TURKCELL SECOND QUARTER OF 2015 July 30, 2015 1
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 Kaan Terzioğlu Turkcell CEO 3
TURKCELL GROUP: PROGRESSING ON OUR PRIORITIES PRIORITIES PROGRESS New organization structure SOLIDIFYING OUR More efficient supply chain POSITION IN TURKEY Integrated network: Mobile & Fiber POSITIONING AS AN Integrated sales & marketing for mobile and fixed businesses INTEGRATED COMPANY Focused on end-to-end customer experience Purchased 44.96% of our subsidiary in Ukraine for $100 million EVALUATING OUR Completed debt restructuring of Astelit & eliminated currency risk in OPTIONS FOR SUBSIDIARIES a volatile market • Optimizing capital structure • Improving working capital need UPCOMING NEAR-TERM AGENDA • Evaluating subsidiary performance and M&A options • Spectrum auction in Turkey 4
TURKCELL GROUP: OVERVIEW OF BUSINESS LINES Q2 2015 TURKCELL TURKCELL TURKCELL OTHER TRY MILLION 1 INTERNATIONAL TURKEY CONSOLIDATED SUBSIDIARIES YoY % YoY % YoY % YoY % Revenue 2,835 205 (23.6%) 54 9.2% (10.7%) 3,093 5.8% % in Total 91.6% 2.8pp 6.6% (2.6pp) 1.7% (0.3pp) 100% - EBITDA 2 915 56 25 11.9% (12.9%) (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 585 109 18 712 22.1% n.m (1.6%) 44.6% 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 1 TRY figures are based on IFRS TRY figures 5 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: SEGMENT PERFORMANCE TURKCELL TURKEY 1 Q215 TRY million TRY million YoY Growth CONSUMER 2,206 2,122 ↑9.2% yoy ↑9.9% 2,008 ↑9.5% yoy 2,835 550 CORPORATE ↑2.8% 532 yoy 2,711 ↑ 8.6% 507 2,595 WHOLESALE 93 92 71 ↓1.2% Q214 Q115 Q215 Q214 Q115 Q215 6 1 Turkcell Turkey revenues include eliminations
TURKCELL TURKEY: REVENUE BREAKDOWN BREAKDOWN OF DATA REVENUES YoY Growth REVENUE BREAKDOWN Q215 TRY Million TRY Million ↑47.2% 31% 10% 638 606 4% ↑9.2% 434 3% TRY 2,835 ↑30.1% yoy 233 220 179 mn Q214 Q115 Q215 52% Mobil broadband Fixed broadband BREAKDOWN OF SMS, SERVICES Consumer&Corporate YoY Growth & SOLUTIONS REVENUES YoY Growth Data ↑42.2% TRY Million ↑48.9% 164 156 Voice ↓4.2% 142 105 SMS, Services & Solutions ↑9.6% ↓15.3% 139 136 ↑22.0% Other* Q214 Q115 Q215 Wholesale ↓1.2% SMS Services & Solutions 7 *Other includes Turkcell Satış ( retail store in telecommunications), Global Bilgi (call center services), Rehberlik Hizmetleri (information services) and Turkcell Teknoloji (research and development)
TURKCELL TURKEY: OPERATIONAL HIGHLIGHTS FIBER NET ADDITIONS SUBSCRIPTION Market Share Thousand 50 QoQ NET ADD TOTAL 42 39 41 33 ↑53% ↓290 K 34.0 mn MOBILE 22 ↓47% 14 15.9 mn ↑ 334K 11 POSTPAID 2 -2 PREPAID ↓624K 18.1 mn Q214 Q314 Q414 Q115 Q215 ↑8.6% YoY TRY24.0 ARPU Turkcell Superonline TTNet MULTIPLAY 3 Share in total subscribers 1.3 mn ↑ 74K FIXED 12% 16% 53% FIBER 818K ↑42K 52% 51% Total TV 4 TV 1 ↑40K ~140K ~210K ↑32K 528K 47% ADSL 33% 37% ARPU 2 ↑1.9% YoY TRY47.9 Q214 Q115 Q215 Single Play Double Play Triple Play 1 TV subscribers are also included in total fiber subscribers 2 Fixed residential ARPU of Fiber and ADSL blended 8 3 Triple play consists of fixed voice, fixed data and TV. Totals may have rounding differences 4 Including mobile TV and web TV users
TURKCELL TURKEY: REVENUE SHARE TREND Total Telecom Market REVENUE SHARE OF MAJOR PLAYERS 1 46.3% 45.3% 44.3% Turk Telekom Group Turkcell 35.6% 35.6% 35.0% Turkey 20.1% 19.1% 18.6% Vodafone Q213 Q214 Q215 9 1 Share calculation based on operators announcements
TURKCELL INTERNATIONAL :OPERATIONS IN UKRAINE AND BELARUS BeST 2 ASTELIT BYR BILLION Q214 Q215 YoY% Q214 Q215 YoY% UAH MILLION Revenue 961 1,076 11.9% Revenue 163 190 16.7% EBITDA EBITDA 277 324 16.9% 0.7 4 500.0% EBITDA Margin 28.9% 30.2% 1.3pp EBITDA Margin 0.4% 2.2% 1.8pp HIGHLIGHTS OF ASTELIT HIGHLIGHTS OF BeST • UAH/USD appreciated 10% QoQ • BYR/USD devaluated 4% QoQ • Solid operational performance • 1.1 million subscribers 1 10.6 million subscribers 1 (↑11. 6% yoy) o 26.7K net add o 293K quarterly net adds o (1) 3m active subscribers 10 (2) As Inflationary accounting is ended starting from Q115, Q214 figures presented in the table are not inflation adjusted for comparative purposes
STRENGTHENING OUR POSITION IN THE REGION Acquired 44.96% stake of Astelit for US$ 100 million • Flexibility in decision making to strengthen our position in the region 100% owned by Turkcell Restructured Astelit’s debt • Eliminated foreign currency risk on P&L • Manageable debt level: 3.6 billion UAH Became the first operator to launch 3G+ in Ukraine on June 4 th • 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 11
TURKCELL GROUP: 2015 GUIDANCE ON TRACK GUIDANCE * TRY MILLION REMARKS REVENUE 12,800 – 13,100 6%-9% growth EBITDA 3,850 – 4,050 31%-32% margin ** OPERATIONAL CAPEX / SALES ~20% ** Excluding licence fees «TURKCELL Capital Markets Day » For Business Discussion & Strategy SAVE THE DATE! November 9, 2015 London (*)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, 12 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.
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. 13
TURKCELL GROUP: REVENUE & EBITDA DEVELOPMENT REVENUE EBITDA TRY MILLION TRY MILLION Astelit (43) (63) (6) (85) 3,093 239 170 18 (15) 995 907 2,923 EBITDA ↑9.7% Margin Margin Revenue ↑5.8% EBITDA Margin ↑1.2pp 31.0% 32.2% EBITDA Δ in Δ in Direct Δ in G&A Δ in S&M EBITDA Revenue Δ in Turkcell Δ in Turkcell Δ in Other Revenue Q214 Revenues cost of exp. exp. Q215 Q214 Turkey International Subsidiaries Q215 revenues* 14 *Excluding depreciation and amortization
TURKCELL GROUP: NET INCOME NET INCOME MARGIN NET INCOME DEVELOPMENT TRY MILLION Q2 2014 Q2 2015 YoY% EBITDA 907 995 9.7% 23.9% 23.0% Depreciation and (386) (410) 6.0% amortization 16.8% Net finance inc / (exp) 47 397 752.1% 12.6% Share of profit of associates 74 94 27.4% Other inc/ (exp) (92) (123) 34.1% 8.3% Monetary gains / (losses) 60 - - Non-controlling interests 50 (101) (302.6%) 4.7% Income tax exp (167) (141) (15.6%) Q114 Q214 Q314 Q414 Q115 Q215 Net Income 492 712 44.6% 15
TURKCELL GROUP: BALANCE SHEET HIGHLIGHTS NET DEBT/EBITDA 2 SUMMARY BALANCE SHEET TRY MILLION Q2 2014 Q2 2015 After -0.07 dividend Total Cash 7,917 4,298 payment Total Assets 21,767 20,661 Total Debt 3,460 4,014 Net Cash 4,457 284 Total Equity 15,545 13,499 -1.1 -1.2 MAJOR CASH OUTFLOW ITEMS -1.4 -1.4 Dividend (2010-2014) TRY3,925 mn Capex 1 TRY957 mn 2012 2013 2014 Q115 Q215 Corporate tax payment of Turkcell Iletisim TRY218 mn Increase in trade payables TRY236 mn 16 1 Including operational and non-operational capex 2 Annualized EBITDA used for Q115 and Q215
THANK YOU For further information please e-mail investor.relations@turkcell.com.tr or call Turkcell Investor Relations at (+90 212 313 1888) Please download our IR app via below QR codes For Android For iOS 17
APPENDIX 18
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