Altimo and TeliaSonera Combine Their Ownership Interests in MegaFon and Turkcell
12 Nov 2009
TeliaSonera and Altimo have agreed to combine their ownership interests by contributing their respective direct and indirect interests in Turkcell and MegaFon, into a new company. The new company will be established in a western jurisdiction and listed on the New York Stock Exchange.
The purpose is to create a leading international operator, with over 90 million subscribers in Russia, Turkey and the CIS countries, and with well functioning corporate governance. The new company will focus on developing the operational excellence of Turkcell and MegaFon as well as expanding into new emerging markets.
The main advantage of establishing the new company is the control improvement over assets liquidity. This will be achieved by simplification of the shareholder structure both of Turkcell and MegaFon, listing the new company, agreeing on a long-term dividend policy and paying regular dividends.
Once established, the new company will own a majority of the shares both in Turkcell and MegaFon. AF Telecom, the third major shareholder in MegaFon, is also invited to join the partnership. Provided AF Telecom joins, TeliaSonera and the Russian investors will have substantially similar ownership and equal influence over the new company.
None of the major shareholders will have the possibility to acquire control over the new company other than by consent of the other major shareholders. The board will include independent members, who will be able to resolve any deadlocks, by having a casting vote if board members nominated by one of the major shareholders have a different opinion from the board members nominated by the other major shareholders. The Chairman of the new company will be elected by the independent members of the board of directors.
Turkcell and MegaFon are both efficient and professionally managed mobile operators and regarded as national champions. Therefore, the intention is to continue to manage them as separate operations, irrespective of the changes in their ownership structure. Turkcell and MegaFon will both benefit from being part of a major international telecom group with possibilities to unify synergies and share “know-how”.
TeliaSonera and Altimo have agreed to collaborate and align their efforts to resolve all ongoing legal disputes between each of them and Çukurova Group to make the establishment of the new company possible. Such collaboration is expected to result in a speedy resolution of the disputes.
The parties have agreed that Altimo acquires Çukurova Group’s indirect shareholding interest in Turkcell and contributes those shares to the new company without any premium.
In order to avoid potential future conflicts, the parties have agreed that Altimo will support TeliaSonera, a controlling shareholder of Fintur Holdings, with a right of first refusal in respect of any sale of Fintur Holdings and in this case will acquire 100% stake in Fintur Holdings by acquiring Turkcell’s shares in combined company at fair market value.
The agreement signed between TeliaSonera and Altimo is legally binding, but the transaction is subject to agreement on definitive documentation and regulatory approvals.
Lars Nyberg, President and CEO of TeliaSonera, said:
“I am very pleased that we have reached an agreement with Altimo to combine our efforts in resolving the legal disputes, which have been going on far too long. But the real value of the agreement is in the execution of it. The shareholder structure and corporate governance in Turkcell and MegaFon will be improved, as well as the assets liquidity. We have focused on creating a governance structure where all major parties will have good opportunities to influence on decision making without one-side control over the management of new combined company. There is also very little risk of disruptive dead-lock situations. It may take some time to get the final result, but it is obvious now that the new listed company will have excited prospects in future and it will increase shareholders value”.
Alexei Reznikovich, CEO of Altimo, said:
“We believe that this agreement will help both parties to find a way out of the lengthy Turkcell shareholder’s deadlock. Our companies are partners and our consolidated stakes in MegaFon and Turkcell create a controlling interest in combined company. This is a good basis for finding mutual business understanding and establishing a new global leader in mobile telecoms. The benefits of the deal are evident. We aim to create a leading and one of the most dynamic players in the emerging markets with huge potential for further expansion. The new operator will possess wide possibilities for business development and expansion into other emerging markets bringing high quality services for subscribers and increase of shareholders value”.
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