Turkcell's Improved Execution And Strategy Going Unrewarded

Being a Turkcell (NYSE:TKC) shareholder has never been easy, but it has been more frustrating of late as weakness in the Turkish lira has depressed the value of the ADRs and muted the benefit of the 20%-plus increase in the value of the local shares. Going beyond currency, though, I believe there is an argument to be made that the market is still failing to give Turkcell credit for the improvements management has made - improvements that have included successful growth in 4.5G post-paid subscribers, growth in the fixed-line broadband business, growth in value-added services, and a more responsible view toward M&A.

I continue to expect high-single-digit revenue growth and mid-teens FCF growth from Turkcell as the company continues to benefit from the pre-paid to post-paid migration, greater use of data, and expanded add-on service offerings. Discounted back at current exchange rates, those cash flows support a fair value of over $12/ADR today, making Turkcell cheap enough to be worth a closer look.

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Turkcell's Improved Execution And Strategy Going Unrewarded