Turkcell Iletisim Hizmetleri AS (TKC), the largest wireless communications service provider of Turkey, is facing the brunt of the recent socio-political turmoil in the country. The stock price of this Turkish GSM network operator, which offers mobile voice, broadband and other added services dropped nearly 13% in the last week. Notably, this sharp decrease in stock price is not due to financial or operational reasons but is solely related to the political turbulence in Turkey.
Recently, a large and diverse section of the Turkish population was perturbed by certain decisions taken by the ruling Justice and Development Party, headed by the Prime Minister, Recep Tayyip Erdogan. The protesters claimed that Erdogan has become more authoritative, aggressively following capitalism to favor its closest allies and trying to increase Islamist influence on the predominantly secular culture of Turkey.
On the other hand, Erdogan’s government has taken several steps, which has helped Turkey to improve several economic fundamentals. These include soaring gross domestic product, huge influx of foreign direct investments and reasonable control of inflation and unemployment. However, the ongoing socio-cultural conflict may more than offset positive economic developments.
Turkcell is a major business organization in Turkey. As of Mar 31, 2013, the company had 34.9 million subscribers in Turkey. The company offers both post-paid and prepaid wireless services and became one of the first among the global operators to implement 2.5 G HSPA+ network. Turkcell also operates in nine countries in Asia and Europe through various wholly owned or partially owned subsidiaries.
In Apr 2013, Turkcell collaborated with the Turkish Athletics and Swimming Federation to strengthen Government of Turkey’s bid for 2020 Olympics Game. We remain concerned that if the present scenario of political unrest becomes more intense and volatile, then Turkey may miss the 2020 Olympics bid, which otherwise could act as a near-term growth catalyst for Turkcell.
Other Stocks to Consider
Turkcell currently has a Zacks Rank #3 (Hold). However, some other stocks in the non-U.S. wireless communications segment, which are worth a look include Cellcom Israel Ltd. (CEL), China Mobile Ltd. (CHL) and Millicom International Cellular SA (MIICF). All three stocks carry a Zacks Rank #2 (Buy).
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