WOOD Flash – Turkish telecoms: key takeaways from our recent field trip
Recently, we hosted a group investor trip in Turkey and visited both Turkcell (TCELL.IS, HOLD, price target (PT) TRY 15.8) and Turk Telekom (TTKOM.IS, BUY, PT TRY 7.41). During our meetings with the senior executive management teams of both companies, we got the chance to assess how Turkish telcos are dealing with the current macro turmoil in Turkey: a significantly depreciated TRY; higher rates; accelerated CPI pace; and weaker consumer sentiment. Overall, our impression is that both operators will be adjusting their tariffs to reflect (this is already confirmed by our recent price survey) the elevated cost pressures and cut back on discretionary capex to relieve their FCFs in 2018E/19E. Hence, we do not rule out a guidance change following the 3Q18E earnings announcements, when both operators may revise their 2018E growth targets upwards, while trimming their capex budgets.Turk Telekomuniksayon is an integrated telecommunications company in Turkey. Co.'s principal activities include the provision of local, national, international and mobile telecommunication services, internet products and services, as well as call centre and customer relationship management, technology and information management. Co. has service network and product range in the fields of individual and corporate services. Co. provides services in all 81 cities of Turkey. Co. has two main segments; fixed line and mobile. As of Dec 31 2015, Co. had 12.9 million fixed access lines, 8.0 million broadband and 17.3 million mobile subscribers.
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.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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