TeliaSonera sells 7% stake in Turkcell for €461mn

By bne IntelliNews May 4, 2017

Sweden-based mobile operator TeliaSonera on May 4 finalised the sale of a 7% stake in largest Turkish mobile operator Turkcell for TRY1.78bn (€461mn) through an accelerated bookbuilding offering to institutional investors, TeliaSonera announced in a written statement.

Turkcell's main shareholders - Turkish conglomerate Cukurova Holding, Russia’s Alfa Group and TeliaSonera - have been engaged in a long-running legal dispute over control of the company. Russian billionaire Mikhail Fridman’s Alfa Telecom and Turkish billionaire Mehmet Emin Karamehmet, owner of Cukurova Holding, have been locked in a battle that has prevented Turkcell shareholders from convening a shareholders' general meeting to discuss dividend distribution for years.

TeliaSonera has sold a total of 155mn ordinary shares in Turkcell at TRY11.45 per share. Prior to the share sale, the Swedish company controlled a 38% stake in Turkcell, 14% directly and 24% indirectly. The stake now stands at 31%, with the direct stake reduced to 7%.

Turkcell shares were trading at TRY11.47, down 6.6% d/d, as of 10:15 local time, while the benchmark BIST-100 index was also down by 0.21% to 93,665.

The sale of the shares amounting to a 7% stake by TeliaSonera will not result in any change in Turkcell’s controlling structure, Istanbul-based brokerage house Is Yatirim said on May 4.

“Our direct stake in Turkcell is deemed to have no impact or influence on the strategic solution to the Turkcell Holding deadlock. We continue to work relentlessly to find solutions to our shareholding in Turkcell to restore corporate governance and reinstate an attractive capital management policy for the company”, TeliaSonera CEO Johan Dennelind said in May 4 comments on the sale of the stake.

“The market has been mulling a potential sale by Teliasonera, so this news is not completely unexpected”, Oytun Altasli, an analyst at Wood & Company investment bank, said on May 4 in a note to investors. The sale suggests that TeliaSonera may come to the market with the remainder of its direct stake at some later stage, which would imply some potential overhang, according to Altasli.

Under a complex shareholding structure, Friedman’s group holds a 13.2% stake in Turkcell, Karamehmet’s Cukurova Holding controls 13.8% and around 36% of the company’s shares are publicly traded.

Turkcell reported a 19% y/y decline in its net income to TRY459mn in Q1 despite a 26% y/y rise in consolidated revenues to TRY4.05bn, mainly due to the depreciating Turkish lira. Turkcell’s 2016 consolidated net profit declined by 27% y/y to TRY1.51bn.

Fitch Ratings affirmed Turkcell at 'BBB-' with a negative outlook in February while Standard & Poor’s revised down its rating outlook on Turkcell’s 'BBB-' to "negative" from "stable".

Turkcell Financials (Consolidated)
(mn TRY) end-14 end-15 15/16 end-16 16/17
Total Assets 23,668 26,184 11% 31,600 21%
Total Equity 16,689 14,399 -14% 16,068 12%
(mn TRY) 2014 2015 15/16 2016 16/17
Revenues 12,044 12,769 6% 14,101 10%
Gross Margin 4,663 5,003 7% 5,067 1%
Operating Income 3,179 3,401 7% 3,451 1%
Net Income 1,867 2,070 11% 1,512 -27%
source: kap

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