Altimo and TeliaSonera demand removal of Turkcell chairman

TeliaSonera and Altimo, the telecoms arm of Russia's Alfa Group, will demand the removal of Colin Williams, Turkell's chairman, at a shareholder meeting next week, in the latest twist to a long-running battle over ownership and direction of Turkey's largest mobile operator. 

The move comes as Altimo and TeliaSonera, fellow shareholders in Turkcell seek, once again, to break the stranglehold that Mehmet Emin Karamehmet has over the company. Karamehmet is Turkey's richest man according to Forbes 100 list and his Çukurova Group controls Turkcell through a complicated structure.

TeliaSonera is the main shareholder in Turkcell but it cannot control the company because Turkcell Holding A.Ş, holds a controlling 51 per cent share. Turkcell Holding is, in turn, majority-owned by Cukurova Telecoms Holding, with TeliaSonera as the minority partner. Altimo owns a minority stake in Cukurova Telecoms, which is controlled by Cukurova Holding.

Turkcell's board has seven members and all three partners are represented by two members each, and TeliaSonera insists there should be more independent members on the board.

What all this means is that the board has been in crisis for some time, and deadlocks are commonplace. TeliaSonera and Altimo are now questioning the motivation and capabilities of Williams, who replaced Karamehmet as chairman in February 2010 when Karamehmet was sentenced to nearly 12 years in prison over loans made by a bank he owned before Turkey's 2001 financial crisis.

The major areas of contention are the international operations and expansion of Turkcell. According to Bloomberg, TeliaSonera CEO Lars Nyberg claimed that the board deadlock meant that it couldn't make key decisions regarding the company's Belarus and Ukraine operations, leading to "poor financial performance" in those countries.

"Turkcell needs to grow through international acquisitions to add value to its market capitalization, which should be at least $20 billion instead of $13 billion now," he said. "Turkcell would have been more successful if the board hadn't been blocked and could instead take action."

TeliaSonera has sued Williams for refusing to allow it to address shareholders at the upcoming annual meeting, according to Bloomberg, while Altimo CEO Alexei Reznikovich told the Financial Times, "Any shareholder with more than 5 per cent can bring any issue directly to the meeting. So the issue will be brought...We don't believe Mr. Karamehmet will be able to block this."

Williams disputes any wrong doing and has previously issued as statement saying that TeliaSonera made inaccurate statements about his stance on governance issues. He concluded, "I will strongly contest those allegations, as well as any suggestions that I have acted unlawfully."

The meeting will take place on 21 April and Altimo is expected to suggest several candidates to replace Williams, including Julian Horn Smith, a former Vodafone executive who now sits on its advisory board.

For more:
- see this Bloomberg article
- see this Financial Times article (sub. req.)

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