TeliaSonera, the biggest Nordic telephone company, on March 25 said it agreed to buy a 27 percent stake in Turkcell from Cukurova group, raising its holding to 64.3 percent.

``In answer to TeliaSonera, Alfa made an offer to Turkcell the other day offering more for the same stake,'' Kirill Babaev, vice-president for external relations at the Moscow-based company, said in a telephone interview.

The price Stockholm-based TeliaSonera offered for the stake in Turkcell, which has 23 million subscribers, was about 15 percent higher than the company's market value. TeliaSonera has priority over other potential buyers when any Turkcell shares are put on sale, according to the shareholders' agreement.

``This competing bid indicates relationships between TeliaSonera and some players in the Russian market aren't going that well,'' said Jari Honko, an analyst at eQ Bank in Helsinki who has a `buy' rating on TeliaSonera shares and won't change it following Alfa's comments. ``Alfa could be teasing TeliaSonera with this bid. The stake is not as valuable for Alfa as it is for TeliaSonera so it's difficult to see what's in it for them.''

TeliaSonera shares fell as much as 1.7 percent to 41.5 kronor, and traded at 41.8 kronor as of 10:07 a.m. in Stockholm. Turkcell shares rose as much as 5.6 percent to 9.40 liras.

TeliaSonera spokeswoman Charlotte Zuger declined to comment.

Russian Dispute

Alfa Telecom, the telecommunications arm of Alfa Group, one of Russia's biggest industrial-financial groups, is fighting to retain its stake in OAO MegaFon and hasn't received support from TeliaSonera, the largest shareholder of MegaFon.

Alfa Telecom, which owns more than 30 percent of OAO Vimpelcom, Russia's second-largest mobile-phone company, in August 2003 acquired a 25.1 percent stake in MegaFon, Russia's third-largest cellular-phone company, from former owner LV Finance Group Ltd.

IPOC International Growth Fund Ltd. has claimed that it owns the same 25.1 percent stake in MegaFon after paying LV Finance $62 million between April 2001 and July 2003 to satisfy two option agreements signed in 2001.

TeliaSonera Chief Executive Anders Igel has said he wants to increase the company's 44 percent stake in MegaFon. TeliaSonera said earlier this month it will work with IPOC International to resolve the dispute with Alfa and has agreed with the fund to clarify MegaFon's governance and operations.

Alfa's Babaev wouldn't comment on why Alfa was seeking the stake in Turkcell and how it would benefit the Russian company. He said Alfa and TeliaSonera are not in conflict over MegaFon.

``We don't have any arguments with TeliaSonera regarding MegaFon,'' Babaev said.

Turkey's Cukurova is under pressure to sell assets to pay back $5 billion in debt to the government and a bank it owns.

© "Bloomberg.com"