“Turkcell’s Recipe for High Growth: Digital
Services”
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 the 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 as of 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
March 31, 2017 refer to the same item as at March 31, 2016. For
further details, please refer to our consolidated financial
statements and notes as at and for March 31, 2017, 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 first and fourth quarters
of 2016, and the first quarter of 2017 is based on IFRS figures in
TRY terms unless otherwise stated.
- 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 to the calculations in the text.
- Year-on-year and quarter-on-quarter
percentage comparisons appearing in this press release reflect
mathematical calculation.
FIRST QUARTER FINANCIAL HIGHLIGHTS
- Highest revenue and EBITDA1 growth of
the past 10 years both at the Group and Turkcell Turkey level. All
time high quarter revenue and EBITDA at the Group level
- Group revenues and EBITDA up 25.6% and
39.8%, respectively with EBITDA margin of 34.5% which improved by
3.4pp year-on-year and which is the highest first quarter EBITDA
margin since 2009
- Turkcell Turkey’s revenues and EBITDA
up 21.7% and 38.5%, respectively with an EBITDA margin expansion of
4.3pp to 35.6%; data and digital services revenues, comprising 67%
of Turkcell Turkey revenues, up 94.2%
- 18% of Turkcell Turkey revenues is now
generated by digital services
- Turkcell International revenues up
26.0% with an EBITDA margin of 24.3%
- Other subsidiaries’ revenues,
comprising information and entertainment services, call center
services and financial services revenues, up 139.5% with the
increased contribution of the consumer finance company
- Group net income at TRY459 million
(TRY563 million)
- Group’s FX position under control with
short position declining to just US$91 million at Q117-end
- TRY100 million of consumer finance
company receivables securitized with asset-backed security issuance
in April 2017, contributing to Group’s focus on balance sheet
efficiency and boosting cash flow generation ability
- Our Board of Directors has decided to
propose the distribution of TRY1,791 million gross cash dividends
(gross DPS: TRY 0.8141), in line with the pay-out ratio stated in
our dividend policy, at our upcoming Ordinary General Assembly
meeting to be held on 25 May 2017. The dividend payments proposed
will be made in three equal instalments on 15 June 2017, 15
September 2017 and 15 December 2017. Please note that the dividend
distribution is subject to the approval of the General
Assembly.
FINANCIAL HIGHLIGHTS
TRY million Q116
Q416 Q117 y/y % q/q
% Revenue 3,225 4,044 4,053 25.6%
0.2% Turkcell Turkey 2,928 3,576 3,563 21.7% (0.4%) EBITDA1
1,002 1,371 1,400 39.8% 2.1% Turkcell Turkey 916 1,227 1,269 38.5%
3.5% EBITDA Margin 31.1% 33.9% 34.5% 3.4pp 0.6pp Net Income
563 351 459 (18.5%) 30.8%
(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income.
For further details, please refer to our consolidated financial
statements and notes as at and for March 31, 2017 which can be
accessed via our web site in the investor relations section
(www.turkcell.com.tr).
COMMENTS BY KAAN TERZIOGLU, CEO
Turkcell’s recipe for high growth: digital services
We are pleased to share the steps we have taken towards our goal
of digital transformation set in 2015. Over the past two years, we
have transitioned from selling minutes and GB’s to selling
processed data. We have evolved into a digital services company,
creating our own technologies and offering our digital services
globally, while maintaining our leading position in the
telecommunication sector. This quarter we have continued to see the
positive results of our efforts, having beaten our previous records
at both the top-line and EBITDA1 levels. In-line with our plans,
our digital products and services became our recipe for high
growth.
As of the first quarter, 18% of Turkcell Turkey revenues is now
generated by digital services. The number of services developed
in-house has reached 98, while the total downloads of our digital
services have exceeded 53 million. Consumer interest in our
services continued to grow, supported by the impact of 4.5G, which
completed its first year. Our BiP application downloads have
reached 13 million in 192 countries. Of these, 1.4 million were
abroad. In Anatolia it is now used by 1 in 3 of our customers. Our
Fizy application has overtaken its leading global competitor in
Turkey, doubling its customer size. TV viewing duration with
Turkcell TV+ has increased to 40 minutes from 7 minutes per user
per day since its launch. The documents stored in Lifebox have
surpassed 700 million, as this app’s downloads have exceeded 4
million, 45 thousand of which were outside of Turkey. Introducing
Turkey to digital publishing, Dergilik has gained notable
recognition. This digital publishing service has continued to
enable our customers to access the most popular magazines on their
mobile devices. Dergilik has seen 2.2 million magazine downloads
within the first three months of its launch, setting a new
readership record for digital publishing. And with the latest 13
additions, the total number of publications on the platform has
reached 300.
4.5G fuels solid growth of data and digital services
At the beginning of April, we concluded Turkey’s first year with
4.5G. Over the past year, Turkcell’s 4.5G investments have resulted
in 83% population coverage across all 81 cities of Turkey, with
around 26 million subscribers. Boosted by 4.5G users, data
consumption of which reached 5.1GB in March 2017, per capita data
consumption of all users has increased 69% year-on-year to 3GB. Our
smartphone penetration in Turkey has continued to gain traction,
reaching 68% at the end of the first quarter, while the share of
4.5G compatible smartphones has reached 57%. On the back of our
investments and growing customer demand, our data and digital
service revenues posted 94% year-on-year growth.
In the first year of 4.5G, Turkcell enabled a video call via
base stations domestically produced in Turkey as a part of the ULAK
project. At this event, we staged a video call between our two
domestic base stations located in Istanbul and Erzincan with our
instant messaging application BiP, to celebrate 4.5G’s first
anniversary. This video call marks not only a first for the
telecommunications industry in our home country, but also signifies
that our efforts in the past two years have come to fruition.
The highest growth rate of the past decade
We have maintained our strong growth trend in the first quarter,
where both Turkcell Group and Turkcell Turkey posted the strongest
yearly growth figures of the past decade for both revenues and
EBITDA.
In the first quarter, Turkcell Group has reached 4.1 billion TL
of revenues and 1.4 billion TL of EBITDA on annual growth rates of
25.6% and 39.8% respectively. The EBITDA margin of 34.5% was the
highest first quarter margin since 2009. Group net income was
recorded as 459 million TL. Turkcell Turkey growth including
financial services revenues reached 25.4%.
These financial results have been made possible with our strong
operational performance. Our customer base reached 50.4 million,
35.8 million of which are in Turkey. We have seen 496 thousand
total net additions in Turkey with a balanced portfolio growth. Our
mobile segment customers reached 33.4 million with an increase of
351 thousand subscribers while postpaid subscribers increased by
298 thousand on a quarterly basis, representing 53% of our customer
base. In the fixed segment, our fiber and ADSL customers rose by 42
thousand and 62 thousand, respectively on a quarterly basis, while
our total fixed customers reached around 2 million. IPTV customer
base increased to 402 thousand on 42 thousand quarterly net
additions.
Based on our convergence strategy, the share of multi-play
customers in mobile segment using voice, data and digital services
was at 42%2, while on the fixed side the share of customers using
data services with TV has reached 39%3.
Thanks to higher data and digital services revenues from
postpaid subscribers, mobile blended ARPU (excluding M2M) increased
to TRY30.5 on 17.3% annual growth, while fixed residential ARPU
reached TRY53.1 with 5.6% growth.
Leading innovation and social responsibility
While Turkey has passed the first year mark of its transition to
4.5G, Turkcell intensified its efforts towards developing 5G
technologies. Over the past two years, we forged strategic
collaborations with leading national and international technology
companies and universities to develop 5G technologies. Recently, we
have announced our cooperation with ZTE, in addition to our
existing relations with Huawei and Ericsson.
We have received two awards at the GSMA World Mobile Congress,
held in Barcelona, in recognition of our focus on using technology
for the greater good of humanity. Our overall services for the
Syrian refugee community in Turkey brought us GSMA’s biggest
recognition in the form of “Outstanding Contribution to the Mobile
Industry” award, which were proud to share with four other
companies working for refugees. Additionally, we have also won a
second award for best use of our mobile technology in humanitarian
and emergency situations with our “Merhaba Umut” (“Hello Hope”)
project that helps Syrian refugees overcoming the language barrier
in their daily lives in Turkey.
Furthermore, we have carried our “Technology for Humanity” focus
to the Center for the Fourth Industrial Revolution founded by the
World Economic Forum in San Francisco. In a speech we delivered at
the first session of the inaugural roundtable of the Center, we
invited the representatives of the World’s leading technology
companies to leverage technology for a better future for
humanity.
Financell raises the Fintech game
We continued to expand our product and service range in the
Fintech field, where finance and technology meet. We are leveraging
our customer relationships established through telecommunication
services in our move to the financial services arena. Accordingly,
as well as providing financing options that meet our customers’
technology needs via Financell, we also offer distinctive payment
solutions via Paycell. We will also be introducing our customers to
our new generation payment card, Paycell Card, once we receive
regulatory approval. Within three years of its launch, we aim to
have 10 million Paycell card users.
Our consumer finance company, which had initiated its operations
in 2016, had quickly taken giant steps, and will continue to create
funds utilizing capital markets instruments. Within this framework,
Financell has achieved a first in Turkey by participating in the
issuing of an asset-backed security in the non-banking sector. This
notably contributed to our Group’s focus on balance sheet
efficiency.
Last but not the least, our Board has decided to propose 1,791
million TL gross cash dividends to the approval of our upcoming
General Assembly meeting to be held on 25 May 2017. This figure is
perfectly in line with the pay-out ratio stated in our dividend
policy. Please also note that the dividend distribution will be
subject to the approval of the General Assembly.
We have made a strong start to 2017, and we progress in line
with our 2017 targets. We thank all our colleagues and stakeholders
for the role they have played in our success, along with our
investors and our Board of Directors for their unyielding trust and
support. We also express our gratitude to our customers and
business partners who have been with us throughout our success
story.
(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income.(2) Share among mobile voice users
excluding subscribers who have not used their lines in the last 3
months(3) Multiplay customers with TV: Internet + TV users &
internet + TV + voice users
FINANCIAL AND OPERATIONAL REVIEW
Financial Review of Turkcell Group
Profit & Loss Statement (million TRY)
Q116 Q416 Q117
y/y % q/q % Revenue
3,225.4 4,043.6 4,052.6
25.6% 0.2% Cost of revenue1 (2,018.8)
(2,608.3) (2,616.6) 29.6% 0.3%
Cost of
revenue1/Revenue (62.6%) (64.5%)
(64.6%) (2.0pp) (0.1pp) Depreciation and
amortization (454.8) (604.3) (628.4) 38.2% 4.0%
Gross Margin
37.4% 35.5% 35.4% (2.0pp)
(0.1pp) Administrative expenses (178.7) (190.0) (199.8)
11.8% 5.2%
Administrative expenses/Revenue (5.5%)
(4.7%) (4.9%) 0.6pp (0.2pp) Selling and
marketing expenses (481.2) (478.5) (464.6) (3.4%) (2.9%)
Selling
and marketing expenses/Revenue (14.9%) (11.8%)
(11.5%) 3.4pp 0.3pp EBITDA2
1,001.5 1,371.1 1,399.9 39.8%
2.1% EBITDA Margin 31.1% 33.9%
34.5% 3.4pp 0.6pp EBIT3
546.7 766.8 771.5 41.1% 0.6% Net
finance costs 166.2 (198.3) (146.6) (188.2%) (26.1%) Finance costs
(55.0) (692.2) (348.1) 532.9% (49.7%) Finance income 221.2 493.9
201.5 (8.9%) (59.2%) Other income / (expense) (11.1) (44.4) 3.7 n.m
n.m Non-controlling interests (10.9) (17.7) (12.8) 17.4% (27.7%)
Income tax expense (143.4) (111.3) (157.2) 9.6% 41.2% Discontinued
operations 15.2 (44.4) - n.m n.m
Net Income
562.7 350.7 458.6
(18.5%) 30.8%
(1) Including depreciation and amortization expenses.(2) EBITDA
is a non-GAAP financial measure. See page 13 for the explanation of
how we calculate Adjusted EBITDA and its reconciliation to net
income.(3) EBIT is a non-GAAP financial measure and is equal to
EBITDA minus depreciation and amortization expenses.
Revenue of the Group rose by 25.6% year-on-year in Q117.
This growth came mainly from the strong ARPU performance of
Turkcell Turkey, driven by solid data and digital services
growth.
Turkcell Turkey revenues, at 88% of Group revenues, rose by
21.7% to TRY3,563 million (TRY2,928 million).
- Mobile data revenues grew by 88.5% to
TRY1,438 million (TRY763 million) driven mainly by the rise in
smartphone penetration, increased data users and higher data
consumption.
- Fixed data revenues rose by 31.8% to
TRY317 million (TRY240 million) on increased users and
consumption.
- Digital services revenues rose by
179.7% to TRY631 million (TRY226 million). This growth comes mainly
from Turkcell TV+, our digital publishing service Dergilik, music
platform fizy, personal cloud service lifebox and other mobile
services.
- Overall data and digital services
revenues, constituting 67% of Turkcell Turkey revenues, grew by
94.2% to TRY2,386 million (TRY1,229 million).
- Wholesale revenues grew by 34.7% to
TRY108 million (TRY81 million) positively impacted by the increase
in carrier traffic and depreciation of the Turkish Lira.
- We reported revenues of TRY65 million
originating from our Universal Service Project, which is aimed at
building and operating infrastructure in unserved rural areas.
Contractually, this project is financed by Universal Service fund
on a net cost basis.
Turkcell International revenues, comprising 6% of Group
revenues, grew by 26.0% to TRY248 million (TRY197 million), driven
mainly by the increase in lifecell and BeST revenues.
Other subsidiaries' revenues, constituting 6% of Group revenues,
which includes information and entertainment services, call center
revenues and revenues from financial services rose by 139.5% to
TRY242 million (TRY101 million). This was driven by growth in the
consumer finance company’s revenues, which reached TRY116 million
(TRY2 million) in Q117.
Cost of revenue rose to 64.6% (62.6%) as a percentage of
revenues in Q117. This was mainly due to the rise in depreciation
and amortization expenses (1.4pp) reflecting the 4.5G investments,
consumer finance company funding costs (1.4pp), GSM related
equipment costs (1.5pp) and other cost items (1.5pp), despite the
fall in radio expenses (1.6pp), the treasury share (1.2pp) and
interconnect costs (1.0pp).
Administrative expenses declined to 4.9% (5.5%) as a
percentage of revenues in Q117.
Selling and marketing expenses fell to 11.5% (14.9%) as a
percentage of revenues in Q117, driven by the decline in marketing
expenses (1.5pp), prepaid subscriber frequency usage fees (0.9pp),
selling expenses (0.4pp) and other cost items (0.6pp).
EBITDA1 grew by 39.8% year-on-year in Q117 with a
3.4pp improvement in EBITDA margin to 34.5% (31.1%). Cost of
revenue (excluding depreciation and amortization) rose by 0.6pp,
while administrative expenses and selling and marketing expenses
declined by 0.6pp and 3.4pp, respectively.
- Turkcell Turkey’s EBITDA grew by 38.5%
to TRY1,269 million (TRY916 million), while the EBITDA margin
improved 4.3pp to 35.6% (31.3%). Net of Universal Service project,
Turkcell Turkey EBITDA margin would have been 35.9%.
- Turkcell International EBITDA rose by
12.7% to TRY60 million (TRY54 million), while the EBITDA margin was
at 24.3% (27.2%).
- The EBITDA of other subsidiaries rose
by 120.9% to TRY70 million (TRY32 million) with the increasing
contribution of our consumer finance company.
Net finance costs of TRY147 million (net finance income
of TRY166 million) were recorded in Q117. This was mainly due to
higher translation losses recorded in Q117. Increased interest
expense in relation to loans also led to this outcome. Please see
Appendix A for translation loss details.
Income tax expense increased 9.6% year-on-year in Q117.
Please see Appendix A for details.
Net income of the Group declined to TRY459 million
(TRY563 million) year-on-year in Q117. This was mainly due to
higher translation losses recorded in the quarter, higher interest
expense on loans, and an increased depreciation and amortization
expense due to the 4.5G investments.
Turkcell Turkey’s net income declined to TRY454 million (TRY536
million) in Q117, mainly due to the reasons explained above with
respect to the decline in Group net income.
Total cash & debt: Consolidated cash as of March 31,
2017 rose to TRY6,451 million from TRY6,052 million as of December
31, 2016. TRY3,512 million (US$965 million) of consolidated cash
was denominated in US$, TRY969 million (EUR248 million) in EUR and
TRY1,969 million in TRY and other local currencies.
Consolidated debt as of March 31, 2017 rose to TRY10,730 million
from TRY9,781 million as of December 31, 2016. This was mainly due
to the increased debt portfolio of our consumer finance company.
Meanwhile, the translation increase in the FX denominated debt
portfolio of Turkcell Turkey, due to depreciation of the TRY
against the US$ and EUR, also led to a rise in our total
consolidated debt.
(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income.
- Turkcell Turkey’s debt was TRY7,802
million, of which TRY3,663 million (US$1,007 million) was
denominated in US$, TRY3,744 million (EUR958 million) in EUR and
the remaining TRY395 million in TRY.
- The debt balance of lifecell was TRY481
million, denominated in UAH.
- Our consumer finance company had a debt
balance of TRY2,442 million, of which TRY183 million (US$50million)
was denominated in US$, TRY98 million (EUR25 million) was
denominated in EUR.
TRY5,871 million of our consolidated debt is set at a floating
rate, while TRY3,322 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 March 31, 2017 increased to TRY4,280 million from
TRY3,729 million as of December 31, 2016.
In accordance with our hedging policy, in January we engaged in
cross currency swap transactions for US$43 million and EUR20
million of our consumer finance company’s outstanding debt
portfolio. With these transactions a EUR20 million loan with 2 year
maturity and EURIBOR + 120 bps annual interest rate and two
tranches of loans in total of US$43 million with 2 year maturity
and LIBOR + 125 bps annual interest rate have been swapped to a
fixed rate TRY denominated liability. Turkcell Group’s short
position was at US$91 million as at the end of Q117 (Please note
that this figure takes into account advance payments and the impact
of hedging, and assumes utilizing the option of paying the last
installment of the 4.5G license in TRY).
Cash flow analysis: Capital expenditures, including
non-operational items amounted to TRY571.4 million in Q117. The
cash flow item noted as “other” included prepaid subscriber
frequency usage fee payment (TRY309 million), the negative impact
of the decline in trade payables (TRY698 million) and increase in
trade receivables (TRY277 million), and the positive impact of
other items mainly relating to other working capital (TRY293
million).
In Q117, operational capital expenditures (excluding license
fees) of the Group were at 13.2% of total revenues.
Consolidated
Cash Flow (million TRY) Q116 Q416
Q117 EBITDA1 1,001.5
1,371.1 1,399.9 LESS: Capex and License
(738.4) (1,133.5) (571.4) Turkcell Turkey (675.4) (980.7) (533.4)
Turkcell International2 (61.7) (149.7) (35.0) Other Subsidiaries2
(1.3) (3.1) (3.0) Net interest Income/ (expense) 171.5 324.1 10.9
Other (685.8) (939.6) (991.1) Net Change in Debt (145.2) 784.0
549.9
Cash generated (396.4) 406.1
398.2 Cash balance 2,522.4
6,052.4 6,450.5
(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation 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 of Turkcell Turkey
Summary of Operational data Q116
Q416 Q117 y/y %
q/q % Number of subscribers 35.2
35.3 35.8 1.7%
1.4% Mobile Postpaid (million) 16.7 17.4 17.7 6.0% 1.7%
Mobile M2M (million) 2.0 2.1 2.1 5.0% - Mobile Prepaid (million)
16.6 15.7 15.7 (5.4%) - Fiber (thousand) 935.4 1,043.9 1,085.5
16.0% 4.0% ADSL (thousand) 646.2 818.0 879.6 36.1% 7.5% IPTV
(thousand) 268.1 359.7 402.0 49.9% 11.8%
Churn (%) Mobile
Churn (%)1 7.5% 5.6% 5.0% (2.5pp) (0.6pp) Fixed churn (%) 5.0% 5.3%
5.2% 0.2pp (0.1pp)
ARPU (Average Monthly Revenue per User)
(TRY) Mobile ARPU, blended 24.7 29.2 28.8 16.6% (1.4%) Mobile
ARPU, blended (excluding M2M) 26.0 30.9 30.5 17.3% (1.3%) Postpaid
37.3 41.6 41.7 11.8% 0.2% Postpaid (excluding M2M) 41.7 46.8 47.0
12.7% 0.4% Prepaid 12.4 15.6 14.3 15.3% (8.3%) Fixed Residential
ARPU, blended (TRY) 50.3 51.1 53.1 5.6% 3.9%
Average mobile data
usage per user (GB/user) 1.8 2.8 3.0
69.3% 8.8% Mobile MOU (Avg. Monthly Minutes of
usage per subs) blended 298.1 331.3
323.7 8.6% (2.3%)
(1) In Q117, our churn policy was revised to extend from 9
months to 12 months (the period at the end of which we disconnect
prepaid subscribers who have not topped up above TRY10.)
Additionally, under our revised policy, prepaid customers who last
topped up before March will be disconnected at the latest by
year-end. Please note that figures for prior periods have not been
restated to reflect this change in churn policy. The net mobile
subscriber addition figures and mobile churn rate for Q117
disclosed in this document have been positively impacted by this
change.
On the mobile front, our customer base expanded by 351 thousand
quarterly net additions, reaching 33.4 million in total. This was
mainly driven by 298 thousand quarterly net additions to postpaid
customers, reaching 52.9% (50.1%) of our total mobile customer
base. Meanwhile, we registered 53 thousand quarterly net additions
to our prepaid customers.
Our fixed customer base has continued to grow reaching 2 million
customers on 103 thousand quarterly net additions, of which 42
thousand were fiber and 62 thousand were ADSL customers. IPTV
customers reached 402 thousand on 42 thousand quarterly. Total TV
users including OTT TV only customers reached 1.3 million doubling
year-on-year. As of April, Turkcell TV+ mobile application has been
downloaded 2.9 million times.
Mobile churn declined 2.5pp in Q117 year-on-year with our value
focused customer strategy, and our offerings that meet our customer
needs. On the fixed side, the churn rate was at 5.2% (5.0%) in
Q117.
Mobile ARPU rose to TRY28.8 registering record high year-on-year
growth of 16.6% in Q117. Mobile ARPU growth was mainly driven by
our upsell efforts, a favorable change in customer mix and
increased data and digital services usage enabled by our 4.5G
network. Higher triple play ratio of 42%1, which includes customers
of voice, data and digital services combined, positively impacted
the ARPU rise as well.
Fixed residential ARPU rose 5.6% in Q117 with the increase in
multiplay customers with TV2 to 39% of total residential fiber
customers, along with upsell efforts.
Strong demand for our mobile data offerings continued in Q117 as
average mobile data usage per user rose by 69.3% year-on-year.
Average mobile data usage of 4.5G users was at 5.1GB in March
2017.
Mobile MoU rose 8.6% year-on-year in line with our value focused
customer strategy.
Smartphones on our network reached 20.5 million with 1.3 million
quarterly net additions leading to a penetration of 68%. 4.5G
enabled smartphones reached 57% of the total.
(1) Share among mobile voice users excluding subscribers who
have not used their lines in the last 3 months(2) Multiplay
customers with TV: Internet + TV users & internet + TV + voice
users
TURKCELL INTERNATIONAL
lifecell* Financial Data Q116
Q416 Q117 y/y%
q/q % Revenue (million UAH) 1,132.6
1,313.7 1,180.2 4.2%
(10.2%) EBITDA (million UAH) 356.1 362.8 319.7
(10.2%) (11.9%)
EBITDA margin 31.4% 27.6%
27.1% (4.3pp) (0.5pp) Net income / (loss)
(million UAH) (67.6) (62.5) (137.9) 104.0% 120.6%
Capex (million
UAH) 456.9 847.0
237.6 (48.0%) (71.9%) Revenue
(million TRY) 128.5 165.6 159.7 24.3% (3.6%)
EBITDA (million
TRY) 40.4 45.8 43.2 6.9%
(5.7%) EBITDA margin 31.4% 27.6% 27.1% (4.3pp) (0.5pp)
Net income / (loss) (million TRY) (8.4)
(7.9) (18.7) 122.6%
136.7%
(*) Since July 10, 2015, we hold a 100% stake in lifecell.
lifecell revenues rose by 4.2% year-on-year in Q117 in
local currency terms. This was mainly driven by the growth in
mobile data revenues on the back of increased data users and
consumption on 3G+ network. lifecell reported 10.2% year-on-year
decline in EBITDA in local currency terms which resulted in an
EBITDA margin of 27.1% (31.4%). This was mainly due to increased
operational leasing expense post tower related sale and leaseback
transactions. Excluding the tower leasing expenses, lifecell’s
EBITDA margin would have been 30.1% in Q117.
lifecell’s revenues in TRY terms grew by 24.3%, while EBITDA
rose by 6.9% year-on-year in Q117.
lifecell* Q116
Q416 Q117 y/y% q/q
% Number of subscribers (million)1
13.3 12.4 12.3
(7.5%) (0.8%) Active (3 months)2 10.4 9.2 8.9
(14.4%) (3.3%)
MOU (minutes) (12 months) 141.4
141.3 127.2 (10.0%) (10.0%) ARPU
(Average Monthly Revenue per User), blended (UAH) 28.2
35.2 31.9 13.1% (9.4%) Active (3
months) (UAH) 36.1 46.0 43.3 19.9%
(5.9%)
(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, continuing its 3G+ network rollout, maintained its
leadership in geographical coverage in Ukraine. Demand for 3G+
services continued to increase as the number of three-month active
3G data users reached 3.4 million. This positively impacted the
total data traffic supported by the solid growth in data
consumption per user, which more than doubled in Q117 on a
year-on-year basis. Meanwhile, lifecell continued its leader
position in the market in terms of smartphone penetration which has
reached 60% as at the end of Q117.
lifecell’s three-month active subscriber base declined to 8.9
million, mainly due to the declining multiple SIM card usage trend
in the country. Blended ARPU (3-month active) rose by 19.9%
year-on-year in Q117 chiefly with rising mobile data consumption,
price increases and an increased number of customers with higher
ARPU tariffs.
BeST* Q116 Q416
Q117 y/y% q/q % Number
of subscribers (million) 1.6 1.6
1.6 - - Active (3 months)
1.1 1.2 1.3 18.2% 8.3%
Revenue (million BYN) 23.1 26.5 24.0
3.9% (9.4%) EBITDA (million BYN) 0.4 1.6 (1.3)
(425.0%) (181.3%)
EBITDA margin 1.7% 6.1%
(5.3%) (7.0pp) (11.4pp) Net loss (million BYN)
(9.7) (9.9) (13.3) 37.1% 34.3%
Capex (million BYN)
3.4 3.3 3.0
(11.8%) (9.1%) Revenue (million TRY) 32.8 44.5
46.0 40.2% 3.4%
EBITDA (million TRY) 0.5 2.8
(2.4) (580.0%) (185.7%) EBITDA margin 1.7%
6.2% (5.2%) (6.9pp) (11.4pp)
Net loss (million TRY)
(13.7) (16.5) (25.6) 86.9% 55.2%
Capex (million TRY) 4.8 7.8 5.8 20.8%
(25.6%)
(*)BeST, in which we hold an 80% stake, has operated in Belarus
since July 2008.
BeST revenues grew by 3.9% year-on-year in Q117 in local
currency terms, driven mainly by increased voice revenues. BeST
registered an EBITDA decline which led to a negative EBITDA margin
due to one-off impacts mainly related to the inventory write-off.
Excluding these one-off impacts, revenues would have risen by
11.7%, while the EBITDA margin would have been 7.5%.
BeST’s revenues in TRY terms rose by 40.2% year-on-year in Q117.
Excluding the one-off impacts, revenue growth would have been 50.6%
in TRY terms.
BeST continued to offer 4G services to its customers in Minsk
city centre in partnership with beCloud. In Q117, 4G services have
been included in all data package offerings. BeST expanded its
coverage to include two additional regions of Belarus; Vitebsk and
Grodno at the end of Q117. Furthermore, in accordance with
Turkcell’s global digital services strategy, BeST introduced its
mobile TV platform, continued high momentum in BIP downloads and
active users and launched its gaming platform during the
period.
Kuzey Kıbrıs Turkcell (million TRY)*
Q116 Q416 Q117
y/y% q/q% Number of subscribers
(million) 0.5 0.5 0.5
- - Revenue 32.4 35.7 36.2 11.7% 1.4%
EBITDA 11.3 12.3 13.0 15.0%
5.7% EBITDA margin 34.8% 34.4% 36.0% 1.2pp 1.6pp
Net
income 6.1 3.6 7.6 24.6%
111.1% Capex 2.8 11.4 3.6 28.6%
(68.4%)
(*) Kuzey Kıbrıs Turkcell, in which we hold a 100% stake, has
operated in Northern Cyprus since 1999.
Kuzey Kıbrıs Turkcell revenues grew by 11.7% year-on-year
in Q117, reflecting mobile data growth on the back of increased
data consumption. EBITDA rose by 15.0% leading to an EBITDA margin
of 36.0% (34.8%).
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*.
(*)For further details, please refer to our consolidated
financial statements and notes as at and for March 31, 2017 which
can be accessed via our web site in the investor relations section
(www.turkcell.com.tr).
Turkcell Group Subscribers
Turkcell Group subscribers amounted to approximately 50.4
million as of March 31, 2017. 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 Q116
Q416 Q117 y/y %
q/q % Mobile Postpaid (million) 16.7 17.4
17.7 6.0% 1.7% Mobile Prepaid (million) 16.6
15.7 15.7 (5.4%) - Fiber (thousand) 935.4 1,043.9 1,085.5 16.0%
4.0% ADSL (thousand) 646.2 818.0 879.6 36.1% 7.5% IPTV (thousand)
268.1 359.7 402.0 49.9% 11.8%
Turkcell Turkey subscribers
(million)1 35.2 35.3 35.8
1.7% 1.4% Ukraine 13.3 12.4 12.3 (7.5%) (0.8%)
Belarus 1.6 1.6 1.6 - - Kuzey Kıbrıs Turkcell 0.5 0.5 0.5 - -
Turkcell Europe2 0.3 0.3 0.3 - -
Turkcell Group Subscribers
(million) 50.8 50.1
50.4 (0.8%) 0.6%
(1) Subscribers to more than one service are counted separately
for each service.(2) 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.
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
The foreign exchange rates used in our financial reporting,
along with certain macroeconomic indicators, are set out below.
Quarter Q116 Q416
Q117 y/y% q/q% GDP Growth
(Turkey) 4.5% 3.5% n.a n.a
n.a Consumer Price Index (Turkey) 1.8%
3.6% 4.3% 2.5pp 0.7pp US$ / TRY
rate Closing Rate 2.8334 3.5192 3.6386 28.4% 3.4% Average Rate
2.9202 3.2591 3.6665 25.6% 12.5%
EUR / TRY rate Closing Rate
3.2081 3.7099 3.9083 21.8% 5.3% Average Rate 3.2172 3.5147 3.9012
21.3% 11.0%
US$ / UAH rate Closing Rate 26.22 27.19 26.98
2.9% (0.8%) Average Rate 25.77 25.88 27.09 5.1% 4.7%
US$ / BYN
rate* Closing Rate 2.0133 1.9585 1.8720 (7.0%) (4.4%) Average
Rate 2.0552 1.9403 1.9109 (7.0%)
(1.5%)
* 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, Cost of Revenue
excluding depreciation and amortization, Selling and Marketing
expenses and Administrative expenses, but excludes translation
gain/(loss), finance income, finance expense, share of profit of
equity accounted investees, gain on sale of investments, 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)
Q116 Q416 Q117 y/y
% q/q % Adjusted EBITDA
1,001.5 1,371.1 1,399.9
39.8% 2.1% Finance income 221.2 493.9 201.5
(8.9%) (59.2%) Finance costs (55.0) (692.2) (348.1) 532.9% (49.7%)
Other income / (expense) (11.1) (44.4) 3.7 n.m n.m Depreciation and
amortization (454.8) (604.3) (628.4) 38.2% 4.0%
Consolidated profit from continued
operations beforeincome tax & minority interest
701.8 524.1 628.6 (10.4%) 19.9%
Income tax expense (143.4) (111.3) (157.2) 9.6% 41.2%
Consolidated profit from continued
operations beforeminority interest
558.4 412.8 471.4 (15.6%) 14.2%
Discontinued operations 15.2 (44.4) - n.m n.m
Consolidated
profit before minority interest 573.6
368.4 471.4 (17.8%)
28.0%
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 the launch and goals of our payment
card business, 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 2016 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 99.63% and 96.21%, respectively, as of March 2017.
It offers up to 1 Gbps fiber internet speed with its FTTH services.
Turkcell Group companies operate in 9 countries – Turkey, Ukraine,
Belarus, Northern Cyprus, Germany, Azerbaijan, Kazakhstan, Georgia,
Moldova – as of March 31, 2017. Turkcell Group reported a TRY4.1
billion revenue in Q117 with total assets of TRY33.0 billion as of
March 31, 2017. 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 Q116
Q416 Q117 y/y % q/q
% Turkcell Turkey (6.9) (499.1) (154.8)
n.m (69.0%) Turkcell International 3.2 (29.6) (6.9)
(315.6%) (76.7%) Other subsidiaries (1.6) 6.3 4.2 (362.5%) (33.3%)
Turkcell Group (5.3) (522.4)
(157.5) n.m (69.9%)
Table: Income tax expense details
Million TRY Q116
Q416 Q117 y/y % q/q
% Current Tax expense (113.6) (12.4)
(96.1) (15.4%) 675.0% Deferred Tax expense (29.8)
(98.9) (61.1) 105.0% (38.2%)
Income Tax expense
(143.4) (111.3) (157.2)
9.6% 41.2% TURKCELL ILETISIM HIZMETLERI
A.S.
IFRS SELECTED FINANCIALS (TRY
Million)
Quarter
Ended Quarter Ended Year Ended Quarter
Ended March 31, December 31, December 31,
March 31,
2016
2016
2016
2017
Consolidated Statement of Operations Data
Turkcell Turkey 2,927.5 3,576.2 12,787.6 3,562.7 Turkcell
International 196.9 251.6 874.7 248.0 Other 101.0 215.8 623.3 241.9
Total revenues 3,225.4 4,043.6 14,285.6 4,052.6 Direct cost of
revenues (2,018.8) (2,608.3) (9,236.6)
(2,616.6) Gross profit 1,206.6 1,435.3 5,049.0 1,436.0
Administrative expenses (178.7) (190.0) (721.8) (199.8) Selling
& marketing expenses (481.2) (478.5) (1,910.9) (464.6) Other
Operating Income / (Expense) (11.1) (44.4) (234.3)
3.6 Operating profit before financing costs 535.6 722.4
2,182.0 775.2 Finance costs (55.0) (692.2) (1,237.6) (348.1)
Finance income 221.2 493.9 1,064.8 201.5 Discontinued operations
15.2 (44.4) (42.2) - Income before tax and
non-controlling interest 717.0 479.7 1,967.0 628.6 Income tax
expense (143.4) (111.3) (423.2) (157.2) Income
before non-controlling interest 573.6 368.4 1,543.8 471.4
Non-controlling interests (10.9) (17.7) (51.7)
(12.8) Net income 562.7 350.7 1,492.1 458.6
Net income per share 0.26 0.16 0.68 0.21
Other
Financial Data Gross margin 37.4% 35.5% 35.3% 35.4%
EBITDA(*) 1,001.5 1,371.1 4,619.5 1,399.9 Capital expenditures
738.4 1,133.5 3,494.7 571.4
Consolidated Balance Sheet
Data (at period end) Cash and cash equivalents 2,522.4 6,052.4
6,052.4 6,450.5 Total assets 26,175.2 31,600.2 31,600.2 32,954.7
Long term debt 3,373.2 6,935.1 6,935.1 7,408.5 Total debt 4,028.3
9,781.2 9,781.2 10,730.1 Total liabilities 11,273.4 15,531.8
15,531.8 7,673.7 Total shareholders’ equity / Net Assets 14,901.8
16,068.4 16,068.4 16,536.4 (*) Please refer to the
notes on reconciliation of Non-GAAP Financial measures on page 13
(**) For further details, please refer to our consolidated
financial statements and notes as at 31 March 2017 on our web site
TURKCELL ILETISIM HIZMETLERI A.S.
TURKISH ACCOUNTING STANDARDS SELECTED
FINANCIALS (TRY Million)
Quarter Ended Quarter Ended Year Ended
Quarter Ended March 31, December 31,
December 31, March 31,
2016
2016
2016
2017
Consolidated Statement of Operations Data
Turkcell Turkey 2,927.5 3,576.2 12,787.6 3,562.7 Turkcell
International 196.9 251.6 874.7 248.0 Other 101.0 215.8 623.3 241.9
Total revenues 3,225.4 4,043.6 14,285.6 4,052.6 Direct cost of
revenues (2,018.3) (2,608.4) (9,219.1)
(2,616.6) Gross profit 1,207.1 1,435.2 5,066.5 1,436.0
Administrative expenses (178.7) (190.0) (721.8) (199.8) Selling
& marketing expenses (481.2) (478.5) (1,910.9) (464.6) Other
Operating Income / (Expense) 220.4 545.4 1,016.9
259.2 Operating profit before financing and investing costs
767.6 1,312.1 3,450.7 1,030.8 Income from investing activities 9.3
8.3 24.6 10.8 Expense from investing activities (7.0) (40.3) (59.9)
(20.6) Discontinued operations 15.2 (44.4) (42.2)
- Income before financing costs 785.1 1,235.7 3,373.2
1,021.0 Finance income - 385.6 385.6 61.3 Finance expense (67.6)
(1,141.7) (1,768.8) (453.7) Income before tax
and non-controlling interest 717.5 479.6 1,990.0 628.6 Income tax
expense (143.5) (111.3) (426.6) (157.2) Income
before non-controlling interest 574.0 368.3 1,563.4 471.4
Non-controlling interest (10.9) (17.7) (51.7)
(12.8) Net income 563.1 350.6 1,511.7 458.6 Net income per
share 0.26 0.16 0.69 0.21
Other Financial Data
Gross margin 37.4% 35.5% 35.5% 35.4% EBITDA(*) 1,001.5 1,371.1
4,619.5 1,399.9 Capital expenditures 738.4 1,133.5 3,494.7 571.4
Consolidated Balance Sheet Data (at period end) Cash
and cash equivalents 2,522.4 6,052.4 6,052.4 6,450.5 Total assets
26,152.6 31,600.2 31,600.2 32,954.7 Long term debt 3,373.2 6,935.1
6,935.1 7,408.5 Total debt 4,028.3 9,781.2 9,781.2 10,730.1 Total
liabilities 11,270.1 15,531.8 15,531.8 16,418.3 Total shareholders’
equity / Net Assets 14,882.5 16,068.4 16,068.4 16,536.4
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426006085/en/
TurkcellZeynel Korhan Bilek, +90 212 313 1888Investor
Relations and Merger & Acquisitions
Directorinvestor.relations@turkcell.com.tr
Turkcell lletism Hizmetl... (NYSE:TKC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Turkcell lletism Hizmetl... (NYSE:TKC)
Historical Stock Chart
From Sep 2023 to Sep 2024