The accompanying notes on page 7 to 45 are an integral part of these condensed consolidated interim financial statements.
The accompanying notes on page 7 to 45 are an integral part of these condensed consolidated interim financial statements.
(*) Included in reserves in the condensed interim consolidated statement of financial position.
The accompanying notes on page 7 to 45 are an integral part of these condensed consolidated interim financial statements.
The accompanying notes on page 7 to 45 are an integral part of these condensed consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
Notes to the condensed consolidated interim financial statements
|
Page
|
1. Reporting entity
|
7
|
2. Basis of preparation
|
8
|
3. Changes in accounting policies
|
8
|
4. Segment information
|
23
|
5. Seasonality of operations
|
26
|
6. Finance income and costs
|
26
|
7. Income tax expense
|
26
|
8. Revenue
|
27
|
9. Property, plant and equipment
|
28
|
10. Intangible assets
|
29
|
11. Right of use assets
|
30
|
12. Asset held for sale and discontinued operation
|
30
|
13. Equity
|
31
|
14. Borrowings
|
32
|
15. Financial instruments
|
34
|
16. Guarantees and purchase obligations
|
39
|
17. Commitments and contingencies
|
39
|
18. Related parties
|
42
|
19. Subsidiaries
|
44
|
20. Subsequent events
|
45
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
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 2016 and effective from April 2016. The Company’s shares are listed on Borsa Istanb
ul A.Ş. (“BIST”) and New York Stock Exchange (“NYSE”)
.
The condensed consolidated interim financial statements of the Company as at and for the three months ended 31 March 2018 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 24 April 2018.
2600 MHz frequency tender as part of the 4G License Tender, which the Group’s fully owned subsidiary lifecell based in Ukraine had applied to participate, has been held on 31 January 2018. At the tender, lifecell has been awarded with the license for 15 years bidding UAH 909,251 (TL 128,887) for 15 MHz frequency band, the total of Lot 1 and Lot 2. Payment amounting to UAH 909,251 (equivalent to TL 128,887) of license was made in cash on 1 March 2018.
1800 MHz frequency tender as part of the 4G License Tender, which the Group’s fully owned subsidiary lifecell based in Ukraine had applied to participate, was held on 6 March 2018. As a result of the tender, lifecell was awarded with the license for 15 years for 15 MHz frequency band on Lot 1 with its UAH 795,000 bid. Payment amounting to UAH 795,000 (equivalent to TL 124,587) of license was made in cash on 11 April 2018.
After failure to comply with corporate governance principles for election of independent board members, the CMB appointed 3 independent board members and 4 members, of which 2 members were chosen from the independent nominees list submitted by TeliaSonera Finland Oyj (“Sonera”), as board members who satisfy the independence criteria in 2013. On March 29, 2018, in accordance with the shareholder proposal at the Ordinary General Assembly, 3 new members were elected to serve for 3 years instead of 3 members appointed by the CMB. Currently, Turkcell’s board of directors consists of a total of 7 non-executive members, including 3 independent members and 1 board member who satisfy the independence criteria.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
These condensed consolidated interim financial statements for the three months ended 31 March 2018 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 financial statements are to be read in conjunction with the annual financial statements for the year ended 31 December 2017 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 three months ended 31 March 2018 as set out in Note 3.
The Group adopted IFRS 9,
“Financial Instruments” and
IFRS 15, “Revenue from contracts with customers” for the first time for the period beginning on 1 January 2018. The Group early adopted the new standard, IFRS 16, “Leases” for the first time for the period beginning on 1 January 2018.
The impact of adoption of
IFRS 9, “Financial Instruments ” and IFRS 15, “Revenue from contracts with customers” and IFRS 16, “Leases” on the condensed consolidated interim financial statements and accounting policies are explained under
Note 3
.
3.
|
Changes in accounting policies
|
This note explains the impact of the adoption of IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases on the group’s condensed consolidated interim financial statements and also discloses the new accounting policies that have been applied from 1 January 2018, where they are different to those applied in prior periods.
a)
|
Impact on the condensed consolidated interim financial statements
|
The impact of adoption of IFRS 9, IFRS 15 and IFRS 16 on the condensed consolidated interim financial position as at 31 March 2018 and for the three months ended 31 March 2018 are stated as below. The adoptions of these standards do not have a significant impact on the condensed consolidated interim other comprehensive income and
condensed consolidated interim statement of cash flows.
The following tables show the adjustments recognised for each individual line item. Line items that were not affected by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided. The adjustments are explained in more detail by standard below.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
31 March 2018
As reported
|
|
|
Effect Of Change
Due to IFRS 9
|
|
|
Effect Of Change
Due to IFRS 15
|
|
|
Effect Of Change
Due to IFRS 16
|
|
|
31 March 2018 exc. Adoptions
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
9,751,552
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,751,552
|
|
Right-of-use assets
|
|
|
1,519,941
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,519,941
|
|
|
|
-
|
|
Intangible assets
|
|
|
9,279,855
|
|
|
|
-
|
|
|
|
852,904
|
|
|
|
-
|
|
|
|
8,426,951
|
|
Investment properties
|
|
|
620
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
620
|
|
Trade receivables
|
|
|
162,385
|
|
|
|
(1,223
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
163,608
|
|
Receivables from financial services
|
|
|
1,397,815
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,397,815
|
|
Deferred tax assets
|
|
|
118,719
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,729
|
|
|
|
111,990
|
|
Held to maturity investments
|
|
|
1,151
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,151
|
|
Other non-current assets
|
|
|
308,983
|
|
|
|
(324
|
)
|
|
|
(8,656
|
)
|
|
|
(146,189
|
)
|
|
|
464,152
|
|
Total non-current assets
|
|
|
22,541,021
|
|
|
|
(1,547
|
)
|
|
|
844,248
|
|
|
|
1,380,481
|
|
|
|
20,317,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
116,018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
116,018
|
|
Trade receivables and accrued income
|
|
|
2,942,773
|
|
|
|
45,630
|
|
|
|
7,653
|
|
|
|
5,026
|
|
|
|
2,884,464
|
|
Due from related parties
|
|
|
7,525
|
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
7,531
|
|
Receivables from financial services
|
|
|
3,001,084
|
|
|
|
(56,982
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,058,066
|
|
Derivative financial instruments
|
|
|
1,300,969
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,300,969
|
|
Held to maturity investments
|
|
|
13,480
|
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
13,485
|
|
Cash and cash equivalents
|
|
|
4,589,654
|
|
|
|
(1,449
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
4,591,103
|
|
Other current assets
|
|
|
1,215,093
|
|
|
|
(173
|
)
|
|
|
(129,182
|
)
|
|
|
(281,248
|
)
|
|
|
1,625,696
|
|
Subtotal
|
|
|
13,186,596
|
|
|
|
(12,985
|
)
|
|
|
(121,529
|
)
|
|
|
(276,222
|
)
|
|
|
13,597,332
|
|
Assets classified as held for sale
|
|
|
1,345,502
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,345,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
14,532,098
|
|
|
|
(12,985
|
)
|
|
|
(121,529
|
)
|
|
|
(276,222
|
)
|
|
|
14,942,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
37,073,119
|
|
|
|
(14,532
|
)
|
|
|
722,719
|
|
|
|
1,104,259
|
|
|
|
35,260,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
2,200,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,200,000
|
|
Share premium
|
|
|
269
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
269
|
|
Treasury shares (-)
|
|
|
(50,427
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50,427
|
)
|
Additional paid in capital
|
|
|
35,026
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35,026
|
|
Reserves
|
|
|
1,804,947
|
|
|
|
190
|
|
|
|
784
|
|
|
|
(479
|
)
|
|
|
1,804,452
|
|
Remeasurements of employee termination benefit
|
|
|
(44,776
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(44,776
|
)
|
Retained earnings
|
|
|
10,259,896
|
|
|
|
(11,351
|
)
|
|
|
549,649
|
|
|
|
(23,380
|
)
|
|
|
9,744,978
|
|
Total equity attributable to equity holders of Turkcell Iletisim Hizmetleri AS (“the Company”)
|
|
|
14,204,935
|
|
|
|
(11,161
|
)
|
|
|
550,433
|
|
|
|
(23,859
|
)
|
|
|
13,689,522
|
|
Non-controlling interests
|
|
|
42,683
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,683
|
|
Total equity
|
|
|
14,247,618
|
|
|
|
(11,161
|
)
|
|
|
550,433
|
|
|
|
(23,859
|
)
|
|
|
13,732,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
9,414,161
|
|
|
|
-
|
|
|
|
-
|
|
|
|
612,495
|
|
|
|
8,801,666
|
|
Employee benefit obligations
|
|
|
211,716
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
211,716
|
|
Provisions
|
|
|
207,342
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
207,342
|
|
Deferred tax liabilities
|
|
|
858,759
|
|
|
|
(3,371
|
)
|
|
|
147,846
|
|
|
|
-
|
|
|
|
714,284
|
|
Other non-current liabilities
|
|
|
429,379
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
429,379
|
|
Total non-current liabilities
|
|
|
11,121,357
|
|
|
|
(3,371
|
)
|
|
|
147,846
|
|
|
|
612,495
|
|
|
|
10,364,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
5,716,290
|
|
|
|
-
|
|
|
|
-
|
|
|
|
515,623
|
|
|
|
5,200,667
|
|
Current tax liabilities
|
|
|
170,240
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,240
|
|
Trade and other payables
|
|
|
2,986,108
|
|
|
|
-
|
|
|
|
(276
|
)
|
|
|
-
|
|
|
|
2,986,384
|
|
Due to related parties
|
|
|
1,825,333
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,825,333
|
|
Deferred revenue
|
|
|
228,281
|
|
|
|
-
|
|
|
|
24,716
|
|
|
|
-
|
|
|
|
203,565
|
|
Provisions
|
|
|
611,453
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
611,453
|
|
Derivative financial instruments
|
|
|
166,439
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
166,439
|
|
Total current liabilities
|
|
|
11,704,144
|
|
|
|
-
|
|
|
|
24,440
|
|
|
|
515,623
|
|
|
|
11,164,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
22,825,501
|
|
|
|
(3,371
|
)
|
|
|
172,286
|
|
|
|
1,128,118
|
|
|
|
21,528,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
37,073,119
|
|
|
|
(14,532
|
)
|
|
|
722,719
|
|
|
|
1,104,259
|
|
|
|
35,260,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
Three month ended 31 March 2018 As reported
|
|
|
Effect Of Change
Due to IFRS 9
|
|
|
Effect Of Change
Due to IFRS 15
|
|
|
Effect Of Change
Due to IFRS 16
|
|
|
Three month ended 31 March 2018 exc. Adoptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
4,549,650
|
|
|
|
-
|
|
|
|
(2,050
|
)
|
|
|
-
|
|
|
|
4,551,700
|
|
Revenue from financial services
|
|
|
211,945
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
211,945
|
|
Total revenue
|
|
|
4,761,595
|
|
|
|
-
|
|
|
|
(2,050
|
)
|
|
|
-
|
|
|
|
4,763,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
(3,039,877
|
)
|
|
|
-
|
|
|
|
(83,908
|
)
|
|
|
3,417
|
|
|
|
(2,959,386
|
)
|
Cost of revenue from financial services
|
|
|
(74,882
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(74,882
|
)
|
Total cost of revenue
|
|
|
(3,114,759
|
)
|
|
|
-
|
|
|
|
(83,908
|
)
|
|
|
3,417
|
|
|
|
(3,034,268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,509,773
|
|
|
|
-
|
|
|
|
(85,958
|
)
|
|
|
3,417
|
|
|
|
1,592,314
|
|
Gross profit from financial services
|
|
|
137,063
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
137,063
|
|
Total gross profit
|
|
|
1,646,836
|
|
|
|
-
|
|
|
|
(85,958
|
)
|
|
|
3,417
|
|
|
|
1,729,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
13,894
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,894
|
|
Selling and marketing expenses
|
|
|
(389,802
|
)
|
|
|
-
|
|
|
|
110,810
|
|
|
|
13,475
|
|
|
|
(514,087
|
)
|
Administrative expenses
|
|
|
(214,883
|
)
|
|
|
669
|
|
|
|
-
|
|
|
|
8,403
|
|
|
|
(223,955
|
)
|
Other expenses
|
|
|
(47,365
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
70
|
|
|
|
(47,435
|
)
|
Operating profit
|
|
|
1,008,680
|
|
|
|
669
|
|
|
|
24,852
|
|
|
|
25,365
|
|
|
|
957,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
464,812
|
|
|
|
-
|
|
|
|
-
|
|
|
|
128
|
|
|
|
464,684
|
|
Finance costs
|
|
|
(778,282
|
)
|
|
|
(87
|
)
|
|
|
-
|
|
|
|
(55,602
|
)
|
|
|
(722,593
|
)
|
Net finance costs
|
|
|
(313,470
|
)
|
|
|
(87
|
)
|
|
|
-
|
|
|
|
(55,474
|
)
|
|
|
(257,909
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
|
695,210
|
|
|
|
582
|
|
|
|
24,852
|
|
|
|
(30,109
|
)
|
|
|
699,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(170,195
|
)
|
|
|
(216
|
)
|
|
|
(3,681
|
)
|
|
|
6,729
|
|
|
|
(173,027
|
)
|
Profit from continuing operations
|
|
|
525,015
|
|
|
|
366
|
|
|
|
21,171
|
|
|
|
(23,380
|
)
|
|
|
526,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from discontinued operations (attributable to owners of the Company)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Profit for the year
|
|
|
525,015
|
|
|
|
366
|
|
|
|
21,171
|
|
|
|
(23,380
|
)
|
|
|
526,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year is attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company
|
|
|
500,780
|
|
|
|
366
|
|
|
|
21,171
|
|
|
|
(23,380
|
)
|
|
|
502,623
|
|
Non-controlling interests
|
|
|
24,235
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,235
|
|
Total
|
|
|
525,015
|
|
|
|
366
|
|
|
|
21,171
|
|
|
|
(23,380
|
)
|
|
|
526,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL)
|
|
|
0.23
|
|
|
|
0.00
|
|
|
|
0.01
|
|
|
|
(0.01
|
)
|
|
|
0.24
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
3.
|
Changes in accounting policies (continued)
|
a)
|
Impact on the condensed consolidated interim financial statements (continued)
|
IFRS 9 Financial Instruments – Impact of adoption
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of IFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the condensed consolidated interim financial statements as stated below:
The total impact on the group’s retained earnings as at 1 January 2018 is as follows:
|
|
1 January 2018
|
|
Retained Earnings Opening – 31 December 2017
|
|
|
11,312,276
|
|
Increase in provision for receivables from financial services
|
|
|
(52,951
|
)
|
Increase in provision for other financial assets
|
|
|
37,762
|
|
Deferred tax effect
|
|
|
3,155
|
|
Other
|
|
|
317
|
|
Total impact of adoption in accordance with IFRS 9
|
|
|
(11,717
|
)
|
Retained Earnings Opening – 1 January 2018 (Including IFRS 9- excluding IFRS 15)
|
|
|
11,300,559
|
|
Impairment of financial assets
The group recognizes impairment charges for financial assets that are subject to the expected credit loss model in accordance with IFRS 9 as below:
·
Trade receivables resulting from operations
·
Financial services receivables
·
Cash and cash equivalents
·
Financial investments
·
Other receivables
·
Other assets
Financial services receivables
On 1 January 2018, credit risks were assessed for these loans in accordance with the impairment methodology and TL (52,951) has been recognized under retained earnings.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
3.
|
Changes in accounting policies (continued)
|
a)
|
Impact on the condensed consolidated interim financial statements (continued)
|
The reconciliation of impairment provision and opening balances for financial services receivables as of 1 January 2018 is stated as below:
|
|
1 January 2018
|
|
At 1 January 2018 (calculated under IAS 39)
|
|
|
72,992
|
|
Amounts restated through opening retained earnings
|
|
|
52,951
|
|
At 1 January 2018 (calculated under IFRS 9)
|
|
|
125,943
|
|
Current year provision at profit or loss statement – IFRS 9
|
|
|
43,921
|
|
Current year provision at profit or loss statement if IAS 39 was applied
|
|
|
39,890
|
|
Other financial assets
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for its financial assets comprising of trade receivables, cash and cash equivalents, financial investments, other receivables and other assets.
The reconciliation of impairment provision and opening balances for other financial assets as of 1 January 2018 is stated as below:
|
|
1 January 2018
|
|
At 1 January 2018 (calculated under IAS 39)
|
|
|
705,440
|
|
Amounts restated through opening retained earnings
|
|
|
(37,762
|
)
|
At 1 January 2018 (calculated under IFRS 9)
|
|
|
667,678
|
|
Current year provision at profit or loss statement-IFRS 9
|
|
|
68,672
|
|
Current year provision at profit or loss statement if IAS 39 was applied
|
|
|
73,285
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
3.
|
Changes in accounting policies (continued)
|
a)
|
Impact on the condensed consolidated interim financial statements (continued)
|
IFRS 15 Revenue from Contracts with Customers – Impact of adoption
The impact of adoption of IFRS 15, “Revenue from contracts with customers” on retained earnings as of 1 January 2018 is stated as below:
|
|
31 December 2017
|
|
Retained earnings 1 January 2018- (including IFRS 9 effects-excluding IFRS 15 effects)
|
|
|
11,300,559
|
|
Recognition of asset for subscriber acquisition cost
|
|
|
820,866
|
|
Decrease in current assets and non-current assets
|
|
|
(132,685
|
)
|
Deferred tax effect
|
|
|
(144,171
|
)
|
Other
|
|
|
(15,532
|
)
|
Adjustment to retained earnings from adoption of IFRS 15
|
|
|
528,478
|
|
|
|
|
|
|
Opening retained earnings 1 January 2018 - (including IFRS 9 and IFRS 15 effects)
|
|
|
11,829,037
|
|
Contract costs eligible for capitalization as incremental costs of obtaining a contract comprise commission on sale relating to postpaid contracts with acquired or retained subscribers. Contract costs are capitalized in the month of service activation if the Group expects to recover those costs. Contract costs comprise sales commissions to dealers and to own salesforce which can be directly attributed to an acquired or retained contract. Contract costs are classified as intangible assets in the condensed consolidated interim financial statements.
Contract costs capitalized prior to IFRS 15 have been classified under prepaid expenses. As of 1 January 2018, contract costs amounting to 156,879 TL has been classified from prepaid expenses to intangible assets.
Details of contract costs and related accumulated depreciation for the period 1 January - 31 March 2018 has been disclosed under Note 10.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
3.
|
Changes in accounting policies (continued)
|
a)
|
Impact on the condensed consolidated interim financial statements (continued)
|
Subscriber acquisition costs
Following the adoption of IFRS 15, the costs that relate directly to fulfil a contract are capitalized as subscriber acquisition costs under intangible asset. The asset is amortised on a straight line basis over the customer life time it relates to, consistent with the pattern of recognition of the associated revenue.
b)
|
New standards and interpretations applied
|
IFRS 9 Financial instruments
The last version of IFRS 9, issued in July 2014, replaces the existing guidance in IAS 39 “Financial Instruments: Recognition and Measurement”. It also carries forward the guidance on recognition, classification, measurement and derecognition of financial instruments from IAS 39 to IFRS 9. The last version of IFRS 9 includes a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements and also includes guidance issued in previous versions of IFRS 9. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018.
Classification and measurement – Financial assets
IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics.
IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, FVOCI (fair value through other comprehensive income) and FVTPL (fair value through profit or loss) . The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale.
The new classification requirements would have had a impact on its accounting for consumer financing loans, trade receivables, investments in debt securities, cash and cash equivalents and other financial assets. Since Turkcell Finansman A.S. may sell and derecognizes some portion of its loans depending on the management assessment, the related portion may be assessed in “hold and sell” business model and may require fair value measurement.
Impairment – Financial assets and contract assets
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with a forward looking ‘expected credit loss’ (ECL) model. This will require considerable judgement about how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis.
The new impairment model will apply to financial assets measured at amortised cost or FVOCI, except for investments in equity instruments, and to contract assets.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
b)
|
New standards and interpretations applied (continued)
|
IFRS 9 Financial instruments
(continued)
Under IFRS 9, loss allowances will be measured on either the following bases.
|
-
|
12 month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and
|
|
-
|
lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.
|
Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since initial recognition and 12 month ECL measurement applies if it has not.
An entity may determine that a financial asset’s credit risk has not increased significantly if the asset has low credit risk at the reporting date. However lifetime ECL measurement (simplified approach) always apply for trade receivables and contract assets without a significant financing component. The Group will apply lifetime ECL measurement for all group companies except Turkcell Finansman A.S. which will apply both 12 month and lifetime ECL (general approach) since it is a financing company.
Transition
The Group has taken advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 are recognized in retained earnings and reserves as at 1 January 2018.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2014, and amended in April 2016, and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard supersedes all current revenue recognition requirements under IFRS. The Group adopted the new standard on the required effective date using the modified retrospective method which requires the recognition of the cumulative effect of initially applying IFRS 15, as at
January 1, 2018, to retained earnings and not restate prior years.
The Group is mainly in the business of providing telecommunication services. The goods and services are sold both on their own in separate identified contracts with customers and together as a bundled package of goods and/or services.
Sale of goods
For contracts with customers and intermediaries in which the sale of device or equipment is generally expected to be a performance obligation, adoption of IFRS 15 does not have significant impact on the Group’s revenue and profit or loss because sale of goods were already recognised as a distinct performance obligation at fair value under current accounting treatment.
The Group expects the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
b)
|
New standards and interpretations applied (continued)
|
IFRS 15 Revenue from Contracts with Customers
(continued)
Rendering of services
The Group mainly provides telecommunication services. Services are generally bundled with other products/services and these bundled services and products involve consideration in the form of fixed fee or a fixed fee coupled with a continuing payment stream or discount. The Company’s current accounting treatment in allocating total consideration to the performance obligations comply with the requirements of IFRS 15.
Contract costs
Under IFRS 15, certain incremental costs incurred in acquiring a contract with a customer will be deferred on the consolidated statement of financial position and amortised as revenue is recognised under the related contract; this will generally lead to the later recognition of charges for some commissions payable to third party dealers and employees.
IFRS 16 Leases
The Group has applied IFRS 16 Lease with initial application date of January 1, 2018. The Group has opted using the modified retrospective approach - option 2 application and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4.
Policy applicable from 1 January 2018
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, The Group assess whether:
|
-
|
the contract involved the use of an identified asset – this may be specified explicitly or implicitly
|
|
-
|
the asset should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, the asset is not identified;
|
|
-
|
the Group has the right to obtain substantially all of the economic benefits from the use of an asset throughout the period of use; and
|
|
-
|
the Group has the right to direct use of the asset. The Group has the right when it has the decision-making rights that are most relevant to changing the how and for what purpose the asset is used is predetermined, the Group has the right the use of asset if either:
|
|
-
|
the Group has the right to operate the asset or;
|
|
-
|
the Group designed the asset in a way that predetermines how and for what purpose it will be used.
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
b)
|
New standards and interpretations applied (continued)
|
IFRS 16 Leases (continued)
The policy is applied to contracts entered into, or changed, on or after 1 January 2018.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
Policy applicable before 1 January 2018
For contracts entered into before 1 January 2018, the Group determined whether the arrangement was or contained a lease based on the assessment whether:
|
-
|
the fulfillment of the arrangement was dependent on the use of specific asset or assets; and
|
|
-
|
the arrangement has conveyed a right of use the asset if one of the following met;
|
|
-
|
the purchaser had the ability or right to operate the asset while obtaining or controlling more than a significant amount of the output;
|
|
-
|
the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or
|
|
-
|
facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.
|
The Group as a lessee
Right of use asset
The Group recognizes a right-of use asset and a lease liability at the lease commencement date.
The right of use asset is initially recognized at cost comprising of:
-
|
amount of the initial measurement of the lease liability;
|
-
|
any lease payments made at or before the commencement date, less any lease incentives received;
|
-
|
any initial direct costs incurred by the Group; and
|
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end date of the useful life of the right-of-use asset of the end date of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability (Note 11).
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
b)
|
New standards and interpretations applied (continued)
|
IFRS 16 Leases (continued)
Lease Liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’ incremental borrowing rate. Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
|
-
|
fixed payments, including in-substance fixed payments;
|
|
-
|
variable lease payments that depend on an index or a rate, initially measured using the index or rate as the commencement date;
|
|
-
|
amounts expected to be payable under a residual value guarantee; and
|
|
-
|
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewable period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain to terminate early.
|
After initial recognition, the lease liability is measured (a) increasing the carrying amount to reflect interest on lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
Where, (a) there is a change in the lease term as a result of reassessment of certainty to exercise an exercise option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Group remeasures the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. The Group determines the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the its incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.
Where, (a) there is a change in the amounts expected to be payable under a residual value guarantee; or (b) there is a change in the future lease payments resulting from a change in an index or a rate used to determine those payments, including change to reflect changes in market rental rates following a market rent review, the Group remeasures the lease liabilities by discounting the revised lease payments using an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In such case, the Group use revised discount rate that reflects changes in the interest rate.
The Group recognises the amount of the remeasurement of lease liability as an adjustment to the right of use asset. Where the carrying amount of the right of use asset is reduced zero and there is further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the remeasurement in profit or loss.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
b)
|
New standards and interpretations applied (continued)
|
IFRS 16 Leases (continued)
The Group accounts for a lease modification as a separate lease if both:
-
the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
-
the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
The Group as a Lessor
When the Group acts an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use-asset arising from the head lease, not with reference to the underlying asset.
If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.
Transition
The Group applied IFRS 16 with a date of initial application of January 1, 2018. As a result, the Group has changed its accounting policy for lease contracts as detailed below.
The Group opted IFRS 16 using modified retrospective approach - option 2 application under which the cumulative effect of initially applying the Standard recognised at the date of initial application at 1 January 2018.
On transition to IFRS 16, the Group elected to apply practical expedient to grandfather the assessment of which transitions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 January 2018.
On transition the Group does not elect to apply recognition exemption for short-term leases by class of underlying assets and leases for low-value items which shall be applied lease-by-lease basis on both transition and subsequently.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
b)
|
New standards and interpretations applied (continued)
|
IFRS 16 Leases (continued)
As a lessee, the Group previously classified leases as operating and finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. At transition lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate at 1 January 2018. The Group measured right-of-use assets at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments under IFRS 16 modified retrospective approach option 2 application and used the following practical expedients;
|
-
|
Group applied a single discount rate to a portfolio of leases with similar characteristics
|
|
-
|
Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application
|
|
-
|
Excluded initial direct costs from measuring the right-of-use asset at the date of initial application
|
|
-
|
Used hindsight when determining the lease term when the contract contains options to renew or terminate the lease.
|
c)
|
Standards, amendments
and interpretations applicable as at 31 March 2018:
|
-
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.
-
Annual improvements 2014-2016;
effective from annual periods beginning on or after 1 January 2018. These amendments impact 2 standards:
·
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,
·
IAS 28, ‘Investments in associates and joint venture’ regarding measuring an associate or joint venture at fair value.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
c)
|
Standards, amendments
and interpretations applicable as at 31 March 2018 (continued):
|
-
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.
d)
|
Standards, amendments and interpretations that are issued but not effective as at 31 March 2018
|
-
Amendment to IFRS 9, ‘Financial instruments’;
effective from annual periods beginning on or after 1 January 2019. This amendment confirm that when a financial liability measured at amortised cost is modified without this resulting in de-recognition, a gain or loss should be recognised immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate. This means that the difference cannot be spread over the remaining life of the instrument which may be a change in practice from IAS 39.
-
Amendment to IAS 28, ‘Investments in associates and joint venture’;
effective from annual periods beginning on or after 1 January 2019. These amendments clarify that companies account for long-term interests in associate or joint venture to which the equity method is not applied using IFRS 9.
-
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 (Interpretations Committee) 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 three months ended 31 March 2018
(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)
d)
|
Standards, amendments and interpretations that are issued but not effective as at 31 March 2018 (continued)
|
-
|
Annual improvements 2015-2017;
effective from annual periods beginning on or after 1 January 2019. These amendments include minor changes to:
|
·
IFRS 3, ‘Business combinations’, – a company remeasures its previously held interest in a joint operation when it obtains control of the business.
·
IFRS 11, ‘Joint arrangements’, – a company does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.
·
IAS 12, ‘Income taxes’ – a company accounts for all income tax consequences of dividend payments in the same way.
·
IAS 23, ‘Borrowing costs’ – a company treats as part of general borrowings any borrowing originally made to develop an asset when the asset is ready for its intended use or sale.
-
Amendments to IAS 19, ‘Employee benefits’ on plan amendment, curtailment or settlement’;
effective from annual periods beginning on or after 1 January 2019. These amendments require an entity to:
·
use updated assumptions to determine current service cost and net interest for the reminder of the period after a plan amendment, curtailment or settlement; and
·
recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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 reportable segments in accordance with its integrated communication and technology services strategy - Turkcell Turkey and Turkcell International. While some of these strategic segments offer the same types of services, 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 Board of Directors may transfer the authorities, other than recognized by the law, to the General Manager 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 Lifecell Digital Limited. 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
A.Ş.(“
Turkcell Finansman”),
Turkcell Özel Finansman A.Ş.
(“T
ÖFAŞ
”),
Turkcell Enerji Cozumleri ve Elektrik Satıs Ticaret A.S
(“Turkcell Enerji”) and Paycell LLC (“Paycell”).
The Board primarily uses adjusted EBITDA to assess the performance of the operating segments. Adjusted EBITDA definition includes revenue, cost of revenue excluding depreciation and amortization, selling and marketing expenses and administrative expenses.
Adjusted EBITDA is not a financial measure defined by IFRS 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 the consolidated profit for the year is included in the accompanying notes.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
|
|
Three months ended 31 March
|
|
|
|
Turkcell Turkey
|
|
|
Turkcell International
|
|
|
All other segments
|
|
|
Intersegment Eliminations
|
|
|
Consolidated
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenue
|
|
|
4,116,998
|
|
|
|
3,562,694
|
|
|
|
279,406
|
|
|
|
248,047
|
|
|
|
445,688
|
|
|
|
256,303
|
|
|
|
(80,497
|
)
|
|
|
(14,442
|
)
|
|
|
4,761,595
|
|
|
|
4,052,602
|
|
Inter-segment revenue
|
|
|
(14,858
|
)
|
|
|
(7,294
|
)
|
|
|
(13,898
|
)
|
|
|
(7,139
|
)
|
|
|
(51,741
|
)
|
|
|
(9
|
)
|
|
|
80,497
|
|
|
|
14,442
|
|
|
|
-
|
|
|
|
-
|
|
Revenue from external customers
|
|
|
4,102,140
|
|
|
|
3,555,400
|
|
|
|
265,508
|
|
|
|
240,908
|
|
|
|
393,947
|
|
|
|
256,294
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,761,595
|
|
|
|
4,052,602
|
|
Adjusted EBITDA
|
|
|
1,781,200
|
|
|
|
1,269,167
|
|
|
|
92,826
|
|
|
|
60,336
|
|
|
|
152,221
|
|
|
|
71,458
|
|
|
|
(4,278
|
)
|
|
|
(1,083
|
)
|
|
|
2,021,969
|
|
|
|
1,399,878
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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)
|
|
|
Three months ended
31 March
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
525,015
|
|
|
|
471,401
|
|
Add(Less):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
170,195
|
|
|
|
157,214
|
|
Finance income
|
|
|
(464,812
|
)
|
|
|
(201,494
|
)
|
Finance costs
|
|
|
778,282
|
|
|
|
348,084
|
|
Other income
|
|
|
(13,894
|
)
|
|
|
(34,978
|
)
|
Other expenses
|
|
|
47,365
|
|
|
|
31,290
|
|
Depreciation and amortization
|
|
|
979,818
|
|
|
|
628,361
|
|
Consolidated adjusted EBITDA
|
|
|
2,021,969
|
|
|
|
1,399,878
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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 cost for the three months ended 31 March 2018 and 2017 amount to TL (313,470) and TL (146,590).
Finance costs mainly include foreign exchange losses on borrowings amounting to TL (439,969), interest expense on financial liabilities measured at amortized cost TL (172,540) and discount interest income on dividends TL 75,134.
Interest expense and foreign exchange loss effect of right of use assets is respectively TL (35,469) and TL (20,133) for the three months ended 31 March 2018.
Income tax expense is recognised 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 three months ended 31 March 2018 is 24%, compared to 25% for the three months ended 31 March 2017.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
Three months ended 31 March
|
|
|
|
Turkcell Turkey
|
|
|
Turkcell International
|
|
|
Other
|
|
|
Intersegment eliminations
|
|
|
Consolidated
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunication services
|
|
|
3,812,050
|
|
|
|
3,335,205
|
|
|
|
243,954
|
|
|
|
222,947
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,948
|
)
|
|
|
(14,442
|
)
|
|
|
4,036,056
|
|
|
|
3,543,710
|
|
Equipment revenues
|
|
|
272,825
|
|
|
|
210,069
|
|
|
|
20,777
|
|
|
|
14,831
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
293,602
|
|
|
|
224,900
|
|
Revenue from financial services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
211,945
|
|
|
|
115,970
|
|
|
|
-
|
|
|
|
-
|
|
|
|
211,945
|
|
|
|
115,970
|
|
Call center revenues
|
|
|
-
|
|
|
|
-
|
|
|
|
2,108
|
|
|
|
1,742
|
|
|
|
61,866
|
|
|
|
54,987
|
|
|
|
(1,297
|
)
|
|
|
-
|
|
|
|
62,677
|
|
|
|
56,729
|
|
Commission fees on betting business
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,584
|
|
|
|
45,919
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,584
|
|
|
|
45,919
|
|
Revenue from betting business
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,768
|
|
|
|
39,225
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,768
|
|
|
|
39,225
|
|
Other
|
|
|
32,123
|
|
|
|
17,420
|
|
|
|
12,567
|
|
|
|
8,527
|
|
|
|
61,525
|
|
|
|
202
|
|
|
|
(59,252
|
)
|
|
|
-
|
|
|
|
46,963
|
|
|
|
26,149
|
|
Total
|
|
|
4,116,998
|
|
|
|
3,562,694
|
|
|
|
279,406
|
|
|
|
248,047
|
|
|
|
445,688
|
|
|
|
256,303
|
|
|
|
(80,497
|
)
|
|
|
(14,442
|
)
|
|
|
4,761,595
|
|
|
|
4,052,602
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
9.
|
Property, plant and equipment
|
Cost
|
|
Balance as at
1
January
2018
|
|
|
Additions
|
|
|
Disposals
|
|
|
Transfers
|
|
|
Impairment expenses/ (reversals)
|
|
|
Effects of movements in exchange rates
|
|
|
Transfer from Investment Property
|
|
|
Balance as at
31
March 2018
|
|
Network infrastructure (All operational)
|
|
|
15,480,128
|
|
|
|
47,648
|
|
|
|
(44,242
|
)
|
|
|
303,488
|
|
|
|
-
|
|
|
|
237,009
|
|
|
|
-
|
|
|
|
16,024,031
|
|
Land and buildings
|
|
|
786,058
|
|
|
|
9,542
|
|
|
|
(2,335
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,922
|
|
|
|
5,817
|
|
|
|
801,004
|
|
Equipment, fixtures and fittings
|
|
|
728,202
|
|
|
|
9,024
|
|
|
|
(5,592
|
)
|
|
|
5,598
|
|
|
|
-
|
|
|
|
3,233
|
|
|
|
-
|
|
|
|
740,465
|
|
Motor vehicles
|
|
|
37,216
|
|
|
|
-
|
|
|
|
(99
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
354
|
|
|
|
-
|
|
|
|
37,471
|
|
Leasehold improvements
|
|
|
314,867
|
|
|
|
407
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
462
|
|
|
|
-
|
|
|
|
315,736
|
|
Construction in progress
|
|
|
672,294
|
|
|
|
358,571
|
|
|
|
-
|
|
|
|
(315,336
|
)
|
|
|
(206
|
)
|
|
|
10,090
|
|
|
|
-
|
|
|
|
725,413
|
|
Total
|
|
|
18,018,765
|
|
|
|
425,192
|
|
|
|
(52,268
|
)
|
|
|
(6,250
|
)
|
|
|
(206
|
)
|
|
|
253,070
|
|
|
|
5,817
|
|
|
|
18,644,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network infrastructure (All operational)
|
|
|
7,326,559
|
|
|
|
385,844
|
|
|
|
(38,790
|
)
|
|
|
-
|
|
|
|
9,102
|
|
|
|
143,221
|
|
|
|
-
|
|
|
|
7,825,936
|
|
Land and buildings
|
|
|
209,918
|
|
|
|
9,270
|
|
|
|
(74
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,106
|
|
|
|
4,863
|
|
|
|
225,083
|
|
Equipment, fixtures and fittings
|
|
|
539,827
|
|
|
|
15,465
|
|
|
|
(2,281
|
)
|
|
|
-
|
|
|
|
6
|
|
|
|
2,563
|
|
|
|
-
|
|
|
|
555,580
|
|
Motor vehicles
|
|
|
31,306
|
|
|
|
618
|
|
|
|
(99
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
352
|
|
|
|
-
|
|
|
|
32,177
|
|
Leasehold improvements
|
|
|
245,747
|
|
|
|
7,597
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
448
|
|
|
|
-
|
|
|
|
253,792
|
|
Total
|
|
|
8,353,357
|
|
|
|
418,794
|
|
|
|
(41,244
|
)
|
|
|
-
|
|
|
|
9,108
|
|
|
|
147,690
|
|
|
|
4,863
|
|
|
|
8,892,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
9,665,408
|
|
|
|
6,398
|
|
|
|
(11,024
|
)
|
|
|
(6,250
|
)
|
|
|
(9,314
|
)
|
|
|
105,380
|
|
|
|
954
|
|
|
|
9,751,552
|
|
Depreciation expense for the three months ended 31 March 2018 amounting to TL 428,108 including impairment losses are recognized in 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 three months ended 31 March 2018 amounting to TL 9,314 are included in depreciation expense.
As at 31 March 2018, net book amount of fixed assets acquired under finance leases amounted to TL 173,168.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
Balance at
1 January 2018
|
|
|
Impact of IFRS 15 adaption
|
|
|
Additions
|
|
|
Disposals
|
|
|
Transfers
|
|
|
Effects of movements
in exchange rates
|
|
|
Balance at
31 March 2018
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSM and other telecommunication operating licenses
|
|
|
8,139,628
|
|
|
|
-
|
|
|
|
1,490
|
|
|
|
-
|
|
|
|
158,520
|
|
|
|
64,648
|
|
|
|
8,364,286
|
|
Computer software
|
|
|
7,117,116
|
|
|
|
-
|
|
|
|
114,913
|
|
|
|
-
|
|
|
|
102,659
|
|
|
|
23,677
|
|
|
|
7,358,365
|
|
Indefeasible right of usage
|
|
|
112,556
|
|
|
|
-
|
|
|
|
5,062
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
117,618
|
|
Transmission lines
|
|
|
71,820
|
|
|
|
-
|
|
|
|
32
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,852
|
|
Brand name
|
|
|
7,040
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,040
|
|
Customer base
|
|
|
15,512
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,512
|
|
Central betting system operating right
|
|
|
11,981
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,981
|
|
Goodwill
|
|
|
32,834
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,834
|
|
Subscriber acquisition cost
|
|
|
-
|
|
|
|
1,414,146
|
|
|
|
119,294
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,533,440
|
|
Other
|
|
|
42,749
|
|
|
|
-
|
|
|
|
1,034
|
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
43,773
|
|
Construction in progress
|
|
|
127,637
|
|
|
|
-
|
|
|
|
177,349
|
|
|
|
-
|
|
|
|
(255,883
|
)
|
|
|
5,841
|
|
|
|
54,944
|
|
|
|
|
15,678,873
|
|
|
|
1,414,146
|
|
|
|
419,174
|
|
|
|
(10
|
)
|
|
|
5,296
|
|
|
|
94,166
|
|
|
|
17,611,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSM and other telecommunication operating licenses
|
|
|
2,419,230
|
|
|
|
-
|
|
|
|
135,979
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,639
|
|
|
|
2,573,848
|
|
Computer software
|
|
|
4,770,880
|
|
|
|
-
|
|
|
|
138,495
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,590
|
|
|
|
4,923,965
|
|
Indefeasible right of usage
|
|
|
23,274
|
|
|
|
-
|
|
|
|
2,146
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,420
|
|
Transmission lines
|
|
|
62,468
|
|
|
|
-
|
|
|
|
1,145
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63,613
|
|
Brand name
|
|
|
6,512
|
|
|
|
-
|
|
|
|
176
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,688
|
|
Customer base
|
|
|
11,774
|
|
|
|
-
|
|
|
|
109
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,883
|
|
Central betting system operating right
|
|
|
11,491
|
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,706
|
|
Subscriber acquisition cost
|
|
|
-
|
|
|
|
593,280
|
|
|
|
87,256
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
680,536
|
|
Other
|
|
|
32,834
|
|
|
|
-
|
|
|
|
1,301
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
34,131
|
|
|
|
|
7,338,463
|
|
|
|
593,280
|
|
|
|
366,822
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
33,229
|
|
|
|
8,331,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
|
8,340,410
|
|
|
|
820,866
|
|
|
|
52,352
|
|
|
|
(6
|
)
|
|
|
5,296
|
|
|
|
60,937
|
|
|
|
9,279,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense on intangible assets other than goodwill for the three months ended 31 March 2018 amounting to TL 366,822 including impairment losses are recognized in cost of revenues.
There is no impairment losses on intangible assets recognized for the three months ended 31 March 2018.
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 31,188 for the three months ended 31 March 2018.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
As of 1 January 2018, The Company provided a right of use asset equal to the lease liability adjusted for prepaid or accrued rent payments. In accordance with this methodology, application of IFRS 16 does not have an impact on the Group’s retained earnings as of 1 January 2018.
Closing balances of right of use assets as of 1 January and 31 March 2018 and depreciation and amortization expenses for the three months ended 31 March 2018 is stated as below:
|
|
Tangible
|
|
|
|
|
|
Intangible
|
|
|
|
|
|
|
Site Rent
|
|
|
Building
|
|
|
Network equipment
|
|
|
Other
|
|
|
Total
|
|
|
Right of Way
|
|
|
Total
|
|
Balance at 1 January
|
|
|
1,077,517
|
|
|
|
146,826
|
|
|
|
226,243
|
|
|
|
115,652
|
|
|
|
1,566,238
|
|
|
|
12,321
|
|
|
|
1,578,559
|
|
Depreciation charge for the year
|
|
|
(107,168
|
)
|
|
|
(14,316
|
)
|
|
|
(44,583
|
)
|
|
|
(16,385
|
)
|
|
|
(182,452
|
)
|
|
|
(1,621
|
)
|
|
|
(184,073
|
)
|
Balance at 31 March
|
|
|
1,055,600
|
|
|
|
163,407
|
|
|
|
180,297
|
|
|
|
109,435
|
|
|
|
1,508,739
|
|
|
|
11,202
|
|
|
|
1,519,941
|
|
As of 1 January 2018, balance amounting to 427,437 TL that was classified under prepaid expenses prior to application of IFRS 16 has been reclassified to right of use asset as result of the adoption of IFRS 16.
As at 31 March 2018, additions to right of use assets amount to TL 127,787.
12.
|
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 2018 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.
Our subsidiary Fintur
, has transferred its total shareholding in Azertel Telekomunikasyon Yatirim Diş Ticaret A.Ş (“Azertel”) to Azerbaijan International Telecom LLC (“Azintelecom”)
at the price of EUR 221,687 on 5 March 2018. The signing of definitive agreement, the transfer of shares to Azintelecom and the transfer of proceeds to Fintur were completed simultaneously. The transaction has no impact on condensed consolidated interim financial statements since Fintur is classified as “assets held for sale” in the statement of financial position.
Our subsidiary Fintur has completed the transfer of all its shares in Geocell LLC to Silknet JSC on 20 March 2018, a joint stock company organized under the laws of Georgia, for a total consideration of USD 153,000 upon receiving the necessary regulatory approvals. The transaction has no impact on condensed consolidated interim financial statements since Fintur is classified as “assets held for sale” in the statement of financial position.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
Dividends
Turkcell:
On 29 March 2018, the Company’s General Assembly has approved a dividend distribution for the year ended
31 December 2017
amounting to TL 1,900,000; this represents
a gross cash dividend of full TL 0.86364
per share. The dividend will be paid in three instalments on 18 June, 17 September and 17 December 2018 to the shareholders.
Azerinteltek:
According to the two resolution of the General Assembly Meeting of Azerinteltek within 2018, shareholders decided to pay dividend amounting to 5,959 AZN (31 March 2018: 13,103 TL) from the profit realized for the last quarter of 2017 dividend payment was made in 2018.
Inteltek:
According to Board of Directors Resolution of Inteltek dated 18 December 2017 the advanced dividend payment has been made on 3 January 2018 the amount equal to TL 28,402 for the first nine months of 2017 profit. According to the meeting minute resolution of the Ordinary General Assembly Meeting of Inteltek dated 30 March 2018, the shareholders resolved to pay a dividend amount equal to TL 60,011 out of profits for the year ended 31 December 2017 (remaining amount after deducting interim dividends for the nine-month period ended 30 September 2017 amounting to TL 28,402) and a dividend out legal reserves amount equal to TL 9,507. The aggregate amount of dividends to be paid until 31 December 2018.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
|
|
31 March
2018
|
|
|
31 December
2017
|
|
Non-current liabilities
|
|
|
|
|
|
|
Unsecured bank loans
|
|
|
6,809,940
|
|
|
|
6,376,981
|
|
Secured bank loans
|
|
|
2,151
|
|
|
|
2,368
|
|
Finance lease liabilities
|
|
|
108,651
|
|
|
|
108,164
|
|
Debt securities issued
|
|
|
1,880,924
|
|
|
|
1,770,482
|
|
Rent lease obligations
|
|
|
612,495
|
|
|
|
-
|
|
|
|
|
9,414,161
|
|
|
|
8,257,995
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Unsecured bank loans
|
|
|
3,213,374
|
|
|
|
2,643,112
|
|
Current portion of unsecured bank loans
|
|
|
1,733,279
|
|
|
|
1,513,425
|
|
Current portion of secured bank loans
|
|
|
2,071
|
|
|
|
2,022
|
|
Current portion of finance lease liabilities
|
|
|
15,400
|
|
|
|
14,556
|
|
Current portion of long-term debt securities issued
|
|
|
111,592
|
|
|
|
105,039
|
|
Debt securities issued (*)
|
|
|
124,951
|
|
|
|
-
|
|
Rent lease obligations
|
|
|
515,623
|
|
|
|
-
|
|
|
|
|
5,716,290
|
|
|
|
4,278,154
|
|
The scope of the EUR 690,000 unutilized portion of the EUR 750,000 loan agreement signed with China Development Bank (CDB) has been expanded. In this respect, in addition to Turkcell, the Company’s subsidiaries Turkcell Superonline, Turkcell Finansman and lifecell LLC will also be able to utilize the corresponding loan. Furthermore, in addition to the right to utilize in EUR terms, relevant loan may also be utilized in USD and Renminbi (RMB) with respective annual interest rates of LIBOR + 2.2% and 5.5%. There have been no changes to maturity and the repayment schedule of the loan. As at 9 March 2018, the Company has utilized RMB 202,600 (equivalent to TL 127,218 as at 31 March 2018) under this agreement.
Increase in borrowings arises from funds received by Turkcell Finansman in order to provide loans to its customers.
(*)
The Company has approved issuance of management agreement based lease certificates in accordance with capital markets legislation through KT Sukuk Varlık Kiralama A.S. in the domestic market, in Turkish Lira terms, at an amount of up to TRY 300,0
00, on various dates and at various amounts without public offering, as private placement and/or to be sold to institutional investors. As at 31 March 2018, the Company has issued management agreement based lease certificates through
KT Sukuk Varlık Kira
lama A.S amounting to TL 125,000 (not discounted).
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
14.
|
Borrowings (continued)
|
Terms and conditions of outstanding loans are as follows:
|
|
|
|
|
|
31 March 2018
|
|
31 December 2017
|
|
|
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+4.0%
|
|
2018-2023
|
|
3,419,743
|
|
Libor+2.0%-Libor+3.3%
|
|
2018-2020
|
|
2,880,615
|
Unsecured bank loans (*)
|
|
EUR
|
|
Floating
|
|
Euribor+1.2%-Euribor+3.4%
|
|
2018-2026
|
|
5,992,302
|
|
Euribor+1.2%-Euribor+2.2%
|
|
2018-2026
|
|
5,511,579
|
Unsecured bank loans
|
|
TL
|
|
Fixed
|
|
11.1%-15.3%
|
|
2018-2019
|
|
1,632,040
|
|
11.1%-15.5%
|
|
2018-2019
|
|
1,620,391
|
Unsecured bank loans
|
|
UAH
|
|
Fixed
|
|
12.8%-17.0%
|
|
2018
|
|
585,290
|
|
11%-14.5%
|
|
2018
|
|
520,933
|
Unsecured bank loans
|
|
RMB
|
|
Fixed
|
|
5.5%
|
|
2018-2026
|
|
127,218
|
|
-
|
|
-
|
|
-
|
Secured bank loans (**)
|
|
BYN
|
|
Fixed
|
|
12%-16%
|
|
2018-2020
|
|
4,222
|
|
12%-16%
|
|
2018-2020
|
|
4,390
|
Debt securities issued
|
|
USD
|
|
Fixed
|
|
5.8%
|
|
2018-2025
|
|
1,992,516
|
|
5.8%
|
|
2018-2025
|
|
1,875,521
|
Debt securities issued
|
|
TL
|
|
Fixed
|
|
13.7%
|
|
2018
|
|
124,951
|
|
-
|
|
-
|
|
-
|
Finance lease liabilities
|
|
EUR
|
|
Fixed
|
|
0%-3.6%
|
|
2018-2031
|
|
120,193
|
|
3.4%
|
|
2018-2024
|
|
116,797
|
Finance lease liabilities
|
|
USD
|
|
Fixed
|
|
22.5%-33.7%
|
|
2018
|
|
43
|
|
22.5%
|
|
2018
|
|
41
|
Finance lease liabilities
|
|
TL
|
|
Fixed
|
|
27.5%-27.7%
|
|
2018-2020
|
|
3,815
|
|
27.5%-27.7%
|
|
2018-2020
|
|
5,882
|
|
|
|
|
|
|
|
|
|
|
14,002,333
|
|
|
|
|
|
12,536,149
|
(*)
|
Secured by blocked deposit amounting to EUR 29,850 and USD 21,600 (equivalent to TL 230,585 as at 31 March 2018), in connection with the foreign currency loans utilized by Turkcell Finansman.
|
(**)
|
Belarusian Telecom pledged its certain property, plant and equipment to secure these bank loans. Also, these bank loans are secured by the Government of the Republic of Belarus (Note 16)
.
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
15.
|
Financial instruments
|
Impairment losses
Movement in the provision for impairment of other financial assets and due from related parties that are assessed for impairment collectively for the three months ended 31 March 2018 is as follows:
|
|
31 March
2018
|
|
Opening balance
|
|
|
705,440
|
|
IFRS 9 effect
|
|
|
(37,762
|
)
|
Provision for impairment recognized during the year
|
|
|
68,672
|
|
Amounts collected
|
|
|
(34,790
|
)
|
Exchange differences
|
|
|
2,722
|
|
Receivables written off during the year as uncollectible
|
|
|
(30,837
|
)
|
Closing balance
|
|
|
673,445
|
|
There is no provision for impairment in respect to due from related parties.
Movement in the provision for impairment of receivables from financial services that are assessed for impairment collectively for the three months ended 31 March 2018 is as follows:
|
|
31 March
2018
|
|
Opening balance
|
|
|
72,992
|
|
IFRS 9 effect
|
|
|
52,951
|
|
Provision for impairment recognized during the year
|
|
|
43,921
|
|
Amounts collected
|
|
|
(17,249
|
)
|
Closing balance
|
|
|
152,615
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
15.
|
Financial instruments (continued)
|
Exposure to currency risk
The Group’s exposure to foreign currency risk based on notional amounts is as follows:
|
|
31 December 2017
|
|
|
|
USD
|
|
|
EUR
|
|
Foreign currency denominated assets
|
|
|
|
|
|
|
Other non-current assets
|
|
|
72
|
|
|
|
2,681
|
|
Due from related parties-current
|
|
|
571
|
|
|
|
407
|
|
Trade receivables and accrued income
|
|
|
18,890
|
|
|
|
57,283
|
|
Other current assets
|
|
|
43,039
|
|
|
|
35,049
|
|
Cash and cash equivalents
|
|
|
688,717
|
|
|
|
237,697
|
|
|
|
|
751,289
|
|
|
|
333,117
|
|
Foreign currency denominated liabilities
|
|
|
|
|
|
Loans and borrowings-non-current
|
|
|
(557,180
|
)
|
|
|
(960,629
|
)
|
Debt securities issued-non-current
|
|
|
(469,387
|
)
|
|
|
-
|
|
Other non-current liabilities
|
|
|
(85,816
|
)
|
|
|
-
|
|
Loans and borrowings-current
|
|
|
(206,535
|
)
|
|
|
(285,827
|
)
|
Debt securities issued-current
|
|
|
(27,848
|
)
|
|
|
-
|
|
Trade and other payables-current
|
|
|
(328,323
|
)
|
|
|
(29,442
|
)
|
Due to related parties
|
|
|
(1,172
|
)
|
|
|
(394
|
)
|
|
|
|
(1,676,261
|
)
|
|
|
(1,276,292
|
)
|
Exposure related to derivative instruments
|
|
|
|
|
|
|
|
|
Participating cross currency swap and FX swap contracts
|
|
|
937,011
|
|
|
|
748,650
|
|
Currency forward contracts
|
|
|
50,000
|
|
|
|
-
|
|
Net exposure
|
|
|
62,039
|
|
|
|
(194,525
|
)
|
|
|
31 March 2018
|
|
|
|
|
|
|
USD
|
|
|
EUR
|
|
|
CNY
|
|
Foreign currency denominated assets
|
|
|
|
|
|
|
|
|
|
Other non-current assets
|
|
|
222
|
|
|
|
411
|
|
|
|
-
|
|
Due from related parties-current
|
|
|
490
|
|
|
|
715
|
|
|
|
-
|
|
Trade receivables and accrued income
|
|
|
18,873
|
|
|
|
59,821
|
|
|
|
-
|
|
Other current assets
|
|
|
35,366
|
|
|
|
37,007
|
|
|
|
-
|
|
Cash and cash equivalents
|
|
|
538,144
|
|
|
|
212,054
|
|
|
|
-
|
|
|
|
|
593,095
|
|
|
|
310,008
|
|
|
|
-
|
|
Foreign currency denominated liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings-non-current
|
|
|
(595,590
|
)
|
|
|
(977,957
|
)
|
|
|
(196,772
|
)
|
Debt securities issued-non-current
|
|
|
(476,316
|
)
|
|
|
-
|
|
|
|
-
|
|
Other non-current liabilities
|
|
|
(85,574
|
)
|
|
|
-
|
|
|
|
-
|
|
Loans and borrowings-current
|
|
|
(330,507
|
)
|
|
|
(306,359
|
)
|
|
|
(6,502
|
)
|
Debt securities issued-current
|
|
|
(28,259
|
)
|
|
|
-
|
|
|
|
-
|
|
Trade and other payables-current
|
|
|
(184,761
|
)
|
|
|
(27,981
|
)
|
|
|
-
|
|
Due to related parties
|
|
|
(658
|
)
|
|
|
(401
|
)
|
|
|
-
|
|
|
|
|
(1,701,665
|
)
|
|
|
(1,312,698
|
)
|
|
|
(203,274
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exposure related to derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Participating cross currency swap and FX swap contracts
|
|
|
1,174,350
|
|
|
|
745,150
|
|
|
|
202,600
|
|
Net exposure
|
|
|
65,780
|
|
|
|
(257,540
|
)
|
|
|
(674
|
)
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
15.
|
Financial instruments (continued)
|
Exposure to currency risk (continued)
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 31 March 2018 and 31 December 2017 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
|
|
|
|
31 March
2018
|
|
|
31 December
2017
|
|
|
|
|
|
|
|
|
USD
|
|
|
25,976
|
|
|
|
(23,400
|
)
|
EUR
|
|
|
(125,352
|
)
|
|
|
87,838
|
|
CNY
|
|
|
(42
|
)
|
|
|
-
|
|
10% weakening of the TL, UAH, BYN against the following currencies as at 31 March 2018 and 31 December 2017 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
|
|
|
|
31 March
2018
|
|
|
31 December
2017
|
|
|
|
|
|
|
|
|
USD
|
|
|
(25,976
|
)
|
|
|
23,400
|
|
EUR
|
|
|
125,352
|
|
|
|
(87,838
|
)
|
CNY
|
|
|
42
|
|
|
|
-
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
15.
|
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 31 March 2018 and 31 December 2017 on a recurring basis:
|
|
Fair values
|
|
|
|
|
|
|
|
|
|
|
|
31 March
2018
|
|
31 December
2017
|
|
Fair Value hierarchy
|
|
Valuation Techniques
|
|
|
|
|
|
|
|
|
|
Participating cross currency swap contracts (*)
|
|
1,033,284
|
|
950,862
|
|
Level 3
|
|
Pricing models based on discounted cash Present value of the estimated future cash flows based on unobservable yield curves and end period FX rates
|
|
|
|
|
|
|
|
|
|
FX swap contracts
|
|
215,572
|
|
(4,675)
|
|
Level 2
|
|
Present value of the estimated future cash flows based on observable yield curves and end period FX rates
|
|
|
|
|
|
|
|
|
|
Currency forward contracts
|
|
1,797
|
|
(2,246)
|
|
Level 2
|
|
Forward exchange rates at the balance sheet date
|
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 31 March 2018.
(*) Participating cross currency swap contracts include EUR-TL interest and currency swap contracts, EUR put and call options, amounting to nominal value of EUR 560,000, USD-TL interest and currency swap contracts and put and call options amounting to nominal value of USD 400,000. On 9 March 2018, the Company has realized
CNY-TL interest and currency swap contracts amounting to nominal value of CNY 202,600
.
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. Regarding these contracts, TL 151,620 accrual of interest expense and TL 35,497 accrual of interest income has been reflected to condensed consolidated interim financial statements as at 31 March 2018 (31 December 2017: TL 92,384 and TL 19,731 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 111,247 lower as at 31 March 2018 (31 December 2017: TL 129,870).
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
15.
|
Financial instruments (continued)
|
Fair values (continued)
Movements in the participating cross currency swap contracts for the years ended 31 March 2018 are stated below:
|
|
31 March 2018
|
|
Opening balance
|
|
|
950,862
|
|
Gains recognized in profit or loss
|
|
|
82,422
|
|
Closing balance
|
|
|
1,033,284
|
|
Valuation inputs and relationships to fair value
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value measurement of contingent consideration.
|
|
Fair value at
|
|
|
|
Inputs
|
|
|
|
|
31 March 2018
|
|
31 December 2017
|
|
Unobservable
Inputs
|
|
31 March 2018
|
|
31 December 2017
|
|
Relationship of unobservable inputs to fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
337,925
|
|
323,691
|
|
Risk-adjusted discount rate
|
|
5.3%
|
|
4.8%
|
|
A change in the discount rate by 100 bps would increase / decrease FV by TL (9,454) and TL 9,820 respectively.
|
|
|
|
|
|
|
Expected settlement date
|
|
first quarter
of 2021
|
|
first quarter
of 2021
|
|
If expected settlement date changes by 1 year FV would increase / decrease by TL (17,085) and TL 17,994 respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in
the consideration payable in relation to acquisition of Belarusian Telecom f
or the years ended 31 March 2018 are stated below:
|
|
31 March 2018
|
|
Opening balance
|
|
|
323,691
|
|
Gains recognized in profit or loss
|
|
|
14,234
|
|
Closing balance
|
|
|
337,925
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
16.
|
Guarantees and purchase obligations
|
At 31 March 2018, outstanding purchase commitments with respect to property, plant and equipment, inventory, advertising and sponsorship amount to TL 602,252 (31 December 2017: TL 592,956). Payments for these commitments will be made within 3 years.
The Group is contingently liable in respect of letters of guarantee obtained from banks and given to public institutions and private entities, and financial guarantees provided to subsidiaries amounting to TL 5,146,188 at 31 March 2018 (31 December 2017: TL 4,926,916).
As at 31 March 2018, the Company’s commitments regarding lifecell’s 3G and 4G licenses purchases amounted to respectively UAH 123,743 (TL 18,409) and UAH 19,433 (TL 2,891) .
17.
|
Commitments and Contingencies
|
17.1
|
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. 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 and ICTA alleged that Company made deficient treasury payments in the past, The Company objected to these claims.
After then, the Company has resolved the following within the scope of Provisional Article 13 added to the Telegraph and Telephone Law No.406 dated 4 February 1924 of the Law on the Amendment of Certain Tax Laws and Other Laws No. 7061 published in the Official Gazette dated December 5th, 2017: to restructure relevant disputes and their interest fees and to choose the method of increasing for relevant years’ legal payment amounts from the options in order to restructure relevant disputes and their interest fees for the periods for which examination is ongoing or has not been yet initiated. The Company applied for restructure, and according to the Law The Company submitted waiver petition or accepted the cases related to the restructured amounts. . In some of the cases, the Courts already granted decisions in line with the petitions submitted by the Company and in the other pending cases, it is expected that the Courts shall grant decisions in line with the statement of waiver/acceptance of the aforementioned cases.
Based on the Laws stated above, the total amount, including principal and interest, calculated is
TL 206,365 and is TL 209,159, respectively. The total payment including interest on installments is
TL 436,300 and the payment will be made in 6 equal installments in two-month periods. First two installments were paid on 31 January and 2 April 2018 amounting to TL 69,254 and TL 70,634.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is certain, thus, including discount TL 356,112 provision is recognized in the condensed consolidated interim financial statements as at and for the period ended
31 March 2018 (31 December 2017: 417,668).
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
17.
|
Commitments and Contingencies (continued)
|
17.2
|
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 related to SCT prepared for the years 2008-2012. The Company filed 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 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.
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 and accepted the other restructuring applications for the years 2008, 2009, 2010, 2012 and the Company paid the restructuring amount of TL 117,058. The Company also filed a case for the cancellation of aforementioned rejection act of the Tax Office for the year 2011. The both cases are pending 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. Tax Audit Committee has begun the limited tax investigation for the period of 2013. For the year of 2014, 2015 and 2016 investigations have 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 31 March 2018 amounting to 24,160 TL including discount (31 December 2016: 24,175).
17.3
|
Dispute on Value Added Tax and Corporate Tax
|
As of 31 March 2018; (i) Tax investigations for VAT and SCT for the years 2015 and 2016 are ongoing. (ii) Tax investigations regarding the Company’s VAT and corporate tax practices for the years 2012, 2013 and 2014 have been concluded without any assessment. 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 31 March 2018.
17.4
|
Investigation initiated by ICTA on subscription numbers and radio utilization and usage fees
|
ICTA commenced in-depth investigations, against the GSM operators for the years, 2004-2009, 2010-2011, 2012, 2013 and 2014. As a result of the investigations, ICTA imposed 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. ICTA filed lawsuits against Company for the collection of the radio utilization and usage fee amount which was alleged that the Company paid deficiently.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
17.
|
Commitments and Contingencies (continued)
|
17.4
|
Investigation initiated by ICTA on subscription numbers and radio utilization and usage fees (continued)
|
The Company has resolved the following based on the Laws No. 7061 as explained in detailed note 17.1 to restructure radio fees which are in dispute and respective penalty, default interest regarding these disputes. The Company applied for restructure, and according to the Law The Company submitted waiver petition or accepted the cases related to the restructured amounts. In some of the cases, the Courts already granted decisions in line with the petitions submitted by the Company and in the other pending cases, it is expected that the Courts shall grant decisions in line with the statement of waiver/acceptance of the aforementioned cases.
The total amount, including principal and interest, calculated within the scope of clause 2 is TL 158,340. The total payment including interest on installments is TL 166,257 and the payment will be made in 6 equal installments in two-month periods. First two installments were paid on 31 January and 2 April 2018 amounting to TL 26,390 and TL 26,923.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits is certain, thus, including discount TL 135,732 provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 31 March 2018 (31 December 2017: 157,446).
17.5
|
Disputes regarding the Law on the Protection of Competition
|
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 it was decided to apply administrative fine amounting to TL 91,942 on the Company. A lawsuit was filed by the Company. The Court rejected the case. The Company shall appeal the decision with the request of the stay of the execution.
Three private companies filed a lawsuits against the Company in relation with this case claiming in total of TL 113,084 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. The cases are still 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 31 December 2017 (31 December 2016: None).
17.6
|
Other ongoing lawsuits
|
Within condensed consolidated interim financial statements prepared as of 31 March 2018, 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 31 March 2018 (31 December 2017: None).
Subject
|
31 March 2018
Anticipated Maximum Risk
(excluding accrued interest)
|
31 December 2017
Anticipated Maximum Risk
(excluding accrued interest)
|
31 December 2017
Provision
|
31 December 2016
Provision
|
Disputes related with ICTA
|
13,367
|
13,367
|
-
|
-
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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 of the Group’s members of the Board of Directors and chief officers.
There are no loans to key management personnel as of 31 March 2018 and 2017.
The Group provide additional benefits to key management personnel and contribution to retirement plans based on a pre-determined ratio of compensation.
|
|
31 March
2018
|
|
|
31 March
2017
|
|
Short-term benefits(*)
|
|
|
16,030
|
|
|
|
12,186
|
|
Termination benefits
|
|
|
34
|
|
|
|
537
|
|
Long-term benefits
|
|
|
104
|
|
|
|
101
|
|
|
|
|
16,168
|
|
|
|
12,824
|
|
(*) Includes share-based payment.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
18.
|
Related parties (continued)
|
Transactions with related parties
|
|
Three months ended
31 March
|
|
Revenue from related parties
|
|
2018
|
|
|
2017
|
|
Sales to
Kyivstar GSM JSC (“Kyivstar”)
|
|
|
|
|
|
|
Telecommunications services
|
|
|
8,673
|
|
|
|
5,256
|
|
Sales to Telia Sonera International Carrier AB (“Telia”)
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
3,055
|
|
|
|
2,350
|
|
Sales to Vimpelcom OJSC (“Vimpelcom”)
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
1,252
|
|
|
|
1,486
|
|
Sales to MegaFon OJSC (“Megafon”)
|
|
|
|
|
|
|
|
|
Telecommunication services
|
|
|
826
|
|
|
|
974
|
|
Sales to Azercell Telekom MMC (“Azercell”)
|
|
|
|
|
|
|
|
|
Telecommunication services
|
|
|
256
|
|
|
|
276
|
|
Sales to other related parties
|
|
|
1,002
|
|
|
|
970
|
|
|
|
|
15,064
|
|
|
|
11,312
|
|
|
|
Three months ended 31 March
|
|
Related party expenses
|
|
2018
|
|
|
2017
|
|
Charges from Kyivstar
|
|
|
|
|
|
|
Telecommunications services
|
|
|
13,635
|
|
|
|
8,346
|
|
Charges from Telia
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
1,651
|
|
|
|
318
|
|
Charges from Vimpelcom
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
850
|
|
|
|
1,093
|
|
Charges from Megafon
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
561
|
|
|
|
680
|
|
Charges from Azercell
|
|
|
|
|
|
|
|
|
Telecommunications services
|
|
|
79
|
|
|
|
158
|
|
Charges from Hobim
Bilgi İslem Hizmetleri AS (“Hobim”)
|
|
|
|
|
|
|
|
|
Invoicing and archieving services
|
|
|
-
|
|
|
|
8,125
|
|
Charges from other related parties
|
|
|
2,847
|
|
|
|
2,163
|
|
|
|
|
19,623
|
|
|
|
20,883
|
|
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(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 31 March 2018 and 31 December 2017 are as follows:
|
|
|
|
|
|
Effective Ownership Interest
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
Country of
|
|
|
|
31 March
|
|
31 December
|
Name
|
|
Incorporation
|
|
Business
|
|
2018 (%)
|
|
2017 (%)
|
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 and entertainment investments
|
|
100
|
|
100
|
Turkcell Superonline
|
|
Turkey
|
|
Telecommunications, television services 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
|
|
Turkey
|
|
Payment services and e-money license
|
|
100
|
|
100
|
lifecell
|
|
Ukraine
|
|
Telecommunications
|
|
100
|
|
100
|
Turkcell Finansman
|
|
Turkey
|
|
Consumer financing services
|
|
100
|
|
100
|
Beltower
|
|
Republic of Belarus
|
|
Telecommunications Infrastructure business
|
|
100
|
|
100
|
Turkcell Enerji
|
|
Turkey
|
|
Electricity energy trade and wholesale and retail electricity sales
|
|
100
|
|
100
|
Paycell
|
|
Ukraine
|
|
Consumer financing services
|
|
100
|
|
100
|
Lifecell Digital
|
|
Turkish Republic of Northern Cyprus
|
|
Telecommunications
|
|
100
|
|
100
|
Belarusian Telecom
|
|
Republic of Belarus
|
|
Telecommunications
|
|
80
|
|
80
|
Lifetech
|
|
Republic of Belarus
|
|
Research and development
|
|
78
|
|
78
|
T
ÖFAŞ
(
1
)
|
|
Turkey
|
|
Payment services and e-money license
|
|
100
|
|
100
|
Inteltek
|
|
Turkey
|
|
Information and Entertainment Services
|
|
55
|
|
55
|
Azerinteltek
|
|
Azerbaijan
|
|
Information and Entertainment Services
|
|
28
|
|
28
|
(1) On February 16, 2018, Turkcell Ozel Finansman A.S., which will grant loans within the framework of Islamic financing principles for purchases of goods and services, was incorporated under the laws of Republic of Turkey.
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2018
(Amounts expressed in thousands of Turkish Liras unless otherwise stated. Currencies other than Turkish Liras are expressed in thousands unless otherwise stated.)
The sale process of the bond issuance of the Company with an aggregate principal amount of USD 500,000, 10 year maturity, a redemption date of 11 April 2028 and a re-offer price of 97.779% with a fixed coupon rate of 5.80% per annum to qualified investors abroad was completed on 11 April 2018 and the notes are listed on the official list of Euronext Dublin (Irish Stock Exchange).
On 13 April 2018, Turkcell Finansman sold financial loans amounting to TL 100,000
to Aktif Yatırım Bankası A.Ş. Turkcell Varlık Finansman Fund (“Fund”) founded by Aktif Yatırım Bankası A.Ş
.