Q4 & 2014 RESULTS February 13, 2015
NOTICE 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. 2
BUSINESS OVERVIEW İlker Kuruöz Turkcell CEO
TURKCELL GROUP: FINANCIAL HIGHLIGHTS QUARTER YEAR Q4 2014 FY 2014 TRY MILLION 1 Growth YoY % Growth YoY % Revenue 3,103 12,044 8% 6% EBITDA 2 917 3,762 8% 6% EBITDA Margin 29.6% 31.2% 0.1pp 0.1pp EBIT 466 2,122 26% 9% Net Income 258 1,865 (49%) (20%) Highlights • Solid performance both in Q414 & FY 2014, guidance delivered • Net income adversely impacted by macroeconomic conditions in international markets 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 4 operating activities.
TURKCELL GROUP: OVERVIEW OF MAJOR BUSINESS LINES FY 2014 TURKCELL ASTELIT TURKCELL TURKEY SUPERONLINE TRY MILLION 1 YoY % YoY % YoY % Revenue 9,369 1,253 758 3% 35% (12%) EBITDA 2,924 3% 327 38% 232 (12%) EBITDA Margin 31.2% 0.2pp 26.1% 0.4pp 30.6% 0.1pp 1,865 88 45 EBIT 1% 64% 7% 78% 10% 6% % of Group Revenues 5 1 TRY figures are based on IFRS TRY figures and standalone figures, does not include consolidation eliminations
TURKCELL GROUP: REVENUE BREAKDOWN OF SEGMENTS Q4 2014 FY 2014 TRY MILLION YoY % YoY % TURKCELL GROUP 3,103 8% 12,044 6% TURKCELL TURKEY VOICE 1 1,555 1% 6,374 (1%) 567 44% 1,931 34% MOBILE BROADBAND MESSAGING 151 (26%) 645 (23%) MOBILE SERVICES 123 21% 430 5% 336 28% 1,253 35% FIBER BROADBAND OTHER SUBSIDIARIES 2 376 (2%) 1,422 5% 1 Voice revenues include outgoing, incoming, roaming and other (comprising almost 1% of Turkcell Turkey) revenues 6 2 Includes consolidation eliminations
TURKCELL TURKEY: OPERATIONAL HIGHLIGHTS SUBSCRIBER POSTPAID TREND & ARPU SUBSCRIBER (MILLION) FY14 70% Q414 Net add 67% 65% 62% ↓98 K ↓ 548K Total Postpaid 15.2 14.0 subscriber ↑401K ↑1.2mn Postpaid 13.2 11.7 ↑ 1.2 mn in FY14 15.2 FY11 FY12 FY13 FY14 Postpaid subscriber Share of postpaid in revenues Total subs 34.6 mn Q4 FY Growth Growth ARPU (TRY) 2014 YoY % 2014 YoY % Blended 19.4 23.0 8.0% 22.5 3.7% Postpaid 38.0 4.1% 37.7 1.1% Postpaid (mn) Prepaid (mn) Prepaid 2.7% (1.7%) 11.6 11.6 7
TURKCELL TURKEY: STRONG GROWTH IN DATA SMARTPHONE TREND MOBILE BB & SERVICES REVENUE TRY MILLION 32% 40% 29% YoY 26% 24% ↑5% 430 30% 408 645 ↓ 23% 389 19% 838 389 12.7 865 9.6 12% 846 ↑ 3.1mn 1,931 ↑34% 6.2 1,437 net add 1,040 3.8 in FY14 724 FY11 FY12 FY13 FY14 FY11 FY12 FY13 FY14 Smartphone (million) Penetration Mobile Services Messaging Mobile BB Mobile BB & Services Revenue as % of Turkcell Turkey 791K net add in Q414 with contracted offers and contribution of T-50 8
TURKCELL SUPERONLINE: PROFITABLE GROWTH CONTINUED STRONG FINANCIAL PERFORMANCE OPERATIONAL HIGHLIGHTS TRY million 1 CAGR MARKET SHARE* REVENUE 1,253 81% 76% 75% 73% 925 ↑40% 684 460 327 8pp↑ EBITDA 13% 11% 8% 5% ↑59% in 3 yrs 238 142 FY11 FY12 FY13 9M14 Incumbent Turkcell Superonline 82 • 1.2 million total customers (fiber + ADSL) 88 EBIT ↑344% • Market leader with total 735K fiber customers 54 (50K↑ in Q414 & 165K↑in 2014) 17 • 2.1 million homepasses (380K↑ YoY ) 1 • Turkcell TV+ 60K subscribers FY11 FY12 FY13 FY14 9 1 KPIs presented are based on Superonline standalone financials *Source: Calculated based on ICTA figures (fixed broadband subscribers including cable, excluding ISDN subs)
UKRAINE : IMPACT OF CHALLENGING MACRO ON FINANCIALS FINANCIAL PERFORMANCE MARKET ENVIRONMENT REVENUE GROWTH (UAH) SUBSCRIBER* MARKET SHARE (YoY) 15% 15% 48% 48% 46% 44% 11% 10% 38% 38% 37% 37% 9% 7% 7% 6% 16% 18% 15% 3% 14% 1% 2% FY11 FY12 FY13 Q314 -5% -5% life:) Operator 1 Operator 2 FY11 FY12 FY13 Q314 Q414 life:) Operator 1 Operator 2 FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Operational performance remained solid • 97% UAH/USD devaluation in FY14 limited Astelit’s contribution o 10.3 million subscribers o 15% top-line growth in local currency in Q414 o 1.1 million rise in subscribers YoY in Q414 o 5.4% revenue contribution (2.7pp ↓ YoY) in Q414 10 *3 month active subscriber
TURKCELL GROUP: 2015 PRIORITIES & OUTLOOK PRIORITIES 2015 GUIDANCE TRY MILLION Fiber and Superior mobile customer REVENUE 12,800 – 13,100 broadband experience 3,850 – 4,050 EBITDA OPERATIONAL ~20% Operational New CAPEX/ SALES* excellence & products productivity & services * Excluding licence fees (*)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. 11 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 1 particular the risk factor section therein.
FINANCIAL REVIEW 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 Q4 & FY2014 result announcement press release. 12
TURKCELL GROUP: REVENUE TRY million Q414 vs. Q413 FY14 vs. FY13 YoY ↑8% YoY ↑6% Δ in Turkcell Group: ∑ TRY 220 mn Δ in Turkcell Group: ∑ TRY 636 mn Δ in Turkcell Turkey: Δ in Turkcell Turkey: ∑ TRY 246 mn ∑ TRY 152 mn 390 12,044 67 3,103 332 144 (86) 11,408 8 2,884 Revenue Δ in Voice* Δ in Mobile Δ in Revenue Revenue Δ in Voice* Δ in Mobile Δ in Revenues Q413 BB&services Subsidiaries Q414 FY13 BB&services Subsidiaries FY14 13 *Voice revenues include outgoing, incoming, roaming and other (comprising almost 1% of Turkcell Turkey) revenues
TURKCELL GROUP: EBITDA TRY million Q414 vs. Q413 FY14 vs. FY13 YoY ↑8% YoY ↑6% (275) (12) 636 (131) (152) 220 5 3,762 (7) 3,544 917 851 EBITDA Margin ↑ 0.1pp EBITDA Margin ↑0.1pp EBITDA Δ in Δ in Direct Δ in G&A Δ in S&M EBITDA EBITDA Δ in Δ in Direct Δ in G&A Δ in S&M EBITDA Q413 Revenues cost of exp. exp. Q414 FY13 Revenues cost of exp. exp. FY14 revenues* revenues* 14 *Excluding depreciation and amortization
TURKCELL GROUP: NET INCOME QUARTER YEAR TRY million 1 Net income'13 reported 505 2,326 Δ in EBIT 97 172 Δ in Finance Inc./Exp. (327) (847) Δ in Equity in Net Inc./Loss (83) (90) Δ in Taxation (68) (139) Δ in Other 134 443 Net income'14 reported ↓49% ↓ 20% 258 1,865 BeST Impairment (35) (35) Fintur impact (83) (116) A-tel Share Sale Impact (-) 24 Reimbursements (8) (29) ICTA penalties (2) (108) Other one-off impacts (4) (6) Net income'14 excluding one-offs 390 2,135 15 1 TRY figures are based on IFRS TRY figures
TURKCELL GROUP: FINANCIAL HIGHLIGHTS CASH & DEBT BREAKDOWN SUMMARY BALANCE SHEET ~$1,562 mn 2013 2014 TRY MILLION 1 FX 40% TRY Cash Total Cash 8,129 9,032 60% Total Assets 21,285 23,694 Total Debt 3,333 3,698 FX 13% TRY Net Cash 4,796 5,334 Total Debt 87% Total Equity 14,735 16,711 Int’l MAJOR CASH OUTFLOW ITEMS IN FY14 18% Local • Total Capex: TRY 2,145 mn FX Debt ~$253 mn • Corporate tax of Turkcell Turkey: TRY 538 mn 82% 16 1 TRY figures are based on IFRS TRY figures
THANK YOU For further information please e-mail investor.relations@turkcell.com.tr or call Turkcell Investor Relations at (+90 212 313 1888) 17
APPENDIX 18
SUMMARY INCOME STATEMENT AS PER CMB 1 FINANCIALS (TRY MILLION ) Summary income statement Q4 2013 Q4 2014 YoY (%) 2013 2014 YoY (%) Revenue 2,883.6 3,103.2 8% 11,407.9 12,043.6 6% Direct Cost of Revenues 2 (1,848.9) (1,972.2) 7% (7,058.9) (7,380.8) 5% (510.4) (517.8) (1,843.6) (1,974.6) S&M 1% 7% G&A (152.0) (146.8) (3%) (550.3) (562.7) 2% EBITDA 851.5 917.1 8% 3,544.5 3,761.8 6% 29.5% 29.6% 31.1% 31.2% EBITDA Margin 0.1pp 0.1pp Net Income 506.7 257.9 (49%) 2,330.3 1,866.9 (20%) 1 Capital Markets Board of Turkey 2 Depreciation and amortization is included 19
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