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Turkcell Iletisim Hizmetleri: Fourth Quarter and Full Year 2014 Results

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Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) (BIST:TCELL):

  • 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, year-on-year comparison of our key indicators is provided and figures in parentheses following the operational and financial results for the year end 2014 refer to the same item at the year end of 2013 and figures in parentheses following the operational and financial results for the fourth quarter of 2014 refer to the same item in the fourth quarter of 2013. For further details, please refer to our consolidated financial statements and notes as at and for the year ended December 31, 2014, which can be accessed via our website in the investor relations section (www.turkcell.com.tr).
  • Please note that selected financial information presented in this press release for the fourth quarters and year end of 2014 and 2013, both in TRY and US$ is based on IFRS figures.
  • In the tables used in this press release totals may not foot due to rounding differences. The same applies for the calculations in the text.

HIGHLIGHTS

FULL YEAR

  • Turkcell Group revenues and EBITDA1 both grew by 6% to TRY12,044 million (TRY11,408 million) and TRY3,762 million (TRY3,544 million), respectively. EBITDA margin was at 31.2% (31.1%).
  • Net income fell 20% to TRY1,865 million (TRY2,326 million), adversely impacted mainly by macroeconomic conditions in our international markets of operation as well as several one off items. Excluding the one-off items, net income would be TRY2,135 million2.
  • Mobile business revenues in Turkey rose 3% to TRY9,369 million (TRY9,123 million) with an EBITDA margin of 31.2% (31.0%).
    • Mobile broadband revenues grew by 34% to TRY1,931 million (TRY1,437 million) with strong demand for data.
    • Voice revenues3 fell by 1% to TRY6,374 million (TRY6,460 million), mainly due to lower MTRs.
  • Subsidiaries4 registered revenue growth of 17% to TRY2,674 million (TRY2,285 million) and EBITDA growth of 18% to TRY838 million (TRY712 million).
  • On January 28, 2015, Turkcell announced CEO, Sureyya Ciliv’s resignation. On the same day, the Turkcell Board of Directors appointed Ilker Kuruoz as acting CEO in addition to his role as the Chief Technology Group Officer.

FOURTH QUARTER 2014

  • Group revenues grew by 8% to TRY3,103 million (TRY2,884 million) with the higher contribution of mobile broadband and fiber broadband revenues.
  • Group EBITDA1 rose 8% to TRY917 million (TRY851 million) with an EBITDA margin of 29.6% (29.5%).
  • Net income fell by 49% to TRY258 million (TRY505 million), mainly due to currency devaluation in Ukraine and Belarus, along with various one-offs. Excluding one-off impacts, net income would be TRY390 million2.
  • Mobile business revenues in Turkey reached TRY2,392 million (TRY2,240 million) on 7% growth, while the EBITDA margin rose to 30.1% (29.9%).
    • Mobile broadband revenues rose by 44% to TRY567 million (TRY394 million), posting the highest growth rate of the year.
    • Voice revenues3 grew by 1% to TRY1,555 million (TRY1,547 million).
  • Revenues of subsidiaries4 climbed 10% to TRY711 million (TRY644 million) with an EBITDA increase of 8% to TRY196 million (TRY181 million).

(1) EBITDA is a non-GAAP financial measure. See page 16 for the reconciliation of EBITDA to net cash from operating activities.
(2) The adjusted figures are non-IFRS measures. For further details on the factors for which adjustments have been made and on the calculation of the adjustments, please see page 9.
(3) Voice revenues include outgoing, incoming, roaming and other (comprising almost 1% of Turkcell Turkey) revenues.
(4) Including eliminations.
(*) For details, please refer to our consolidated financial statements and notes as at, and for the year ended December 31, 2014 which can be accessed on our web site in the investor relations section (www.turkcell.com.tr).

COMMENTS FROM CEO, ILKER KURUOZ

“Turkcell Group reached its 2014 targets. Consolidated revenues rose 6% to TRY12 billion, while EBITDA grew 6% to TRY3.8 billion. Meanwhile, EBIT rose 9% to TRY2.1 billion, while net income declined by 20% to TRY1.9 billion, mainly due to unfavorable macroeconomic conditions in countries of our international operations.

In 2014, Turkcell Turkey’s revenues grew by 3% on 34% growth in mobile broadband. Meanwhile, Turkcell Superonline revenues grew by 35% year-on-year on the back of an increased fiber subscriber base. Our Ukrainian business sustained its operational performance, and accordingly its revenues rose by 13% in local currency terms. Nonetheless, its revenues contracted 12% in TRY terms due to 97% local currency devaluation in Ukraine.

The Turkcell team in 2014 continued to differentiate itself with its focus on providing superior customer experience and best-in-class service to create more value for its customers through technology, innovation, and operational excellence. We introduced the Turkcell T50 to our customers, Turkey’s first operator branded smartphone with 4G, which ranked among the top selling smartphones in Turkey. Meanwhile, we launched our TV platform Turkcell TV Plus which, differentiated by the synergy between our 3G network and fiber infrastructure, strengthened our offering with a triple play service.

We are proud to have transformed Turkcell from a GSM only operator to a leading communication and technology company, both in Turkey and in the region, over the past 20 years. We sustain our pioneering role and leadership of the sector through consistent investment in technology and infrastructure, thereby providing our customers superior value. In the 4G era, we target creating more value for our customers with a sustained focus on quality, supported by accelerated investments, and innovative products and services.

We believe that the strong team spirit of Turkcell employees and support of our business partners, who together have made the company “Turkey’s Turkcell”, will ensure continued success. We thank all of our stakeholders for sharing our success story with us.”

OVERVIEW OF TURKCELL TURKEY

The mobile market remained competitive in 2014. The market continued to opt for price oriented offers over product, service and network speed. Furthermore, the market has shifted towards increased data incentive bundled offers. Despite some upward price adjustments in early Q414, these did not lead to significant improvement in overall competition. In light of the first quarter of 2015 thus far, we expect this competitive environment to prevail.

As Turkcell, our strategy has always been to provide a superior and differentiating customer experience through operational excellence and investment in technology and innovation, ensuring a high quality offering.

As a result of our continued focus on quality, our postpaid subscriber base expanded by 1.2 million yearly net additions to 15.2 million. Accordingly, the postpaid share in total subscribers reached 44%, and 70% in total revenues. Overall, our subscriber base declined by 0.5 million to 34.6 million, mainly through losses from the more price-sensitive prepaid segment. Meanwhile, blended ARPU for the full year rose by 4% driven by an increased postpaid subscriber base and rising mobile data demand.

On the smartphone front, the momentum has continued, despite the regulatory change on credit card payment and local currency depreciation. This durable growth of the smartphone market should help us realize our strategy to monetize the mobile broadband business. Our attractive contracted offers and the success of our affordable T-branded smartphones led to 3.1 million additions to our smartphone base, which rose to 12.7 million. This amounted to a 10 pp yearly increase in smartphone penetration on our network to 40%.

In 2014, we had continued to differentiate ourselves with our innovative products and services. We strengthened our leading M2M solution provider position with the launch of our “Connected Car Platform”. We expanded Turkcell-branded applications further with “Super SmallBiz” targeting small businesses and “Turkcell My Child and Me” for parents. Our latest T-series smartphone, T-50, became the top selling smartphone in Turkey in Q314, while Turkcell TV+, our TV platform, strengthened our product offering and enabled Turkcell Superonline to provide triple play services.

Looking forward, we remain quite enthusiastic about the new era of 4G in Turkey. We aim to sustain our technology leadership in the market by leveraging on the synergy with our fiber broadband subsidiary to ensure our customers enjoy the full value of the 4G environment.

Turkcell Group Guidance*:

For 2015, we anticipate continued growth on a consolidated basis, mainly through our mobile broadband and fiber broadband businesses in Turkey. We target consolidated revenues in the range of TRY12,800 – TRY13,100 million and consolidated EBITDA in the range of TRY3,850 – TRY4,050 million. In accordance with our growth plans, we expect an operational capex to sales ratio of around 20%, with increased investments in preparation of the mobile network to 4G transition, further expansion of the fiber network, and the roll out of Astelit’s 3G network. This ratio excludes new spectrum fees in Turkey and Ukraine related to 4G and 3G, respectively, which are expected to be auctioned this year.

(*) Please note that this paragraph contains forward looking statements based on our current estimates and expectations regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual Report on Form 20-F for 2013 filed with U.S. Securities and Exchange Commission, and in particular, the risk factor section therein.

FINANCIAL AND OPERATIONAL REVIEW

The following discussion focuses principally on the developments and trends in our business in the fourth quarter and full year 2014 in TRY terms. Selected financial information presented in this press release for the fourth quarters and for the full year 2014 and 2013, both in TRY and US$, is based on IFRS figures.

Selected financial information for the fourth quarter of 2013, third and fourth quarters of 2014 and full year 2013 and 2014, both in TRY and US$ prepared in accordance with IFRS, and in TRY prepared in accordance with the Turkish Accounting standards is also included at the end of this press release.

Financial Review of Turkcell Group

Profit & Loss Statement

(million TRY)

Quarter Year
Q413 Q414 y/y % FY13 FY14 y/y %
Total Revenue 2,883.6 3,103.2 7.6% 11,407.9 12,043.6 5.6%
Direct cost of revenues1 (1,851.3) (1,972.2) 6.5% (7,063.9) (7,383.9) 4.5%
Direct cost of revenues1/revenues (64.2%) (63.6%) 0.6pp (61.9%) (61.3%) 0.6pp
Depreciation and amortization (481.6) (450.7) (6.4%) (1,594.4) (1,639.4) 2.8%
Gross Margin 35.8% 36.4% 0.6pp 38.1% 38.7% 0.6pp
Administrative expenses (152.0) (146.8) (3.4%) (550.3) (562.7) 2.3%
Administrative expenses/revenues (5.3%) (4.7%) 0.6pp (4.8%) (4.7%) 0.1pp
Selling and marketing expenses (510.4) (517.8) 1.4% (1,843.6) (1,974.6) 7.1%
Selling and marketing expenses/revenues (17.7%) (16.7%) 1.0pp (16.2%) (16.4%) (0.2pp)
EBITDA2 851.5 917.1 7.7% 3,544.5 3,761.8 6.1%
EBITDA Margin 29.5% 29.6% 0.1pp 31.1% 31.2% 0.1pp
EBIT3 369.9 466.4 26.1% 1,950.1 2,122.4 8.8%
Net finance income / (expense) 149.7 (176.9) (218.2%) 555.3 (291.6) (152.5%)
Finance expense (89.7) (400.1) 346.0% (204.6) (1,247.0) 509.5%
Finance income 239.4 223.2 (6.8%) 759.9 955.4 25.7%
Share of profit of associates 75.8 (6.9) (109.1%) 297.3 207.3 (30.3%)
Other income / (expense) (35.6) 1.4 (103.9%) (58.9) (76.3) 29.5%
Monetary gains / (losses) 72.5 32.3 (55.4%) 176.9 205.1 15.9%
Non-controlling interests (7.9) 128.9 n.m. (3.4) 428.2 n.m.
Income tax expense (119.5) (187.3) 56.7% (591.4) (730.4) 23.5%
Net Income 504.9 257.9 (48.9%) 2,325.9 1,864.7 (19.8%)

(1) Including depreciation and amortization expenses.
(2) EBITDA is a non-GAAP financial measure. See page 16 for the reconciliation of EBITDA to net cash from operating activities.
(3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.

Revenue grew by 7.6% year-on-year to TRY3,103.2 million (TRY2,883.6 million) in Q414 driven by:

  • 6.8% rise in mobile business revenues in Turkey to TRY2,391.7 million (TRY2,239.5 million)
    • 43.9% growth in mobile broadband revenues to TRY566.7 million (TRY393.7 million) with increased smartphone users on our network, higher number of mobile broadband users and increased data usage
    • 25.7% fall in SMS revenues due to the declining usage trend impacted by the adoption of OTT (“over the top” messaging) and other alternative instant messaging services, coupled with the ICTA’s 20% ceiling price decrease on SMS, which came into effect on 1 January 2014
    • 20.7% increase in mobile services revenues with our increased efforts to promote these services
  • 10.5% increase in the revenues of subsidiaries to TRY711.4 million (TRY644.0 million) comprising 22.9% (22.3%) of the Group top line.
    • 28.1% increase in Turkcell Superonline revenues to TRY335.8 million (TRY262.1 million)
    • 27.9% decline in Astelit’s revenues to TRY167.1 million (TRY231.9 million)

For the full year, revenues grew by 5.6% to TRY12,043.6 million (TRY11,407.9 million) driven by:

  • 2.7% increase in mobile business revenues in Turkey to TRY9,369.5 million (TRY9,123.1 million). Excluding MTR cut impact, mobile business revenues in Turkey would have increased by 5%.
    • 34.4% rise in mobile broadband revenues to TRY1,930.6 million (TRY1,436.7 million) with increased smartphone penetration of 10 percentage points in a year, a higher number of mobile broadband users and increased data usage
    • 23.0% fall in SMS revenues due to the declining usage trend impacted by the increasing adoption of OTT and alternative messaging services, coupled with the ICTA’s 20% ceiling price decrease on SMS
    • 5.3% growth in mobile services revenues
  • 17.0% rise in the revenues of subsidiaries to TRY2,674.1 million (TRY2,284.7 million) constituting 22.2% (20.0%) of the Group top line.
    • 35.4% growth in Turkcell Superonline revenues to TRY1,252.5 million (TRY925.2 million)
    • 12.0% decrease in Astelit’s revenues to TRY758.2 million (TRY861.6 million)

Direct cost of revenues* rose by 6.5% to TRY1,972.2 million (TRY1,851.3 million) in Q414, while as a percentage of revenues declining to 63.6% (64.2%) driven by the decrease in depreciation and amortization expenses and other various cost items, more than offsetting the increase in operational expenses of certain subsidiaries.

For the full year, direct cost of revenues grew by 4.5% to TRY7,383.9 million (TRY7,063.9 million), while as a percentage of revenues decreasing to 61.3% (61.9%). This decrease was led by the lower interconnect costs of Turkcell Turkey and decrease in various other cost items as opposed to the rise in the operational expenses of certain subsidiaries.

The table below presents the interconnect revenues and costs of Turkcell Turkey:

Million TRY Quarter Year
Q413 Q414 y/y % FY13 FY14 y/y %
Interconnect revenues 253.2 281.3 11.1% 1,171.3 1,116.5 (4.7%)
as a % of revenues 11.3% 11.8% 0.5pp 12.8% 11.9% (0.9pp)
Interconnect costs (238.6) (267.1) 11.9% (1,118.3) (1,049.7) (6.1%)
as a % of revenues (10.7%) (11.2%) (0.5pp) (12.3%) (11.2%) 1.1pp

Administrative expenses as a percentage of revenues declined 0.6pp to 4.7% (5.3%) in Q414, mainly due to lower bad debt expenses (0.4pp) and other cost items (0.2pp). For the full year, administrative expenses as a percentage of revenues decreased by 0.1pp to 4.7% (4.8%).

*In 2013, the direct cost of revenues included a total tax expense of TRY34 million regarding the ICTA decision dated September 26, 2012 enabling users of mobile lines without subscription to register those lines under their names at no charge.

Selling and marketing expenses as a percentage of revenues fell by 1.0pp to 16.7% (17.7%) in Q414, mainly driven by the decrease in selling expenses (0.6pp), marketing expenses (0.3pp) and other cost items (0.1pp).

For the full year, selling and marketing expenses as a percentage of revenues increased to 16.4% (16.2%) driven by the increase in selling expenses (0.2pp) and other cost items (0.4pp) more than offsetting the decline in marketing expenses (0.4pp).

EBITDA* rose by 7.7% to TRY917.1 million (TRY851.5 million), while the EBITDA margin was at 29.6% (29.5%) in Q414. The decrease in selling and marketing expenses by 1.0pp and administrative expenses by 0.6pp was offset by the increase in direct cost of revenues (excluding depreciation and amortization) by 1.5pp as a percentage of revenues.

For the full year, EBITDA rose to TRY3,761.8 million (TRY3,544.5 million) on 6.1% growth, while the EBITDA margin stood at 31.2% (31.1%). The 0.2pp decrease in direct cost of revenues (excluding depreciation and amortization) and in administrative expenses by 0.1pp was offset by the 0.2pp increase in selling and marketing expenses as a percentage of revenues.

The EBITDA of subsidiaries grew by 8.3% to TRY196.0 million (TRY181.0 million) in Q414. For the full year, the EBITDA of subsidiaries rose by 17.6% to TRY 837.5 million (TRY712.1 million).

Net finance expense of TRY176.9 million (net finance income of TRY149.7 million) was recorded in Q414, mainly due to the increase in translation losses to TRY383 million (TRY59.0 million).

For the full year, Turkcell Group recorded a net finance expense of TRY291.6 million (net finance income of TRY555.3 million) due to higher translation losses of TRY1,110.8 million (TRY75.6 million), partially offset by higher interest income earned on time deposits.

The table below presents translation loss details:

Million TRY Quarter Year
Q413 Q414 y/y % FY13 FY14 y/y %
Turkcell Turkey 21.9 72.9 232.9% 139.1 225.8 62.3%
Turkcell Superonline (18.4) (6.3) (65.8%) (59.2) (38.2) (35.5%)
Astelit (2.3) (294.9) n.m. (7.6) (991.2) n.m.
Best (58.9) (149.6) 154.0% (123.6) (294.5) 138.3%
Other (1.3) (5.1) 292.3% (24.3) (12.7) (47.7%)
Turkcell Group (59.0) (383.0) 549.2% (75.6) (1,110.8) n.m.

The share of profit of equity accounted investees was a loss of TRY6.9 million (income of TRY75.8 million), mainly due to non-cash impairment charges of US$88 million recorded by Fintur in relation to goodwill and fixed assets in Q414. The impact of this on our Group financials was TRY83 million on the basis of our 41.45% share of Fintur.

For the full year, our share in the net income of unconsolidated investees fell by 30.3% to TRY207.3 million (TRY297.3 million) impacted mainly by non-cash charges of US$125 million in Fintur, stemming from write down of operational assets and impairment charges relating to goodwill and fixed assets. These charges negatively impacted our Group financials by TRY116 million on the basis of our 41.45% share in Fintur.(*)EBITDA is a non-GAAP financial measure. See page 16 for the reconciliation of EBITDA to net cash from operating activities

Income tax expense details for Q414 and FY14 are presented in the table below:

Million TRY Quarter Year
Q413 Q414 y/y % FY13 FY14 y/y %
Current Tax expense (166.7) (170.3) 2.2% (650.5) (709.4) 9.1%
Deferred Tax Income/expense 47.2 (17.0) (136.0%) 59.1 (21.0) (135.5%)
Income Tax expense (119.5) (187.3) 56.7% (591.4) (730.4) 23.5%

Net income fell by 48.9% to TRY257.9 million (TRY504.9 million) in Q414. Net income was negatively impacted by the devaluation of UAH against US$ in Ukraine and BYR against US$ in Belarus, non-cash impairment charges incurred by Fintur, decrease in monetary gain and a higher tax expense. Net income was impacted by several one-off items both in Q413 and Q414. Excluding one-off items, net income in Q414 would be TRY390 million (TRY630 million in Q413).

For the full year, net income declined by 19.8% to TRY1,864.7 million (TRY2,325.9 million). This was mainly driven by devaluation in Ukraine and Belarus, the impact of non-cash impairment charges incurred by Fintur and a higher tax expense. Excluding one-off items, net income in FY14 would be TRY2,135 million (TRY2,511 million in FY13).

Net income impacts (million TRY) Q413 FY13 Net income impacts (million TRY) Q414 FY14
Net income excluding one-offs* 630 2,511 Net income excluding one-offs* 390 2,135
BeST impairment (61) (61) Best impairment (35) (35)
ICTA Decision Regarding a Tariff** (41) (41) Fintur impact (83) (116)
Other impacts (23) (83) A-Tel Share Sale impact 24
Reimbursements** (8) (29)
ICTA penalties** (2) (108)
Other impacts (4) (6)
Net income reported 505 2,326 Net income reported 258 1,865

* Net income excluding one-off impacts is a presentation of our net income, adjusted to exclude certain items that we consider to be exceptional. However, it should not be relied upon as comparable to reported net income prepared in accordance with the IFRS that we apply. Although we expect that the specific items represented in this adjustment are non-recurring, no assurance can be given that this will be the case and that we will not be affected by similar items in the future.
** For details, please refer to consolidated financial statements and notes as at and for the years ended December 31, 2013 and December 31, 2014 under the note 34 which can be accessed via our website.

In Q413 and FY13, other impacts mainly comprised impairment charges, regulatory penalties and the tax expense regarding the ICTA decision as explained at the footnote of direct cost of revenues section.

Total debt as of December 31, 2014 was at TRY3,697.7 million (US$1,594.6 million), compared to TRY3,545.0 million (US$1,555.6 million) as of September 30, 2014 in consolidated terms. The debt balance of Ukraine (including intra-group debt) was TRY1,580.3 million (US$681.5 million), Belarus was TRY1,540.3 million (US$664.2 million) and Turkcell Superonline was TRY737.0 million (US$317.8 million).

TRY2,890.9 million (US$1,246.7 million) of our consolidated debt is at a floating rate, while TRY2,449.8 million (US$1,056.5 million) will mature within less than a year. As of December 31, 2014, our debt/annual EBITDA ratio in TRY terms was 98%. (Please note that the figures in parentheses refer to US$ equivalents).

Cash flow analysis: Capital expenditures, including non-operational items in Q414, amounted to TRY935.3 million, of which TRY593.7 million was related to Turkcell Turkey, TRY254.4 million to Turkcell Superonline, TRY37.7 million to Astelit and TRY15.6 million to BeST. The cash flow item noted as “other” included cash inflows mainly relating to the effects of foreign exchange rate valuations on cash and cash equivalents and cash outflows due to corporate tax payment and the change in net working capital.

For the full year, capital expenditures including non-operational items were at TRY2,144.8 million, of which TRY1,361.6 million was related to Turkcell Turkey, TRY552.8 million to Turkcell Superonline, TRY101.3 million to Astelit and TRY35.4 million to BeST. The cash flow item noted as “other” mainly comprised cash inflow related to dividends from Fintur and cash outflows due to corporate tax payment and the change in net working capital.

In 2014, operational capex as a percentage of revenues realized at around 17%.

Consolidated Cash Flow (million TRY) Quarter Year
Q413 Q414 FY13 FY14
EBITDA1 851.5 917.1 3,544.5 3,761.8
LESS:
Capex and License (818.5) (935.3) (1,822.3) (2,144.8)
Turkcell (500.2) (593.7) (1,057.8) (1,361.6)
Turkcell Superonline (172.1) (254.4) (399.1) (552.8)
Ukraine2 (61.2) (37.7) (144.6) (101.3)
Net interest Income/ (expense) 208.7 206.1 630.9 819.3
Other 199.1 57.8 (995.2) (1,633.8)
Net Change in Debt (15.2) 94.2 (227.9) 100.5
Cash generated / (used) 425.6 339.9 1,130.0 903.0
Cash balance 8,128.9 9,031.9 8,128.9 9,031.9

(1) EBITDA is a non-GAAP financial measurement. See page 16 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 Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
Number of total subscribers (million) 35.2 34.6 (1.7%) 35.2 34.6 (1.7%)
Postpaid 14.0 15.2 8.6% 14.0 15.2 8.6%
Prepaid 21.2 19.4 (8.5%) 21.2 19.4 (8.5%)
ARPU(Average Monthly Revenue per User), blended (TRY) 21.3 23.0 8.0% 21.7 22.5 3.7%
Postpaid 36.5 38.0 4.1% 37.3 37.7 1.1%
Prepaid 11.3 11.6 2.7% 11.8 11.6 (1.7%)
ARPU, blended (US$) 10.5 10.3 (1.9%) 11.4 11.2 (1.8%)
Postpaid 18.0 17.0 (5.6%) 19.6 18.8 (4.1%)
Prepaid 5.6 5.2 (7.1%) 6.2 5.8 (6.5%)
Churn (%) 6.7% 7.7% 1.0pp 27.4% 28.3% 0.9pp
MOU (Average Monthly Minutes of Usage per Subscriber), blended 257.5 279.3 8.5% 259.3 275.3 6.2%

Subscribers of Turkcell Turkey declined by 548 thousand (98 thousand net losses in Q414) to 34.6 million in 2014 due to losses in the more price-sensitive prepaid segment in the ongoing aggressive competitive environment. Meanwhile, we expanded our postpaid subscriber base by 1.2 million net additions during the year, mainly through pre to post switches and superior network quality. Consequently, our postpaid subscriber share in total subscriber base has improved to 43.9% (39.8%).

Churn Rate refers to voluntarily and involuntarily disconnected subscribers. Our churn rate increased by 1.0pp to 7.7% in Q414, and by 0.9pp to 28.3%* for the full year, primarily impacted by the increased competition in the market.

ARPU rose by 8.0% to TRY23.0 (TRY21.3) in Q414 on the back of higher mobile broadband usage and increased postpaid customer base. For the full year, ARPU grew by 3.7% to TRY22.5 (TRY21.7) driven by the same factors.

MoU rose by 8.5% to 279.3 minutes in Q414 and by 6.2% to 275.3 minutes in 2014. This increase in MoU was led by higher incentives and higher package utilization.

OTHER DOMESTIC AND INTERNATIONAL OPERATIONS

Astelit’s financial performance has been adversely impacted by the unfavorable political and macroeconomic environment in Ukraine throughout the year. The local currency devaluation, which has reached 97% for the full year, led Astelit’s contribution to Group revenue to contract in 2014 and also caused significant FX losses at the Group level. In 2015, the local currency devaluation exceeded 60% year-to-date.
Astelit recorded 15% revenue growth in local currency in the fourth quarter, while in TL terms, registering a decline of 27.9% to TRY167.1 million (TRY231.9 million). EBITDA declined 30.4% to TRY49.7 million (TRY71.4 million) with an EBITDA margin of 29.7% (30.8%). For the full year, local currency revenue growth was at 13%, whereas, in TL terms, there was a decrease of 12.0% to TRY758.2 million (TRY861.6 million). With the 11.7% decline in EBITDA to TRY232.2 million (TRY262.9 million), Astelit maintained its EBITDA margin at 30.6% (30.5%) in 2014.
On the operational front, Astelit recorded 1.1 million net additions throughout the year, increasing its three-month active subscriber base to 10.3 million. Blended ARPU (3-month active) rose by 1.2% to UAH33.3 (UAH32.9) in Q414 and remained almost flat at UAH34.5 (UAH34.4) for the full year. The MoU (12-months active) fell by 5.3% to 162.8 minutes (172.0 minutes) in Q414, and by 6.9% to 166.7 minutes (179.0 minutes) in the full year, due to changing consumer behavior as a result of tough macroeconomic conditions.

(*) Churn rate in FY13 was impacted by the ICTA decision enabling users of mobile lines without a subscription to register those lines undertheir names. Each subscription line registered due to this decision had to be recorded as a churn, and also as an acquisition in operators’records. Excluding the impact of this decision, the churn rate would have been 26.4% in 2013.

Ukraine has been facing political tension since early 2014. As a result, in Crimea, which constituted 3% of Astelit’s revenues in 2014, operations have been discontinued starting from Q414 for reasons beyond its control, and are unlikely to be resumed in the near future. As of December 31, 2014, Astelit’s non-current assets in Crimea were fully depreciated to their scrap value. Yet, despite occasional network disruptions in the Donetsk and Luhansk regions, Astelit has continued its operations to date without major incident.

We continue to believe in the potential of the Ukrainian mobile market and remain committed to our operations in that country. On January 15, 2015, we announced Astelit’s application to participate in the 3G license tender. In compliance with the 3G tender conditions, Astelit paid tender guarantees of UAH270 million for each three lots, totaling UAH810 million, on February 10, 2015. Introduction of 3G technology is expected to open a new chapter in Ukraine’s telecommunication industry, and we are excited to extend the expertise we have developed in our home market to this arena.

Astelit* Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
Number of subscribers (million)1 12.6 13.9 10.3% 12.6 13.9 10.3%
Active (3 months)2 9.2 10.3 12.0% 9.2 10.3 12.0%
MOU (minutes) (12 months) 172.0 162.8 (5.3%) 179.0 166.7 (6.9%)
ARPU (Average Monthly Revenue per User), blended (US$) 3.1 1.8 (41.9%) 3.2 2.2 (31.3%)
Active (3 months) (US$) 4.1 2.4 (41.5%) 4.3 3.0 (30.2%)
Active (3 months) (UAH) 32.9 33.3 1.2% 34.4 34.5 0.3%
Revenue (million UAH) 912.8 1,046.7 14.7% 3,595.2 4,051.7 12.7%
Revenue (million TRY) 231.9 167.1 (27.9%) 861.6 758.2 (12.0%)
Revenue (million US$) 114.2 74.5 (34.8%) 449.8 347.2 (22.8%)
EBITDA (million UAH) 281.0 310.4 10.5% 1,096.0 1,237.3 12.9%
EBITDA (million TRY) 71.4 49.7 (30.4%) 262.9 232.2 (11.7%)
EBITDA (million US$)3 35.2 22.2 (36.9%) 137.1 106.3 (22.5%)
EBITDA margin 30.8% 29.7% (1.1pp) 30.5% 30.6% 0.1pp
Net loss (million UAH) (19.1) (2,078.7) n.m. (261.5) (5,593.2) n.m.
Net loss (million TRY) (4.9) (323.2) n.m. (60.7) (1,066.9) n.m.
Net loss (million US$) (2.4) (145.0) n.m. (32.7) (484.3) n.m.
Capex (million UAH) 213.9 327.2 53.0% 541.5 688.9 27.2%
Capex (million TRY) 61.2 37.7 (38.4%) 144.6 101.3 (29.9%)
Capex (million US$) 26.8 15.8 (41.0%) 67.8 43.7 (35.5%)

(*) Astelit, in which we hold a 55% stake through Euroasia, has operated in Ukraine since February 2005.
(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 revenue generating activity.
(3) EBITDA is a non-GAAP financial measurement. See page 16 for the reconciliation of Euroasia’s EBITDA to net cash from operating activities. Euroasia holds a 100% stake in Astelit.

Turkcell Superonline resumed its solid financial and operational performance on 28.1% revenue growth and a 34.2% EBITDA rise in Q414. The EBITDA margin improved 1.2pp to 25.6% (24.4%), mainly with the increasing scale of the business.

In Q414, the share of residential and corporate segment revenues in total revenues reached 71% (64%) following the 52.8% and 27.4% growth of residential and corporate segment revenues, respectively. Meanwhile, the share of non-group revenues reached 78% (74%).

For the full year, growth momentum continued with a revenue rise of 35.4% and EBITDA increase of 37.6%. The EBITDA margin reached 26.1% (25.7%) on a 0.4pp improvement. Residential segment revenues grew by 53.2%, while the corporate segment revenues grew by 32.2%. Accordingly, the share of residential and corporate business in total revenues rose to 67% (63%). The share of non-group revenues increased to 77% (74%).

Turkcell Superonline’s total subscriber base (including ADSL subscribers) reached 1.2 million on the back of 346 thousand net additions in 2014. FTTH subscriber base1 increased to 735 thousand with a 165 thousand net increase for the full year. By the end of 2014, Turkcell Superonline has become the market leader in terms of number of total FTTH subscribers in Turkey.

Turkcell Superonline has continued to invest in its fiber network, increasing home passes2 by 380 thousand in 2014 to 2.1 million. Furthermore, capitalizing on its network, Turkcell Superonline has strengthened its product offering with the addition of the TV platform, Turkcell TV+.

In 2015, we expect Turkcell Superonline to continue its growth momentum by expanding its subscriber base, increasing its home passes2 with further capital expenditure in its infrastructure.

Moreover, we expect that the arrival of the new 4G era will bring additional synergies between our mobile and fiber businesses, and strengthen Turkcell Superonline’s already successful business model.

Turkcell Superonline* (million TRY) Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
Revenue 262.1 335.8 28.1% 925.2 1,252.5 35.4%
Residential 94.4 144.2 52.8% 329.6 504.9 53.2%
% of revenues 36.0% 42.9% 6.9pp 35.6% 40.3% 4.7pp
Corporate 73.7 93.9 27.4% 253.4 335.1 32.2%
% of revenues 28.1% 28.0% (0.1pp) 27.4% 26.8% (0.6pp)
Wholesale 94.0 97.7 3.9% 342.3 412.5 20.5%
% of revenues 35.9% 29.1% (6.8pp) 37.0% 32.9% (4.1pp)
EBITDA 3 64.1 86.0 34.2% 237.8 327.1 37.6%
EBITDA Margin 24.4% 25.6% 1.2pp 25.7% 26.1% 0.4pp
Capex 172.1 254.4 47.8% 399.1 552.8 38.5%
FTTH subscribers 570.0 735.1 29.0% 570.0 735.1 29.0%

(*)Turkcell Superonline is our wholly-owned subsidiary, providing fiber broadband.
(1) FTTH subscriber base refers to residential, corporate and wholesale fiber subscribers.
(2) Home passes figure refers to the total of home passes and office passes figures.
(3)EBITDA is a non-GAAP financial measure. See page 16 for the reconciliation of EBITDA to net cash from operating activities.

Fintur subscriber base declined 0.7 million during the year, resulting from Kcell’s subscriber decline, mainly due to clean-up of subscribers. Fintur’s consolidated revenues declined by 19.7% to US$423 million (US$527 million) in Q414, driven mainly by decrease in Kcell revenues resulting from devaluation of the Kazakhstani Tenge (KZT) against the US$. For the full year, revenues fell by 11.5% to US$1,801 million (US$2,036 million) mainly due to the same factors.

Fintur had a negative impact of US$3 million (US$37 million contribution) on our net income in Q414 driven mainly by non-cash impairment charges at Fintur as discussed on page 8. Fintur’s contribution to Turkcell’s net income declined by 39.1% to US$95 million (US$156 million) in 2014 due to non-cash charges as explained on page 8.

Fintur* Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
Subscribers (million) 21.5 20.8 (3.3%) 21.5 20.8 (3.3%)
Kazakhstan 14.3 13.0 (9.1%) 14.3 13.0 (9.1%)
Azerbaijan 4.4 4.6 4.5% 4.4 4.6 4.5%
Moldova 1.0 1.1 10.0% 1.0 1.1 10.0%
Georgia 1.8 2.1 16.7% 1.8 2.1 16.7%
Revenue (million US$) 527 423 (19.7%) 2,036 1,801 (11.5%)
Kazakhstan 322 248 (23.0%) 1,233 1,052 (14.7%)
Azerbaijan 151 127 (15.9%) 584 549 (6.0%)
Moldova 20 17 (15.0%) 79 72 (8.9%)
Georgia 35 31 (11.4%) 140 128 (8.6%)
Fintur’s contribution to Group’s net income (million US$) 37 (3) (108.1%) 156 95 (39.1%)

(*) We hold a 41.45% stake In Fintur, which has interests in Kazakhstan, Azerbaijan, Moldova, and Georgia.

Turkcell Group Subscribers amounted to approximately 71.5 million as of December 31, 2014. This figure is calculated by taking the number of subscribers of Turkcell and each of our subsidiaries and unconsolidated investees. It includes the total number of mobile subscribers of Turkcell Turkey, Astelit and BeST, as well as of our operations in the Turkish Republic of Northern Cyprus (“Northern Cyprus”), Fintur and Turkcell Europe. Turkcell Group subscribers rose by 0.2 million year-on-year mainly driven by the increase in subscriber base of Astelit.

Turkcell Group Subscribers (million) 2013 2014 y/y %
Turkcell Turkey 35.2 34.6 (1.7%)
Ukraine 12.6 13.9 10.3%
Fintur 21.5 20.8 (3.3%)
Northern Cyprus 0.4 0.4 -
Belarus 1.2 1.4 16.7%
Turkcell Europe1 0.4 0.4 -
TURKCELL GROUP 71.3 71.5 0.3%

1: The “wholesale traffic purchase” agreement, signed between Turkcell Europe GmbH operating in Germany and Deutsche Telekom for five years in 2010, had been modified to reflect the shift in business model to a “marketing partnership”. The new agreement between Turkcell and a subsidiary of Deutsche Telekom was signed on August 27, 2014. The transfer of Turkcell Europe subscribers and operations to Deutsche Telekom’s subsidiary was completed on January 15, 2015.

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.

Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
TRY / US$ rate
Closing Rate 2.1343 2.3189 8.6% 2.1343 2.3189 8.6%
Average Rate 2.0302 2.2421 10.4% 1.9094 2.1850 14.4%
Consumer Price Index (Turkey) 2.3% 1.6% (0.7pp) 7.4% 8.2% 0.8pp
GDP Growth (Turkey) 4.5% n.a. n.a. 4.1% n.a. n.a.
UAH/ US$ rate
Closing Rate 7.99 15.77 97.4% 7.99 15.77 97.4%
Average Rate 7.99 14.09 76.3% 7.99 11.87 48.6%
BYR/ US$ rate
Closing Rate 9,510 11,850 24.6% 9,510 11,850 24.6%
Average Rate 9,282 10,912 17.6% 8,883 10,255 15.4%

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 Group (million US$) Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
EBITDA 420.4 409.1 (2.7%) 1,858.0 1,725.2 (7.1%)
Income tax expense (59.4) (83.5) 40.6% (310.7) (334.6) 7.7%
Other operating income / (expense) (16.9) (1.3) (92.3%) (29.2) (40.3) 38.0%
Financial income / (expense) 78.2 3.9 (95.0%) 299.9 17.8 (94.1%)
Net increase / (decrease) in assets and liabilities 26.5 14.9 (43.8%) (824.0) (566.3) (31.3%)
Net cash from operating activities 448.8 343.1 (23.6%) 994.0 801.8 (19.3%)
Turkcell Superonline (million TRY) Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
EBITDA 64.1 86.0 34.2% 237.8 327.1 37.6%
Income tax expense 35.3 (8.6) (124.4%) 38.4 (19.1) (149.7%)
Other operating income / (expense) 2.7 0.9 (66.7%) 0.6 3.1 416.7%
Financial income / (expense) (18.4) (37.7) 104.9% (63.7) (57.8) (9.3%)
Net increase / (decrease) in assets and liabilities 15.2 82.7 444.1% (106.0) 48.0 (145.3%)
Net cash from operating activities 98.9 123.3 24.7% 107.1 301.3 181.3%
Euroasia (million US$) Quarter Year
Q413 Q414 y/y% FY13 FY14 y/y%
EBITDA 35.2 22.2 (36.9%) 137.1 106.3 (22.5%)
Other operating income / (expense) (0.2) 0.5 (350.0%) 1.1 1.0 (9.1%)
Financial income / (expense) (9.0) (13.8) 53.3% (50.9) (56.1) 10.2%
Net increase / (decrease) in assets and liabilities (27.4) 15.5 (156.6%) (10.9) 17.4 (259.6%)
Net cash from operating activities (1.4) 24.4 n.m. 76.4 68.6 (10.2%)

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. This includes, in particular, our targets for revenue, EBITDA and capex in 2015 and our 4G and 3G development in Turkey and Ukraine, respectively. More generally, 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”, “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 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 2013 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 34.6 million subscribers as of December 31, 2014. Turkcell is a leading regional player with its approximately 71.5 million subscribers in nine countries as of December 31, 2014. It was one of the first among the global operators to have implemented HSPA+. It has announced two new HSPA+ Technologies on its 3G network to meet rising data usage. Having successfully integrated 3C-HSDPA and DC-HSUPA Technologies, it became the first mobile operator in the world to enable peak speed of 63.3 Mbps downlink while also enabled an 11.5 Mbps uplink on a 3G network. Turkcell Superonline, a wholly owned subsidiary of Turkcell, is the first telecom operator to offer households fiber broadband connection at speeds of up to 1,000 Mbps in Turkey. As of December 2014, Turkcell’s population coverage is at 99.81% in 2G and 91.21% in 3G. Turkcell reported a TRY12.0 billion (US$5.5 billion) revenue with total assets of TRY23.7 billion (US$10.2 billion) as of December 31, 2014. It has been listed on the NYSE and the BIST since July 2000, and is the only NYSE-listed company in Turkey. Read more at www.turkcell.com.tr

This press release can also be viewed using the Turkcell Investor Relation app, which can be downloaded here for iOS, and here for Android mobile devices.

TURKCELL ILETISIM HIZMETLERI A.S.

TURKISH ACCOUNTING STANDARDS SELECTED FINANCIALS (TRY Million)

Quarter Ended Quarter Ended Quarter Ended 12 Months Ended 12 Months Ended
December 31, September 30, December 31, December 31, December 31,
2013 2014 2014 2013 2014
Consolidated Statement of Operations Data
Revenues
Communication fees 2,545.3 2,757.5 2,631.9 10,242.8 10,437.2
Revenues from betting business 73.1 69.1 85.5 230.4 297.9
Monthly fixed fees 18.2 10.0 10.4 75.9 51.5
Simcard sales 7.2 11.9 6.3 29.8 31.7
Call center revenues and other revenues 239.8 313.7 369.1 829.0 1,225.3
Total revenues 2,883.6 3,162.2 3,103.2 11,407.9 12,043.6
Direct cost of revenues -1,848.9 -1,879.0 -1,972.2 -7,058.9 -7,380.8
Gross profit 1,034.7 1,283.2 1,131.0 4,349.0 4,662.8
Administrative expenses -152.0 -138.0 -146.8 -550.3 -562.7
Selling & marketing expenses -510.4 -496.5 -517.8 -1,843.6 -1,974.6
Other Operating Income / (Expense) 35.3 424.0 269.4 907.9 1,053.6
Operating profit before financing and investing costs 407.6 1,072.7 735.8 2,863.0 3,179.1
Income from investing activities 8.9 1.7 5.4 30.2 20.0
Expense from investing activities -15.3 -10.2 9.3 -58.1 -16.8
Share of profit of equity accounted investees 75.8 66.8 -6.9 297.3 207.3
Income before financing costs 477.0 1,131.0 743.6 3,132.4 3,389.6
Finance expense 85.1 -255.6 -459.8 -383.2 -1,424.9
Monetary gain/(loss) 72.5 48.3 32.3 176.9 205.1
Income before tax and non-controlling interest 634.6 923.7 316.1 2,926.1 2,169.8
Income tax expense -120.0 -217.0 -187.1 -592.4 -731.1
Income before non-controlling interest 514.6 706.7 129.0 2,333.7 1,438.7
Non-controlling interest -7.9 49.0 128.9 -3.4 428.2
Net income 506.7 755.7 257.9 2,330.3 1,866.9
Net income per share 0.23 0.34 0.12 1.06 0.85
Other Financial Data
Gross margin 35.9% 40.6% 36.4% 38.1% 38.7%
EBITDA(*) 851.5 1,050.4 917.1 3,544.5 3,761.8
Capital expenditures 818.5 555.1 935.3 1,822.3 2,144.8
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 8,128.9 8,692.0 9,031.9 8,128.9 9,031.9
Total assets 21,255.6 22,673.4 23,668.3 21,255.6 23,668.3
Long term debt 1,528.5 1,101.3 1,247.9 1,528.5 1,247.9
Total debt 3,332.5 3,545.0 3,697.7 3,332.5 3,697.7
Total liabilities 6,544.8 6,472.5 6,979.5 6,544.8 6,979.5
Total shareholders’ equity / Net Assets 14,710.8 16,200.9 16,688.8 14,710.8 16,688.8
* For further details, please refer to our consolidated financial statements and notes as at 31 December 2014 on our web site.
TURKCELL ILETISIM HIZMETLERI A.S.

IFRS SELECTED FINANCIALS (TRY Million)

Quarter Ended Quarter Ended Quarter Ended 12 Months Ended 12 Months Ended
December 31, September 30, December 31, December 31, December 31,
2013 2014 2014 2013 2014
Consolidated Statement of Operations Data
Revenues
Communication fees 2,545.3 2,757.5 2,631.9 10,242.8 10,437.2
Revenues from betting business 73.1 69.1 85.5 230.4 297.9
Monthly fixed fees 18.2 10.0 10.4 75.9 51.5
Simcard sales 7.2 11.9 6.3 29.8 31.7
Call center revenues and other revenues 239.8 313.7 369.1 829.0 1,225.3
Total revenues 2,883.6 3,162.2 3,103.2 11,407.9 12,043.6
Direct cost of revenues -1,851.3 -1,880.2 -1,972.2 -7,063.9 -7,383.9
Gross profit 1,032.3 1,282.0 1,131.0 4,344.0 4,659.7
Administrative expenses -152.0 -138.0 -146.8 -550.3 -562.7
Selling & marketing expenses -510.4 -496.5 -517.8 -1,843.6 -1,974.6
Other Operating Income / (Expense) -35.6 17.8 1.4 -58.9 -76.3
Operating profit before financing costs 334.3 665.3 467.8 1,891.2 2,046.1
Finance costs -89.7 -83.7 -400.1 -204.6 -1,247.0
Finance income 239.4 225.7 223.2 759.9 955.4
Monetary gain/(loss) 72.5 48.3 32.3 176.9 205.1
Share of profit of equity accounted investees 75.8 66.8 -6.9 297.3 207.3
Income before taxes and minority interest 632.3 922.4 316.3 2,920.7 2,166.9
Income tax expense -119.5 -216.4 -187.3 -591.4 -730.4
Income before minority interest 512.8 706.0 129.0 2,329.3 1,436.5
Non-controlling interests -7.9 49.0 128.9 -3.4 428.2
Net income 504.9 755.0 257.9 2,325.9 1,864.7
Net income per share 0.23 0.34 0.12 1.06 0.85
Other Financial Data
Gross margin 35.8% 40.5% 36.4% 38.1% 38.7%
EBITDA(*) 851.5 1,050.4 917.1 3,544.5 3,761.8
Capital expenditures 818.5 555.1 935.3 1,822.3 2,144.8
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 8,128.9 8,692.0 9,031.9 8,128.9 9,031.9
Total assets 21,284.6 22,699.3 23,694.2 21,284.6 23,694.2
Long term debt 1,528.5 1,101.3 1,247.9 1,528.5 1,247.9
Total debt 3,332.5 3,545.0 3,697.7 3,332.5 3,697.7
Total liabilities 6,549.5 6,476.3 6,983.6 6,549.5 6,983.6
Total shareholders’ equity / Net Assets 14,735.1 16,223.0 16,710.6 14,735.1 16,710.6
* For further details, please refer to our consolidated financial statements and notes as at 31 December 2014 on our web site.
TURKCELL ILETISIM HIZMETLERI A.S.

IFRS SELECTED FINANCIALS (US$ MILLION)

Quarter Ended Quarter Ended Quarter Ended 12 Months Ended 12 Months Ended
December 31, September 30, December 31, December 31, December 31,
2013 2014 2014 2013 2014
Consolidated Statement of Operations Data
Revenues
Communication fees 1,252.0 1,280.6 1,172.7 5,369.0 4,779.3
Revenues from betting business 36.0 32.1 38.2 120.4 136.1
Monthly fixed fees 9.0 4.6 4.7 40.0 23.6
Simcard sales 3.6 5.6 2.8 15.6 14.6
Call center revenues and other revenues 117.0 144.7 164.2 430.4 559.3
Total revenues 1,417.6 1,467.6 1,382.6 5,975.4 5,512.9
Direct cost of revenues -905.6 -870.4 -877.6 -3,693.3 -3,375.5
Gross profit 512.0 597.2 505.0 2,282.1 2,137.4
Administrative expenses -74.3 -63.6 -65.2 -286.8 -256.8
Selling & marketing expenses -250.7 -230.3 -230.7 -964.1 -903.1
Other Operating Income / (Expense) -16.9 8.7 0.6 -29.2 -35.5
Operating profit before financing costs 170.1 312.0 209.7 1,002.0 942.0
Finance expense -39.1 -37.6 -175.4 -95.5 -559.3
Finance income 117.3 105.8 98.9 395.4 437.5
Monetary gain/(loss) 31.6 17.1 12.6 82.9 88.4
Share of profit of equity accounted investees 37.4 31.4 -2.7 155.4 96.6
Income before taxes and minority interest 317.3 428.7 143.1 1,540.2 1,005.2
Income tax expense -59.4 -100.5 -83.5 -310.7 -334.6
Income before minority interest 257.9 328.2 59.6 1,229.5 670.6
Minority interest -3.9 23.8 57.9 -1.3 194.3
Net income 254.0 352.0 117.5 1,228.2 864.9
Net income per share 0.12 0.16 0.05 0.56 0.39
Other Financial Data
Gross margin 36.1% 40.7% 36.5% 38.2% 38.8%
EBITDA(*) 420.4 489.1 409.1 1,858.0 1,725.2
Capital expenditures 360.3 222.5 394.2 853.8 924.9
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 3,808.7 3,814.1 3,894.9 3,808.7 3,894.9
Total assets 9,972.6 9,960.6 10,217.9 9,972.6 10,217.9
Long term debt 716.2 483.3 538.1 716.2 538.1
Total debt 1,561.4 1,555.6 1,594.6 1,561.4 1,594.6
Total liabilities 3,068.7 2,841.8 3,011.6 3,068.7 3,011.6
Total equity 6,903.9 7,118.8 7,206.3 6,903.9 7,206.3
* Please refer to the notes on reconciliation of Non-GAAP Financial measures on page 16
** For further details, please refer to our consolidated financial statements and notes as at 31 December 2014 on our web site.

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