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TURKCELL
SECOND QUARTER OF 2015 July 30, 2015
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This presentation may contain statements that are forward looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially due to factors discussed in this presentation, in our press release, in the Risk Factors section of Turkcell’s most recent Form 20-F, or in other reports and filings with the US Securities and Exchange Commission. We undertake no duty to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Please note that all financial data is consolidated, whereas non-financial data is unconsolidated unless otherwise specified.
NOTICE
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BUSINESS OVERVIEW
Kaan Terzioğlu Turkcell CEO
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TURKCELL GROUP: PROGRESSING ON OUR PRIORITIES
SOLIDIFYING OUR POSITION IN TURKEY
New organization structure
More efficient supply chain
POSITIONING AS AN INTEGRATED
COMPANY
Integrated network: Mobile & Fiber
Integrated sales & marketing for mobile and fixed businesses
Focused on end-to-end customer experience
EVALUATING OUR OPTIONS FOR SUBSIDIARIES
Purchased 44.96% of our subsidiary in Ukraine for $100 million
Completed debt restructuring of Astelit & eliminated currency risk in a volatile market
PRIORITIES
PROGRESS
UPCOMING NEAR-TERM AGENDA
• Optimizing capital structure
• Improving working capital need
• Evaluating subsidiary performance and M&A options
• Spectrum auction in Turkey
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Q2 2015 TRY MILLION1
Revenue 2,835 9.2% 205 (23.6%) 54 (10.7%) 3,093 5.8%
% in Total 91.6% 2.8pp 6.6% (2.6pp) 1.7% (0.3pp) 100% -
EBITDA2 915 11.9% 56 (12.9%) 25 (5.4%) 995 9.7%
EBITDA Margin 32.3% 0.8pp 27.2% 3.3pp 45.8% 2.5pp 32.2% 1.2pp
Net Income 585 22.1% 109 n.m 18 (1.6%) 712 44.6%
TURKCELL GROUP: OVERVIEW OF BUSINESS LINES
1 TRY figures are based on IFRS TRY figures 2 EBITDA is a non-GAAP financial measure. Please refer to the press release for the reconciliation of EBITDA to net cash from operating activities
TURKCELL TURKEY
YoY %
OTHER SUBSIDIARIES
YoY %
TURKCELL INTERNATIONAL
YoY %
TURKCELL CONSOLIDATED
YoY %
HIGHLIGHTS OF THE SECOND QUARTER
• Turkcell Turkey: Strong growth driven by growth in mobile (↑47.2%) & fixed broadband (↑30.1%)
• Turkcell Int’l: YoY depreciation of UAH and BYR led to decline in revenues & EBITDA
• Consolidated: Record high second quarter revenue, EBITDA and net income
₋ Consolidated net income increased 44.6% yoy due to strong operational performance along with
translation gain in Q215 (TRY 261 mn) while translation loss (TRY 165 mn) recorded in Q214
6
507
532
550
93 71
92
Q214 Q115 Q215
2,008
2,122
2,206
TRY million
2,595
2,711
2,835
Q214 Q115 Q215
TURKCELL TURKEY1
CONSUMER
CORPORATE
WHOLESALE
TRY million Q215
YoY Growth
↑9.9%
↑2.8% yoy
↑9.5% yoy
↑9.2% yoy
↑8.6%
↓1.2%
1 Turkcell Turkey revenues include eliminations
TURKCELL TURKEY: SEGMENT PERFORMANCE
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BREAKDOWN OF SMS, SERVICES & SOLUTIONS REVENUES
164
136 139 105
142 156
Q214 Q115 Q215
SMS Services & Solutions
434
606 638
179 220 233
Q214 Q115 Q215
Mobil broadband Fixed broadband52%
31% 10% 4% 3% TRY 2,835
mn
Data ↑42.2%
Voice ↓4.2%
YoY Growth
SMS, Services & Solutions ↑9.6%
Other* ↑22.0%
TURKCELL TURKEY: REVENUE BREAKDOWN
REVENUE BREAKDOWN Q215 BREAKDOWN OF DATA REVENUES
Consumer&Corporate
Wholesale ↓1.2%
↑9.2% yoy
↑30.1%
↑47.2%
↓15.3%
↑48.9%
YoY Growth
YoY Growth
TRY Million TRY Million
TRY Million
*Other includes Turkcell Satış (retail store in telecommunications), Global Bilgi (call center services), Rehberlik Hizmetleri (information services) and Turkcell Teknoloji (research and development)
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TURKCELL TURKEY: OPERATIONAL HIGHLIGHTS
SUBSCRIPTION
47% 37% 33%
53% 52% 51%
12% 16%
Q214 Q115 Q215Single Play Double Play Triple Play
Share in total subscribers
FIBER NET ADDITIONS
MULTIPLAY3
~140K
TOTAL
34.0 mn
PREPAID ↓624K
ADSL
QoQ NET ADD
MOBILE
18.1 mn
15.9 mn POSTPAID ↑334K
↓290K
FIBER
FIXED 1.3 mn
↑42K
TV1 ↑40K
↑74K
1 TV subscribers are also included in total fiber subscribers 2 Fixed residential ARPU of Fiber and ADSL blended 3 Triple play consists of fixed voice, fixed data and TV. Totals may have rounding differences 4 Including mobile TV and web TV users
818K
528K ↑32K
Total TV4
~210K
ARPU ↑8.6% YoY TRY24.0
ARPU2 ↑1.9% YoY TRY47.9
39 33
50 41 42
11 22
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-2 2
Q214 Q314 Q414 Q115 Q215Turkcell Superonline TTNet
Market Share
↓47%
↑53%
Thousand
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Total Telecom Market
TURKCELL TURKEY: REVENUE SHARE TREND
1 Share calculation based on operators announcements
46.3% 45.3% 44.3%
35.0% 35.6% 35.6%
18.6% 19.1% 20.1%
Q213 Q214 Q215
Vodafone
Turkcell Turkey
Turk Telekom Group
REVENUE SHARE OF MAJOR PLAYERS1
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Q214 Q215 YoY%
Revenue 163 190 16.7%
EBITDA 0.7 4 500.0%
EBITDA Margin 0.4% 2.2% 1.8pp
• UAH/USD appreciated 10% QoQ
• Solid operational performance
o 10.6 million subscribers1 (↑11.6% yoy)
o 293K quarterly net adds
TURKCELL INTERNATIONAL:OPERATIONS IN UKRAINE AND BELARUS
UAH MILLION Q214 Q215 YoY%
Revenue 961 1,076 11.9%
EBITDA 277 324 16.9%
EBITDA Margin 28.9% 30.2% 1.3pp
ASTELIT
BYR BILLION
BeST 2
• BYR/USD devaluated 4% QoQ
• 1.1 million subscribers 1
o 26.7K net add
HIGHLIGHTS OF ASTELIT HIGHLIGHTS OF BeST
(1) 3m active subscribers (2) As Inflationary accounting is ended starting from Q115, Q214 figures presented in the table are not inflation adjusted for comparative purposes
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Acquired 44.96% stake of Astelit for US$ 100 million
Restructured Astelit’s debt
• Eliminated foreign currency risk on P&L
• Manageable debt level: 3.6 billion UAH
STRENGTHENING OUR POSITION IN THE REGION
100% owned by Turkcell
Became the first operator to launch 3G+ in Ukraine on June 4th
• Ability to provide 3G services to ~2.7 million customers
• Strong demand underlined by growth trend in data
• 43% smartphone penetration (3-month active)
• 16% data as a percentage of revenues
• Flexibility in decision making to strengthen our position in the region
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REVENUE 12,800 – 13,100 6%-9% growth
EBITDA 3,850 – 4,050 31%-32% margin
OPERATIONAL CAPEX / SALES ~20%
TURKCELL GROUP: 2015 GUIDANCE ON TRACK
TRY MILLION GUIDANCE*
**
REMARKS
(*)This estimate is based on our current expectations regarding market conditions and assumption that current market conditions continue in 2015 for each of our different businesses. No assurance can be given that actual results will be consistent with such expectations. For a discussion of factors that may affect our results, see our latest Annual Report on Form 20-F filed with U.S. Securities and Exchange Commission, and in particular the risk factor section therein.
** Excluding licence fees
For Business Discussion & Strategy
SAVE THE DATE! November 9, 2015 London
«TURKCELL Capital Markets Day»
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FINANCIAL OVERVIEW
Murat Erden Turkcell CFO
NOTICE:
Please note that all financial data are consolidated whereas non-financial data are unconsolidated unless otherwise specified.
EBITDA is a non-GAAP financial measure. Please refer to the press release for the reconciliation of EBITDA to net cash from operating activities.
All non-financial data are unconsolidated, prepared in accordance with IFRS and expressed in US$ and/or TRY.
The figures used in this presentation are rounded while percentage changes are calculated based on the figures disclosed in the Q2 2015 result announcement press release.
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907
995 170
(85) (15) 18
EBITDAQ214
Δ in Revenues
Δ in Direct cost of
revenues*
Δ in G&A exp.
Δ in S&M exp.
EBITDAQ215
TURKCELL GROUP: REVENUE & EBITDA DEVELOPMENT
TRY MILLION
*Excluding depreciation and amortization
REVENUE EBITDA
TRY MILLION
2,923
3,093 239
(63) (6)
RevenueQ214
Δ in Turkcell Turkey
Δ in Turkcell International
Δ in Other Subsidiaries
RevenueQ215
Revenue ↑5.8% EBITDA Margin ↑1.2pp
Astelit (43)
EBITDA ↑9.7%
Margin 31.0%
Margin 32.2%
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TRY MILLION Q2 2014 Q2 2015 YoY%
EBITDA 907 995 9.7%
Depreciation and
amortization (386) (410) 6.0%
Net finance inc / (exp) 47 397 752.1%
Share of profit of associates 74 94 27.4%
Other inc/ (exp) (92) (123) 34.1%
Monetary gains / (losses) 60 - -
Non-controlling interests 50 (101) (302.6%)
Income tax exp (167) (141) (15.6%)
Net Income 492 712 44.6%
TURKCELL GROUP: NET INCOME
NET INCOME DEVELOPMENT
12.6%
16.8%
23.9%
8.3%
4.7%
23.0%
Q1
14
Q2
14
Q3
14
Q4
14
Q1
15
Q2
15
NET INCOME MARGIN
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TURKCELL GROUP: BALANCE SHEET HIGHLIGHTS
-1.2 -1.4
-1.4
-1.1
-0.07
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12
20
13
20
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Q1
15
Q2
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NET DEBT/EBITDA2
TRY MILLION Q2 2014 Q2 2015
Total Cash 7,917 4,298
Total Assets 21,767 20,661
Total Debt 3,460 4,014
Net Cash 4,457 284
Total Equity 15,545 13,499
SUMMARY BALANCE SHEET
After dividend payment
MAJOR CASH OUTFLOW ITEMS
Dividend (2010-2014) TRY3,925 mn
Capex1 TRY957 mn
Corporate tax payment of Turkcell Iletisim TRY218 mn
Increase in trade payables TRY236 mn
1 Including operational and non-operational capex 2 Annualized EBITDA used for Q115 and Q215
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THANK YOU For further information please e-mail
[email protected] or call Turkcell Investor Relations at
(+90 212 313 1888) Please download our IR app via below QR codes For Android For iOS
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APPENDIX
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SUMMARY INCOME STATEMENT AS PER CMB1 FINANCIALS
1 Capital Markets Board of Turkey 2 Depreciation and amortization is included
Summary income statement Q2 2014 Q1 2015 Q2 2015 YoY (%) QoQ (%)
Revenue 2,923.0 2,978.2 3,092.9 6% 4%
Direct Cost of Revenues2 (1,788.7) (1,828.0) (1,897.2) 6% 4%
S&M (477.2) (476.3) (458.9) (4%) (4%)
G&A (135.8) (140.8) (150.4) 11% 7%
EBITDA 907.0 926.8 994.8 10% 7%
EBITDA Margin 31.0% 31.1% 32.2% 1.2pp 1.1pp
Net Income 492.7 141.6 712.5 45% 403%
(TRY MILLION)
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SUMMARY INCOME STATEMENT AS PER IFRS FINANCIALS
1 Depreciation and amortization is included
($ MILLION)
Summary income statement Q2 2014 Q1 2015 Q2 2015 YoY (%) QoQ (%)
Revenue 1,378.7 1,209.9 1,163.9 (16%) (4%)
Direct Cost of Revenues1 (843.9) (743.0) (714.4) (15%) (4%)
S&M (225) (193.3) (172.8) (23%) (11%)
G&A (64.1) (57.2) (56.6) (12%) (1%)
EBITDA 427.8 376.6 374.3 (13%) (1%)
EBITDA Margin 31.0% 31.1% 32.2% 1.2pp 1.1pp
Net Income 232.5 48.1 268.5 15% 458%
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CONSOLIDATED BALANCE SHEET ($ MILLION)
Consolidated Balance Sheet ($ mn) 2Q 2014 1Q 2015 2Q 2015 YoY (%) QoQ (%)
Cash & Bank 3,728 3,131 1,600 (57%) (49%)
CURRENT ASSETS 5,673 5,120 3,507 (38%) (32%)
Fixed Assets, Net 3,671 3,276 3,393 (8%) 4%
Other Long Term Assets 907 791 791 (13%) 0%
TOTAL NON-CURRENT ASSETS 4,578 4,067 4,184 (9%) 3%
TOTAL ASSETS 10,251 9,186 7,691 (25%) (16%)
S/T Debt 1,106 1,371 1,267 15% (8%)
TOTAL CURRENT LIABILITIES 2,075 3,732 2,150 4% (42%)
L/T Debt 524 211 228 (56%) 8%
TOTAL NON-CURRENT LIABILITIES 855 501 516 (40%) 3%
MINORITY INTEREST (138) (203) -223 62% 10%
Share Capital 1,636 1,636 1,636 0% 0%
TOTAL EQUITY 7,321 4,953 5,025 (31%) 1%
TOTAL EQUITY AND LIABILITIES 10,251 9,186 7,691 (25%) (16%)
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2.31 2.54 2.90
2.92 2.35
2.94 2.82 2.98
2012 2013 2014 2Q15
Average Period-End
CURRENCY TRENDS
USD / TRY EUR / TRY
USD / BYR USD / UAH
1.79 1.91 2.19
2.66 1.78 2.13 2.32
2.69
2012 2013 2014 2Q15
8,326 8,883 10,255
14,801 8,570 9,510 11,850
15,346
2012 2013 2014 2Q15
7.99 7.99 11.87
21.44
7.99 7.99
15.77
21.02
2012 2013 2014 2Q15
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TRY MILLION
Q2 2013 Q2 2014 Q2 2015
TURKCELL GROUP 2,855 2,923 3,093
TURKCELL TURKEY1 2,526 2,595 2,835
CONSUMER 1,995 2,008 2,206
CORPORATE 465 507 550
WHOLESALE 79 93 92
TURKCELL
INTERNATIONAL 286 268 205
OTHER SUBSIDIARIES2 43 60 54
TURKCELL GROUP: HISTORICAL REVENUE BREAKDOWN
1 Turkcell Turkey revenues include eliminations 2 Other subsidiaries include betting business in Turkey and Azerbaijan and Group eliminations