“4.5G Investment Generated the Highest
Growth of the Past 10 Years”
Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC)
(BIST:TCELL):
- Please note that all financial data is
consolidated and comprises that of Turkcell Iletisim Hizmetleri
A.S. (the “Company”, or “Turkcell”) and its subsidiaries and
associates (together referred to as the “Group”), unless otherwise
stated.
- As previously announced, starting from
Q115, we now have three reporting segments:
- "Turkcell Turkey" which comprises all
of our telecom related businesses in Turkey (as used in our
previous releases, this term covered only mobile businesses). All
non-financial data presented in this press release is
unconsolidated and comprises Turkcell Turkey only figures, unless
otherwise stated. The terms "we", "us", and "our" in this press
release refer only to Turkcell Turkey, except in discussions of
financial data, where such terms refer to the Group, and except
where context otherwise requires.
- “Turkcell International” which
comprises all of our telecom related businesses outside of
Turkey.
- “Other subsidiaries” which is mainly
comprised of our information and entertainment services, call
center business revenues, financial services revenues and
inter-business eliminations. Call centers were previously included
in Turkcell Turkey but are, with effect from the fourth quarter of
2015, now included in “Other subsidiaries”. We have made this
change because we believe that our third party call center revenues
are not telecom related. All figures presented in this document for
prior periods have been restated to reflect this change.
- In this press release, a year-on-year
comparison of our key indicators is provided and figures in
parentheses following the operational and financial results for
December 31, 2016 refer to the same item as at December 31, 2015.
For further details, please refer to our consolidated financial
statements and notes as at and for December 31, 2016, which can be
accessed via our website in the investor relations section
(www.turkcell.com.tr).
- Selected financial information
presented in this press release for the fourth quarters and for the
full year 2015 and 2016 is based on IFRS figures.
- In accordance with our strategic
approach and IFRS requirements, Fintur is classified as ‘held for
sale’ and reported as discontinued operations as of October 2016.
Certain operating data that we previously presented with Fintur
included has been restated without Fintur.
- In the tables used in this press
release totals may not foot due to rounding differences. The same
applies for the calculations in the text.
- Year-on-year and quarter-on-quarter
percentage comparisons appearing in this press release reflect
mathematical calculation.
FOURTH QUARTER FINANCIAL HIGHLIGHTS
- Highest revenue and EBITDA growth of
the past ten years, plus all time high quarterly revenue and
EBITDA, both at Group and Turkcell Turkey level
- Group revenues and EBITDA1 up 21.3% and
29.6%, respectively with an EBITDA margin of 33.9% up 2.2pp
year-on-year
- Turkcell Turkey’s revenues and EBITDA
up 19.3% and 28.3%, respectively with an EBITDA margin improvement
of 2.4pp to 34.3%; data and digital services revenues, comprising
62% of Turkcell Turkey revenues, up 94.1%
- Turkcell International revenues up
12.4% with an EBITDA margin of 27.2%
- Group net income as per IFRS at TRY351
million (TRY584 million). Group proforma net income2 up 15.7% to
TRY706 million (TRY610 million)
- Fintur classified as ‘held for sale’
and reported as discontinued operations as of October 2016
FULL YEAR FINANCIAL SUMMARY
- Full year guidance for 2016
delivered
- All-time-high full year revenue and
EBITDA, both at Group and Turkcell Turkey level
- Group revenues and EBITDA1 up 11.9% and
11.6%, respectively with an EBITDA margin of 32.3%
- Turkcell Turkey revenues and EBITDA up
11.4% and 10.7%, respectively with an EBITDA margin of 32.5%
- Group net income as per IFRS of
TRY1,492 million (TRY2,068 million). Group proforma net income2 up
7.4% to TRY2,522 million (TRY2,348 million)
- 2017 Group guidance3; revenue growth
target of 13% - 15%, EBITDA margin target of 32% - 34% and
operational capex over sales ratio target of ~20%Group midterm
target3 for the period 2017-2019; revenue growth target of 12% -
14%, EBITDA margin target of 33% - 35% and operational capex over
sales ratio targeted to decline to ~16% as of 2019
FINANCIAL HIGHLIGHTS
TRY million Q415
Q416 y/y % FY15
FY16 y/y % Revenue 3,334 4,044
21.3% 12,769 14,286 11.9% Turkcell
Turkey 2,998 3,576 19.3% 11,481 12,788 11.4% EBITDA1 1,058 1,371
29.6% 4,141 4,620 11.6% Turkcell Turkey 956 1,227 28.3% 3,760 4,161
10.7% EBITDA Margin 31.7% 33.9% 2.2pp 32.4% 32.3% (0.1pp) Net
Income 584 351 (40.0%) 2,068 1,492 (27.8%) Proforma Net Income2
610 706 15.7% 2,348 2,522
7.4%
(1) EBITDA is a non-GAAP financial measure. See page 14 for the
reconciliation and the explanation of how we calculate Adjusted
EBITDA to net income.(2) We use "proforma net income" as a means of
presenting our net income net of certain non-operating items and
items that we believe are non-recurring. We believe “proforma net
income” facilitates performance comparisons from period to period
and management decision making. We define "proforma net income" in
this document as net income excluding FX gain / (loss) (including
tax and minority impact), interest Income on time deposits of
Turkcell Iletisim Hizmetleri, interest expense on loans &
borrowings, Fintur impact, 4.5G license amortization and one-off
items. Please note that this is a non-GAAP measure and that we may
in future presentations change the scope of items that we deduct
from net income to arrive at "proforma net income." Please see
Appendix A for a reconciliation of Group and Turkcell Turkey
proforma net income to net income as per IFRS.(3) Please note that
this paragraph contains forward looking statements based on our
current estimates and expectations regarding market conditions for
each of our different businesses. No assurance can be given that
actual results will be consistent with such estimates and
expectations. For a discussion of factors that may affect our
results, see our Annual Report on Form 20-F for 2015 filed with
U.S. Securities and Exchange Commission, and in particular, the
risk factor section therein.For further details, please refer to
our consolidated financial statements and notes as at and for
December 31, 2016 which can be accessed via our web site in the
investor relations section (www.turkcell.com.tr).
COMMENTS BY KAAN TERZIOGLU, CEO
4.5G investment generated the highest growth of the past 10
years
We concluded the year of 2016 having met all of our targets with
outstanding performance. In 2016, as Turkcell Group our investments
amounted to TRY3.5 billion. These investments, which we made in
full confidence in both our country and its economy, have notably
resulted in positive returns in all our areas of operation. In the
fourth quarter of 2016, Turkcell Group and Turkcell Turkey
registered the highest revenue and EBITDA growth since 2007.
With our 4.5G investment, one of the key developments of 2016,
we achieved population coverage of around 82.5% in 81 cities across
Turkey, while the average data consumption of our 4.5G customers
reached 5GB in December. We have registered our highest customer
retention level in mobile since 2007, and in the last quarter we
saw 291 thousand net additions, which is the highest level since
2013. On the fixed side, the quarterly gain of 147 thousand
subscribers was the highest ever, while fiber subscribers exceeded
1 million. The great interest in our digital services continued to
increase in this quarter as well. Our TV subscribers exceeded 1
million, and at the same time customers who downloaded BiP,
Turkcell TV+, Lifebox, Goller Cepte (Goals on Mobile), fizy,
Hesabım (My Account), Dergilik (Digital Publishing) and Turkcell
Academy applications reached 44.2 million from 21.4 million in the
previous year. In 2016, we made digital services all access, once
again in line with our vision. Meanwhile, our consumer finance
company Financell, which started its operations in 2016, provided
TRY2.9 billion of loans to 1 million 850 thousand customers.
In addition to operational progress, we actively managed our
balance sheet and risks. In the last quarter, we reduced our
foreign exchange position to US$125 million1 from US$2 billion in
2015, mitigating the foreign exchange risk.
All of these developments reflected positively in our
financials. Turkcell Group revenues rose 21.3% year-on-year to
TRY4.0 billion in the quarter, with EBITDA2 reaching TRY1.4 billion
on a 29.6% rise, and with an EBITDA margin of 33.9%. In 2016,
Turkcell Group revenues grew 11.9% exceeding TRY14 billion, while
EBITDA2 rose 11.6% to TRY4.6 billion and the EBITDA margin was at
32.3%. Thus, we delivered on our 2016 guidance. In 2016, net income
as per IFRS realized at TRY1.5 billion, while proforma net income3
rose 7.4% to TRY2.5 billion.
Previously we had stated that we were evaluating various
strategic alternatives for Fintur, in which we own a 41.45% stake,
including its sale. In parallel to our strategy, and due to IFRS
rules, we have decided to classify Fintur as ‘held for sale’.
Consumption of data and digital services is
increasing…
In the last quarter of 2016, our data revenues grew 74%
year-on-year and our digital service revenues grew 200% on
increased data users, 2.8GB average monthly data usage per user,
64% smartphone penetration and strong demand. Our 4.5G subscribers4
reached 23 million.
In the last quarter, our customer acquisition continued in
postpaid, fiber and digital services. The postpaid subscriber base
grew by 797 thousand annually, comprising 52.5% of the total
subscriber base. Our fiber customer base rose by 144 thousand,
exceeding 1 million, while our total number of fixed customers
reached 1.9 million with 342 thousand annual net additions.
In line with our convergence strategy, the mobile triple play
ratio5, which includes customers of voice, data and digital
services combined, reached 42% with a 25pp increase, while
multiplay with TV service users6 ratio grew 10pp to 36%
year-on-year.
Thanks to our value focused acquisition strategy, as well as
increasing package penetration, a growing postpaid base, rising
data consumption and triple play customers, mobile ARPU posted a
record increase of 18% in the fourth quarter to TRY30.97, while
fixed residential ARPU reached TRY51.1.
Pioneers in the sector….
In 2016, our consumer finance company, launched under the
Financell brand, and operating in areas of finance and technology
known collectively as "Fintech", made great progress within a short
period of time. Financell, saw excess demand in the issuance of its
commercial paper, expects to continue to raise funds using capital
market instruments in the upcoming periods, and aims to continue to
contribute to Group balance sheet efficiency. In this respect, the
necessary approval for the issuance of asset-backed securities was
applied for in January 2017. Turkcell Ödeme Hizmetleri A.Ş.
(Turkcell Payment Services), which offers payment solutions to
customers, and operating under the Paycell brand, received BRSA
authorization in August 2016, to become the first licensed operator
brand.
Responding to strong data demand, and in step with technological
developments in the sector, Turkcell enabled data based
communication with ‘lifecell’, the digital brand of Kuzey Kıbrıs
Turkcell, marking a first for Turkey and the world. With lifecell,
through which communication needs such as voice and messaging are
met via data packages, calls are made through BiP, while digital
services such as Lifebox, Fizy and Turkcell TV+ also enhance our
customers’ lives.
Due to the responsibility we bear as a technological leader, we
have played a key role in the global development of 5G technologies
through our national and international collaborations made over the
past 1.5 years. Our cooperation with Ericsson in the 15GHz band
enabled us to achieve a speed of 24.7Gbit in Turkey’s first 5G
test. As Turkcell, our goal is to be one of the first 5G operators
in the world, while at the same time developing homegrown
technology in 5G, thereby ensuring that Turkey produces technology
rather than merely consuming it.
In 2016, to meet Turkey's digital data management need, we built
the nation’s largest data center in Gebze, which has a closed area
of 33 thousand square meters meeting the highest standards. In
addition, we started discussions with sector players towards
establishing common infrastructure for efficient use of resources
and ensuring fair competition within the scope of Turkey's fiber
mobilization.
We continue to grow in 2017
Despite the macroeconomic and geopolitical headwinds in 2016, we
reached our year-end targets both operationally and financially
with record prints. We introduced our customers to 4.5G technology
swiftly and seamlessly. Going forward, we aim to continue to
deliver the most advanced communication technology to our customers
and enrich their lives through digital services.
In this respect in 2017, we target increasing our Group revenues
by 13-15%, an EBITDA margin of 32-34%, and an operational capex to
sales ratio of 20%. In the medium term, between 2017-2019, we are
targeting to have our Group revenues grow by 12-14%, with an EBITDA
margin target of 33-35% and the operational capex to sales ratio to
decline to 16% by 20198.
I take this opportunity to once again thank our investors,
employees and Board of Directors, as well as all stakeholders, who
have continuously supported the realization of Turkcell’s targeted
performance.
(1) This figure takes into account advance payments and the
impact of hedging, and assumes utilizing the option of paying the
last instalment of the 4.5G licence in TRY.(2) EBITDA is a non-GAAP
financial measure. See page 14 for the reconciliation and the
explanation of how we calculate Adjusted EBITDA to net income.(3)
We use "proforma net income" as a means of presenting our net
income net of certain non-operating items and items that we believe
are non-recurring. We believe “proforma net income” facilitates
performance comparisons from period to period and management
decision making. We define "proforma net income" in this document
as net income excluding FX gain / (loss) (including tax and
minority impact), interest income on time deposits of Turkcell
Iletisim Hizmetleri, interest expense on loans & borrowings,
Fintur impact, 4.5G license amortization and one-off items. Please
note that this is a non-GAAP measure and that we may in future
presentations change the scope of items that we deduct from net
income to arrive at "proforma net income." Please see Appendix A
for a reconciliation of Group and Turkcell Turkey proforma net
income to net income as per IFRS.(4) Customers registered to 4.5G
services through SMS confirmation(5) Breakdown among mobile voice
users which excludes subscribers who do not use their line in the
last 3 months(6) Multiplay customers with TV: Internet + TV users
& internet + TV + voice users(7) Blended mobile ARPU excluding
M2M users(8) Please note that this paragraph contains forward
looking statements based on our current estimates and expectations
regarding market conditions for each of our different businesses.
No assurance can be given that actual results will be consistent
with such estimates and expectations. For a discussion of factors
that may affect our results, see our Annual Report on Form 20-F for
2015 filed with U.S. Securities and Exchange Commission, and in
particular, the risk factor section therein.
FINANCIAL AND OPERATIONAL REVIEW
The following discussion focuses principally on the developments
and trends in our business in the fourth quarter and full year 2016
in TRY terms. Selected financial information presented in this
press release for the fourth quarters and for the full year 2015
and 2016 is based on IFRS figures.
Selected financial information for the fourth quarter of 2015,
third and fourth quarters of 2016 and full year 2015 and 2016,
prepared in accordance with IFRS and Turkish Accounting standards,
is also included at the end of this press release.
Financial Review of Turkcell Group
Profit & Loss Statement
(million TRY)
Quarter Year Q415
Q416 y/y % FY15
FY16 y/y % Total Revenue 3,334.5
4,043.6 21.3% 12,769.4 14,285.6
11.9% Direct cost of revenues1 (2,054.8) (2,608.3) 26.9%
(7,769.5) (9,236.6) 18.9%
Direct cost of
revenues1/revenues (61.6%) (64.5%)
(2.9pp) (60.8%) (64.7%) (3.9pp)
Depreciation and amortization (437.0) (604.3) 38.3% (1,667.8)
(2,203.2) 32.1%
Gross Margin 38.4% 35.5%
(2.9pp) 39.2% 35.3% (3.9pp)
Administrative expenses (165.9) (190.0) 14.5% (625.3) (721.8)
15.4% Administrative expenses/revenues (5.0%)
(4.7%) 0.3pp (4.9%) (5.1%)
(0.2pp) Selling and marketing expenses (492.6) (478.5)
(2.9%) (1,901.9) (1,910.9)
0.5% Selling and marketing
expenses/revenues (14.8%) (11.8%) 3.0pp
(14.9%) (13.4%) 1.5pp EBITDA2
1,058.2 1,371.1 29.6% 4,140.5
4,619.5 11.6% EBITDA Margin 31.7%
33.9% 2.2pp 32.4% 32.3% (0.1pp)
EBIT3 621.2 766.8 23.4%
2,472.7 2,416.3 (2.3%) Net finance income /
(expense) 12.5 (198.3) n.m (43.4) (172.8) 298.2% Finance expense
(141.0) (692.2) 390.9% (799.5) (1,237.6) 54.8% Finance income 153.5
493.9 221.8% 756.1 1,064.8 40.8% Other income / (expense) (31.1)
(44.4) 42.8% (225.9) (234.3) 3.7% Non-controlling interests (7.6)
(17.7) 132.9% 164.1 (51.7) (131.5%) Income tax expense (109.2)
(111.3) 1.9% (667.1) (423.2) (36.6%) Discontinued operations 98.4
(44.4) (145.1%) 367.3 (42.2) (111.5%)
Net Income
584.2 350.7 (40.0%) 2,067.7
1,492.1 (27.8%) Proforma Net
Income4 610.1 706.0
15.7% 2,348.4 2,521.6
7.4%
(1) Including depreciation and amortization expenses.(2) EBITDA
is a non-GAAP financial measure. See page 14 for the reconciliation
and an explanation of how we calculate Adjusted EBITDA to net
income.(3) EBIT is a non-GAAP financial measure and is equal to
EBITDA minus depreciation and amortization expenses.(4) We use
"proforma net income" as a means of presenting our net income net
of certain non-operating items and items that we believe are
non-recurring. We believe “proforma net income” facilitates
performance comparisons from period to period and management
decision making. We define "proforma net income" in this document
as net income excluding FX gain / (loss) (including tax and
minority impact), interest Income on time deposits of Turkcell
Iletisim Hizmetleri, interest expense on loans & borrowings,
Fintur impact, 4.5G license amortization and one-off items. Please
note that this is a non-GAAP measure and that we may in future
presentations change the scope of items that we deduct from net
income to arrive at "proforma net income." Please see Appendix A
for a reconciliation of Group and Turkcell Turkey proforma net
income to net income as per IFRS.
Revenues of the Group grew by 21.3% year-on-year in
Q416.
Turkcell Turkey revenues, comprising 88% of Group revenues, rose
by 19.3% to TRY3,576 million (TRY2,998 million).
- Consumer segment revenues increased by
19.9% to TRY2,867 million (TRY2,391 million), while corporate
segment revenues grew by 11.7% to TRY591 million (TRY529
million).Mobile data revenues rose by 89.1% to TRY1,400 million
(TRY740 million) mainly with higher smartphone penetration,
increased data users and higher data consumption. Fixed data
revenues increased by 26.8% to TRY289 million (TRY228 million) with
increased customers and higher usage. Digital services revenues
grew by 200.5% to TRY537 million (TRY179 million) mainly driven by
increased usage of Turkcell TV+, Turkcell’s digital publishing
service Dergilik, our music platform fizy, personal cloud service
and other mobile services. Consequently, our overall data and
digital services revenues, comprising 62% of Turkcell Turkey
revenues, rose by 94.1% to TRY2,226 million (TRY1,147 million) in
Q416.
- Wholesale revenues grew by 47.7% to
TRY137 million (TRY93 million) driven by the rise in carrier
traffic.
Turkcell International revenues, comprising 6% of Group
revenues, grew by 12.4% to TRY252 million (TRY224 million) driven
mainly by the 12.7% rise in lifecell revenues.Other subsidiaries'
revenues, at 5% of Group revenues, which includes information and
entertainment services, call center revenues and revenues from
financial services rose by 91.1% to TRY216 million (TRY113
million). This was mainly driven by the contribution of our
consumer finance company, which commenced operations in March 2016,
and which registered revenues of TRY90 million in Q416.For the full
year, Group revenues grew by 11.9%.Turkcell Turkey revenues rose by
11.4% to TRY12,788 million (TRY11,481 million). Excluding emergency
packages Turkcell Turkey revenue growth would be 11.9%, EBITDA
margin would be 32.9%.
- Consumer segment revenues increased by
11.9% to TRY10,216 million (TRY9,127 million), while corporate
segment revenues grew by 7.9% to TRY2,192 million (TRY2,032
million).Our mobile data revenues rose by 65.1% to TRY4,478 million
(TRY2,712 million), while fixed data revenues increased by 27.4% to
TRY1,054 million (TRY828 million). Digital services revenues grew
by 94.6% to TRY1,282 million (TRY659 million). Overall, data and
digital services revenues rose by 62.3% to TRY6,814 million
(TRY4,198 million).
- Wholesale revenues grew by 17.4% to
TRY453 million (TRY386 million).
Turkcell International revenues increased by 2.2% to TRY875
million (TRY856 million).
Other subsidiaries' revenues rose by 44.2% to TRY623 million
(TRY432 million). The consumer finance company recorded revenues of
TRY185 million for the full year.
Direct cost of revenues rose to 64.5% (61.6%) as a
percentage of revenues in Q416. This was mainly due to the rise in
depreciation and amortization expenses (1.8pp) reflecting the 4.5G
license cost and investments, retail sales related device costs
(2.7pp) and consumer finance company funding costs (1.0pp), despite
the fall in radio expenses (1.1pp), treasury share (1.1pp) and
other cost items (0.4pp).
For the full year, direct cost of revenues as a percentage of
revenues rose to 64.7% (60.8%), mainly due to the rise in
depreciation and amortization expenses (2.4pp) and retail sales
related device costs (1.5pp).
Administrative expenses declined to 4.7% (5.0%) as a
percentage of revenues in Q416, while for the full year increasing
to 5.1% (4.9%).
Selling and marketing expenses fell to 11.8% (14.8%) as a
percentage of revenues in Q416, driven by the decline in selling
expenses (1.0pp) with our value focused customer acquisition
strategy, in marketing expenses (0.8pp) and in other cost items
(1.2pp).
For the full year, selling and marketing expenses as a
percentage of revenues declined to 13.4% (14.9%) on the back of the
decrease in selling expenses (0.8pp), and in other cost items
(1.0pp), despite the increase in marketing expenses (0.3pp).
EBITDA1 rose by 29.6% year-on-year in Q416 with a
2.2pp improvement in EBITDA margin to 33.9% (31.7%). Direct cost of
revenues (excluding depreciation and amortization) increased by
1.1pp, while administrative expenses and selling and marketing
expenses declined by 0.3pp and 3.0pp, respectively.
(1) EBITDA is a non-GAAP financial measure. See page 14 for the
reconciliation and an explanation of how we calculate Adjusted
EBITDA to net income.
- Turkcell Turkey’s EBITDA grew by 28.3%
to TRY1,227 million (TRY956 million), while the EBITDA margin
improved 2.4pp to 34.3% (31.9%).
- Turkcell International EBITDA was at
TRY68 million (TRY68 million), while the EBITDA margin was at 27.2%
(30.2%).
- The EBITDA of other subsidiaries rose
by 119.2% to TRY76 million (TRY35 million) with the increasing
contribution of our consumer finance company.
For the full year, EBITDA grew by 11.6% year-on-year with an
EBITDA margin of 32.3% (32.4%). Direct cost of revenues (excluding
depreciation and amortization) and administrative expenses rose by
1.4pp and 0.2pp, respectively, while selling and marketing expenses
fell by 1.5pp.
- Turkcell Turkey’s EBITDA rose by 10.7%
to TRY4,161 million (TRY3,760 million), while the EBITDA margin was
at 32.5% (32.7%).
- Turkcell International EBITDA was at
TRY235 million (TRY246 million), while the EBITDA margin was at
26.9% (28.7%).
- The EBITDA of other subsidiaries rose
by 65.4% to TRY223 million (TRY135 million).
Net finance expense of TRY198 million (net finance income
of TRY12 million) was recorded in Q416. This was mainly due to the
translation losses reported in Q416 compared to a translation gain
registered in Q415. Increased interest expenses in relation to
loans and 4.5G payables also contributed to this outcome.
For the full year net finance expense rose to TRY173 million
(TRY43 million), mainly due to higher translation losses and
interest expenses in relation to loans and 4.5G payables, as well
as the decline in interest income from time deposits. Please see
Appendix A for translation gain and loss details.
Income tax expense increased 1.9% year-on-year in Q416.
For the full year the income tax expense declined by 36.6%. Please
see Appendix A for details.
Net income of the Group as per IFRS declined to TRY351
million (TRY584 million) in Q416. This was mainly due to
translation losses recorded in the quarter, the negative Fintur
impact, higher interest expense on loans and 4.5G payables, and
increased amortization expense due to the 4.5G license. Proforma
net income1 rose 15.7% to TRY706 million (TRY610 million) in
Q416.
The net income of Turkcell Turkey as per IFRS declined to TRY386
million (TRY518 million) in Q416, mainly due to the reasons
explained above with respect to the decline in Group net income.
Proforma net income1 increased by 12.5% to TRY656 million (TRY584
million) in Q416.
For the full year, Group net income as per IFRS declined to
TRY1,492 million (TRY2,068 million). This was mainly due to higher
translation losses, increased interest expenses in relation to
loans and 4.5G payables, the negative Fintur impact, a higher
amortization expense due to the 4.5G license, the decline in
interest income from time deposits and the expenses incurred to
benefit from tax amnesty based on Article 6736. Proforma net
income1 grew by 7.4% to TRY2,522 million (TRY2,348 million).
The net income of Turkcell Turkey as per IFRS declined to
TRY1,480 million (TRY2,484 million) for the full year, mainly due
to the reasons explained above with respect to the decline in Group
net income. Proforma net income1 increased by 4.1% to TRY2,384
million (TRY2,291 million).
Please see Appendix A for a reconciliation of Group and Turkcell
Turkey proforma net income to net income as per IFRS.
(1) We use "proforma net income" as a means of presenting our
net income net of certain non-operating items and items that we
believe are non-recurring. We believe “proforma net income”
facilitates performance comparisons from period to period and
management decision making. We define "proforma net income" in this
document as net income excluding FX gain / (loss) (including tax
and minority impact), interest Income on time deposits of Turkcell
Iletisim Hizmetleri, interest expense on loans & borrowings,
Fintur impact, 4.5G license amortization and one-off items. Please
note that this is a non-GAAP measure and that we may in future
presentations change the scope of items that we deduct from net
income to arrive at "proforma net income." Please see Appendix A
for a reconciliation of Group and Turkcell Turkey proforma net
income to net income as per IFRS.
Total cash & debt: Consolidated cash as of December
31, 2016 increased to TRY6,052 million, of which TRY2,841 million
(US$807 million) was denominated in US$, TRY1,403 million (EUR378
million) in EUR and TRY1,700 million in TRY, despite the TRY1.4
billion third instalment payment of the 4.5G license in Q416.
Consolidated debt as of December 31, 2016 rose to TRY9,781
million from TRY8,132 million as of September 30, 2016. This was
mainly due to the higher debt portfolio of our consumer finance
company through utilization of loans, as well as commercial paper
issuance with a nominal amount of TRY250 million. Meanwhile, the
translation increase in the FX denominated debt portfolio of
Turkcell Turkey, due to depreciation of TRY against US$ and EUR,
also led to a rise in our total consolidated debt.
- Turkcell Turkey’s debt was TRY7,605
million, of which TRY3,668 million (US$1,042 million) was
denominated in US$, TRY3,548 million (EUR956 million) in EUR and
the remaining TRY388 million in TRY.
- The debt balance of lifecell was TRY407
million, denominated in UAH.
- Our consumer finance company had a debt
balance of TRY1,763 million, of which TRY93 million (EUR25 million)
was denominated in EUR.
TRY5,578 million of our consolidated debt is set at a floating
rate, while TRY2,846 million will mature within less than a year.
(Please note that the figures in parentheses refer to US$ or EUR
equivalents).
Net debt as of December 31, 2016 increased to TRY3,729 million
from TRY2,486 million as of September 30, 2016. Turkcell Group’s
short position was at US$125 million as at the end of Q416 (Please
note that this figure takes into account advance payments and the
impact of hedging, and assumes utilizing the option of paying the
last instalment of the 4.5G licence in TRY).
Cash flow analysis: Capital expenditures, including
non-operational items amounted to TRY1,133.5 million in Q416. The
cash flow item noted as “other” included payment of the third
instalment of the 4.5G license (TRY1,384 million), payment to
benefit from the tax amnesty based on Article 6736 (TRY130 million)
and the positive impact of decreased advances given for fixed asset
purchases (TRY233 million), prepaid expenses (TRY148 million) and
other working capital (TRY193 million).
For the full year, capital expenditures, including
non-operational items were at TRY3,494.7 million. The cash flow
item noted as “other” included payment of the second and third
instalments of the 4.5G license (TRY2,704 million), payment to
benefit from the tax amnesty based on Article 6736 (TRY130 million)
and the negative impact of increased advances given for fixed asset
purchases (TRY210 million), prepaid expenses (TRY35 million) and
the positive impact of the change in other working capital (TRY59
million).
In Q416 and FY16, operational capital expenditures (excluding
license fees) at the Group level were at 26.9% and 23.0% of total
revenues, respectively.
Consolidated Cash Flow (million TRY) Quarter
Year Q415 Q416
FY15 FY16 EBITDA1 1,058.2
1,371.1 4,140.5 4,619.5 LESS: Capex and
License (6,188.9) (1,133.5) (8,536.2) (3,494.7) Turkcell Turkey
(6,218.1) (980.7) (7,751.7) (3,144.4) Turkcell International2 28.1
(149.7) (770.2) (336.7) Other Subsidiaries2 1.1 (3.1) (14.3) (13.6)
Net interest Income (32.8) 324.1 445.8 616.9 Other 3,220.9 (939.6)
1,987.0 (3,020.0) Net Change in Debt 958.9 784.0 (225.3) 4,411.9
Cash generated / (used) (983.7) 406.1
(2,188.1) 3,133.6 Cash balance before dividend
payment 2,918.8 6,052.4 6,843.8
6,052.4 Dividend paid -
- (3,925.0)
-
Cash balance after dividend payment 2,918.8
6,052.4 2,918.8 6,052.4
(1) EBITDA is a non-GAAP financial measure. See page 14 for the
reconciliation and an explanation of how we calculate Adjusted
EBITDA to net income.(2) The impact from the movement of reporting
currency (TRY) against local currencies of subsidiaries in other
countries is included in these lines.
Operational Review in Turkey
Summary of Operational Data Quarter
Year Q415 Q416 y/y%
FY15 FY16 y/y% Number
of subscribers (million) 35.8 35.3 (1.4%)
35.8 35.3 (1.4%) Mobile Postpaid (million)
16.6 17.4 4.8% 16.6 17.4 4.8% Mobile M2M (million) 1.9 2.1 10.5%
1.9 2.1 10.5% Mobile Prepaid (million) 17.4 15.7 (9.8%) 17.4 15.7
(9.8%) Fiber (thousand) 899.4 1,043.9 16.1% 899.4 1,043.9 16.1%
ADSL (thousand) 620.8 818.0 31.8% 620.8 818.0 31.8% IPTV (thousand)
223.7 359.7 60.8% 223.7 359.7 60.8%
Churn (%) Mobile Churn
(%) 7.9% 5.6% (2.3pp) 27.3% 24.6% (2.7pp) Fixed churn (%) 5.2% 5.3%
0.1pp 16.7% 18.9% 2.2pp
ARPU (Average Monthly Revenue per
User) Mobile ARPU, blended (TRY) 25.1 29.2 16.3% 24.5 26.8 9.4%
Postpaid 38.5 41.6 8.1% 38.5 39.2 1.8% Postpaid (excluding M2M)
42.8 46.8 9.3% 42.7 44.0 3.0% Prepaid 12.8 15.6 21.9% 12.4 13.9
12.1% Fixed Residential ARPU, blended (TRY) 50.3 51.1 1.6% 48.7
51.1 4.9%
Average mobile data usage per user (GB/user) 1.7
2.8 68.4% 1.4 2.4 64.7%
Mobile MOU (Average Monthly Minutes of
usage per subs)blended 299.3 331.3
10.7%
296.6 323.9 9.2%
On the mobile front, we registered the highest quarterly net
customer additions of 291 thousand since 2013, reaching 33 million
in total. This was driven by 333 thousand quarterly net additions
to postpaid customers, comprising 52.5% (48.7%) of our total mobile
customer base. For the full year, our postpaid customers expanded
by 797 thousand net additions, while prepaid customers declined by
1.8 million in line with our strategy of focusing on valuable
customers.
We registered solid customer growth on the fixed front with all
time high quarterly net additions of 147 thousand, of which 52
thousand were fiber and 95 thousand were ADSL. Accordingly, our
fixed customers reached 1.9 million, while our fiber customers
exceeded 1 million. Annually, we reported 342 thousand net
additions to our fixed customer base; 144 thousand were fiber and
197 thousand were ADSL customers. IPTV customers reached 360
thousand on 36 thousand quarterly, and 136 thousand annual net
additions. Mobile TV has been downloaded by 2.5 million users to
date.
Mobile churn declined 2.3pp in Q416 year-on-year and 2.7pp for
the full year on the back of our value focused customer strategy,
and value propositions that meet our customers’ needs. On the fixed
side, the churn rate was at 5.3% (5.2%) in Q416 and at 18.9%
(16.7%) for the full year.
We reached all time high quarterly mobile ARPU of TRY29.2
registering record high growth of 16.3% in Q416 year-on-year. For
the full year mobile ARPU reached a record high of TRY26.8 on 9.4%
growth. Mobile ARPU growth was mainly driven by our upsell
strategy, favourable change in customer mix, focus on high value
customer groups, and increased package penetration. The triple play
ratio, which includes customers of voice, data and digital services
combined reached 42%1 and contributed to the ARPU rise.
Fixed residential ARPU rose 1.6% in Q416 and 4.9% for the full
year with the increase in multiplay customers with TV2 to 36% of
total residential fiber customers, along with upsell efforts.
We saw solid demand for our mobile data offerings with the
introduction of 4.5G, which led to 68.4% growth in average mobile
data usage per user in Q416 and 64.7% for the full year. Average
mobile data usage of 4.5G users increased to 5GB in December
2016.
Mobile MoU rose 10.7% in Q416 and 9.2% for the full year with an
increased postpaid base and upsell efforts.
Smartphone penetration on our network reached 64% with 759
thousand quarterly and 3.1 million annual net additions.
Accordingly, there were 19.2 million smartphones on our network at
quarter end, with 55% being 4.5G enabled.
(1) Breakdown among mobile voice users which excludes
subscribers who do not use their line in the last 3 months(2)
Multiplay customers with TV: Internet + TV users & internet +
TV + voice users
TURKCELL INTERNATIONAL
lifecell* Financial Data Quarter
Year Q415 Q416 y/y%
FY15 FY16 y/y% Revenue
(million UAH) 1,158.9 1,313.7
13.4% 4,476.5 4,837.5
8.1% EBITDA (million UAH) 421.0 362.8 (13.8%) 1,485.2
1,356.4 (8.7%)
EBITDA margin (UAH) 36.3% 27.6%
(8.7pp) 33.2% 28.0% (5.2pp) Net income
/ (loss) (million UAH)** (130.2) (62.5) (52.0%) (4,438.7) 928.3 n.m
Capex (million UAH) 490.3 847.0
72.8% 5,959.1
2,255.8
(62.1%) Revenue (million TRY) 146.9 165.6 12.7% 564.3 570.7
1.1%
EBITDA (million TRY) 53.3 45.8
(14.1%) 187.7 159.9 (14.8%) EBITDA
margin (TRY) 36.3% 27.6% (8.7pp) 33.3% 28.0% (5.3pp)
Net income
/ (loss) (million TRY)** (16.8)
(7.9) (53.0%) (541.3)
98.3 n.m
(*) Since July 10, 2015, we hold a 100% stake in lifecell.
(**)During 3rd quarter of 2015, foreign exchange gains and
losses arising from receivable from or payable to a foreign
operation, the settlement of which is neither planned nor likely
occur in the foreseeable future, were considered to form part of a
net investment in a foreign operation and were recognized directly
in equity in the foreign currency translation differences in the
consolidated financial statements. Exchange differences arising in
the foreign operations’ individual financial statements which were
recognized directly in equity in the foreign currency translation
differences in the consolidated financial statements were
eliminated from the individual financial statements above for
reporting purposes.
lifecell, registering solid year-on-year growth of 13.4%
in local currency terms, reached record high quarterly revenues of
UAH1,314 million (UAH1,159 million) in Q416. This was mainly driven
by the rise in mobile data revenues on the back of higher data
usage on the 3G+ network and the increased contribution of terminal
sales. lifecell’s EBITDA fell by 13.8% in local currency terms
leading to an EBITDA margin of 27.6% (36.3%). This was due to
higher network related costs resulting from the 3G+ roll-out and
operational leasing expense post tower related sale and leaseback
transactions, as well as higher marketing expenses. lifecell’s
revenues in TRY terms grew by 12.7%, while EBITDA declined 14.1%
year-on-year in Q416.
For the full year, lifecell revenues in local currency terms
rose by 8.1%, while the EBITDA margin was at 28.0%. Impacted by
annual devaluation, lifecell registered limited revenue growth of
1.1% in TRY terms, while EBITDA declined by 14.8%.
lifecell* Operational Data Quarter
Year Q415 Q416 y/y%
FY15 FY16 y/y% Number
of subscribers (million)1 13.5 12.4
(8.1%) 13.5 12.4
(8.1%) Active (3 months)2 10.6 9.2 (13.2%)
10.6 9.2 (13.2%)
MOU (minutes) (12 months) 146.0
141.3 (3.2%) 150.0 140.5 (6.3%)
ARPU (Average Monthly Revenue per User),
blended (UAH)
28.4 35.2
23.9% 27.0 31.3
15.9% Active (3 months)
(UAH) 36.2 46.0 27.1% 35.5 40.6
14.4%
(1) We may occasionally offer campaigns and tariff schemes that
have an active subscriber life differing from the one that we
normally use to deactivate subscribers and calculate churn.
(2) Active subscribers are those who in the past three months
made a revenue generating activity.
(*) Since July 10, 2015, we hold a 100% stake in lifecell.
lifecell continued its focus on expanding the 3G+ network in
Q416, offering the largest geographical coverage in Ukraine. The
adoption of customers to 3G+ services continued as the number of
three-month active 3G data users reached 3.3 million. This led to
increased overall data usage on the lifecell network, as data
consumption per data user more than doubled since the introduction
of 3G+. lifecell remained the market leader in terms of smartphone
penetration, which rose to 57% in Q416.
lifecell’s three-month active subscriber base declined to 9.2
million, mainly due to decreasing multiple SIM card usage. Blended
ARPU (3-month active) rose by 27.1% in Q416 and 14.4% for the full
year, mainly driven by increased mobile data usage as well as
smartphone tariffs with higher ARPU. MoU (12-month active) fell
3.2% in Q416 and 6.3% for the full year, due to changing consumer
behaviour.
BeST* Quarter Year Q415
Q416 y/y% FY15
FY16 y/y% Number of subscribers
(million)1 1.5 1.6
6.7% 1.5 1.6 6.7%
Active (3 months) 1.1 1.2 9.1% 1.1
1.2 9.1%
Revenue (million BYN) 23.2
26.5 14.2% 82.6 98.6 19.4%
EBITDA (million BYN) 0.9 1.6 77.8% 1.8 3.9 116.7%
EBITDA margin
(BYN) 3.7% 6.1% 2.4pp 2.2%
4.0% 1.8pp Net loss (million BYN)** (12.4) (9.9)
(20.2%) (303.5) (43.5) (85.7%)
Capex (million BYN)
5.3 3.3 (37.7%)
11.7 11.1 (5.1%) Revenue
(million TRY) 38.1 44.5 16.8% 141.6 150.0 5.9%
EBITDA (million
TRY) 1.4 2.8 100.0% 3.1 6.2
100.0% EBITDA margin (TRY) 3.7% 6.2% 2.5pp 2.2% 4.1% 1.9pp
Net loss (million TRY)** (20.3) (16.5)
(18.7%) (531.3) (65.6) (87.7%) Capex
(million TRY) 7.3 7.8 6.8% 18.2
19.9 9.3%
(1) Starting from Q116, subscriber figure for BeST includes
suspended subscriptions whose contracts are still in place. All
figures presented in this document for prior periods have been
restated to reflect this change.
(*)BeST, in which we hold an 80% stake, has operated in Belarus
since July 2008.
(**)During 3rd quarter of 2015, foreign exchange gains and
losses arising from receivable from or payable to a foreign
operation, the settlement of which is neither planned nor likely
occur in the foreseeable future, were considered to form part of a
net investment in a foreign operation and were recognized directly
in equity in the foreign currency translation differences in the
consolidated financial statements. Exchange differences arising in
the foreign operations’ individual financial statements which were
recognized directly in equity in the foreign currency translation
differences in the consolidated financial statements were
eliminated from the individual financial statements above for
reporting purposes.
BeST revenues rose by 14.2% year-on-year in Q416 in local
currency terms driven by subscriber base expansion along with
increased voice and terminal revenues on higher smartphone sales.
BeST registered an EBITDA margin improvement of 2.4pp to 6.1%
(3.7%), mainly driven by top-line growth and better operational
expense management. BeST’s revenues in TRY terms grew by 16.8%
year-on-year, while EBITDA in TRY terms doubled.
For the full year, revenues in local currency terms rose by
19.4% with EBITDA ramping up 116.7% leading to an EBITDA margin of
4.0% (2.2%). Revenues in TRY terms increased by 5.9%, limited by
annual devaluation, while EBITDA rose by 100%.
BeST continued to offer 4G services to its customers in Minsk
city centre in partnership with beCloud. From September 2016
onwards, a wide range of commercial product portfolio covering 4G
packages have been offered. As part of Turkcell’s global digital
services strategy, BeST is committed to offering new mobile
services.
KKTCELL (million TRY)* Quarter
Year Q415 Q416 y/y%
FY15 FY16 y/y% Number
of subscribers (million)1 0.4 0.5
25.0% 0.4 0.5
25.0% Revenue 33.4 35.7 6.9% 130.9 135.9 3.8%
EBITDA
12.4 12.3 (0.8%) 50.3 50.0
(0.6%) EBITDA margin 37.1% 34.4% (2.7pp) 38.4% 36.8% (1.6pp)
Net income 7.9 3.6 (54.4%) 30.1
28.6 (5.0%) Capex 14.1 11.4
(19.1%) 29.6 24.4 (17.6%)
(1) Starting from Q116, subscriber figure for KKTCELL includes
M2M subscriptions as well. All figures presented in this document
for prior periods have been restated to reflect this change.
(*) KKTCELL, in which we hold a 100% stake, has operated in
Northern Cyprus since 1999.
Kuzey Kıbrıs Turkcell revenues rose by 6.9% year-on-year
in Q416, reflecting mobile data growth on the back of higher data
demand. EBITDA declined by 0.8% leading to an EBITDA margin of
34.4% (37.1%), mainly due to increased marketing expenses in
relation to the launch of our digital brand lifecell.
For the full year, revenues grew by 3.8%, while EBITDA declined
by 0.6%, leading to an EBITDA margin of 36.8% (38.4%). The decline
in EBITDA margin was driven by higher marketing expenses.
Fintur has operations in Azerbaijan, Kazakhstan, Moldova
and Georgia, and we hold a 41.45% stake in the company. In
accordance with our strategic approach and IFRS requirements,
Fintur is classified as ‘held for sale’ and reported as
discontinued operations as of October 2016*. Going forward, during
discontinued operation classification period, our profit & loss
statement will not be impacted by Fintur results.
Turkcell Group Subscribers
Turkcell Group subscribers amounted to approximately 50.1
million as of December 31, 2016. This figure is calculated by
taking the number of subscribers of Turkcell Turkey and each of our
subsidiaries. It includes the total number of mobile, fiber, ADSL
and IPTV subscribers of Turkcell Turkey, and the mobile subscribers
of lifecell and BeST, as well as those of Kuzey Kıbrıs Turkcell and
Turkcell Europe.
Turkcell Group
Subscribers Q415 Q416 y/y
% Mobile Postpaid (million) 16.6 17.4 4.8%
Mobile Prepaid (million) 17.4 15.7 (9.8%) Fiber (thousand) 899.4
1,043.9 16.1% ADSL (thousand) 620.8 818.0 31.8% IPTV (thousand)
223.7 359.7 60.8%
Turkcell Turkey subscribers
(million)1 35.8 35.3 (1.4%) Ukraine
13.5 12.4 (8.1%) Belarus2 1.5 1.6 6.7% KKTCELL3 0.5 0.5 - Turkcell
Europe4 0.3 0.3 -
Turkcell Group Subscribers (million)
51.6 50.1 (2.9%)
(1) Subscribers to more than one service are counted separately
for each service.(2) Starting from Q116, subscriber figure for BeST
includes suspended subscriptions whose contracts are still in
place. All figures presented in this document for prior periods
have been restated to reflect this change.(3) Starting from Q116,
subscriber figure for KKTCELL includes M2M subscriptions as well.
All figures presented in this document for prior periods have been
restated to reflect this change.(4) The “wholesale traffic
purchase” agreement, signed between Turkcell Europe GmbH operating
in Germany and Deutsche Telekom for five years in 2010, had been
modified to reflect the shift in business model to a “marketing
partnership”. The new agreement between Turkcell and a subsidiary
of Deutsche Telekom was signed on August 27, 2014. The transfer of
Turkcell Europe operations to Deutsche Telekom’s subsidiary was
completed on January 15, 2015. Subscribers are still included in
the Turkcell Group Subscriber figure.
(*)For further details, please refer to our consolidated
financial statements and notes as at and for December 31, 2016
which can be accessed via our web site in the investor relations
section (www.turkcell.com.tr).
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
The foreign exchange rates used in our financial reporting,
along with certain macroeconomic indicators, are set out below.
Quarter Year Q415
Q316 Q416 y/y%
q/q% FY15 FY16
y/y% GDP Growth (Turkey) 7.4% (1.8%)
n.a n.a n.a 6.1% n.a n.a
Consumer Price Index (Turkey) 2.4% 1.1%
3.6% 1.2pp 2.5pp 8.8% 8.5%
(0.3pp) US$ / TRY rate Closing Rate 2.9076 2.9959
3.5192 21.0% 17.5% 2.9076 3.5192 21.0% Average Rate 2.9366 2.9706
3.2591 11.0% 9.7% 2.7271 3.0059 10.2%
EUR / TRY rate Closing
Rate 3.1776 3.3608 3.7099 16.8% 10.4% 3.1776 3.7099 16.8% Average
Rate 3.2000 3.3104 3.5147 9.8% 6.2% 3.0219 3.3179 9.8%
US$ / UAH
rate Closing Rate 24.00 25.91 27.19 13.3% 4.9% 24.00 27.19
13.3% Average Rate 23.18 25.28 25.88 11.6% 2.4% 21.79 25.56 17.3%
US$ / BYN rate* Closing Rate 1.8569 1.9264 1.9585 5.5% 1.7%
1.8569 1.9585 5.5% Average Rate 1.7909 1.9732
1.9403 8.3% (1.7%) 1.5917 1.9846
24.7%
* The official currency of the Republic of Belarus has been
redenominated on July 1, 2016. As a result, BYR10,000 has become
BYN1 starting from 1 July 2016. Prior periods have been adjusted
accordingly for presentation purposes.
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS: We
believe Adjusted EBITDA, among other measures, facilitates
performance comparisons from period to period and management
decision making. It also facilitates performance comparisons from
company to company. Adjusted EBITDA as a performance measure
eliminates potential differences caused by variations in capital
structures (affecting interest expense), tax positions (such as the
impact of changes in effective tax rates on periods or companies)
and the age and book depreciation of tangible assets (affecting
relative depreciation expense). We also present Adjusted EBITDA
because we believe it is frequently used by securities analysts,
investors and other interested parties in evaluating the
performance of other mobile operators in the telecommunications
industry in Europe, many of which present Adjusted EBITDA when
reporting their results.
Our Adjusted EBITDA definition includes Revenue, Direct Cost of
Revenue excluding depreciation and amortization, Selling and
Marketing expenses and Administrative expenses, but excludes
translation gain/(loss), finance income, share of profit of equity
accounted investees, gain on sale of investments, income/(loss)
from related parties, minority interest and other
income/(expense).
Nevertheless, Adjusted EBITDA has limitations as an analytical
tool, and you should not consider it in isolation from, or as a
substitute for analysis of, our results of operations, as reported
under IFRS. The following table provides a reconciliation of
Adjusted EBITDA, as calculated using financial data prepared in
accordance with IFRS as issued by the IASB, to net profit, which we
believe is the most directly comparable financial measure
calculated and presented in accordance with IFRS as issued by the
IASB.
Turkcell Group (million TRY) Quarter
Year Q415 Q416 y/y%
FY15 FY16 y/y%
Adjusted EBITDA 1,058.2 1,371.1 29.6%
4,140.5 4,619.5 11.6% Finance income 153.5
493.9 221.8% 756.1 1,064.8 40.8% Finance costs (141.0) (692.2)
390.9% (799.5) (1,237.6) 54.8% Other income / (expense) (31.1)
(44.4) 42.8% (225.9) (234.3) 3.7% Depreciation and amortization
(437.0) (604.3) 38.3% (1,667.8) (2,203.2) 32.1%
Consolidated
profit from continued operations before income tax & minority
interest 602.6 524.1 (13.0%)
2,203.3 2,009.2 (8.8%) Income tax expense
(109.2) (111.3) 1.9% (667.1) (423.2) (36.6%)
Consolidated profit
from continued operations before minority interest 493.3
412.8 (16.3%) 1,536.2 1,586.0
3.2% Discontinued operations 98.4 (44.4) (145.1%) 367.3
(42.2) (111.5%)
Consolidated profit before minority interest
591.8 368.4 (37.7%)
1,903.6 1,543.8 (18.9%)
NOTICE: This release includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934 and the Safe
Harbor provisions of the US Private Securities Litigation Reform
Act of 1995. This includes, in particular, our targets for revenue,
EBITDA and capex in 2017 and for the medium term 2017 to 2019. More
generally, all statements other than statements of historical facts
included in this press release, including, without limitation,
certain statements regarding our operations, financial position and
business strategy may constitute forward-looking statements. In
addition, forward-looking statements generally can be identified by
the use of forward-looking terminology such as, among others,
"will," "expect," "intend," "estimate," "believe", "continue" and
“guidance”.
Although Turkcell believes that the expectations reflected in
such forward-looking statements are reasonable at this time, it can
give no assurance that such expectations will prove to be correct.
All subsequent written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by
reference to these cautionary statements. For a discussion of
certain factors that may affect the outcome of such forward looking
statements, see our Annual Report on Form 20-F for 2015 filed with
the U.S. Securities and Exchange Commission, and in particular the
risk factor section therein. We undertake no duty to update or
revise any forward looking statements, whether as a result of new
information, future events or otherwise.
The Company makes no representation as to the accuracy or
completeness of the information contained in this press release,
which remains subject to verification, completion and change. No
responsibility or liability is or will be accepted by the Company
or any of its subsidiaries, board members, officers, employees or
agents as to or in relation to the accuracy or completeness of the
information contained in this press release or any other written or
oral information made available to any interested party or its
advisers.
ABOUT TURKCELL: Turkcell is a converged telecommunication
and technology services provider, founded and headquartered in
Turkey. It serves its customers with voice, data, TV and
value-added consumer and enterprise services on mobile and fixed
networks. Turkcell launched LTE services in its home country on
April 1st, 2016, employing LTE-Advanced and 3 carrier aggregation
technologies in 81 cities. In 2G and 3G, Turkcell’s population
coverage is at 99.67% and 96.04%, respectively, as of December
2016. It offers up to 1 Gbps fiber internet speed with its FTTH
services. Turkcell Group companies operate in 6 countries – Turkey,
Ukraine, Belarus, Northern Cyprus, Germany, Azerbaijan – as of
December 31, 2016. Turkcell Group reported a TRY14.3 billion
revenue in FY16 with total assets of TRY31.6 billion as of December
31, 2016. It has been listed on the NYSE and the BIST since July
2000, and is the only NYSE-listed company in Turkey. Read more at
www.turkcell.com.tr
This press release can also be viewed using the Turkcell
Investor Relation app, which can be downloaded
here for iOS,
and here for Android mobile
devices.
Appendix A – Tables
Table: Translation gain and loss details
Million TRY Quarter Year
Q415 Q416 y/y %
FY15 FY16 y/y % Turkcell Turkey
45.9 (499.1) n.m 402.1 (759.5)
(288.9%) Turkcell International 2.2 (29.6) n.m (892.3) (37.4)
(95.8%) Other Subsidiaries (2.9) 6.3 n.m 0.9 7.2 700.0%
Turkcell
Group 45.2 (522.4)
n.m (489.3) (789.7) 61.4%
Table: Income tax expense details
Million TRY Quarter Year
Q415 Q416 y/y %
FY15 FY16 y/y % Current Tax
expense (46.3) (12.4) (73.2%) (591.3)
(200.7) (66.1%) Deferred Tax Income/expense (62.9) (98.9)
57.2% (75.8) (222.5) 193.5%
Income Tax expense
(109.2) (111.3) 1.9%
(667.1) (423.2) (36.6%)
Table: Reconciliation of proforma net income to net income
per IFRS
Group net income:
Net income
impacts (million TRY) Q415 Net income impacts
(million TRY) Q416 Proforma net
income 610 Proforma net income 706 FX
impact (net of tax and minority interest) 38 FX impact (net of tax)
(427) Interest income (net of tax) 16 Interest income (net of tax)
332 Interest expense (net of tax) (43) Interest expense (net of
tax) (134)
One-off impacts (net of tax) One-off
impacts (net of tax) Commercial Agreement Termination
(6) Turk Telekom Settlement (51) 4.5G VAT receivables discount (30)
4.5G VAT receivables discount 1 4.5G license amortization (6) 4.5G
license amortization (81) Fintur impact 93 Fintur impact (42) Other
impacts (37) Other impacts (4)
Net income - IFRS
584 Net income -IFRS 351
Net income impacts (million
TRY) FY15 Net income impacts (million TRY)
FY16 Proforma net income
2,348 Proforma net income 2,522 FX impact (net
of tax and minority interest) (404) FX impact (net of tax) (643)
Interest income (net of tax) 181 Interest income (net of tax) 403
Interest expense (net of tax) (118) Interest expense (net of tax)
(342)
One-off impacts (net of tax) One-off impacts
(net of tax) Commercial Agreement Termination (118) Coup
attempt emergency
communication packages
(48) Turk Telekom Settlement (51) Expenses incurred in relation to
tax amnesty (136) 4.5G VAT receivables discount (30) 4.5G VAT
receivables discount 30 4.5G license amortization (6) 4.5G license
amortization (260) Fintur impact 349 Fintur impact (40) Other
impacts (83) Other impacts 6
Net income - IFRS
2,068 Net income - IFRS 1,492
Turkcell Turkey net income:
Net income
impacts (million TRY) Q415 Net income impacts
(million TRY) Q416 Proforma net
income 584 Proforma net income 656 FX
impact (net of tax) 37 FX impact (net of tax) (399) Interest income
(net of tax) 16 Interest income (net of tax) 332 Interest expense
(net of tax) (19) Interest expense (net of tax) (127)
One-off impacts (net of tax) One-off impacts (net of
tax) Commercial Agreement Termination (6) Turk Telekom
Settlement (51) 4.5G VAT receivables discount (30) 4.5G VAT
receivables discount 1 4.5G license amortization (6) 4.5G license
amortization (81) Other impacts (7) Other impacts 4
Net income -
IFRS 518 Net income -IFRS
386 Net
income impacts (million TRY) FY15 Net income
impacts (million TRY) FY16
Proforma net income 2,291 Proforma net income
2,384 FX impact (net of tax) 302 FX impact (net of tax)
(608) Interest income (net of tax) 181 Interest income (net of tax)
403 Interest expense (net of tax) (39) Interest expense (net of
tax) (301)
One-off impacts (net of tax) One-off
impacts (net of tax) Commercial Agreement Termination
(118) Coup attempt emergency
communication packages
(48) Turk Telekom Settlement (51) Expenses incurred in relation to
tax amnesty (136) 4.5G VAT receivables discount (30) 4.5G VAT
receivables discount 30 4.5G license amortization (6) 4.5G license
amortization (260) Other impacts (46) Other impacts 16
Net
income - IFRS 2,484 Net income - IFRS
1,480 TURKCELL ILETISIM HIZMETLERI A.S.
IFRS SELECTED FINANCIALS (TRY
Million)
Quarter Ended Quarter
Ended Quarter Ended Year Ended Year Ended
December 31, September 30, December 31,
December 31, December 31,
2015
2016
2016
2015
2016
Consolidated Statement of Operations Data
Turkcell Turkey 2,997.8 3,275.7 3,576.2 11,480.9 12,787.6 Consumer
2,391.0 2,625.8 2,867.3 9,127.3 10,216.0 Corporate 529.2 536.4
591.1 2,031.7 2,191.5 Other 77.6 113.5 117.8 321.9 380.1 Turkcell
International 223.8 222.4 251.6 856.1 874.7 Other 112.9 160.4 215.8
432.4 623.3 Total revenues 3,334.5 3,658.5 4,043.6 12,769.4
14,285.6 Direct cost of revenues (2,054.8) (2,372.6)
(2,608) (7,769.5) (9,236.6) Gross profit 1,279.7
1,285.9 1,435.3 4,999.9 5,049.0 Administrative expenses (165.9)
(177.3) (190.0) (625.3) (721.8) Selling & marketing expenses
(492.6) (468.0) (478.5) (1,901.9) (1,910.9) Other Operating Income
/ (Expense) (31.1) (192.6) (44.4) (225.9)
(234.3) Operating profit before financing costs 590.1 448.0
722.4 2,246.8 2,182.0 Finance costs (141.0) (349.7) (692.2) (799.5)
(1,237.6) Finance income 153.5 187.2 493.9 756.1 1,064.8
Discontinued operations 98.4 (5.1) (44.4)
367.3 (42.2) Income before tax and non-controlling interest
701.0 280.4 479.7 2,570.7 1,967.0 Income tax expense (109.2)
(106.3) (111.3) (667.1) (423.2) Income before
non-controlling interest 591.8 174.1 368.4 1,903.6 1,543.8
Non-controlling interests (7.6) (11.5) (17.7)
164.1 (51.7) Net income 584.2 162.6 350.7
2,067.7 1,492.1 Net income per share 0.27 0.07
0.16 0.94 0.68
Other Financial Data Gross
margin 38.4% 35.1% 35.5% 39.2% 35.3% EBITDA(*) 1,058.2 1,217.6
1,371.1 4,140.5 4,619.5 Capital expenditures 6,188.9 743.2 1,133.5
8,536.2 3,494.7
Consolidated Balance Sheet Data (at
period end) Cash and cash equivalents 2,918.8 5,646.2 6,052.4
2,918.8 6,052.4 Total assets 26,207.3 30,230.3 31,600.2 26,207.3
31,600.2 Long term debt 3,487.8 6,445.2 6,935.1 3,487.8 6,935.1
Total debt 4,214.2 8,131.5 9,781.2 4,214.2 9,781.2 Total
liabilities 11,788.4 14,785.1 15,531.8 11,788.4 15,531.8 Total
shareholders’ equity / Net Assets 14,418.9 15,445.3 16,068.4
14,418.9 16,068.4 (*) Please refer to the notes on
reconciliation of Non-GAAP Financial measures on page 14 (**) For
further details, please refer to our consolidated financial
statements and notes as at 31 December 2016 on our web site
TURKCELL ILETISIM HIZMETLERI A.S.
TURKISH ACCOUNTING STANDARDS SELECTED
FINANCIALS (TRY Million)
Quarter Ended Quarter
Ended Quarter Ended Year Ended Year Ended
December 31, September 30, December 31,
December 31, December 31,
2015
2016
2016
2015
2016
Consolidated Statement of Operations Data
Turkcell Turkey 2,997.8 3,275.7 3,576.2 11,480.9 12,787.6 Consumer
2,391.0 2,625.8 2,867.3 9,127.3 10,216.0 Corporate 529.2 536.4
591.1 2,031.7 2,191.5 Other 77.6 113.5 117.8 321.9 380.1 Turkcell
International 223.8 222.4 251.6 856.1 874.7 Other 112.9 160.4 215.8
432.4 623.3 Total revenues 3,334.5 3,658.5 4,043.6 12,769.4
14,285.6 Direct cost of revenues (2,054.2) (2,356.3)
(2,608.4) (7,766.5) (9,219.1) Gross profit 1,280.3
1,302.2 1,435.2 5,002.9 5,066.5 Administrative expenses (165.9)
(177.3) (190.0) (625.3) (721.8) Selling & marketing expenses
(492.6) (468.0) (478.5) (1,901.9) (1,910.9) Other Operating Income
/ (Expense) (15.9) 105.9 545.4 925.0
1,016.9 Operating profit before financing and investing costs 605.9
762.8 1,312.1 3,400.7 3,450.7 Income from investing activities 6.2
7.6 8.3 14.9 24.6 Expense from investing activities (27.5) (6.5)
(40.3) (74.3) (59.9) Discontinued operations 98.4 (5.1)
(44.4) 367.3 (42.2) Income before financing
costs 683.0 758.8 1,235.7 3,708.6 3,373.2 Finance income - - 385.6
- 385.6 Finance expense 18.6 (456.1) (1,141.7)
(1,135.1) (1,768.8) Income before tax and non-controlling
interest 701.6 302.7 479.6 2,573.5 1,990.0 Income tax expense
(109.4) (109.4) (111.3) (667.7) (426.6)
Income before non-controlling interest 592.2 193.3 368.3 1,905.8
1,563.4 Non-controlling interest (7.6) (11.5) (17.7)
164.1 (51.7) Net income 584.6 181.8 350.6 2,069.9
1,511.7 Net income per share 0.27 0.08 0.16 0.94 0.69
Other Financial Data Gross margin 38.4% 35.6% 35.5%
39.2% 35.5% EBITDA(*) 1,058.2 1,217.6 1,371.1 4,140.5 4,619.5
Capital expenditures 6,188.9 743.2 1,133.5 8,536.2 3,494.7
Consolidated Balance Sheet Data (at period end) Cash and
cash equivalents 2,918.8 5,646.2 6,052.4 2,918.8 6,052.4 Total
assets 26,184.2 30,230.3 31,600.2 26,184.2 31,600.2 Long term debt
3,487.8 6,445.2 6,935.1 3,487.8 6,935.1 Total debt 4,214.2 8,131.5
9,781.2 4,214.2 9,781.2 Total liabilities 11,784.9 14,785.1
15,531.8 11,785.4 15,531.8 Total shareholders’ equity / Net Assets
14,399.3 15,445.3 16,068.4 14,399.3 16,068.4
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version on businesswire.com: http://www.businesswire.com/news/home/20170215005777/en/
TurkcellInvestor RelationsKorhan Bilek, +90-212-313
1888Directorinvestor.relations@turkcell.com.trorCorporate
Communications:Tel: + 90 212 313
2321Turkcell-Kurumsal-Iletisim@turkcell.com.tr
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