Intrinsic value of Turkcell Iletisim Hizmetleri ADR - TKC

Previous Close

$9.05

  Intrinsic Value

$9.36

stock screener

  Rating & Target

hold

+3%

  Value-price divergence*

0%

Previous close

$9.05

 
Intrinsic value

$9.36

 
Up/down potential

+3%

 
Rating

hold

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 7.8

 

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
  11.90
  11.21
  10.59
  10.03
  9.53
  9.07
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
Revenue, $m
  3,793
  4,244
  4,720
  5,220
  5,744
  6,291
  6,862
  7,456
  8,075
  8,719
  9,388
  10,083
  10,806
  11,556
  12,337
  13,148
  13,993
  14,871
  15,786
  16,739
  17,732
  18,767
  19,847
  20,974
  22,151
  23,381
  24,665
  26,009
  27,414
  28,883
  30,421
Variable operating expenses, $m
 
  3,115
  3,464
  3,831
  4,215
  4,617
  5,036
  5,472
  5,926
  6,398
  6,889
  7,399
  7,929
  8,480
  9,052
  9,648
  10,267
  10,912
  11,583
  12,282
  13,011
  13,770
  14,563
  15,390
  16,254
  17,156
  18,099
  19,084
  20,115
  21,193
  22,322
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
  3,115
  3,464
  3,831
  4,215
  4,617
  5,036
  5,472
  5,926
  6,398
  6,889
  7,399
  7,929
  8,480
  9,052
  9,648
  10,267
  10,912
  11,583
  12,282
  13,011
  13,770
  14,563
  15,390
  16,254
  17,156
  18,099
  19,084
  20,115
  21,193
  22,322
Operating income, $m
  916
  1,129
  1,256
  1,389
  1,528
  1,674
  1,826
  1,984
  2,149
  2,320
  2,498
  2,684
  2,877
  3,077
  3,285
  3,501
  3,725
  3,959
  4,203
  4,456
  4,721
  4,996
  5,284
  5,584
  5,897
  6,225
  6,567
  6,924
  7,299
  7,690
  8,099
EBITDA, $m
  1,484
  1,596
  1,775
  1,963
  2,160
  2,366
  2,581
  2,805
  3,037
  3,279
  3,531
  3,793
  4,064
  4,347
  4,640
  4,946
  5,263
  5,594
  5,938
  6,296
  6,670
  7,059
  7,465
  7,889
  8,332
  8,794
  9,278
  9,783
  10,311
  10,864
  11,443
Interest expense (income), $m
  115
  114
  139
  166
  193
  222
  253
  284
  317
  351
  387
  424
  463
  502
  544
  587
  632
  679
  728
  778
  831
  886
  943
  1,003
  1,065
  1,130
  1,198
  1,270
  1,344
  1,422
  1,503
Earnings before tax, $m
  540
  1,015
  1,116
  1,223
  1,335
  1,452
  1,573
  1,700
  1,832
  1,969
  2,111
  2,260
  2,414
  2,574
  2,740
  2,913
  3,093
  3,280
  3,475
  3,678
  3,890
  4,111
  4,341
  4,581
  4,832
  5,094
  5,368
  5,655
  5,955
  6,268
  6,596
Tax expense, $m
  114
  274
  301
  330
  360
  392
  425
  459
  495
  532
  570
  610
  652
  695
  740
  787
  835
  886
  938
  993
  1,050
  1,110
  1,172
  1,237
  1,305
  1,375
  1,449
  1,527
  1,608
  1,692
  1,781
Net income, $m
  401
  741
  815
  893
  974
  1,060
  1,149
  1,241
  1,337
  1,437
  1,541
  1,650
  1,762
  1,879
  2,001
  2,127
  2,258
  2,395
  2,537
  2,685
  2,840
  3,001
  3,169
  3,344
  3,527
  3,719
  3,919
  4,128
  4,347
  4,576
  4,815

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
  7,593
  8,444
  9,338
  10,275
  11,254
  12,275
  13,339
  14,446
  15,597
  16,794
  18,038
  19,330
  20,673
  22,070
  23,521
  25,032
  26,603
  28,240
  29,944
  31,720
  33,572
  35,504
  37,521
  39,626
  41,826
  44,124
  46,527
  49,040
  51,669
  54,421
Adjusted assets (=assets-cash), $m
  6,782
  7,593
  8,444
  9,338
  10,275
  11,254
  12,275
  13,339
  14,446
  15,597
  16,794
  18,038
  19,330
  20,673
  22,070
  23,521
  25,032
  26,603
  28,240
  29,944
  31,720
  33,572
  35,504
  37,521
  39,626
  41,826
  44,124
  46,527
  49,040
  51,669
  54,421
Revenue / Adjusted assets
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
Average production assets, $m
  4,169
  4,665
  5,187
  5,737
  6,312
  6,914
  7,541
  8,194
  8,875
  9,582
  10,317
  11,081
  11,875
  12,700
  13,558
  14,450
  15,378
  16,343
  17,349
  18,396
  19,487
  20,625
  21,812
  23,051
  24,344
  25,695
  27,107
  28,584
  30,127
  31,743
  33,433
Working capital, $m
  1,590
  828
  920
  1,018
  1,120
  1,227
  1,338
  1,454
  1,575
  1,700
  1,831
  1,966
  2,107
  2,253
  2,406
  2,564
  2,729
  2,900
  3,078
  3,264
  3,458
  3,660
  3,870
  4,090
  4,319
  4,559
  4,810
  5,072
  5,346
  5,632
  5,932
Total debt, $m
  2,597
  2,248
  2,673
  3,119
  3,586
  4,075
  4,584
  5,115
  5,667
  6,242
  6,839
  7,460
  8,105
  8,775
  9,472
  10,196
  10,950
  11,734
  12,551
  13,401
  14,287
  15,212
  16,176
  17,182
  18,233
  19,330
  20,477
  21,676
  22,930
  24,242
  25,615
Total liabilities, $m
  4,138
  3,789
  4,214
  4,660
  5,127
  5,616
  6,125
  6,656
  7,208
  7,783
  8,380
  9,001
  9,646
  10,316
  11,013
  11,737
  12,491
  13,275
  14,092
  14,942
  15,828
  16,753
  17,717
  18,723
  19,774
  20,871
  22,018
  23,217
  24,471
  25,783
  27,156
Total equity, $m
  4,251
  3,804
  4,230
  4,678
  5,148
  5,638
  6,150
  6,683
  7,237
  7,814
  8,414
  9,037
  9,684
  10,357
  11,057
  11,784
  12,541
  13,328
  14,148
  15,002
  15,892
  16,820
  17,788
  18,798
  19,853
  20,955
  22,106
  23,310
  24,569
  25,886
  27,265
Total liabilities and equity, $m
  8,389
  7,593
  8,444
  9,338
  10,275
  11,254
  12,275
  13,339
  14,445
  15,597
  16,794
  18,038
  19,330
  20,673
  22,070
  23,521
  25,032
  26,603
  28,240
  29,944
  31,720
  33,573
  35,505
  37,521
  39,627
  41,826
  44,124
  46,527
  49,040
  51,669
  54,421
Debt-to-equity ratio
  0.611
  0.590
  0.630
  0.670
  0.700
  0.720
  0.750
  0.770
  0.780
  0.800
  0.810
  0.830
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.890
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
  0.930
  0.930
  0.930
  0.940
  0.940
Adjusted equity ratio
  0.465
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501
  0.501

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  401
  741
  815
  893
  974
  1,060
  1,149
  1,241
  1,337
  1,437
  1,541
  1,650
  1,762
  1,879
  2,001
  2,127
  2,258
  2,395
  2,537
  2,685
  2,840
  3,001
  3,169
  3,344
  3,527
  3,719
  3,919
  4,128
  4,347
  4,576
  4,815
Depreciation, amort., depletion, $m
  568
  467
  520
  575
  632
  692
  755
  820
  888
  959
  1,033
  1,108
  1,188
  1,270
  1,356
  1,445
  1,538
  1,634
  1,735
  1,840
  1,949
  2,062
  2,181
  2,305
  2,434
  2,570
  2,711
  2,858
  3,013
  3,174
  3,343
Funds from operations, $m
  -530
  1,208
  1,335
  1,467
  1,607
  1,752
  1,903
  2,061
  2,226
  2,396
  2,574
  2,758
  2,950
  3,149
  3,356
  3,572
  3,796
  4,029
  4,272
  4,525
  4,788
  5,063
  5,350
  5,649
  5,962
  6,288
  6,630
  6,986
  7,360
  7,750
  8,159
Change in working capital, $m
  -853
  88
  93
  97
  102
  107
  111
  116
  121
  126
  130
  136
  141
  146
  152
  158
  165
  171
  178
  186
  194
  202
  211
  220
  230
  240
  251
  262
  274
  287
  300
Cash from operations, $m
  323
  1,120
  1,242
  1,370
  1,504
  1,645
  1,792
  1,945
  2,105
  2,271
  2,444
  2,623
  2,809
  3,003
  3,204
  3,414
  3,631
  3,858
  4,093
  4,339
  4,595
  4,861
  5,139
  5,430
  5,732
  6,049
  6,379
  6,725
  7,086
  7,463
  7,859
Maintenance CAPEX, $m
  0
  -417
  -466
  -519
  -574
  -631
  -691
  -754
  -819
  -887
  -958
  -1,032
  -1,108
  -1,188
  -1,270
  -1,356
  -1,445
  -1,538
  -1,634
  -1,735
  -1,840
  -1,949
  -2,062
  -2,181
  -2,305
  -2,434
  -2,570
  -2,711
  -2,858
  -3,013
  -3,174
New CAPEX, $m
  -910
  -496
  -523
  -549
  -575
  -601
  -627
  -654
  -680
  -707
  -735
  -764
  -794
  -825
  -858
  -892
  -928
  -966
  -1,005
  -1,047
  -1,091
  -1,138
  -1,187
  -1,239
  -1,293
  -1,351
  -1,412
  -1,476
  -1,544
  -1,615
  -1,690
Cash from investing activities, $m
  -952
  -913
  -989
  -1,068
  -1,149
  -1,232
  -1,318
  -1,408
  -1,499
  -1,594
  -1,693
  -1,796
  -1,902
  -2,013
  -2,128
  -2,248
  -2,373
  -2,504
  -2,639
  -2,782
  -2,931
  -3,087
  -3,249
  -3,420
  -3,598
  -3,785
  -3,982
  -4,187
  -4,402
  -4,628
  -4,864
Free cash flow, $m
  -629
  208
  252
  302
  355
  413
  473
  538
  605
  676
  750
  827
  907
  990
  1,076
  1,166
  1,258
  1,354
  1,454
  1,557
  1,664
  1,775
  1,890
  2,010
  2,134
  2,263
  2,398
  2,538
  2,683
  2,835
  2,994
Issuance/(repayment) of debt, $m
  1,225
  406
  425
  446
  467
  488
  510
  531
  552
  575
  597
  621
  645
  670
  697
  724
  754
  784
  817
  851
  886
  924
  964
  1,006
  1,051
  1,098
  1,147
  1,199
  1,254
  1,312
  1,373
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
  406
  425
  446
  467
  488
  510
  531
  552
  575
  597
  621
  645
  670
  697
  724
  754
  784
  817
  851
  886
  924
  964
  1,006
  1,051
  1,098
  1,147
  1,199
  1,254
  1,312
  1,373
Total cash flow (excl. dividends), $m
  846
  614
  677
  748
  823
  901
  983
  1,069
  1,158
  1,251
  1,347
  1,448
  1,552
  1,660
  1,773
  1,890
  2,012
  2,139
  2,270
  2,408
  2,550
  2,699
  2,854
  3,016
  3,184
  3,361
  3,544
  3,737
  3,937
  4,147
  4,367
Retained Cash Flow (-), $m
  -445
  -405
  -426
  -448
  -469
  -490
  -512
  -533
  -555
  -577
  -600
  -623
  -648
  -673
  -700
  -727
  -757
  -787
  -820
  -854
  -890
  -928
  -968
  -1,010
  -1,055
  -1,102
  -1,152
  -1,204
  -1,259
  -1,317
  -1,378
Prev. year cash balance distribution, $m
 
  852
  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
 
  1,061
  251
  300
  354
  411
  471
  536
  603
  674
  748
  824
  904
  987
  1,074
  1,163
  1,255
  1,351
  1,451
  1,554
  1,660
  1,771
  1,886
  2,006
  2,130
  2,259
  2,393
  2,533
  2,678
  2,830
  2,989
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,017
  230
  261
  291
  318
  342
  362
  377
  387
  392
  391
  386
  375
  360
  341
  319
  294
  267
  239
  211
  183
  156
  131
  108
  88
  70
  54
  41
  31
  23
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 A.S. provides mobile telecommunication services for consumer, corporate, and wholesale customers. The company operates in two segments, Turkcell Turkey and Turkcell International. It offers mobile communication and fixed voice services; and broadband services that consist of mobile broadband, fiber to the home/building, and ADSL. The company also provides Turkcell App, an application store for users to download mobile applications; Turkcell TV+, which enables its subscribers to watch live television channels and on-demand video content on their mobile devices and through IPTV platform; Turkcell Music, a digital music platform to stream and download music; Goals on Your Mobile, a sports application for soccer clubsÂ’ fans; a range of cloud solutions; and Mobile Finance Business payment solutions. In addition, it offers Real-time Enterprise solutions; Super Esnaf, a location-based application, which provides the geographic information of small business owners; Turkcell Smart Enablers, a mobile-based network that offers companies to know their customers; Turkcell Smart Map service; location based services; Turkcell Smart Education, an education platform; Mobile Signature, which enables mobile subscribers to sign on electronic documents and transactions; collocation, infrastructure, backup, and security services; Machine to Machine platform to manage devices; mobile marketing services; and Turkcell Partner Network, a business ecosystem. Further, the company provides international roaming, and wholesale voice and data services. As of December 31, 2015, it had approximately 17.4 million prepaid subscribers and 16.6 million postpaid subscribers; and approximately 1.5 million fixed line customers. The company covers 2.4 million homes with its fiber infrastructure. The company was founded in 1993 and is headquartered in Istanbul, Turkey. Turkcell Iletisim Hizmetleri AS operates as a subsidiary of Turkcell Holding AS.

FINANCIAL RATIOS  of  Turkcell Iletisim Hizmetleri ADR (TKC)

Valuation Ratios
P/E Ratio 49.7
Price to Sales 5.2
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 61.6
Price to Free Cash Flow -33.9
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 2%
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. 7.4%
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. 10.7%
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. 28.2%
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 $3793 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 11.9% 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 4.3%, 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 73.4%.

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 6.2% 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 109.9%.

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 19.5%. 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 - $4251 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 865.316 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 $7.8 billion.

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COMPANY NEWS

▶ [$$] 2 Steady Stocks in a Volatile Post-Coup Turkey   [Jul-29-17 12:01AM  Barrons.com]
▶ Turkcell Iletisim Hizmetleri: Second Quarter 2017 Results   [Jul-27-17 11:46AM  Business Wire]
▶ Turkcell Moving Fast on the Way To 5G   [Jun-16-17 10:28AM  Business Wire]
▶ 12 Emerging Market Headlines: Earnings, Oil & Risk   [Apr-26-17 07:04PM  Barrons.com]
▶ Turkcell Files Its 2016 Annual Report on Form 20-F   [Mar-20-17 05:15PM  Business Wire]
▶ Turkcell Earnings Socked By Weak Lira   [Feb-15-17 01:59PM  at Barrons.com]
▶ Turkey: Lira & Stocks Hit New Lows Despite Bank Action   [Jan-10-17 03:59PM  at Barrons.com]
▶ Turkey: Central Bank Holds Rates; Syria Peace?   [Dec-20-16 10:30AM  at Barrons.com]
▶ Is Aramark (ARMK) Worthy of Your Portfolio?   [Dec-01-16 12:06PM  at Insider Monkey]
▶ Turkcell Feud Unresolved as Fridman Buyout Option Expires   [Nov-28-16 01:41PM  at Bloomberg]
▶ S&P Ups Turkey Credit Outlook, Eyes 100,000 In Coup Purge   [Nov-04-16 02:08PM  at Barrons.com]
▶ VimpelCom To Pay U.S. Dividend, Shares Rise 5%   [Nov-03-16 02:26PM  at Barrons.com]
▶ Turkcell Slips 3%, Coup Attempt Hurt 3Q Earnings   [Nov-02-16 12:50PM  at Barrons.com]
▶ Turkcell CEO Kaan Terzioglu Elected to the GSMA Board   [Oct-31-16 08:51AM  Business Wire]
▶ Moodys Maintains Turkcells Investment Grade Rating   [Sep-27-16 04:06PM  Business Wire]
▶ Turkey Market Analysts & Media Silenced In Post-Coup Purge   [Jul-29-16 02:10PM  at Barrons.com]
▶ Turkey: When a Coup Doesnt Destroy a Market   [11:05AM  at 24/7 Wall St.]
▶ [$$] Turkcell Plans Overseas Expansion to Beat Slowing Sales in Turkey   [Jun-30-16 09:56AM  at The Wall Street Journal]
▶ Turkcell Opens Turkeys Largest Data Center   [Jun-03-16 06:36AM  Business Wire]
▶ [$$] Global Telecoms Struggle to Answer Challenge from Messaging Apps   [May-23-16 11:40PM  at The Wall Street Journal]
▶ Bringing 3G Wireless to Remote Regions   [May-10-16 12:34PM  at MarketWatch]
▶ Bringing 3G Wireless to Remote Regions   [12:34PM  at MarketWatch]
▶ [$$] Wireless Firms Roam the Globe for Customers   [May-06-16 12:07AM  at The Wall Street Journal]
▶ Turkcell Iletisim Hizmetleri: First Quarter 2016 Results   [Apr-28-16 10:58AM  Business Wire]
Stock chart of TKC 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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