Washington, D.C. 20549
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- __________
Enclosure: A press release dated October 25, 2017, announcing Turkcell’s Third Quarter 2017 results and Q3 2017 IFRS Report.
The accompanying notes on page 7 to 34 are an integral part of these condensed consolidated interim financial statements.
Turkcell Iletisim Hizmetleri Anonim Sirketi (the “Company” or “Turkcell”) was incorporated in Turkey on 5 October 1993 and commenced its operations in 1994. The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark / Istanbul.
The Company operates under a 25-year GSM license granted in and effective from April 1998, a 20-year 3G license granted in and effective from April 2009 and a 13-year 4.5G license granted in August 2015 and effective from April 2016. The Company’s shares are listed on Borsa
Istanbul A.Ş. (
“BIST”) and New York Stock Exchange (“NYSE”).
The condensed consolidated interim financial statements of the Company as at and for the nine months ended 30 September 2017 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in an associate.
These condensed consolidated interim financial statements were approved for issue on 25 October 2017.
Paycell LLC (“Paycell”), has received its financial company status and established in Ukraine as a subsidiary of lifecell Limited Liability Company (“lifecell”) as at 21 September 2017. Paycell will apply to obtain financial services and local currency transfer licences in order to provide lifecell customers device sales on credit, and means of digital payment via e-money.
The Company sold financial loans amounting to TL 87,589
to Aktif Yatırım Bankası A.Ş. Turkcell Varlık Finansmanı Fund
(“Fund”)
founded by Aktif Yatırım Bankası A.Ş. on 14 April 2017 in order
to create funds for issuance of Asset Backed Securities (“ABS”) which will be issued by the Fund in a structure where Turkcell Finansman will act as the source organization. The Company sold second financial loans amounting to TL 89,607
to Aktif Yatırım Bankası A.Ş. Turkcell
Varlık
Finansmanı
Fund (“Fund”
) founded by Aktif Yatırım Bankası A.Ş. on
22 August 2017. The Company transferred its contractual rights to receive cash flows from the financial loans that have been sold to the Fund resulting in de-recognition of the related assets from its consolidated financial statements. Moreover, the Company did not consolidate the Fund since the activities of the Fund are not controlled by the Company and the Fund has been defined as a structured entity.
Within the scope of the Decree Law No. 683 announced on 23 January 2017, the Company has applied to pay Euro denominated 4.5G license obligation in Turkish Liras converted at the buying exchange rate announced by the Central Bank of the Republic of Turkey on 2 January 2017. The last instalment of 4.5G license payable amounting to TL 1,534,702 was paid on 26 April 2017.
The Company and the Ministry of Transport, Maritime Affairs and Communications, Directorate General of Communications signed a contract to continue the contract to establish and operate mobile communication infrastructure and operation in uncovered areas, (Phase 1) until 31 December 2018 and to add mobile broadband services to the existing infrastructure providing GSM services under Universal Service Law and to operate the new and existing networks together. Mobile broadband services will be added to the existing infrastructure established in accordance with Phase 1 in 1,799 rural locations. The new and the existing infrastructure will be operated together. As of 30 September 2017, the Company has recognized TL 143,843 revenue from its operations related to this contract.
During the period the Group transferred
its building located in Istanbul, Tepebası
from investment property to property, plant and equipment since the asset it is not held to earn rental income or for capital appreciation (Note 8).
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
1.
|
Reporting entity (continued)
|
As at 23 October 2015, the Company signed a loan agreement package with China Development Bank (“CDB”) for an amount up to EUR 500,000 with 2 years availability period to refinance the Group’s existing loans and for an amount up to EUR 750,000 with 3 years availability period to finance the Group’s procurements from China in relation to infrastructure investments. The total loan package has 10 years final maturity starting from availability period starting date with 3 years grace period and will be paid back in equal instalments. The annual interest rate of the loan is EURIBOR + 2.2%. As at 26 October 2015, the Company utilized EUR 500,000 under this agreement. As at 5 April 2017, the Company utilized an additional EUR 60,000, which will mature on 22 April 2026, under this agreement in relation to Turkcell Superonline infrastructure investments (Note 12).
The 174-day debt securities of Turkcell Finansman A.S. with a nominal value of TL 250,000, that was issued to qualified investors without a public offering, was redeemed on 8 June 2017 (Note 12).
The sale process of Turkcell Finansman’s 179-day debt securities with a nominal amount of TL 150,000, maturity date of 25 August 2017 and an annual simple interest of 11.8% to qualified investors within Turkey, without public placement was completed on 27 February 2017 (Note 12).
On 25 May 2017, the Company’s General Assembly has approved a dividend distribution for the years ended from 2010 to 2016 amounting to TL 3,000,000 (equivalent to $841,633 as at 25 May 2017, date of Ordinary General Assembly Meeting). This represents a gross cash dividend of full TL 1.3636364 (equivalent to full $0.3825604 as at 25 May 2017, date of Ordinary General Assembly Meeting) per share. The dividend will be paid in three instalments on 15 June, 15 September and 15 December 2017 to the shareholders. First instalment was paid during the six month period ended 30 June 2017 amounting to TL 933,997. The Company has paid TL 1,000,000 in total including withholding tax which have been paid in July 2017. Second instalment was paid during the nine months ended 30 September 2017 amounting to TL 933,413. The Company will pay TL 1,000,000 in total including withholding tax which have been paid in October 2017 (Note 11).
As at 30 September 2017, the Company sold all of debt securities issued with a total nominal value of USD 18,000 comprising portion of the debt securities issued previously added to its portfolio, USD 18,000 within the scope of the Board of Director’s buy-back decision dated 27 July 2016.
On 6 July 2017, the Company acquired a land located in Istanbul Kartal for a consideration of TL 98,500 + VAT, payment of which was made during the nine months ended 30 September 2017.
As at 30 September 2017, the increase in other current assets is resulted from blocked deposit of Turkcell Finansman A.S. (Note 12).
These condensed consolidated interim financial statements for the nine months ended 30 September 2017 have been prepared in accordance with IAS 34 Interim Financial Reporting.
These condensed consolidated interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these condensed consolidated interim financial statements are to be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2016 and any public announcements made by the Company during the interim reporting period.
The accounting policies, presentation and methods of computation are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new accounting policies for transactions occurred during the nine months ended 30 September 2017 as set out in Note 3.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
3.
|
Significant accounting policies
|
When the Group sells goods or services as a principal, revenue and operating costs are recorded on a gross basis. When the Group sells goods or services as an agent, revenue and operating costs are recorded on a net basis, representing the net margin earned. Whether the Group is considered to be acting as principal or agent in the transaction depends on management’s analysis of both the legal form and substance of the agreement between the Group and its business partners; such judgements impact the amount of reported revenue and operating costs but do not impact reported assets, liabilities or cash flows. Since the Company acts as principal in relation to the agreement signed with the Ministry of Transport, Maritime Affairs and Communications, Directorate General of Communications (Note 1), revenue and operating costs are reported on a gross basis in these condensed consolidated interim financial statements.
New standards and interpretations
|
i)
|
Standards, amendments and interpretations effective as at 30 September 2017
|
|
|
-
|
Amendments to IAS 7 ‘Statement of cash flows’
on disclosure initiative, effective from annual periods beginning on or after 1 January 2017. These amendments introduce an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment is part of the IASB’s Disclosure Initiative, which continues to explore how financial statement disclosure can be improved.
|
|
|
-
|
Amendments IAS 12, ‘Income Taxes’
, effective from annual periods beginning on or after 1 January 2017. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. It also clarify certain other aspects of accounting for deferred tax assets.
|
|
|
-
|
Annual improvements 2014–2016
,
|
|
|
·
|
IFRS 1,‘First-time adoption of IFRS’
, regarding the deletion of short-term exemptions for first-time adopters regarding IFRS 7, IAS 19, and IFRS 10 effective 1 January 2018.
|
|
|
·
|
IFRS 12,‘Disclosure of interests in other entities’
regarding clarification of the scope of the standard. These amendments should be applied retrospectively for annual periods beginning on or after 1 January 2017.
|
|
|
·
|
IAS 28,‘Investments in associates and joint ventures’
regarding measuring an associate or joint venture at fair value effective 1 January 2018.
|
|
ii)
|
Standards, amendments and interpretations effective after 30 September 2017
|
|
|
-
|
IFRS 9 ‘Financial instruments’
, effective from annual periods beginning on or after 1 January 2018. This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model.
|
|
|
-
|
IFRS 15, ‘Revenue from contracts with customers’
, effective from annual periods beginning on or after 1 January 2018. IFRS 15, ‘Revenue from contracts with customers’ is a converged standard from the IASB and FASB on revenue recognition. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally.
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
3.
|
Significant accounting policies (continued)
|
New standards and interpretations (continued)
|
ii)
|
Standards, amendments and interpretations effective after 30 September 2017 (continued)
|
|
|
-
|
Amendment to IFRS 15, ‘Revenue from contracts with customers’
, effective from annual periods beginning on or after 1 January 2018. These amendments comprise clarifications of the guidance on identifying performance obligations, accounting for licences of intellectual property and the principal versus agent assessment (gross versus net revenue presentation). New and amended illustrative examples have been added for each of those areas of guidance. The IASB has also included additional practical expedients related to transition to the new revenue standard. The Company currently performs fair value allocation of the identified elements for bundled packages that combine multiple goods and services based on their respective fair values as well as capitalization and recognition of expenses for customer acquisition costs over the customer retention period; therefore no material impact is expected with respect to these areas as result of the adoption of the standard. The Company plans to adopt the modified retrospective approach so that contracts that are not completed by 1 January 2018 will be accounted for as if they have been recognized in accordance with IFRS 15 from the very beginning. The cumulative effect arising from the transaction will be recognized as an adjustment to the opening balance of Equity in the year of initial application. Prior period comparative financial statements will not be restated.
|
|
|
-
|
IFRS 16, ‘Leases’
, effective from annual periods beginning on or after 1 January 2019, This standard replaces the current guidance in IAS 17 and is a far reaching change in accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of low-value assets.
|
For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also be affected by the new standard. At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees.
Company expects that IFRS 16 will affect the recognition of operating lease contracts. Nevertheless, the Company has not yet fully determined the effects of the lease contracts on the financial statements in the consolidated financial statements. In theory IFRS 16 implementation would be effective from annual period beginning on 1 January 2019. The standard also provides early adaptation option to the Company. The Company evaluates both options for the implementation date of the standard.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
3.
|
Significant accounting policies (continued)
|
New standards and interpretations (continued)
|
ii)
|
Standards, amendments and interpretations effective after 30 September 2017 (continued)
|
|
|
-
|
Amendment to IAS 40, ‘Investment property’
relating to transfers of investment property, effective from annual periods beginning on or after 1 January 2018. These amendments clarify that to transfer to, or from, investment properties there must be a change in use. To conclude if a property has changed use there should be an assessment of whether the property meets the definition. This change must be supported by evidence.
|
|
|
-
|
Amendments to IFRS 2, ‘Share based payments’
on clarifying how to account for certain types of share-based payment transactions, effective from annual periods beginning on or after 1 January 2018. This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications that change an award from cash-settled to equity-settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s tax obligation associated with a share-based payment and pay that amount to the tax authority.
|
|
|
-
|
IFRIC 22, ‘Foreign currency transactions and advance consideration’,
effective from annual periods beginning on or after 1 January 2018. This IFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency. The interpretation provides guidance for when a single payment/receipt is made as well as for situations where multiple payments/receipts are made. The guidance aims to reduce diversity in practice.
|
|
|
-
|
IFRIC 23, ‘Uncertainty over income tax treatments’,
effective from annual periods beginning on or after 1 January 2019. This IFRIC clarifies how the recognition and measurement requirements of IAS 12 ‘Income taxes’, are applied where there is uncertainty over income tax treatments. The IFRS IC had clarified previously that IAS 12, not IAS 37 ‘Provisions, contingent liabilities and contingent assets’, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the tax authority. For example, a decision to claim a deduction for a specific expense or not to include a specific item of income in a tax return is an uncertain tax treatment if its acceptability is uncertain under tax law. IFRIC 23 applies to all aspects of income tax accounting where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates.
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
The Group has two main reportable segments in accordance with its integrated communication and technology services strategy as Turkcell Turkey, and Turkcell International. Some of these strategic segments offer the same types of services, however they are managed separately because they operate in different geographical locations and are affected by different economic conditions.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker function is carried out by the Board of Directors, however the Board of Directors may transfer the authorities, other than recognized by the law, to the Chief Executive Officer and other directors.
Turkcell Turkey reportable segment includes the operations of Turkcell, Turkcell Superonline Iletisim Hizmetleri A.S.(“Turkcell Superonline”), Turkcell Satis ve Dagitim Hizmetleri A.S. (“Turkcell Satis”), group call center operations of Global Bilgi Pazarlama Danisma ve Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Turkcell Teknoloji Arastirma ve Gelistirme A.S. (“Turkcell Teknoloji”), Kule Hizmet ve Isletmecilik A.S. (“Global Tower”), Rehberlik Hizmetleri Servisi A.S. (“Rehberlik”), Turkcell Odeme Hizmetleri A.S. (“Turkcell Odeme”) and Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”). Turkcell International reportable segment includes the operations of Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), East Asian Consortium B.V. (“Eastasia”), LLC lifecell (“lifecell”), Lifecell Ventures Coöperatief U.A (“Lifecell Ventures”), Beltel Telekomunikasyon Hizmetleri A.S. (“Beltel”), CJSC Belarusian Telecommunications Network (“Belarusian Telecom”), LLC UkrTower (“UkrTower”), LLC Global Bilgi (“Global LLC”), Turkcell Europe GmbH (“Turkcell Europe”), Lifetech LLC (“Lifetech”), Beltower LLC (“Beltower”) and Fintur Holdings B.V. (“Fintur”). The operations of these legal entities aggregated into one reportable segment as the nature of services are similar and most of them share similar economic characteristics. Other reportable segment mainly comprises the information and entertainment services in Turkey and Azerbaijan, non-group call center operations of Turkcell Global Bilgi, Turkcell Finansman AS (“TFS”),Turkcell Enerji Cozumleri v
e Elektrik Satıs Ticaret A.S
(“Turkcell Enerji”) and Paycell LLC (“Paycell”).
Information regarding the operations of each reportable segment is included below. Adjusted EBITDA is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Adjusted EBITDA definition includes revenue, direct cost of revenues excluding depreciation and amortization, selling and marketing expenses and administrative expenses.
Adjusted EBITDA is not a financial measure defined by International Financial Reporting Standards as a measurement of financial performance and may not be comparable to other similarly-titled indicators used by other companies. Reconciliation of Adjusted EBITDA to consolidated profit for the period is provided in the accompanying notes.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
4.
|
Segment Information (continued)
|
|
|
|
Nine months ended 30 September
|
|
|
|
|
Turkcell Turkey
|
|
|
Turkcell International
|
|
|
Other
|
|
|
Intersegment Eliminations
|
|
|
Consolidated
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenue
|
|
|
11,409,596
|
|
|
|
9,211,399
|
|
|
|
778,781
|
|
|
|
623,103
|
|
|
|
830,529
|
|
|
|
433,189
|
|
|
|
(52,859
|
)
|
|
|
(25,728
|
)
|
|
|
12,966,047
|
|
|
|
10,241,963
|
|
|
Inter-segment revenue
|
|
|
(24,657
|
)
|
|
|
(12,570
|
)
|
|
|
(28,193
|
)
|
|
|
(12,610
|
)
|
|
|
(9
|
)
|
|
|
(548
|
)
|
|
|
52,859
|
|
|
|
25,728
|
|
|
|
-
|
|
|
|
-
|
|
|
Revenues from external customers
|
|
|
11,384,939
|
|
|
|
9,198,829
|
|
|
|
750,588
|
|
|
|
610,493
|
|
|
|
830,520
|
|
|
|
432,641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,966,047
|
|
|
|
10,241,963
|
|
|
Adjusted EBITDA
|
|
|
4,027,736
|
|
|
|
2,934,276
|
|
|
|
199,867
|
|
|
|
166,981
|
|
|
|
264,969
|
|
|
|
145,626
|
|
|
|
(3,270
|
)
|
|
|
1,553
|
|
|
|
4,489,302
|
|
|
|
3,248,436
|
|
|
|
|
Three months ended 30 September
|
|
|
|
|
Turkcell Turkey
|
|
|
Turkcell International
|
|
|
Other
|
|
|
Intersegment Eliminations
|
|
|
Consolidated
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenue
|
|
|
4,044,010
|
|
|
|
3,275,679
|
|
|
|
272,929
|
|
|
|
222,445
|
|
|
|
300,977
|
|
|
|
170,293
|
|
|
|
(20,489
|
)
|
|
|
(9,926
|
)
|
|
|
4,597,427
|
|
|
|
3,658,491
|
|
|
Inter-segment revenue
|
|
|
(8,818
|
)
|
|
|
(4,757
|
)
|
|
|
(11,666
|
)
|
|
|
(4,727
|
)
|
|
|
(5
|
)
|
|
|
(442
|
)
|
|
|
20,489
|
|
|
|
9,926
|
|
|
|
-
|
|
|
|
-
|
|
|
Revenues from external customers
|
|
|
4,035,192
|
|
|
|
3,270,922
|
|
|
|
261,263
|
|
|
|
217,718
|
|
|
|
300,972
|
|
|
|
169,851
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,597,427
|
|
|
|
3,658,491
|
|
|
Adjusted EBITDA
|
|
|
1,460,642
|
|
|
|
1,095,043
|
|
|
|
73,529
|
|
|
|
60,401
|
|
|
|
99,824
|
|
|
|
61,177
|
|
|
|
(1,600
|
)
|
|
|
992
|
|
|
|
1,632,395
|
|
|
|
1,217,613
|
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
4.
|
Segment Information (continued)
|
|
|
|
Nine months ended
|
|
|
Three months ended
|
|
|
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
1,801,428
|
|
|
|
1,175,417
|
|
|
|
614,991
|
|
|
|
174,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add (Less):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) from discontinued operations
|
|
|
-
|
|
|
|
(2,209
|
)
|
|
|
-
|
|
|
|
5,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations
|
|
|
1,801,428
|
|
|
|
1,173,208
|
|
|
|
614,991
|
|
|
|
179,249
|
|
|
Income tax expense
|
|
|
502,244
|
|
|
|
311,880
|
|
|
|
161,087
|
|
|
|
106,195
|
|
|
Finance income
|
|
|
(619,117
|
)
|
|
|
(570,941
|
)
|
|
|
(175,698
|
)
|
|
|
(187,235
|
)
|
|
Finance costs
|
|
|
835,307
|
|
|
|
545,427
|
|
|
|
341,103
|
|
|
|
349,756
|
|
|
Other income
|
|
|
(51,054
|
)
|
|
|
(52,404
|
)
|
|
|
(18,963
|
)
|
|
|
(7,052
|
)
|
|
Other expenses
|
|
|
124,062
|
|
|
|
242,356
|
|
|
|
58,836
|
|
|
|
199,688
|
|
|
Depreciation and amortization
|
|
|
1,896,432
|
|
|
|
1,598,910
|
|
|
|
651,039
|
|
|
|
577,012
|
|
|
Consolidated adjusted EBITDA
|
|
|
4,489,302
|
|
|
|
3,248,436
|
|
|
|
1,632,395
|
|
|
|
1,217,613
|
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
5.
|
Seasonality of operations
|
The Turkish mobile communications market is affected by seasonal peaks and troughs. Historically, the effects of seasonality on mobile communications usage had positively influenced the Company’s results in the second and third quarters of the fiscal year and negatively influenced the results in the first and fourth quarters of the fiscal year. Recently, however, due to changing market dynamics, such as the Information Technologies and Communications Authority
(
“ICTA”)’s intervention in tariffs and increasing competition in the Turkish telecommunications market, the effects of seasonality on the Company’s subscribers’ mobile communications usage has decreased. National and religious holidays in Turkey also affect the Company’s operational results.
|
6.
|
Finance income and costs
|
Net finance income/ (costs) amounts to TL (216,190), TL 25,514, TL (165,405) and TL (162,521) for the nine and three months ended 30 September 2017 and 2016, respectively.
Finance income for the nine months ended 30 September 2017 is mainly attributable to interest income from contracted handset sales
, changes in fair value of derivative financial instruments, interest income on bank deposits and discount interest income on dividends payable.
Finance costs for the nine months ended 30 September 2017 is mainly attributable to financing costs of borrowings and derivative financial instruments.
Net foreign exchange losses mainly include foreign exchange losses on borrowings amounting to TL 488,784 and foreign exchange loss on bonds issued amounting to TL (16,685), respectively whereas the Company recognized foreign exchange gains amounting to TL 205,129 from its operations.
Income tax expense is recognized based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the nine months ended 30 September 2017 is 22%, compared to 21% for the nine months ended 30 September 2016. The increase in effective tax rate is resulted from the differences between estimations in previous year’s and current period’s tax deductions and exemptions.
Effective tax rates for the three months ended 30 September 2017 and 2016 are 21% and 38% respectively.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
8.
|
Property, plant and equipment
|
|
Cost
|
|
Balance as at 1
January
2017
|
|
|
Additions
|
|
|
Disposals
|
|
|
Transfers
|
|
|
Impairment expenses/ (reversals)
|
|
|
Effects of movements in exchange rates
|
|
|
Transfer from Investment Property
|
|
|
Balance as at
30
September 2017
|
|
|
Network infrastructure (All operational)
|
|
|
13,897,308
|
|
|
|
294,735
|
|
|
|
(286,231
|
)
|
|
|
1,010,631
|
|
|
|
-
|
|
|
|
54,989
|
|
|
|
-
|
|
|
|
14,971,432
|
|
|
Land and buildings
|
|
|
519,702
|
|
|
|
145,306
|
|
|
|
(1,340
|
)
|
|
|
7,077
|
|
|
|
-
|
|
|
|
535
|
|
|
|
64,594
|
|
|
|
735,874
|
|
|
Equipment, fixtures and fittings
|
|
|
617,732
|
|
|
|
66,071
|
|
|
|
(7,496
|
)
|
|
|
2,043
|
|
|
|
-
|
|
|
|
690
|
|
|
|
-
|
|
|
|
679,040
|
|
|
Motor vehicles
|
|
|
34,136
|
|
|
|
2,546
|
|
|
|
(1,548
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
87
|
|
|
|
-
|
|
|
|
35,221
|
|
|
Leasehold improvements
|
|
|
311,761
|
|
|
|
2,129
|
|
|
|
(4,693
|
)
|
|
|
478
|
|
|
|
-
|
|
|
|
181
|
|
|
|
-
|
|
|
|
309,856
|
|
|
Construction in progress
|
|
|
566,523
|
|
|
|
1,133,603
|
|
|
|
-
|
|
|
|
(1,020,229
|
)
|
|
|
-
|
|
|
|
2,412
|
|
|
|
-
|
|
|
|
682,309
|
|
|
Total
|
|
|
15,947,162
|
|
|
|
1,644,390
|
|
|
|
(301,308
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
58,894
|
|
|
|
64.594
|
|
|
|
17,413,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network infrastructure (All operational)
|
|
|
6,843,580
|
|
|
|
981,253
|
|
|
|
(270,542
|
)
|
|
|
-
|
|
|
|
15,718
|
|
|
|
29,561
|
|
|
|
-
|
|
|
|
7,599,570
|
|
|
Land and buildings
|
|
|
159,351
|
|
|
|
16,461
|
|
|
|
(221
|
)
|
|
|
-
|
|
|
|
366
|
|
|
|
225
|
|
|
|
22,366
|
|
|
|
198,548
|
|
|
Equipment, fixtures and fittings
|
|
|
497,606
|
|
|
|
37,908
|
|
|
|
(5,245
|
)
|
|
|
-
|
|
|
|
33
|
|
|
|
571
|
|
|
|
-
|
|
|
|
530,873
|
|
|
Motor vehicles
|
|
|
30,252
|
|
|
|
1,587
|
|
|
|
(1,500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
61
|
|
|
|
-
|
|
|
|
30,400
|
|
|
Leasehold improvements
|
|
|
220,668
|
|
|
|
20,857
|
|
|
|
(4,069
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
168
|
|
|
|
-
|
|
|
|
237,624
|
|
|
Total
|
|
|
7,751,457
|
|
|
|
1,058,066
|
|
|
|
(281,577
|
)
|
|
|
-
|
|
|
|
16,117
|
|
|
|
30,586
|
|
|
|
22,366
|
|
|
|
8,597,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
8,195,705
|
|
|
|
586,324
|
|
|
|
(19,731
|
)
|
|
|
-
|
|
|
|
(16,117
|
)
|
|
|
28,308
|
|
|
|
42,228
|
|
|
|
8,816,717
|
|
Depreciation expenses for the nine and three months ended 30 September 2017 were TL 1,074,183 and TL 360,528 respectively including impairment losses and recognized in direct cost of revenues.
The impaired network
infrastructure
mainly consists of damaged or technologically inadequate mobile and fixed line infrastructure investments.
Impairment losses on property, plant and equipment for the nine and three months ended 30 September 2017 amounted to TL 16,117 and TL 6,115 respectively and are included in depreciation expense.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
Cost
|
|
Balance at 1 January 2017
|
|
|
Additions
|
|
|
Disposals
|
|
|
Transfers
|
|
|
Impairment
|
|
|
Effects of movements in exchange rates
|
|
|
Balance at
30 September 2017
|
|
|
GSM and other telecommunication operating licenses
|
|
|
8,039,431
|
|
|
|
1,841
|
|
|
|
-
|
|
|
|
69,697
|
|
|
|
-
|
|
|
|
17,712
|
|
|
|
8,128,681
|
|
|
Computer software
|
|
|
6,076,405
|
|
|
|
281,873
|
|
|
|
(6,842
|
)
|
|
|
315,842
|
|
|
|
-
|
|
|
|
5,400
|
|
|
|
6,672,678
|
|
|
Transmission lines
|
|
|
71,602
|
|
|
|
218
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,820
|
|
|
Central betting system operating right
|
|
|
11,981
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,981
|
|
|
Indefeasible right of usage
|
|
|
46,017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,017
|
|
|
Brand name
|
|
|
7,040
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,040
|
|
|
Customer base
|
|
|
15,512
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,512
|
|
|
Goodwill
|
|
|
32,834
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,834
|
|
|
Other
|
|
|
38,321
|
|
|
|
4,282
|
|
|
|
-
|
|
|
|
(597
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
42,006
|
|
|
Construction in progress
|
|
|
142,875
|
|
|
|
353,706
|
|
|
|
-
|
|
|
|
(384,942
|
)
|
|
|
-
|
|
|
|
1,498
|
|
|
|
113,137
|
|
|
Total
|
|
|
14,482,018
|
|
|
|
641,920
|
|
|
|
(6,842
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
24,610
|
|
|
|
15,141,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSM and other telecommunication operating licenses
|
|
|
1,878,895
|
|
|
|
408,395
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,329
|
|
|
|
2,290,619
|
|
|
Computer software
|
|
|
4,237,996
|
|
|
|
397,723
|
|
|
|
(5,942
|
)
|
|
|
-
|
|
|
|
702
|
|
|
|
2,509
|
|
|
|
4,632,988
|
|
|
Transmission lines
|
|
|
58,203
|
|
|
|
2,641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
767
|
|
|
|
-
|
|
|
|
61,611
|
|
|
Central betting system operating right
|
|
|
10,588
|
|
|
|
684
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,272
|
|
|
Indefeasible right of usage
|
|
|
18,785
|
|
|
|
2,535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,320
|
|
|
Brand name
|
|
|
5,808
|
|
|
|
528
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,336
|
|
|
Customer base
|
|
|
11,286
|
|
|
|
378
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,664
|
|
|
Other
|
|
|
24,468
|
|
|
|
5,916
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,384
|
|
|
Total
|
|
|
6,246,029
|
|
|
|
818,800
|
|
|
|
(5,942
|
)
|
|
|
-
|
|
|
|
1,469
|
|
|
|
5,838
|
|
|
|
7,066,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
|
8,235,989
|
|
|
|
(176,880
|
)
|
|
|
(900
|
)
|
|
|
-
|
|
|
|
(1,469
|
)
|
|
|
18,772
|
|
|
|
8,075,512
|
|
Amortization expense on intangible assets other than goodwill for the nine and three months ended 30 September 2017 amounted to TL 820,269 and TL 289,852, respectively including impairment losses and are recognized in cost of revenues.
Impairment losses on intangible assets for the nine and three months ended 30 September 2017 amounted to TL 1,469 and TL 702 respectively and recognized in depreciation expense.
Computer software includes internally generated capitalized software development costs that meet the definition of an intangible asset. The amount of internally generated computer software is TL 102,904 and TL 36,598 respectively, for the nine months and three months ended 30 September 2017.
Research expenditure related to internally generated software capitalized for the nine and three months ended 30 September 2017 amounting to TL 26,134 and TL 9,804, respectively and are recognized in cost of revenue.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
10.
|
Asset held for sale and discontinued operations
|
In 2016, the Group has committed to plan to exit from Fintur operations in relevant jurisdictions and initiated an active program to locate a buyer for its associate. In this regard, Fintur has been classified as held for sale and reported as discontinued operation starting from 1 October 2016.
Equity accounting for Fintur ceased starting from 1 October 2016, and in accordance with IFRS 5, Fintur has been measured at the lower of carrying amount and fair value less costs to sell. Comparative period in the condensed consolidated interim statement of profit or loss and other comprehensive income and the condensed consolidated interim statement of cash flows are restated to reflect the classification of Fintur as discontinued operation.
The Company is still committed to the plan to exit from Fintur operations in relevant jurisdictions and the delay during 2017 in the sales process was caused by events and circumstances beyond the Company’s control. Turkcell has taken necessary actions to respond the change in circumstances and Fintur is being actively marketed at reasonable prices given the change in circumstances.
Dividends
Turkcell:
On 25 May 2017, the Company’s General Assembly has approved a dividend distribution for the years ended from 2010 to 2016 amounting to TL 3,000,000 (equivalent to $841,633 as at 25 May 2017, date of Ordinary General Assembly Meeting), This represents
a gross cash dividend of full TL 1.3636364 (equivalent to full $0.3825604
as at 25 May 2017, date of Ordinary General Assembly Meeting) per share. The dividend will be paid in three instalments on 15 June, 15 September and 15 December 2017 to the shareholders. First installment was paid
during the six month period ended 30 June 2017
amounting to TL 933,997.
The Company paid TL 1,000,000 in total including withholding tax in July 2017. Second instalment was paid during the nine months ended 30 September 2017 amounting to TL 933,413. The Company will pay TL 1,000,000 in total including withholding tax in October 2017.
Azerinteltek:
According to resolution of the General Assembly Meeting of Azerinteltek held in 13 February 2017, Board of Directors decided to pay dividend amounting to AZN 3,778 (equivalent to TL 7,915 as at
30 September 2017) from the profit realized for the fourth quarter of 2016. Dividend payments were completed in 2017.
According to resolution of the General Assembly Meeting of Azerinteltek held in 27 April 2017, Board of Directors decided to pay advance dividend amounting to AZN 3,098 (equivalent to TL 6,490 as at 30 September 2017) from the profit realized for the first quarter of 2017. Dividend payments were completed in 2017.
According to resolution of the General Assembly Meeting of Azerinteltek held in 11 July 2017, Board of Directors decided to pay advance dividend amounting to AZN 2,391 (equivalent to TL 5,009 as at
30 September 2017)
from the profit realized for the first quarter of 2017. Dividend payments were completed in 2017.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
Inteltek:
According to the resolution of
the
General Assembly Meeting of Inteltek held on 31 March 2017, General Assembly resolved to pay dividend amounting to TL 63,528 from the profit realized in 2016 (remaining amount after deducting advance dividends for the period of January-June 2016 amounting to TL 20,455) and dividend from legal reserves which exceeds legal limit mentioned under the Law amounting to TL 11,585 until 31 December 2017. Dividend payments were completed in 2017.
|
|
|
30 September
2017
|
|
|
31 December
2016
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Unsecured bank loans
|
|
|
6,042,349
|
|
|
|
5,300,756
|
|
|
Secured bank loans
|
|
|
2,560
|
|
|
|
3,580
|
|
|
Finance lease liabilities
|
|
|
44,569
|
|
|
|
41,539
|
|
|
Debt securities issued
|
|
|
1,690,521
|
|
|
|
1,589,227
|
|
|
|
|
|
7,779,999
|
|
|
|
6,935,102
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Unsecured bank loans
|
|
|
2,832,264
|
|
|
|
1,581,135
|
|
|
Current portion of long-term unsecured bank loans
|
|
|
1,143,220
|
|
|
|
922,867
|
|
|
Current portion of long-term secured bank loans
|
|
|
1,958
|
|
|
|
2,054
|
|
|
Current portion of long-term finance lease liabilities
|
|
|
9,155
|
|
|
|
6,575
|
|
|
Current portion of long-term debt securities issued
|
|
|
100,387
|
|
|
|
94,473
|
|
|
Debt securities issued
|
|
|
-
|
|
|
|
238,956
|
|
|
|
|
|
4,086,984
|
|
|
|
2,846,060
|
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
12.
|
Borrowings (continued)
|
Terms and conditions of outstanding loans are as follows:
|
|
|
|
|
|
30 September 2017
|
|
31 December 2016
|
|
|
Currency
|
|
Interest
rate type
|
|
Nominal interest
rate
|
|
Payment
Period
|
|
|
Carrying
amount
|
|
Nominal interest
rate
|
|
Payment
Period
|
|
|
Carrying amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured bank loans (*)
|
USD
|
|
Floating
|
|
Libor+2.0%-Libor+3.1%
|
|
2017-2020
|
|
|
2,613,632
|
|
Libor+2.0%-Libor+2.6%
|
|
2017-2020
|
|
|
1,984,533
|
|
Unsecured bank loans (*)
|
EUR
|
|
Floating
|
|
Euribor+1.2%-Euribor+2.2%
|
|
2018-2026
|
|
|
4,646,221
|
|
Euribor+1.2%-Euribor+2.2%
|
|
2017-2025
|
|
|
3,593,110
|
|
Unsecured bank loans
|
TL
|
|
Fixed
|
|
10.4%-14.9%
|
|
2017-2019
|
|
|
2,229,982
|
|
10.4%-12.6%
|
|
2017-2018
|
|
|
1,819,944
|
|
Unsecured bank loans
|
UAH
|
|
Fixed
|
|
11.0%-13.5%
|
|
2017-2018
|
|
|
527,998
|
|
13.5%-18.6%
|
|
2017
|
|
|
407,171
|
|
Secured bank loans (**)
|
BYN
|
|
Fixed
|
|
12%-16%
|
|
2017-2020
|
|
|
4,518
|
|
12%-16%
|
|
2017-2020
|
|
|
5,634
|
|
Debt securities issued
|
USD
|
|
Fixed
|
|
5.8%
|
|
2017-2025
|
|
|
1,790,908
|
|
5.8%
|
|
2017-2025
|
|
|
1,683,700
|
|
Debt securities issued
|
TL
|
|
Fixed
|
|
-
|
|
-
|
|
|
-
|
|
10.7%
|
|
2017
|
|
|
238,956
|
|
Finance lease liabilities
|
EUR
|
|
Fixed
|
|
3.4%
|
|
2018-2024
|
|
|
47,801
|
|
3.4%
|
|
2017-2024
|
|
|
48,034
|
|
Finance lease liabilities
|
USD
|
|
Fixed
|
|
18%-28%
|
|
2017-2018
|
|
|
41
|
|
18%-28%
|
|
2017-2018
|
|
|
80
|
|
Finance lease liabilities
|
TL
|
|
Fixed
|
|
27.7%
|
|
2017-2020
|
|
|
5,882
|
|
-
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
11,866,983
|
|
|
|
|
|
|
9,781,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
Secured by the blocked deposit amounting to EUR 24,670 and USD 12,600 (equivalent to TL 148,183 as at 30 September 2017), in connection with the foreign currency loans utilized by TFS.
|
|
(**)
|
Secured by the Government of the Republic of Belarus.
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
13.
|
Financial instruments
|
Impairment losses
Movement in the provision for impairment of trade receivables and due from related parties that are assessed for impairment collectively for the nine months ended 30 September 2017 is as follows:
|
|
|
30 September
2017
|
|
|
Opening balance
|
|
|
964,311
|
|
|
Impairment loss recognized
|
|
|
277,654
|
|
|
Collections
|
|
|
(169,151
|
)
|
|
Effect of exchange differences
|
|
|
243
|
|
|
Amounts written-off
|
|
|
(21,622
|
)
|
|
Provision no longer required
(*)
|
|
|
(47,500
|
)
|
|
Closing balance
|
|
|
1,003,935
|
|
The provision for impairment with respect to due from related parties is TL 187 as at 30 September 2017.
(*)
With the transfer of claim agreement, the Company has transferred its doubtful receivables, which have been commenced execution proceedings and which have not yet been commenced execution proceedings but have been in the legal follow-up within the period between 2011 and 2013, to the debt collection company.
Movement in the provision for impairment of receivables from financial services that are assessed for impairment collectively for the nine months ended 30 September 2017 is as follows:
|
|
|
30 September
2017
|
|
|
Opening balance
|
|
|
10,170
|
|
|
Impairment loss recognized
|
|
|
50,331
|
|
|
Collections
|
|
|
(18,152
|
)
|
|
Closing balance
|
|
|
42,349
|
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
13.
|
Financial instruments (continued)
|
Exposure to currency risk
The Group’s exposure to foreign currency risk based on notional amounts is as follows:
|
|
|
31 December 2016
|
|
|
|
|
USD
|
|
|
EUR
|
|
|
Foreign currency denominated assets
|
|
|
|
|
|
|
|
Other non-current assets
|
|
|
244
|
|
|
|
2,131
|
|
|
Due from related parties-current
|
|
|
1,210
|
|
|
|
388
|
|
|
Trade receivables and accrued income
|
|
|
14,178
|
|
|
|
61,841
|
|
|
Other current assets
|
|
|
19,929
|
|
|
|
7,144
|
|
|
Cash and cash equivalents
|
|
|
807,372
|
|
|
|
378,057
|
|
|
|
|
|
842,933
|
|
|
|
449,561
|
|
|
Foreign currency denominated liabilities
|
|
|
|
|
|
|
Loans and borrowings-non current
|
|
|
(483,910
|
)
|
|
|
(959,482
|
)
|
|
Debt securities issued-non- current
|
|
|
(451,588
|
)
|
|
|
-
|
|
|
Other non-current liabilities
|
|
|
(99,273
|
)
|
|
|
-
|
|
|
Loans and borrowings-current
|
|
|
(80,029
|
)
|
|
|
(21,985
|
)
|
|
Debt securities issued-current
|
|
|
(26,845
|
)
|
|
|
-
|
|
|
Trade and other payables-current
|
|
|
(175,083
|
)
|
|
|
(425,992
|
)
|
|
Due to related parties
|
|
|
(398
|
)
|
|
|
(334
|
)
|
|
|
|
|
(1,317,126
|
)
|
|
|
(1,407,793
|
)
|
|
Exposure related to derivative instruments
|
|
|
|
|
|
|
|
|
|
Participating cross currency swap contracts
|
|
|
250,000
|
|
|
|
500,000
|
|
|
Currency swap contracts
|
|
|
7,960
|
|
|
|
25,000
|
|
|
Currency forward contracts
|
|
|
(30,071
|
)
|
|
|
-
|
|
|
Net exposure
|
|
|
(246,304
|
)
|
|
|
(433,232
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 September 2017
|
|
|
|
|
USD
|
|
|
EUR
|
|
|
Foreign currency denominated assets
|
|
|
|
|
|
|
|
|
|
Other non-current assets
|
|
|
72
|
|
|
|
2,131
|
|
|
Due from related parties-current
|
|
|
631
|
|
|
|
422
|
|
|
Trade receivables and accrued income
|
|
|
24,081
|
|
|
|
57,243
|
|
|
Other current assets
|
|
|
73,148
|
|
|
|
32,270
|
|
|
Held to maturity investments
|
|
|
1,006
|
|
|
|
-
|
|
|
Cash and cash equivalents
|
|
|
780,552
|
|
|
|
233,530
|
|
|
|
|
|
879,490
|
|
|
|
325,596
|
|
|
Foreign currency denominated liabilities
|
|
|
|
|
|
|
Loans and borrowings-non current
|
|
|
(563,866
|
)
|
|
|
(1,022,605
|
)
|
|
Debt securities issued-non- current
|
|
|
(475,921
|
)
|
|
|
-
|
|
|
Other non-current liabilities
|
|
|
(89,968
|
)
|
|
|
-
|
|
|
Loans and borrowings-current
|
|
|
(171,945
|
)
|
|
|
(97,045
|
)
|
|
Debt securities issued-current
|
|
|
(28,261
|
)
|
|
|
-
|
|
|
Trade and other payables-current
|
|
|
(170,742
|
)
|
|
|
(31,526
|
)
|
|
Due to related parties
|
|
|
(827
|
)
|
|
|
(701
|
)
|
|
|
|
|
(1,501,530
|
)
|
|
|
(1,151,877
|
)
|
|
Exposure related to derivative instruments
|
|
|
|
|
|
|
|
|
|
Participating cross currency swap contracts
|
|
|
417,900
|
|
|
|
595,000
|
|
|
Currency swap contracts
|
|
|
146,881
|
|
|
|
(19,670
|
)
|
|
Net exposure
|
|
|
(57,259
|
)
|
|
|
(250,951
|
)
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
13.
|
Financial instruments (continued)
|
Exposure to currency risk (continued)
The following significant exchange rates are applied during the period:
|
|
|
Average Rate
|
|
|
Closing Rate
|
|
|
|
|
30 September
|
|
|
30 September
|
|
|
30 September
|
|
|
31 December
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USD/TL
|
|
|
3.5763
|
|
|
|
2.9215
|
|
|
|
3.5521
|
|
|
|
3.5192
|
|
|
EUR/TL
|
|
|
3.9867
|
|
|
|
3.2523
|
|
|
|
4.1924
|
|
|
|
3.7099
|
|
|
USD/BYN
|
|
|
1.9100
|
|
|
|
1.9994
|
|
|
|
1.9623
|
|
|
|
1.9585
|
|
|
USD/UAH
|
|
|
26.5003
|
|
|
|
25.4487
|
|
|
|
26.5211
|
|
|
|
27.1909
|
|
Sensitivity analysis
The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The aggregate foreign exchange exposure is composed of all assets and liabilities denominated in foreign currencies. The analysis excludes net foreign currency investments.
10% strengthening of the TL, UAH, BYN against the following currencies as at 30 September 2017 and 31 December 2016 would have increased / (decreased) profit or loss before by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
|
|
|
Profit or loss
|
|
|
|
|
30 September
2017
|
|
|
31 December
2016
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
20,339
|
|
|
|
86,679
|
|
|
EUR
|
|
|
105,209
|
|
|
|
160,725
|
|
10% weakening of the TL, UAH, BYN against the following currencies as at 30 September 2017 and 31 December 2016 would have increased / (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
|
|
|
Profit or loss
|
|
|
|
|
30 September
2017
|
|
|
31 December
2016
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
(20,339
|
)
|
|
|
(86,679
|
)
|
|
EUR
|
|
|
(105,209
|
)
|
|
|
(160,725
|
)
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
13.
|
Financial instruments (continued)
|
Fair values
To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level is as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 30 September 2017 and 31 December 2016 on a recurring basis:
|
|
Fair values
|
|
|
30 September
2017
|
|
31 December
2016
|
|
Fair Value
hierarchy
|
|
Valuation Techniques
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency swap contracts
|
3,069
|
|
611
|
|
Level 2
|
|
Pricing models based on discounted cash flow analysis using the observable yield curve
|
|
Participating cross currency swap contracts (*)
|
598,702
|
|
382,054
|
|
Level 3
|
|
Pricing models based on discounted cash flow analysis using the unobservable yield curve
|
|
Currency forward contracts
|
-
|
|
(1,286)
|
|
Level 2
|
|
Pricing models based on period end foreign currency rates.
|
|
Consideration payable in relation to acquisition of Belarusian Telecom (**)
|
(319,575)
|
|
(295,062)
|
|
Level 3
|
|
Net present value
|
There were no transfers between levels during the period.
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 September 2017.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
13.
|
Financial instruments (continued)
|
Fair values (continued)
(*) Participating cross currency swap contracts include EUR-TL interest and currency swap contracts, EUR put and call options, amounting to nominal value of EUR 500,000 and also USD-TL interest and currency swap contracts and put and call options amounting to nominal value of USD 250,000 in total. The EUR-TL participating cross currency swap contracts, which are EUR 100,000, EUR 150,000 and EUR 250,000, was combined into one contract as of 26 May 2017 and the maturity of the contracts was extended to 23 October 2025. Additionally, cross currency swap contracts include EUR-TL interest and participating cross currency swap contracts nominal value of EUR 115,170 and USD-TL interest and currency swap contracts amounting to nominal value of USD 222,184 in total. Regarding these contracts, TL 102,767 accrual of interest expense and TL 22,581 accrual of interest income has been reflected to condensed consolidated interim financial statements as at 30 September 2017 (31 December 2016: TL 40,367 and TL 8,220 respectively). Since bid-ask spread is unobservable input; in valuation of participating cross currency swap contracts, prices in bid- ask price range which were considered the most appropriate were used instead of mid prices. If mid prices were used in the valuation the fair value of participating cross currency swap contracts would have been TL 78,837 lower as at 30 September 2017 (31 December 2016: TL 23,291).
(**) Discount rate of 4.3% was used for the present value calculation of the consideration payable in relation to acquisition of Belarusian Telecom as at 30 September 2017 (31 December 2016: 5.6%). Company management expects consideration to be paid with an amount of USD 100,000 during the first quarter of 2020 (31 December 2016: the first quarter of 2020).
The following table presents the changes in level 3 instruments for the nine months ended 30 September 2017:
Participating cross currency swap contracts:
|
|
|
30 September
2017
|
|
|
Opening balance
|
|
|
382,054
|
|
|
Total gains or losses:
|
|
|
|
|
|
in profit or loss
|
|
|
216,648
|
|
|
Closing balance
|
|
|
598,702
|
|
Consideration payable in relation to acquisition of Belarusian Telecom:
|
|
|
30 September
2017
|
|
|
Opening balance
|
|
|
(295,062
|
)
|
|
Total gains or losses:
|
|
|
|
|
|
in profit or loss
|
|
|
(24,513
|
)
|
|
Closing balance
|
|
|
(319,575
|
)
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
13.
|
Financial instruments (continued)
|
Fair values (continued)
Valuation inputs and relationships to fair value
The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurement of contingent consideration.
|
|
|
Fair value at
|
|
|
|
Inputs
|
|
|
|
|
|
30
September 2017
|
|
31 December 2016
|
|
Unobservable
Inputs
|
|
30 September 2017
|
31 December 2016
|
|
Relationship of unobservable inputs to fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
319,575
|
|
295,062
|
|
Risk-adjusted discount rate
|
|
4.3%
|
5.6%
|
|
A change in the discount rate by 100 bps would increase / decrease FV by TL (7,536) and TL 7,793 respectively.
|
|
|
|
|
|
|
|
Expected settlement date
|
|
first quarter of 2020
|
first quarter of 2020
|
|
If expected settlement date changes by 1 year FV would increase / decrease by TL (13,225) and TL 13,835 respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts of financial assets and financial liabilities measured at amortized cost are a reasonable approximation of their fair values.
|
14.
|
Guarantees and purchase obligations
|
As at 30 September 2017, outstanding purchase commitments with respect to the acquisition of property, plant and equipment, inventory and purchase of sponsorship, rent and advertisement services amounted to TL 520,356 (31 December 2016: TL 915,868). Realizations for these commitments are going to be made within 5 year period.
As at 30 September 2017, the Group is contingently liable in respect of bank letters of guarantee obtained from banks given to customs authorities, private companies and other public organizations, provided guarantees to private companies and financial guarantees to subsidiaries totaling to TL 3,787,126 (31 December 2016: TL 2,370,723).
As at 30 September 2017, the Company’s commitments regarding lifecell’s 3G license purchases amounted to UAH 207,039 (equivalent to TL 27,730 as at 30 September 2017).
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
15.
|
Commitments and Contingencies
|
|
15.1
|
Dispute on Treasury Share Amounts
|
According to the 2G and 3G Concession Agreements, The Company is obliged to pay each month 15% of its monthly gross sales; with the exception of the interest for late payment of the amounts charged to its subscribers and of the indirect taxes, fiscal obligations such as fees and duties and the invoiced amounts recorded in the accounts
to the Treasury as treasury share. The Company is obliged to pay 90% of this share to Treasury and 10% of the remaining as the universal services share to the Ministry of Transport, Maritime Affairs and Communications. The Company is also obliged to pay once a year 0,35% of its gross sale as the Authority contribution share.
The Undersecretariat of Treasury alleged that Company made deficient treasury payments in the past and sent requests for payment and BTK requested penalty fee over the alleged underpaid treasury share amounts. The Company objected to these claims and initiated legal processes which are still pending.
The Company filed a claim for the request of the preliminary injunction in order to prevent the payment regarding the 2010-2011 Treasury Report under 2G Concession Agreement. The Court of First Instance accepted the request. Defendants objected to the injunction. The Court rejected the objection and ruled that The Company shall submit a security in the amount of 7.000 TL
The maximum loss of the Company, excluding the interest for late payment arising from these disputes, for 2G Concession Agreement and 3G Concession Agreement could be TL 425,893and TL 49,634, respectively.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain, thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 30 September 2017 (31 December 2016: None).
|
15.2
|
Dispute on Special Communication Tax
|
Large Tax Payers Office levied Special Communication Tax (SCT) and tax penalty on the Company amounting to TL 527,639 in total, of which SCT amounting 211,056 and penalty amounting to TL 316,583 based on the claim stated on Tax Investigation Reports prepared for the years 2008-2012, that the Company should pay Special Communication Tax over the prepaid card sales made by the distributors. The Company filed 60 lawsuits in the Tax Courts for the cancellation of each tax and tax penalty claim. In some of the cases, The Court decided in favour of The Company, in some of the cases, The Court decided partially in favour of the Company, in some of the cases, The Court decided in favour of the Tax Office. The parties appealed the decisions regarding the parts against them.
The Large Tax Payers Office has collected TL 80,355 (TL 77,480 and TL 2,875 overdue interest) calculated for the parts against the Company for the assessment of the SCT for the year 2011 by offsetting the receivables of the Company from Public Administrations. No provision for the aforementioned amount is recognized in the consolidated financial statements so that it was shown in other receivables.
As per the Law no. 6736, the Company filed applications for the restructuring of penalties and interest on the SCT regarding the dispute on the tax amount for the years 2008, 2009, 2010, 2011 and 2012. Tax Office rejected the application for the year 2011; accepted the other restructuring applications for the years 2008, 2009, 2010, 2012 and the Company paid the restructuring amount of TL 117,058. Within this scope the Company submitted the waiver petition to the Tax Office for the cases related with the restructuring SCT amount. The Council of State decided that there is no need to grant a decision regarding the appeal process by the reason of waiver. On the other hand, Tax Office rejected the application for the restructuring of the SCT regarding the dispute on the tax amount for the year 2011.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
15.
|
Commitments and Contingencies (continued)
|
|
15.2
|
Dispute on Special Communication Tax (continued)
|
The Company filed a case for the stay of execution and cancellation of aforementioned rejection act of Tax Office for the year 2011. The Court rejected the Company’s stay of execution request. The Company objected to the decision. The case is pending.
On the other hand, the appeal process is pending in the 12 cases filed for the cancellation of the fined tax assessment prepared for the year 2011.
Limited tax investigation for the period of 2013 has been started in 2014 and the result of investigation has not yet been notified to Turkcell. Large Tax Payers Office has begun the limited tax investigation for the period of 2013. For the year of 2014 ,2015 and 2016 a new investigation has been initiated.
Based on the probable payment including interest in case of restructuring the SCT for the year 2013 as per the Law no. 6736, the Company accrued provisions in the condensed consolidated interim financial statements as at and for the period ended 30 September 2017 amounting to 14,866 TL (31 December 2016: 14,866).
|
15.3
|
Investigation initiated by ICTA on subscription numbers and radio utilization and usage fees
|
ICTA commenced in-depth investigations, against the GSM operators, on the accuracy of the subscriber numbers report for the terms, 2004-2009, 2010-2011, 2012, 2013 and 2014 which are the key input for the calculation and payment of radio utilization and usage fees. As a result of the investigations, ICTA imposed 4 separate administrative fines to the Company amounting TL 11.240 in total and decided to warn the Company. The administrative fines were paid within 1 month following the notification of the decision of ICTA, with 25% discount. The Company filed lawsuits for the cancellation of aforementioned administrative fines and ICTA’s administrative acts implied on the Company for the collection of the radio utilization and a usage fee which was claimed to have been paid deficiently. The cases are pending.
ICTA filed 4 lawsuits on 13 October 2014, 23 December 2014, 3 March 2015 and 11 April 2016 for the collection of the total amount of TL 196,383. The amount which was alleged that the Company paid deficiently by the ICTA decision took upon the investigation for the periods 2004 – 2009, 2010 – 2011, and 2012 on the radio utilization and usage fees, with its accrued interest, which will be calculated. The Courts decided to take expert report for the cases dated 13 October 2014, 23 December 2014 and 3 March 2015. The Courts decided to consolidate the lawsuits filed by ICTA on 13 October 2014 and 23 December 2014. The expert report has been notified to the Company, for the case dated 13 October 2014 and the consolidated case dated 23 December 2014. The expert committee has requested additional information and documents from the parties with this report. The Company submitted its objections and declarations against the expert report and the Court decided to take an additional expert report. The expert committee submitted their additional report to the Court. The additional expert report is in favor of the Company. For the case dated 3 March 2015, the expert report has been notified to the Company. The expert committee has requested additional information and documents from the parties with this report. The Parties submitted their objections and declarations against the expert report and the Court decided to take an additional expert report. Then, the Court decided to consolidate the lawsuit dated 11 April 2016 with the lawsuits dated 13 October 2014 and 23 December 2014. The cases are pending.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
15.
|
Commitments and Contingencies (continued)
|
|
15.3
|
Investigation initiated by ICTA on subscription numbers and radio utilization and usage fees (continued)
|
ICTA initiated an execution proceeding against Turkcell for allegedly deficiently paid radio license and utilization fees and relating to this, order of payment has been notified to the Company on 17 October 2017.
With the payment order, ICTA demands the deficiently paid radio utilization and usage fees in the amount of 21.191TL with its interest as a result of the investigation regarding the radio license and utilization fees for the year 2013 and also the deficiently paid radio utilization fees in the amount of 8.782 TL with its interest, as a result of the investigation about the correctness of notifications about TRx channels that have not been notified to ICTA on the ground that they are not actually used even though
they built, for the year 2011 and before.
Total amount of the execution proceeding which contains interest and expenses, is 60.257 TL. The Company shall object to the payment order in due time. Additionally the Company shall file an application for complaint.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain, thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 30 September 2017 (31 December 2016: None).
|
15.4
|
Disputes regarding the Law on the Protection of Competition
|
With the decision dated 6 June 2011 and numbered 230 established on the grounds of the investigation initiated by the Competition Board on the grounds that the Company violated the competitive environment through abusing its dominant position in the Turkish mobile market and infringements of Article 4 and 6 of the Law No. 4054, it was decided to apply administrative fine amounting to TL 91,942 on the Company. A lawsuit was filed in the Council of State for the stay of execution and the cancellation of the execution of Article 4 and 6 by the Company. The case is still pending.
On 8 March 2012, payment order has been sent to the Company by the Tax Office. The Company filed a lawsuit for the stay of execution and cancellation of the payment order on 13 March 2012. The Court accepted the lawsuit and cancelled the payment order. Tax Office appealed the decision. The Company replied the appeal request. Appeal process is still pending.
Dogan Dagitim Satis Pazarlama Odeme Aracilik ve Tahsilat Sistemleri A.S. filed a lawsuit against the Company on 5 June 2012 claiming TL 110,484 together with up to 3 times of the loss amount to be determined by the court for its material damages by reserving its rights for surpluses allegedly on the ground that the Company caused that damage by its applications to its sub-distributors which constituted a violation of the law no. 4054 and that violation was proved by the Competition Board decision in which the Board imposed TL 91,942 administrative fine to the Company. The case is still pending.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
15.
|
Commitments and Contingencies (continued)
|
|
15.4
|
Disputes regarding the Law on the Protection of Competition (continued)
|
Mobiltel İletisim Hizmetleri Sanayi ve Ticaret A.
S. filed a lawsuit against the Company on 17 August 2012 claiming TL 500 together with up to 3 times of the loss amount to be determined by the court for its material damages by reserving its rights for surpluses allegedly on the ground that the Company gives exclusive competence to its sub-dealers and that violation was proved by the Competition Board decision in which the Board imposed TL 91,942 administrative fine to the Company and that Mobiltel was not able to sale any product to the sub-dealers which were given exclusive competence by the Company. The Court decided to take expert report in the case.
The lawsuit is pending.
Pamuk Elektronik whose dealership agreement was terminated initiated a lawsuit with a claim of a compensation three times of its alleged damages due to the Company’s actions falling within the scope of the Competition Board’s administrative monetary fine in the amount of TL 91,942 and also with a compensation claim in the amount of TL 2,100 due to the alleged unjust termination of the agreement. The Court decided to reject the lawsuit with the reason that the dispute must be solved with arbitration procedure because of the term in the agreement. The decision was finalized by satisfying the appeal process and correction of the decision process. Subsequently, Pamuk Elektronik initiated an arbitration case against the Company with a compensation claim in the amount of TL 1.100. The Arbitral Tribunal partially accepted the claim and awarded that The Company to compensate 110 TL. The Company filed a lawsuit for the cancellation of the arbitral award. The case is pending.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain, thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 30 September 2017 (31 December 2016: None).
|
15.5
|
Other ongoing lawsuits and investigations
|
Within condensed consolidated interim financial statements prepared as of 30 September 2017, obligations which are related to following ongoing disputes have been evaluated.
Based on the management opinion, an outflow of resources embodying economic benefits is deemed to be less than probable, thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 30 September 2017 (31 December 2016: None).
|
Subject
|
Anticipated maximum risk
(excluding accrued interest)
|
Provision
|
|
Disputes related with ICTA
|
22,746
|
-
|
In addition, Large Tax Payers Office carries out limited tax investigations regarding the Company’s VAT and corporate tax practices for the years 2012, 2013 and 2014 and VAT practices for the years 2015 and 2016. Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain, thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 30 September 2017.
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
Transactions with key management personnel:
Key management personnel comprise the Group’s key management executive officers and members of board of directors.
As at 30 September 2017 and 2016, none of the Group’s executive officers has outstanding loans due to the Group.
In addition to their salaries, the Group also provides non-cash benefits to executive officers and contributes to a post-employment defined plan on their behalf. The Group is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits.
Total compensation provided to key management personnel for the nine and three months ended 30 September 2017 and 2016 are TL 47,394, TL 36,212, TL 20,913 and TL 8,213 respectively
a
s listed below;
|
|
|
Nine months ended
|
|
|
Three months ended
|
|
|
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term benefits
|
|
|
45,791
|
|
|
|
30,677
|
|
|
|
20,671
|
|
|
|
6,864
|
|
|
Termination benefits
|
|
|
1,201
|
|
|
|
5,259
|
|
|
|
72
|
|
|
|
1,239
|
|
|
Long-term benefits
|
|
|
402
|
|
|
|
276
|
|
|
|
170
|
|
|
|
110
|
|
|
|
|
|
47,394
|
|
|
|
36,212
|
|
|
|
20,913
|
|
|
|
8,213
|
|
Transactions with related parties
|
|
|
Nine months ended
|
|
|
Three months ended
|
|
|
Revenues from related parties
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
Sales to
Kyivstar GSM JSC (“Kyivstar”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
18,701
|
|
|
|
21,647
|
|
|
|
7,160
|
|
|
|
8,403
|
|
|
Sales to Teliasonera International Carrier AB (“Telia”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
7,427
|
|
|
|
8,501
|
|
|
|
3,098
|
|
|
|
3,313
|
|
|
Sales to VimpelCom (BVI) Ltd. (“Vimpelcom”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
5,673
|
|
|
|
17,067
|
|
|
|
2,023
|
|
|
|
3,376
|
|
|
Sales to PJSC MegaFon (“Megafon”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
3,821
|
|
|
|
8,874
|
|
|
|
1,622
|
|
|
|
2,601
|
|
|
Sales to Azercell Telekom MMC (“Azercell”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
1,223
|
|
|
|
2,038
|
|
|
|
661
|
|
|
|
845
|
|
|
Sales to Krea Icerik Hizmetleri ve Produksiyon AS (“Krea”) (*)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Call center, fixed line services, rent and interest charges
|
|
|
-
|
|
|
|
3,422
|
|
|
|
-
|
|
|
|
1,205
|
|
|
Sales to Millenicom Telekomunikasyon AS (“Millenicom”) (**)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
-
|
|
|
|
997
|
|
|
|
-
|
|
|
|
-
|
|
|
Sales to other related parties
|
|
|
4,160
|
|
|
|
6,706
|
|
|
|
1,770
|
|
|
|
1,573
|
|
|
|
|
|
41,005
|
|
|
|
69,252
|
|
|
|
16,334
|
|
|
|
21,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
16.
|
Related
parties
(continued)
|
Transactions with related parties (continued)
|
|
|
Nine months ended
|
|
|
Three months ended
|
|
|
Related party expenses
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
30 September 2017
|
|
|
30 September 2016
|
|
|
Charges from Kyivstar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
28,943
|
|
|
|
32,936
|
|
|
|
10,926
|
|
|
|
12,658
|
|
|
Charges from Hobim Bilgi Islem Hizmetleri AS (“Hobim”) (***)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invoicing and archiving services
|
|
|
16,993
|
|
|
|
21,975
|
|
|
|
-
|
|
|
|
6,842
|
|
|
Charges from Vimpelcom
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
5,620
|
|
|
|
1,711
|
|
|
|
2,398
|
|
|
|
609
|
|
|
Charges from Megafon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
3,440
|
|
|
|
1,909
|
|
|
|
1,396
|
|
|
|
778
|
|
|
Charges from Telia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
2,872
|
|
|
|
686
|
|
|
|
218
|
|
|
|
(56
|
)
|
|
Charges from Azercell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
503
|
|
|
|
781
|
|
|
|
162
|
|
|
|
523
|
|
|
Charges from Krea (*)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital television broadcasting services
|
|
|
-
|
|
|
|
5,975
|
|
|
|
-
|
|
|
|
-
|
|
|
Charges from Millenicom (**)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
-
|
|
|
|
180
|
|
|
|
-
|
|
|
|
-
|
|
|
Charges from other related parties
|
|
|
7,710
|
|
|
|
6,461
|
|
|
|
3,206
|
|
|
|
1,816
|
|
|
|
|
|
66,081
|
|
|
|
72,614
|
|
|
|
18,306
|
|
|
|
23,170
|
|
|
(*)
|
Revenues and expenses from Krea include transactions until 26 August 2016.
|
|
(**)
|
Revenues and expenses from Millenicom include transactions until 21 January 2016.
|
|
(***)
|
Revenues and expenses from Hobim include transactions until 20 June 2017.
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
Subsidiaries of the Company as at 30 September 2017 and 31 December 2016 are as follows:
|
|
|
|
Effective Ownership Interest
|
|
|
|
|
|
|
|
Subsidiaries
|
Country of
|
|
30 September
|
31 December
|
|
Name
|
Incorporation
|
Business
|
2017 (%)
|
2016 (%)
|
|
Kibris Telekom
|
Turkish Republic of Northern Cyprus
|
Telecommunications
|
100
|
100
|
|
Turkcell Global Bilgi
|
Turkey
|
Customer relations management
|
100
|
100
|
|
Turktell
|
Turkey
|
Information technology, value
added GSM services investments
|
100
|
100
|
|
Turkcell Superonline
|
Turkey
|
Telecommunications and content services
|
100
|
100
|
|
Turkcell Satis
|
Turkey
|
Sales and delivery
|
100
|
100
|
|
Eastasia
|
Netherlands
|
Telecommunications investments
|
100
|
100
|
|
Turkcell Teknoloji
|
Turkey
|
Research and development
|
100
|
100
|
|
Global Tower
|
Turkey
|
Telecommunications infrastructure
business
|
100
|
100
|
|
Financell
|
Netherlands
|
Financing business
|
100
|
100
|
|
Rehberlik
|
Turkey
|
Directory Assistance
|
100
|
100
|
|
Lifecell Ventures
|
Netherlands
|
Telecommunications investments
|
100
|
100
|
|
Beltel
|
Turkey
|
Telecommunications investments
|
100
|
100
|
|
Turkcell Gayrimenkul
|
Turkey
|
Property investments
|
100
|
100
|
|
Global LLC
|
Ukraine
|
Customer relations management
|
100
|
100
|
|
UkrTower
|
Ukraine
|
Telecommunications infrastructure
business
|
100
|
100
|
|
Turkcell Europe
|
Germany
|
Telecommunications
|
100
|
100
|
|
Turkcell Odeme
(1)
|
Turkey
|
Payment services and e-money license
|
100
|
100
|
|
lifecell
|
Ukraine
|
Telecommunications
|
100
|
100
|
|
TFS
|
Turkey
|
Consumer financing services
|
100
|
100
|
|
Beltower
|
Republic of Belarus
|
Telecommunications Infrastructure business
|
100
|
100
|
|
Belarusian Telecom
|
Republic of Belarus
|
Telecommunications
|
80
|
80
|
|
Lifetech
|
Republic of Belarus
|
Research and development
|
78
|
78
|
|
Inteltek
|
Turkey
|
Information and Entertainment Services
|
55
|
55
|
|
Azerinteltek
|
Azerbaijan
|
Information and Entertainment Services
|
28
|
28
|
|
Turkcell Enerji
(2)
|
Turkey
|
Electricity energy trade and wholesale and retail electricity sales
|
100
|
-
|
|
Paycell
(3)
|
Ukraine
|
Consumer financing services
|
100
|
-
|
|
(1)
|
Turkcell Odeme operating under “Paycell” brand has been authorized by the Banking Regulation and Supervision Agency (“BRSA”) to operate as an “electronic money institution” and to provide intermediation service for invoice payments. The decision was published in the Official Gazette on 22 July 2017
.
|
|
(2)
|
Turkcell Enerji, that will be engaged in electricity energy trade, wholesale sales and retail sales was incorporated on 20 February 2017. The Company
is
a wholly owned subsidiary of Turktell and has obtained its electricity supply license upon approval from Energy Market Regulatory Authority (“EMRA”) as at 11 May 2017.
|
|
(3)
|
The company “Paycell LLC” which is established in Ukraine by lifecell and wholly owned by the company granted the “financial company” status on September 21, 2017. Paycell LLC will apply for financial services and local money transfer licenses to provide digital payment services to customers via credit device sales and e-money.
|
|
TURKCELL ILETISIM HIZMETLERI AS
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
As at and for the nine months ended 30 September 2017
|
|
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
None.