“VALUE FOCUS DRIVES PROFITABLE
GROWTH”
Turkcell Iletisim Hizmetleri (NYSE:TKC) (BIST:TCELL):
- Please note that all financial data is consolidated and
comprises that of Turkcell Iletisim Hizmetleri A.S. (the “Company”,
or “Turkcell”) and its subsidiaries and associates (together
referred to as the “Group”), unless otherwise stated.
- We have three reporting segments:
- "Turkcell Turkey" which comprises all of our telecom related
businesses in Turkey (as used in our previous releases in periods
prior to Q115, this term covered only the mobile businesses). All
non-financial data presented in this press release is
unconsolidated and comprises Turkcell Turkey only figures, unless
otherwise stated. The terms "we", "us", and "our" in this press
release refer only to Turkcell Turkey, except in discussions of
financial data, where such terms refer to the Group, and except
where context otherwise requires.
- “Turkcell International” which comprises all of our telecom
related businesses outside of Turkey.
- “Other subsidiaries” which is mainly comprised of our
information and entertainment services, call center business
revenues, financial services revenues, energy business revenues and
inter-business eliminations. Turkcell Ödeme ve Elektronik Para
Hizmetleri A.Ş., our subsidiary responsible for payment services,
was previously reported under Turkcell Turkey but with effect from
the first quarter of 2019 is now included in “Other Subsidiaries”.
We made this change due to the fact that its non-group revenues,
which are not telco related, and consumer finance business related
revenues now comprise the majority of its total revenues. All
figures presented in this document for prior periods have been
restated to reflect this change.
- In this press release, a year-on-year comparison of our key
indicators is provided and figures in parentheses following the
operational and financial results for December 31, 2019 refer to
the same item as at December 31, 2018. For further details, please
refer to our consolidated financial statements and notes as at and
for December 31, 2019, which can be accessed via our website in the
investor relations section (www.turkcell.com.tr).
- Selected financial information presented in this press release
for the fourth quarter and for the full year of 2018 and 2019 is
based on IFRS figures in TRY terms unless otherwise stated.
- In accordance with our strategic approach and IFRS
requirements, Fintur is classified as ‘held for sale’ and reported
as discontinued operations as of October 2016. On December 12,
2018, Turkcell signed a binding agreement and on April 2, 2019
completed the transfer of its shares in Fintur to Sonera Holding
B.V., the majority shareholder of Fintur.
- In the tables used in this press release totals may not foot
due to rounding differences. The same applies to the calculations
in the text.
- Year-on-year and quarter-on-quarter percentage comparisons
appearing in this press release reflect mathematical
calculation.
FINANCIAL HIGHLIGHTS
TRY million
Q418
Q419
y/y%
FY18
FY19
y/y%
Revenue
5,626
6,684
18.8%
21,292
25,137
18.1%
EBITDA1
2,239
2,754
23.0%
8,788
10,426
18.6%
EBITDA Margin (%)
39.8%
41.2%
1.4pp
41.3%
41.5%
0.2pp
EBIT2
952
1,349
41.7%
4,500
5,380
19.6%
EBIT Margin (%)
16.9%
20.2%
3.3pp
21.1%
21.4%
0.3pp
Net Income
864
756
(12.5%)
2,021
3,246
60.6%
FULL YEAR HIGHLIGHTS
- Solid financial performance:
- Revenues up 18% on the back of the strong ARPU performance of
Turkcell Turkey
- EBITDA up 19% leading to an EBITDA margin of 41.5%; EBIT up 20%
resulting in an EBIT margin of 21.4%
- Record high net income on 61% growth driven by solid
operational performance, prudent financial risk management and
Fintur sale
- TRY1.01 billion dividends distributed
- Leverage at 1.0x on 0.4x year-on-year improvement
- Operational momentum continued:
- Mobile postpaid subscriber net additions of 1.5 million in
2019, the highest print of the past decade
- Superbox3 subscribers at 323 thousand, on 290 thousand annual
net additions
- Strong free cash flow4 generation of TRY2.4 billion; this rises
to TRY4.6 billion including Fintur sale proceeds
- 2020 guidance5; revenue growth target of 13% - 16%, EBITDA
margin target of 39% - 42%, EBIT margin target of 18% - 21% and
operational capex over sales ratio6 target of 16% - 18%
FOURTH QUARTER HIGHLIGHTS
- Remarkable financial performance achieved:
- Group revenues up 19% on record high Turkcell Turkey ARPU
performance
- EBITDA up 23% resulting in an EBITDA margin of 41.2%; EBIT up
42% leading to an EBIT margin of 20.2%
- Group net income at TRY756 million including one-off negative
impact of TRY199 million
- Solid operational performance continued:
- Record high quarterly mobile postpaid customer net additions of
984 thousand; 62% postpaid share
- Record high mobile ARPU7 and residential fiber ARPU growth of
22.7% and 21.0%, respectively
- Average monthly data usage of 4.5G subscribers at 10.8 GB in
Q419
- Multiplay with TV subscriber ratio8 at 53.3% on 4.7pp
year-on-year rise
(1) EBITDA is a non-GAAP financial measure. See page 15 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income. (2) EBIT is a non-GAAP financial
measure and is equal to EBITDA minus depreciation and amortization
expenses. (3) Superbox subscribers are included in mobile
subscribers. (4) Free cash flow calculation includes EBITDA and the
following items as per IFRS cash flow statement; acquisition of
property, plant and equipment, acquisition of intangible assets,
change in operating assets/liabilities, payment of lease
liabilities and income tax paid (5) Please note that this paragraph
contains forward looking statements based on our current estimates
and expectations regarding market conditions for each of our
different businesses. No assurance can be given that actual results
will be consistent with such estimates and expectations. For a
discussion of factors that may affect our results, see our Annual
Report on Form 20-F for 2018 filed with U.S. Securities and
Exchange Commission, and in particular, the risk factor section
therein. (6) Excluding license fee (7) Excluding M2M (8) Multiplay
subscribers with TV: Fiber internet + IPTV users & fiber
internet + IPTV + fixed voice users
For further details, please refer to our consolidated financial
statements and notes as at and for December 31, 2019 which can be
accessed via our website in the investor relations section
(www.turkcell.com.tr).
COMMENTS BY MURAT ERKAN, CEO
As Turkcell Group, we end another year of delivering solutions
that add value to our customers' lives. This continues to support
our vision of providing superior digital services for a better
future. Thanks to our infrastructure investments that enable us to
offer the latest technologies, we continued to play a leading role
in the digital transformation of Turkey, and of other countries in
which we operate. As 2019 was our 25th anniversary, it held special
importance for us. In the quarter century behind us, we have
achieved countless successes, while having pioneered numerous
innovations. And in the upcoming period, we will continue our
customer-oriented strategy with the responsibility that comes with
these achievements, and that encourages us to achieve our
goals.
We are the leader among integrated telecom sector players in
Turkey.
2019 was a year of global uncertainties and cost increases due
to trade wars and geopolitical tension, and yet one where a
macroeconomic rebalancing occurred in our domestic market. The
steps we took to strengthen the bond with our customers produced
strong operational and financial results. Thanks to our actions in
strategic focus areas determined by our customer orientation and
effective balance sheet management, we achieved strong financial
results and met our targets. In 2019, Turkcell Group consolidated
revenues increased by 18.1% year-on-year, reaching TRY25.1 billion.
Consolidated EBITDA1 rose by 18.6% to TRY10.4 billion and the
EBITDA margin was at 41.5%. Our EBIT2 margin was 21.4%. Net income
rose yearly by 61% to a record-high TRY3.2 billion. Our operational
capital expenditures3 to sales ratio was 18%. With these results,
we are proud to be the leader in Turkey in both total turnover and
growth, as well as in net profit among integrated telecom sector
players.
We increased the number of postpaid subscribers by a record
level.
In 2019, where we comprehensively renewed our customer approach,
we registered a net total of 1.5 million mobile postpaid subscriber
additions, the highest level of the past decade. We have
strengthened our customer base with this increase in the postpaid
base that generates triple the ARPU of the prepaid subscriber base.
Excluding the impact of mandatory line closings for all telecom
operators, our total mobile subscriber base rose by 0.7 million
this year. The analysis of big data and use of AI with our advanced
analytical capabilities enable us to make the right offer to the
right customer at the right time. In our telecom business, which we
manage with a micro-segment approach, we can diversify our offers
and extend dynamic pricing. Leveraging these capabilities, we
registered record high mobile blended ARPU4 growth of 22.7%
year-on-year in Q419, which is crucial for sustainable growth.
With the increased 4.5G user and smart phone penetration, and
the use of our innovative digital services, average mobile data
consumption continued its uptrend this year. Average mobile data
usage was 9 GB in the fourth quarter up 53%, while the internet
usage of our 4.5G subscribers reached 10.8 GB. Thanks to the
increasing use of data and digital services, the preference of
packages offering higher benefits and the rise in postpaid
subscribers, we recorded nearly double the mobile ARPU growth of
our competitors.
Our strong infrastructure underpins the unique services that
meet the needs of our customers.
Thanks to our wide frequency bands and investments, we are among
the few operators worldwide to provide the fastest 4.5G service
with 1.2 Gbps speed. Superbox5, which offers fiber-speed home
internet service over this robust mobile infrastructure, is among
our stand-out innovative products of the year. Superbox, Turkey’s
first and most wide-spread FWA product, has reached 323 thousand
subscribers. This technology, set to become widespread with 5G
networks worldwide, also confirmed the readiness of our strong
infrastructure for the 5G era. Moreover, with our strong fiber
infrastructure, we are one of the few operators worldwide to offer
10 Gbps speed. As of the end of 2019, our fiber subscribers had
reached 1.5 million, while IPTV subscribers had reached
approximately 720 thousand. In fiber residential ARPU, record
growth of 21% in the last quarter resulted from our offers renewed
at the start of the year plus the demand for packages offering more
capacity, and the impact of rising IPTV users.
We generated 1 billion TL revenue from digital services on a
stand-alone basis.
Our digital services, one of our strategic focus areas, allow us
to provide solutions that enrich our customers' lives. And while
these services contribute to higher ARPU, they also strengthen
customer loyalty.
BiP, fizy, TV+, Dergilik and lifebox were the most preferred
Turkcell applications this year. We have recently added an
"emergency button" to our locally-developed communication and life
platform BiP, which registers average daily traffic of 274 million
messages. This function offers the ability to automatically send
location and a message to predetermined contacts in an emergency.
We began to use AI-enabled personalized content on our Dergilik,
fizy and TV+ platforms, while also entering into advertising
collaborations. Stand-alone digital service revenues that we aim to
increase 2.5 times over the next 3 years scaled TRY1 billion in
2019.
We are the sole supplier for our corporate customers for
end-to-end digital transformation.
We support the digital transformation of private sector and
public institutions with our digital business solutions, another
strategic focus area. Capable of providing tailor-made solutions,
we offer services ranging from cloud technologies, data center
services and cyber security to information technologies, and the
Internet of Things, thereby supporting digitalization and
differentiation. Thanks to our extensive sales network, strong
partner ecosystem and superior infrastructure, we rank among the
top three IT solution providers in Turkey, and aim to lead the
market within 3 years.
We have conducted over 1,000 projects in which we analyzed the
digital transformation needs of our customers operating in various
sectors, offering the right solution and service. In this context,
in 2019 we inaugurated the fifth city hospital where we established
integrated information system infrastructure.
Given the importance of data in digital age, and with the
conviction that Turkey's data should remain in Turkey, we continue
to increase our data storage and processing capacity. On a
datacenter investment of approximately 1 billion TL to date, we own
a total of 33,500 sqm of white space at eight locations, including
Turkey’s largest data center.
Paycell is accepted at 7 thousand points of sale.
We continue to improve the capabilities of Paycell, our techfin
payment platform, expanding both customer base and merchant number.
Thanks to multiple services and solutions in different verticals,
access to Turkcell's extensive sales network, strong customer base
and technology expertise, we see strong growth potential for
Paycell, especially in an environment with attractive dynamics and
supportive regulation. Paycell makes life easier for our customers
by offering direct carrier billing, money transfer, payment
services and wallet, plus cash top-up for the Turkcell prepaid line
and the public transportation card IstanbulKart as well as Paycell
card. We also provide merchants a QR based payment alternative and
mobile POS solutions. As of end-2019, the Paycell has approximately
4.5 million active users, with Paycell accepted as a means of
payment at 7 thousand points. While Paycell cards reached 2.4
million, the number of credit cards registered on the application
has exceeded 4.4 million.
Our preparation for 5G continues at full speed.
A key issue of the coming period is the transition to 5G. Given
the speed and capacity increase it offers, we believe that 5G
technology, the infrastructure of Industry 4.0, will lead to a
rapid transformation across all sectors, playing a vital role in
Turkey’s digital transformation. As Turkcell, we continue our
preparations for the transition to 5G without let up in pace,
realizing industry firsts. In this context, in the speed test
conducted on the 3.5GHz band allocated for testing purposes, in
August we recorded the world’s highest speed of 2.283 Gbps on the
5G pilot network with a commercial 5G handset.
We are aware that joint infrastructure will play a vital role in
the transition to 5G, ensuring the efficient use of national
resources to the benefit of all participants. We continue related
efforts accordingly. In this context, with the infrastructure
sharing agreements signed with Turksat and Vodafone Turkey, we
share our fiber infrastructure and offer fixed internet services to
more households. We also participate in initiatives to develop
local 5G technologies.
We attach importance to sustainability and introduce
pioneering initiatives.
Our efforts to offer customers environmentally friendly and
sustainable product alternatives continue to receive global
recognition. We are one of the founding members of the CFO
Taskforce initiative created by the United Nations Global Compact.
We are proud to take part in efforts to develop corporate finance
models and tools in step with the United Nations Sustainable
Development Goals. While producing the technologies of the future,
we will maintain our focus on sustainability across all our digital
products and services, corporate collaborations and processes. In
addition, we support the electronic waste recycling campaign,
launched as a sustainability initiative, with resulting revenues
funding local education.
We announced our three-year goals in November.
Confidence based on positive macroeconomic developments, our
stronger organization and pursuit of our strategic priorities, we
disclosed our targets for the 2020-2022 period to all our
stakeholders at meetings in London and in Istanbul. In this
three-year period, we target6 13% - 16% revenue growth (CAGR), 39%
- 42% EBITDA margin and an 18% - 21% EBIT margin. We expect an
operational capex3 to sales ratio of 16% - 18%. We confirm these
goals for 2020. We continue to work at full strength to create
value for all our stakeholders to achieve these goals and more.
Our innovative services and solutions will continue to bring
value to our customers.
The year of 2019 was one of success in many areas, as we
continued to bring value to our customers' lives through innovation
and quality services. In 2020, with our innovative approach and
leading position, we target sustainable and profitable growth.
We thank all our colleagues for the part they have played in our
success, along with our Board of Directors for their unyielding
trust and support. We also express our gratitude to our customers
and business partners, who have remained with us throughout our
success story.
(1) EBITDA is a non-GAAP financial measure. See page 15 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income. (2) EBIT is a non-GAAP financial
measure and is equal to EBITDA minus depreciation and amortization
expenses. (3) Excluding license fee (4) Excluding M2M (5) Superbox
subscribers are included in mobile subscribers (6) Please note that
this paragraph contains forward looking statements based on our
current estimates and expectations regarding market conditions for
each of our different businesses. No assurance can be given that
actual results will be consistent with such estimates and
expectations. For a discussion of factors that may affect our
results, see our Annual Report on Form 20-F for 2018 filed with
U.S. Securities and Exchange Commission, and in particular, the
risk factor section therein.
FINANCIAL AND OPERATIONAL REVIEW
Financial Review of Turkcell Group
Profit & Loss Statement (million
TRY)
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Revenue
5,626.3
6,683.8
18.8%
21,292.5
25,137.1
18.1%
Cost of revenue1
(2,607.5)
(3,206.3)
23.0%
(9,858.0)
(12,036.9)
22.1%
Cost of revenue1/Revenue
(46.3%)
(48.0%)
(1.7pp)
(46.3%)
(47.9%)
(1.6pp)
Gross Margin1
53.7%
52.0%
(1.7pp)
53.7%
52.1%
(1.6pp)
Administrative expenses
(198.2)
(217.4)
9.7%
(673.4)
(779.8)
15.8%
Administrative expenses/Revenue
(3.5%)
(3.3%)
0.2pp
(3.2%)
(3.1%)
0.1pp
Selling and marketing expenses
(500.7)
(384.9)
(23.1%)
(1,626.7)
(1,555.2)
(4.4%)
Selling and marketing
expenses/Revenue
(8.9%)
(5.8%)
3.1pp
(7.6%)
(6.2%)
1.4pp
Net impairment losses on financial and
contract assets
(81.0)
(121.3)
49.8%
(346.4)
(338.9)
(2.2%)
EBITDA2
2,239.0
2,753.8
23.0%
8,788.0
10,426.4
18.6%
EBITDA Margin
39.8%
41.2%
1.4pp
41.3%
41.5%
0.2pp
Depreciation and amortization
(1,287.0)
(1,404.9)
9.2%
(4,288.0)
(5,046.6)
17.7%
EBIT3
952.0
1,348.9
41.7%
4,500.0
5,379.9
19.6%
EBIT Margin
16.9%
20.2%
3.3pp
21.1%
21.4%
0.3pp
Net finance income / (costs)
(18.5)
(214.3)
n.m
(1,687.0)
(1,727.7)
2.4%
Finance income4
(1,361.0)
44.9
n.m
1,677.1
297.5
(82.3%)
Finance costs4
1,342.5
(259.2)
(119.3%)
(3,364.1)
(2,025.1)
(39.8%)
Other income / (expense)
46.5
(128.2)
(375.7%)
(140.1)
(346.6)
147.4%
Non-controlling interests
(77.7)
2.0
n.m
(156.3)
(30.2)
(80.7%)
Share of profit of equity accounted
investees
0.3
(19.1)
n.m
(0.1)
(15.7)
n.m
Income tax expense
(38.7)
(233.7)
503.9%
(495.5)
(785.6)
58.5%
Discontinued operations
-
-
-
-
772.4
n.a
Net Income
863.9
755.6
(12.5%)
2,021.1
3,246.5
60.6%
(1) Excluding depreciation and amortization expenses. (2) EBITDA
is a non-GAAP financial measure. See page 15 for the explanation of
how we calculate Adjusted EBITDA and its reconciliation to net
income. (3) EBIT is a non-GAAP financial measure and is equal to
EBITDA minus depreciation and amortization expenses. (4) Fair value
loss and interest expense regarding derivative instruments and the
respective fair value gain and interest income regarding derivative
instruments are represented on a net basis. Starting from Q219,
interest income on financial assets and interest expenses for
financial liabilities, both measured at amortized cost, are
represented on a net basis. Historical periods were restated to
reflect this change.
Revenue of the Group grew 18.8% year-on-year in Q419
driven mainly by the strong ARPU performance of Turkcell Turkey,
supported by upsell efforts, increased data usage as well as larger
postpaid subscriber base. This solid performance is a result of our
microsegment layered approach enabled by strong data analytics
capabilities.
Turkcell Turkey revenues, comprising 86% of Group revenues, rose
20.9% to TRY5,741 million (TRY4,747 million).
- Consumer business grew by 21.8% on the back of solid ARPU
performance driven by increased data consumption, rising postpaid
subscribers and upsell efforts.
- Corporate revenues rose by 29.4% supported by the solid
performance of digital business solution that grew 32%
year-on-year.
- Standalone digital services revenues from consumer and
corporate businesses were TRY275 million in Q419.
- Wholesale revenues rose 39.5% to TRY305 million (TRY219
million) on the back of increased carrier traffic and the positive
impact of currency movements.
Turkcell International revenues, at 8% of Group revenues, rose
33.0% to TRY561 million (TRY422 million), mainly with the continued
ARPU growth of lifecell and positive impact of currency
movements.
Other subsidiaries' revenues, comprising 6% of Group revenues,
which includes information and entertainment services, call center
revenues, revenues from financial services and energy business
revenues were at TRY382 million (TRY457 million).
- We completed the sale of our shares in Azerinteltek, our
sports betting business in Azerbaijan, as of January 11, 2019. We
received the transfer of proceeds on December 27, 2018 and
transferred control of the subsidiary. We did not report any
revenues in 2019 in relation to Azerinteltek operations.
- Our contract with Spor Toto to carry out sports betting
operations in Turkey has ended as of August 28, 2019.
- Our consumer finance company’s revenues were at TRY201 million
(TRY247 million) in Q419. Revenues were impacted by the decline in
the consumer loan portfolio, from TRY4.2 billion as of Q418 to
TRY2.4 billion as of Q419, due mainly to the installment limitation
on consumer loans for telecom devices.
For the full year, Turkcell Group revenues rose by 18.1%.
Turkcell Turkey revenues grew by 18.8% to TRY21,487 million
(TRY18,093 million).
- Consumer business grew by 17.0% driven by strong ARPU
performance.
- Corporate revenues rose by 32.4% supported by digital business
solutions revenue growth of 44%.
- Standalone digital services revenues from consumer and
corporate businesses reached TRY1 billion in FY19.
- Wholesale revenues grew by 26.0% to TRY1,154 million (TRY916
million).
Turkcell International revenues rose by 37.5% to TRY2,003
million (TRY1,457 million).
Other subsidiaries’ revenues were at TRY1,647 million (TRY1,743
million).
Cost of revenue (excluding depreciation and amortization)
increased to 48.0% (46.3%) as a percentage of revenues in Q419.
This was driven mainly by increased cost of goods sold (3.5pp),
despite the decline in cost of revenue of financial services
(0.9pp) and other cost items (0.9pp) as a percentage of
revenues.
For the full year, cost of revenue (excluding depreciation and
amortization) increased to 47.9% (46.3%) as a percentage of
revenues. This was due mainly to the rise in cost of goods sold
(3.0pp) and other cost items (0.1pp), despite the decline in cost
of revenue of financial services (0.8pp) and interconnection costs
(0.7pp) as a percentage of revenues.
Administrative Expenses were at 3.3% (3.5%) as a
percentage of revenues in Q419. For the full year, administrative
expenses were at 3.1% (3.2%) as a percentage of revenues.
Selling and Marketing Expenses decreased to 5.8% (8.9%)
as a percentage of revenues in Q419. This was driven by the decline
in selling expenses (2.3pp) and marketing expenses (0.8pp) as a
percentage of revenues.
For the full year, selling and marketing expenses declined to
6.2% (7.6%) as a percentage of revenues driven by the decline in
selling expenses (1.2pp) and other cost items (0.2pp).
Net impairment losses on financial and contract assets
was at 1.8% (1.4%) as a percentage of revenues in Q419. For the
full year, net impairment losses on financial and contract assets
was at 1.3% (1.6%) as a percentage of revenues.
EBITDA1 rose by 23.0% year-on-year in Q419 leading to an
EBITDA margin of 41.2% (39.8%) driven mainly by effective cost
management.
- Turkcell Turkey’s EBITDA rose by 33.2% to TRY2,360 million
(TRY1,771 million) leading to an EBITDA margin of 41.1% (37.3%) in
Q419.
- Turkcell International EBITDA2 was at TRY244 million (TRY247
million) leading to an EBITDA margin of 43.5% (58.5%) in Q419.
- The EBITDA of other subsidiaries stood at TRY150 million
(TRY221 million) in Q419.
(1) EBITDA is a non-GAAP financial measure. See page 15 for the
explanation of how we calculate adjusted EBITDA and its
reconciliation to net income. (2) We started to capitalize the
frequency usage fees of lifecell in Q418 in accordance with IFRS16.
The change was implemented retrospectively for 2018; impact
regarding previous quarters of 2018 was booked in Q418. We started
to capitalize the frequency usage fees of BeST in Q219 in
accordance with IFRS16. These changes positively impacted Turkcell
International EBITDA.
For the full year, EBITDA grew by 18.6% resulting in an EBITDA
margin of 41.5% (41.3%)
- Turkcell Turkey’s EBITDA rose by 18.7% to TRY8,789 million
(TRY7,404 million) with an EBITDA margin 40.9% (40.9%).
- Turkcell International EBITDA rose by 47.5% to TRY904 million
(TRY613 million) with an EBITDA margin of 45.1% (42.1%).
- The EBITDA of other subsidiaries was at TRY733 million (TRY771
million).
Depreciation and amortization expenses increased 9.2% in
Q419. For the full year depreciation and amortization expenses
increased 17.7%.
Net finance expense increased to TRY214 million (TRY18
million) in Q419. Interest income on bank deposits declined
compared to Q418. Excluding the impact of net swap interest
expense, our net FX gain was TRY95.6 million in Q418, when TRY
appreciated while we carried a short FX position, yet our net FX
gain was TRY17.7 million in Q419, when TRY depreciated while we
carried a long FX position.
Our net finance expense has improved significantly from TRY521.2
million in Q319. In the previous quarters of 2019, we incurred
negative mark to market losses from derivative instruments due to
sharply falling interest rates. In Q419, we incurred a net positive
impact from FX movements, normalizing our total net finance
expense.
For the full year net finance expense increased to TRY1,728
million (TRY1,687 million). This was due mainly to lower interest
income on bank deposits and higher interest expenses resulting from
borrowings and lease obligations, despite lower foreign exchange
losses after hedging.
Please note that the Group started to apply hedge accounting as
of July 1, 2018 for existing participating cross currency swap and
cross currency swap transactions, in accordance with the IFRS 9
hedge accounting requirement. Please see the IFRS report for
details.
See Appendix A for the details of net foreign exchange gain and
loss.
Income tax expense increased to TRY234 million (TRY39
million) in Q419 mainly due to deferred tax income incurred in
Q418. For the full year income tax expense increased 58.5%. Please
see Appendix A for details.
Net income of the Group was at TRY756 million (TRY864
million) in Q419. Stronger operational performance compared to the
previous year’s fourth quarter was offset by the changes in net
finance expense as well as the low base of tax expense in Q418.
Please also note that Q419 net income was negatively impacted by
one-off TRY199 million settlement with the tax authority.
For the full year, group net income rose 60.6% to an all-time
high level of TRY3,246 million. This was driven mainly by a solid
operational performance, lower net foreign exchange losses after
hedging and the contribution of the Fintur sale, despite the lower
interest income on bank deposits and higher interest expenses
resulting from borrowings and lease obligations.
Total cash & debt: Consolidated cash as of December
31, 2019 declined to TRY10,239 million from TRY10,975 million as of
September 30, 2019, due mainly to the dividend payment as well as
debt repayments. Excluding FX swap transactions for TRY borrowing,
81% of our cash is in US$, 12% in EUR and 7% in TRY.
Consolidated debt as of December 31, 2019 declined to TRY20,306
million from TRY20,675 million as of September 30, 2019, mainly on
the back of debt repayments despite the negative impact of FX
movements. Please note that TRY1,533 million of our consolidated
debt is comprised of lease obligations.
Consolidated debt breakdown excluding lease obligations:
- Turkcell Turkey’s debt was at TRY15,994 million, of which
TRY9,096 million (US$1,531 million) was denominated in US$,
TRY5,425 million (EUR816 million) in EUR, TRY201 million (CNY237
million) in CNY and the remaining TRY1,272 million in TRY.
- Our consumer finance company had a debt balance of TRY1,733
million, of which TRY1,194 million (US$201 million) was denominated
in US$, and TRY214 million (EUR32 million) in EUR with the
remaining TRY325 million in TRY.
- The debt balance of lifecell was TRY1,044 million, all
denominated in UAH.
TRY735 million of lease obligations is denominated in TRY, TRY19
million (US$3 million) in US$, TRY163 million (EUR24 million) in
EUR and the remaining balance in other local currencies (please
note that the figures in parentheses refer to US$ or EUR
equivalents).
TRY10,117 million of our consolidated debt is set at a floating
rate. Excluding consumer finance business borrowings, TRY6,206
million of consolidated debt will mature within less than a
year.
Net debt as of December 31, 2019 was at TRY10,067 million with a
net debt to EBITDA ratio of 0.97 times. Excluding consumer finance
company consumer loans, our telco only debt was at TRY7,658 million
with a leverage of 0.77 times.
Turkcell Group has a long FX position of US$115 million as at
the end of the year. (Please note that this figure takes advance
payments and hedging into account, but excludes FX swap
transactions for TRY borrowing. Derivatives (VIOP) and forward
transactions are included).
Capital expenditures: Capital expenditures, including
non-operational items, amounted to TRY2,445 million in Q419. For
the full year, capital expenditures including non-operational items
were at TRY7,225 million.
For Q419 and the full year, operational capital expenditures
(excluding license fees) at the Group level were at 25.4% and 18.0%
of total revenues, respectively.
Capital expenditures (million
TRY)
Quarter
Year
Q418
Q419
FY18
FY19
Operational Capex
1,448.6
1,696.0
3,943.1
4,525.1
License and Related Costs
1.7
0.1
414.1
1.8
Non-operational Capex (Including IFRS15
& IFRS16)
784.3
749.2
3,286.9
2,697.8
Total Capex1
2,234.6
2,445.4
7,644.0
7,224.7
(1) Breakdown of capex for Q418 has been restated
Operational Review of Turkcell Turkey
Summary of Operational Data
Quarter
Year
Q418
Q419
y/y %
FY18
FY19
y/y %
Number of subscribers (million)
36.7
35.7
(2.7%)
36.7
35.7
(2.7%)
Mobile Postpaid (million)
18.8
20.4
8.5%
18.8
20.4
8.5%
Mobile M2M (million)
2.4
2.6
8.3%
2.4
2.6
8.3%
Mobile Prepaid (million)
14.9
12.4
(16.8%)
14.9
12.4
(16.8%)
Fiber (thousand)
1,385.6
1,484.7
7.2%
1,385.6
1,484.7
7.2%
ADSL (thousand)
905.6
719.1
(20.6%)
905.6
719.1
(20.6%)
Superbox (thousand)1
33.5
323.2
864.8%
33.5
323.2
864.8%
Cable(thousand)
-
49.2
n.a
-
49.2
n.a
IPTV (thousand)
613.4
719.7
17.3%
613.4
719.7
17.3%
Churn (%)2
Mobile Churn (%)3
2.9%
4.5%
1.6pp
2.1%
2.7%
0.6pp
Fixed Churn (%)
2.2%
2.3%
0.1pp
1.8%
2.1%
0.3pp
ARPU (Average Monthly Revenue per User)
(TRY)
Mobile ARPU, blended
35.0
42.8
22.3%
33.9
39.8
17.4%
Mobile ARPU, blended (excluding M2M)
37.4
45.9
22.7%
36.2
42.6
17.7%
Postpaid
49.5
59.6
20.4%
48.2
56.4
17.0%
Postpaid (excluding M2M)
56.4
67.7
20.0%
54.9
64.1
16.8%
Prepaid
17.4
18.8
8.0%
16.9
18.3
8.3%
Fixed Residential ARPU, blended
56.6
68.0
20.1%
55.7
64.5
15.8%
Residential Fiber ARPU
58.2
70.4
21.0%
57.0
67.0
17.5%
Average mobile data usage per user
(GB/user)
5.9
9.0
52.5%
5.2
7.4
42.3%
Mobile MoU (Avg. Monthly Minutes of
usage per subs) blended
356.4
431.4
21.0%
359.5
415.3
15.5%
(1) Superbox subscribers are included in mobile subscribers. (2)
Presentation of churn figures has been changed to demonstrate
average monthly churn figures for the respective quarters. (3) In
Q117, our churn policy was revised to extend from 9 months to 12
months (the period at the end of which we disconnect prepaid
subscribers who have not topped up above TRY10). Additionally,
under our revised policy, prepaid customers who last topped up
before March will be disconnected at the latest by year-end. As a
regulatory requirement, we started to disconnect prepaid lines in
accordance with new ICTA regulation, which requires deactivation of
prepaid lines which lack residency documents by the 6th month of
subscription. Our mobile subscriber base was at 32.7 million as at
the year end. Our postpaid subscriber base expanded by 1.5 million
net annual additions in FY19, the highest of the past 10 years.
Accordingly, postpaid subscribers, whose ARPU generation on average
is more than three times that of prepaid subscribers, reached 62.2%
(55.7%) of the subscriber base. We were able to achieve this sound
performance on the back of our microsegment layered approach and
regional offers enabled by our strong data analytics capabilities.
Meanwhile, our prepaid customers declined by 2.6 million in FY19,
due mainly to 1.9 million disconnections in accordance with the new
ICTA regulation that requires deactivation of prepaid lines which
lack residency documents by the 6th month of subscription, and
deactivation of 580 thousand inactive prepaid customers in line
with our churn policy. In Q419, we registered record high quarterly
postpaid subscriber net additions of 984 thousand. On the fixed
front, our fiber subscriber base grew by 29 thousand quarterly and
99 thousand annual net additions. Our fixed wireless access
product, Superbox, continued its growth momentum expanding its
customer base on 106 thousand quarterly and 290 thousand annual net
additions. Meanwhile, our cable subscribers had reached 49 thousand
by year end. IPTV customers numbered 720 thousand on 36 thousand
quarterly and 106 thousand annual net additions. The average
monthly mobile churn rate was at 4.5% and 2.7% in Q419 and FY19,
respectively. Excluding the impact of regulatory disconnections and
deactivation of inactive prepaid lines in line with our churn
policy, our average monthly churn rate would have been 2.1% in
Q419. Average monthly fixed churn rate was 2.3% in Q419 and 2.1%
for the full year. We recorded all time high mobile ARPU (excluding
M2M) growth of 22.7% year-on-year in Q419 driven mainly by a
favorable customer mix, upsell efforts, increased data consumption
and price adjustments. Mobile ARPU (excluding M2M) grew 17.7% for
the full year. Meanwhile, we also registered record high
residential fiber ARPU growth of 21.0% in Q419 year-on-year, mainly
on upsell performance, price adjustments as well as with higher
revenue generating subscriber acquisitions. Multiplay subscribers
with TV4, reaching 53.3% of total residential fiber subscribers,
also helped strong ARPU performance. Fiber residential ARPU grew by
17.5% for the full year. Average monthly mobile data usage per user
increased 52.5% in Q419 year-on-year and 42.3% for the full year,
driven by the increasing data consumption of 4.5G users and
increased digital services usage. Accordingly, the average mobile
data usage of 4.5G users reached 10.8 GB in Q419. The number of
4.5G compatible smartphones on our network was at 19.2 million
comprising 87% of the smartphones on our network. Excluding the
impact of regulatory disconnections, 4.5G compatible smartphones on
our network would have reached nearly 20.2 million by year end.
(4) Multiplay subscribers with TV: Fiber internet + IPTV users
& fiber internet + IPTV + fixed voice users
TURKCELL INTERNATIONAL
lifecell1 Financial
Data
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Revenue (million UAH)
1,417.0
1,557.9
9.9%
5,268.5
5,983.8
13.6%
EBITDA (million UAH)
1,083.5
818.6
(24.4%)
2,762.2
3,243.4
17.4%
EBITDA margin (%)
76.5%
52.5%
(24.0pp)
52.4%
54.2%
1.8pp
Net income / (loss) (million UAH)
(730.1)
(215.0)
(70.6%)
(1,300.7)
(1,113.6)
(14.4%)
Capex (million UAH)
2,694.9
639.9
(76.3%)
7,767.0
1,895.3
(75.6%)
Revenue (million TRY)
273.3
369.4
35.2%
924.0
1,315.8
42.4%
EBITDA (million TRY)
205.9
194.2
(5.7%)
489.4
711.6
45.4%
EBITDA margin (%)
75.3%
52.6%
(22.7pp)
53.0%
54.1%
1.1pp
Net income / (loss) (million
TRY)
(126.3)
(50.8)
(59.8%)
(220.2)
(243.3)
10.5%
(1) Since July 10, 2015, we hold a 100% stake in lifecell.
lifecell (Ukraine) revenues rose 9.9% year-on-year in
Q419 in local currency terms, driven mainly by growing mobile data
revenues with the increasing data consumption of subscribers.
EBITDA in local currency terms was UAH818.6 million, which led to
an EBITDA margin of 52.5%. Please also note that lifecell began to
capitalize its radio frequency usage costs in Q418 in accordance
with IFRS16, and that the overall impact including the
retrospective adjustments for previous quarters of 2018, was booked
in Q418. lifecell revenues in TRY terms grew 35.2% year-on-year in
Q419, positively impacted by currency movements, and with an EBITDA
margin of 52.6%.
For the full year, lifecell revenues in local currency terms
rose 13.6%, while EBITDA increased 17.4%, which led to an EBITDA
margin of 54.2% on 1.8pp improvement. In TRY terms, lifecell
registered revenue growth of 42.4% with an EBITDA margin of
54.1%.
lifecell Operational Data
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Number of subscribers
(million)3
9.9
8.9
(10.1%)
9.9
8.9
(10.1%)
Active (3 months)4
7.3
7.4
1.4%
7.3
7.4
1.4%
MOU (minutes) (12 months)
148.6
157.0
5.7%
144.9
149.0
2.8%
ARPU (Average Monthly Revenue per
User), blended (UAH)
47.2
58.3
23.5%
42.8
54.0
26.2%
Active (3 months) (UAH)
63.1
73.3
16.2%
57.3
71.8
25.3%
(3) We may occasionally offer campaigns and tariff schemes that
have an active subscriber life differing from the one that we
normally use to deactivate subscribers and calculate churn. (4)
Active subscribers are those who in the past three months made a
revenue generating activity.
Three-month active subscriber base of lifecell rose to 7.4
million in 4Q19 mainly on the attractive offers and customer
retention focus. lifecell registered 3-month active ARPU growth of
16.2% year-on-year in Q419, driven mainly by upsell efforts and the
rise in data consumption of subscribers. lifecell continued its
focus on high ARPU generating customers, leveraging the quality of
its 4.5G and 3G networks, as well as its wide portfolio of digital
services that contribute ARPU growth.
The penetration of 4.5G users in lifecell’s customer base
continued to increase, supporting data and digital services usage
growth. Accordingly, 4.5G users had reached 50% of total mobile
data users as at the end of the year. Meanwhile, average data
consumption per user rose by 46%, driven mainly by the higher data
usage of 4.5G users. lifecell sustained its leadership of the
Ukrainian market in smartphone penetration, which had reached 80%
as at the end of Q419. Moreover, lifecell and other telecom
operators in the country signed a memorandum with the government in
October with the aim of providing LTE services to rural areas, and
national and international roads over the 900 MHz frequency
band.
lifecell pursued efforts to increase the usage of its digital
services among its customer base by introducing attractive offers
and expanding its portfolio with new digital services. In Q419
lifecell introduced the BiP virtual number service enabling
customers to use their numbers abroad without a SIM card and a
lifestyle portal.
BeST1
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Number of subscribers (million)
1.6
1.5
(6.3%)
1.6
1.5
(6.3%)
Active (3 months)
1.2
1.1
(8.3%)
1.2
1.1
(8.3%)
Revenue (million BYN)
32.9
33.9
3.0%
124.9
135.0
8.1%
EBITDA (million BYN)
12.7
7.4
(41.7%)
27.9
35.5
27.2%
EBITDA margin (%)
38.6%
21.7%
(16.9pp)
22.3%
26.3%
4.0pp
Net loss (million BYN)
(8.3)
(8.0)
(3.6%)
(37.0)
(33.3)
(10.0%)
Capex (million BYN)
18.3
7.2
(60.7%)
56.6
49.9
(11.8%)
Revenue (million TRY)
83.8
93.8
11.9%
292.9
365.0
24.6%
EBITDA (million TRY)
31.3
20.3
(35.1%)
66.1
96.4
45.8%
EBITDA margin (%)
37.4%
21.7%
(15.7pp)
22.6%
26.4%
3.8pp
Net loss (million TRY)
(21.3)
(22.1)
3.8%
(86.0)
(89.8)
4.4%
(1) BeST, in which we hold an 80% stake, has operated in Belarus
since July 2008.
BeST revenues grew 3.0% year-on-year in Q419 in local
currency terms, driven mainly by the rise in mobile data revenues
with increased number and consumption of data users. Digital
services revenues also contributed to revenue growth. BeST’s EBITDA
was at BYN7.4 million in Q419 with an EBITDA margin of 21.7%. BeST
revenues in TRY terms rose 11.9% year-on-year in Q419, while the
EBITDA margin stood at 21.7%.
For the full year, revenues in local currency terms increased by
8.1% to BNY135.0 million with an EBITDA margin of 26.3%. In TRY
terms, BeST achieved revenue growth of 24.6% and EBITDA growth of
45.8% with an EBITDA margin of 26.4%.
Offering 4G services in all six regions of Belarus, BeST
continued to increase the penetration of 4G users within its
customer base in Q419. Accordingly, 4G users reached 55% of 3-month
active users, which supported the rise in data and digital services
consumption. In Q419 average data consumption of subscribers rose
42% on the back of higher data consumption of 4G users. Meanwhile,
BeST pursued its efforts to increase the use of its digital
services. Games, fizy and TV+ applications have been the most
popular digital services among users, while digital tariff PLAY,
which offers 7 digital services within a single package, continued
to increase its attractiveness. As a result of these efforts, those
subscribers using at least one digital service comprised 28% of the
3-month active subscriber base.
Kuzey Kıbrıs Turkcell2
(million TRY)
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Number of subscribers (million)
0.5
0.5
-
0.5
0.5
-
Revenue
45.8
67.1
46.5%
180.1
222.3
23.4%
EBITDA
11.6
21.2
82.8%
58.8
78.5
33.5%
EBITDA margin (%)
25.3%
31.6%
6.3pp
32.6%
35.3%
2.7pp
Net income
8.9
12.4
39.3%
32.9
41.8
27.1%
Capex
23.3
23.9
2.6%
65.5
58.6
(10.5%)
(2) Kuzey Kıbrıs Turkcell, in which we hold a 100% stake, has
operated in Northern Cyprus since 1999
Kuzey Kıbrıs Turkcell revenues grew by 46.5% year-on-year
in Q419, driven mainly by the rise in mobile broadband consumption
and handset sales, as well as the positive contribution of the
growing fixed broadband business. The EBITDA of Kuzey Kıbrıs
Turkcell rose 82.8% leading to an EBITDA margin of 31.6%.
For the full year, Kuzey Kıbrıs registered revenue growth of
23.4% and EBITDA growth 33.5%, which resulted in an EBITDA margin
of 35.3%.
Fintur: In accordance with our strategic approach and
IFRS requirements, Fintur is classified as ‘held for sale’ and
reported as discontinued operations as of October 2016.
On December 12, 2018, Turkcell signed a binding agreement and on
April 2, 2019 completed the transfer of its shares in Fintur to
Sonera Holding B.V., the majority shareholder of Fintur. The final
value of the transaction was EUR352.9 million. As the conditions
precedent required for the share transfer were completed within
Q119, TRY772 million profit generated from the transaction was
reflected in the Q119 financial statements.
We booked a provision of TRY60 million in Q219 for the
recognition of liability in relation to the Kcell Share Purchase
Agreement regarding the past Kcell transaction and performed the
respective payment in Q319.
Turkcell Group Subscribers
Turkcell Group subscribers amounted to approximately 46.7
million as of December 31, 2019. This figure is calculated by
taking the number of subscribers of Turkcell Turkey and each of our
subsidiaries. It includes the total number of mobile, fiber, ADSL,
cable and IPTV subscribers of Turkcell Turkey, and the mobile
subscribers of lifecell and BeST, as well as those of Kuzey Kıbrıs
Turkcell and lifecell Europe.
Turkcell Group Subscribers
Q418
Q319
Q419
y/y%
q/q%
Mobile Postpaid (million)
18.8
19.4
20.4
8.5%
5.2%
Mobile Prepaid (million)
14.9
15.0
12.4
(16.8%)
(17.3%)
Fiber (thousand)
1,385.6
1,455.7
1,484.7
7.2%
2.0%
ADSL (thousand)
905.6
758.9
719.1
(20.6%)
(5.2%)
Superbox (thousand)1
33.5
217.4
323.2
864.8%
48.7%
Cable (thousand)
-
33.0
49.2
n.a
49.1%
IPTV (thousand)
613.4
683.4
719.7
17.3%
5.3%
Turkcell Turkey subscribers
(million)2
36.7
37.3
35.7
(2.7%)
(4.3%)
lifecell (Ukraine)
9.9
9.0
8.9
(10.1%)
(1.1%)
BeST (Belarus)
1.6
1.5
1.5
(6.3%)
-
Kuzey Kıbrıs Turkcell
0.5
0.5
0.5
-
-
lifecell Europe3
0.2
0.2
0.2
-
-
Turkcell Group Subscribers
(million)
48.9
48.5
46.7
(4.5%)
(3.7%)
(1) Superbox subscribers are included in mobile subscribers. (2)
Subscribers to more than one service are counted separately for
each service. (3) The “wholesale traffic purchase” agreement,
signed between Turkcell Europe GmbH operating in Germany and
Deutsche Telekom for five years in 2010, had been modified to
reflect the shift in business model to a “marketing partnership”.
The new agreement between Turkcell and a subsidiary of Deutsche
Telekom was signed on August 27, 2014. The transfer of Turkcell
Europe operations to Deutsche Telekom’s subsidiary was completed on
January 15, 2015. Subscribers are still included in the Turkcell
Group Subscriber figure. Turkcell Europe was rebranded as lifecell
Europe on January 15, 2018.
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
The foreign exchange rates used in our financial reporting,
along with certain macroeconomic indicators, are set out below.
Quarter
Year
Q418
Q319
Q419
y/y%
q/q%
FY18
FY19
y/y%
GDP Growth (Turkey)
(2.8%)
0.9%
n.a
n.a
n.a
2.8%
n.a
n.a
Consumer Price Index (Turkey)
(yoy)
20.3%
9.3%
11.8%
(8.5pp)
2.5pp
20.3%
11.8%
(8.5pp)
US$ / TRY rate
Closing Rate
5.2609
5.6591
5.9402
12.9%
5.0%
5.2609
5.9402
12.9%
Average Rate
5.4369
5.6973
5.7588
5.9%
1.1%
4.7577
5.6604
19.0%
EUR / TRY rate
Closing Rate
6.0280
6.1836
6.6506
10.3%
7.6%
6.0280
6.6506
10.3%
Average Rate
6.2121
6.3389
6.3706
2.6%
0.5%
5.5977
6.3340
13.2%
US$ / UAH rate
Closing Rate
27.69
24.08
23.69
(14.4%)
(1.6%)
27.69
23.69
(14.4%)
Average Rate
28.18
25.15
24.31
(13.7%)
(3.3%)
27.32
25.90
(5.2%)
US$ / BYN rate
Closing Rate
2.1598
2.0743
2.1036
(2.6%)
1.4%
2.1598
2.1036
(2.6%)
Average Rate
2.1307
2.0639
2.0840
(2.2%)
1.0%
2.0338
2.0979
3.2%
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS: We
believe Adjusted EBITDA, among other measures, facilitates
performance comparisons from period to period and management
decision making. It also facilitates performance comparisons from
company to company. Adjusted EBITDA as a performance measure
eliminates potential differences caused by variations in capital
structures (affecting interest expense), tax positions (such as the
impact of changes in effective tax rates on periods or companies)
and the age and book depreciation of tangible assets (affecting
relative depreciation expense). We also present Adjusted EBITDA
because we believe it is frequently used by securities analysts,
investors and other interested parties in evaluating the
performance of other mobile operators in the telecommunications
industry in Europe, many of which present Adjusted EBITDA when
reporting their results.
Our Adjusted EBITDA definition includes Revenue, Cost of Revenue
excluding depreciation and amortization, Selling and Marketing
expenses, Administrative expenses and Net impairment losses on
financial and contract assets, but excludes translation
gain/(loss), finance income, finance expense, share of profit of
equity accounted investees, gain on sale of investments, minority
interest and other income/(expense).
Nevertheless, Adjusted EBITDA has limitations as an analytical
tool, and you should not consider it in isolation from, or as a
substitute for analysis of our results of operations, as reported
under IFRS. The following table provides a reconciliation of
Adjusted EBITDA, as calculated using financial data prepared in
accordance with IFRS as issued by the IASB, to net profit, which we
believe is the most directly comparable financial measure
calculated and presented in accordance with IFRS as issued by the
IASB.
Turkcell Group (million TRY)
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Adjusted EBITDA
2,239.0
2,753.8
23.0%
8,788.0
10,426.4
18.6%
Depreciation and amortization
(1,287.0)
(1,404.9)
9.2%
(4,288.0)
(5,046.6)
17.7%
EBIT
952.0
1,348.9
41.7%
4,500.0
5,379.9
19.6%
Finance income
(1,361.0)
44.9
n.m
1,677.1
297.5
(82.3%)
Finance costs
1,342.5
(259.2)
(119.3%)
(3,364.1)
(2,025.1)
(39.8%)
Other income / (expense)
46.5
(128.2)
(375.7%)
(140.1)
(346.6)
147.4%
Share of profit of equity accounted
investees
0.3
(19.1)
n.m
(0.1)
(15.7)
n.m
Consolidated profit from continued
operations before income tax & minority interest
980.3
987.3
0.7%
2,672.8
3,289.9
23.1%
Income tax expense
(38.7)
(233.7)
503.9%
(495.5)
(785.6)
58.5%
Consolidated profit from continued
operations before minority interest
941.6
753.6
(20.0%)
2,177.3
2,504.3
15.0%
Discontinued operations
-
-
-
-
772.4
n.a
Consolidated profit before minority
interest
941.6
753.6
(20.0%)
2,177.3
3,276.7
50.5%
NOTICE: This release includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934 and the Safe
Harbor provisions of the US Private Securities Litigation Reform
Act of 1995. This includes, in particular, our targets for revenue,
EBITDA, EBIT and capex for 2020. More generally, all statements
other than statements of historical facts included in this press
release, including, without limitation, certain statements
regarding the launch of new businesses, our operations, financial
position and business strategy may constitute forward-looking
statements. In addition, forward-looking statements generally can
be identified by the use of forward-looking terminology such as,
among others, "will," "expect," "intend," "estimate," "believe",
"continue" and “guidance”.
Although Turkcell believes that the expectations reflected in
such forward-looking statements are reasonable at this time, it can
give no assurance that such expectations will prove to be correct.
All subsequent written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by
reference to these cautionary statements. For a discussion of
certain factors that may affect the outcome of such forward looking
statements, see our Annual Report on Form 20-F for 2018 filed with
the U.S. Securities and Exchange Commission, and in particular the
risk factor section therein. We undertake no duty to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
The Company makes no representation as to the accuracy or
completeness of the information contained in this press release,
which remains subject to verification, completion and change. No
responsibility or liability is or will be accepted by the Company
or any of its subsidiaries, board members, officers, employees or
agents as to or in relation to the accuracy or completeness of the
information contained in this press release or any other written or
oral information made available to any interested party or its
advisers.
ABOUT TURKCELL: Turkcell is a digital operator
headquartered in Turkey, serving its customers with its unique
portfolio of digital services along with voice, messaging, data and
IPTV services on its mobile and fixed networks. Turkcell Group
companies operate in 5 countries – Turkey, Ukraine, Belarus,
Northern Cyprus, Germany. Turkcell launched LTE services in its
home country on April 1st, 2016, employing LTE-Advanced and 3
carrier aggregation technologies in 81 cities. Turkcell offers up
to 10 Gbps fiber internet speed with its FTTH services. Turkcell
Group reported TRY25.1 billion revenue in FY19 with total assets of
TRY45.7 billion as of December 31, 2019. It has been listed on the
NYSE and the BIST since July 2000, and is the only NYSE-listed
company in Turkey. Read more at www.turkcell.com.tr.
Appendix A – Tables
Table: Net foreign exchange gain and loss details
Million TRY
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Turkcell Turkey
1,030.1
(338.5)
(132.9%)
(1,816.0)
(799.2)
(56.0%)
Turkcell International
5.7
(15.3)
(368.4%)
(117.9)
(49.9)
(57.7%)
Other Subsidiaries
434.3
(78.6)
(118.1%)
(761.1)
(190.5)
(75.0%)
Net FX loss before hedging
1,470.1
(432.4)
(129.4%)
(2,695.0)
(1,039.6)
(61.4%)
Swap interest income/(expense)1
(177.4)
(144.7)
(18.4%)
(496.3)
(659.5)
32.9%
Fair value gain on derivative financial
instruments1
(1,374.6)
450.1
(132.7%)
1,719.6
570.2
(66.8%)
Net FX gain / (loss) after
hedging
(81.8)
(127.0)
55.3%
(1,471.7)
(1,128.9)
(23.3%)
(1) Swap interest income / (expense) which was included in fair
value gain on derivative financial instruments line in previous
quarters has been presented separately.
Table: Income tax expense details
Million TRY
Quarter
Year
Q418
Q419
y/y%
FY18
FY19
y/y%
Current tax expense
(114.9)
(62.5)
(45.6%)
(655.0)
(570.5)
(12.9%)
Deferred tax income / (expense)
76.2
(171.2)
(324.7%)
159.5
(215.1)
(234.9%)
Income Tax expense
(38.7)
(233.7)
503.9%
(495.5)
(785.6)
58.5%
TURKCELL ILETISIM HIZMETLERI A.S.IFRS SELECTED FINANCIALS
(TRY Million) Quarter Ended Quarter Ended
Quarter Ended Year Ended Year Ended Dec
31, Sep 30, Dec 31, Dec 31, Dec 31,
2018
2019
2019
2018
2019
Consolidated Statement of Operations Data
Turkcell Turkey
4,747.5
5,652.4
5,740.7
18,092.6
21,487.2
Turkcell International
421.9
525.0
561.0
1,457.0
2,002.8
Other
457.0
409.5
382.1
1,742.9
1,647.2
Total revenues
5,626.3
6,586.9
6,683.8
21,292.5
25,137.1
Direct cost of revenues
(3,894.5)
(4,279.6)
(4,611.2)
(14,146.0)
(17,083.5)
Gross profit
1,731.8
2,307.3
2,072.5
7,146.5
8,053.7
Administrative expenses
(198.2)
(186.8)
(217.4)
(673.4)
(779.8)
Selling & marketing expenses
(500.7)
(353.8)
(384.9)
(1,626.7)
(1,555.2)
Other Operating Income / (Expense)
46.5
(92.8)
(128.2)
(140.1)
(346.6)
Net impairment loses on financial and contract assets
(81.0)
(125.7)
(121.3)
(346.4)
(338.9)
Operating profit before financing costs
998.5
1,548.2
1,220.8
4,359.9
5,033.3
Finance costs
1,342.5
(439.1)
(259.2)
(3,364.1)
(2,025.1)
Finance income
(1,361.0)
(82.2)
44.9
1,677.1
297.5
Share of profit of equity accounted investees
0.3
1.6
(19.1)
(0.1)
(15.7)
Income before tax and non-controlling interest
980.3
1,028.6
987.3
2,672.8
3,289.9
Income tax expense
(38.7)
(229.2)
(233.7)
(495.5)
(785.6)
Income from continuing operations before non-controlling interest
941.6
799.4
753.6
2,177.3
2,504.3
Discontinued operations
-
-
-
-
772.4
Non-controlling interests
(77.7)
1.9
2.0
(156.3)
(30.2)
Net income
863.9
801.3
755.6
2,021.1
3,246.5
Net income per share
0.39
0.37
0.34
0.93
1.49
Other Financial Data Gross margin
30.8%
35.0%
31.0%
33.6%
32.0%
EBITDA(*)
2,239.0
2,838.7
2,753.8
8,788.0
10,426.4
Total Capex
2,234.6
1,618.8
2,445.4
7,644.0
7,224.7
Operational capex
1,448.6
989.5
1,696.0
3,943.1
4,525.1
Licence and related costs
1.7
0.4
0.1
414.1
1.8
Non-operational Capex
784.3
628.9
749.2
3,286.9
2,697.8
Consolidated Balance Sheet Data (at period
end) Cash and cash equivalents
7,419.2
10,975.4
10,238.7
7,419.2
10,238.7
Total assets
42,765.3
45,515.0
45,715.0
42,765.3
45,715.0
Long term debt
13,119.6
12,903.9
12,677.4
13,119.6
12,677.4
Total debt
20,155.5
20,675.2
20,305.7
20,155.5
20,305.7
Total liabilities
26,711.7
28,084.2
27,632.0
26,711.7
27,632.0
Total shareholders’ equity / Net Assets
16,053.6
17,430.8
18,082.9
16,053.6
18,082.9
(*) Please refer to the notes on reconciliation of Non-GAAP
Financial measures on page 15
For further details, please refer to our consolidated financial
statements and notes as at 31 December 2019 on our web site
TURKCELL ILETISIM HIZMETLERI A.S.TURKISH ACCOUNTING
STANDARDS SELECTED FINANCIALS (TRY Million) Quarter
Ended Quarter Ended Quarter Ended Year
Ended Year Ended Dec 31, Sep 30, Dec
31, Dec 31, Dec 31,
2018
2019
2019
2018
2019
Consolidated Statement of Operations Data
Turkcell Turkey
4,747.5
5,652.4
5,740.7
18,092.6
21,487.2
Turkcell International
421.9
525.0
561.0
1,457.0
2,002.8
Other
457.0
409.5
382.1
1,742.9
1,647.2
Total revenues
5,626.3
6,586.9
6,683.8
21,292.5
25,137.1
Direct cost of revenues
(3,894.5)
(4,279.6)
(4,611.2)
(14,146.0)
(17,083.5)
Gross profit
1,731.8
2,307.3
2,072.5
7,146.5
8,053.7
Administrative expenses
(198.2)
(186.8)
(217.4)
(673.4)
(779.8)
Selling & marketing expenses
(500.7)
(353.8)
(384.9)
(1,626.7)
(1,555.2)
Other Operating Income / (Expense)
(500.8)
(163.7)
465.9
1,392.4
877.7
Operating profit before financing and investing costs
532.1
1,602.9
1,936.1
6,238.8
6,596.4
Net impairment loses on financial and contract assets
(81.0)
(125.7)
(121.3)
(346.4)
(338.9)
Income from investing activities
212.9
9.9
54.2
238.8
102.8
Expense from investing activities
58.1
(19.8)
42.2
(118.9)
(44.1)
Share of profit of equity accounted investees
0.3
1.6
(19.1)
(0.1)
(15.7)
Income before financing costs
722.5
1,468.9
1,892.1
6,012.2
6,300.6
Finance income
(1,533.0)
(96.5)
1.0
1,280.3
106.6
Finance expense
1,790.8
(343.9)
(905.8)
(4,619.7)
(3,117.3)
Income from continuing operations before tax and non-controlling
interest
980.3
1,028.6
987.3
2,672.8
3,289.9
Income tax expense from continuing operations
(38.7)
(229.2)
(233.7)
(495.5)
(785.6)
Income from continuing operations before non-controlling interest
941.6
799.4
753.6
2,177.3
2,504.3
Discontinued operations
-
-
-
-
772.4
Income before non-controlling interest
941.6
799.4
753.6
2,177.3
3,276.7
Non-controlling interest
(77.7)
1.9
2.0
(156.3)
(30.2)
Net income
863.9
801.3
755.6
2,021.1
3,246.5
Net income per share
0.39
0.37
0.34
0.93
1.49
Other Financial Data Gross margin
30.8%
35.0%
31.0%
33.6%
32.0%
EBITDA(*)
2,239.0
2,838.7
2,753.8
8,788.0
10,426.4
Total Capex
2,234.6
1,618.8
2,445.4
7,644.0
7,224.7
Operational capex
1,448.6
989.5
1,696.0
3,943.1
4,525.1
Licence and related costs
1.7
0.4
0.1
414.1
1.8
Non-operational Capex
784.3
628.9
749.2
3,286.9
2,697.8
Consolidated Balance Sheet Data (at period
end) Cash and cash equivalents
7,419.2
10,975.4
10,238.7
7,419.2
10,238.7
Total assets
42,765.3
45,515.0
45,715.0
42,765.3
45,715.0
Long term debt
13,119.6
12,903.9
12,677.4
13,119.6
12,677.4
Total debt
20,155.5
20,675.2
20,305.7
20,155.5
20,305.7
Total liabilities
26,711.7
28,084.2
27,632.0
26,711.7
27,632.0
Total shareholders’ equity / Net Assets
16,053.6
17,430.8
18,082.9
16,053.6
18,082.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200220005630/en/
Investor Relations Korhan Bilek, Tel: + 90 212 313 1888
investor.relations@turkcell.com.tr
Corporate Communications: Tel: + 90 212 313 2321
Turkcell-Kurumsal-Iletisim@turkcell.com.tr
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