no intention of taking a majority in Vimpelcom because the group, as a financial investor, doesn't want the burden of running Vimpelcom.

"We might buy control if it's a sound financial decision, but we would rather not do that," he said, noting that Alfa's strategy is to build blocking stakes of around 25% in companies.

Reznikovich is in London urging investors to support a move for Ukrainian RadioSystems at Vimpelcom's extraordinary shareholder meeting set for mid-July.

The Alfa Telecom CEO said the two companies need to avoid a deadlock situation. Alfa is "happy" to count Telenor as one of its partners, he added.

Reznikovich said Vimpelcom will continue to focus on expansion in the countries that used to make up the Soviet Union and is "doing a lot of work to prepare deals."

Likewise, Alfa will continue to focus its investment on mobile telecoms assets in emerging markets in former Soviet Union territories and adjacent regions like Turkey and India, he said, adding that he still sees a lot of potential in wireless over the next five to seven years.

-By Nic Fildes, Dow Jones Newswires; 44-20-7842-9264; nicolas.fildes@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 10th June 2005