Alfa Group is an industrial conglomerate controlled by the Russian oligarch Mikhail Fridman, a billionaire businessman and one of Russia’s wealthiest men. For months now, his group has repeatedly clashed with the Norwegian telecoms carrier Telenor ASA over the Ukrainian expansion plans of Russian mobile operator VimpelCom BV.
Now Alfa has upset the Nordic and Baltic telecoms operator TeliaSonera AB, after Alfa Telecom announced it was buying 27% of the shares of Turkey’s largest mobile operator Turkcell Iletisim Hizmetleri AS, from the financially troubled conglomerate Cukurova Group, for $3.3bn.
Cukurova Group had previously announced the sale of this package to the SwedishFinnish TeliaSonera, which owns 37% of Turkcell. However, Cukurova refused to close the sale. This led TeliaSonera in May to launch a lawsuit over Cukurova’s breaching of the deal that would have given the Swedish-Finnish operator a further 27% stake for $3.1bn, giving it overall control of the Turkish operator.
Now in a dramatic change, Alfa Telecom will loan Cukurova Group $1.7bn for six years and $1.6bn in six-year bonds convertible into Turkcell shares. The convertibles would give Alfa a stake of just over 13%. As part of its deal with Alfa, Cukurova said it would be able to repay some $3.5bn in debts it owes.
It is not the first time Alfa has crossed swords with TeliaSonera. Both outfits clashed when the Nordic group sided with Alfa’s enemy in a conflict over a 25% stake in the Russian mobile operator Megafon. TeliaSonera has a stake of 44% in Megafon, and publicly backed an offshore investment fund, in its bitter conflict with Alfa.
Turkcell is one of the world’s fastest-growing mobile operators, with a 70% share of the rapidly growing Turkish market. It has 24.3 million subscribers in Turkey, and more than 4.2 million subscribers in other countries.
It operates through subsidiary joint ventures in Azerbaijan, Georgia, Iran, Kazakhstan, Moldova, and Ukraine. Turkcell’s revenue in the first quarter of 2005 was $898m. Its owners are the Cukurova Group with a 40.28% stake, TeliaSonera with a 37.09%, M.V. Group with a 6.07% stake, and 16.33% in free circulation, with 0.23% belonging to minority shareholders.
