Nordic telco Telia has confirmed the sale of its stake in Turkish service provider Turkcell.
Telia has agreed to sell its 47.1% holding in Turkcell Holding, which owns 51% in the listed company Turkcell Iletisim Hizmetleri, to the sovereign wealth fund the Turkey Wealth Fund for US$530 million.
The transaction includes, subject to closing, a full and global settlement of all shareholder disputes and litigations connected to Turkcell and Turkcell Holding.
Since the sale of a 14% direct stake in 2017, Telia has not been a direct owner of Turkcell Iletisim. Netherlands-based Fintur, which was jointly owned with Turkcell and owned Moldavian telco Moldtelecom, was dissolved in 2019.
Turkcell Holding has been directly and indirectly owned by Turkey’s Cukurova, Russia’s LetterOne, and Telia, which admitted that “the governance of Turkcell Holding has been challenging” thanks to long-running and debilitating ownership disputes.
While the price paid to Telia is seen as heavily discounted, Telia said that its total investments in Turkcell amounting to approximately SEK13 billion (€1.24 billion) have generated total dividends and net divestment proceeds of approximately SEK28 billion after tax over the last 20 years.
Telia Company’s ownership in Turkcell Holding has a booked value of SEK8 billion, implying that the transaction will result in a capital loss of SEK3 billion, which will be booked in the second quarter of 2020.
The transaction also implies accumulated foreign exchange losses of about SEK 17 billion, but the company said this would have no impact on equity or cash flow.
Closing of the sale is subject to regulatory approvals and an annual general meeting of Turkcell. Telia expects to close the transaction during the second half of this year.
“Today we announce the final piece of the Turkish exit puzzle – the divestment of Telia Company’s stake in Turkcell Holding. Over the past few years, our focus has been our core Nordic and Baltic markets. Through this divestment, we unwind a long-lasting legal deadlock; we reduce risk, improve leverage and increase liquidity which will generate better shareholder returns in our core markets. Turkcell has grown into a strong company which has generated substantial returns for its owners,” said Allison Kirkby, president and CEO of Telia.
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