Regulator Seeks Alfa Mandatory Offer for Turkcell Shrs

ISTANBUL, Feb 19 (Dow Jones) -- Turkey's capital markets regulator, the SPK, has called on Russian company Alfa Group to hold a mandatory tender offer to buy out minority shares in Turkcell Iletisim Hizmetleri, the Ihlas News Agency, or IHA, reported Monday.

The move follows a court decision that had annulled an exemption from the requirement to hold a tender offer.

Turkcell is Turkey's largest mobile phone operator by market share.

Last Month, a Turkish administrative court canceled a decision by SPK to exempt Alfa Group from a tender offer call for minorities. The Russian company purchased a 13.22% stake in Turkcell Iletisim in 2005.

The SPK said in its latest bulletin that Alfa must apply for the tender call within the coming two weeks.

Under Turkish law, a company must hold a tender offer to minority shareholders if it gains more than 25% of a Turkish company, or if the purchase is to impact on management control.

Alfa Group had acquired the Turkcell Iletisim stake under a $3.3 billion loan package deal with Cukurova Holding, the parent company of Turkcell Iletisim.

Further legal tussles could lie ahead. In a separate case, Nordic telecommunications firm TeliaSonera, another major shareholder in Turkcell Iletisim with 13%, has taken legal action against Alfa and Cukurova for the control of Turkcell Iletisim.

In March 2005, debt-laden Turkish group Cukurova Holding had agreed to sell all its shares in Turkcell Iletisim to TeliaSonera for $3.1 billion.

But this was derailed by the Alfa Group and its $3.3-billion loan package for Cukurova in return for sharing the control of Turkcell Iletisim. Cukurova decided to cancel its agreement with TeliaSonera and signed a new agreement with Alfa.

But at the start of this year an international arbitration court ruled that Cukurova has to comply with its original agreement with TeliaSonera.

Some analysts say, Alfa does not want to be obliged to buy the remaining shares of the minority shareholders and is more likely to reach an agreement with TeliaSonera for sharing control of Turkcell Iletisim or get out of the deal completely.

Last week, Russian press reports said that Alfa Group's telecoms arm Altimo might swap its shares in Russian mobile phone group MegaFon and Turkcell Iletisim for a minority stake in TeliaSonera.

Turkcell Iletisim is currently controlled by Turkcell Holding AS, which is 51% owned by Cukurova Holding; 23.4% of the company is traded on the stock exchange.

TeliaSonera owns 43.7% of MegaFon. The Nordic telecoms company said last week that it aims to gain control of both Turkcell Iletisim and MegaFon or would sell its stakes. Altimo also controls 25.1% of MegaFon.

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Posted to the site on 19th February 2007