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bne July 2020 Southeast Europe I 39
Despite the sale, made at a 54% discount according to Bloomberg’s calculations, Turkcell’s share price (TCELL/TKC) rose 10% d/d after the deal was announced. Its market value thus reached Turkish lira (TRY) 32.bn ($4.7bn), meaning the 24.02% stake had a worth of $1.1bn.
Zafer Sonmez, the general manager of TWF – chaired by Erdogan since he fired the board – reminded the market that Turkcell was valued at $17bn when it went public on the Borsa Istanbul and New York Stock Exchange in 2000.
VTB Capital is one observer that does not expect a significant increase in Turkcell’s dividend flows. Ivan Kim of the Russian investment bank made that clear in a note entitled “Tectonic ownership overhaul”.
“Still, government control over the asset with limited economic exposure creates a risk of hefty price tags in spectrum auctions or participation in socially important state projects,” he added.
VTB sees LetterOne as having the option of maintaining the status quo or exiting over the long term. The status quo will probably prevail in the short term, in
its view, as LetterOne has just increased its stake.
Turkcell’s shareholder structure is a great labyrinthine puzzle. Solving who really gets out alive is no mean feat.
Prior to the deal, Telia Sonera was the largest shareholder in Turkcell with its 24.02% indirect stake while Turkish mogul Mehmet Emin Karamehmet’s Cukurova Holding held a 13.8% stake and Russian tycoon Mikhail Fridman’s LetterOne had 13.2%.
There is no available financial information on the deals between Cukurova, LetterOne and TWF.
Cukurova will transfer its stake to TWF to cover Karamehmet’s debt to Turkey’s government-run Ziraat Bank, TWF said.
So Karamehmet has $1.6bn worth of debt owed to Ziraat, but his Turkcell
stake only amounts to 13.8% There is no further information available on what is going on here.
LetterOne, meanwhile, will acquire a direct minority stake in Turkcell, TWF added.
At the end of the interlaced deals, which the parties want completed by September, Turkcell Holding, which has a 51% stake in Turkcell, will be abolished.
TWF will have a direct Turkcell stake amounting to 26.2%, of which 15% will be privileged, while LetterOne will directly control 24.8% and the remaining 49% will remain listed.
LetterOne will issue notes to TWF and some deals will happen during the process as detailed in TWF’s press release.
At the end of the deal, TWF will appoint five of the nine board members thanks to its privileged shares and Erdogan will be the de facto official boss of Turkcell. Erdogan’s partner will be Fridman.
Erdogan also controls Turk Telekom, Turkey’s largest telco, and the neoliberals clock up many miles discussing free market conditions in the country.
Erdogan’s only competitor right now is Vodafone Turkey. May merit prevail.
In 1993, Finland’s Sonera, Sweden’s Ericsson and Cukurova jointly established Turkcell as Turkey’s first GSM operator.
In 2005, LetterOne bought shares in Turkcell and its shareholders entered into a dispute, which continued
until 2017.
From 2011 to 2015, Turkcell could not distribute any dividends due to the shareholder dispute, while the Capital Markets Board of Turkey (SPK), also sometimes known back then as “Prime Minister Erdogan”, moved to appoint board members to Turkcell to solve the deadlock.
The Turkcell investment is the first made by Turkey’s wealth fund since it gained the power to take over private companies.
TWF has updated its website and released an annual report (or rather, something approaching an annual report for 2018). It has a BB-/Stable rating from Fitch Ratings in line with the sovereign rating. Certainly in this case, all eyes should not shift from the sovereign. A “sultan rating”
49%
Public
11.2% + 15%
100%
TWF BTIH
11.2% + 15%
24.8%
LetterOne
100%
IMTIS H.
24.8%
49%
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