* Shareholders fail to agree on board issues

* Government may intervene in dispute

* TeliaSonera regrets move, backs dividend distribution

(Adds quotes, details)

By Evren Ballim

ISTANBUL, June 29 (Reuters) - The prospect of government intervention to break the deadlock in a long-running dispute between investors at Turkish mobile phone company Turkcell

TCELL.IS increased after a shareholder meeting was cancelled on Friday.

Turkcell said the annual meeting could not convene since the quorum required by Turkcell's articles of association had not been reached. Turkcell Holding, which owns 51 percent of the company, was not represented at the meeting.

Behind the cancellation was the failure of shareholders Altimo, the telecoms arm of Russia's Alfa Group, and Turkish group Cukurova to settle a dispute over the board's composition and other issues. ID:nL6E8HQJ6E

Nordic telecoms group TeliaSonera TLSN.ST , another of Turkcell's major shareholders, said it regretted what it called the "postponement" of the Turkcell meeting and said it supported the distribution of dividends.

Turkish Transport and Communications Minister Binali Yildirim signalled on Wednesday the government may intervene on Turkcell if the shareholder dispute continues, telling Reuters he would pursue the public interest. ID:nL6E8HR9VR

The Turkish Shareholders Association, which represents minority investors, say they may open a court case if the dispute drags on further.

"The stage we have reached in Turkcell requires a government intervention. We cannot get dividend payments for two years. We are missing investment opportunities abroad. If problems continue we may open a court case," Ali Bahcuvan, the head of the shareholders association told Reuters.

Turkcell was warned by the Turkish Capital Markets Board (SPK) regulator last week over its failure to comply with new rules raising the number of independent members required on boards to at least three. ID:nL5E8HM14I

BATTLE FOR CONTROL

Cukurova said most of the candidates proposed by Altimo and TeliaSonera for the independent board member position failed to meet SPK criteria. Cukurova also blamed its rivals for blocking dividend payments for the last two years.

Altimo, in turn, said that although it has agreed with Cukurova on the 2011 dividend, failure to agree on the 2010 payment has held up both payments.

TeliaSonera has the largest direct and indirect stake in Turkcell, with a 37 percent share, while Altimo has an indirect stake of 13.22 percent.

Turkish group Cukurova has a 14 percent stake, but carries controlling rights because of a complicated shareholder and management structure.

TeliaSonera and Altimo are locked in legal battles to wrest control of Turkcell from Cukurova, chaired by Mehmet Emin Karamehmet, one of Turkey's most powerful businessmen.

Having forced Karamehmet to step down as Turkcell chairman in 2010, the Nordic and Russian partners are pushing to oust his replacement, Colin Williams, a designated independent board member, who they regard as a proxy for Karamehmet.

Turkcell failed to hold key votes on board changes and its dividend at an extraordinary general meeting in October.

A decision by the Capital Markets Board on the eve of that EGM set new rules raising the number of independent members required on company boards to at least three.

Turkcell has yet to comply with that regulation. Currently, the three main shareholders each have two seats on Turkcell's seven-member board.

By 0921 GMT Turkcell shares were up 0.45 percent to 8.897 lira, while the main share index .XU100 was up 1.15 percent.

(Reporting by Evren Ballim; Writing by Seda Sezer; Editing by Jon Loades-Carter)

((seda.sezer@thomsonreuters.com)(+90 212 350 7051)(Reuters Messaging: seda.sezer@thomsonreuters.com))

Keywords: TURKCELL MEETING/