Nothing has really improved for Turkcell (TKC) since my last update, as the inept handling of the Turkish economy by the government continues to send the value of the Turkish lira spiraling ever lower. While Turkcell management has done a good job of managing its core operations, that’s cold comfort when the currency deprecation utterly undermines what progress there is.
It would be bad enough if it were just the incompetence of Turkey’s government impacting Turkcell – it’s not good to own a house on block that’s on fire – but that’s far from the only challenge here. In addition to a potentially restive major shareholder, Turkcell is facing significant capex in the coming years as it will need to participate in upgrading to 5G while still spending to upgrade its fiber offerings. On top of that, inflation is driving operating and subscription acquisition costs higher, but it’s unclear if pricing can continue to keep pace.
Considering all of this, the upcoming capital markets day, where management will discuss its new three-year plan, is going to be a critical event for the stock. While the shares do still look undervalued, the reality is that until and unless some stability returns to Turkish economy, whatever Turkcell can accomplish on its own will likely be for naught as far as the share price goes.
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