Q4 & FY 2017February 15, 2018
TURKCELL GROUP
BUSINESS OVERVIEW
Kaan TerzioğluTurkcell CEO
Turkcell | Fourth Quarter & Full Year 2017
3
Annual mobile churn at 20.5%, lowest of the past decade
36.7Mn subscribers in Turkey, with 1.5Mn net adds
87% 4.5G subscriber penetration
242K Lifecell subs by Feb.18
2017: A REMARKABLE YEAR
Record top line at 17.6Bn TL, up 23.4% yoy
EBITDA at 6.2Bn TL, up 34.8% yoy
Highest EBITDA margin of past 9 years: 35.3%
3.0Bn TL dividend distributed
8.9 9.0 9.410.5 11.4 12.0 12.8
14.3
17.6
3.0 2.9 2.9 3.2 3.5 3.8 4.1 4.66.2
33.3% 32.7%
31.1% 30.9% 31.1% 31.2%32.4% 32.3%
35.3%
2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue (Bn TL) EBITDA (Bn TL) EBITDA Margin (%)
FINANCIAL OPERATIONAL
23.8%
32.6% 33.9%
27.9%
27.1% 27.4%28.3%
27.3%24.6%
20.5%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue, EBITDA and EBITDA Margin Annual Mobile Churn Rate
Turkcell | Fourth Quarter & Full Year 2017
4
GUIDANCE DELIVERED
*Excluding license fees
INITIALGUIDANCE
REVISEDGUIDANCE ACTUAL
13% - 15%REVENUE GROWTH
21% - 23% 23.4%
32% - 34%EBITDA MARGIN 33% - 35% 35.3%
~20%OP.CAPEX /
SALES* 19% - 20% 21.0%
…Stellar growth performance
…Mid-term target achieved a year ahead
…CAPEX brought forward in Q4
Turkcell | Fourth Quarter & Full Year 2017
5
17.4%
41.8%
55.8%
Q415 Q416 Q417
4,044 4,0534,316
4,597 4,66633.9% 34.5% 33.8%
35.5%37.3%
Q416 Q117 Q217 Q317 Q417
Revenue (Mn TL) EBITDA Margin (%)
Mobile triple play at 55.8%, up 14pp yoy
Yaani downloads reached 3.5Mn
4.5G user data usage at 5.9GB, up 37% yoy
72% smartphone penetration, 15Mn 4.5G compatible
FOURTH QUARTER HIGHLIGHTS
Record top line at 4.7Bn TL, up 15.4% yoy
Highest quarterly EBITDA margin of past 9 years: 37.3%
23% growth in data and digital services revenues
500Mn TL net income impact of tax settlement
FINANCIAL OPERATIONAL
25.9%
35.9%44.4%
Q415 Q416 Q417
Revenue and EBITDA Margin Mobile Triple Play Multiplay with TV
Turkcell | Fourth Quarter & Full Year 2017
6
ConsolidatedTRY Million1
YoY % YoY %
Revenue 4,666 15.4% 17,632 23.4%
EBITDA 1,739 26.8% 6,228 34.8%
EBITDA Margin 37.3% 3.4pp 35.3% 3.0pp
Net Income 216 (38.4%) 1,979 32.6%
Net Income -excl tax settlement2 716 104.2% 2,479 52.3%
Op.Capex/Sales3 35.7% 8.8pp 21.0% (2.0pp)
1 TRY figures are based on IFRS2 Excluding the negative impact of 136Mn TL tax amnesty in Q3 2016 and 500Mn TL tax settlement in Q4 2017. The latter was disclosed on January 30, 2018.3 Excluding license fees
Q4 2017
TURKCELL GROUP FINANCIAL HIGHLIGHTS
• All-time high yearly revenue and EBITDA
• Solid operational performance led to strong bottom-line
• Improved collection performance of receivables led to 133Mn TL contribution in Q417 EBITDA
2017
30%
36%40%
37%40%
Q416 Q117 Q217 Q317 Q417
Two-year Cumulative Revenue Growth Rate (%)
Turkcell | Fourth Quarter & Full Year 2017
7
TRY Million1
YoY % YoY %
Revenue 4,041 13.0% 15,450 20.8%
EBITDA 1,566 27.7% 5,594 34.4%
EBITDA Margin 38.8% 4.5pp 36.2% 3.7pp
Net Income 179 (53.7%) 1,962 32.6%
Net Income - excl tax settlement2 679 75.8% 2,462 52.4%
Q4 2017
TURKCELL TURKEY FINANCIAL HIGHLIGHTS
• Turkcell Turkey Q4 revenue growth including financial services is 15.2% with 38.3% EBITDA margin, while
full year 2017 revenue growth is 23.8% with 36.1% EBITDA margin
2017
1 TRY figures are based on IFRS2 Excluding the negative impact of 136Mn TL tax amnesty in Q3 2016 and 500Mn TL tax settlement in Q4 2017. The latter was disclosed on January 30, 2018.
Turkcell | Fourth Quarter & Full Year 2017
8
48.7 51.1 53.6
25.628.3
31.6
2015 2016 2017
Fixed Residential Mobile Blended (excl. M2M)
27.3%
24.6%
20.5%
2015 2016 2017
OPERATIONAL HIGHLIGHTS
*TV subscribers include 1.7 million of «OTT only» customers and it is excluded from net add & total subs
TURKEY SUBSCRIBERS (million)
4.9%YoY
11.7%YoY
ARPU (TL)
MOBILE CHURN RATE
1.20.9
2.2
Fiber ADSL TV*
Total Turkey subscribers
36.7 mn18.5
15.6
Postpaid PrepaidYoY
1.1mn↑ 63K↓ 103K↑160K↑ 146K↑Net add
54%of total mobile
1.5mn↑ net add YoY
Annual
Turkcell | Fourth Quarter & Full Year 2017
9
SUPERIOR 4.5G QUALITY & SPEED PIONEER CAMPAIGNS+21
+19
+24+28
+31 +32
+38+41
Q117 Q217 Q317 Q417
Points over next best Points over third best
INCREASING APPRECIATION OF CUSTOMERS
• #1 in NPS reflecting superior overall customer satisfaction
• Continued to widen the gap in the fourth quarter
*NPS score comparison is for consumer segment in mobile. (Source: Nielsen)
NET PROMOTER SCORE* OVER COMPETITION
DIGITAL SERVICESPORTFOLIO
ENHANCED SHOPPING EXPERIENCE
Turkcell | Fourth Quarter & Full Year 2017
10
1519
2326 28 29 30
8 9 11 12 13 14 15
Q216 Q316 Q416 Q117 Q217 Q317 Q417
4.5G subscribers 4.5G compatible smartphone
0
4.3
6.0 5.9
1.72.8
4.2 4.3
Q415 Q416 Q317 Q417
4.5G Users Total Users
MOBILE DATA USAGE (Av. GB/User)
52%64%
71% 72%
Q415 Q416 Q317 Q417
SMARTPHONE PENETRATION
CONTINUED RISE IN DATA USAGE4.5G SUBSCRIPTION (million)
6.0GBin
Dec’17
• 4.5G users are driving data usage
o 2x consumption vs. 2G&3G users
• Significant room for further 4.5G adoption
• 68% of smartphones on our network are 4.5G compatible
o ~1mn additions each quarter
Turkcell | Fourth Quarter & Full Year 2017
11
4,1986,814
10,304
2015 2016 2017
1,147
2,2262,735
Q415 Q416 Q417
GROWTH DRIVERS
23%YoY
DATA&DIGITAL SERVICES REVENUES
55%
26%19%
38%
62%68%
Q415 Q416 Q417
SHARE OF REVENUES (IN TURKCELL TURKEY)
(Million TL)
57%
38%
20%
37%
53%
67%
2015 2016 2017
Voice & SMS Data and digital services
QU
AR
TER
LYY
EAR
LY
51%YoY
Turkcell | Fourth Quarter & Full Year 2017
12
58%73%
Q416 Q417
INCREASING MULTIPLAY
24.0%28.2%
41.8% 42.4%46.7%
50.4%55.8%
MOBILE* (TRIPLE PLAY«3P»)
1.0x 1.5x2.9x
1.0x
0.9x0.8x
1P 2P 3P
ARPU & CHURN RATE
ARPU Churn Rate
MOBILE MULTIPLAY
32.6%33.9%
35.9%38.7%
40.5%42.3%
44.4%
Q216 Q316 Q416 Q117 Q217 Q317 Q417
FIBER RESIDENTIAL (MULTIPLAY WITH TV)
*Share of mobile voice line users which excludes subscribers who do not use their line in the last 3 months. Triple Play refers to mobile customers who use voice, data and one of core digital services.
TRIPLE PLAY SHARE IN MOBILE REVENUE
15ppYoY
Turkcell | Fourth Quarter & Full Year 2017
13
63 minwatching
27 minreading
24 minlistening
31 mincalling
13 mininteracting
33 minfor VOIP users
DIGITAL COMPANION THROUGHOUT THE DAY
We aim to increase customer engagement……from basic communication to potentially all digital activities
Turkcell | Fourth Quarter & Full Year 2017
14
Q217
Introduced Yaani & e-commerce
platform Launch of
BiP Gaming
Lifecell«Digital Operator»
Shake&WinCampaign
A YEAR WITH DIGITAL SERVICES
Exclusivealbum launch
Money transfer
Advertisementfrom app
Newspapersadded
Q117 Q417
Group Video Chat
Jan.18
BiP messagesexceeded SMS
First B2B sale(to Moldcell)
SocialChat Room
High School Music Contest
3rd app publisher in
4th app publisher in
Apple TV Airplay &
Android TV
2017
Q317
Turkcell | Fourth Quarter & Full Year 2017
15
INTERACT, READ, LISTEN, WATCH & STORE
*Refers to downloads as of February 2018, net adds are quarterly.** Includes users who utilised the zero rating benefit of Dergilik magazines and newspapers via browser.
Download*
MonthlyActive User
Service KPI’s
QoQ
QoQ
INSTANT MESSAGING
18.3M
4.3M
71Mmessages per day
+1.7M
+0.1M
CALL MANAGEMENT(UPCALL)
2.3M
837K
737Kcalls
per day
+0.6M
+0.2M
DIGITALPUBLISHING
4.6M
7.0M**
157Kcopies read
per day
+1.7M
+2.3M
MUSIC
14.7M
2.0M
9Msongs streamed
per day
+2.0M
+0.3M
TV
6.6M
1.5M
2.3MTV sessions
per day
+1.3M
+0.2M
PERSONAL CLOUD(lifebox)
6.6M
1.4M
39 docs uploadedper person per
day
+0.9M
+0.4M
MY ACCOUNT(Hesabım)
26.8M
17.3M
40% More ARPULess Churn
+3.0M
+2.1M
Turkcell | Fourth Quarter & Full Year 2017
16
Advertising revenues
• Keyword – traffic management
• Main page icon ad
• Ad insertion
MONETIZATION
:MORE THAN A SEARCH ENGINE…
Download
Monthly Active User
Search per day
3.5M
1.2M
1.0M
SERVICE DETAILS
Turkcell | Fourth Quarter & Full Year 2017
17
TRY MILLION
YoY% YoY%
Consumer loans
(balance sheet figure)4,248 79% 4,248 79%
Revenues 183 102% 606 228%
Gross profit 110 127% 329 187%
• 26Mn credit scored customers and Credit Bureau integration
• TCF loan portfolio grew, while Turkcell Turkey contracted handset receivables declined by 1.0Bn TL in 2017
• 200Mn TL of Asset Backed Securities were issued in 2017
• NPL sale (Dec.17)
• Established an insurance company (Feb.18)
STRONG MOMENTUM IN TECHFIN SERVICES
*Financial services figures are based on the contribution to Turkcell Group; **Excludes consumer finance company transactions
FINANCIALS & HIGHLIGHTS*
Q4 2017 2017
• 350Mn TL transactions in 2017**
• App Store mobile payment: first and only in Turkey
• Co-founder of Turkey Payment Platform
• Partnership with Istanbul Municipality for iTaksi network
• Established Paycell LLC in Ukraine
• Available in TRNC
HIGHLIGHTS
1.2MnRegisteredcredit cards
PAYCELL CARD
PAYCELL APP 405Kdownloads
PAYCELL 5Mnusers
Recentlylaunched
Turkcell | Fourth Quarter & Full Year 2017
18
TRY MILLION1
Revenue 288 14.6% 1,067 22.0%
EBITDA 64 (6.3%) 264 12.1%
EBITDA
Margin22.2% (5.0pp) 24.7% (2.2pp)
Q4 2017YoY
TURKCELL INTERNATIONAL
lifecell
BeST
Kuzey Kıbrıs Turkcell
EBITDA Margin(2017)
27.2%16.5%
3.8%40.2%
33.5%16.4%
Revenue Growth(2017, in TRY)
1 TRY figures are based on IFRS
4G tender: 15MHz in 2600
Continued4G rollout
2017YoY
MNP in Q118
HIGHLIGHTS
Turkcell | Fourth Quarter & Full Year 2017
19
FINTUR UPDATE: GEOCELL SHARE TRANSFER
Azercell
Geocell
KCell
Moldcell
Background information:
• Fintur has operations in Azerbaijan, Kazakhstan, Moldova and Georgia, and Turkcell holds 41.45% stake in the company.
• Turkcell has decided to exit Fintur together with majority partner Telia Company, and reported as “assets held for sale” as of October 2016.
Recent development:
• On January 25, 2018, Fintur has signed a binding agreementwith Silknet JSC for selling of Geocell for 153Mn USD.
• The transaction is expected to be completed once the regulatory approvals are received.
• The transaction has no impact on our financial statements since Fintur is classified as “assets held for sale” in our financials.
Turkcell | Fourth Quarter & Full Year 2017
20
2018 GUIDANCE
*Excluding license fees
13% - 15%
16% (in 2019)
2017 - 2019Guidance (Feb.17)
REVENUE GROWTH
EBITDA MARGIN
OP.CAPEX / SALES*
33% - 35%
12% - 14%
2018Guidance
18% - 19%
33% - 35%
FINANCIAL OVERVIEW
Bülent AksuTurkcell CFO
Turkcell | Fourth Quarter & Full Year 2017
22
4,044
4,666
46437 92
29
RevenueQ416
Δ TurkcellTurkey
Δ TurkcellInternational
ΔTCF* Δ OtherSubsidiaries
RevenueQ417
REVENUE
14,286
17,632
2,663192 421 71
RevenueFY16
Δ Turkcell Turkey
Δ Turkcell International
Δ TCF* Δ Other Subsidiaries
RevenueFY17
23.4%15.4%
* Turkcell Consumer Finance Company
QUARTER FULL YEARTRY MILLION TRY MILLION
• 0.6 bn TL revenue add in Q4 YoY, 3.3 bn TL in 2017 YoY
• Turkcell Turkey and TCF are main growth contributors
Turkcell | Fourth Quarter & Full Year 2017
23
EBITDA & EBITDA MARGIN
QUARTER FULL YEAR
4,620
6,2283,347
(1.720)
77 (95)
EBITDAFY16
Δ in Revenues
Δ in Direct cost of
revenues*
Δ in G&Aexp.
Δ in S&Mexp.
EBITDAFY17
1,371
1,739622
(312)123 (66)
EBITDAQ416
Δ in Revenues
Δ in Direct cost of
revenues*
Δ in G&Aexp.
Δ in S&Mexp.
EBITDAQ417
*Excluding depreciation and amortization
Margin32.3%
Margin35.3%
Margin33.9%
Margin37.3%
34.8%26.8%
TRY MILLION TRY MILLION
• EBITDA increase via top-line growth & OPEX management
• Improved collection performance of receivables led to 133Mn TL contribution in G&A
Turkcell | Fourth Quarter & Full Year 2017
24
1,492 1,979
1,609
(394)(401)
251
(472) 42
(149)
Net income Δ in EBITDA Δ in D&A Δ in InterestInc./Exp.
Δ in FX Gain/Loss*
Δ in Other Inc/Exp.
Δ in Fintur Δ in Taxation Net income
351 216
368 (96)
(62) 153
(584)
44 42
NET INCOME DEVELOPMENT
* FX/Gain loss includes impact of fair market value change of swap contracts
Q416 vs. Q417
FY16 vs. FY17
TRY MILLION
TRY MILLION
Includes Tax SettlementProvision 716
2.479
Tax settlement & amnesty impact
Amount factored in
fordividend proposal
1.628
Turkcell | Fourth Quarter & Full Year 2017
25
2,750 3,160 3,576
3,4533,801
4,2481.14x 1.19x
1.26x
0.52x 0.56x0.59x
Q2 2017 Q3 2017 Q4 2017
Net Debt (ex. TCF) TCF loan portfolioNet Debt/EBITDA Net Debt/EBITDA (excl. TCF)
SOLID BALANCE SHEET
TRY MN Q2 2017 Q3 2017 Q4 2017
Total Cash 4,995 4,906 4,712
Total Assets 31,914 32,322 33,982
Total Debt 11,197 11,867 12,536
Total Equity 14,201 14,817 15,045
Net Debt 6,203 6,961 7,824
Net Debt –
excl. TCF*2,750 3,160 3,576
NET DEBT/ EBITDASUMMARY
*Turkcell Consumer Finance Company’s (TCF) loan portfolio is excluded
Turkcell | Fourth Quarter & Full Year 2017
26
6,0524,712
6,228
(4,090)
3961,493
(3,000)
(1,535)
(831)
Q416 EBITDA Capex* Net intincome/(expense)
Net chg in debt DividendPayment
Final installment of4.5G license fee
Other Q417
CASH DEVELOPMENT
* Including operational and non-operational Capex
TRY MILLION
Turkcell | Fourth Quarter & Full Year 2017
27
4.7Bn TLNominal
40%
60%
(1,239)
(688)
(125) (91) (203)
(330)
(144)
Q216 Q316 Q416 Q117 Q217 Q317 Q417
87%
13%
FX Local Currency
78%
22%
FX EXPOSURE
CASH DEBT
Before Hedging
* Including advance payments, hedging and assuming the 4.5G license payables in TRY for the periods before April 2017 and excluding FX swap transactions for TL borrowing
After Hedging
NET FX POSITION*
Comfort Zone(500Mn USD)
12.5Bn TL
USD MILLION
Share
Turkcell | Fourth Quarter & Full Year 2017
28
CAPITAL MARKETS DAY 2018
March 14, 2018
09:00-10:00 Registration & Light Breakfast
10:00-15:30 Management Presentations
19:30-22:00 Dinner w/Management & BoD
AGENDA & DETAILS
Update on the Turkcell Group strategy and 3-year outlook
Four Seasons Bosphorus
İSTANBUL /TURKEY
Guest Speaker
Murat Çetinkaya, CBRT Governor
Turkcell | Fourth Quarter & Full Year 2017
29
This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21Eof the Securities Exchange Act of 1934 and the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Thisincludes, in particular, our targets for revenue, EBITDA and capex in 2018 or for the medium term 2017 to 2019. More generally, allstatements other than statements of historical facts included in this presentation, including, without limitation, certain statementsregarding the launch and goals of our payment card business, our operations, financial position and business strategy may constituteforward-looking statements. In addition, forward-looking statements generally can be identified by the written or oral 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 noassurance that such expectations will prove to be correct. All subsequent written and oral forward-looking statements attributable tous are expressly qualified in their entirety by reference to these cautionary statements. For a discussion of certain factors that mayaffect the outcome of such forward looking statements, see our Annual Report on Form 20-F for 2016 filed with the U.S. Securities andExchange Commission, and in particular the risk factor section therein. We undertake no duty to update or revise any forward lookingstatements, 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, whichremains subject to verification, completion and change. No responsibility or liability is or will be accepted by the Company or any of itssubsidiaries, board members, officers, employees or agents as to or in relation to the accuracy or completeness of the informationcontained in this presentation or any other written or oral information 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 thecharts or tables used in this presentation totals may not foot due to rounding differences. The figures used in this presentation arerounded while percentage changes are calculated based on the figures disclosed in the press release.
NOTICE
For further information please e-mail
[email protected] call Turkcell Investor Relations at
(+90 212 313 1888)
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APPENDIX
Turkcell | Fourth Quarter & Full Year 2017
32
Summary Income Statement As Per CMB1 Financials
1 Capital Markets Board of Turkey2 Depreciation and amortization is included
(TRY MILLION)
Summary income statement Q4 2016 Q4 2017 YoY (%) 2016 2017 YoY (%)
Revenue 4,044 4,666 15% 14,286 17,632 23%
Direct Cost of Revenues2 (2,608) (3,016) 16% (9,219) (11,350) 23%
S&M (479) (544) 14% (1,911) (2,005) 5%
G&A (190) (67) (65%) (722) (645) (11%)
EBITDA 1,371 1,739 27% 4,620 6,228 35%
EBITDA Margin 33.9% %37.3 3.4pp 32.3% %35.3 3.0pp
Net Income 351 216 (38%) 1,512 1,979 31%
Turkcell | Fourth Quarter & Full Year 2017
33
(TRY MILLION)
Consolidated Balance Sheet (TRY mn) 2016 2017 YoY(%)
Cash & Bank 6,052 4,712 (22%)
CURRENT ASSETS 13,351 14,069 5%
TOTAL NON-CURRENT ASSETS 18,249 19,913 9%
TOTAL ASSETS 31,600 33,982 8%
S/T Debt 2,846 4,278 50%
TOTAL CURRENT LIABILITIES 7,359 9,224 25%
L/T Debt 6,935 8,258 19%
TOTAL NON-CURRENT LIABILITIES 8,173 9,714 19%
MINORITY INTEREST 57 56 (2%)
SHARE CAPITAL 2,200 2,200 -
TOTAL EQUITY 16,068 15,045 (6%)
TOTAL EQUITY AND LIABILITIES 31,600 33,982 8%
Consolidated Balance Sheet
Turkcell | Fourth Quarter & Full Year 2017
34
2.90 3.023.32
4.112.82
3.18 3.714.52
2014 2015 2016 2017
Average Period-End
Currency TrendsUSD / TRY EUR / TRY
USD / BYN USD / UAH
2.192.73 3.01
3.632.322.91
3.52 3.77
2014 2015 2016 2017
1.031.59
1.98 1.931.19
1.86 1.96 1.97
2014 2015 2016 2017
11.87
21.7925.56 26.6415.77
24.0027.19 28.07
2014 2015 2016 2017