ANKARA (Turkey), February 5 (SeeNews) – Erste Group Research maintained its recommendation on Turkish mobile operator Turkcell [BIST:TCELL] at “buy” while lowering the target price for the stock to 13.5 Turkish lira ($6.0/4.5 euro) from 14.5 lira, Erste said on Wednesday.
The target price revision is mainly due to a higher risk-free rate after the recent interest rate hike, Erste Group said in a stock report.
“Turkcell Turkey is able to defend its EBITDA margin level. The rising mobile Internet usage and post-paid subscriber base continue to support revenue growth, though the growth rate has slowed down," the research group said in the report.
Erste analysts expect risks coming from Tukcell’s subsidiaries in Ukraine and Belarus related to the impact of currency devaluation on debt as well as from the outcome of the recently imposed 527.7 million special communication tax fine on Turkcell.
“Unlike the consensus, we do not expect dividends to be paid this year," Erste said.
Erste Group also said that it expects Turkcell to register a slowdown in revenue growth to 4.3% on the year for the fourth quarter of 2013 mainly due to domestic MTR reduction of 20%. EBITDA is seen rising at a rate similar to revenue. The large U.S. dollar cash position of Turkcell is expected to prevent foreign exchange losses.
Turkcell is to release its fourth-quarter results on February 19 after market close.
Turkcell is the largest mobile operator in Turkey. The company has a 41.45% stake in Fintur, which provides telecommunication services in Azerbaijan, Kazakhstan, Georgia, and Moldova. Turkcell also owns 55% of Ukraine’s third mobile operator Astelit, 80% of Belarus’ third mobile operator BeST, and 100% of Kibris Telekom in Northern Cyprus.
(1 euro = 3.0267 Turkish lira)