LetterOne, the investment firm chaired by Russian billionaire Mikhail Fridman, has set up LetterOne Technology (L1T), a US$16bn fund that will look to buy up failing mobile operators.
A number of industry heavyweights will sit on L1T’s advisory…
LetterOne, the investment firm chaired by Russian billionaire Mikhail Fridman, has set up LetterOne Technology (L1T), a US$16bn fund that will look to buy up failing mobile operators.
A number of industry heavyweights will sit on L1T’s advisory board, including Digicel owner Denis O’Brien and former Vodafone deputy CEO Sir Julian Horn-Smith.
In addition to making acquisitions, L1T will also hold Fridman’s 47.85% voting stake in Vimpelcom and 13.22% holding in Turkcell.
As far as making further purchases, L1T’s first priority will be to buy and turn around distressed or under-performing mobile operators.
The fund will also look at acquisitions of infrastructure such as towers and data centres, and internet companies that are complementary to its existing mobile operations, such as streaming services and apps.
In a statement today, Alexey Reznikovich, CEO and managing partner of L1T, said: “New acquisitions will benefit from our significant expertise in these markets, and will gain access to our existing customer base, which numbers over 200 million across existing networks.”
Five industry veterans have been named to assist Reznikovich’s team. Joining O’Brien and Horn-Smith are Osama Bedier, founder and CEO of wireless payments group Poynt; Brent Hoberman, co-founder of made.com and lastminute.com; and Russ Shaw, a former executive at Telefonica and Skype.
Turkcell “quasi-nationalised”
Reznikovich has also spoken out about the controversy surrounding its ownership of shares in Turkcell. In an interview with the Financial Times, he claimed that the Turkish government had “quasi-nationalised” the operator through regulator-appointed directors and a loan from the state-backed Ziraat Bank. The loan was secured by local conglomerate Cukurova Holding against its 51% indirect controlling stake, giving the state a certain level of control.
LetterOne made an offer to buy the Cukurova stake in March but its chances of wrestling the shares from the state were deemed low. Instead, analysts saw the offer as an attempt to activate a mechanism in a previous shareholder agreement to force Cukurova to either match its offer and buy it out, or allow LetterOne to buy its stake. If Cukurova allowed LetterOne to buy its stake, a deal would still have to pass muster with Turkish regulators, who are not expected to allow ownership of Turkcell to fall into foreign hands.
Last week Cukurova filed a lawsuit with the London Court of International Arbitration, claiming that LetterOne breached a shareholding agreement between the two companies by forming a pact with Sweden’s Teliasonera – another Turkcell shareholder – to squeeze Cukurova out of the mobile operator.
If the London court decides in its favour, Cukurova, owned by Turkish businessman Mehmet Emin Karamehmet, must reportedly pay about US$2bn to Alfa. Cukurova is reportedly in talks with a state bank to arrange financing for the purchase.