IHS Global Insight Perspective | |
Significance | Russian holding group Alfa has raised its stake in Turkcell from 4.99% to 13.22% after a ruling preventing it from holding a stake of 5% or more became redundant. |
Implications | Having previously sought to merge its stake in Turkcell with that owned by TeliaSonera, the latest move emphasises the importance with which Alfa views the Turkish operator. |
Outlook | As the telecoms markets of the CIS regions mature, the landscape is being increasingly dominated by two major Russian holding groups, with Alfa competing against Sistema. |
Russian holding group Alfa has increased its stake in Turkish mobile operator Turkcell from 4.99% to 13.22% at a cost of approximately US$100 million, according to various Russian media. The deal was secured by Alfa Finance Holdings, the financial arm of Alfa Group, which increased its stake in Alfa Telecom Turkey (ATT) to 100% through the US$51.52-million purchase of a 32.2% stake from Kazakh group Nadash International Holdings, and the US$48.3-million purchase of a 30% stake from Russian-controlled Henri Services Ltd. As ATT owns 13.22% in Turkcell, the deal has allowed Alfa to increase its stake in the operator. Alfa Finance had previously divested a 62.2% stake in Turkcell in order to comply with a 2007 court ruling ordering it to reduce its Turkcell stake to below 5% or divest its stake in Ukrainian mobile operator Kyivstar as part of a dispute with Telenor of Norway. However, with Alfa and Telenor having now settled their differences and pooled their Kyivstar assets into new group VimpelCom Ltd, the ruling concerning Alfa’s Turkcell stake no longer applies.
Outlook and Implications
- Importance of Turkcell: By increasing its stake in Turkcell, Alfa has made clear that the Turkish operator plays an important role in its strategy. Alfa has previously sought to merge its stakes in Turkcell and Russian mobile operator MegaFon, with the stakes in the same operators owned by Scandinavian group TeliaSonera. This move, agreed by TeliaSonera and Alfa in late 2009, was blocked by a Moscow Arbitration Court following an appeal by MegaFon’s third major stakeholder, Telecominvest (see Russia: 5 July 2010: Altimo and TeliaSonera Confirm Intention to Appeal Against Blocking of MegaFon-Turkcell Merger). While Alfa has indicated that it will appeal against the decision to forbid this merger, its latest stake increase emphasises that it is pursuing more than one means of solidifying its grip on Turkcell.
- Alfa Battles with Sistema for CIS Supremacy: As the telecoms markets of the CIS regions mature, the landscape is being increasingly dominated by two major holding groups. Alfa’s CIS telecoms assets, controlled by its telecoms arm Altimo, comprises a presence in Russia through MegaFon, as well as Azerbaijan, Georgia, Kazakhstan, Moldova, and Ukraine, all through Turkcell. Meanwhile, the Sistema holding group is also bolstering its CIS presence. It has established itself as market leader in Russia where its Mobile TeleSystems (MTS) unit is the largest mobile operator, and has acquired major broadband alternative Comstar, on top of which it has a presence in the markets of Armenia, Ukraine, Uzbekistan, Turkmenistan, and Belarus. Alfa has indicated a willingness to collaborate with other groups, such as Telenor and TeliaSonera, in order to achieve consolidation and growth, as indicated by its creation of VimpelCom Ltd, alongside Telenor, as well as the attempt to merge its Turkcell and MegaFon assets. However, while expanding its footprint and creating fresh geographical, product, and marketing synergies, this approach has also created regulatory hurdles, such as opposition from the Moscow Arbitrary Court to the proposed merger of its assets with TeliaSonera.