(Bloomberg) -- Turkey’s sovereign wealth fund is considering buying the minority stake in Turkcell Iletisim Hizmetleri AS held by LetterOne Holdings SA, which is partly-owned by sanctioned Russian billionaires Mikhail Fridman and Petr Aven, according to people familiar with the matter.

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The wealth fund, also known by its initials TWF and the biggest holder in Turkcell, has approached LetterOne to discuss a potential offer for its 19.8% stake, the people said. It’s unclear whether LetterOne is interested in selling its stake in the country’s largest wireless carrier by market value, the people said, asking not to be identified as the conversations remain private.

Shares of Turkcell extended gains to more than 4% and TWF’s bonds due 2029 advanced on Wednesday following the Bloomberg News report. Turkcell’s shares have risen 61% in the past year, giving the company a market value of about $6.5 billion. A 19.8% stake would be worth around $1.3 billion based on current market price.

Turkcell offers mobile and fixed networks to clients in Turkey and also has investments in Belarus, its website shows. TWF became Turkcell’s largest shareholder in 2020 and gained control of the board with its 26.2% holding, including a 15% privileged stake. One of Turkcell’s main competitors is Turk Telekomunikasyon AS, which is also owned by TWF. A potential acquisition of LetterOne’s stake in Turkcell could give the wealth fund a tighter grip on the country’s telecom market, while the fund isn’t subject to antitrust regulations.

Fridman, Aven and their partners are sanctioned by the UK, European Union and the US after Russia started war on Ukraine in 2022, although LetterOne isn’t sanctioned. Fridman and the partners resigned from LetterOne board in the same year while the sanctions prevent them from getting proceeds from any deal. TWF has privately expressed concerns about potential risks to Turkcell from the sanctions, as the company is also listed in New York, the people said.

Turkey, a NATO member, has refrained from joining its Western allies in imposing sanctions against Russia, with President Recep Tayyip Erdogan maintaining friendly ties with President Vladimir Putin.

TWF previously held informal discussions with potential buyers about selling its Turkcell stake, Bloomberg News reported in July. Some within the fund opposed a sale as the carrier is seen as a strategic asset, the people have said. Buying out LetterOne’s stake could make any potential future TWF’s divestment of its Turkcell shares easier, according to the people.

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Deliberations are preliminary and there’s no guarantee a deal would happen, the people said. Representatives for Turkcell and LetterOne declined to comment, while TWF didn’t respond to requests for comment.

LetterOne and Turkcell were at odds before. In 2022, LetterOne called for the dismissal of four board members as it pushed for a governance overhaul to attract international investors. The board of Turkcell rejected most of LetterOne’s requests later.

--With assistance from Yuliya Fedorinova.

(Updates Turkcell’s share move in third paragraph and add more details in fourth paragraph.)

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