Turkcell Iletısım Hızmetlerı: Fırst Quarter 2012 Results
"Strong Start to the Year"
ISTANBUL, May 2, 2012 /PRNewswire/ --
- 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"). All non-financial data is unconsolidated and comprises Turkcell only figures. The terms "we", "us", and "our" in this press release refer only to the Company, except in discussions of financial data, where such terms refer to the Group, and where context otherwise requires.
- 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 March 31, 2012 refer to the same item as at March 31, 2011. For further details, please refer to our consolidated financial statements and notes as at and for March 31, 2012 which can be accessed via our web site in the investor relations section (http://www.turkcell.com.tr).
HIGLIGHTS OF THE FIRST QUARTER OF 2012
- Turkcell Group made a strong start to 2012 with double-digit year-on-year revenue and EBITDA growth
- Group revenues increased by 12.4% to TRY2,382 million (TRY2,118 million)
- Group EBITDA[1] increased by 12.3% to TRY703 million (TRY626 million), while Group EBITDA margin was flat at 29.5%
- Turkcell Turkey's revenues grew by 8% to TRY1,984 million (TRY1,840 million)
- Turkcell Turkey registered growth in voice revenues[2] of 3% forthe second consecutive quarter
- Mobile broadband& services revenues rose 25% to TRY529 million (TRY424 million)
- Mobile broadband revenues rose 52% to TRY229 million (TRY151 million)
- The share of mobile broadband and service revenues rose 4pp to 27% (23%)
- Turkcell Turkey's EBITDA increased by 8% to TRY581 million (TRY540 million), while EBITDA margin was flat at 29.3%
- Revenues of subsidiaries[3] grew by 43% to TRY398 million (TRY279 million), while their contribution to the top line rose to 17% (13%)
- EBITDA of subsidiaries[3] improved by 41% to TRY121 million (TRY86 million), while their contribution to Group EBITDA rose to 17% (14%)
- Turkcell Group registered strong growth in net income toTRY515 million (TRY330 million), mainly due to higher EBITDA and financial income
COMMENTS FROM CEO, SUREYYA CILIV
"In the first quarter of 2012, Turkcell Group continued its double-digit growth and recorded TRY2.4 billion in revenue, TRY703 million EBITDA and TRY515 million of net income.
Turkcell maintained its customer base with its strong network and simplified tariff structure that enhances customer satisfaction, despite intensifying competition during the quarter. Turkcell's voice[2] revenues rose by 3% year-on-year, while mobile broadband revenues climbed by 52% as smartphone penetration increased with the contribution of Turkcell branded smartphones.
Turkcell Group, offering mobile communication, fiber broadband and information & communication technology solutions over its fast and high quality network, continued its investments without losing pace during the quarter. Through integrating our infrastructure advantage with innovative solutions and best customer experience, we launched our cloud computing service, Turkcell SuperBulut, that will make a significant contribution both to the Turkish economy overall and the budgets of the enterprises. We also presented Turkcell TVPlus, which provides our customers a personalized viewing experience across all connected screens. Over the coming periods, we will continue to bring the World's newest technologies to Turkey and sustain our leadership.
We are delighted with the increasing contribution of our subsidiaries. While our fiber business grew by 59% year-on-year, revenue from Ukrainian operations were up by 17% in US$ terms. Consequently, our subsidiaries' contribution to group revenues and EBITDA rose 43% and 41%, respectively.
As Turkcell, we contribute to Turkey's future with our strong mobile and fiber networks, recognized worldwide by prestigious institutions, together with our focus on innovation and our social responsibility projects. We would like to thank all our customers, employees, business partners and shareholders for their continued support."
(1)EBITDA is a non-GAAP financial measure. See page 12 for the reconciliation of EBITDA to net cash from operating activities.
(2) Voice revenues include outgoing, incoming, roaming and other (comprising almost 2% of Turkcell Turkey) revenues.
(3)Including eliminations.
OVERVIEW OF TURKCELL TURKEY
In the first quarter of 2012, Turkey's macroeconomic climate was unchanged quarter-on-quarter, and in the mobile market line penetration remained almost flat at around the 88% level. During the quarter, competition accelerated with new tariff structures, aggressive port-in offers and increased communication. On the postpaid front, all operators concentrated on increasing the postpaid subscriber base and the number of contracted subscribers by offering bundled and flat minute packages. The market witnessed monthly postpaid package fee reductions to TRY9 - 15 levels, pressuring price levels in the market and adversely impacting profitability levels. As for Turkcell, during the quarter we restructured our postpaid tariffs to serve different customer needs and usage behavior, thus ensuring the satisfaction and long term retention of our valuable customer base. As a result of our efforts, we succeeded in increasing our postpaid subscriber base by 15.4% on a year-on-year basis, recording approximately 347,000 net additions during the quarter.
Meanwhile, on the prepaid front, the competition was particularly aggressive with a continued focus on bundled packages and increased incentives for higher refills. Despite aggressive competition we improved our churn performance on a year-on-year basis. Our efforts to promote higher refills, packages and upsell offers, designed based on customer needs, resulted in a 3% prepaid ARPU increase year-on-year.
On the smartphone front, momentum in the market has continued with35% growth in smartphone sales on a year-on-year basis. During the quarter, the share of smartphones in handset sales rose to approximately 38% from 34% quarter-on-quarter. Meanwhile, Turkcell continued to drive the market with its smartphone penetration focus, by promoting its T-series phones and other affordable devices. In consequence, the number of smartphones in our network grew by 82% on a year-on-year basis to 4.3 million with 500K additions during the quarter.
Overall, we maintained our subscriber base, increasing our revenues by 8% and decreasing our churn rate by 1.5pp on a year-on-year basis with a greater focus on customer retention and satisfaction. In accordance with our long term strategy of providing the best quality and innovative products and building on our established superior network, during the quarter we continued to differentiate ourselves for the future with our new platform, Turkcell SuperBulut, delivering cloud computing services to corporate customers. In addition, we have recently launched TVPlus, our new personalized TV Platform, giving subscribers a personalized TV experience.
While competition intensified in the Turkish mobile market in Q1 2012, we made a good start to the year on Turkcell Turkey's solid operational performance, together with the increased contribution of our subsidiaries. For the full year of 2012, we maintain our TRY9,900 - 10,100 million revenue and TRY3,000 - TRY3,200 million EBITDA guidance for Turkcell Group.
FINANCIAL AND OPERATIONAL REVIEW OF THE FIRST QUARTER 2012
The following discussion focuses principally on the developments and trends in our business in the first quarter of 2012 in TRY terms. Selected financial information for the first and fourth quarters of 2011, and the first quarter of 2012, both in TRY and US$ prepared in accordance with IFRS and in TRY prepared in accordance with the Capital Markets Board of Turkey's standards are also included at the end of this press release.
Financial Review of Turkcell Group
Profit & Loss Statement (million TRY) Q111 Q411 Q112 y/y % q/q %
Total Revenue 2,118.4 2,445.5 2,381.8 12.4% (2.6%)
Direct cost of revenues[1] (1,249.2) (1,791.8) (1,491.3) 19.4% (16.8%)
Depreciation and amortization (278.0) (596.4) (333.1) 19.8% (44.1%)
Gross Margin 41.0% 26.7% 37.4% (3.6pp) 10.7pp
Administrative expenses (110.3) (103.8) (118.1) 7.1% 13.8%
Selling and marketing expenses (411.1) (451.6) (402.8) (2.0%) (10.8%)
EBITDA[2] 625.8 694.7 702.7 12.3% 1.2%
EBITDA Margin 29.5% 28.4% 29.5% - 1.1pp
Net finance income / (expense) 37.0 27.8 161.8 337.3% 482.0%
Finance expense (71.6) (111.8) (58.3) (18.6%) (47.9%)
Finance income 108.6 139.6 220.1 102.7% 57.7%
Share of profit of associates 56.7 55.0 49.5 (12.7%) (10.0%)
Other income / (expense) (27.9) (10.4) (6.5) (76.7%) (37.5%)
Monetary gains / (losses) - 273.5 40.5 - (85.2%)
Non-controlling interests 15.5 5.8 4.7 (69.7%) (19.0%)
Income tax expense (99.0) (118.3) (104.8) 5.9% (11.4%)
Net Income 330.1 331.7 514.8 56.0% 55.2%
(1) Including depreciation and amortization expenses.
(2) EBITDA is a non-GAAP financial measure. See page 12 for the reconciliation of EBITDA to net cash from operating activities.
Revenue grew by 12.4% year-on-year to TRY2,381.8 million (TRY2,118.4 million) due to an 8% increase in Turkcell Turkey's revenues and 43% improvement in the contribution of group companies:
- 8% growth in Turkcell Turkey's revenues arose from 25% growth in mobile broadband & services revenues, mainly on the 52% growth in broadband revenues, together with the 3% rise in voice revenues.
- The contribution of Group companies improved to 17% (13%). Specifically, Turkcell Superonline revenues rose 59.2% to TRY145.0 million (TRY91.1 million), while Astelit's revenues grew by 16.9% to US$91.4 million (US$78.2 million).
Compared to the previous quarter, revenues fell 2.6%, mainly due to the lower voice revenues of Turkcell Turkey and flat contribution of group companies, mostly on seasonality.
Direct cost of revenues increased by 19.4% to TRY1,491.3 million (TRY1,249.2 million), while as a percentage of revenues rose to 62.6% (59.0%). This mainly arose from the increase in interconnection costs (1.8pp), depreciation and amortization (0.9pp), wages and salaries (0.6pp) and other items (0.3pp) as a percentage of revenues.
Quarter-on-quarter, direct costs as a percentage of revenue declined 10.7pp to 62.6% (73.3%). This was mainly driven by the decreased depreciation and amortization by 10.4pp, treasury share and universal service fund (0.7pp) and network related expenses (0.5pp)as opposed to the increase in wages and salaries (0.8pp)and other items (0.1pp) as a percentage of revenues.
- Decrease in depreciation and amortization expenses mainly attributes to the one time impact of inflation accounting of TRY240 million and impairment impact in Belarus in Q411.
In Q112, Turkcell Turkey's interconnection costs rose to TRY235.0 million (TRY180.2 million) YoY increasing Turkcell Turkey's interconnection costs as a percentage of revenue by 2pp to 11.8% (9.8%). In the meantime, Turkcell Turkey's interconnection revenues rose 37.4% to TRY221.1 million (TRY160.9 million), driven mostly by the all direction packages of the other operators. This led to an increased share of interconnection revenues in Turkcell Turkey's revenues to 11.1% (8.7%).
Administrative expenses as a percentage of revenue declined 0.2pp to 5.0%(5.2%) in Q112 mainly due to a decrease in bad debt expenses and wages and salaries as a percentage of revenues. Compared to the last quarter, administrative expenses as a percentage of revenue rose 0.8pp driven by the increase in bad debt expenses as a result of an increased postpaid subscriber base and increase in uncollected receivables belonging to invoices older than 1 year.
Selling and marketing expenses as a percentage of revenues decreased 2.5pp to 16.9% (19.4%) in Q112 due to the fall in prepaid frequency fees of 2.6pp,and in marketing expenses by 0.5pp, which were partially offset by an increase in selling expenses of 0.2pp and wages & salaries of 0.3pp. On a quarter-on-quarter basis, selling and marketing expenses as a percentage of revenues decreased by 1.6pp to 16.9% from 18.5% inQ411, mainly due to lower marketing expenses down by 0.8pp.
EBITDA increased by 12.3% to TRY702.7 million in Q112 from TRY625.8 million in Q111, while the EBITDA margin was flat at 29.5% (29.5%). Direct cost of revenues (excluding depreciation and amortization) as a percentage of revenues increased 2.7pp, which was partially offset by decrease in selling and marketing expenses by 2.5pp and administrative expenses by 0.2pp.
EBITDA margin improved by 1.1pp compared to the previous quarter due to the decline in selling and marketing expenses by 1.6pp and direct cost of revenues (excluding depreciation and amortization) by 0.3pp, which was offset by the 0.8pp increase in administrative expenses.
Net finance income increased to TRY161.8 million in Q112 compared to TRY37.0 million in Q111, led by the increased interest income resulting from higher interest rates and increase in time deposits, as well as a translation gain of TRY37 million as opposed to the translation loss of TRY24 million in Q111.
Compared to the previous quarter, net finance income increased from TRY27.8 million to TRY161.8 million. This was mainly due to translation gain of TRY37 million, as opposed to the translation loss of TRY92 million in Q411, mainly relating to BeST which stem from devaluation of BYR against US$.
Share of profit of equity accounted investees comprising our share in the net income of unconsolidated investees Fintur and A-Tel dropped by 12.7% YoY to TRY49.5 million (TRY56.7 million) mainly due to negative impact of competition in Kazakhstan and the effects of competition and regulation in Georgia.
Compared to the previous quarter, our share in the net income of unconsolidated investees decreased 10.0% to TRY49.5 million (TRY55.0 million)mainly driven by lower revenues due to seasonality.
Income tax expense amounted to TRY104.8 million in Q112 compared to the TRY99.0 million of Q111. The taxation charge decreased by 11.4% compared to Q411. TRY119.1 million of the total tax charge comprised current tax charges, while TRY14.3 million of deferred tax was recorded.
Million TRY Q111 Q411 Q112 y/y % q/q %
Current Tax expense (50.9) (122.9) (119.1) 134.0% (3.1%)
Deferred Tax Income/expense (48.1) 4.6 14.3 (129.7%) 210.9%
Income Tax expense (99.0) (118.3) (104.8) 5.9% (11.4%)
Net income increased 56.0% to TRY514.8 million (TRY330.1 million) which was achieved through higher EBITDA of TRY702.7 million (TRY625.8 million), and higher net finance income of TRY161.8 million (TRY37.0 million) mainly arising from increased interest income on time deposits together with a translation gain of TRY37 million as opposed to translation loss of TRY24 million in Q111.
Quarter-on-quarter, net income rose by 55.2% to TRY514.8 million (TRY 331.7 million),mainly due to the absence of one off items and impairment charges of TRY105 million in Q411 mostly stemming from Belarusian operations, together with a translation gain and monetary gain recognized from Belarus operations amounting to TRY71.0 million.
Total debt in Q112 in consolidated terms was TRY3,359million (US$1,895 million). TRY914 million (US$ 515 million) of this was related to Turkcell's Ukrainian operations. TRY2,522 million (US$1,423 million) of our consolidated debt is at a floating rate, while TRY2,590 million (US$1,461 million) will mature within less than a year. Our debt/annual EBITDA ratio decreased to 112% in Q112.
Cash flow analysis: Capital expenditures amounted to TRY252.9 million in Q112, of which TRY160.0million was related to Turkcell Turkey, TRY9.3 million to Astelit, TRY63.7 million to Turkcell Superonline and TRY3.9 million to BeST.The other item in cash flow mainly includes the corporate tax payment of TRY111 million for Turkcell Turkey and frequency usage fee payment of TRY250 million for the following months in 2012.
Subsequent to March 31, 2012, Turkcell paid the guaranteed loan of Euroasia (55% owned subsidiary) in the amount of US$150 million.
Consolidated Cash Flow (million TRY) Q111 Q411 Q112
EBITDA[1] 625.8 694.7 702.7
LESS:
Capex and License (181.8) (716.2) (252.9)
Turkcell (94.4) (361.3) (160.0)
Ukraine[2] (11.4) (51.9) (9.3)
Investment & Marketable Securities - (1,596.1) 1,585.8
Net interest Income/ (expense) 60.9 120.2 125.3
Other (643.5) 87.1 (905.6)
Net Change in Debt (50.7) (14.2) 53.8
Cash generated (189.3) (1,424.5) 1,309.1
Cash balance 4,915.8 4,738.4 6,047.5
(1) EBITDA is a non-GAAP financial measurement. See page 12 for the reconciliation of EBITDA to net cash from operating activities.
(2)The appreciation of reporting currency (TRY) against US$ is included in this line.
Operational Review in Turkey
Summary of Operational data Q111 Q411 Q112 y/y % q/q %
Number of total subscribers (million) 33.1 34.5 34.5 4.2% -
Postpaid 10.4 11.7 12.0 15.4% 2.6%
Prepaid 22.7 22.9 22.5 (0.9%) (1.7%)
ARPU, blended (TRY) 18.4 19.7 19.2 4.3% (2.5%)
Postpaid 37.9 37.5 36.5 (3.7%) (2.7%)
Prepaid 9.8 11.0 10.1 3.1% (8.2%)
ARPU (Average Monthly Revenue per
User), blended (US$) 11.7 10.8 10.7 (8.5%) (0.9%)
Postpaid 24.1 20.6 20.4 (15.4%) (1.0%)
Prepaid 6.2 6.0 5.7 (8.1%) (5.0%)
Churn (%) 9.3% 7.7% 7.8% (1.5pp) 0.1pp
MOU (Average Monthly Minutes of usage
per subscriber), blended 192.5 220.4 221.5 15.1% 0.5%
Subscribers of Turkcell Turkey increased by 4.2% YoY to 34.5 million (33.1 million).During the quarter, competition intensified on lower prices, higher incentives and aggressive MNP offers. Under the circumstances, we maintained our subscriber base with our simplified tariff structure, through a greater focus on customer retention and satisfaction. On the postpaid front, we registered 347K net subscribers in Q112, the share of which in the total subscriber base rose to 34.8% (31.4%) with our particular focus on increasing our higher value generating postpaid base.
Churn Rate refers to voluntarily and involuntarily disconnected subscribers. In Q112, our churn rate decreased to 7.8% from 9.3% a year ago, which we achieved through a greater focus on customer retention and satisfaction, promoting the contract and appropriate offers that address different subscriber needs.
MoU increased to 221.5 minutes on a rise of 15.1% year-on-year. The increased package penetration and offers with higher minutes based on subscriber needs increased MOU.
ARPU in TRY terms increased by 4.3% to TRY19.2 compared to Q111 with the rise in the share of postpaid subscribers to 34.8% (31.4%). Postpaid ARPU fell by 3.7% to TRY36.5 (TRY37.9), despite the rise in incoming and mobile broadband& services revenues, as a result of intense competition, as well as the dilutive impact of switches from the prepaid segment. Meanwhile, prepaid ARPU increased to TRY10.1 (TRY9.8) in Q112, mainly due to higher incoming and mobile broadband& services revenues, as well as upsell and packaging activities.
OTHER DOMESTIC AND INTERNATIONAL OPERATIONS
Astelit, in which we hold a 55% stake through Euroasia, has operated in Ukraine since February 2005.
Astelit's revenues rose by 16.9% YoY and amounted to US$91.4 million (US$78.2 million) in Q112, mainly stemming from the growth in subscriber base, data revenues and international call revenues.
In Q112 Astelit recorded the highest quarterly EBITDA margin reaching 27.2% (24.0%), which was up by 3.2 pp year-on-year. Astelit recorded an EBITDA margin exceeding 25% for the fourth consecutive quarter, mainly due to the company's focus on business efficiency and operational profitability. In addition, Astelit achieved a positive free cash flow for the first time in the full year 2011, which continued in the first quarter of 2012 with a 21.4% free cash flow margin.
Astelit's registered subscribers rose by 1.2 million to 9.9 million year-on-year. With the contribution of the regional growth strategy aimed at new acquisitions and expansion, three month active subscribers rose by 1.0 million to 7.1 million (6.1 million)year-on-year.
The blended ARPU increased by 6.9% in Q112, mainly due to increased usage of data services and international calls. MoU remained almost flat at195.6 (196.7) in Q112.
Astelit Q111 Q411 Q112 y/y % q/q %
Number of subscribers (million)[1] 8.7 9.7 9.9 13.8% 2.1%
Active (3 months)[2] 6.1 7.0 7.1 16.4% 1.4%
MOU (minutes)[3] 196.7 194.7 195.6 (0.6%) 0.5%
ARPU (Average Monthly Revenue per
User), blended (US$) 2.9 3.4 3.1 6.9% (8.8%)
Active (3 months) 4.3 4.7 4.3 - (8.5%)
Revenue (million UAH) 621.5 783.0 729.9 17.4% (6.8%)
Revenue (million US$) 78.2 98.1 91.4 16.9% (6.8%)
EBITDA(million US$)[4] 18.8 24.9 24.9 32.4% -
EBITDA margin 24.0% 25.4% 27.2% 3.2pp 1.8pp
Net loss (million US$) (24.4) (16.4) (15.7) (35.7%) (4.3%)
Capex(million US$) 7.4 26.6 5.3 (28.4%) (80.1%)
(1) 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.
(2) Active subscribers are those who in the past three months made a transaction which brought revenue to the Company.
(3) Astelit has changed its calculation methodology for minute of usage per customer starting from Q3 2011. The minutes are now calculated based on the actual call duration of subscribers. Previously, minutes were calculated on the basis of charging units consumed. This change will have the effect of decreasing Astelit's average minutes of usage (no impact on revenue). For purposes of comparability, figures published for recent periods will be restated to give effect to this change.
(4) EBITDA is a non-GAAP financial measurement. See page 12 for the reconciliation of Euroasia's EBITDA to net cash from operating activities. Euroasia holds a 100% stake in Astelit.
Turkcell Superonline is our wholly-owned subsidiary, providing fiber broadband.
Turkcell Superonline's network reached approximately 1.1 million home passes (HP) in Q112 in accordance with our continued investments in the fiber-optic infrastructure. The number of FTTX subscribers increased by 91% and reached approximately to 307 thousand. For 2012, we are concentrating more on increasing our in city coverage and improving our subscriber take-up rate.
Revenues continued to grow by 59.2% to TRY145.0 million (TRY91.1 million), mainly on the higher growth of residential and corporate segments. On a year-on-year basis, the residential segment grew by92%, mostly due to subscriber growth, while the corporate segment rose105%, mainly on improving synergy with Turkcell Turkey. Meanwhile, the EBITDA margin rose 4.1pp to 20.1% (16.0%) stimulated by revenue growth of more profitable data revenues. In addition, Turkcell Superonline recorded a positive net income for the second consecutive quarter. Turkcell Superonline's share in Turkcell transmission costs reached 74% in Q112 as a result of increasing synergy. Non-group revenues constituted 69.2% of total revenues in Q112.
Turkcell Superonline (million TRY) Q111 Q411 Q112 y/y % q/q %
Revenue 91.1 140.7 145.0 59.2% 3.1%
EBITDA [1] 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%)
(1)EBITDA is a non-GAAP financial measure. See page 12 for the reconciliation of EBITDA to net cash from operating activities.
Fintur in which we hold a 41.45% stake has interests in Kazakhstan, Azerbaijan, Moldova, and Georgia.
Fintur continued to improve its market position in Q112, adding approximately 0.4 million net subscribers, thereby increasing its total subscriber base to 18.6 million, driven by growth in Kazakhstan. Fintur's consolidated revenue increased by 4.2% year-on-year to US$467 million (US$448 million) in Q1 2012, while revenues decreased by 8.6% quarter-on-quarter from US$511 million in Q411 mainly due to impact of seasonality.
We account for our investment in Fintur using the equity method. Fintur's contribution to net income decreased from TRY66.5million (US$42.2 million) in Q111 to TRY54.6 million (US$30.3 million) in Q112, stemming from the negative impact of competition in Kazakhstan and the effects of competition and regulation in Georgia.
Fintur Q111 Q411 Q112 y/y % q/q %
Subscribers (million) 16.5 18.2 18.6 12.7% 2.2%
Kazakhstan 9.4 10.8 11.2 19.1% 3.7%
Azerbaijan 4.0 4.2 4.2 5.0% -
Moldova 1.0 1.1 1.1 10.0% -
Georgia 2.1 2.1 2.1 - -
Revenue (million US$) 448 511 467 4.2% (8.6%)
Kazakhstan 274 317 280 2.2% (11.7%)
Azerbaijan 123 137 137 11.4% -
Moldova 16 21 17 6.3% (19.0%)
Georgia 33 36 33 - (8.3%)
Other[1] 2 - - - -
Fintur's contribution to Group's
net income 42 36 30 (28.6%) (16.7%)
- Includes intersegment eliminations
Turkcell Group Subscribers amounted to approximately 65.3 million as of March 31, 2012. This figure is calculated by taking the number of subscribers in Turkcell and each of our subsidiaries and unconsolidated investees. It includes the total number of mobile subscribers in Astelit and BeST, as well as in our operations in the Turkish Republic of Northern Cyprus ("Northern Cyprus"), Fintur and Turkcell Europe. Turkcell Group subscribers rose by 0.5 million during the quarter, thanks to the increased subscriber base of Fintur, as well as the contribution of Astelit.
Turkcell Group Subscribers (million) Q111 Q411 Q112 y/y % q/q %
Turkcell 33.1 34.5 34.5 4.2% -
Ukraine 8.7 9.7 9.9 13.8% 2.1%
Fintur 16.5 18.2 18.6 12.7% 2.2%
Northern Cyprus 0.4 0.4 0.4 - -
Belarus 1.7 1.8 1.7 - (5.6%)
Turkcell Europe - 0.2 0.2 - -
TURKCELL GROUP 60.4 64.8 65.3 8.1% 0.8%
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
The foreign exchange rates that have been used in our financial reporting, along with certain macroeconomic indicators, are set out below.
Q111 Q411 Q112 y/y % q/q %
TRY / US$ rate
Closing Rate 1.5483 1.8889 1.7729 14.5% (6.1%)
Average Rate 1.5737 1.8209 1.7871 13.6% (1.9%)
Consumer Price Index 1.6% 5.7% 1.5% - -
GDP Growth 11.0% 5.2% n.a - -
UAH/ US$ rate
Closing Rate 7.96 7.99 7.99 0.4% -
Average Rate 7.94 7.98 7.99 0.6% 0.1%
BYR/ US$ rate
Closing Rate 3,045 8,350 8,020 163.4% (4.0%)
Average Rate 3,018 8,025 8,208 172.0% 2.3%
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS: We believe that EBITDA is a measurement commonly used by companies, analysts and investors in the telecommunications industry that enhances the understanding of our cash generation ability and liquidity position, and assists in the evaluation of our capacity to meet our financial obligations. We also use EBITDA as an internal measurement tool, and accordingly, we believe that its presentation provides useful and relevant information to analysts and investors. Our EBITDA definition includes Revenue, Direct Cost of Revenue excluding depreciation and amortization, Selling and Marketing expenses and Administrative expenses, but excludes translation gain/(loss), finance income, share of profit of equity accounted investees, gain on sale of investments, income/(loss) from related parties, minority interest and other income/(expense). EBITDA is not a measure of financial performance under IFRS, and should not be construed as a substitute for net earnings (loss) as a measure of performance, or cash flow from operations as a measure of liquidity. The following table provides a reconciliation of EBITDA, which is a non-GAAP financial measurement, to net cash from operating activities, which we believe is the most directly comparable financial measurement calculated and presented in accordance with IFRS.
Turkcell (million US$) Q111 Q411 Q112 y/y % q/q %
EBITDA 397.7 383.5 393.1 (1.2%) 2.5%
Income tax expense (62.9) (67.1) (58.7) (6.7%) (12.5%)
Other operating income / (expense) (17.6) 1.9 (4.9) (72.2%) -
Financial income 0.6 7.5 3.8 533.3% (49.3%)
Financial expense (29.9) (13.9) (33) 10.4% 137.4%
Net increase / (decrease) in assets
and liabilities (339.1) (29.6) (404.5) 19.3% -
Net cash from operating activities (51.2) 282.3 (104.2) 103.5% -
Turkcell Superonline (million TRY) Q111 Q411 Q112 y/y % q/q %
EBITDA 14.5 31.1 29.1 100.7% (6.4%)
Other operating income / (expense) 0.1 0.3 0.1 - (66.7%)
Financial income 0.8 1.0 40.1 - -
Financial expense (9.4) (15.0) (41.0) 336.2% 173.3%
Net increase / (decrease) in assets
and liabilities (83.8) 47.5 (35.4) (57.8%) -
Net cash from operating activities (77.8) 64.8 (7.1) (90.9%) -
Euroasia (million US$) Q111 Q411 Q112 y/y % q/q %
EBITDA 18.8 24.9 24.9 32.4% -
Other operating income / (expense) 0.1 1.9 0.2 100.0% (89.5%)
Financial income 0.2 0.3 0.2 - (33.3%)
Financial expense (14.2) (14.8) (12.1) (14.8%) (18.2%)
Net increase / (decrease) in assets
and liabilities 2.9 13.4 15.8 444.8% 17.9%
Net cash from operating activities 7.8 25.7 29.0 271.8% 12.8%
FORWARD-LOOKING STATEMENTS: 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. All statements other than statements of historical facts included in this press release, including, without limitation, certain statements regarding 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" or "continue."
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 2011 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.
ABOUT TURKCELL: Turkcell is the leading communications and technology company in Turkey, with 34.5 million subscribers and a market share of approximately 53% based on December 31, 2011 results (since the Authority has not disclosed subscriber market shares for Q1 2012). Turkcell is a leading regional player, with market leadership in five of the nine countries in which it operates with its approximately 65.3 million subscribers as of March 31, 2012. The company covers approximately 88% of the Turkish population through its 3G and 99.13% through its 2G technology supported network. It has become one of the first among the global operators to have implemented HSDPA+ and achieved a 43.2 Mbps speed using the HSPA multi carrier solution. Turkcell reported a TRY2.4 billion (US$1.3billion) net revenue with total assets of TRY17.2 billion (US$9.7 billion) as of March 31, 2012. It has been listed on the NYSE and the ISE since July 2000, and is the only NYSE-listed company in Turkey. Read more at http://www.turkcell.com.tr
TURKCELL ILETISIM HIZMETLERI A.S.
IFRS SELECTED FINANCIALS (TRY Million)
Quarter Ended Quarter Ended 12 months Ended Quarter Ended
March 31, December 31, December 31, March 31,
2011 2011 2011 2012
Consolidated Statement
of Operations Data
Revenues
Communication fees 1,970.8 2,252.8 8,724.7 2,180.9
Commission fees on betting
business 18.4 31.5 86.5 35.2
Monthly fixed fees 27.9 24.7 104.5 24.5
Simcard sales 7.3 8.2 35.3 6.1
Call center revenues and
other revenues 94.0 128.3 419.1 135.1
Total revenues 2,118.4 2,445.5 9,370.1 2,381.8
Direct cost of revenues (1,249.2) (1,791.8) (5,954.3) (1,491.3)
Gross profit 869.2 653.7 3,415.8 890.5
Administrative expenses (110.3) (103.8) (410.9) (118.1)
Selling & marketing expenses (411.1) (451.6) (1,684.9) (402.8)
Other Operating Income /
(Expense) (27.9) (10.4) (218.5) (6.5)
Operating profit before
financing costs 319.9 87.9 1,101.5 363.1
Finance costs (71.6) (111.8) (528.3) (58.3)
Finance income 108.6 139.6 545.6 220.1
Monetary gain/(loss) - 273.5 273.5 40.5
Share of profit of equity
accounted investees 56.7 55.0 227.1 49.5
Income before taxes and
minority interest 413.6 444.2 1,619.4 614.9
Income tax expense (99.0) (118.3) (485.0) (104.8)
Income before minority
interest 314.6 325.9 1,134.4 510.1
Non-controlling interests 15.5 5.8 43.3 4.7
Net income 330.1 331.7 1,177.7 514.8
Net income per share 0.15 0.15 0.54 0.23
Other Financial Data
Gross margin 41% 27% 36% 37.4%
EBITDA(*) 625.8 694.7 2,912.9 702.7
Capital expenditures 181.8 716.2 1,635.8 252.9
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 4,915.9 4,738.4 4,738.4 6,047.5
Total assets 15,151.0 17,186.7 17,186.7 17,157.1
Long term debt 2,210.3 1,997.3 1,997.3 769.8
Total debt 2,790.8 3,528.6 3,528.6 3,359.3
Total liabilities 5,187.3 6,360.3 6,360.3 5,832.0
Total shareholders'
equity / Net Assets 9,963.7 10,826.4 10,826.4 11,325.1
** For further details, please refer to our consolidated financial statements and
notes as at 31 March 2012 on our web site.
TURKCELL ILETISIM HIZMETLERI A.S.
CMB SELECTED FINANCIALS (TRY Million)
Quarter Ended Quarter Ended 12 months Ended Quarter Ended
March 31, December 31, December 31, March 31,
2011 2011 2011 2012
Consolidated Statement
of Operations Data
Revenues
Communication fees 1,970.8 2,252.8 8,724.7 2,180.9
Commission fees on
betting business 18.4 31.5 86.5 35.2
Monthly fixed fees 27.9 24.7 104.5 24.5
Simcard sales 7.3 8.2 35.3 6.1
Call center revenues
and other revenues 94.0 128.3 419.1 135.1
Total revenues 2,118.4 2,445.5 9,370.1 2,381.8
Direct cost of revenues (1,247.7) (1,790.5) (5,948.8) (1,489.8)
Gross profit 870.7 655.0 3,421.3 892.0
Administrative expenses (110.3) (103.8) (410.9) (118.1)
Selling & marketing
expenses (411.1) (451.6) (1,684.9) (402.8)
Other Operating Income
/ (Expense) (27.8) (10.4) (217.3) (6.5)
Operating profit before
financing costs 321.5 89.2 1,108.2 364.6
Finance costs (71.6) (111.8) (528.3) (58.3)
Finance income 108.6 139.7 545.6 220.1
Monetary gain/(loss) - 273.5 273.5 40.5
Share of profit of equity
accounted investees 56.7 55.0 227.1 49.5
Income before taxes and
minority interest 415.2 445.6 1,626.1 616.4
Income tax expense (99.8) (118.1) (486.1) (105.6)
Income before minority
interest 315.4 327.5 1,140.0 510.8
Non-controlling interests 15.5 5.8 43.3 4.7
Net income 330.9 333.3 1,183.3 515.5
Net income per share 0.15 0.15 0.54 0.23
Other Financial Data
Gross margin 41% 27% 37% 37%
EBITDA(*) 625.8 694.7 2,912.9 702.7
Capital expenditures 181.8 716.2 1,635.8 252.9
Consolidated Balance
Sheet Data (at period end)
Cash and cash equivalents 4,915.9 4,738.4 4,738.4 6,047.5
Total assets 15,106.1 17,147.0 17,147.0 17,119.0
Long term debt 2,210.3 1,997.3 1,997.3 769.8
Total debt 2,790.8 3,528.6 3,528.6 3,359.3
Total liabilities 5,180.1 6,353.5 6,353.5 5,825.9
Total shareholders'
equity / Net Assets 9,926.0 10,793.5 10,793.5 11,293.1
** For further details, please refer to our consolidated financial statements and
notes as at 31 March 2012 on our web site.
TURKCELL ILETISIM HIZMETLERI A.S.
IFRS SELECTED FINANCIALS (US$ MILLION)
Quarter Ended Quarter Ended 12 months Ended Quarter Ended
March 31, December 31, December 31, March 31,
2011 2011 2011 2012
Consolidated Statement
of Operations Data
Revenues
Communication fees 1,252.6 1,231.6 5,225.4 1,220.9
Commission fees on
betting business 11.7 17.3 51.4 19.7
Monthly fixed fees 17.8 13.6 63.0 13.7
Simcard sales 4.6 4.5 21.2 3.4
Call center revenues and other
revenues 59.7 69.0 248.7 75.6
Total revenues 1,346.4 1,336.0 5,609.7 1,333.3
Direct cost of revenues (793.9) (960.8) (3,528.9) (835.0)
Gross profit 552.5 375.2 2,080.8 498.3
Administrative expenses (70.1) (56.1) (246.5) (66.2)
Selling & marketing expenses (261.3) (246.7) (1,010.6) (225.8)
Other Operating Income
/ (Expense) (17.7) 4.8 128.7) (3.6)
Operating profit before
financing costs 203.4 77.2 695.0 202.7
Finance costs (45.6) (28.6) (289.7) (33.0)
Finance income 68.9 82.2 330.3 123.6
Monetary gain/(loss) - 144.8 144.8 22.9
Share of profit of equity
accounted investees 36.0 30.3 136.9 27.5
Income before taxes and
minority interest 262.7 305.9 1,017.3 343.7
Income tax expense (62.9) (67.1) (292.2) (58.7)
Income before minority interest 199.8 238.8 725.1 285.0
Non-controlling interests 9.8 3.2 26.6 2.6
Net income 209.6 242.0 751.7 287.6
Net income per share 0.10 0.11 0.34 0.13
Other Financial Data
Gross margin 41% 28% 37% 37%
EBITDA(*) 397.7 383.5 1,748.1 393.1
Capital expenditures 117.4 367.7 866.0 142.7
Consolidated Balance Sheet
Data (at period end)
Cash and cash equivalents 3,175.0 2,508.5 2,508.5 3,411.1
Total assets 9,785.6 9,098.8 9,098.8 9,677.4
Long term debt 1,427.6 1,057.4 1,057.4 434.2
Total debt 1,802.5 1,868.1 1,868.1 1,894.8
Total liabilities 3,350.3 3,367.2 3,367.2 3,289.5
Total equity 6,435.2 5,731.6 5,731.6 6,387.9
* Please refer to the notes on reconciliation of Non-GAAP Financial measures
on page 12
** For further details, please refer to our consolidated financial statements
and notes as at 31 March 2012 on our web site.
For further information please contact Turkcell
Corporate Affairs:
Koray Ozturkler, Chief Corporate
Affairs Officer
Tel: +90-212-313-1500
Email: [email protected]
Investors:
Nihat Narin, Investor and
International Media Relations
Tel: + 90-212-313-1244
Email: [email protected]
Media:
Filiz Karagul Tuzun,
Corporate Communications
Tel: + 90-212-313-2304
Email: [email protected]
SOURCE Turkcell
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