Turkcell - Superb Data Monetization
We have made some substantial changes to our operating estimates for Turkcell after the company's impressive performance in 1H17. We are increasing our target price to TRY16.07 per share and upgrading our recommendation to a BUY. On our revised estimates, the stock trades at a favorable 2018E EV/EBITDA of 5.1 and P/E of 11.6, discounts of 15% and 23% to peers. We think the market does not fully appreciate how successfully the company has been able to capitalize on the rapid rise in data consumption in Turkey. Moreover, after the Sonera stake sale, the overhang risk is now a thing of the past. While a fine may result from the recently initiated tax investigation into the sector, the stock has underperformed the BIST 100 by 4% since the news emerged, so the risk should be mostly priced in.Turkcell Iletisim Hizmetleri is a provider of mobile services in Turkey. Co. provides mobile voice, internet and other services over its mobile communications network. Subscribers can choose between postpaid and prepaid services. Postpaid subscribers sign a subscription contract, and receive monthly bills for services, while prepaid subscribers must purchase a starter pack which consists of a SIM card and inclusive airtime. GSM offers a range of services that include voice, circuit switched data, packet data and fax, in addition to standard service offerings such as call barring, call forwarding, call waiting and roaming into areas serviced by other GSM carriers.
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