Monday, August 17, 2020

Turkcell Can't Swim Faster Than The Negative Currents Around Turkey

As far as “controlling the things they can control”, I find almost nothing to fault Turkcell (TKC) management for as the company has navigated a change in leadership and the challenges of COVID-19 quite well. Turkcell continues to do a good job of shifting its sub base towards postpaid plans, while supporting increased data use through prudent network upgrades and a growing suite of services. The company’s non-cellular activities also continue to grow well, as the company expands its fiber and IPTV businesses.

The problem remains the economy of Turkey and the political leadership of the country. Whether “basket case” is a harsh or fair assessment, inflation remains persistently high (low double-digits recently) and President Recep Erdoğan’s eccentric views on economics remain a problem. Foreign investment in Turkey has dropped, and the average exchange rate between the dollar and the lira fell another 11% from the first quarter to the second quarter. Although I continue to believe that Turkcell is fundamentally undervalued, the currency and country risks remain high, and that makes this a difficult recommendation.

 

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Turkcell Can't Swim Faster Than The Negative Currents Around Turkey

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