Turkcell Continues To Execute Well, But Macro Remains An Uncontrollable Risk

I believe I’ve been fair, if not effusive, in my praise of Turkcell (NYSE:TKC) management, and nothing has changed since my last article on this leading Turkish telecom provider to change my view. Management continues to do a good job of navigating a difficult inflationary environment (running at around 85%/year), as well as keeping the company ahead of rivals and continuing to reinvest in the long-term growth potential of the business.

While I thought the challenging macro environment in Turkey would mitigate potential gains in the share price, I’m happy to say I was wrong – Turkcell shares have risen more than a quarter since my last update, a strong performance against a backdrop of largely negative emerging market telco performances over that time. While the shares still look undervalued, the challenges of modeling in a high-inflation environment are considerable and ongoing erosion in the value of the Turkish lira remains a real risk.

 

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Turkcell Continues To Execute Well, But Macro Remains An Uncontrollable Risk