CAPITAL MARKETS DAY - s3.turkcell.com.tr...This presentation contains statements that are forward...

CAPITAL MARKETS DAY November 9, 2015 / London

2

NOTICE

This presentation contains statements that are forward looking, in particular our guidance and estimates for

the 2015 to 2018 period. 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 recent press releases and our most recent annual report, in particular in the Risk

Factors section of Turkcell’s most recent Form 20F and 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.

This presentation includes business and market information derived from public sources and our own

estimates that we believe is indicative of trends in our business and markets, but that has not necessarily

been prepared under our generally applied accounting standards and has been subject to adjustments, and

thus should not be relied upon as conclusive. This presentation also contains Non-GAAP financial measures,

notably EBITDA, which is not a measure of financial performance under IFRS and is not a substitute for net

earnings (loss) as a measure of performance.

Please note that all financial data are consolidated whereas non-financial data are unconsolidated unless

otherwise specified.

AGENDA

TURKCELL GROUP STRATEGY OVERVIEW

TURKCELL GROUP FINANCIAL HIGHLIGHTS

TURKCELL TURKEY POSITIONING

NETWORK & TECHNOLOGY

CORPORATE BUSINESS REVIEW

4

MURAT DOĞAN ERDEN - EVP- FINANCE

Serving as the Chief Financial Officer since 2013

Prior to this position, he was the Acting Chief Financial Officer and Head of Treasury and Risk Management

BURAK SEVİLENGÜL - EVP- MARKETING

Appointed Executive Vice President of Marketing in April 2015

Prior to this position, he was the Chief Consumer Marketing and Sales Officer

İLKER KURUÖZ - EVP- TECHNOLOGY

Serving as the Executive Vice President of Technology since December 2013

Previously, he was the Chief Information and Communications Officer of Turkcell

KAAN TERZİOĞLU - CHIEF EXECUTIVE OFFICER

Appointed Turkcell’s Chief Executive Officer on April 1, 2015

Prior to this position in Turkcell, he was Vice President at the Cisco Systems. He was a member of

Board of Directors at Akbank, Aksigorta A.Ş., Teknosa İç ve Dış Ticaret A.Ş. and Carrefoursa A.Ş.

TUĞRUL CORA - SVP- CORPORATE SALES

Appointed as the Senior Vice President of Corporate Sales since July 2015

Prior to this position, he was Director of Strategic & Major Accounts Management

MANAGEMENT- PRESENTERS

5

DOĞUŞ KURAN - SVP - CUSTOMER SERVICES

Appointed Senior Vice President of Customer Services Function as of October 2015

Prior to this position, he was the partner at the Accenture Turkey Office responsible for the

telecommunication, media and technology sectors

SERHAT DEMİR - EVP - LEGAL AND REGULATION

Appointed the Executive Vice President of Legal and Regulation Function in May 2015

Prior to this position in Turkcell, he was the Director of Legal Affairs at Çalık Holding

MANAGEMENT- PARTICIPANTS

MURAT ERKAN - SVP - RETAIL AND ACTIVE SALES

Appointed Senior Vice President of Retail & Active Sales under Sales Function as of October 2015

Prior to this position, he was Senior Vice President of Home and Consumer Business and the

General Manager of Turkcell Superonline

M. Kaan Terzioğlu CEO, Turkcell Group

STRATEGY

OVERVIEW

7

TALKING POINTS

1 The Market

The Plan 2

And The Outlook 3

8

Convergence

• Fixed & mobile and Telecom & Media

• Untapped potential in Turkey

Regulations

• Challenges vs. opportunities

New Business Areas

• New revenue sources in the digital space through better utilization of the network

Effective Cost Management

• Focus on profitability via innovative approaches

Change in Value Pools

• Shift to digital players in the global TMT sector

• Data’s share is increasing rapidly

• Rapid adoption in the Turkish market

THE MARKET

9

CORNERSTONES

CONVERGENCE

INTERNATIONAL EXPANSION

BALANCE SHEET OPTIMIZATION

CORPORATE GOVERNANCE

POSITIONING IN TURKEY

Converged Communications &

Technology Services

Regional Assets

Globally Relevant Services

10

Sustainable Growth

Growing Young Population

Source: Turkish Statistical Institute (TUIK) , International Monetary Fund, World Economic Outlook Database, October 2015

GROWING ECONOMY

18.6 19.1 20.3 20.9 21.8 22.8

20

13

20

14

20

15

E

20

16

E

20

17

E

20

18

E

12% 2015-2018

GDP Per Capita (PPP)

$ thousand

Share of <30 years old in population As of 2014, %

<30 49%

11

THE MARKET

Source: ICTA 1 Smartphone penetration on Turkcell’s network as of Q315

80.9 m Total Subscribers

92% Mobile Penetration

41% Fixed Broadband

Penetration

25% Pay-TV Penetration

49% Smartphone Penetration1

Q214 Q215

Mobile Market Petabyte

Mobile broadband usage

Mobile broadband penetration

37% 45%

62 PB 126 PB

Q214 Q215

Fiber Market Millions

Fiber subscribers

Share of >8Mbps package

31%

65%

1.3 mn 1.6 mn

Q214 Q215

24% 25%

Pay-TV Market Millions

Pay-TV subscribers

Pay-TV penetration

5.3 mn 5.5 mn

12

THE MARKET

45.2% 45.8% 45.0% 44.3%

36.0% 35.3% 35.5% 35.6%

18.9% 18.8% 19.5% 20.1%

Q314 Q414 Q115 Q215 Q315E

REVENUE SHARE OF MAJOR PLAYERS

Source: ICTA Reports, Operators’ announcements, Q315 is based on internal estimates

Vodafone

Turkcell Turkey

Turk Telekom Group

13

TURKCELL GROUP

68.1 million Mobile customers

Fixed customers

1.4 million

Turkey generates 91% of revenues & EBITDA

9 Countries

Total Assets

TRY21 billion

1 As of November 5, 2015

TV customers

342K Market Cap1

TRY26 billion

14

CORPORATE

CONSUMER

WHOLESALE

TURKCELL GROUP CONVERGED COMMUNICATIONS AND TECHNOLOGY SERVICES

MAIN SEGMENTS1

18.2%

78.1%

4.2%

6.5%

10.9%

8.5%

OUR BUSINESSES2

VOICE DATA

SERVICES & SMS

TV

(2.0%)

11.3%

34.2%

500%

1 Breakdown does not include other revenues 2 Breakdown does not include wholesale and other revenues

Share in revenues in Q315 Q315 YoY growth

TURKCELL TURKEY

TURKCELL INTERNATIONAL

OTHER SUBSIDIARIES

91.4% 7.0% 1.6%

9.9% (22.9%) (10.1%)

50.1% 31.7%

0.3% 10.3%

15

AMBITION LEVEL

Group Revenue Growth

►

2014 2015E 2016E 2017E

5.6%

GUIDANCE 2015 ↑Around 6%

2018E

CAGR 2015 - 2018 ↑Around 10-14%

Bars are not shown to scale

16

91% 7%

Revenue CAGR 2015-2018

10%

EBITDA Margin next 3 years

32%-35%

Revenue CAGR 2015-2018

15%

EBITDA Margin next 3 years

~35%

GROWTH DRIVERS

TURKCELL TURKEY


Share in Group Revenues

as of Q315

Other

17

GROWTH DRIVERS

2015-2018 CAGR

>25% Data Growth

>30% Service & Solutions Growth (excl. SMS)

~5% Voice decline

52%

30%

18%

LTM* Sep'15 2018E

Services & Solutions & Other Data Voice

* Last 12 months

~20%

~50%

~30%

TURKCELL TURKEY

18

~35% EBITDA Margin

~15% CAGR 2015E-2018E

Astelit is the main driver

GROWTH DRIVERS

66%

15%

15%

LTM* Sep'15 2018E

Astelit BeST KKTCell Other

>10%

>15%

~70%

* Last 12 months


19

12% 12% 14% 15% 16%

FY11 FY12 FY13 FY14 9M15 2018E

9% 10% 11% 13%

10%

25.5% 28.2%

30.5% 30.6% 32.1%

MOMENTUM IN UKRAINE

Revenue Growth (UAH)

EBITDA Margin

Revenue Market Share

>35% EBITDA margin in next 3 years

>10% Revenue growth in UAH

↑4pp market share in last 4 years

* 9M15 revenue market share is based on internal estimates.

20

AMBITION LEVEL

Group EBITDA Margin

►

2014 2015E 2016E 2017E

31%

2018E

GUIDANCE 2015 32-32.5%

2015 - 2018 Around 32-35%


21

AMBITION LEVEL

Group Operational Capex/ Sales (excl. license fees)

►

Op. Capex Trend

17%-16% in FY18

2014 2015E 2016E 2017E 2018E

GUIDANCE 2015 ~20%


22

DISCIPLINED M&A Main Criteria:

• Cultural & geographical alignment

• Balanced portfolio of mobile & fixed infrastructure

• EBITDA accretive

Azercell

Geocell

Turkcell

KKTCell

KCell life : )

Turkcell Europe

Moldcell

MIDTERM GROUP

REVENUE BREAKDOWN Focus on

Eastern Europe

Balkans &

MENA life : )

91%

80-85%

7%

~7-10% 2%

~8-10%

Current Organic Inorganic

Turkey International Other

23

9M 2015 Growth YoY %

9,435 5.5%

3,082 8.4%

32.7% 0.9pp

1,484 (7.7%)

1,860 15.6%

CONSOLIDATED TRY MILLION1 Q3 2015

Growth YoY %

Revenue 3,364 6.4%

EBITDA

1,161 10.5%

EBITDA Margin 34.5% 1.3pp

Net Income 630 (16.5%)

Net Income excl.

non-recurring items2 707 17.8%

1 TRY figures are based on IFRS TRY figures 2 Net Income excluding FX gain/(loss) (inc tax and minority impact), monetary gain (inflation impact), interest Income on time deposit & one off items

9 MONTHS QUARTER

FINANCIAL HIGHLIGHTS Q3 & YTD

24

GUIDANCE FOR 2015 - 2016

2015E 2016E

REVENUE GROWTH

EBITDA MARGIN

OPERATIONAL CAPEX / SALES*

Turkey ~10% Group ~6%

31%-33% 32%-32.5%

~20% ~20%

* Excluding license fees

2014

31.2%

17%

TURKCELL GROUP

Turkey 8-10% Group 8-10%

Turkey 6.4% Group 5.6%

25

STRATEGIC PRIORITIES

POSITION

TURKCELL AS A

CONVERGED

COMPANY

• Convergence in sales & marketing

• Convergence in network & technology

STRENGTHEN

OUR POSITION

IN TURKEY

• Largest 4.5G spectrum

• Stronger customer base

• Fair competitive environment

FOCUS ON

INTERNATIONAL

EXPANSION

• Return on investment in our international businesses

• Disciplined M&A approach

TAKE VALUE

CREATING

ACTIONS

• Strong balance sheet

• Improving working capital & FCF

26

MURAT DOĞAN ERDEN - EVP– FINANCE

Serving as the Chief Financial Officer since 2013

Prior to this position, he was the Acting Chief Financial Officer and Head of Treasury and Risk Management

BURAK SEVİLENGÜL - EVP- MARKETING

Appointed Executive Vice President of Marketing in April 2015

Prior to this position, he was the Chief Consumer Marketing and Sales Officer

İLKER KURUÖZ - EVP- TECHNOLOGY

Serving as the Executive Vice President of Technology since December 2013

Previously, he was the Chief Information and Communications Officer of Turkcell

TUĞRUL CORA - SVP- CORPORATE SALES

Appointed as the Senior Vice President of Corporate Sales since July 2015

Prior to this position, he was Director of Strategic & Major Accounts Management

NEXT SPEAKERS

AGENDA

TURKCELL GROUP STRATEGY OVERVIEW

TURKCELL GROUP FINANCIAL HIGHLIGHTS

TURKCELL TURKEY POSITIONING


CORPORATE BUSINESS REVIEW

FINANCIAL

HIGHLIGHTS

Murat D. ERDEN Executive Vice President, Finance

29

TURKCELL GROUP FINANCE: VALUE CREATION

ORGANIC REVENUE Growth

Convergent Offers

Consumer Finance

Retail Business

International Business

NET INCOME Focus

Financial Income/Expense Outlook

CAPEX Outlook

Tax Optimization

EBITDA Improvement

Opex Management

Cost Optimization Program

BALANCE SHEET OPTIMIZATION Focal Point

Working Capital Management

Leverage Optimization

30

7%

-5%

28%

~10% ~15%

~50%

Turkcell Turkey Turkcell International Other Subsidiaries

2012-2015E 2015E-2018E

TURKCELL GROUP REVENUE CAGR

percentage

ORGANIC REVENUE GROWTH

Data & services growth 3G spectrum, services growth and economic recovery in

Ukraine

Main driver: Turkcell Financial Services

CAGRs presented for 2012-2015E and 2015E-2018E are approximate.

Please note that in the three year plan presented, Turkcell Satış (retail store in telecommunications) and Global Bilgi (call center services) have been included in “Other Subsidiaries” whereas in our most recent financial release they were included in “Turkcell Turkey”. The historic financial information herein has been adjusted accordingly

31

7% 10-14%

Turkcell Group

2012-2015E 2015E-2018E

TURKCELL GROUP REVENUE CAGR

percentage


GROUP REVENUES

10-14%



32

40%

15%

30%

10%

TURKCELL TURKEY REVENUE BREAKDOWN

>25% Mobile Data

>20% Fixed Data

>30% Services


10%

5%

Voice Mobile Data Fixed Data

2018E 2015E Percentage

Services Messaging Other

50%

25%

2015 – 2018 CAGR

5% 5% 3% 2%

Shares presented for 2015E and 2018E are approximate.

Please note that in the three year plan presented, Turkcell Satış (retail store in telecommunications) and Global Bilgi (call center services) have been included in “Other Subsidiaries” whereas in our most recent financial release they were included in “Turkcell Turkey”. The historic financial information herein has been adjusted accordingly.

33

14%

18%

2% 2%

82%

Treasury Share &Other LegalPayments

ICTA FrequencyFees

Prepaid SubscriberUsage Fee

Non-AddressableCosts

Addressable Costs Total Cost Base

as % of revenues

ADDRESSABLE & NON-ADDRESSABLE COST BASE

of Opex consists of non-addressable cost base 18%

EBITDA IMPROVEMENT

of total cost base is in hard currency 10% Please note that in the three year plan presented, Turkcell Satış (retail store in telecommunications) and Global Bilgi (call center services) have been included in “Other Subsidiaries” whereas in our most recent financial release they were included in “Turkcell Turkey”. The historic financial information herein has been adjusted accordingly

34

14%

11% 12% 12%

3%

Treasury Share &Other legalpayments

InterconnectionCosts

Network RelatedCosts

Selling & Marketing General &Administrative

2015E 2018E

TURKCELL TURKEY COSTS as % of

revenues

Increase in network costs offset by cost optimization program Benefiting from digitalization in marketing

~

EBITDA IMPROVEMENT

Shares presented for 2015E and 2018E are approximate.

Please note that in the three year plan presented, Turkcell Satış (retail store in telecommunications) and Global Bilgi (call center services) have been included in “Other Subsidiaries” whereas in our most recent financial release they were included in “Turkcell Turkey”. The historic financial information herein has been adjusted accordingly.

35

Network

Customer Experience

Information Technologies

Non-technical Opex & Capex

(1) Total Opex & Capex

until 2018 ~TRY1.0bn1 The program targets

total saving of around

The program includes saving across the core operational areas such as;

Cost efficiency program will be effective through 2018.

EBITDA IMPROVEMENT

36

8% 5%

20% >10%

>20%

>40%


2012-2015E 2015E-2018E

percentage

EBITDA IMPROVEMENT

TURKCELL GROUP EBITDA CAGR

>10% Financial discipline maintained

>20% Higher contribution of

Astelit and Best

>40% Turkcell Financial Services

as the main contributor



37

8% 5%

20% >10%

>20%

>40%


2012-2015E 2015E-2018E

percentage

EBITDA IMPROVEMENT

TURKCELL GROUP EBITDA CAGR

GROUP EBITDA

MARGIN 2018

32-35% CAGRs presented for 2012-2015E and 2015E-2018E are approximate.


38

EBITDA Margin Comparison (2014) percentage

~

EBITDA IMPROVEMENT

Vodafone Group financial year ended 31 March 2015

Turkcell’s EBITDA margin is one of the highest when impact of Treasury share is excluded.

EBITDA Margin Excl. Treasury Share 44%

39

FINANCIAL INCOME & EXPENSE

AMORTIZATION & TAX

NET INCOME DEVELOPMENTS

• BeST: Outstanding loans replaced by quasi equity

• Astelit: Short term loans converted into local currency

MINIMIZING CURRENCY RISK

• 4.5G license for ~EUR1.6bn with 13 year duration with related investment in Turkey

INCREASING AMORTIZATION EXPENSE

• Impact of US$2.9bn loan package

NEW LOANS

• Efficiency tax management through simplification of current subsidiary structure

TAX OPPORTUNITIES

40

93%

7%

2014 2015E 2018ETurkcell International Turkcell Turkey

17% 20%

2014 2015E 2018E

TURKCELL GROUP OPERATIONAL CAPEX1/REVENUES

TURKCELL GROUP OPERATIONAL CAPEX BREAKDOWN

Percentage

Shares presented for 2015 and 2018 are approximate.

(1) License fees are not included

Turkcell Turkey 4.5G Roll-out

Turkcell Turkey Fiber Roll-out

Ukraine 3G Roll-out

MAIN INVESTMENT AREAS

of the capital expenditures are denominated in foreign currency

~70%

TURKCELL GROUP OPERATIONAL CAPEX

Percentage

<17% 90% 90%

10% 10%

41

ONLY TURKISH COMPANY WITH INVESTMENT GRADE FROM THREE RATING AGENCIES

BBB- Stable

Baa3 Negative

BBB- Stable


42

NET DEBT & EBITDA DEBT RESTRUCTURING LENGTHENS

MATURITY

PRIOR PROSPECTIVE1


-1.6

-1.1

-0.6

-0.1

0.4

0.9

1.4

1.9

2.4

2.9

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

2013 2014 2015E 2018E

Net Debt Net Debt/EBITDA

-1.4x

1-1.5x

-1.4x

TRY Million Percentage

Short Term Long Term

81%

19%

83%

17%

Shares presented for 2015 and 2018 are approximate.

(1) In the case of US$500 million bond and EUR500 million CDB loan are utilized

0.2x

43

DATE AMOUNT MATURITY INTEREST PURPOSE OF FUNDING AVAILABILITY

PERIOD

Club Loan (September

2015)

US$500mn and

EUR445mn

2 year grace period, 5 years

maturity

3 month LIBOR/

EURIBOR + 2.00%

CAPEX and inorganic growth opportunities

June 30, 2016

Bond (October 2015) US$500mn 15/10/2025 5.95% -

China Development

Bank (October 2015)

EUR500mn

EUR750mn

3 year grace period, 10 years

maturity

EURIBOR + 2.20%

EUR500mn: Debt restructuring

EUR750mn: CAPEX

2 Years

3 Years

Summary US$2.9bn 6 Years 3.40%

CAPEX, Debt restructuring and inorganic growth

opportunities

9 Months – 3 Years

Equal weighting of EUR and US$ debt


CAPEX and inorganic growth opportunities

44

Dec15E Dec16E Dec17E Dec18E

TFS Loan Portfolio

Receivables from terminals

Improve working capital management

NPL sales opportunity

Addressing unbanked population

New revenue stream

Contribution to Company Value

Synergy & Growth of M-Banking

Convergence between telecom & finance

TURKCELL FINANCIAL SERVICES (TFS)

Expectations Regarding Establishment of

Support smartphone penetration &

converged offers


45

Improve working capital management

NPL sales opportunity

Addressing unbanked population

New revenue stream

Contribution to Company Value

Synergy & Growth of M-Banking

Convergence between telecom & finance

TURKCELL FINANCIAL SERVICES (TFS)

Expectations Regarding Establishment of

Support smartphone penetration &

converged offers


2013A 2014A 2015E 2016E 2017E 2018E

FCF (Excl. License Fees)

46

ORGANIC REVENUE Growth

1

EBITDA Improvement 2

BALANCE SHEET OPTIMIZATION Focal Point

4

NET INCOME Focus

3

GROUP REVENUES

2015-2018 CAGR

10-14% GROUP EBITDA

MARGIN 2018

32-35%

Dynamic working capital management

Leverage optimization

~1-1.5x

Improvement via debt restructuring & tax optimization

SUMMARY

47

TURKCELL

TURKEY

POSITIONING

Burak SEVİLENGÜL Executive Vice President- Marketing

48

46.3% 45.3% 44.3%

35.0% 35.6% 35.6%

18.6% 19.1% 20.1%

Q213 Q214 Q215 2015E 2016E 2017E 2018E

1 Turkcell estimates

MARKET LEADER IN 3 YEARS

REVENUE SHARE OF MAJOR PLAYERS1

49

CONVERGENCE

STRONG GROWTH IN CORE BUSINESS

AGGRESSIVE GROWTH IN SERVICES

NEW AGE MARKETING

OUR WINNING STRATEGY

50

CONVERGENCE



NEW AGE MARKETING


a. MONETIZING USAGE b. SUBSCRIBER MIX CHANGE

51

6.2

9.6 12.7 19%

30%

40%

>50%

2012 2013 2014 2015E 2018E

million

MONETIZING USAGE: SMARTPHONE EFFECT

SMARTPHONE PENETRATION

>70% SP penetration by 2018

2x Traffic increase with SP1

4G compatible sales

>90%

GROWTH DRIVERS

1 A Turkcell smartphone user creates two times higher traffic when switched from a non-smartphone.

52

60

48 46 45 44 43 42 41 41

Tu

rke

y

Fin

lan

d

Ch

ina

Ru

ssia

Sin

gap

ore

Bra

zil

Me

xic

o

De

nm

ark

Arg

en

tin

a

MONETIZING USAGE: DATA CONSUMPTION

60% of smartphone users watch long videos (>5 mins) daily or more frequently1

1IAB Research «Mobile Video Usage: A Global Perspective» (2015)

percentage

2 Google Consumer Barometer, Social Media Usage by Countries (2014)

92 86 84 83

73 72 72 71 68

52

Tu

rke

y

Arg

en

tin

a

Bra

zil

Ch

ina

Ru

ssia

US

UK

Ca

na

da

Au

stra

lia

Ge

rma

ny

Social media usage is highest in Turkey2

percentage

53

2015E 2018E

MONETIZING USAGE: 4.5G BOOST

TOTAL MOBILE TRAFFIC

4.5G

3G

Increase in smartphone

data usage1

Penetration of 4.5G supporting devices in smartphones by 20182

2.7x

~%55

1 Average monthly cellular data usage on smartphones, USA - Analysys Mason and Nielsen, 2014 2 Turkcell forecast

6X

3G

54

~47%

>60%

Q315 2018E

SUBSCRIBER MIX CHANGE

POSTPAID SUBSCRIBER SHARE

~10%

~30%

2015E 2018E

QUADRUPLE PLAY1

1 Calculated on the basis of several assumptions including Turkcell mobile market share in cities with DSL, or fiber presence

55

SUBSCRIBER MIX CHANGE

2015E 2018E

more subscribers with >TRY 50 ARPU

less subscribers with <TRY 5 ARPU

>4 M

>1 M

FIXED-MOBILE BLENDED ARPU

10% CAGR

TRY

56

CONVERGENCE



NEW AGE MARKETING


57

Household focus Products & services

“One-stop shop”

Customer experience

& services

Single bill

CONVERGED TURKCELL

COMMITTED TO DELIVERING A CONVERGED EXPERIENCE

58

WELL-POSITIONED FOR CONVERGENCE

SUBSCRIBER MARKET SHARE (Q2’15)

Fiber roll-out to continue in new cities

Significant growth potential in fixed broadband and TV

Others 15%

CHALLENGER

IN FIXED

BROADBAND

►

Market Size: TRY4.7bn*

Türk Telekom 70%

Turkcell 15%

Source: Company announcements, ICTA Q2’15 Report * ICTA Q4’14 Report. Company calculation. FY figures.

New products & services to gain customers and to generate revenue

STARTER IN TV

►

Turkcell 3%

Digiturk 52%

Turk Telekom

5%

D-Smart 19%

Tele Dünya 13%


Cable TV 8%

LEADER

IN MOBILE ► Largest customer base to penetrate

with converged offers


Vodafone 30%

Turkcell 47%

Türk Telekom

23%

59


SALES CHANNEL

1,100 Exclusive Turkcell Shops

50,000 D2D visits per month

32,000,000 Digital channels log in per month

ORGANIZATION

Single P&L

Budget Optimization

Best Practices of each

1 «Turkey’s Lovemarks in 2015» Survey by Mediacat & IPSOS. In «GSM operators» category.

2 Capital Magazine Research with GfK «500 Most Admired Company» List (2014)

BRAND

Lovemark1

Most Admired2

"Innovative"

60


• FttB/H fiber network

• Focused roll-out plan

• Higher take-up rate

• Highest customer satisfaction

FIBER

• All access service model

• Turkcell TV+ on ADSL

• Content partnership TURKCELL TV+

4.5G

• Even stronger

• Differentiation: speed and quality

• Capacity to facilitate usage boost

• New offerings and services

61

CONVERGENCE



NEW AGE MARKETING


62

Leading premium music service

80

200

400

800

2012 2015E 2016E 2018E

Cumulative million

400+ Curated list

4.5M Download

TURKCELL MUSIC

STREAM

63

0.1

1.5

5

2011 2015E 2018E

SPORTS SERVICES

million

2006 2011 2015 SMS & MMS MOBILE SITE

& APP

TEAM SPECIFIC

APPS

2018 NEW FEATURES

& IOT

DOWNLOAD One stop shop for teams content

Instant goals from Turkish Premier League

Real time news

Match catch up & statistics

Fan chat

Next:

IoT integration

Gamification

Content Expansion

Celebrity Engagement

64

Cloud for everyone The most widely used personal cloud service in Turkey

PERSONAL CLOUD

2.1 M Download to date

190 M Stored data unit

0.45

4

10

2014 2015E 2016E 2018E

million

1.8

ACTIVE USERS

65

TURKCELL TV+: NEXT GENERATION TV

400

2015E 2018E

USERS

thousand

5X

Strong take up in fiber base

Penetration in ADSL base with hybrid boxes

Aggressive growth with 4.5G

New revenue stream through all-access

Partnership with content providers

Anytime with cloud pvr & timeshift

Anywhere with real multiscreen experience

Next:

66

1.0

1.4

Q215 Q315

DOWNLOAD1

BIP: NEXT GENERATION COMMUNICATION PLATFORM

ACTIVE USERS

million

1 Includes the download of BIP 2.0 & 3.0. BIP 2.0 launched in April 2015

Also in Germany & Northern Cyprus

41% of users are non-Turkcell

High Quality Voice&Video Call

Soon in Ukraine & Belarus!

Local content

67

1

10

2015E 2018E

MOBILE PAYMENT MOBILE WALLET FINANCIAL

TRANSACTIONS

From mainly digital content purchases to new areas

Secure and convenient mobile payment with any

credit/debit card

Money transfer at

Turkcell Stores

FINANCIAL SERVICES

1.4 2.4

5.5

2012 2015E 2018E

Number of Users million

Turkcell Invoice /

Prepaid account

Credit/

Debit Card Money Transfer

Number of Cards Registered

million

68

PEOPLE

THINGS SYSTEMS

INTERNET OF THINGS

VEHICLES

million

1.6

7.8

Q3 2015 2018E

CONNECTIONS ON TURKCELL NETWORK

Connected Cash Register

GROWTH DRIVERS

Insurance Telematics

Smartgrid Roll out

E-call initiative

Cold chain tracking

69

DIGITAL MARKETING & ADVERTISING

15%

From SMS marketing to enhanced digital marketing platform

Marketing Insight Services

End to end marketing solutions for SME

MARKET SHARE IN TURKEY

1.7

2.7 2018

2015

TRY billion

70

AGGRESSIVE GROWTH IN SERVICES & SOLUTIONS

609

LTM Sep'15 2018E

REVENUE GENERATION

>30% Services & Solutions Revenue CAGR (2015-2018)

TRY million

71

CONVERGENCE



NEW AGE MARKETING


72

NEW AGE MARKETING

Digital Turkcell

Operational efficiency

Personalised offer management

Superior full digital experience

Real-Time

Big data utilization

Customer journey analytics

Advanced analytical modelling

Need-centric approach

Unique micro segmentation management

Tailor-made offers and solutions

Increased satisfaction and loyalty

73

KEY MESSAGES

CONVERGENCE

► CORE BUSINESS

SERVICES

MARKETING

►

►

►

Strong fundamentals to lead the market

Value creation through monetizing growing data usage

Value focused customer mix

Significant growth potential in services

Effective marketing through segmentation; digitalization

CORPORATE

BUSINESS

TUĞRUL CORA Senior Vice President – Corporate Sales

75 Source : Method Research, Q2’2015 Trend Reports and TUIK (inc.public)

2.7 MILLION COMPANIES 27 MILLION

EMPLOYEES

TRY 5.6 billion telecom spending

TURKISH CORPORATE MARKET

76

TURKCELL CORPORATE MARKET SHARE

2010 2014 2018E

Market Size*

Turkcell Corporate Competitors

31% 34% 37-39%

TRY 4.2 billion TRY 5.6 billion TRY 7.6 billion

2010-2014 2015-2018

Market 8%

Turkcell 10%

Market 8%

Turkcell 10-12%

CAGR (%)

►

*Market Size: Mobile, Fixed and DC&Cloud in Turkey

77

9/10 TURKEY’S TOP COMPANIES WORKING WITH TURKCELL

78

BRANCH OFFICES

CONNECTIVITY MANAGED NETWORK

CUSTOMERS

DATA CENTERS

Cold Chain Management

Security & Surveillance

Smart Office Vehicles

IoT

SmartGrid

Mobile Apps

4G SmartPhone/

Tablet

EMPLOYEES HEADQUARTERS

Security End User Services

Helpdesk

Desktop Virtualization Wi-Fi

Cloud Security

Messaging & Collaboration

ERP

CRM

Active Directory

Application Operations

Database

Storage

Location Based

7/24 Monitoring

Predictive

Realtime

Mobile Learning

Device Management

DIGITAL TRANSFORMATION OF AN ENTERPRISE

Social Networks

Big Data

79

Hosting & Facility

Management

DC&Cloud Infrastructure

Managed Network &

Security

Managed Infrastructure

Application Operations

End User Services

FROM TELCO TO TECHNOLOGY SERVICES PROVIDER

Partially Complete

Connectivity

Telecom Operator

DC&Cloud Provider

System Integrator

TURKCELL 2010

TURKCELL 2018

TURKCELL 2015

80

GAME PLAN IN THREE GROWTH AREAS

1

3

Mobile data growth with 4.5G

Fixed penetration into customer base

DC&Cloud market development

2

81


1

3




2

82

MOBILE DATA GROWTH

Best mobile network coverage & frequency spectrum advantage with 3G/4.5G

End-to-end Enterprise Mobility Solutions

Corporate mobile market share >60%

TURKCELL

Source(1) : Cisco VNI: Forecast and Methodology, 2014-B2019

Source(2) : 2015 Enterprise Mobile Application Report, 451Research, sponsored by Kony

Source(3) : GSMA Intelligence, M2M Connections 2014-2019

MARKET TRENDS

51% Growth in business mobile data traffic 1

x4 Global enterprise mobility market growth2

(2014-2019)

35% Growth in M2M connections3

83

CORPORATE MOBILE PRODUCT PENETRATION

2010 2014 2018E

0.4mn

0.8mn

1.6mn

MOBILE BROADBAND

2010 2014 2018E

0.2mn 0.4mn

1.0mn

2010 2014 2018E

M2M

0.8mn

1.5mn

3.6mn

MOBILE VOICE USING DATA

2.0x 2.5x 2.5x

2014 – 2018E 2014 – 2018E 2014 – 2018E

84


1

3




2

85

MARKET TRENDS

12% Corporate fixed data revenue growth in Turkey3

36% Growth in video and digital content in corporate networks2

20% Increase in fixed business internet traffic1

FIXED BUSINESS GROWTH

Source(1) : Cisco VNI Forecast and Methodology, 2014-2019 Source(2) : Cisco VNI Global IP Traffic Forecast, 2014-2019 Source(3) : Turkcell Corporate Management estimations

Only 6% fiber penetration

into customer base

TURKCELL

Only sizeable

fixed network alternative to the incumbent

Incumbent vs Turkcell 200k vs 35k km fiber 300k vs 150k office pass

86

2010 2015 2018E

5k

25k

50k

2.0x

2015 – 2018E

FIBER CORPORATE CUSTOMERS

INCREASE IN FIBER CUSTOMER BASE

43%

75%

36%

7% 6%

CentralPublic

StrategicAccounts

LargeAccounts

MediumBusiness

SmallBusiness

FY 2015E - % of Corporate Mobile Customers

FIBER CUSTOMER PENETRATION

87


1

3




2

88

Source(1) : IDC Predictions 2015: Accelerating Innovation – and Growth – on the 3rd Platform Source(2) : Cisco Global Cloud Index Source(3) : IDC’s Worldwide SaaS Enterprise Applications 2014-2018 Forecast Source(4) : Accenture Turkey Cloud Market Survey

MARKET TRENDS

19% Growth in cloud market1

Increase in cloud workload2

(2013-2018)

x2

New government regulations promoting localization of data

x3

TelecomOperators

HostingCompanies

SystemIntegrators

Other

21%

18%

FROM WHOM CUSTOMERS PREFER TO BUY CLOUD4

63%

21% 18%

7%

SaaS based Enterprise Applications3

(2014-2018)

EMERGING DC&CLOUD MARKET

89

• End-to-end IT infrastructure solutions via Professional Services

• Dedicated DC&Cloud services for Government Entities

• Strategic partnership with global players in IaaS and SaaS

• Special focus on managed security services

• Product development in secure messaging & collaboration

2015 7K m2

2018 30K m2

NATION’S LARGEST DC&CLOUD INFRASTRUCTURE

90

SEGMENTED EXECUTION

► CENTRAL PUBLIC

►

►

►

STRATEGIC ACCOUNTS

LARGE & MEDIUM ENTERPRISES

SMALL BUSINESSES & SOHO

• m-Government Solutions

• Dedicated data center & cloud

• Secure Messaging & Collaboration

• Mobile transformation

• IT outsourcing and end-to-end solutions

• Industrial focus

• Big Data Monetization

• Strong growth in mobile data

• Penetrate with fixed network products

• Basic cloud services

• Growth through convergence across all channels

• Penetrate market with TV

Direct salesforce Indirect salesforce

91

2014 Mobile Voice Mobile Data Fixed Data DC&Cloud Other 2018E

TURKCELL CORPORATE REVENUE GROWTH

↓-3-5%

↑20-25%

↑25-30% ↑50-60%

↑2-4%

CAGR

10-12% TRY 1.9bn

Total Revenue

Three Growth Engines ►

92

İlker Kuruöz Executive Vice President- Technology

NETWORK

&

TECHNOLOGY

93

İlker Kuruöz

NETWORK

CONVERGENCE

DIGITALIZATION

DEVICES & SERVICES


94

İlker Kuruöz

NETWORK

CONVERGENCE

DIGITALIZATION

DEVICES & SERVICES


95

SPEED

63.3 MBPS MOBILE

1000 MBPS FIBER

CUSTOMER NEED: QUALITY

2G: 99.81%

COVERAGE

3G: 94.14%

~35K km Fiber network

2.3 mn Home pass

484

Q113 Q315

CAPACITY

Average Usage (MB/User/month)

3.4x 1,637

96

# 1 OPERATOR

#1 COUNTRY in the world in terms of mobile network coverage

* Among 11 operators in Istanbul, London, Milano, Paris

SUPERIOR NETWORK: INTERNATIONAL RECOGNITION

in Europe* for 3G data speed

AMONG TOP 8 1,000 Mbps Fiber Broadband Speed, ranking Turkey among top 8 in the world

97

0.7

0.4

CALL SUCCESS RATIO (%) CALL DROP RATIO (%)

0.6

Europe & Middle East

World

Turkcell

MOBILE NETWORK CUSTOMER EXPERIENCE

*Ericsson Study- May 2015

99.6

99.2

98.7

98

4.3

3.6

2.9

4.5

3.7

2.9

HIGH COVERAGE

Turkcell

Vodafone

Türk Telekom

4.4

4.0

3.4

*Ipsos-Perception Studies – Q215

BEST MOBILE BROADBAND SUPERIOR TECHNOLOGY

MOBILE NETWORK CUSTOMER EXPERIENCE

99

CONTINUED DATA GROWTH

250

1,500

2015E 2018E

MOBILE INTERNET USAGE (PB/YEAR)

Social Media Internet Video

Other Web/Data

53%

28%

8% 11%

41% 28% 10% 21%

6x

250

2015E 2018E

1,500

17,300

5,450

INTERNET USAGE (PB/YEAR)

Mobile

Fixed

5,700

18,800

3x

100

CONTINUED DEMAND FOR VOICE

2017 2015

Video-o-BIP

4G Voice

VoBIP

eVoLTE

2016

TOTAL VOICE TRAFFIC (Billion Minutes)

Fixed Mobile

125

160

3

5

2015E 2018E 2015E 2018E

MOU (Minutes Per User)

9% CAGR

8% CAGR

>300

>400

101

26.6% 20.8%

11.9% 8.9%

73.4% 79.2%

88.1% 91.1%

2012 2013 2014 Q315

2G+3G Voice Traffic % 2G+3G DataTraffic %

VOICE & DATA CAPACITY USAGE

MOBILE NETWORK CAPACITY UTILIZATION

102

234.4 MHz

FREQUENCIES BEFORE AND AFTER 4.5G TENDER

TOTAL FREQUENCY BEFORE TENDER

Turkcell Vodafone Türk Telekom

62.0 57.0 64.8

172.4

82.8

110.2

AWARDED FREQUENCY IN

TENDER

TOTAL FREQUENCY AFTER 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

103

234.4 MHz

FREQUENCIES BEFORE AND AFTER 4.5G TENDER

Turkcell Vodafone Türk Telekom

62.0 57.0 64.8

172.4

82.8

110.2

139.8 MHz

175.0 MHz

2600 MHz

2100 MHz

1800 MHz

900 MHz

800 MHz 4.5G main coverage layer

2G/3G coverage and voice layer

Main layer for 4.5G Terminal support, capacity and

coverage layer

Mobile broadband layer for 3G 4.5G 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

60.0 40.0 35.0

70.0

35.0 30.0

59.6

20.0 70.0

24.8

24.8

20.0

20.0

20.0

20.0

per MHz per sub cost

104

2018-2019

2017

MAXIMUM THEORETICAL THROUGHPUT

HSPA + Triple Carrier

Triple Carrier

April 1, 2016

3 - 4 Carrier

> 4 Carrier

TURKCELL HAS HIGHEST SPEED CAPABILITY

Turkcell

Vodafone

Türk Telekom

With Wi-Fi Aggregation

105

~35 km 41.5 km thousand

95% of Turkcell transmission traffic carried

~20% of Turkey transmission traffic carried

Independent Fiber Backbone

thousand

►

WELL-POSITIONED TRANSMISSION BACKBONE

2018 2015

Transforming Silk Road into

Fiber Road

106

14 cities 19 cities

New 2016-2018

62% of total population

75% of total fixed broadband subscribers

65% of total households

True Fiber

►

INTELLIGENT IN-CITY FIBER ROLL-OUT STRATEGY

2018 2015

Existing 2015

Source: TURKSTAT, ICTA Report- 2014

107

biggest infrastructure operator in Europe

3rd

~9K towers in Turkey and Ukraine

↑20% Revenue CAGR (2012-2014)

WELL POSITIONED TOWER BUSINESS

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

108

İlker Kuruöz

NETWORK

CONVERGENCE

DIGITALIZATION

DEVICES & SERVICES


109

CONVERGENCE READY, FUTURE READY

FIXED

FIXED ACCESS

Transport Network

MOBILE

MOBILE ACCESS

FIXED + MOBILE

Transport Network

Mobile Access Fixed Access

TECHNOLOGY INVESTMENT EFFICIENCY CUSTOMER

• IPv6 readiness (VoLTE)

• Groundwork for future convergence

• Efficient capacity usage

• CAPEX Saving

• Single BSS/OSS platform

• Standard network KPI’s

• OPEX Saving

• Cross sell bundles

• Customer satisfaction • Investing in new technologies

ONE NETWORK

110

Real-Time Rating For All Subcribers Real-time notifications, Spending control, roaming rating

Converged CRM &Billing Solution

Single Platform for Fixed &Mobile

Business & Network Analytics

Best Offer, Rule-based Marketing

Central Product Catalogue Management

Commercial & Technical

CONVERGED IT CAPABILITIES

111

EFFICIENCY THROUGH CONVERGED NETWORK

2015

15% 38% ► % of base stations connected to fiber network

►

2018

► 17%-16% ~20% Operational Capex/Sales (exc. licence)

►

112

İlker Kuruöz

NETWORK

CONVERGENCE

DIGITALIZATION

DEVICES & SERVICES


113

Hardware T-Series

END TO END CUSTOMER EXPERIENCE

OS Android

Aggregation My Account

Payment Wallet

Storage Cloud

Access Wifi

Integration Social

Content Music Books & Magazines Academy Ticketing

Personalization By Segment

114

DIGITALIZATION ROADMAP

The Starting Point

2012

Single Hub

2013

Convergence

2016

E-Channel Excellence

2018

Digital Ecosystem

2015

115

İlker Kuruöz

NETWORK

CONVERGENCE

DIGITALIZATION

DEVICES & SERVICES


116

IMPACT OF T-SERIES

9 devices since 2010

70% 1st time smartphone users

2 million sold to date

Increased Turkcell Products &Services penetration

117

TURKCELL TV+

True multi screen with STB, Android, iOS, phones, tablets, PC, Mac browsers

4K UHD soon with high resolution, crisp video

Dynamic and interactive content with comprehensive app store

Current feature highlights:

• Video on Demand

• Personal cloud recording

• Timeshift TV up to 12 hours

• Social-TV interactivity

118

OUR IoT PRODUCTS & SERVICES

CONSUMER

Tracking Solutions Tracks assets

Healthmeter Monitors blood pressure, diabetes

►

RESIDENTIAL Connected Home Control through smart devices ►

Energy Monitoring Shows energy consumption

Cold Chain Monitors temperatures

CORPORATE ►

119

SUMMARY: MAINTAIN TECHNOLOGY LEADERSHIP

1. NETWORK

2. CONVERGENCE

3. DIGITALIZATION

4. DEVICES & SERVICES

Best mobile and fixed network experience at the highest speed ►

One network and one IT for one customer

Easy, seamless, fast converged digital experience

Devices & Services strategy for enhanced user experience

►

►

►

120

THANK YOU

For further information

[email protected] (+90 212 313 1888)

Please download our IR app via below QR codes

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