turkcell investor presentation...• high margin • fragmented market ... • assurance for...

1

Investor Presentation

TURKCELL INVESTOR PRESENTATION

November 2020


STRATEGIC FOCUS AREAS

2

33


CORE COMPETENCIES

STRATEGIC FOCUS AREAS

Digital Business Solutions Techfin ServicesDigital Services

Strong Bond With Customers

State-of-the-art Infrastructure

Advanced Analytics & Technology

Strong & Agile Team

Telecom Services

Well-Positioned to Create More Value

44


Diversified Business Model Based on Digital Transformation

Our business model inherits a diversified approach that serves to minimize contraction risk under different economic cycles and assures a sustainable and strong growth

Telecom Services Digital Services

Digital BusinessSolutions

Techfin Services

• Main growth & profitability driver• Necessity item; less volatile• Strong ARPU growth• International revenue flow

• Driven by digitalization trend• Fairly growth sensitive• Data localisation

• Digital transformation trend• Remote working & education• Global partners: 20 partnerships

• Non-cyclical and disruptive business• Tech-savy & high unbanked population• Wide range of services

Yearly growth and revenue shares are as of Q3 2020

4%Share in ConsolidatedRevenues 28%

StandaloneRevenueGrowth (YoY)

6%Share in ConsolidatedRevenues 40%

RevenueGrowth(YoY) 3%

Share in ConsolidatedRevenues 85%

Paycell Non-GroupRevenueGrowth (YoY)

14.0%Mobile ARPUGrowth(YoY)

9.4%Residential FiberARPU Growth(YoY)

55


Enlarge subscriber base with dedicated focus on postpaid segment

Grow in fixed broadband through fiber and FWA

Utilize the digital channel for acquisition, device sales and growth

Leverage continued demand

Ensure standalone growth

Expand globally

Boost overall corporate business with multiplay focus

Provide end-to-endIT solutions for corporates

Trusted partner of corporates through their digital transformation

Reach wider customer base with complete portfolio of solutions

Reach out to long tail of 1.6Mn+merchants in Turkey

Launch new consumerfinance solutions

GROW IN TELECOM SERVICES

MONETIZEDIGITAL SERVICES

LEVERAGEDIGITAL BUSINESS SOLUTIONS

LEAD TECHFIN SERVICES

+1 Million Subscribers/year

in Turkey

2.5x Standalone revenue

growth in 3 years

#1 Solution Provider

in 3 years

17 Million Active Paycell users

by 2022

Strategic Focus Areas

Note: As disclosed in November 2019

66


MPOS

PSD2

E-money

Micro Lending

Potential regulatory changes in the definition of loan facilitations

Benefit: Potential to give micro loans to consumers

The potential adaptation of PSD2 Payment Services Directive of EU in Turkey

Benefit: Ability to reach banking system, becoming single interface for customers

Using smartphone or tablet to perform the functions of a cash register

Benefit: Increased penetration of longtail merchants

Potential legislative measure to remove the requirement to keep e-money funds in escrow account

Benefit: Potential to attract more users offering return on e-money accounts

Techfin: Regulation Becoming More Supportive

77


Turkish Techfin Ecosystem

DCB Wallet

Bill Payment

Payment Facilitators

Money Transfer

Paycell App Strategy

E-Money

VISION: Being an enabler on financial inclusion with the combination of technology and financial services

Paycell: Super App for All Techfin Solutions

88


Merchants

Go-to Market Strategy

(MPOS & QR)

Go-to Market Strategy

(App)

Customers

6,000Turkcell Stores

37 MnCustomers

4,000Direct Sales Force

TurkcellTechnology

Paycell: Go to Market Strategy

99


1 Bn

2.5 Bn

2019 2022E

Paid Subscriptions

Platform Licensing

Discovery Services

Traffic Monetization

Data Monetization

Operator Co-operations

Standalone Revenue (TL)

DSS: The Dynamics of New Standalone Strategy

1010


Telco market figures consist of mobile and fixed voice & data figures and exclude hardware sales. Mobile figures are based on Futurebright 2018 Q4 Field Research. Fixed figures are based on ICTA Report 2018 Q4 and Turkcell Estimation. ICT, Hardware & Software figures are based on IDC Blackbook 2019.

TELCO BUSINESS / EXISTING BUSINESS

41%

24

DIGITAL & ICT BUSINESS / GROWTH ENGINE

5%

HARDWARE & SOFTWARE BUSINESS / OPPORTUNISTIC APPROACH

• Superior network perception• Net add, increase in ARPU• Opportunity of multiplay, new services• High margin

• Fragmented market• Lack of strong system integrator• Increase in demand for digitilization

• Profitable growth with integrated solutions

TelcoMarket Share

ICTMarket Share

Billion TRY

DBS: Market & Turkcell Positioning

1111


Inflationary Pricing

Effective Balance Sheet

Risk Management

Strong Free Cash Flow

Generation

Efficient Capital Allocation

• Key to sustainable growth and profitability

• Assurance for required return on investment

• Above-market ARPU growth

• Liquidity management• Net FX position

• Sustainable revenue growth• Continued operational

profitability• Controlled capex

• Review of investment requirement in conventional services

• Investment in high growth businesses

• Ensure returns above WACC

Turkcell Finance: Key Priorities

1212


Reduce funding needsin capex heavy traditional business

Invest in new high growth areas

Global Telco Industry Challenges

Flow of funds

Turkcell’sResponses

Digital services (TV, music, etc.)

Techfin services

ICT solutions (datacenter, cloud etc.)

IPO/M&A activities

Infrastructure sharing

Sell & leaseback transactions

Heavyinvestment

need

Slowrevenuegrowth

Improve returns over WACC12

Efficient Capital Allocation

13


Post COVID-19 Era: Strategic Opportunities

KEY

TREN

DS

OU

RSO

LUTI

ON

S

Digital Business Solutions Techfin ServicesDigital Services

• Remote working

• Remote & interactive education

• Remote healthcare services

• Digital transformation of ecosystem

• Digital customer

• At home experience

• Smart payment solutions

• Cashless society

• Largest Data Center with 30K m2 area

• Cloud & Security Services

• Digital transformation solutions

• IoT Solutions & Big Data Analytics

• Digital & System Integration Projects

• Unique digital applications portfolio

• TV streaming platform (TV+)

• Local VC solution: BiP Meet

• Paycell: Payment services platform

• Paycell as a «super app» withDCB, money transfer, wallet, etc.

• Merchant solutions:QR code, CRM, MPOS

Telco Services

• At home experience

• E-commerce

• Superbox: FWA solution

• Digital channels:DO, turkcell.com.tr


14

Q3 2020 RESULTS

15


Q3 2020: Strong Profitable Growth

16.1%STRONG FINANCIALS

SOLIDOPERATIONALRESULTS

ROBUST GROWTH IN STRATEGIC FOCUS AREAS

Revenue Growth EBITDA Margin Leverage

44.4% 0.8x

14.0%Mobile1 Res. Fiber

ARPU GrowthTotal Subscriber

Net AddDigital Channel Revenue Share

382K 12%9.4%

1 Excluding M2M Note: Growth rates on this slide are on an annual basis.

28% 40% 85%Digital Business

SolutionsPaycell

Non-GroupDigital Services

Stand-Alone

FCF

1Bn TL

16


3%

(71%)

(33%)

Q3 19 Q2 20 Q3 20

Strong Trends In A Challenging Environment

Continued demand for content

41

70 70

Q3 19 Q2 20 Q3 20

Online payment fordigital content

117

215248

Q3 19 Q2 20 Q3 20

Daily minutes spent on mobile TV+ (per user)Digital payments (DCB) volume (Mn TL)

Strong demand foronline channels

4%

11%12%

Q319 Q2 20 Q3 20

Digital channel’s revenue share*

Continued pressure on roaming revenues

YoY growth in total roaming revenues

*of Turkcell Turkey consumer revenue excluding fixed business

17


Note: TRY figures are based on IFRS. * Excluding license fees

Turkcell Group Financials

Highlights

• Robust revenue growth above expectations; 10.5% q-o-q growth

• Strong bottom-line performance in Q3; highest quarterly level generated from operations

Revenue 7,649 16.1% 21,232 15.1%

EBITDA 3,394 19.6% 9,027 17.7%

EBITDA Margin 44.4% 1.3pp 42.5% 0.9pp

EBIT 1,877 14.4% 4,687 16.3%

EBIT Margin 24.5% (0.4pp) 22.1% 0.3pp

Net Income 1,211 51.1% 2,935 17.8%

Opr. Capex/Sales* 19.3% 4.3pp 16.4% 1.1pp

Q3 2020MILLION TL YoY 9M 2020 YoY

1818


NET DEBT/ EBITDA

1 Excludes Turkcell Finance Company’s loan portfolio

TCF loan portfolio

Net Debt1

1

Total Cash 9,212 10,929 13,524

Total Assets 45,329 47,042 52.249

Total Debt 19,500 19,776 22,841

Lease Obligations 1,482 1,485 2,065

Total Equity 18,678 19,538 20,909

Net Debt 10,288 8,847 9,317

Net Debt1 8,213 7,053 7,416

SUMMARYMILLION TL

Q1 20 Q2 20 Q3 20

8,213

7,0537,416

2,075

1,794 1,901

0.9x0.8x 0.8x

0.8x0.7x 0.7x

Q1 20 Q2 20 Q3 20

Net Debt/EBITDA Net Debt/EBITDA

Solid Balance Sheet

1919


BILLION TL

• 2.6 billion TL free cash flow* in the first nine months

• Successful collection performance and cost control

• Aim is to continue generating positive FCF in the upcoming periods

*Free cash flow calculation includes EBITDA and the following items as per cash flow statement of IFRS reports: acquisition of property, plant and equipment, acquisition of intangible assets, change in operating assets/liabilities, payment of lease liabilities and income tax paid

(0.7)0.0

1.5

0.3

1.3

1.0

2017 2018 9M 2019 9M 2020

Q1

Q2

Q3

Free Cash Flow Generation

2020


155115 114

50 31

Q3 19 Q4 19 Q1 20 Q2 20 Q3 20

38%

5%

49%

8%

USD MILLIONNET FX POSITION2

2 Including advance payments, derivative transactions for hedging purposes and excluding FX swap transactions1 Excluding FX swap transactions.

13.5Bn TLNominal

49%

28%

15%

9%

CASH1 DEBT

Before Hedging After Hedging

22.8Bn TL

Share

USD EUR TRY Other

66%2%

31%

FX Exposure

21


2.5%

1.9%

2.4%

Q3 19 Q2 20 Q3 20

TURKEY SUBSCRIBERS ARPU*

MONTHLY AVERAGE MOBILE CHURN RATE

21.5

12.2

Postpaid Prepaid

QoQ 317K↑ 13K↓ 45K↑ 39K↑

Net add

Operational Highlights

1.6

0.7

67K

Fixed subscribers

0.8

IPTV

fiber ADSL

fiber

cable

ADSL

2.4

MILLIONTL

66.1 68.972.3

45.6 46.6

52.0

Mobile blended (excl.M2M)Q3 19 Q3 20

14.0% YoY

Fiber ResidentialQ3 19 Q3 20

9.4% YoY

Q2 20 Q2 20

64%Postpaid

Share

Total

382K↑9K↓

IPTV

*: From this quarter onwards, TV+ OTT revenues are included in the mobile blended ARPU. Please refer to pg 10 in Q3 2020 Press Release for a detailed explanation.

22


217

323

400

491

551

Q3 19 Q4 19 Q1 20 Q2 20 Q3 20

SUBSCRIBER TREND THOUSAND

Superbox: Pioneer in the Market

• Alternative to fiber, offering fiber-like speed

• Continued demand given the speed and convenience

60KNet Add Q3 2020

2.5xSubscribers

Q3 20 vs. Q3 19

23


2123 23

Q3 19 Q4 19 Q1 20 Q2 20 Q3 20

Turkcell Op1 Op2

Leadership in Experience: Innovative Offers

CUSTOMER EXPERIENCECONSUMER NET PROMOTER SCORE (POINTS)

Source: Future Bright

+15

+20+21

+9

MEGA PLANS

Yearly contentMonthly payment

PLANS FOR TEAMS

Teams of 2-5 peopleIn-group GB transfer

In-group unlimited calls

SHAKE&WIN FESTIVAL

13Mn participation38Mn gifts

83Mn GB give away

SHAKE &WIN!

TURKCELL FAMILY & FRIENDS

24


Online Channel: Continued StrengthDIGITAL CHANNELS REVENUE SHARE*

4%

6%7%

11%12%

Q3 19 Q4 19 Q1 20 Q2 20 Q3 20

• Continued demand in our online channels (website and DO application)

• Higher digital channel share contributing to opex savings

*of Turkcell Turkey consumer revenue excluding fixed business

Website Visits(Q3 Monthly Avg)

28Mn

DO AppActive User (3M)

23Mn

Conversion Rate (YoY)

2.1x

3.1xOnline Top-upVolume (YoY)

25


Strategic Focus Areas: Digital Services

4%

Share in Consolidated Revenue

Secure and seamlessvideo conference platform

28%

TV+ READY Turkey’s first operator-tier

Android TV devicePlug&Watch

Fast, easy and secure sharingdata storage in Turkey

lifebox TransferKEY

HIG

HLI

GH

TSST

AN

D-A

LON

E P

ERFO

RM

AN

CE

Revenue Growth (YoY)

2.7Mn

Paid Users*

*Includes subscribers of IPTV, OTT TV, fizy, lifebox, Dergilik

(29% yoy)

26


Strategic Focus Areas: Digital Business Solutions

6%

KEY

HIG

HLI

GH

TSP

ERFO

RM

AN

CE

Strong pipeline /System integration projects

backlog of 938 Mn TL*

One-stop shop cloudprovider with

«Turkcell Multicloud»

Digitalization of processes with «Secure Digital Signature» and

Turkcell Digital Archive»

Establishment of new global

vendor partnerships

40%

Share in Consolidated RevenueRevenue Growth (YoY)

*Backlog refers to the value of contracted revenue from system integration projects that is yet to be recognized until the end of the contract term.

27


Strategic Focus Areas: Techfin ServicesK

EY H

IGH

LIG

HTS

Paycell Android POS: Pilot scheme, live in 2021

• First regulatory approved Android POS in Turkey, smart operating system

• Single payment platform for merchants (payment facilitator); ensures cost advantages

• Payments with QR code; capable of serving all bank debit/credit cards, meal cards

• Paycell app store as a CRM platform for SMEs

PER

FOR

MA

NC

E

3%85%

Total Techfin Business** Share in Consolidated Revenue

Paycell Non-Group* RevenueGrowth (YoY)

* Excluding revenues from Turkcell & Turkcell Consumer Finance. Calculated on Management Reporting figures. ** Includes Paycell and Turkcell Consumer Finance revenues

28


96%248 Million TL

DCB transactions

Techfin: Payment Services Platform

FOUR PILLARS OF REVENUE GENERATION

DIRECT CARRIERBILLING

BILL PAYMENT

PAYCELL CARD

MERCHANT SOLUTIONS

65%3.4 million

3rd party Bill Payments

11KPoints Paycell is

Accepted

171%117 million TL

Paycell Card transactions

58

7764 63

78

4232 36

27

47

72%

42%

57%

43%

60%

Q3 19 Q4 19 Q1 20 Q2 20 Q320

Revenue EBITDAEBITDA Margin

MILLION TL

Note: Growth figures are based on non-group transactions and indicate y-o-y growth in Q3 2020.

4.6 million Paycell 3MAU*

2.2 billion TL Total transaction volume*

* includes direct carrier billing, bill payments and Paycell Cardtransaction volumes, both group and non-group

HIGHLIGHTS

• Rising Paycell Card and Paycell app users and DCB transaction volume in Q3

• Increasing number of member merchants

• Strong demand for ready-to-use limit at Paycell Card

• Launched Paycell Android POS in a pilot scheme

29


Techfin: Financing Business

LOAN PORTFOLIO

0.4 0.5 0.5

2.71.8 1.9

Q3 19 Q2 20 Q3 20

Turkcell Contracted Receivables Financell Consumer Loans

3.12.2

MILLION TLBILLION TL

• Loan portfolio rose to 2.4 billion TL with increased volume quarterly

• CoR came down to 2.5% in Q3, from 3.4% in Q2.

Revenue 127.0 (3.7%) (41.9%)

EBITDA 97.3 26.5% (32.3%)

EBITDA Margin 76.6% 18.3pp 10.8pp

Net Income 69.5 44.5% n.m.

YoYQoQQ3 20202.4

30


32.2 31.6 32.0

19.621.0 21.4

Q3 19 Q2 20 Q3 20

4.5G subscription 4.5G compatible smartphone

4.25.2 5.4

10.0

13.9 14.1

8.1

11.7 12.2

Q3 19 Q2 20 Q3 20

Non 4.5G Users 4.5G Users Total Users

MOBILE DATA USAGE 4.5G SUBSCRIPTION

Growth Engine: Mobile Data

95% are 4.5G

subscribers

21 million with

4.5G compatible SPs90% are 4.5G

compatible SPs

80% smartphone

penetration

AV. GB/USER MILLION

51% YoY data

usage growth

31


15%

1 Figures are based on IFRS

Turkcell International

SUBSIDIARIES AT A GLANCE

Note: Remaining 7% comprises other international operations and intra-company eliminations. Ukraine, Belarus and TRNC local currency growth figures are based on stand-alone financials.

• 14.2% yoy revenue growth in local currency

• 4G user data usage: 12GB/month, ↑42% yoy

• Positive bottomline for the quarter

• 1.4% yoy revenue growth in local currency

• 4G user data usage: 13GB/month, ↑48% yoy

• Launched postpaid subscription plans

Lifecell Ukraine

Life :) BelarusRevenue 658 25.3% 1,795 24.5%

EBITDA 298 25.8% 819 24.1%

EBITDA Margin 45.2% 0.2pp 45.6% (0.2pp)

FINANCIAL HIGHLIGHTS1

9%

69%

KKTCell TRNC

• 18.5% yoy revenue growth

• Higher data and handset revenues against continued decline in roaming revenues

Q3 2020 Revenue ShareMILLION TL

Q3 2020 YoY9M 2020YoY

32


New Era with the Change in OwnershipSHAREHOLDING STRUCTURE

(Current Status)

Publicly Held

54%

100%

IMTIS H.

19.8%

100%

TWF BTIH

26.2%*

TVF BTIH: TVF Bilgi Teknolojileri İletişim Hizmetleri Yatırım San. ve Tic. A.Ş.IMTIS H.: IMTIS Holdings S.à r.l.*Including 15% privileged Group A shares

KEY HIGHLIGHTS

• Simplified ownership structure

• End of the long-standing shareholder dispute

• Enhanced corporate governance

• TWF holds privilege for the election of 5 members (out of 9)

Note: Post closing, IMTIS sold a 5% stake in Borsa Istanbul on Nov 10, 2020

33


2020 Guidance Revised Upwards

10% - 12%

40% - 42%

17% - 19%

19% - 21%

REVENUE GROWTH

EBITDA MARGIN

EBIT MARGIN

OP.CAPEX/SALES*

*Excluding license fees

14% - 15%

41% - 42%

19%

20% - 21%

AS REVISED IN APRIL (POST PANDEMIC)

UPDATED

~


APPENDIX

3535


Top-Notch Features

TranslationGroup Video CallEmergency ButtonBiP Meet

Telco-OTT Power

App2NW2nd NumberFixed Number

Quality of ServiceDedicated BandwithOTT Box

Integrated Experiences

fizyDigital MagsTV+

Timeshift & Cloud RecordingLyricsMusic VideoLive Broadcasting

CrossPlatform

Recommendation

Strategic Focus:Digital Services

Differentiation with Unique Skills

3636


Strategic Focus:Digital Services

TURKEY

DONE DEAL

NEGOTIATION

TURKEY

Global Expansion

3737


16KCOMPANY

COMPANY

COMPANY

528K

2.5Mn

OPTIMIZECOSTS

INCREASEREVENUES

Strategic Focus:Digital Business Solutions

3 MILLION COMPANIES

Corporate Customers’ Needs in Turkey

3838


Strategic Focus:Techfin Services

417 Mn**

900 Mn*

>1.2 Bn*

* Active users**Registered users

346 Mn*310 Mn*441 Mn**

37 Mn*140 Mn*

E-Commerce Tech Savvy Regulatory Environment

KEY DRIVERS IN WEST

Unbanked Population Tech Savvy Regulatory Environment

KEY DRIVERS IN EAST

Global Techfin Revolution

SOURCE: Statista, Press Search

3939


89%

Smartphonepenetration

83Mn

Youngest & largest

population in Europe

1.9Mn

Merchant

59%

Cashspending

31%

Unbankedpopulation

19th

Largest economyin the World

Strategic Focus:Techfin Services

Turkey: Attractive Dynamics

SOURCE: Worldbank, TurkStat, Turkey Social Security Institution, Turkey Risk Center, wearesocial.com

4040


234.4 MHz

TOTAL FREQUENCYBEFORE TENDER

Turkcell Vodafone Türk Telekom

62.0 57.064.8

172.4

82.8

110.2

AWARDED FREQUENCY IN

TENDER

TOTAL FREQUENCYAFTER TENDER

139.8 MHz

175.0 MHz

€0.3

€0.4

€0.5

• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost

Frequencies Before and After 4.5G Tender

4141


234.4 MHz

Turkcell Vodafone Türk Telekom

62.0 57.064.8

172.4

82.8

110.2

139.8 MHz

175.0 MHz

Main layer for 4.5G Terminal support, capacity and coverage layer

2600 MHz

2100 MHz

1800 MHz

900 MHz

800 MHz 4.5G main coverage layer

2G/3G coverage and voice layer

Mobile broadband layer for 3G4.5G usage for mid/long term

4.5G capacity boost layer for hot spots

€0.3

€0.4

€0.5

• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost

60.040.0 35.0

70.0

35.0 30.0

59.6

20.070.0

24.8

24.8

20.0

20.0

20.0

20.0

Frequency Bands After 4.5G Tender

4242


SPEED

1,200 Mbps

2018

* Source: https://gsacom.com/paper/progress-gigabit-lte-networks-2/

QUALITY

CarrierAggregationall network

The BestExperts

4x44x4 MIMOall network

MIMO: Multi Input Multi Output

SPEED QUALITY

Fastest & Best & Widest

4343


44.1%

Incumbent53.1%

Other players2.8%

6.6 6.6 6.8 7.2 7.88.7

9.5 9.7 10.3

0.55 1.2 1.461.67

1.93

2.29

2.803.21

3.52

0.490.49 0.56

0.63

0.74

0.83

0.93

1.08

1.18

10.2%11.0%

11.5%12.1%

13.2%

14.7%

16.3%17.1%

18.4%

2012 2013 2014 2015 2016 2017 2018 2019 Q2 2020

xDSL Fiber Cable PenetrationNote: Company calculation based on data in ICTA Q2 2020 Report

15.3 mnTotal

Subscribers

3 majorOperators

18.4%Penetration

TURKISH FIXED BROADBAND MARKET FIXED BROADBAND MARKET BY TECHNOLOGY (Mn)

FIBER SUBSCRIBER MARKET SHARE

Q2 2020

Fixed Broadband Market

4444


21 28Number of cities

In partnership withTürksat & Vodafone

Turkcell (stand-alone)

Turkcell infrastructure

Overlapping

Türksat infrastructure

First in Europe

10 GbpsFiber to the home

The map displays the cities in Turkey where Turkcell offers fiber and cable internet services through its partnership with Türksat and Vodafone. HFC stands for hybrid fiber-coaxial.

3.8 mn 3.8 mn fiber + 3.0 mn cable (HFC)Homepass

Well-invested Infrastructure: Focus on Sharing

4545


MassiveMachine Type

Communication

Ultra ReliableLow-LatencyCommunication

EnhancedMobileBroadband

5G is an Evolution

4646


5%

10%

15%

20%

25%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Turkcell Group EEMEA

Source: Bloomberg Industry Data and company announcements*Excluding licence fees

Turkcell Group Average: 18.0%*

EEMEA Average: 16.9%Between 2009 and 2019

Capex/Sales Trend

4747


Internet ~59%

Pay TV ~30%

~24 MnHouseholds

Determining household via network and social network analysis

Capturing potential via house profiling by using big data

Raising wallet share with cross contracting, household offers and new products

s Share

53%

Source: Turkey Household: Turkcell expectation based on TurkStat 2018 announcement Internet & Pay TV: ICTA Q219 Turkcell’s Share: Future Bright Convergence & Household Penetration Research Q119

New Definition of The Customer

4848


AnalyzeCustomer Behaviour

Social networkApplication usage

Location baseNetwork metrics

BIG DATA

Adaptive learningRule-based

management

ARTIFICIAL INTELLIGENCE

+8%+20%Lower benefit

Lower price

Higher benefitHigher price

Multiple layered offersfor value maximization

Special offer for customers with churn risk

RIGHT OFFER TO THE RIGHT CUSTOMER AT THE RIGHT TIME

Utilize Big Data to Maximize Consumer Surplus

4949


1HYBRIDOFFERS

Mix of postpaid & prepaid offers

Flexible postpaid management

No bill shock

2YEARLY

PACKAGES

Data benefit which can be used flexibly

during 12 months

3SEMI

CONTRACTS

Contract based on benefit

Flexible price

4PURE

DIGITAL OFFER

Game changer tariff

Low cost play

Digital channels only

New Pricing Approach

5050


100104

115

111 114121

136 137 138 139

155

100105

112

119 120124

127131

134 138 142

Q1

18

Q2

18

Q3

18

Q4

18

Q1

19

Q2

19

Q3

19

Q4

19

Q1

20

Q2

20

Q3

20

TCELL ARPU (exl. M2M) CPI

Q1

16

Q2

16

Q3

16

Q4

16

Q1

17

Q2

17

Q3

17

Q4

17

Q1

18

Q2

18

Q3

18

Q4

18

Q1

19

Q2

19

Q3

19

Q4

19

Q1

20

Q2

20

TCELL Operator 1 Operator 2

TURKCELL ARPU VS. CPI TREND MOBILE ARPU COMPARISONQ116=100Company and TUIK announcements

Q116=100Based on ICTA market report

Key for sustaininggrowth & margins

Secure ROI of projects & investments

Reflecting coststo the prices

ARPU growth above competition

50

Inflationary Pricing

5151


POTENTIAL ACTIONS

• Established in 2015, fully owned by Turkcell

• Standalone payment and e-money company

• Payment institution and e-money licenses from BRSA

• Mobile payment solutions in several verticals

• Share know-how

• Invest jointly

• Diversify risk

STRATEGIC PARTNER

INORGANIC GROWTH

• Acquire local techfin companies to

expand vertical solutions

• Look for synergies

Paycell: Turkey’s Leading Techfin Company

5252


548900

1,276

2,070

2,429

2015 2016 2017 2018 2019

1,719

2,429

3,210

4,076

4,823

2015 2016 2017 2018 2019

NET REVENUE TREND EBITDA TREND

TRY Mn TRY Mn

• 48 thousand km rollout, 21 cities

• 1.6 Mn fiber customers

• Data speed up to 10Gbps

• Infrastructure sharing (Turksat & Vodafone)

• 3.7 Mn fiber homepass

INITIAL PUBLIC OFFERING

• More transparent articulation of equity story

• Diversify risk

• Invest jointly

• Share know-how

STRATEGIC PRE-IPO PARTNER

INORGANIC GROWTH

• Acquire local or regional fiber assets, smart-home and security companies

• Look for synergies

INFRASTRUCTURE SHARING

• Asset light model

POTENTIAL ACTIONS

Turkcell Superonline: Turkey’s Fastest Fiber

5353


68

112139

223

290

2015 2016 2017 2018 2019

168212

257

338

431

2015 2016 2017 2018 2019

Note: Tower portfolio includes owned and managed towers and towers for which contract management services are provided.

NET REVENUE TREND EBITDA TREND

TRY Mn TRY Mn

• First and only TowerCo of Turkey

• Tower portfolio of 10,726 (owned + right of use)

• Regional player operating in 4 countries

• Long term, visible revenue stream & strong profitability

• More transparent articulation of equity story

POTENTIAL ACTIONS

INFRASTRUCTURE SHARING

INITIAL PUBLIC OFFERING


Tenancy ratio

1.7x

Global Tower: Turkey’s First & Only TowerCo

5454


87

207

346

803

314

2015 2016 2017 2018 2019

• 112k m2 datacenter space

• 33.5k m2 white space

• 8 locations

• Ankara datacenter: 44k m2 datacenter space, 12k m2 white space

• Gebze datacenter: 33k m2 datacenter space, 10k m2 white space

• İzmir datacenter: 15k m2 datacenter space, 2.4k m2 white space

CUMULATIVE DATACENTER INVESTMENTS

TRY Mn


FUTURE FUNDING

SELL AND LEASE BACK

FREE CASH FLOW GENERATION

Datacenters: Largest White Space Capacity in Turkey

5555


* Turkcell Finance Company (Financell)

6,587

7,649

996

133 (91) 26

RevenueQ3 19

Δ TurkcellTurkey

Δ TurkcellInternational

ΔTCF* Δ OtherSubsidiaries

RevenueQ3 20

16.1%

MILLION TLQUARTER

• Yearly incremental revenue generation of 1.1 bn TL in Q3 2020

• 1.0 billion TL revenue from Turkcell Turkey with 18% growth, driven by strong ARPU performance and equipment revenues

• Hit on roaming revenues and slowdown in TCF impacted topline negatively

Revenue

5656


2,839

2,8393,256 3,256 3,259 3,317

3,394

1,063(645)

3 58 77

EBITDAQ3 19

Δ in Revenues

Δ in Direct cost of

revenues*

Δ in G&Aexpenses

Δ in S&Mexpenses

Δ Doubtful trade

receivables**

EBITDAQ3 20

• 19.6% EBITDA growth in Q3 2020 on the back of strong revenue growth and lower S&M and G&A expenses

• Continuing EBITDA margin improvement in Turkcell Turkey; 2.0pp yoy in Q3 2020

* Excluding depreciation and amortization ** net impairment losses on financial and contract assets

19.6%

EBIT: 1,64124.9%

EBIT: 1,87724.5%

Margin44.4%

Margin43.1%

MILLION TLQUARTER

EBITDA & EBIT

5757


Short FX

position

Limited Short FX

position

Positive/NeutralFX

position

• Almost all cash in hard currency

• 50% of FX denominated debt is hedged

• Hedging for whole maturity (principal & interest)

NET FX POSITION

(1) Data of Turkcell Group, excluding consumer finance business.

Dec15 Dec16 Dec18 Dec19

Effective Balance Sheet Risk Management

129 261 314 251

1,785

213143

2020 2021 2022 2023 2024+

FX Local Currency

404 314 251

1,785

• US$1.7 Bn equivalent of cash holdings covers maturities until 2024

• Strong free cash flow generation

• Available credit lines from diversified funding sources

LIQUIDITY MANAGEMENTPrincipal & Interest Payments1

US$ Mn

342

5858


Major Funding Details

5959


LIFECELL UKRAINE LIFE :) BELARUS KKTCell TRNC LIFECELL VENTURES NL

• Growth driven by data

• Expand digital services

• Net profit by 2021

• Growth driven by data

• Expand digital services

• Grow in fixed broadband

• New revenue streams(Corporate & SystemIntegration)

• Expand DSS footprint

• Make new strategic alliances

• Revenue generation

Strategic Focus Areas of Turkcell International

6060


lifecell PERFORMANCE

HIGHLIGHTS

UKRAINE MOBILE MARKET FACTS*

53 mnTotal

subscribers

3Operators

121% Mobile

Penetration

Ownership 100% Turkcell

Ownership 100% VEON

Ownership 100% Bakcell

*Source: Company calculation based on Q3 2020 results

UAH MILLION Q3 2020 YoY% 9M20 YoY%

Revenue 1,745 14.2% 4,922 11.2%

EBITDA 910 12.3% 2,588 6.7%

EBITDA Margin 52.1% (0.9pp) 52.6% (2.2pp)

• Operational performance (3 months active):

• 7.8 million subscribers in Q3 2020

• UAH 76.3 ARPU, 2.1% YoY

• 81% SP penetration (market leader)

• First to launch 4G services in Ukraine on 2600 MHz

• 4.5G services on the 1800 MHz frequency since Jul 1st, 2018

• NCCIR issued license for both GSM and LTE in 900 MHz band

• New license became valid as of July 1st, 2020 (for 5 years)

Operations in Ukraine

http://en.wikipedia.org/wiki/File:Flag_of_Ukraine.svg

6161


49.1%

36.1%

14.8%

KYIVSTAR

VDF

lifecell

12% 10% 12%

8%

14%18% 16% 16%

7%

12%

30%

-11%

27%

9%

11%

Q319 Q419 Q120 Q220 Q320

FINANCIALS

53.0% 52.6% 50.5%55.1%

52.1%

54.6%49.1%

53.3% 52.6% 53.4%

64.8%69.5% 67.9% 67.8% 67.8%

Q319 Q419 Q120 Q220 Q320

Mobile Revenue

Subscriber*

(*) 3 month active subscribers

Mobile Revenue Growth (in UAH)(YoY)

lifecell VDF Kyivstar

EBITDA Margin (%)

Source: Company announcements (Q3 2020)

MARKET SHARE

48.1%

38.0%

13.9%

KYIVSTAR

VDF

lifecell

Ukraine: Mobile Market Performance

6262


*Source: Company calculation based on Q3 2020 results

BeST PERFORMANCE

HIGHLIGHTS

BELARUS MOBILE MARKET FACTS*

12 mnTotal

Subscribers

3Operators

126% Mobile

Penetration

Ownership 80% Turkcell20% Belarusian State

Ownership51% Belarusian State49% MTS

Ownership100% Telekom Austria

Q3 2020 YoY% 9M20 YoY%

Revenue 35.8 1.4% 100.9 (0.1%)

EBITDA 8.1 (15.6%) 24.1 (14.2%)

EBITDA Margin 22.6% (4.6pp) 23.9% (3.9pp)

BYN MILLION

• 1.1 million subscribers in Q3 2020 (3-month active)

• Provides 4G LTE services in 6 regions and 444 cities/towns/settlements

• Average monthly data consumption grew by 58% yoy to 10.9GB

• 4G users reached 61% of 3-month active users, driving further data and digital services usage.

Operations in Belarus

http://zhenghe.tripod.com/b/belarus/flags.html

6363


48%

41%

11%

MTS

A1

life:)

FINANCIALS

9.8%

3.2% 1.9%

-3.3%0.8%

5.3%

8.8%18.8%

7.6% 13.3%

18.5%15.1%

19.3%14.5% 16.0%

Q319 Q419 Q120 Q220 Q320

49%45%

6%

MTS

A1

life:)

Source: Company announcements (Q3 2020)

Subscriber*

Revenue

(*) 3 month active subscribers

life :) EBITDA Margin Trend*

Mobile Revenue Growth (in BYN)(YoY)

27.2%

21.7%

26.0%23.3% 22.6%

Q319 Q419 Q120 Q220 Q320

life:) A1 MTSMARKET SHARE Belarus: Mobile Market Performance

6464


Special Communication Tax (SCT) 7.5% 7.5%

VAT 18% 18%

Treasury Share1 15% 1%

TRX fees 5%(of net sales)

-

Contribution Share to Telecom Authority 0.35%(of net sales)

0.35%(of net sales)

New subscription SCT2 (at first enrollment) TRY 79.00 -

Wireless license fees (per acquisition) TRY 34.15 -

Wireless usage fees (annual) TRY 34.15 -

TAX MOBILE FIXED

1Under the license agreement Turkcell pays a treasury share equal to 15% of its gross revenue from Turkish GSM operations2 Excluding M2M SIMs

Taxation in Turkey

6565


13.6

9.1

6.6

3.1 3.1 3.12.5 2.5 2.5 2.5 2.5 2.5

2.5 2.5

17.2 15.714.4

11.1 11.1

8.16.5

4.94.8 4.2 4.4 4.5

5.0 5.1

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MTR-Turkcell Europe-MTR

MTR: Mobile Termination Rate Source: BEREC Jan 2020 report, Cullen International

EVOLUTION OF MTR TRY kuruş per min.

MTR RATESTRYkr.

OLD Since 2013 Asymmetry OLD Since 2013 Asymmetry

Turkcell 3.13 2.50 - 1.70 0.43 -

Vodafone TR 3.23 2.58 3% 1.73 0.43 -

TTKOM 3.70 2.96 18% 1.87 0.47 9%

Mobile Voice Rates SMS Rates

Turkcell MTR is halfof the European

MTR level

Mobile/SMS Termination Rates in Turkey

6666


4.11

5.606.33

8.42

4.52

6.036.65

9.13

2017 2018 2019 Q3 2020

Average Period-End

3.634.76

5.66

7.193.77

5.265.94

7.81

2017 2018 2019 Q3 2020

1.93 2.03 2.10

2.541.972.16 2.10

2.64

2017 2018 2019 Q3 2020

26.64

27.3225.90

27.55

28.07

27.69

23.69

28.30

2017 2018 2019 Q3 2020

USD / TRY EUR / TRY

USD / BYN USD / UAH

Currency Trends

67


Notice

This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities ExchangeAct 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 in 2020 or for the medium term 2020 to 2022. More generally, all statements other than statements of historical facts included in thispresentation, including, without limitation, certain statements regarding the launch of new businesses, our operations, financial position and business strategymay constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the written or oral use of forward-lookingterminology 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 suchexpectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety byreference to these cautionary statements. For a discussion of certain factors that may affect the outcome of such forward looking statements, see our AnnualReport on Form 20-F for 2019 filed with the U.S. Securities and Exchange Commission, and in particular the risk factor section therein. We undertake no duty toupdate 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 presentation, which remains subject toverification, 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 presentation or any other written or oralinformation made available to any interested party or its advisers.

Please note that all financial data are consolidated whereas non-financial data are unconsolidated unless otherwise specified. In the charts or tables used in thispresentation totals may not foot due to rounding differences. The figures used in this presentation are rounded while percentage changes are calculated based onthe figures disclosed in the press release.

68


THANK YOUFor further information please e-mail

[email protected] call Turkcell Investor Relations at

(+90 212 313 1888)

Turkcell IR Website

THANK YOU

mailto:[email protected]

https://www.turkcell.com.tr/en/aboutus/investor-relations

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