Following much media speculation, Telia Company has agreed to sell its 47.1% holding in Turkcell Holding to state-owned Turkey Wealth Fund (TWF) for $530 million.

It was through Turkcell Holding that Telia held a 24% indirect stake in Turkcell. Turkey's largest mobile operator, Turkcell Holding has a 51% stake in Turkcell (the rest is a free float).

Allison Kirkby, Telia's new CEO, described the move as the "final piece of the Turkish exit puzzle." (Telia divested 14% of direct ownership in Turkcell in 2017.)

She added, no doubt with some relief, that this final divestment "unwinds a long-lasting legal deadlock." The transaction, subject to closing, includes a "full and global settlement of all shareholder disputes and litigations connected to Turkcell and Turkcell Holding."

The exit has come at a price. Although Telia gets to improve liquidity and "reduce risk," the Nordic operator is selling off its Turkcell Holding stake well below book value of 8 billion Swedish kronor (around US$850 million). Telia said it will take the $320 million hit in its second-quarter results.

Squabbling since 2005
Through the sale to TFW, Telia will end its extremely difficult relationship with Çukurova Telecom Holding, a Turkish industrial conglomerate, which holds the remaining 52.9% stake in Turkcell Holding.

In 2005, Telia apparently signed an agreement with Çukurova to purchase its shares in Turkcell Holding. The Telia line, though, was that Çukurova reneged on that promise.

In 2011, an International Chamber of Commerce (ICC) arbitral tribunal awarded Telia $932 million in damages, plus interest and costs, for Çukurova's failure to deliver the Turkcell Holding shares. Çukurova, meanwhile, sought to overturn the ICC award.

"We have always regarded the possibility of receiving that sum as very slim and was not regarded as an asset in our books," a Telia spokesperson told Light Reading. This dispute has now been settled as part of the TFW deal.

Another corporate-governance complication was a number of legal disputes between LetterOne and Çukurova. LetterOne is an international investment business formerly known as Alfa Telecom – and founded by Russian investor Mikhail Fridman – which holds a 49% stake in Çukurova Telecom Holding.

Telia, Fridman and Çukurova were so much at loggerheads with each other that even Turkcell shareholder meetings were reportedly scrapped.

Turkish acrimony aside, Telia has been drawing back from the more far-flung parts of its operations for some time. After a corruption scandal at its Uzbekistan subsidiary, Telia upped sticks there in 2017.

Other exits in recent years, based on a 2015 plan to focus more on its core assets in the Nordic and Baltic regions, include Azerbaijan, Georgia, Kazakhstan, Moldovia, Nepal and Tajikistan.

— Ken Wieland, contributing editor, special to Light Reading