Intrinsic value of Turkcell Iletisim Hizmetleri ADR - TKC

Previous Close

$6.07

  Intrinsic Value

$565.08

stock screener

  Rating & Target

str. buy

+999%

Previous close

$6.07

 
Intrinsic value

$565.08

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of TKC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.89
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
Revenue, $m
  3,793
  53,501
  60,992
  68,982
  77,459
  86,414
  95,838
  105,723
  116,066
  126,865
  138,124
  149,846
  162,041
  174,719
  187,896
  201,589
  215,819
  230,610
  245,986
  261,977
  278,615
  295,933
  313,968
  332,758
  352,345
  372,773
  394,088
  416,339
  439,577
  463,856
  489,234
Variable operating expenses, $m
 
  -23,551
  -26,859
  -30,387
  -34,130
  -38,084
  -42,245
  -46,610
  -51,177
  -55,945
  -60,917
  -66,165
  -71,549
  -77,148
  -82,966
  -89,012
  -95,296
  -101,826
  -108,616
  -115,677
  -123,023
  -130,670
  -138,633
  -146,930
  -155,579
  -164,599
  -174,010
  -183,835
  -194,096
  -204,816
  -216,022
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,876
  -23,551
  -26,859
  -30,387
  -34,130
  -38,084
  -42,245
  -46,610
  -51,177
  -55,945
  -60,917
  -66,165
  -71,549
  -77,148
  -82,966
  -89,012
  -95,296
  -101,826
  -108,616
  -115,677
  -123,023
  -130,670
  -138,633
  -146,930
  -155,579
  -164,599
  -174,010
  -183,835
  -194,096
  -204,816
  -216,022
Operating income, $m
  916
  77,053
  87,850
  99,368
  111,590
  124,499
  138,083
  152,333
  167,243
  182,811
  199,040
  216,011
  233,590
  251,867
  270,862
  290,602
  311,115
  332,436
  354,602
  377,654
  401,638
  426,603
  452,601
  479,688
  507,924
  537,372
  568,098
  600,174
  633,673
  668,672
  705,256
EBITDA, $m
  1,484
  80,009
  91,210
  103,159
  115,837
  129,229
  143,321
  158,104
  173,571
  189,721
  206,557
  224,087
  242,324
  261,284
  280,990
  301,467
  322,748
  344,866
  367,860
  391,775
  416,656
  442,554
  469,524
  497,624
  526,916
  557,464
  589,340
  622,615
  657,366
  693,674
  731,625
Interest expense (income), $m
  115
  4,068
  4,992
  5,985
  7,043
  8,166
  9,353
  10,601
  11,911
  13,281
  14,711
  16,203
  17,756
  19,371
  21,051
  22,797
  24,611
  26,496
  28,455
  30,493
  32,611
  34,815
  37,110
  39,499
  41,988
  44,583
  47,289
  50,113
  53,061
  56,139
  59,356
Earnings before tax, $m
  540
  72,984
  82,858
  93,384
  104,547
  116,333
  128,731
  141,732
  155,332
  169,530
  184,329
  199,808
  215,834
  232,495
  249,811
  267,805
  286,504
  305,940
  326,146
  347,162
  369,027
  391,788
  415,492
  440,190
  465,936
  492,789
  520,809
  550,061
  580,612
  612,533
  645,900
Tax expense, $m
  114
  19,706
  22,372
  25,214
  28,228
  31,410
  34,757
  38,268
  41,940
  45,773
  49,769
  53,948
  58,275
  62,774
  67,449
  72,307
  77,356
  82,604
  88,059
  93,734
  99,637
  105,783
  112,183
  118,851
  125,803
  133,053
  140,618
  148,516
  156,765
  165,384
  174,393
Net income, $m
  401
  53,279
  60,486
  68,170
  76,319
  84,923
  93,973
  103,464
  113,393
  123,757
  134,560
  145,860
  157,559
  169,721
  182,362
  195,498
  209,148
  223,336
  238,087
  253,428
  269,390
  286,005
  303,309
  321,338
  340,133
  359,736
  380,191
  401,544
  423,847
  447,149
  471,507

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,607
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8,389
  103,086
  117,518
  132,912
  149,247
  166,502
  184,659
  203,705
  223,634
  244,442
  266,134
  288,721
  312,217
  336,646
  362,035
  388,419
  415,837
  444,335
  473,962
  504,773
  536,831
  570,199
  604,948
  641,153
  678,893
  718,253
  759,322
  802,194
  846,968
  893,749
  942,647
Adjusted assets (=assets-cash), $m
  6,782
  103,086
  117,518
  132,912
  149,247
  166,502
  184,659
  203,705
  223,634
  244,442
  266,134
  288,721
  312,217
  336,646
  362,035
  388,419
  415,837
  444,335
  473,962
  504,773
  536,831
  570,199
  604,948
  641,153
  678,893
  718,253
  759,322
  802,194
  846,968
  893,749
  942,647
Revenue / Adjusted assets
  0.559
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
Average production assets, $m
  4,169
  28,837
  32,875
  37,181
  41,751
  46,577
  51,657
  56,985
  62,559
  68,380
  74,449
  80,767
  87,340
  94,174
  101,276
  108,657
  116,327
  124,299
  132,586
  141,206
  150,174
  159,508
  169,229
  179,357
  189,914
  200,925
  212,413
  224,407
  236,932
  250,018
  263,697
Working capital, $m
  1,590
  -10,914
  -12,442
  -14,072
  -15,802
  -17,629
  -19,551
  -21,567
  -23,677
  -25,881
  -28,177
  -30,569
  -33,056
  -35,643
  -38,331
  -41,124
  -44,027
  -47,044
  -50,181
  -53,443
  -56,838
  -60,370
  -64,049
  -67,883
  -71,878
  -76,046
  -80,394
  -84,933
  -89,674
  -94,627
  -99,804
Total debt, $m
  2,597
  40,587
  48,655
  57,260
  66,392
  76,037
  86,187
  96,834
  107,974
  119,605
  131,731
  144,357
  157,492
  171,147
  185,340
  200,089
  215,415
  231,345
  247,907
  265,131
  283,051
  301,704
  321,128
  341,367
  362,464
  384,466
  407,423
  431,389
  456,418
  482,568
  509,902
Total liabilities, $m
  4,138
  57,625
  65,692
  74,298
  83,429
  93,075
  103,224
  113,871
  125,011
  136,643
  148,769
  161,395
  174,529
  188,185
  202,378
  217,126
  232,453
  248,383
  264,944
  282,168
  300,088
  318,741
  338,166
  358,404
  379,501
  401,503
  424,461
  448,426
  473,455
  499,606
  526,939
Total equity, $m
  4,251
  45,461
  51,825
  58,614
  65,818
  73,427
  81,435
  89,834
  98,622
  107,799
  117,365
  127,326
  137,688
  148,461
  159,657
  171,293
  183,384
  195,952
  209,017
  222,605
  236,742
  251,458
  266,782
  282,748
  299,392
  316,750
  334,861
  353,768
  373,513
  394,144
  415,707
Total liabilities and equity, $m
  8,389
  103,086
  117,517
  132,912
  149,247
  166,502
  184,659
  203,705
  223,633
  244,442
  266,134
  288,721
  312,217
  336,646
  362,035
  388,419
  415,837
  444,335
  473,961
  504,773
  536,830
  570,199
  604,948
  641,152
  678,893
  718,253
  759,322
  802,194
  846,968
  893,750
  942,646
Debt-to-equity ratio
  0.611
  0.890
  0.940
  0.980
  1.010
  1.040
  1.060
  1.080
  1.090
  1.110
  1.120
  1.130
  1.140
  1.150
  1.160
  1.170
  1.170
  1.180
  1.190
  1.190
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
  1.230
Adjusted equity ratio
  0.465
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  401
  53,279
  60,486
  68,170
  76,319
  84,923
  93,973
  103,464
  113,393
  123,757
  134,560
  145,860
  157,559
  169,721
  182,362
  195,498
  209,148
  223,336
  238,087
  253,428
  269,390
  286,005
  303,309
  321,338
  340,133
  359,736
  380,191
  401,544
  423,847
  447,149
  471,507
Depreciation, amort., depletion, $m
  568
  2,956
  3,360
  3,790
  4,247
  4,730
  5,238
  5,771
  6,328
  6,910
  7,517
  8,077
  8,734
  9,417
  10,128
  10,866
  11,633
  12,430
  13,259
  14,121
  15,017
  15,951
  16,923
  17,936
  18,991
  20,092
  21,241
  22,441
  23,693
  25,002
  26,370
Funds from operations, $m
  -530
  56,235
  63,846
  71,960
  80,566
  89,653
  99,211
  109,235
  119,721
  130,667
  142,077
  153,936
  166,293
  179,139
  192,490
  206,363
  220,781
  235,766
  251,345
  267,549
  284,407
  301,956
  320,232
  339,274
  359,125
  379,828
  401,432
  423,985
  447,540
  472,151
  497,876
Change in working capital, $m
  -853
  -1,424
  -1,528
  -1,630
  -1,729
  -1,827
  -1,922
  -2,017
  -2,110
  -2,203
  -2,297
  -2,391
  -2,488
  -2,586
  -2,688
  -2,793
  -2,903
  -3,017
  -3,137
  -3,262
  -3,394
  -3,533
  -3,679
  -3,833
  -3,996
  -4,167
  -4,348
  -4,539
  -4,741
  -4,953
  -5,177
Cash from operations, $m
  323
  57,658
  65,374
  73,590
  82,296
  91,480
  101,134
  111,252
  121,831
  132,870
  144,374
  156,328
  168,780
  181,725
  195,178
  209,157
  223,684
  238,783
  254,482
  270,811
  287,801
  305,489
  323,911
  343,107
  363,121
  383,996
  405,780
  428,524
  452,280
  477,104
  503,054
Maintenance CAPEX, $m
  0
  -2,506
  -2,884
  -3,287
  -3,718
  -4,175
  -4,658
  -5,166
  -5,698
  -6,256
  -6,838
  -7,445
  -8,077
  -8,734
  -9,417
  -10,128
  -10,866
  -11,633
  -12,430
  -13,259
  -14,121
  -15,017
  -15,951
  -16,923
  -17,936
  -18,991
  -20,092
  -21,241
  -22,441
  -23,693
  -25,002
New CAPEX, $m
  -910
  -3,780
  -4,037
  -4,307
  -4,570
  -4,827
  -5,079
  -5,328
  -5,575
  -5,821
  -6,068
  -6,318
  -6,573
  -6,834
  -7,102
  -7,381
  -7,670
  -7,972
  -8,288
  -8,619
  -8,968
  -9,334
  -9,721
  -10,128
  -10,557
  -11,011
  -11,489
  -11,993
  -12,525
  -13,087
  -13,679
Cash from investing activities, $m
  -952
  -6,286
  -6,921
  -7,594
  -8,288
  -9,002
  -9,737
  -10,494
  -11,273
  -12,077
  -12,906
  -13,763
  -14,650
  -15,568
  -16,519
  -17,509
  -18,536
  -19,605
  -20,718
  -21,878
  -23,089
  -24,351
  -25,672
  -27,051
  -28,493
  -30,002
  -31,581
  -33,234
  -34,966
  -36,780
  -38,681
Free cash flow, $m
  -629
  51,372
  58,453
  65,996
  74,008
  82,478
  91,397
  100,758
  110,557
  120,793
  131,468
  142,565
  154,131
  166,158
  178,658
  191,648
  205,148
  219,178
  233,764
  248,933
  264,713
  281,137
  298,239
  316,056
  334,627
  353,994
  374,199
  395,290
  417,314
  440,324
  464,373
Issuance/(repayment) of debt, $m
  1,225
  7,510
  8,067
  8,606
  9,131
  9,645
  10,150
  10,647
  11,140
  11,632
  12,126
  12,626
  13,134
  13,656
  14,193
  14,749
  15,327
  15,930
  16,561
  17,224
  17,920
  18,653
  19,425
  20,238
  21,097
  22,002
  22,958
  23,966
  25,029
  26,151
  27,334
Issuance/(repurchase) of shares, $m
  -17
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,299
  7,510
  8,067
  8,606
  9,131
  9,645
  10,150
  10,647
  11,140
  11,632
  12,126
  12,626
  13,134
  13,656
  14,193
  14,749
  15,327
  15,930
  16,561
  17,224
  17,920
  18,653
  19,425
  20,238
  21,097
  22,002
  22,958
  23,966
  25,029
  26,151
  27,334
Total cash flow (excl. dividends), $m
  846
  58,882
  66,521
  74,602
  83,139
  92,123
  101,546
  111,405
  121,697
  132,425
  143,593
  155,190
  167,265
  179,813
  192,851
  206,397
  220,475
  235,108
  250,326
  266,157
  282,633
  299,790
  317,664
  336,295
  355,724
  375,996
  397,157
  419,255
  442,343
  466,475
  491,707
Retained Cash Flow (-), $m
  -445
  -5,912
  -6,365
  -6,789
  -7,204
  -7,609
  -8,007
  -8,399
  -8,788
  -9,176
  -9,566
  -9,961
  -10,362
  -10,773
  -11,197
  -11,635
  -12,091
  -12,567
  -13,065
  -13,588
  -14,137
  -14,715
  -15,324
  -15,966
  -16,643
  -17,358
  -18,111
  -18,907
  -19,746
  -20,630
  -21,564
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  52,971
  60,156
  67,813
  75,936
  84,514
  93,539
  103,005
  112,909
  123,249
  134,027
  145,230
  156,903
  169,040
  181,654
  194,762
  208,383
  222,541
  237,260
  252,569
  268,496
  285,075
  302,340
  320,329
  339,081
  358,638
  379,045
  400,349
  422,598
  445,844
  470,143
Discount rate, %
 
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
 
  50,641
  54,741
  58,460
  61,705
  64,385
  66,425
  67,765
  68,363
  68,199
  67,272
  65,596
  63,233
  60,236
  56,687
  52,683
  48,332
  43,749
  39,052
  34,356
  29,771
  25,391
  21,300
  17,561
  14,217
  11,292
  8,790
  6,701
  4,996
  3,640
  2,588
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Turkcell Iletisim Hizmetleri AS is engaged in establishing and operating a Global System for Mobile Communications (GSM) network in Turkey and regional states. The Company's segments include Turkcell Turkey, which includes the operations of Turkcell Superonline, Turkcell Satis ve Dagitim Hizmetleri A.S., group call center operations of Global Bilgi Pazarlama Danisma ve Cagri Servisi Hizmetleri A.S., Turktell Bilisim Servisleri A.S., Kule Hizmet ve Isletmecilik A.S., Turkcell Odeme Hizmetleri A.S. and Turkcell Gayrimenkul Hizmetleri A.S; Turkcell International, which includes the operations of Kibris Mobile Telekomunikasyon Limited Sirketi, Eastasian Consortium BV, lifecell LLC, UkrTower LLC, LLC Global Bilgi, Turkcell Europe GmbH, Lifetech LLC, Beltower LLC and Fintur Holdings BV, and Other, which comprises the information and entertainment services in Turkey and Azerbaijan, and non-group call center operations of Turkcell Global Bilgi and Turkcell Finansman AS.

FINANCIAL RATIOS  of  Turkcell Iletisim Hizmetleri ADR (TKC)

Valuation Ratios
P/E Ratio 33.2
Price to Sales 3.5
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 41.2
Price to Free Cash Flow -22.7
Growth Rates
Sales Growth Rate 11.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.4%
Cap. Spend. - 3 Yr. Gr. Rate 0.9%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 43.3%
Total Debt to Equity 61.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 7.3%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 8.2%
Return On Equity 10%
Return On Equity - 3 Yr. Avg. 10.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 35.5%
Gross Margin - 3 Yr. Avg. 37.8%
EBITDA Margin 32.2%
EBITDA Margin - 3 Yr. Avg. 32.1%
Operating Margin 24.2%
Oper. Margin - 3 Yr. Avg. 22.6%
Pre-Tax Margin 14.2%
Pre-Tax Margin - 3 Yr. Avg. 16.6%
Net Profit Margin 10.6%
Net Profit Margin - 3 Yr. Avg. 14.2%
Effective Tax Rate 21.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.3%
Payout Ratio 3.5%

TKC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TKC stock intrinsic value calculation we used $46523 million for the last fiscal year's total revenue generated by Turkcell Iletisim Hizmetleri ADR. The default revenue input number comes from 2016 income statement of Turkcell Iletisim Hizmetleri ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TKC stock valuation model: a) initial revenue growth rate of 15% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.6%, whose default value for TKC is calculated based on our internal credit rating of Turkcell Iletisim Hizmetleri ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Turkcell Iletisim Hizmetleri ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TKC stock the variable cost ratio is equal to -44%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TKC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 12.3% for Turkcell Iletisim Hizmetleri ADR.

Corporate tax rate of 27% is the nominal tax rate for Turkcell Iletisim Hizmetleri ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TKC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TKC are equal to 53.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Turkcell Iletisim Hizmetleri ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TKC is equal to -20.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $39549 million for Turkcell Iletisim Hizmetleri ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2200 million for Turkcell Iletisim Hizmetleri ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Turkcell Iletisim Hizmetleri ADR at the current share price and the inputted number of shares is $13.4 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Turkcell Opens Next-Generation Data Center in Izmir   [Jun-22-18 12:16PM  Business Wire]
▶ Turkcell Iletisim Hizmetleri: First Quarter 2018 Results   [Apr-24-18 11:22AM  Business Wire]
▶ CORRECTING and REPLACING Future of 5G Discussed in Istanbul   [Apr-06-18 01:28PM  Business Wire]
▶ Future of 5G Discussed in Istanbul   [Apr-05-18 03:36PM  Business Wire]
▶ Turkcells Investment Grade Status Affirmed Twice in a Week   [Apr-02-18 08:45AM  Business Wire]
▶ lifecell Becomes First to Launch 4.5G in Ukraine   [Mar-30-18 11:48AM  Business Wire]
▶ Turkcell Files Its 2017 Annual Report on Form 20-F   [Mar-22-18 05:35PM  Business Wire]
▶ Lifecell to Provide the Best LTE Experience in Ukraine   [Mar-19-18 07:04AM  Business Wire]
▶ Lifecell Ventures Marks a New Era for Telecom Industry   [Feb-26-18 07:55AM  Business Wire]
▶ Top Ranked Value Stocks to Buy for December 13th   [Dec-13-17 03:50PM  InvestorPlace]
▶ Turkcell Launches Turkeys Search Engine Yaani   [Oct-26-17 12:44PM  Business Wire]
▶ Turkcell Iletisim Hizmetleri: Third Quarter 2017 Results   [Oct-25-17 11:24AM  Business Wire]
▶ Turkcell Rolls Out NarrowBand-IoT Network across Turkey   [Aug-24-17 03:41AM  Business Wire]
▶ [$$] 2 Steady Stocks in a Volatile Post-Coup Turkey   [Jul-29-17 12:01AM  Barrons.com]
▶ Turkcell Iletisim Hizmetleri: Second Quarter 2017 Results   [Jul-27-17 11:46AM  Business Wire]
▶ Turkcell Moving Fast on the Way To 5G   [Jun-16-17 10:28AM  Business Wire]
▶ 12 Emerging Market Headlines: Earnings, Oil & Risk   [Apr-26-17 07:04PM  Barrons.com]
▶ Turkcell Files Its 2016 Annual Report on Form 20-F   [Mar-20-17 05:15PM  Business Wire]
▶ Turkcell Earnings Socked By Weak Lira   [Feb-15-17 01:59PM  at Barrons.com]
▶ Turkey: Lira & Stocks Hit New Lows Despite Bank Action   [Jan-10-17 03:59PM  at Barrons.com]
▶ Turkey: Central Bank Holds Rates; Syria Peace?   [Dec-20-16 10:30AM  at Barrons.com]
▶ Is Aramark (ARMK) Worthy of Your Portfolio?   [Dec-01-16 12:06PM  at Insider Monkey]
▶ Turkcell Feud Unresolved as Fridman Buyout Option Expires   [Nov-28-16 01:41PM  at Bloomberg]
Financial statements of TKC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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