TeliaSonera and Altimo have reportedly agreed to combine ownership interests into a new company. To achieve this, both TeliaSonera and Altimo will contribute their respective direct and indirect interests in Turkcell (News - Alert) and Megafon.

 

The new company will be established in a western jurisdiction and listed on the New York Stock Exchange and will focus on developing the operational excellence of Turkcell and MegaFon (News - Alert), as well as expanding into new emerging markets. The main advantages of establishing the new company is that the control over and liquidity of the assets will improve. This will be achieved by simplifying the shareholder structure of both Turkcell and MegaFon, listing the new company, agreeing on a long term dividend policy and paying regular dividends.

 

Lars Nyberg, president and CEO of TeliaSonera (News - Alert), said the new company will improve the shareholder structure and control of Turkcell and Megafon, as well as the liquidity of these assets. TeliaSonera has focused on creating a governance structure where all major parties will have possibilities to influence, without single-handedly controlling, the management of the new telecommunications group. TeliaSonera provides quality cross-border voice, IP and capacity services in the Nordic and Baltic countries, the emerging markets of Eurasia, including Russia and Turkey, and also in Spain.

 

The new company will own a majority of the shares in both Turkcell and Megafon after it is established. The third major shareholder in Megafon, AF Telecom, has also been invited to join the partnership. 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 board members, who will be able to resolve any deadlocks. The chairman of the new company will be elected among the independent board members.

 

As Turkcell and Megafon are both professionally managed mobile operators, they will be managed as separate operations, irrespective of the changes in their ownership structure. In addition, Turkcell and Megafon will both benefit from being part of a major international telecom group with possibilities to extract synergies and share know-how.

 

TeliaSonera and Altimo will also 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. Subject to their satisfactory resolution, the parties have agreed that Altimo will acquire Çukurova Group’s indirect shareholding in Turkcell and contribute these shares to the new company without any premium.

 

Even though the agreement signed between TeliaSonera and Altimo is legally binding, the transaction is subject to agreement on definitive documentation and regulatory approvals.

 

According to Alexei Reznikovich, CEO of Altimo, this agreement will help both parties find a way out of the Turkcell shareholder deadlock. Both TeliaSonera and Altimo are natural partners whose stakes in Megafon and Turkcell create control when combined together. Altimo aims to create one of the most dynamic players in the emerging markets. The new operator will possess broader possibilities for business development and expansion into other emerging markets thereby bringing high quality services for subscribers and more value for all shareholders.