TURKCELL INVESTOR PRESENTATION...• High margin • Fragmented market ... • Assurance for...
Transcript of TURKCELL INVESTOR PRESENTATION...• High margin • Fragmented market ... • Assurance for...
1
Investor Presentation
TURKCELL INVESTOR PRESENTATION
November 2020
Investor Presentation
STRATEGIC FOCUS AREAS
2
33
Investor Presentation
CORE COMPETENCIES
STRATEGIC FOCUS AREAS
Digital Business Solutions Techfin ServicesDigital Services
Strong Bond With Customers
State-of-the-art Infrastructure
Advanced Analytics & Technology
Strong & Agile Team
Telecom Services
Well-Positioned to Create More Value
44
Investor Presentation
Diversified Business Model Based on Digital Transformation
Our business model inherits a diversified approach that serves to minimize contraction risk under different economic cycles and assures a sustainable and strong growth
Telecom Services Digital Services
Digital BusinessSolutions
Techfin Services
• Main growth & profitability driver• Necessity item; less volatile• Strong ARPU growth• International revenue flow
• Driven by digitalization trend• Fairly growth sensitive• Data localisation
• Digital transformation trend• Remote working & education• Global partners: 20 partnerships
• Non-cyclical and disruptive business• Tech-savy & high unbanked population• Wide range of services
Yearly growth and revenue shares are as of Q3 2020
4%Share in ConsolidatedRevenues 28%
StandaloneRevenueGrowth (YoY)
6%Share in ConsolidatedRevenues 40%
RevenueGrowth(YoY) 3%
Share in ConsolidatedRevenues 85%
Paycell Non-GroupRevenueGrowth (YoY)
14.0%Mobile ARPUGrowth(YoY)
9.4%Residential FiberARPU Growth(YoY)
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Investor Presentation
Enlarge subscriber base with dedicated focus on postpaid segment
Grow in fixed broadband through fiber and FWA
Utilize the digital channel for acquisition, device sales and growth
Leverage continued demand
Ensure standalone growth
Expand globally
Boost overall corporate business with multiplay focus
Provide end-to-endIT solutions for corporates
Trusted partner of corporates through their digital transformation
Reach wider customer base with complete portfolio of solutions
Reach out to long tail of 1.6Mn+merchants in Turkey
Launch new consumerfinance solutions
GROW IN TELECOM SERVICES
MONETIZEDIGITAL SERVICES
LEVERAGEDIGITAL BUSINESS SOLUTIONS
LEAD TECHFIN SERVICES
+1 Million Subscribers/year
in Turkey
2.5x Standalone revenue
growth in 3 years
#1 Solution Provider
in 3 years
17 Million Active Paycell users
by 2022
Strategic Focus Areas
Note: As disclosed in November 2019
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Investor Presentation
MPOS
PSD2
E-money
Micro Lending
Potential regulatory changes in the definition of loan facilitations
Benefit: Potential to give micro loans to consumers
The potential adaptation of PSD2 Payment Services Directive of EU in Turkey
Benefit: Ability to reach banking system, becoming single interface for customers
Using smartphone or tablet to perform the functions of a cash register
Benefit: Increased penetration of longtail merchants
Potential legislative measure to remove the requirement to keep e-money funds in escrow account
Benefit: Potential to attract more users offering return on e-money accounts
Techfin: Regulation Becoming More Supportive
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Investor Presentation
Turkish Techfin Ecosystem
DCB Wallet
Bill Payment
Payment Facilitators
Money Transfer
Paycell App Strategy
E-Money
VISION: Being an enabler on financial inclusion with the combination of technology and financial services
Paycell: Super App for All Techfin Solutions
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Investor Presentation
Merchants
Go-to Market Strategy
(MPOS & QR)
Go-to Market Strategy
(App)
Customers
6,000Turkcell Stores
37 MnCustomers
4,000Direct Sales Force
TurkcellTechnology
Paycell: Go to Market Strategy
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Investor Presentation
1 Bn
2.5 Bn
2019 2022E
Paid Subscriptions
Platform Licensing
Discovery Services
Traffic Monetization
Data Monetization
Operator Co-operations
Standalone Revenue (TL)
DSS: The Dynamics of New Standalone Strategy
1010
Investor Presentation
Telco market figures consist of mobile and fixed voice & data figures and exclude hardware sales. Mobile figures are based on Futurebright 2018 Q4 Field Research. Fixed figures are based on ICTA Report 2018 Q4 and Turkcell Estimation. ICT, Hardware & Software figures are based on IDC Blackbook 2019.
TELCO BUSINESS / EXISTING BUSINESS
41%
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DIGITAL & ICT BUSINESS / GROWTH ENGINE
5%
HARDWARE & SOFTWARE BUSINESS / OPPORTUNISTIC APPROACH
• Superior network perception• Net add, increase in ARPU• Opportunity of multiplay, new services• High margin
• Fragmented market• Lack of strong system integrator• Increase in demand for digitilization
• Profitable growth with integrated solutions
TelcoMarket Share
ICTMarket Share
Billion TRY
DBS: Market & Turkcell Positioning
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Investor Presentation
Inflationary Pricing
Effective Balance Sheet
Risk Management
Strong Free Cash Flow
Generation
Efficient Capital Allocation
• Key to sustainable growth and profitability
• Assurance for required return on investment
• Above-market ARPU growth
• Liquidity management• Net FX position
• Sustainable revenue growth• Continued operational
profitability• Controlled capex
• Review of investment requirement in conventional services
• Investment in high growth businesses
• Ensure returns above WACC
Turkcell Finance: Key Priorities
1212
Investor Presentation
Reduce funding needsin capex heavy traditional business
Invest in new high growth areas
Global Telco Industry Challenges
Flow of funds
Turkcell’sResponses
Digital services (TV, music, etc.)
Techfin services
ICT solutions (datacenter, cloud etc.)
IPO/M&A activities
Infrastructure sharing
Sell & leaseback transactions
Heavyinvestment
need
Slowrevenuegrowth
Improve returns over WACC12
Efficient Capital Allocation
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Investor Presentation
Post COVID-19 Era: Strategic Opportunities
KEY
TREN
DS
OU
RSO
LUTI
ON
S
Digital Business Solutions Techfin ServicesDigital Services
• Remote working
• Remote & interactive education
• Remote healthcare services
• Digital transformation of ecosystem
• Digital customer
• At home experience
• Smart payment solutions
• Cashless society
• Largest Data Center with 30K m2 area
• Cloud & Security Services
• Digital transformation solutions
• IoT Solutions & Big Data Analytics
• Digital & System Integration Projects
• Unique digital applications portfolio
• TV streaming platform (TV+)
• Local VC solution: BiP Meet
• Paycell: Payment services platform
• Paycell as a «super app» withDCB, money transfer, wallet, etc.
• Merchant solutions:QR code, CRM, MPOS
Telco Services
• At home experience
• E-commerce
• Superbox: FWA solution
• Digital channels:DO, turkcell.com.tr
Investor Presentation
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Q3 2020 RESULTS
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Investor Presentation
Q3 2020: Strong Profitable Growth
16.1%STRONG FINANCIALS
SOLIDOPERATIONALRESULTS
ROBUST GROWTH IN STRATEGIC FOCUS AREAS
Revenue Growth EBITDA Margin Leverage
44.4% 0.8x
14.0%Mobile1 Res. Fiber
ARPU GrowthTotal Subscriber
Net AddDigital Channel Revenue Share
382K 12%9.4%
1 Excluding M2M Note: Growth rates on this slide are on an annual basis.
28% 40% 85%Digital Business
SolutionsPaycell
Non-GroupDigital Services
Stand-Alone
FCF
1Bn TL
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Investor Presentation
3%
(71%)
(33%)
Q3 19 Q2 20 Q3 20
Strong Trends In A Challenging Environment
Continued demand for content
41
70 70
Q3 19 Q2 20 Q3 20
Online payment fordigital content
117
215248
Q3 19 Q2 20 Q3 20
Daily minutes spent on mobile TV+ (per user)Digital payments (DCB) volume (Mn TL)
Strong demand foronline channels
4%
11%12%
Q319 Q2 20 Q3 20
Digital channel’s revenue share*
Continued pressure on roaming revenues
YoY growth in total roaming revenues
*of Turkcell Turkey consumer revenue excluding fixed business
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Investor Presentation
Note: TRY figures are based on IFRS. * Excluding license fees
Turkcell Group Financials
Highlights
• Robust revenue growth above expectations; 10.5% q-o-q growth
• Strong bottom-line performance in Q3; highest quarterly level generated from operations
Revenue 7,649 16.1% 21,232 15.1%
EBITDA 3,394 19.6% 9,027 17.7%
EBITDA Margin 44.4% 1.3pp 42.5% 0.9pp
EBIT 1,877 14.4% 4,687 16.3%
EBIT Margin 24.5% (0.4pp) 22.1% 0.3pp
Net Income 1,211 51.1% 2,935 17.8%
Opr. Capex/Sales* 19.3% 4.3pp 16.4% 1.1pp
Q3 2020MILLION TL YoY 9M 2020 YoY
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Investor Presentation
NET DEBT/ EBITDA
1 Excludes Turkcell Finance Company’s loan portfolio
TCF loan portfolio
Net Debt1
1
Total Cash 9,212 10,929 13,524
Total Assets 45,329 47,042 52.249
Total Debt 19,500 19,776 22,841
Lease Obligations 1,482 1,485 2,065
Total Equity 18,678 19,538 20,909
Net Debt 10,288 8,847 9,317
Net Debt1 8,213 7,053 7,416
SUMMARYMILLION TL
Q1 20 Q2 20 Q3 20
8,213
7,0537,416
2,075
1,794 1,901
0.9x0.8x 0.8x
0.8x0.7x 0.7x
Q1 20 Q2 20 Q3 20
Net Debt/EBITDA Net Debt/EBITDA
Solid Balance Sheet
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Investor Presentation
BILLION TL
• 2.6 billion TL free cash flow* in the first nine months
• Successful collection performance and cost control
• Aim is to continue generating positive FCF in the upcoming periods
*Free cash flow calculation includes EBITDA and the following items as per cash flow statement of IFRS reports: acquisition of property, plant and equipment, acquisition of intangible assets, change in operating assets/liabilities, payment of lease liabilities and income tax paid
(0.7)0.0
1.5
0.3
1.3
1.0
2017 2018 9M 2019 9M 2020
Q1
Q2
Q3
Free Cash Flow Generation
2020
Investor Presentation
155115 114
50 31
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20
38%
5%
49%
8%
USD MILLIONNET FX POSITION2
2 Including advance payments, derivative transactions for hedging purposes and excluding FX swap transactions1 Excluding FX swap transactions.
13.5Bn TLNominal
49%
28%
15%
9%
CASH1 DEBT
Before Hedging After Hedging
22.8Bn TL
Share
USD EUR TRY Other
66%2%
31%
FX Exposure
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Investor Presentation
2.5%
1.9%
2.4%
Q3 19 Q2 20 Q3 20
TURKEY SUBSCRIBERS ARPU*
MONTHLY AVERAGE MOBILE CHURN RATE
21.5
12.2
Postpaid Prepaid
QoQ 317K↑ 13K↓ 45K↑ 39K↑
Net add
Operational Highlights
1.6
0.7
67K
Fixed subscribers
0.8
IPTV
fiber ADSL
fiber
cable
ADSL
2.4
MILLIONTL
66.1 68.972.3
45.6 46.6
52.0
Mobile blended (excl.M2M)Q3 19 Q3 20
14.0% YoY
Fiber ResidentialQ3 19 Q3 20
9.4% YoY
Q2 20 Q2 20
64%Postpaid
Share
Total
382K↑9K↓
IPTV
*: From this quarter onwards, TV+ OTT revenues are included in the mobile blended ARPU. Please refer to pg 10 in Q3 2020 Press Release for a detailed explanation.
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Investor Presentation
217
323
400
491
551
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20
SUBSCRIBER TREND THOUSAND
Superbox: Pioneer in the Market
• Alternative to fiber, offering fiber-like speed
• Continued demand given the speed and convenience
60KNet Add Q3 2020
2.5xSubscribers
Q3 20 vs. Q3 19
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Investor Presentation
2123 23
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20
Turkcell Op1 Op2
Leadership in Experience: Innovative Offers
CUSTOMER EXPERIENCECONSUMER NET PROMOTER SCORE (POINTS)
Source: Future Bright
+15
+20+21
+9
MEGA PLANS
Yearly contentMonthly payment
PLANS FOR TEAMS
Teams of 2-5 peopleIn-group GB transfer
In-group unlimited calls
SHAKE&WIN FESTIVAL
13Mn participation38Mn gifts
83Mn GB give away
SHAKE &WIN!
TURKCELL FAMILY & FRIENDS
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Investor Presentation
Online Channel: Continued StrengthDIGITAL CHANNELS REVENUE SHARE*
4%
6%7%
11%12%
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20
• Continued demand in our online channels (website and DO application)
• Higher digital channel share contributing to opex savings
*of Turkcell Turkey consumer revenue excluding fixed business
Website Visits(Q3 Monthly Avg)
28Mn
DO AppActive User (3M)
23Mn
Conversion Rate (YoY)
2.1x
3.1xOnline Top-upVolume (YoY)
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Investor Presentation
Strategic Focus Areas: Digital Services
4%
Share in Consolidated Revenue
Secure and seamlessvideo conference platform
28%
TV+ READY Turkey’s first operator-tier
Android TV devicePlug&Watch
Fast, easy and secure sharingdata storage in Turkey
lifebox TransferKEY
HIG
HLI
GH
TSST
AN
D-A
LON
E P
ERFO
RM
AN
CE
Revenue Growth (YoY)
2.7Mn
Paid Users*
*Includes subscribers of IPTV, OTT TV, fizy, lifebox, Dergilik
(29% yoy)
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Investor Presentation
Strategic Focus Areas: Digital Business Solutions
6%
KEY
HIG
HLI
GH
TSP
ERFO
RM
AN
CE
Strong pipeline /System integration projects
backlog of 938 Mn TL*
One-stop shop cloudprovider with
«Turkcell Multicloud»
Digitalization of processes with «Secure Digital Signature» and
Turkcell Digital Archive»
Establishment of new global
vendor partnerships
40%
Share in Consolidated RevenueRevenue Growth (YoY)
*Backlog refers to the value of contracted revenue from system integration projects that is yet to be recognized until the end of the contract term.
27
Investor Presentation
Strategic Focus Areas: Techfin ServicesK
EY H
IGH
LIG
HTS
Paycell Android POS: Pilot scheme, live in 2021
• First regulatory approved Android POS in Turkey, smart operating system
• Single payment platform for merchants (payment facilitator); ensures cost advantages
• Payments with QR code; capable of serving all bank debit/credit cards, meal cards
• Paycell app store as a CRM platform for SMEs
PER
FOR
MA
NC
E
3%85%
Total Techfin Business** Share in Consolidated Revenue
Paycell Non-Group* RevenueGrowth (YoY)
* Excluding revenues from Turkcell & Turkcell Consumer Finance. Calculated on Management Reporting figures. ** Includes Paycell and Turkcell Consumer Finance revenues
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Investor Presentation
96%248 Million TL
DCB transactions
Techfin: Payment Services Platform
FOUR PILLARS OF REVENUE GENERATION
DIRECT CARRIERBILLING
BILL PAYMENT
PAYCELL CARD
MERCHANT SOLUTIONS
65%3.4 million
3rd party Bill Payments
11KPoints Paycell is
Accepted
171%117 million TL
Paycell Card transactions
58
7764 63
78
4232 36
27
47
72%
42%
57%
43%
60%
Q3 19 Q4 19 Q1 20 Q2 20 Q320
Revenue EBITDAEBITDA Margin
MILLION TL
Note: Growth figures are based on non-group transactions and indicate y-o-y growth in Q3 2020.
4.6 million Paycell 3MAU*
2.2 billion TL Total transaction volume*
* includes direct carrier billing, bill payments and Paycell Cardtransaction volumes, both group and non-group
HIGHLIGHTS
• Rising Paycell Card and Paycell app users and DCB transaction volume in Q3
• Increasing number of member merchants
• Strong demand for ready-to-use limit at Paycell Card
• Launched Paycell Android POS in a pilot scheme
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Investor Presentation
Techfin: Financing Business
LOAN PORTFOLIO
0.4 0.5 0.5
2.71.8 1.9
Q3 19 Q2 20 Q3 20
Turkcell Contracted Receivables Financell Consumer Loans
3.12.2
MILLION TLBILLION TL
• Loan portfolio rose to 2.4 billion TL with increased volume quarterly
• CoR came down to 2.5% in Q3, from 3.4% in Q2.
Revenue 127.0 (3.7%) (41.9%)
EBITDA 97.3 26.5% (32.3%)
EBITDA Margin 76.6% 18.3pp 10.8pp
Net Income 69.5 44.5% n.m.
YoYQoQQ3 20202.4
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Investor Presentation
32.2 31.6 32.0
19.621.0 21.4
Q3 19 Q2 20 Q3 20
4.5G subscription 4.5G compatible smartphone
4.25.2 5.4
10.0
13.9 14.1
8.1
11.7 12.2
Q3 19 Q2 20 Q3 20
Non 4.5G Users 4.5G Users Total Users
MOBILE DATA USAGE 4.5G SUBSCRIPTION
Growth Engine: Mobile Data
95% are 4.5G
subscribers
21 million with
4.5G compatible SPs90% are 4.5G
compatible SPs
80% smartphone
penetration
AV. GB/USER MILLION
51% YoY data
usage growth
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Investor Presentation
15%
1 Figures are based on IFRS
Turkcell International
SUBSIDIARIES AT A GLANCE
Note: Remaining 7% comprises other international operations and intra-company eliminations. Ukraine, Belarus and TRNC local currency growth figures are based on stand-alone financials.
• 14.2% yoy revenue growth in local currency
• 4G user data usage: 12GB/month, ↑42% yoy
• Positive bottomline for the quarter
• 1.4% yoy revenue growth in local currency
• 4G user data usage: 13GB/month, ↑48% yoy
• Launched postpaid subscription plans
Lifecell Ukraine
Life :) BelarusRevenue 658 25.3% 1,795 24.5%
EBITDA 298 25.8% 819 24.1%
EBITDA Margin 45.2% 0.2pp 45.6% (0.2pp)
FINANCIAL HIGHLIGHTS1
9%
69%
KKTCell TRNC
• 18.5% yoy revenue growth
• Higher data and handset revenues against continued decline in roaming revenues
Q3 2020 Revenue ShareMILLION TL
Q3 2020 YoY9M 2020YoY
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Investor Presentation
New Era with the Change in OwnershipSHAREHOLDING STRUCTURE
(Current Status)
Publicly Held
54%
100%
IMTIS H.
19.8%
100%
TWF BTIH
26.2%*
TVF BTIH: TVF Bilgi Teknolojileri İletişim Hizmetleri Yatırım San. ve Tic. A.Ş.IMTIS H.: IMTIS Holdings S.à r.l.*Including 15% privileged Group A shares
KEY HIGHLIGHTS
• Simplified ownership structure
• End of the long-standing shareholder dispute
• Enhanced corporate governance
• TWF holds privilege for the election of 5 members (out of 9)
Note: Post closing, IMTIS sold a 5% stake in Borsa Istanbul on Nov 10, 2020
33
Investor Presentation
2020 Guidance Revised Upwards
10% - 12%
40% - 42%
17% - 19%
19% - 21%
REVENUE GROWTH
EBITDA MARGIN
EBIT MARGIN
OP.CAPEX/SALES*
*Excluding license fees
14% - 15%
41% - 42%
19%
20% - 21%
AS REVISED IN APRIL (POST PANDEMIC)
UPDATED
~
Investor Presentation
APPENDIX
3535
Investor Presentation
Top-Notch Features
TranslationGroup Video CallEmergency ButtonBiP Meet
Telco-OTT Power
App2NW2nd NumberFixed Number
Quality of ServiceDedicated BandwithOTT Box
Integrated Experiences
fizyDigital MagsTV+
Timeshift & Cloud RecordingLyricsMusic VideoLive Broadcasting
CrossPlatform
Recommendation
Strategic Focus:Digital Services
Differentiation with Unique Skills
3636
Investor Presentation
Strategic Focus:Digital Services
TURKEY
DONE DEAL
NEGOTIATION
TURKEY
Global Expansion
3737
Investor Presentation
16KCOMPANY
COMPANY
COMPANY
528K
2.5Mn
OPTIMIZECOSTS
INCREASEREVENUES
Strategic Focus:Digital Business Solutions
3 MILLION COMPANIES
Corporate Customers’ Needs in Turkey
3838
Investor Presentation
Strategic Focus:Techfin Services
417 Mn**
900 Mn*
>1.2 Bn*
* Active users**Registered users
346 Mn*310 Mn*441 Mn**
37 Mn*140 Mn*
E-Commerce Tech Savvy Regulatory Environment
KEY DRIVERS IN WEST
Unbanked Population Tech Savvy Regulatory Environment
KEY DRIVERS IN EAST
Global Techfin Revolution
SOURCE: Statista, Press Search
3939
Investor Presentation
89%
Smartphonepenetration
83Mn
Youngest & largest
population in Europe
1.9Mn
Merchant
59%
Cashspending
31%
Unbankedpopulation
19th
Largest economyin the World
Strategic Focus:Techfin Services
Turkey: Attractive Dynamics
SOURCE: Worldbank, TurkStat, Turkey Social Security Institution, Turkey Risk Center, wearesocial.com
4040
Investor Presentation
234.4 MHz
TOTAL FREQUENCYBEFORE TENDER
Turkcell Vodafone Türk Telekom
62.0 57.064.8
172.4
82.8
110.2
AWARDED FREQUENCY IN
TENDER
TOTAL FREQUENCYAFTER TENDER
139.8 MHz
175.0 MHz
€0.3
€0.4
€0.5
• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost
Frequencies Before and After 4.5G Tender
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Investor Presentation
234.4 MHz
Turkcell Vodafone Türk Telekom
62.0 57.064.8
172.4
82.8
110.2
139.8 MHz
175.0 MHz
Main layer for 4.5G Terminal support, capacity and coverage layer
2600 MHz
2100 MHz
1800 MHz
900 MHz
800 MHz 4.5G main coverage layer
2G/3G coverage and voice layer
Mobile broadband layer for 3G4.5G usage for mid/long term
4.5G capacity boost layer for hot spots
€0.3
€0.4
€0.5
• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost
60.040.0 35.0
70.0
35.0 30.0
59.6
20.070.0
24.8
24.8
20.0
20.0
20.0
20.0
Frequency Bands After 4.5G Tender
4242
Investor Presentation
SPEED
1,200 Mbps
2018
* Source: https://gsacom.com/paper/progress-gigabit-lte-networks-2/
QUALITY
CarrierAggregationall network
The BestExperts
4x44x4 MIMOall network
MIMO: Multi Input Multi Output
SPEED QUALITY
Fastest & Best & Widest
4343
Investor Presentation
44.1%
Incumbent53.1%
Other players2.8%
6.6 6.6 6.8 7.2 7.88.7
9.5 9.7 10.3
0.55 1.2 1.461.67
1.93
2.29
2.803.21
3.52
0.490.49 0.56
0.63
0.74
0.83
0.93
1.08
1.18
10.2%11.0%
11.5%12.1%
13.2%
14.7%
16.3%17.1%
18.4%
2012 2013 2014 2015 2016 2017 2018 2019 Q2 2020
xDSL Fiber Cable PenetrationNote: Company calculation based on data in ICTA Q2 2020 Report
15.3 mnTotal
Subscribers
3 majorOperators
18.4%Penetration
TURKISH FIXED BROADBAND MARKET FIXED BROADBAND MARKET BY TECHNOLOGY (Mn)
FIBER SUBSCRIBER MARKET SHARE
Q2 2020
Fixed Broadband Market
4444
Investor Presentation
21 28Number of cities
In partnership withTürksat & Vodafone
Turkcell (stand-alone)
Turkcell infrastructure
Overlapping
Türksat infrastructure
First in Europe
10 GbpsFiber to the home
The map displays the cities in Turkey where Turkcell offers fiber and cable internet services through its partnership with Türksat and Vodafone. HFC stands for hybrid fiber-coaxial.
3.8 mn 3.8 mn fiber + 3.0 mn cable (HFC)Homepass
Well-invested Infrastructure: Focus on Sharing
4545
Investor Presentation
MassiveMachine Type
Communication
Ultra ReliableLow-LatencyCommunication
EnhancedMobileBroadband
5G is an Evolution
4646
Investor Presentation
5%
10%
15%
20%
25%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Turkcell Group EEMEA
Source: Bloomberg Industry Data and company announcements*Excluding licence fees
Turkcell Group Average: 18.0%*
EEMEA Average: 16.9%Between 2009 and 2019
Capex/Sales Trend
4747
Investor Presentation
Internet ~59%
Pay TV ~30%
~24 MnHouseholds
Determining household via network and social network analysis
Capturing potential via house profiling by using big data
Raising wallet share with cross contracting, household offers and new products
s Share
53%
Source: Turkey Household: Turkcell expectation based on TurkStat 2018 announcement Internet & Pay TV: ICTA Q219 Turkcell’s Share: Future Bright Convergence & Household Penetration Research Q119
New Definition of The Customer
4848
Investor Presentation
AnalyzeCustomer Behaviour
Social networkApplication usage
Location baseNetwork metrics
BIG DATA
Adaptive learningRule-based
management
ARTIFICIAL INTELLIGENCE
+8%+20%Lower benefit
Lower price
Higher benefitHigher price
Multiple layered offersfor value maximization
Special offer for customers with churn risk
RIGHT OFFER TO THE RIGHT CUSTOMER AT THE RIGHT TIME
Utilize Big Data to Maximize Consumer Surplus
4949
Investor Presentation
1HYBRIDOFFERS
Mix of postpaid & prepaid offers
Flexible postpaid management
No bill shock
2YEARLY
PACKAGES
Data benefit which can be used flexibly
during 12 months
3SEMI
CONTRACTS
Contract based on benefit
Flexible price
4PURE
DIGITAL OFFER
Game changer tariff
Low cost play
Digital channels only
New Pricing Approach
5050
Investor Presentation
100104
115
111 114121
136 137 138 139
155
100105
112
119 120124
127131
134 138 142
Q1
18
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q2
20
Q3
20
TCELL ARPU (exl. M2M) CPI
Q1
16
Q2
16
Q3
16
Q4
16
Q1
17
Q2
17
Q3
17
Q4
17
Q1
18
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q2
20
TCELL Operator 1 Operator 2
TURKCELL ARPU VS. CPI TREND MOBILE ARPU COMPARISONQ116=100Company and TUIK announcements
Q116=100Based on ICTA market report
Key for sustaininggrowth & margins
Secure ROI of projects & investments
Reflecting coststo the prices
ARPU growth above competition
50
Inflationary Pricing
5151
Investor Presentation
POTENTIAL ACTIONS
• Established in 2015, fully owned by Turkcell
• Standalone payment and e-money company
• Payment institution and e-money licenses from BRSA
• Mobile payment solutions in several verticals
• Share know-how
• Invest jointly
• Diversify risk
STRATEGIC PARTNER
INORGANIC GROWTH
• Acquire local techfin companies to
expand vertical solutions
• Look for synergies
Paycell: Turkey’s Leading Techfin Company
5252
Investor Presentation
548900
1,276
2,070
2,429
2015 2016 2017 2018 2019
1,719
2,429
3,210
4,076
4,823
2015 2016 2017 2018 2019
NET REVENUE TREND EBITDA TREND
TRY Mn TRY Mn
• 48 thousand km rollout, 21 cities
• 1.6 Mn fiber customers
• Data speed up to 10Gbps
• Infrastructure sharing (Turksat & Vodafone)
• 3.7 Mn fiber homepass
INITIAL PUBLIC OFFERING
• More transparent articulation of equity story
• Diversify risk
• Invest jointly
• Share know-how
STRATEGIC PRE-IPO PARTNER
INORGANIC GROWTH
• Acquire local or regional fiber assets, smart-home and security companies
• Look for synergies
INFRASTRUCTURE SHARING
• Asset light model
POTENTIAL ACTIONS
Turkcell Superonline: Turkey’s Fastest Fiber
5353
Investor Presentation
68
112139
223
290
2015 2016 2017 2018 2019
168212
257
338
431
2015 2016 2017 2018 2019
Note: Tower portfolio includes owned and managed towers and towers for which contract management services are provided.
NET REVENUE TREND EBITDA TREND
TRY Mn TRY Mn
• First and only TowerCo of Turkey
• Tower portfolio of 10,726 (owned + right of use)
• Regional player operating in 4 countries
• Long term, visible revenue stream & strong profitability
• More transparent articulation of equity story
POTENTIAL ACTIONS
INFRASTRUCTURE SHARING
INITIAL PUBLIC OFFERING
• Asset light model
Tenancy ratio
1.7x
Global Tower: Turkey’s First & Only TowerCo
5454
Investor Presentation
87
207
346
803
314
2015 2016 2017 2018 2019
• 112k m2 datacenter space
• 33.5k m2 white space
• 8 locations
• Ankara datacenter: 44k m2 datacenter space, 12k m2 white space
• Gebze datacenter: 33k m2 datacenter space, 10k m2 white space
• İzmir datacenter: 15k m2 datacenter space, 2.4k m2 white space
CUMULATIVE DATACENTER INVESTMENTS
TRY Mn
• Asset light model
FUTURE FUNDING
SELL AND LEASE BACK
FREE CASH FLOW GENERATION
Datacenters: Largest White Space Capacity in Turkey
5555
Investor Presentation
* Turkcell Finance Company (Financell)
6,587
7,649
996
133 (91) 26
RevenueQ3 19
Δ TurkcellTurkey
Δ TurkcellInternational
ΔTCF* Δ OtherSubsidiaries
RevenueQ3 20
16.1%
MILLION TLQUARTER
• Yearly incremental revenue generation of 1.1 bn TL in Q3 2020
• 1.0 billion TL revenue from Turkcell Turkey with 18% growth, driven by strong ARPU performance and equipment revenues
• Hit on roaming revenues and slowdown in TCF impacted topline negatively
Revenue
5656
Investor Presentation
2,839
2,8393,256 3,256 3,259 3,317
3,394
1,063(645)
3 58 77
EBITDAQ3 19
Δ in Revenues
Δ in Direct cost of
revenues*
Δ in G&Aexpenses
Δ in S&Mexpenses
Δ Doubtful trade
receivables**
EBITDAQ3 20
• 19.6% EBITDA growth in Q3 2020 on the back of strong revenue growth and lower S&M and G&A expenses
• Continuing EBITDA margin improvement in Turkcell Turkey; 2.0pp yoy in Q3 2020
* Excluding depreciation and amortization ** net impairment losses on financial and contract assets
19.6%
EBIT: 1,64124.9%
EBIT: 1,87724.5%
Margin44.4%
Margin43.1%
MILLION TLQUARTER
EBITDA & EBIT
5757
Investor Presentation
Short FX
position
Limited Short FX
position
Positive/NeutralFX
position
• Almost all cash in hard currency
• 50% of FX denominated debt is hedged
• Hedging for whole maturity (principal & interest)
NET FX POSITION
(1) Data of Turkcell Group, excluding consumer finance business.
Dec15 Dec16 Dec18 Dec19
Effective Balance Sheet Risk Management
129 261 314 251
1,785
213143
2020 2021 2022 2023 2024+
FX Local Currency
404 314 251
1,785
• US$1.7 Bn equivalent of cash holdings covers maturities until 2024
• Strong free cash flow generation
• Available credit lines from diversified funding sources
LIQUIDITY MANAGEMENTPrincipal & Interest Payments1
US$ Mn
342
5858
Investor Presentation
Major Funding Details
5959
Investor Presentation
LIFECELL UKRAINE LIFE :) BELARUS KKTCell TRNC LIFECELL VENTURES NL
• Growth driven by data
• Expand digital services
• Net profit by 2021
• Growth driven by data
• Expand digital services
• Grow in fixed broadband
• New revenue streams(Corporate & SystemIntegration)
• Expand DSS footprint
• Make new strategic alliances
• Revenue generation
Strategic Focus Areas of Turkcell International
6060
Investor Presentation
lifecell PERFORMANCE
HIGHLIGHTS
UKRAINE MOBILE MARKET FACTS*
53 mnTotal
subscribers
3Operators
121% Mobile
Penetration
Ownership 100% Turkcell
Ownership 100% VEON
Ownership 100% Bakcell
*Source: Company calculation based on Q3 2020 results
UAH MILLION Q3 2020 YoY% 9M20 YoY%
Revenue 1,745 14.2% 4,922 11.2%
EBITDA 910 12.3% 2,588 6.7%
EBITDA Margin 52.1% (0.9pp) 52.6% (2.2pp)
• Operational performance (3 months active):
• 7.8 million subscribers in Q3 2020
• UAH 76.3 ARPU, 2.1% YoY
• 81% SP penetration (market leader)
• First to launch 4G services in Ukraine on 2600 MHz
• 4.5G services on the 1800 MHz frequency since Jul 1st, 2018
• NCCIR issued license for both GSM and LTE in 900 MHz band
• New license became valid as of July 1st, 2020 (for 5 years)
Operations in Ukraine
6161
Investor Presentation
49.1%
36.1%
14.8%
KYIVSTAR
VDF
lifecell
12% 10% 12%
8%
14%18% 16% 16%
7%
12%
30%
-11%
27%
9%
11%
Q319 Q419 Q120 Q220 Q320
FINANCIALS
53.0% 52.6% 50.5%55.1%
52.1%
54.6%49.1%
53.3% 52.6% 53.4%
64.8%69.5% 67.9% 67.8% 67.8%
Q319 Q419 Q120 Q220 Q320
Mobile Revenue
Subscriber*
(*) 3 month active subscribers
Mobile Revenue Growth (in UAH)(YoY)
lifecell VDF Kyivstar
EBITDA Margin (%)
Source: Company announcements (Q3 2020)
MARKET SHARE
48.1%
38.0%
13.9%
KYIVSTAR
VDF
lifecell
Ukraine: Mobile Market Performance
6262
Investor Presentation
*Source: Company calculation based on Q3 2020 results
BeST PERFORMANCE
HIGHLIGHTS
BELARUS MOBILE MARKET FACTS*
12 mnTotal
Subscribers
3Operators
126% Mobile
Penetration
Ownership 80% Turkcell20% Belarusian State
Ownership51% Belarusian State49% MTS
Ownership100% Telekom Austria
Q3 2020 YoY% 9M20 YoY%
Revenue 35.8 1.4% 100.9 (0.1%)
EBITDA 8.1 (15.6%) 24.1 (14.2%)
EBITDA Margin 22.6% (4.6pp) 23.9% (3.9pp)
BYN MILLION
• 1.1 million subscribers in Q3 2020 (3-month active)
• Provides 4G LTE services in 6 regions and 444 cities/towns/settlements
• Average monthly data consumption grew by 58% yoy to 10.9GB
• 4G users reached 61% of 3-month active users, driving further data and digital services usage.
Operations in Belarus
6363
Investor Presentation
48%
41%
11%
MTS
A1
life:)
FINANCIALS
9.8%
3.2% 1.9%
-3.3%0.8%
5.3%
8.8%18.8%
7.6% 13.3%
18.5%15.1%
19.3%14.5% 16.0%
Q319 Q419 Q120 Q220 Q320
49%45%
6%
MTS
A1
life:)
Source: Company announcements (Q3 2020)
Subscriber*
Revenue
(*) 3 month active subscribers
life :) EBITDA Margin Trend*
Mobile Revenue Growth (in BYN)(YoY)
27.2%
21.7%
26.0%23.3% 22.6%
Q319 Q419 Q120 Q220 Q320
life:) A1 MTSMARKET SHARE Belarus: Mobile Market Performance
6464
Investor Presentation
Special Communication Tax (SCT) 7.5% 7.5%
VAT 18% 18%
Treasury Share1 15% 1%
TRX fees 5%(of net sales)
-
Contribution Share to Telecom Authority 0.35%(of net sales)
0.35%(of net sales)
New subscription SCT2 (at first enrollment) TRY 79.00 -
Wireless license fees (per acquisition) TRY 34.15 -
Wireless usage fees (annual) TRY 34.15 -
TAX MOBILE FIXED
1Under the license agreement Turkcell pays a treasury share equal to 15% of its gross revenue from Turkish GSM operations2 Excluding M2M SIMs
Taxation in Turkey
6565
Investor Presentation
13.6
9.1
6.6
3.1 3.1 3.12.5 2.5 2.5 2.5 2.5 2.5
2.5 2.5
17.2 15.714.4
11.1 11.1
8.16.5
4.94.8 4.2 4.4 4.5
5.0 5.1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
MTR-Turkcell Europe-MTR
MTR: Mobile Termination Rate Source: BEREC Jan 2020 report, Cullen International
EVOLUTION OF MTR TRY kuruş per min.
MTR RATESTRYkr.
OLD Since 2013 Asymmetry OLD Since 2013 Asymmetry
Turkcell 3.13 2.50 - 1.70 0.43 -
Vodafone TR 3.23 2.58 3% 1.73 0.43 -
TTKOM 3.70 2.96 18% 1.87 0.47 9%
Mobile Voice Rates SMS Rates
Turkcell MTR is halfof the European
MTR level
Mobile/SMS Termination Rates in Turkey
6666
Investor Presentation
4.11
5.606.33
8.42
4.52
6.036.65
9.13
2017 2018 2019 Q3 2020
Average Period-End
3.634.76
5.66
7.193.77
5.265.94
7.81
2017 2018 2019 Q3 2020
1.93 2.03 2.10
2.541.972.16 2.10
2.64
2017 2018 2019 Q3 2020
26.64
27.3225.90
27.55
28.07
27.69
23.69
28.30
2017 2018 2019 Q3 2020
USD / TRY EUR / TRY
USD / BYN USD / UAH
Currency Trends
67
Investor Presentation
Notice
This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities ExchangeAct of 1934 and the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. This includes, in particular, our targets for revenue, EBITDA,EBIT and capex in 2020 or for the medium term 2020 to 2022. More generally, all statements other than statements of historical facts included in thispresentation, including, without limitation, certain statements regarding the launch of new businesses, our operations, financial position and business strategymay constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the written or oral use of forward-lookingterminology such as, among others, "will," "expect," "intend," "estimate," "believe", "continue" and “guidance”.
Although Turkcell believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that suchexpectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety byreference to these cautionary statements. For a discussion of certain factors that may affect the outcome of such forward looking statements, see our AnnualReport on Form 20-F for 2019 filed with the U.S. Securities and Exchange Commission, and in particular the risk factor section therein. We undertake no duty toupdate or revise any forward looking statements, whether as a result of new information, future events or otherwise.
The Company makes no representation as to the accuracy or completeness of the information contained in this presentation, which remains subject toverification, completion and change. No responsibility or liability is or will be accepted by the Company or any of its subsidiaries, board members, officers,employees or agents as to or in relation to the accuracy or completeness of the information contained in this presentation or any other written or oralinformation made available to any interested party or its advisers.
Please note that all financial data are consolidated whereas non-financial data are unconsolidated unless otherwise specified. In the charts or tables used in thispresentation totals may not foot due to rounding differences. The figures used in this presentation are rounded while percentage changes are calculated based onthe figures disclosed in the press release.
68
Investor Presentation
THANK YOUFor further information please e-mail
[email protected] call Turkcell Investor Relations at
(+90 212 313 1888)
Turkcell IR Website
THANK YOU