Entering text into the input field will update the search result below

Still Nothing To Delight Turkcell Investors

Stephen Simpson profile picture
Stephen Simpson


  • Turkcell had another good operating quarter, with further growth in postpaid subscribers, fiber/pay TV subscribers, and data/digital service utilization.
  • Turkey remains a "basket case economy" in the eyes of many investors, undermining the currency and casting a shadow over Turkcell.
  • "Guilt by association" may be unfair, but it's real, and it significantly mitigates the substantial undervaluation I see today in Turkcell's share price.

When I last wrote about Turkcell (NYSE:TKC) in late February, I wrote, “Turkcell still looks undervalued to me, but it also still looks like a potential value trap unless and until the situation in Turkey improves.” And so it goes, with ADRs down another 15% or so, as the Covid-19 outbreak has further sapped investor enthusiasm in emerging market stocks. If there’s a bright side, it’s that Turkcell’s performance over the last three months has been better than at least some emerging market names like America Movil (AMX), MTN Group (OTCPK:MTNOY), Telefonica (TEF), and Telkom (OTCPK:TLKGY), so … yay?

For better or worse, the Turkcell story remains as it was. Management has actually done a good job with respect to drivers like data and digital services, as well as growing fixed-line fiber and IPTV businesses. Overall, the company is shifting toward a richer service mix and one with fewer less-lucrative prepaid subscribers. Still, it’s an emerging market telco in an unpopular country during a risk-off phase of the market, so it’s going to take time before the stock’s apparent undervaluation makes any real difference.

Decent First Quarter Results

Turkcell managed to once again do a little better than expected on a quarterly basis, with revenue basically in line (Bloomberg consensus) and EBITDA about 2% better.

Revenue rose 17% year over year, and declined slightly on a sequential basis, with revenue in Turkey up 19%. Mobile revenue rose 19%, as 21.5% adjusted ARPU growth was offset by 2% subscriber shrinkage. Within the subscriber numbers, prepaid subs declined 19%, while postpaid rose 12%; management estimates it still holds strong 63% share in postpaid, with not much disruption from Vodafone (VOD) or Turk Telekom (OTC:TRKNY). Fixed-line revenue rose 17%, with solid growth in subs (fiber up almost 8%, IPTV up 18%) and

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Analyst’s Disclosure: I am/we are long TKC, MTNOY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.