Daily Brief TMT/Internet: Gumi Inc, Turkcell Iletisim Hizmet As, Turkcell Iletisim Hizmetleri A, Turk Telekomunikasyon As and more

• Strategic Pivot to Web3 and Metaverse: Gumi is aggressively shifting its focus from a reliance on hit-driven mobile games to becoming a comprehensive Web3 enterprise, underscored by strategic partnerships with Square Enix and SBI Holdings, and significant investments in cryptocurrencies like XRP and Bitcoin.
• Financial Volatility and Restructuring: The company has experienced significant financial turbulence, with a substantial net loss in FY24 driven by underperforming titles, leading to the discontinuation of flagship games, workforce reductions, and a halt in the development of high-risk original titles.
• Leveraging Existing IP for Future Growth: Despite sunsetting major titles, Gumi plans to leverage its well-known ‘Brave Frontier’ IP for a new Web3 game, ‘Brave Frontier Versus’, in partnership with the Sui Foundation, aiming to blend its established brand with new blockchain-based gaming experiences.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Dominant Market Leader Facing Macro Headwinds: Turkcell is the leading integrated telecommunications and technology provider in Turkey, commanding a significant market share. However, its performance is intrinsically linked to the volatile Turkish economy, facing challenges from hyperinflation and currency depreciation.
• Strategic Pivot to Digital Services Driving Growth: The company is successfully transitioning from a traditional telecom operator to a digital services provider. Its portfolio of digital offerings, including fintech (Paycell), streaming (TV+), and messaging (BiP), represents a key growth driver and diversifies revenue streams away from core telecom services.
• Strong Financial Performance and Shareholder Returns: Despite the challenging environment, Turkcell has demonstrated a robust growth track record in revenue and profitability. The company maintains a commitment to shareholder returns, evidenced by a consistent and growing dividend.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Market Leader Facing Macro Headwinds: Turkcell is the leading mobile operator in Turkey with a strong market share of approximately 41% and a growing fiber and digital services portfolio. However, its financial performance is significantly impacted by Turkey’s hyperinflationary environment and currency volatility, which creates substantial uncertainty.
• Strategic Focus on Digital and Fiber Expansion: The company is strategically pivoting from a traditional telecom operator to a digital services provider, focusing on high-growth areas like FinTech (Paycell), streaming (TV+), cloud services, and data centers. Continued investment in its fiber network, which passes over 6.2 million homes, is key to capturing high-value broadband customers and supporting its digital ecosystem.
• Valuation Attractive but Governance and Capex Risks Remain: The stock appears attractively valued, reflected in a high Smartkarma value score and low valuation multiples. However, significant upcoming capital expenditures for the 5G rollout and concerns regarding the influence of its largest shareholder, the Turkey Wealth Fund (TWF), on capital allocation decisions pose notable risks for investors.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Dominant Integrated Operator with Strong Growth: Turk Telekom is Turkey’s largest integrated telecommunications operator, benefiting from a vast fiber network and a leading position in fixed-line services. The company has demonstrated exceptional revenue growth, driven by inflationary pricing and rising data demand, although net income growth has been more modest.
• State Ownership and Strategic Importance: With the Turkey Wealth Fund (TWF) as the majority shareholder (61.68%), the company is of high strategic importance to the nation’s digitalization and 5G rollout. This provides a degree of stability but also introduces potential government influence on strategy and dividend policy.
• Challenging Macro and Dividend Outlook: The company operates in a high-inflation, volatile macroeconomic environment in Turkey, which poses significant risks. Reflecting a focus on deleveraging and funding future investments like the 5G rollout, the company has suspended dividend payments, a key consideration for income-focused investors.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.