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TURKCELL
THIRD QUARTER OF 2015 October 27, 2015
Turkcell | Third Quarter 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
Turkcell | Third Quarter 2015
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Acquired largest spectrum in 4.5G auction
Upgraded to investment grade by 3 rating agencies
Raised $2.4 billion debt & issued $500 million Eurobond1
Restructured debt of BeST in Belarus1
Applied to establish consumer finance company
Completed
EXECUTION CONTINUES FOR MORE VALUE
Continued Execution in Q3 2015
1 Completed in October 2015
• Convergence of
• Sales channels
• Organizational structure
• Mobile and fixed network
• Decrease in distributor number to 2 from 5
• Increased ownership to 100% in Astelit and acquired 3G license
• Debt restructuring of Astelit
Turkcell | Third Quarter 2015
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9M 2015 Growth YoY %
9,435 5.5%
3,082 8.4%
32.7% 0.9pp
1,484 (7.7%)
1,860 15.6%
CONSOLIDATED TRY MILLION1 Q3 2015
Growth YoY %
Revenue 3,364 6.4%
EBITDA 1,161 10.5%
EBITDA Margin 34.5% 1.3pp
Net Income 630 (16.5%) Net Income excl.
non-recurring items2 707 17.8%
1 TRY figures are based on IFRS TRY figures 2 Net Income excluding FX gain/(loss) (inc tax and minority impact), monetary gain (inflation impact), interest Income on time deposit & one off items
9 MONTHS QUARTER
Highlights of the Quarter
FINANCIAL HIGHLIGHTS
All time highest revenue and EBITDA
1.3pp EBITDA margin improvement through efficiency measures & more value focus
Turkcell | Third Quarter 2015
6 1 TRY figures are based on IFRS TRY figures
TURKCELL TURKEY: STRONG GROWTH IN ALL SEGMENTS
TURKCELL TURKEY1
2,797 2,771 2,711 2,835
3,074
943 812 831 915
1,062
34%
29% 31%
32%
35%
Q314 Q414 Q115 Q215 Q315
Revenue EBITDA EBITDA Margin
9.9% YoY
120 70 71 92
130
Q314 Q414 Q115 Q215 Q315
WHOLESALE
8.5% YoY
(TRY MILLION)
4.2%
% in Turkcell Turkey
12.6% YoY
525
547 532
550 560
2,167 2,168 2,122
2,206
2,402 CONSUMER
CORPORATE
10.9% YoY
6.5% YoY
SEGMENT REVENUES
78.1%
18.2%
(TRY MILLION)
Turkcell | Third Quarter 2015
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50%
32% 10% 4% 4% TRY 3,074
mn
1 Other includes Turkcell Satış (retail store in telecommunications), Global Bilgi (call center services), Rehberlik Hizmetleri (information services) and Turkcell Teknoloji (research and development) Total may have rounding differences
TURKCELL TURKEY: DATA & SERVICES DRIVE GROWTH
YoY Growth Consumer&Corporate
Data ↑34.2%
Voice ↓2.0%
Services&Solutions ↑11.3%
Other1 ↑18.5%
Wholesale ↑8.5%
530 567 606 638 727
196 214
220 233
247
Q314 Q414 Q115 Q215 Q315
Mobil broadband Fixed broadband
34.2%
YoY
26.0%
37.2%
975
780
REVENUE BREAKDOWN Q315 DATA REVENUES TRY MILLION TRY MILLION
9.9% YoY
726
826 871
Turkcell | Third Quarter 2015
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125 136
142
156
176
Q314 Q414 Q115 Q215 Q315
1 Includes BIP 2.0 & 3.0 2 Excluding SMS revenues
TURKCELL TURKEY: FOCUS ON SERVICES CONTINUED
MOBILE SERVICES SERVICES REVENUES2
TRY MILLION
40.3% YoY
1.3M Active Users
Download 1.6M Turkcell Music
Smart Storage
Instant Messaging
Download1 1.4M
Launched in Germany & Northern Cyprus
Soon in Ukraine & Belarus!
New features: Voice & Video Call
41% of users are non-Turkcell
Turkcell | Third Quarter 2015
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62.0 57.0 64.8
172.4
82.8 110.2
Turkcell Vodafone Avea
234.4
4.5G tender
175.0
Before tender
Total
139.8 0.3
0.4 0.5
Turkcell Vodafone Avea
UNIT PRICES - per MHz per Subs FREQUENCY BREAKDOWN EUR
Largest «technology agnostic» frequency acquired
Highest speed (375 Mbps) through carrier aggregation
Only operator to provide 1Gbps speed, with supported terminals
Only operator in 2100 MHz, leader in 3G with 6 carriers
1.6 bn Euro License fee to be paid in 4 installments
4.5G services to commence in April’16
TURKCELL TURKEY: LARGEST FREQUENCY & HIGHEST SPEED
Turkcell | Third Quarter 2015
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34.7 34.6 34.3 34.0 34.2
14.8 15.2 15.5 15.9 16.1
43% 44% 45%
47% 47%
Q314 Q414 Q115 Q215 Q315
Total subscriber Postpaid subscriber
Postpaid share (%)
1,101 1,191
1,272 1,346 1,419
686 735 776 818 852
Q314 Q414 Q115 Q215 Q315
Total subscriber Fiber subscriber
MOBILE (MILLION)
TURKCELL TURKEY: ROBUST OPERATIONAL PERFORMANCE
278K QoQ
34K QoQ
FIXED (THOUSAND)
ARPU (TRY) Q314 Q414 Q115 Q215 Q315 YoY Growth
Mobile Blended 23.8 23.0 22.7 24.0 26.1 9.7%
Postpaid 39.4 38.0 36.9 38.0 40.4 2.5%
Prepaid 12.4 11.6 11.3 12.2 13.5 8.9%
Fixed Residential 47.3 48.1 47.1 47.9 49.1 3.8%
74K QoQ
271K QoQ
Turkcell | Third Quarter 2015
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44% 40% 37% 33% 30%
54% 52%
52% 51% 51%
2% 7% 12% 16% 19%
Q314 Q414 Q115 Q215 Q315
Single Play Double Play Triple Play**
TURKCELL TURKEY: FOCUS ON MULTIPLAY OFFERINGS
INCREASE IN TRIPLE PLAY TURKCELL TV+
131K QoQ net add
Q314 Q414 Q115 Q215 Q315
Turkcell TV* 116K 138K 165K 211K 342K
*Including IPTV, mobile and web subscribers **Triple play consists of fixed voice, fixed data and TV
% in fiber residential subscribers
3pp QoQ
Turkcell | Third Quarter 2015
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305
254
193 205
235
74 62 53 56
70
24.3%
24.6%
27.5% 27.2%
29.6%
Q314 Q414 Q115 Q215 Q315
Revenue EBITDA EBITDA Margin
TURKCELL INTERNATIONAL: IMPROVED PROFITABILITY
TURKCELL INTERNATIONAL
TRY MILLION
22.9% YoY
16.8%
UKRAINE
BELARUS
SEGMENT HIGHLIGHTS
UAH MILLION Q315 YoY Growth
Revenue 1,183 3.3%
EBITDA 412 14.0%
EBITDA Margin 34.9% 3.3pp
Q315 YoY Growth
Revenue 227 16.7%
EBITDA 5 26.3%
EBITDA Margin 2.1% 0.1pp
BYR BILLION
67.3%
% in Turkcell International
6.0% YoY
14.2%
NORTHERN CYPRUS Q315 YoY Growth
Revenue 33.3 (6.7%)
EBITDA 12.7 (10.6%)
EBITDA Margin 38.0% (1.8pp)
TL MILLION
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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.
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 Q3 2015 result announcement press release.
Turkcell | Third Quarter 2015
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1,050
1,161 202
(83) (30) 22
EBITDAQ314
Δ in Revenues
Δ in Direct cost of
revenues*
Δ in G&A exp.
Δ in S&M exp.
EBITDAQ315
3,162
3,364 278
(70) (6)
RevenueQ314
Δ in Turkcell Turkey
Δ in Turkcell International
Δ in Other Subsidiaries
RevenueQ315
TURKCELL GROUP: REVENUE & EBITDA DEVELOPMENT
*Excluding depreciation and amortization
Margin 33.2%
Margin 34.5%
REVENUE EBITDA
TRY MILLION TRY MILLION
1.3pp EBITDA Margin
6.4% Revenue
Turkcell | Third Quarter 2015
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755
630
86 (69) 13
(43)
(48) 33 (97 )
Net incomeQ314
Δ in EBIT Δ in Interest Inc./Exp.
Δ in Equity in
Net Inc./Loss
Δ in FX Gain/Loss
Δ in Monetary Gain/Loss
Δ in Taxation Δ in Other Inc/Exp.
Net incomeQ315
NET INCOME
TURKCELL GROUP: NET INCOME DEVELOPMENT
∆ in interest income (51) ∆ in interest expense (18)
TRY MILLION
Minority impact due to increase in Astelit’s
ownership (63)
Turkcell | Third Quarter 2015
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4,298 3,902
1,161 (634) 128 (955) (96)
Q215 EBITDA Capex* Netinterestincome
Netchange in
debt
Othercash flow
items
Q315
TURKCELL GROUP: BALANCE SHEET HIGHLIGHTS
Q3 2014 Q3 2015
Total Cash 8,692 3,902
Total Assets 22,699 20,579
Total Debt 3,545 3,467
Net Cash 5,147 436
Total Equity 16,223 13,798
SUMMARY BALANCE SHEET
MAJOR CASH FLOW ITEMS
Net debt repayment of TRY 955 million TL
Astelit acquisition TRY 268 million TL
Capex1 TRY634 mn
Corporate tax payment of Turkcell Iletisim TRY110 mn
Foreign currency valuation impact TRY222mn
1 Including operational and non-operational capex
TRY MILLION
CASH DEVELOPMENT
Turkcell | Third Quarter 2015
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17%
83%
Long Term Short Term
RESILIENT INVESTMENT GRADE PROFILE
ONLY TURKISH COMPANY WITH INVESTMENT GRADE FROM THREE RATING AGENCIES
BBB- Stable
BBB- Stable
Baa3 Negative
81%
19%
PRIOR PROSPECTIVE1
DEBT MATURITY
1) Club Loan –Sept 2015
US$ 500 million and EUR 445 million
CAPEX and inorganic growth opportunities
2) China Development Bank - Oct 2015
EUR 500 million – Debt restructuring
EUR 750 million - CAPEX
3) Bond - Oct 2015
US$ 500 million
4.5G payment and inorganic growth opportunities 1 In the case of 500 mn USD bond and 500 mn EUR CDB loan are utilized
Turkcell | Third Quarter 2015
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INCREMENTAL PROGRESS ON EBITDA LED TO GUIDANCE UPGRADE
33.2%
29.6%
31.1% 32.2%
34.5%
31.1% 30.9% 31.1% 31.2% ̴32%-32.5%
Q314 Q414 Q115 Q215 Q315 FY11 FY12 FY13 FY14 FY15E
CONSOLIDATED EBITDA MARGIN
REVENUE GROWTH 5.5% 6%-9% Turkcell Turkey ~10% Turkcell Group ~6%
EBITDA MARGIN 32.7% 31%-32% 32%-32.5%
OPERATIONAL CAPEX / SALES** 18% ~20% ~20%
(**) Excluding licence fees
9M15 UPDATED
2015 GUIDANCE
(*)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.
TURKCELL GROUP OLD
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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
Turkcell | Third Quarter 2015
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FOR BUSINESS DISCUSSION & STRATEGY UPDATE SAVE THE DATE!
TURKCELL CAPITAL MARKETS DAY
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APPENDIX
Turkcell | Third Quarter 2015
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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 Q3 2014 Q2 2015 Q3 2015 YoY (%) QoQ (%)
Revenue 3,162.2 3,092.9 3,363.8 6% 9%
Direct Cost of Revenues2 (1,879.0) (1,897.2) (1,987.1) 6% 5%
S&M (496.5) (458.9) (474.1) (5%) 3%
G&A (138.0) (150.4) (168.2) 22% 12%
EBITDA 1,050.4 994.8 1,160.6 10% 17%
EBITDA Margin 33.2% 32.2% 34.5% 1.3pp 2.3pp
Net Income 755.7 712.5 631.3 (16%) (11%)
(TRY MILLION)
Turkcell | Third Quarter 2015
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CONSOLIDATED BALANCE SHEET (IFRS) (TRY MILLION)
Consolidated Balance Sheet ( TRY mn) Q3 2014 Q2 2015 Q3 2015 YoY(%) QoQ (%)
Cash & Bank 8,692 4,298 3,902 (55%) (9%)
CURRENT ASSETS 12,977 9,423 9,188 (29%) (2%)
Fixed Assets, Net 7,951 9,115 9,349 18% 3%
Other Long Term Assets 1,771 2,124 2,042 15% (4%)
TOTAL NON-CURRENT ASSETS 9,722 11,238 11,391 17% 1%
TOTAL ASSETS 22,699 20,661 20,579 (9%) 0%
S/T Debt 2,444 3,402 2,884 18% (15%)
TOTAL CURRENT LIABILITIES 4,627 5,774 5,374 16% (7%)
L/T Debt 1,101 612 582 (47%) (5%)
TOTAL NON-CURRENT LIABILITIES 1,849 1,388 1,407 (24%) 1%
MINORITY INTEREST -338 -600 73 (122%) (112%)
TOTAL EQUITY 16,223 13,499 13,798 (15%) 2%
TOTAL EQUITY AND LIABILITIES 22,699 20,661 20,579 (9%) 0%
Turkcell | Third Quarter 2015
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2.31 2.54 2.90 2.92 3.18 2.35
2.94 2.82 2.98 3.42
2012 2013 2014 2Q15 3Q15
Average Period-End
CURRENCY TRENDS
USD / TRY EUR / TRY
USD / BYR USD / UAH
1.79 1.91 2.19
2.66 2.85 1.78 2.13 2.32
2.69 3.04
2012 2013 2014 2Q15 3Q15
8,326 8,883 10,255
14,801 16,428
8,570 9,510 11,850
15,346 17,703
2012 2013 2014 2Q15 3Q15
7.99 7.99 11.87
21.44 21.36
7.99 7.99
15.77
21.02 21.53
2012 2013 2014 2Q15 3Q15
Turkcell | Third Quarter 2015
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TRY MILLION
Q3 2013 Q3 2014 Q3 2015
TURKCELL GROUP 2,981 3,162 3,364
TURKCELL TURKEY1 2,588 2,797 3,074
CONSUMER 2,025 2,167 2,402
CORPORATE 471 525 560
WHOLESALE 105 120 130
TURKCELL
INTERNATIONAL 349 305 235
OTHER SUBSIDIARIES2 44 61 55
TURKCELL GROUP: HISTORICAL REVENUE BREAKDOWN
1 Turkcell Turkey revenues include eliminations 2 Other subsidiaries include information and entertainment services in Turkey and Azerbaijan and Group eliminations