Turkcell Iletisim Hizmetleri A.S. (ADR) (TKC)

Here is my #1 pick for June 2008...

TKC - Turkcell Iletisim Hizmetleri A.S. (Turkcell) - $19.48
http://www.turkcell.com.tr/

Turkcell Iletisim Hizmetleri A.S. (Turkcell) is a provider of mobile services in Turkey. The Company provides mobile voice and data services over its global system for mobile communications (GSM) network. As of April 1, 2008, Turkcell provided service to its subscribers in 197 countries through commercial roaming agreements with 576 operators. The Company provides wireless and value-added mobile communications services to subscribers throughout Turkey. Subscribers can choose between its postpaid and pre-paid services. As of December 31, 2007, Turkcell had approximately 29 million pre-paid subscribers and 6.4 million postpaid subscribers. The Company has investments in Azerbaijan, Georgia, Kazakhstan, Moldova and the Ukraine.

INTRINSIC STRENGTH: 91%
GRADE: A
RATING: STRONG BUY
INTRINSIC VALUE: $30.19
TAKE-OVER VALUE: $35.14

This one has great fundamentals, is diversified, and is selling at a very cheap market value compared to what the company is really worth. The company has been in a perpetual long-term uptrend for the past 5 years. Recently it has dipped from $27. This represents a buy opportunity in my view.

This stock basically fits into my mantra. High quality, low price. Look at TKC for yourselves. I'm putting down 20% of my portfolio in TKC.

More research on TKC...http://www.turkcell.com.tr/en/investorRelations/WhyinvestinTurkcell?banner=dig_20080303_WhyinvestinTurkcell

Company Qualities

1. Approximately 57% market share as of December 31, 2007 in a 3 operator environment.
2. By far the strongest operator in brand image, customer satisfaction, network coverage and profitability.
3. Offering exposure to six other high growth markets with additional population of approximately 80 million on top of sizable 70.6 million people in Turkey.
4. Solid operational & financial performance with large subscriber base and high margins.
5. Recorded revenue of US$6,328.6 million, EBITDA of US$2,627.1 million and net income of US$1,350.2 million for the year ended December 31, 2007.
6. As of December 31, 2007 number of subscribers has reached 35.4 million
7. The only company in Turkey with NYSE listing as a result complying with Sarbanes Oxley as well as local capital market requirements.
8. Superior advantage against competition in terms of coverage and capacity with population coverage of 97.8% as of December 31, 2007 of which approximately 81.3% is EDGE enabled.
9. Leading provider of mobile communications services in Turkey in terms of breadth, usage and quality of Value Added Services and one of the pioneers in the world with innovative products.
10. Established dividend policy. The Board of Directors of Turkcell intends to distribute cash dividends in an amount of not less than 50% of Turkcell's distributable profits, based on the financial statements prepared in accordance with the accounting principles accepted by the Capital Markets Board of Turkey, for each fiscal year. On February 27, 2008, the Turkcell Board of Directors decided to recommend distribution of cash dividends in an amount of approximately TRY648.7 million (approximately US$546.0 million as of February 27, 2008) representing a 14% increase compared to approximately TRY567.0 million (approximately US$411.9 million) a year ago. This corresponding to 50% of Turkcell's distributable income of the current year, based on the financial statements prepared in accordance with the accounting principles accepted by the Capital Markets Board of Turkey. This dividend proposal is to be evaluated and decided upon at the Ordinary General Assembly of Shareholders to be held on April 25, 2008. This represents a net and gross cash dividend of TRY0.2948699 (approximately US$0.248165 as of February 27, 2008) per ordinary share with a nominal value of TRY1 and approximately TRY0.737174 (approximately US$0.620412 as of February 27, 2008) per ADR.

The market

1. Robust economic achievements; inflation rate falling from 70% levels to 8% levels and interest rates falling from 100% to 20% levels in 2001 and 2007 period.
2. Political stability with commitment to structural reforms, EU accession process, strong IMF relations and more FDI's coming into the country.
3. A unique investment opportunity with its impressive GDP growth in recent years.
4. Expected GDP growth to continue at approximately 5% levels going forward vs. 2% in average in Europe that is about EU15 countries .
5. Suggesting further room for growth with approximately 88% mobile line penetration as of December 31, 2007, one of the lowest penetrated markets in Europe .
6. The youngest and most dynamic population in Europe with around 35% of the population below age 19 forming a great base of future potential.
7. Continuous population growth in Turkey compared to negative growth in other emerging countries.

Turkcell is primarily involved in the business of providing mobile services in Turkey. It holds over 50% share in the domestic market with over 28.7 million subscribers. The company also holds major stake in Astelit, the third largest operator in Ukraine and Fintur International that operates in Azerbaijan and Kazakhstan. Turkcell revenues are divided into five major segments: communication fees, commission fees, monthly fixed fees, sales of SIM cards and call center revenues. Communication fees, consisting of charges for calls that originate or terminate on company’s network, that include voice and data services, are the most important source of revenues contributing about 95% to the tally.

Turkey’s population is about 75 million, with over 60% mobile penetration. The average age of the population is 29, much lower than other western European counterparts. As mobile industry looks younger age group as a major target audience especially for the growing data and web based services, the appealing age group makes turkey an impressive market for the mobile operators. However, the competition in the market is heating up rapidly, as the dominance of Turkcell, is up for challenge with government selling Telsim to Vodafone and Turk Telekom to Oger Telecom, the two major competitors of TurkCell.

Looking forward, the ongoing dispute between Turkcell’s three main stake holders Cukurova Group, Alpha Group and TeliaSonera for control of the company, is set to take its tool, and can create negative impact in such a competitive market condition. Adding to it, Turk Telecom’s move of drastically reducing prices can make the company to follow suit in order to hold the market share, which can affect the margins negatively. Further, company’s proposed $250 million investment in Ukraine affiliate Astelit raises additional concerns, due to low Average rate per unit and negative margins of the Ukrainian operator, making Turkcell a risky investment in 2007.

I spend a lot of time in Turkey. Just like in the US, there are several mobile phone providers. Avea happens to be the default partner of AT&T, so that's what I get there... and everyone laughs at me for using something other than Turkcell. It is the dominant brand in the industry.

And there's a lot more to like once you take a look at their financials. Solid subscriber growth, both in Turkey and especially its central Asian partnerships, and long term increases in revenue per subscriber. A PEG below 1? That's a steal for this brand! What if CHL or AMX traded for this price? You'd buy them. Why not TKC? Because Turkey shares a border with Iraq? Because they have historically had inflation problems? Right now, I don't see either as a threat to the long term growth of the Turkish economy or one of its flagship companies. EU membership is too tempting a carrot to cause any significant financial policy changes, regardless of the party in power.

The recent sell-off has created a real bargain in this company’s stock price. The strengths of this company have been well-covered on the CAPS boards and in Fool-contributor Will Frankenhoff’s great write-up from January 23, “Turkcell: Investors’ Best Call.” The 4Q and year-end 2006 report showed remarkable cash-generation that has vastly improved an already sterling balance sheet. It was also the first time I’d heard of Inteltek, a subsidiary of Turkcell’s that operates as a central online sports betting center. Pretty exciting stuff! The newly-minted CEO from Microsoft that is focused on enhancing the company’s technology offerings only further validates a solid investment thesis.

TKC is a very good company that has to put up with a corrupt marketplace and a government whose policies and greed throw off proper business planning. Still, the Turkish people rely on their cellphones because the landlines are not as good and this has kept TKC in the game. This company can, and has been a mover, but only in limited spurts when, for whatever reason, the economic conditions haven't been fouled up by the government. TKC management is tenacious and clever-- and while the Turkish government is a huge obsticle and allowing compeditors that should have been toast to gain market share-- you cannot ever count this company out.
Sadly, for now, one must wait until Turkish market conditions allow for a real turn-around. Good long-term investment however IF compeditors remain small.

I am bitter that I am only rating TKC on caps now, since I bought the stock at 13 and more at 15.

Let's face it, TKC is bizarrely cheap. It's a highly profitable company in a growing cellular market in Turkey plsu expanding outside of Turkey, and has an amazing;le cheap p/e and price to cash flow. Basically there is an overhang from the Turkey factor (potential political instability) and the ownership of the company (feuding factions = feuding over pure gold).

I can tell you that people will keep using their mobile phones thru all this and TKC will continue to prosper. This is a no brainer!!

Dominant player in Turkey. Secular upside factors include continuing growth until saturation in 2 years, large FCF, low D/E and growing cash pile. Either dividend increase or acquisitions likely. Has shown discipline on acquisitions/debt with pass on TIM Hellas. Short-term upside factors acquisition by fte/dt/chl/telia, discovery by mr. market a la amx/chl, revaluing of turkish bourse or resolution of management issues. No longer a deep value play at $13 but a reasonably safe acquisition at a good valuation. Tight trading range also makes this a relatively safe short-term buy/sell trading play. One of my larger holdings.

Wow! Have you seen how many Turks there are? Wonder what would happen if most of them started using cellular phones? I bet the companies who sell mobile services to them would do quite well. What? There is a Turkish company who owns about 60% of the market? Guess that one would be the one to own. What? It's on sale right now? Wonderful! I'll take it. Pretty much as simple as that for this one. Outperform!

tkc-tukish company utliizing a GMS network is a great buy & hold for all fools for a minium of of 3/5. people who say that the turkish government is corrupt ought to check out our own government & banks & insurance firms, brokers, auto industry-you name it who is more corrupt fools. this is one you have to put on your watch list at least. while the fools who buy & hold, you can watch us get just a little bit richer than you!!!!!!!!!!!! fool on

Wow I knew that telecom was hot in developing markets but just look at the scorecard on this baby. IMHO you can't loose on a stock with this kind of performance & price.

With valuations down, it's a good time to buy monopoly telecom assets. This is a company that's actually increased its subscribership thanks to newly enacted number portability measures in Turkey.

This stock is a part of my Marketocracy Capital Ventures Fundamental Fund which seeks to invest in stocks with strong balance sheets, period. It is my belief that companies with strong balance sheets will always outperform in the end.

Performance of the Marketocracy CVFF can be found here... http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=PpDoGoLjEgLkCdLfMaKiAbDc

Below $20 is ridiculously cheap for this stock! Forward P/E is now below 10!! Great margins, low debt, high growth, sweet ROE, etc.... They have plenty of cash and assets to allow for organic growth to slow in their base country, while potentially making investments/acquisitions outside of Turkey as they have in the past. This stock doesn't belong on the clearance aisle, though it has been placed their recently. People neglect the fact that 07 Q4 earnings beat estimates by 24% and 08 Q1 estimates have been revised upward dramatically. I think before too long TKC will see a lot more institutional ownership as more investment vehicles in the region become available over time (Turkey ETF's?)... This would give a nice boost to share prices, of course... Too much upside to pass up, especially when I look out my window in Los Angeles and see the effects of our slowing economy and weak dollar...

It has some currency risk, but it's still a solid performer. Considering what kind of crap is now fetching super-optimistic valuations in this market, I feel more comfortable buying TKC than buying the index.

Turkcell Cellphone company. Has a moated market in Turkey, a country that is just starting to adopt cell phone technologies. I believe this company has a lot of room to grow, and few competitors.

I don't take Cramer any more seriously than I do a stranger I would meet on the street. But his argument for TKC got me to investigate the stock. It looks like a good company free of US economic trouble.

Price makes it a good value, with low P&E. Turkey is set to grow and this company is positioned to continue to dominate its domestic market as well as to expand internationally.

Another beaten down stock with great long term prospects.

Cash, low vaaluation, low numbers, good growth prospects.