turkcell q112 presentation_final
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FIRST QUARTER OF 2012 May 3, 2012
NOTICE
2
This presentation may contain statements that are forward looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially due to factors discussed in this presentation, in our press release, in the Risk Factors section of Turkcell’s most recent Form 20-F or in other reports and filings with the US Securities and Exchange Commission. We undertake no duty to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Please note that all financial data are consolidated whereas non-financial data are unconsolidated unless otherwise specified.
BUSINESS OVERVIEW
Süreyya Ciliv, Turkcell CEO
TURKCELL GROUP FINANCIAL PERFORMANCE
CONSOLIDATED FINANCIAL RESULTS
TRY million Q1 2011 Q4 2011 Q1 2012 YoY (%) QoQ (%)
Revenue 2,118 2,446 2,382 12.4% (2.6%)
EBITDA 626 695 703 12.3% 1.2%
EBITDA Margin 29.5% 28.4% 29.5% - 1.1pp
Net Income 330 332 515 56.0% 55.2%
Avg. US$/TRY rate 1.57 1.82 1.79 13.6% (1.9%)
Double digit revenue growth YoY led by 8% growth in Turkcell Turkey and 43% growth in subsidiaries
Double digit EBITDA growth YoY
• Higher revenue
• Increased contribution of subsidiaries
4
Strong growth in net income
• Higher EBITDA
• Higher net finance income
5
TURKCELL GROUP STRONG START TO THE YEAR
Turkcell Turkey Voice1
Turkcell Turkey Mobile Broadband & Services
Subsidiaries
Q1 2011
43%
25%
3%
Q1 2012
1,416 1,455
(TRY million)
529
279 398
YoY Growth
424
1 Voice revenues include outgoing, incoming, roaming and other (comprising almost 2% of Turkcell Turkey) revenues
Turkcell Superonline grew by 59%
• Retaining the customer base
• Simplified tariff structure
• Responded to aggressive competition via affordable tariff plans
• Continued contracting efforts
TURKCELL TURKEY MARKET AT A GLANCE
6
• Aggressive offers & communication
• Decrease in average price per minute
• Higher incentives
• Continued focus on postpaid
9.3% 7.8%
Q1 2011 Q1 2012
Churn rate
61% 38%
Turkcell Market
Smartphone sales in total handset sales1
TURKCELL’S FOCUS MOBILE MARKET
1 Source: Gfk
• Increased smartphone sales
• 35%1 YoY growth in smartphone sales
• Fueling the mobile broadband usage
• Increased smartphone penetration
• Promoted bundled offers
• Created the need via innovation
TURKCELL TURKEY SHAPING THE FUTURE WITH TECHNOLOGY & INNOVATION
High Quality Mobile Network
7
High Speed Fiber Network
• 6,000 more 2G/3G base stations compared to the closest competitor
Turkey’s first mobile technology to link patients with their
doctors… • The first and only
operator in Turkey providing 1000 mbps speed for residential segment
Personal TV experience that spans multiple
screens and on-demand content…
Tailored and on-demand cloud services for
corporate customers… • Investments to reach
84 mbps speed
TURKCELL TURKEY TURKEY’S CHAMPION IN 3G DATA SPEED
8
11.91
4.90 4.55
2.37 1.75 1.40
Turkcell Avea Vodafone
Dowload Upload
RESULTS OF 3G DATA SPEED TEST (Mbps)
Test was run on a total of 59 points in 7 regions and 9 provinces in Turkey
2,136 measurements were taken
According to the independent test results of PCnet Magazine, Turkcell is the fastest in terms of 3G data speed…
22.7 22.9 22.5
10.4 11.7 12.0
Q111 Q411 Q112Prepaid Postpaid
TURKCELL TURKEY MAINTAINED SUBSCRIBER BASE
9
63%
65%
Q111 Q112
Postpaid as a % of revenues Postpaid as a % of subscribers
SHARE OF POSTPAID IN REVENUES & SUBSCRIBERS
33.1 34.5 34.5
SUBSCRIBER (million)
31% 35%
Q111 Q112
SUMMARY OPERATIONAL RESULTS
Q1 2011 Q4 2011 Q1 2012 YoY (%) QoQ (%)
ARPU (TRY) -blended 18.4 19.7 19.2 4.3% (2.5%)
ARPU (TRY) -postpaid 37.9 37.5 36.5 (3.7%) (2.7%)
ARPU (TRY) -prepaid 9.8 11.0 10.1 3.1% (8.2%)
MoU 192.5 220.4 221.5 15.1% 0.5%
151 229
164
173
109
127
Q111 Q112
MobileServices
SMS/MMS
MobileBroadband
424
TURKCELL TURKEY MOBILE BROADBAND DROVE NON-VOICE REVENUE GROWTH
10
MOBILE BROADBAND & SERVICE REVENUES BREAKDOWN (TRY million)
529
HIGHER SHARE OF MOBILE BROADBAND WITH INCREASING SMARTPHONE NUMBERS
↑52% YoY
2.4
3.8 4.3
8%
10%
12%
Q111 Q411 Q112
# of smartphones (million)Mobile Broadband as a % of revenues
↑ 6% YoY
↑16% YoY
↑25% YoY
↑82% YoY
52% 41%
23%
30% 24%
29%
Q111 Q112
Residential
Corporate
Wholesale
11
TURKCELL SUPERONLINE FINANCIAL RESULTS
TRY million Q1 2011 Q4 2011 Q1 2012 YoY (%) QoQ (%)
Revenue 91.1 140.7 145.0 59.2% 3.1%
EBITDA 14.5 31.1 29.1 100.7% (6.4%)
EBITDA Margin 16.0% 22.1% 20.1% 4.1pp (2.0pp)
Capex 43.0 172.4 63.7 48.1% (63.1%)
REVENUE BREAKDOWN Revenue growth through continued strong growth in all segments
307K fiber subscribers in Q112
Group synergy further enhanced:
• Share of Turkcell Superonline in Turkcell’s transmission cost reached 74%
TURKCELL SUPERONLINE STRONG GROWTH IN FIBER BROADBAND
↑92% YoY
↑105% YoY
↑24% YoY
UKRAINE SUSTAINED PROFITABILTY LEVELS
12
ASTELIT FINANCIAL RESULTS
$ million Q1 2011 Q4 2011 Q1 2012 YoY (%) QoQ (%)
Revenue 78.2 98.1 91.4 16.9% (6.8%)
EBITDA 18.8 24.9 24.9 32.4% -
EBITDA Margin 24.0% 25.4% 27.2% 3.2pp 1.8pp
Capex 7.4 26.6 5.3 (28.4%) (80.1%)
EBITDA & FCF MARGIN DEVELOPMENT
14.6%
21.4% 24.0%
27.2%
Q111 Q112
FCF margin EBITDA marginTurnaround strategy resulted in strong revenue and EBITDA growth YoY
• Regional focus
• 7.1 million active subscribers up by 1 million YoY
Sustained improvement in EBITDA margins
• 4th consecutive quarter with above 25% EBITDA margin levels
FINANCIAL OVERVIEW
Murat Erden,
Turkcell Acting CFO
NOTICE:
Please note that all financial data are consolidated whereas non-
financial data are unconsolidated unless otherwise specified.
EBITDA is a non-GAAP financial measure. Please refer to the
press release for the reconciliation of EBITDA to net cash from
operating activities.
All non-financial data are unconsolidated, prepared in
accordance with IFRS and expressed in US$ and/or TRY.
The figures used in this presentation are rounded while
percentage changes are calculated based on the figures
disclosed in the Q1 2012 result announcement press release.
2,446 2,382 (57) (1) (6)
RevenueQ411
Δ in Voice* Δ in Mobile broadband & services
Δ in Subsidiaries RevenueQ112
TURKCELL GROUP REVENUE (TRY MILLION)
14
2,118
2,382
39 105
120
RevenueQ111
Δ in Voice* Δ in Mobile broadband & services
Δ in Subsidiaries RevenueQ112
Δ in Turkcell Turkey: ∑ TRY 144mn
Δ in Turkcell Turkey: ∑ TRY (58mn)
Q1 2012 vs. Q1 2011 YoY ↑12.4%
Q1 2012 vs. Q4 2011 QoQ↓ (2.6%)
*Voice revenues include outgoing, incoming, roaming and other (comprising almost 2% of Turkcell Turkey) revenues
29.5% 29.5% (2.7pp) 0.2pp
2.5pp
EBITDAQ111
Δ in Direct cost of revenues*
Δ in G&A exp.
Δ in S&M exp.
EBITDAQ112
15
28.4% 29.5% 0.3pp (0.8pp) 1.6pp
EBITDAQ411
Δ in Direct cost of revenues*
Δ in G&A exp.
Δ in S&M exp.
EBITDAQ112
TURKCELL GROUP EBITDA MARGIN (%)
* Excluding depreciation and amortization
Q1 2012 vs. Q1 2011 YoY (-)
Q1 2012 vs. Q4 2011 QoQ ↑ 1.1pp
TURKCELL GROUP NET INCOME (TRY MILLION)
16
330
515
22 65 (7)
60 40 (6) 11
Net incomeQ111
Δ in EBIT Δ in Interest Inc./Exp.
Δ in Equity in Net Inc./Loss
Δ in FX Gain/Loss
Δ in Monetary Gain/Loss
Δ in Taxation Δ in Other Net incomeQ112
Q1 2012 vs. Q1 2011 YoY ↑ 56.0%
332
515 271 5 (5) 129 (233)
13 3
Net incomeQ411
Δ in EBIT Δ in Interest Inc./Exp.
Δ in Equity in Net Inc./Loss
Δ in FX Gain/Loss
Δ in Monetary Gain/Loss
Δ in Taxation Δ in Other Net incomeQ112
Q1 2012 vs. Q4 2011 QoQ ↑ 55.2% Δ in EBITDA Δ in Depreciation
8 263
Δ in EBITDA Δ in Depreciation
77 (55)
TURKCELL GROUP BALANCE SHEET HIGHLIGHTS
17
Consolidated (TRY million) Q1 2011 Q4 2011 Q1 2012
Total Cash 4,916 6,3341 6,0582
Total Assets 15,151 17,187 17,157
Total Debt 2,791 3,529 3,359
Net Cash 2,125 2,805 2,699
Total Equity 9,964 10,826 11,325
Strong balance sheet maintained Subsequent event to March 31, 2012: Payment of the guaranteed loan of Euroasia amounted to USD 150 million as of April 6, 2012
1 TRY 1,596 million time deposits with a maturity longer than 3 months was recorded as Financial Investment 2 TRY 10 million time deposits with a maturity longer than 3 months was recorded as Financial Investment
Q1 2012 CAPEX SPLIT (TRY MILLION)
Turkcell Superonline
64
Turkcell Turkey
160
International 18
Other 11
Total Capex: TRY 253 million
APPENDIX
SUMMARY INCOME STATEMENT AS PER CMB1 FINANCIALS (TRY MILLION)
19
Summary income statement (TRY mn) Q1 2011 Q4 2011 Q1 2012 YoY (%) QoQ (%)
Revenue 2,118.4 2,445.5 2,381.8 12.4% (2.6%)
Direct Cost of Revenues2 (1,247.7) (1,790.5) (1,489.8) 19.4% (16.8%)
S&M (411.1) (451.6) (402.8) (2.0%) (10.8%)
G&A (110.3) (103.8) (118.1) 7.1% 13.8%
EBITDA 625.8 694.7 702.7 12.3% 1.2%
EBITDA Margin 29.5% 28.4% 29.5% - 1.1pp
Net Income 330.9 333.3 515.5 55.8% 54.7%
1 Capital Markets Board of Turkey 2 Depreciation and amortization is included
CONSOLIDATED CASH FLOW ($ MILLION)
20
Consolidated Cash Flow($ mn) Q1 2011* Q4 2011* Q1 2012 YoY (%) QoQ (%)
EBITDA1 398 384 393 (1.3%) 2.3%
LESS:
Capex and License (117) (368) (143) 22.2% (61.1%)
Turkcell (61) (185) (90) 47.5% (51.4%)
Ukraine (7) (27) (5) (28.6%) (81.5%)
Investment & Marketable Securities 6 (847) 892 n.m. (205.3%)
Net Interest Income/Expense 39 70 70 79.5% -
Other (422) (63) (340) (19.4%) 439.7%
Net Change in Debt (31) (7) 31 (200.0%) (542.9%)
Dividend paid - - - - -
Cash Generated (127) (831) 903 (811.0%) (208.7%)
Cash Balance 3,175 2,509 3,411 7.4% 36.0%
1 EBITDA is a non-GAAP financial measure. See page 12 of our press release for the reconciliation of EBITDA to net cash from operating activities. * Changed from previously released presentation
CONSOLIDATED BALANCE SHEET ($ MILLION)
21
Consolidated Balance Sheet ($ mn) Q1 2011 Q4 2011 Q1 2012 YoY (%) QoQ (%)
Cash & Bank 3,175 2,509 3,411 7.4% 36.0%
CURRENT ASSETS 4,462 4,464 4,808 7.8% 7.7%
Fixed Assets, Net 4,703 3,956 4,139 (12.0%) 4.6%
Other Long Term Assets 620 679 730 17.7% 7.5%
TOTAL NON-CURRENT ASSETS 5,323 4,635 4,869 (8.5%) 5.0%
TOTAL ASSETS 9,786 9,099 9,677 (1.1%) 6.4%
S/T Debt 375 812 1,462 289.9% 80.0%
TOTAL CURRENT LIABILITIES 1,552 2,063 2,585 66.6% 25.3%
L/T Debt 1,428 1,057 434 (69.6%) (58.9%)
TOTAL NON-CURRENT LIABILITIES 1,798 1,304 704 (60.8%) (46.0%)
MINORITY INTEREST (34) (61) (61) 79.4% 0.0%
Share Capital 1,636 1,636 1,636 0.0% 0.0%
TOTAL EQUITY 6,435 5,732 6,388 (0.7%) 11.4%
TOTAL EQUITY AND LIABILITIES 9,786 9,099 9,677 (1.1%) 6.4%
THANK YOU
www.turkcell.com.tr
For further information please e-mail
[email protected] or call Turkcell Investor Relations at
(+90 212 313 1888)