26 Ocak 2012 Perşembe

Teknik Analiz - Türk Telekom

Neutral 2
Price (24 Jan 12) TL7.44
Target price TL7.40
Expected share price return -0.5%
The Turkish Government has pledged to connect 620k classrooms to the Internet; and equip them with PCs as well as to provide ‘free tablets’ for essentially all of; the country’s 16-18m school children at a cost of TL8bn. Turk Telekom is a top; contender for provision of fixed-line and WiFi connectivity in the classrooms.; Turk Telekom recently launched its Lokum offer, providing free modems and free; access to selected Web content to all its fixed-line subscribers. This is targeted to; approximately 6.4m fixed-line voice customers, who currently do not use ADSL and; hence Turk Telekom risks losing them to mobile rivals. As part of the offer such; subscribers can purchase full Internet access for TL1/hour and TL3/day.; Globally unique initiatives. Both initiatives are globally unique not only due to the; government's willingness to spend public cash on internet education in such scale, but; also because this may lead to a breach of net neutrality in fixed-line, in our view, as a; significant part of society may end up with restricted internet access (due to Lokum or; ‘voluntary’ government filters). The plans, in our view, raise a range of questions including those about funding; efficiency of government-sponsored projects; popularity of the locally produced tablets that all pupils may have to use as well as popularity of restricted versions of the internet.; Turk Telekom hopes to trade short-term margin erosion for growth in ADSL; business, de facto basing its growth strategy on a government policy. Turk; Telekom acknowledges that the internet for schools and Lokum projects will affect its; fixed-line margins, not even mentioning new competition in the fixed-line business; segment from Turkcell and Vodafone. However, the company believes that the projects; will significantly accelerate ADSL growth, boosting household penetration from around; 40% to 50-60% in the coming years. As Turk Telekom dominates the ADSL market, this; would lead to 1.7-3.5m ADSL adds and an estimated 6-13% revenue boost. We expect; 1.3m ADSL net adds by 2015, so the company’s scenario could boost annual top line; growth by 1-2% vs our forecast. However, we think that more evidence is needed; before this can be priced in, particularly given the current subscriber dynamics in fixedline voice and ADSL and use of ‘illegal’ ADSL sharing in Turkey. Lokum’s main purpose may actually be protection of voice subscribers as opposed to growth in ADSL.; We continue to see mobile data as the next main profitable growth opportunity in; telcos; we are still to be convinced that the Turkish Government’s initiative may; change this. Although Turk Telekom’s top line is likely to benefit from the government; initiatives, we remain slightly cautious about FM synergies and any unorthodox fixedline; value creation opportunities, also thinking that Turk Telekom’s dominance premium; is priced in. Meanwhile, distribution of free tablets and tolerance of non-neutrality may; in our view have a positive impact on the smartphone and mobile data markets.


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