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”), unless otherwise stated.
- We have four reporting segments:
- "Turkcell Turkey" which comprises our telecom, digital services
and digital business services related businesses in Turkey (as used
in our previous releases in periods prior to Q115, this term
covered only the mobile businesses). All non-financial data
presented in this press release is unconsolidated and comprises
Turkcell Turkey only figures, unless otherwise stated. The terms
"we", "us", and "our" in this press release refer only to Turkcell
Turkey, except in discussions of financial data, where such terms
refer to the Group, and except where context otherwise
requires.
- “Turkcell International” which comprises all of our telecom and
digital services related businesses outside of Turkey.
- “Techfin” which comprises all of our financial services
businesses.
- “Other” which mainly comprises our non-group call center and
energy businesses, retail channel operations, smart devices
management and consumer electronics sales through digital channels
and intersegment eliminations.
- In this press release, a year-on-year comparison of our key
indicators is provided and figures in parentheses following the
operational and financial results for March 31, 2023 refer to the
same item as at March 31, 2022. For further details, please refer
to our consolidated financial statements and notes as at and for
March 31, 2023, which can be accessed via our website in the
investor relations section (www.turkcell.com.tr).
- Selected financial information presented in this press release
for the first and fourth quarters of 2022 and the first quarter of
2023 is based on Turkish Accounting Standards (TAS) / Turkish
Financial Reporting Standards (TFRS) figures in TRY terms unless
otherwise stated.
- In the tables used in this press release totals may not foot
due to rounding differences. The same applies to the calculations
in the text.
- Year-on-year and quarter-on-quarter percentage comparisons
appearing in this press release reflect mathematical
calculation.
NOTICE
We are publishing financial statements as of March 31, 2023
prepared in accordance with Turkish Accounting Standards/Turkish
Financial Reporting Standards (“TAS”/“TFRS”) only. These standards
are issued by the Public Oversight Accounting and Auditing
Standards Authority (“POA”) and are in full compliance with
IAS/IFRS Standards. In an announcement published by the POA on
January 20, 2022, it is stated that TAS 29 “Financial Reporting in
Hyperinflationary Economies” does not apply to TFRS financial
statements as of December 31, 2021. Since then and as of the
preparation date of our latest consolidated financial statements,
no new statement has been made by the POA about TAS 29 application.
Consequently, no TAS 29 adjustment was made to our consolidated
financial statements.
Financial statements prepared in accordance with IFRS should
apply IAS 29 “Financial Reporting in Hyperinflationary Economies”
as of March 31, 2023. In this context, financial statements
prepared in accordance with IFRS and TFRS would have significant
differences and would not be comparable as of March 31, 2023. We
intend to publish IFRS financial statements, compliant with IAS 29
to the extent that it remains applicable, with our Annual Report on
Form 20-F that will be filed to the U.S. Securities and Exchange
Commission.
Although we have not prepared a detailed comparison of
differences between IFRS (unadjusted according to IAS 29) and TFRS,
we have noted in our past financial statements that the most
significant differences have appeared in the lines Other Operating
Income/Expense, Finance Income/Expense, and Investment Activity
Income/Expense. In the past, revenue, net income and EBITDA have
generally not differed. While no assurance can be given that this
will be the case for Q1 2023, we are not at present aware of
changes that would cause other significant differences, other than
those resulting from the application of IAS 29.
FINANCIAL HIGHLIGHTS
TRY million
Q122
Q422
Q123
y/y%
q/q%
Revenue
10,695
16,044
17,276
61.5%
7.7%
EBITDA1
4,302
6,671
6,759
57.1%
1.3%
EBITDA Margin (%)
40.2%
41.6%
39.1%
(1.1pp)
(2.5pp)
EBIT2
2,217
4,156
4,073
83.7%
(2.0%)
EBIT Margin (%)
20.7%
25.9%
23.6%
2.9pp
(2.3pp)
Net Income
803
5,996
2,817
250.8%
(53.0%)
FIRST QUARTER HIGHLIGHTS
- Strong financial performance:
- Group revenues up 61.5% mainly on increased ARPU growth,
expanded postpaid subscriber base, the contribution of
international operations, techfin business and digital business
services. Excluding earthquakes’ impact, revenue growth would have
been around 65%* year-on-year
- EBITDA up 57.1% leading to an EBITDA margin of 39.1%; EBIT up
83.7% resulting in an EBIT margin of 23.6%
- Net income up 250.8% to TRY2.8 billion
- Net leverage3 level at 0.9x; net short FX position of US$31
million
- Robust operational results:
- Turkcell Turkey subscriber base increased by 48 thousand
quarterly net additions
- 342 thousand quarterly mobile postpaid net additions; postpaid
subscriber base share at 69.1%
- 38 thousand fiber net additions
- 160 thousand new fiber homepasses
- Mobile ARPU4 exceeded the average of inflation rate and rose by
67.9% year-on-year in Q123 mainly on the back of gradual price
adjustments over the last year, upsell to higher tariffs and larger
postpaid subscriber base
- Residential fiber ARPU growth of 31.4% year-on-year
- Average monthly data usage of 4.5G users at 17.4 GB in Q123;
smartphone penetration at 88%
- 2023 guidance5 maintained; revenue growth target of between
55-57%, EBITDA target of around TRY34 billion, and operational
capex over sales ratio6 target of around 22%
(1) EBITDA is a non-GAAP financial measure. See page 15 for the
explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income. (2) EBIT is a non-GAAP financial
measure and is equal to EBITDA minus depreciation and amortization
expenses. (3) Starting from Q421, we have revised the definition of
our net debt calculation to include "financial assets” reported
under current and non-current assets. Required reserves held in
CBRT balances are also considered in net debt calculation. We
believe that these assets are highly liquid and can be easily
converted to cash without significant change in value. (4)
Excluding M2M (5) Please note that this section contains
forward-looking statements based on our initial impact assessment
of the earthquake. Factors such as changes in the state of
emergency measures and potential aftershocks, as well as the risk
factors disclosed in our Annual Report on Form 20-F for 2022 filed
with U.S. Securities and Exchange Commission, could cause actual
impacts to differ materially from our expectations. (5) 2023
guidance figures are based on TFRS, and do not include the effects
of a likely adoption of inflationary accounting in accordance with
IAS 29. (6) Excluding license fee *Excluding the impact of
cancellation of certain fees such as activation, cancellation and
late payment fees
For further details, please refer to our consolidated financial
statements and notes as at March 31, 2023 via our website in the
investor relations section (www.turkcell.com.tr).
COMMENTS BY CEO, MURAT ERKAN
The wounds of the earthquake have begun to heal
The wounds of the February earthquake epicentered in
Kahramanmaraş, one of the worst disasters in our history, have been
swiftly addressed. While all resources are being mobilized for the
reconstruction and recovery of the affected region, as Turkiye’s
Turkcell we, too, are supporting the region with various employment
and education-focused projects. As part of the “Turkcell Employment
Mobilization” project we will, in the first stage, provide
employment to 1,100 citizens and their families affected by the
earthquake across 11 provinces. In addition, with our Call and
Vocational Training Center to be established in Hatay, we aim to
support earthquake victims not only with training, but also by
providing areas for socialization. Meanwhile, with the technical
and personal development programs of Turkcell Academy, we aim to
provide the region with a qualified workforce of 5,000 people. As
Turkcell, we will continue our efforts at full speed to improve the
conditions of those affected by the earthquake and alleviate their
suffering.
Mobile ARPU growth outpaced inflation
In the first quarter, despite the new subscriber demand in the
earthquake-affected region and regulatory tourist line closures, we
saw a net total add of 48 thousand subscribers. On the mobile side,
we achieved a net add of 342 thousand postpaid subscribers in line
with our focus on this segment. On the other hand, we lost 367
thousand prepaid subscribers due to regulatory closures we made
this quarter among such subscribers acquired in high numbers from
tourists and visitors in 2022. The mobile churn rate slightly
increased on an annual basis to 1.7%.
Regarding market competition dynamics, it is fair to state that
the first quarter of the year was more balanced compared to the
same period of last year due to the earthquake impact. We saw the
year-end aggressiveness continue in the early months of the year.
Yet as the MNP market volume decreased during the earthquake period
and aggressive campaigns subsided in march, the market became more
rational.
We continued our infrastructure investments to provide our
citizens with the internet speeds they deserve, and aware that the
digitalization of our country depends on the fiber internet
infrastructure. Within the framework of our goal of reaching 300
thousand new homepasses in 2023, we extended our end-to-end fiber
service to 160 thousand new homepasses this quarter reaching a
total of 5.5 million households. As a result of our strategic
investments, we gained a net 38 thousand fiber customers in the
first quarter of the year. The strong demand for our high-speed
packages continued in this quarter. On the fiber side, the share
among new customers of packages with speeds of over 100 Mbps
increased by 22 percentage points compared to the same period of
last year to 44%. Again, in this period, our customers also
appreciated the no-commitment packages we offered for the first
time in the fiber segment. On the other hand, due to the earthquake
effect, fixed churn rate rose slightly on an annual basis. The
fixed and fiber residential churn rates were 1.5% and 1.2%,
respectively. Despite the earthquake impact, the subscribers of
IPTV, which we especially offer to our fiber customers, increased
by 28 thousand this quarter.
In line with our inflationary pricing policy, the sequential
price adjustments since the end of 2021 and the slowdown in
inflation led mobile ARPU growth to outpace inflation, as expected.
Mobile ARPU1, which continued its upward momentum, increased by
67.9% in the first quarter of the year, while the average inflation
rate during the period was 54.3%. On the fixed side, the revenue
reflection of price adjustments is more extended when compared to
mobile due to a longer contract period. In addition, with the
actions we have taken for customers in the earthquake region,
Residential Fiber ARPU grew 31.4% on a year-on-year basis.
In the first quarter of 2023, our consolidated revenues
increased by 61.5% year-on-year to TRY17.3 billion, while EBITDA2
rose by 57.1% to TRY6.8 billion compared to the same period of last
year. Our net profit rose by 250.8% to TRY2.8 billion, thanks to
our strong operational performance, lower FX losses and an
effective cash management.
Strong performance from our focus areas continued
The stand-alone paid users of our digital services and
solutions, which is among our strategic focus areas, rose 24%
year-on-year to 5.2 million, while their stand-alone revenues rose
65,2%. TV+, which enriches its offering with domestic and foreign
content, continues to strengthen its market position in the through
consistent improvement in service quality. In this regard, TV+'s
net promoter score (NPS) has steadily increased over the past four
quarters, and as of this quarter TV+ leads the market. TV+ has been
steadily raising its share in the paid TV market since the second
quarter of 2014, and according to the fourth quarter ICTA report,
it has increased its market share to 16.5%. Despite the earthquake
impact, IPTV subscribers have reached 1.3 million on a 16%
year-on-year increase, while OTT TV subscribers maintained a
similar yearly increase sustaining 1.0 million subscribers.
The revenues of digital business services that offer solutions
for companies' digital transformation increased by 103.9%
year-on-year, exceeding TRY1.6 billion in the first quarter of
2023. The revenue of our data center and cloud business services,
which increase their share in digital business services revenue
each quarter, more than doubled in revenue year-on-year. In this
quarter, we signed 1,163 new projects with a total contract size of
1.8 billion TRY, of which TRY1.2 billion comprised system
integration and managed services projects. Through this project
portfolio, we have a backlog of TRY2.5 billion in contract value to
be collected after the second quarter of 2023.
Our third focus area, techfin, where we provide services under
the Financell and Paycell brands, continued to support group
growth. Financell3’s revenue reached TRY317 million, up 64.6% year
on year. This performance was driven by a credit portfolio reaching
TRY3.9 billion and an increase in average interest rates. Paycell,
Turkiye's digital payment platform, saw its revenues rise 79.4%
year-on-year to TRY294 million. “Pay Later”, which accounts for 71%
of Paycell revenue, doubled its transaction volume compared to the
same period of last year, thanks to a rising number of users, being
preferred in digital content such as transactions in Apple and
Android markets.
The first deliveries of domestically produced smart device Togg
T10X, for which pre-sales demand was exceed nine-fold of the
production, began to be made in April. The T10X has the distinction
of being the first vehicle in the world to be sold through an
electronic wallet. During the presale period of T10X, which is the
first vehicle to be sold via an electronic wallet, a volume of
around TRY11 billion has been executed via Trumore wallet for which
Paycell provided its infrastructure. Our Paycell virtual POS
product, designed for corporate consumers, and enjoying high
demand, will also mediate payments at "Trugo" charging
stations.
I take this opportunity to thank our Board of Directors and all
our team members for their support in making a strong start to the
year, despite the challenges we faced and grief we suffered
together this quarter. I also express our gratitude to our
customers and business partners who remain with us on our journey
towards success.
(1) Excluding M2M (2) EBITDA is a non-GAAP financial measure.
See page 15 for the explanation of how we calculate Adjusted EBITDA
and its reconciliation to net income (3) Following the change in
the organizational structure, the revenues of Turkcell Sigorta
Aracılık Hizmetleri A.Ş. (Insurance Agency), which was previously
managed under the Financell, has been classified from Financell to
"Other" in the Techfin segment as of the first quarter of 2023.
Within this scope, all past data have been revised for
comparability purposes.
FINANCIAL AND OPERATIONAL REVIEW
Financial Review of Turkcell Group
Profit & Loss Statement
(million TRY)
Q122
Q422
Q123
y/y%
q/q%
Revenue
10,695.0
16,043.9
17,275.9
61.5%
7.7%
Cost of revenue1
(5,493.5)
(7,935.3)
(8,840.5)
60.9%
11.4%
Cost of
revenue1/Revenue
(51.4%)
(49.5%)
(51.2%)
0.2pp
(1.7pp)
Gross Margin1
48.6%
50.5%
48.8%
0.2pp
(1.7pp)
Administrative expenses
(303.7)
(473.4)
(560.5)
84.6%
18.4%
Administrative
expenses/Revenue
(2.8%)
(3.0%)
(3.2%)
(0.4pp)
(0.2pp)
Selling and marketing
expenses
(540.7)
(899.8)
(911.8)
68.6%
1.3%
Selling and marketing
expenses/Revenue
(5.1%)
(5.6%)
(5.3%)
(0.2pp)
0.3pp
Net impairment losses on
financial and contract assets
(55.1)
(63.9)
(203.9)
270.0%
219.1%
EBITDA2
4,302.0
6,671.5
6,759.2
57.1%
1.3%
EBITDA Margin
40.2%
41.6%
39.1%
(1.1pp)
(2.5pp)
Depreciation and amortization
(2,084.5)
(2,515.7)
(2,685.8)
28.8%
6.8%
EBIT3
2,217.5
4,155.8
4,073.4
83.7%
(2.0%)
EBIT Margin
20.7%
25.9%
23.6%
2.9pp
(2.3pp)
Net finance income /
(expense)
(3,038.4)
(3,424.2)
(2,104.2)
(30.7%)
(38.5%)
Finance income
72.3
(642.4)
4.6
(93.6%)
n.m
Finance expense
(3,110.7)
(2,781.8)
(2,108.8)
(32.2%)
(24.2%)
Other operating income /
(expense)
1,494.1
1,028.9
1,070.6
(28.3%)
4.1%
Investment activity income /
(expense)
299.2
157.6
510.1
70.5%
223.7%
Non-controlling interests
(0.0)
0.9
0.2
n.m
n.m
Share of profit of equity
accounted investees
(23.4)
(10.0)
6.4
n.m
n.m
Income tax expense
(146.0)
4,087.3
(739.8)
406.7%
(118.1%)
Net Income
802.9
5,996.3
2,816.6
250.8%
(53.0%)
(1) Excluding depreciation and amortization expenses. (2) EBITDA
is a non-GAAP financial measure. See page 15 for the explanation of
how we calculate Adjusted EBITDA and its reconciliation to net
income. (3) EBIT is a non-GAAP financial measure and is equal to
EBITDA minus depreciation and amortization expenses.
Revenue of the Group rose 61.5% year-on-year in Q123.
Turkcell Turkey played a significant role in this performance given
its robust ARPU growth, which was positively impacted by price
adjustments during 2022 aimed at reflecting inflationary effects,
along with successful upsell efforts. Additionally, revenue growth
was supported by our international operations and techfin
business.
Turkcell Turkey revenues, comprising 78% of Group revenues, rose
69.7% year-on-year in Q123 to TRY13,491 million (TRY7,950
million).
- Consumer segment revenues rose 67.6% year-on-year on the back
of an expanded postpaid subscriber base and price adjustments to
offset the impact of inflation.
- Corporate segment revenues grew 85.1% year-on-year driven by
the performance of digital business services, which grew 103.9%
year-on-year.
- Standalone digital services revenues registered as part of the
consumer and corporate segments rose 65.2% year-on-year in Q123.
The primary drivers of this growth were the increased number of
stand-alone paid users and adjustments to the prices of
services.
- Wholesale revenues increased by 53.3% year-on-year to TRY894
million (TRY583 million), driven mainly by the positive impact of
currency movements, as well as the traffic increase and capacity
upgrades of customers.
Turkcell International revenues, comprising 11% of Group
revenues, rose 31.0% year-on-year to TRY1,869 million (TRY1,427
million) due mainly to lifecell’s performance.
Techfin segment revenues, comprising 4% of Group revenues, rose
71.7% year-on-year to TRY606 million (TRY353 million). This was
driven by a 79.4% rise in Paycell revenues and 64.6% growth in
Financell revenues. Please refer to the Techfin section for
details.
Other subsidiaries' revenues, at 8% of Group revenues, including
mainly consumer electronics sales revenues, digital channels,
non-group call center and energy business revenues, were up 35.7%
year-on-year to TRY1,310 million (TRY966 million).
Cost of revenue (excluding depreciation and amortization)
decreased to 51.2% (51.4%) as a percentage of revenues in Q123.
This was driven mainly by the decline in interconnection cost
(2.2pp), despite the increase in employee expenses (1.6pp) and
other cost items (0.4pp) as a percentage of revenues.
Administrative expenses increased to 3.2% (2.8%) as a
percentage of revenues in Q123.
Selling and marketing expenses rose to 5.3% (5.1%) as a
percentage of revenues in Q123. This was driven mainly by the
increase in employee expenses (0.7pp) and energy expenses (0.1pp),
despite the decline in selling expenses (0.4pp) and marketing
expenses (0.2pp) as a percentage of revenues.
Net impairment losses on financial and contract assets
was at 1.2% (0.5%) as a percentage of revenues in Q123.
EBITDA1 rose by 57.1% year-on-year in Q123 leading to an
EBITDA margin of 39.1% (40.2%).
- Turkcell Turkey’s EBITDA grew by 64.1% to TRY5,391 million
(TRY3,286 million) leading to an EBITDA margin of 40.0%
(41.3%).
- Turkcell International EBITDA increased 41.1% to TRY1,007
million (TRY714 million) driving an EBITDA margin of 53.9% (50.1%)
on 3.8pp improvement.
- Techfin segment EBITDA rose 36.3% to TRY248 million (TRY182
million) with an EBITDA margin of 40.9% (51.5%).
- The EBITDA of other subsidiaries decreased by 6.0% to TRY113
million (TRY121 million).
Depreciation and amortization expenses increased 28.8%
year-on-year in Q123.
Net finance expense decreased to TRY2,104 million
(TRY3,038 million) in Q123. This was driven mainly by lower FX
losses from borrowings and issued bonds.
See Appendix A for details of net foreign exchange gain and
loss.
Net other operating income decreased to TRY1,071 million
(TRY1,494 million) in Q123.
See Appendix A for details of net foreign exchange gain and
loss.
Net investment activity income was TRY510 million in Q123
compared to TRY299 million in Q122.
Income tax expense increased to TRY740 million (TRY146
million) due mainly to a higher deferred tax expense incurred in
Q123.
Net income of the Group increased by 250.8% to TRY2,817
million (TRY803 million) in Q123. This was driven mainly by robust
topline growth on the back of strong operational performance, lower
fx losses from borrowings and issued bonds in addition to positive
impact from currency-protected time deposits.
(1) EBITDA is a non-GAAP financial measure. See page 15 for the
explanation of how we calculate adjusted EBITDA and its
reconciliation to net income
Total cash & debt: Consolidated cash as of March 31,
2023 increased to TRY27,317 million from TRY25,961 million as of
December 31, 2022. This was driven mainly by the positive impact of
currency movements. Excluding FX swap transactions, 57% of our cash
is in US$, 15% in EUR, and 26% in TRY.
Consolidated debt as of March 31, 2023 increased to TRY58,486
million from TRY53,854 million as of December 31, 2022 mainly due
to the impact of currency movements and new borrowings. Please note
that TRY3,391 million of our consolidated debt is comprised of
lease obligations. Please note that 44% of our consolidated debt is
in US$, 26% in EUR, 2% in CNY, 5% in UAH, and 22% in TRY.
Net debt1 as of March 31, 2023 was at TRY23,166 million with a
net debt to EBITDA ratio of 0.9 times. Excluding finance company
consumer loans, our telco only net debt was at TRY19,284 million
with a leverage of 0.8 times.
Turkcell Group had a short FX position of US$31 million as at
the end of the first quarter. (Please note that this figure takes
hedging portfolio and advance payments into account). The short FX
position of US$31 million is in line with our FX neutral
definition, which is between -US$200 million and +US$200
million.
Capital expenditures: Capital expenditures, including
non-operational items, amounted to TRY5,439 million in Q123.
For Q123, operational capital expenditures (excluding license
fees) at the Group level were at 19.9% of total revenues.
Capital expenditures (million
TRY)
Q122
Q422
Q123
Operational Capex
1,845.3
4,454.3
3,442.7
License and Related Costs
-
317.5
14.4
Non-operational Capex (Including
IFRS15 & IFRS16)
1,073.1
1,662.5
1,981.4
Total Capex
2,918.3
6,434.3
5,438.5
(1) Starting from Q421, we have revised the definition of our
net debt calculation to include "financial assets” reported under
current and non-current assets. Required reserves held in CBRT
balances are also considered in net debt calculation. We believe
that these assets are highly liquid and can be easily converted to
cash without significant change in value.
Operational Review of Turkcell Turkey
Summary of Operational
Data
Q122
Q422
Q123
y/y%
q/q%
Number of subscribers
(million)
40.0
41.7
41.7
4.3%
-
Mobile Postpaid (million)
24.1
25.6
25.9
7.5%
1.2%
Mobile M2M (million)
3.5
4.0
4.1
17.1%
2.5%
Mobile Prepaid (million)
12.0
12.0
11.6
(3.3%)
(3.3%)
Fiber (thousand)
1,941.0
2,121.8
2,159.7
11.3%
1.8%
ADSL (thousand)
755.7
751.4
759.0
0.4%
1.0%
Superbox (thousand)1
612.4
670.7
676.5
10.5%
0.9%
Cable (thousand)
51.1
43.9
42.4
(17.0%)
(3.4%)
IPTV (thousand)
1,126.4
1,281.7
1,309.3
16.2%
2.2%
Churn (%)2
Mobile Churn (%)
1.6%
2.7%
1.7%
0.1pp
(1.0pp)
Fixed Churn (%)
1.4%
1.3%
1.5%
0.1pp
0.2pp
ARPU (Average Monthly Revenue
per User) (TRY)
Mobile ARPU, blended
54.6
83.8
90.3
65.4%
7.8%
Mobile ARPU, blended (excluding
M2M)
59.8
92.6
100.4
67.9%
8.4%
Postpaid
67.0
101.6
107.4
60.3%
5.7%
Postpaid (excluding M2M)
77.3
118.7
126.2
63.3%
6.3%
Prepaid
29.8
47.9
53.0
77.9%
10.6%
Fixed Residential ARPU,
blended
88.9
110.5
117.1
31.7%
6.0%
Residential Fiber ARPU
89.9
110.6
118.1
31.4%
6.8%
Average mobile data usage per
user (GB/user)
13.4
15.7
16.2
20.9%
3.2%
(1) Superbox subscribers are included in mobile subscribers. (2)
Churn figures represent average monthly churn figures for the
respective quarters.
Despite the negative impact of the earthquake, Turkcell Turkey
subscriber base grew by 48 thousand net additions in Q123 to 41.7
million. On the mobile front, our subscriber base was at 37.5
million with 24 thousand net loss in the first quarter of 2023.
Accordingly, postpaid subscribers reached 69.1% (66.7%) of the
mobile subscriber base. During the quarter, our prepaid customers
decreased by 367 thousand. This was due to the disconnection of 509
thousand prepaid customers in Q123 in accordance with the ICTA
regulation because of significant tourist arrivals in Q322.
On the fixed front, our fiber subscriber base increased by 38
thousand net additions in Q123 supported by sustained demand for
high-speed and quality broadband connections. Total fixed
subscribers reached 3.0 million on 44 thousand quarterly net
additions. Meanwhile, IPTV customers reached 1.3 million on 28
thousand quarterly net additions in Q123.
The average monthly mobile churn rate was at 1.7% in Q123.
Meanwhile, the average monthly fixed churn rate was at 1.5% in
Q123. Our customer-oriented approach and advanced analytic
capabilities led to improved customer retention performance in both
the mobile and fixed segments. This played a crucial role in
maintaining a healthy level of churn.
Despite the negative impact of the earthquake, our mobile ARPU
(excluding M2M) exceeded the average of inflation rate and rose by
67.9% year-on-year in Q123 driven mainly by price adjustments,
upsell to higher tariffs and a larger postpaid subscriber base.
Our residential fiber ARPU growth was 31.4% year-on-year in Q123
due mainly to upselling our customers to higher tariffs. The
earthquake had a negative impact on the gradual growth of our
residential fiber ARPU.
Average monthly mobile data usage per user grew by 20.9% in Q123
to 16.2 GB with the increasing number and data consumption of 4.5G
users. Accordingly, the average mobile data usage of 4.5G users
reached 17.4 GB in Q123.
Total smartphone penetration on our network reached 88% in Q123
on a 1.5pp year-on-year improvement. 93% of those smartphones were
4.5G compatible.
TURKCELL INTERNATIONAL
lifecell1 Financial Data
Q122
Q422
Q123
y/y%
q/q%
Revenue (million UAH)
2,306.8
2,606.8
2,687.4
16.5%
3.1%
EBITDA (million UAH)
1,292.4
1,505.6
1,605.0
24.2%
6.6%
EBITDA margin (%)
56.0%
57.8%
59.7%
3.7pp
1.9pp
Net income (million UAH)
209.4
408.8
515.6
146.2%
26.1%
Capex (million UAH)
711.6
997.4
638.0
(10.3%)
(36.0%)
Revenue (million TRY)
1,112.6
1,326.1
1,386.2
24.6%
4.5%
EBITDA (million TRY)
623.6
765.8
827.9
32.8%
8.1%
EBITDA margin (%)
56.0%
57.7%
59.7%
3.7pp
2.0pp
Net income (million TRY)
101.0
207.8
266.2
163.6%
28.1%
(1) Since July 10, 2015, we hold a 100% stake in lifecell.
lifecell (Ukraine) revenues rose 16.5% year-on-year in
Q123 in local currency terms. The growth in revenue is primarily
driven by the increase in ARPU, which has been supported by the
price adjustments. lifecell’s EBITDA grew 24.2% year-on-year
leading to an EBITDA margin of 59.7% improving 3.7pp year-on-year
on the back of lower international interconnection expenses. In
Q123, lifecell's positive net income was driven by strong topline
performance.
lifecell revenues in TRY terms increased 24.6% year-on-year in
Q123 with strong operational performance. lifecell’s EBITDA in TRY
terms grew by 32.8%, leading to an EBITDA margin of 59.7%.
lifecell Operational Data
Q122
Q422
Q123
y/y%
q/q%
Number of subscribers
(million)2
10.2
10.2
10.8
5.9%
5.9%
Active (3 months)3
8.9
8.5
8.6
(3.4%)
1.2%
MOU (minutes) (12 months)
170.0
148.0
133.5
(21.5%)
(9.8%)
ARPU (Average Monthly Revenue per
User), blended (UAH)
75.6
86.0
85.1
12.6%
(1.0%)
Active (3 months) (UAH)
84.3
104.5
104.6
24.1%
0.1%
(2) 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.
(3) Active subscribers are those who in the past three months
made a revenue generating activity.
The three-month active subscriber base of lifecell increased to
8.6 million in Q123 compared to previous quarter. Meanwhile,
lifecell’s 3-month active ARPU growth was 24.1% year-on-year on the
back of price adjustments. As of Q123, lifecell maintained its
leadership in the Ukrainian market with 84.6% smartphone
penetration.
lifecell remained focused on employee safety and providing
services to Ukrainian customers, with a largely operational
network. On average, around 15% of nearly 9 thousand sites are
temporarily down as of March 31, 2023 on a daily basis. The
conditions of sites in occupied territories are unclear. On
average, approximately 92% of our stores nationwide were open daily
as of the end of March. Moreover, country’s ICT systems, including
payment and CRM, are functioning normally, and the country's
banking system is operating without any issues. Additionally, with
its improved cash generation, the company’s net debt decreased 54%
year-on-year, and lifecell's current cash position is sufficient to
maintain its operations.
BeST1
Q122
Q422
Q123
y/y%
q/q%
Number of subscribers (million)
1.5
1.5
1.5
-
-
Active (3 months)
1.1
1.1
1.1
-
-
Revenue (million BYN)
34.3
38.8
39.3
14.6%
1.3%
EBITDA (million BYN)
10.7
12.4
18.2
70.1%
46.8%
EBITDA margin (%)
31.1%
32.0%
46.3%
15.2pp
14.3pp
Net loss (million BYN)
(8.5)
(103.1)
(9.2)
8.2%
(91.1%)
Capex (million BYN)
21.5
25.3
18.8
(12.6%)
(25.7%)
Revenue (million TRY)
175.8
288.1
269.4
53.2%
(6.5%)
EBITDA (million TRY)
54.6
92.1
124.7
128.4%
35.4%
EBITDA margin (%)
31.1%
32.0%
46.3%
15.2pp
14.3pp
Net loss (million TRY)
(43.7)
(745.4)
(62.8)
43.7%
(91.6%)
(1) BeST, in which we hold a 100% stake, has operated in Belarus
since July 2008.
BeST revenues increased 14.6% year-on-year in local
currency terms in Q123 supported by ARPU growth and upsell to
higher tariffs. Due to the positive impact of the asymmetric mobile
termination rates (MTRs), which came into effect on December 31,
2022, the EBITDA margin improved 15.2pp compared to Q122. BeST’s
revenues in TRY terms increased 53.2% year-on-year in Q123 with an
EBITDA margin of 46.3%.
BeST provides LTE services to its customers in all six regions
through reaching 4.1 thousand sites, and has increased the
penetration of 4G services. Accordingly, 4G users comprised 79% of
the 3-month active subscriber base as of Q123. Meanwhile, the
average monthly data consumption of 4G subscribers rose 10%
year-on-year to 18.4 GB.
Kuzey Kıbrıs Turkcell2 (million
TRY)
Q122
Q422
Q123
y/y%
q/q%
Number of subscribers (million)
0.6
0.6
0.6
-
-
Revenue
96.9
147.8
162.8
68.0%
10.1%
EBITDA
38.3
65.2
53.0
38.4%
(18.7%)
EBITDA margin (%)
39.5%
44.1%
32.5%
(7.0pp)
(11.6pp)
Net income
21.8
106.8
21.6
(0.9%)
(79.8%)
Capex
34.9
361.2
92.2
164.2%
(74.5%)
(2) Kuzey Kıbrıs Turkcell, in which we hold a 100% stake, has
operated in Northern Cyprus since 1999.
Kuzey Kıbrıs Turkcell revenues rose by 68.0% year-on-year
in Q123 due mainly to the increase in mobile and roaming revenues,
as well as fixed broadband and handset sales revenues. Kuzey Kıbrıs
Turkcell recorded a 38.4% increase in EBITDA with a resulting
EBITDA margin of 32.5% in Q123.
TECHFIN
Paycell Financial Data (million
TRY)
Q122
Q422
Q123
y/y%
q/q%
Revenue
164.0
270.2
294.2
79.4%
8.9%
EBITDA
72.9
116.7
123.2
69.0%
5.6%
EBITDA Margin (%)
44.5%
43.2%
41.9%
(2.6pp)
(1.3pp)
Net Income
49.1
83.3
78.8
60.5%
(5.4%)
In Q123, Paycell registered a 79.4% year-on-year increase in
revenue due to the sustained demand for digital payment services.
This demand was addressed through our diversified product
portfolio, which includes mobile payment services, POS solutions,
and Paycell card, particularly the Pay Later solution. Paycell's
EBITDA increased by 69.0% year-on-year, resulting in an EBITDA
margin of 41.9% in the first quarter of 2023.
On the operational front, the quarterly transaction volume
(non-group) of Pay Later service doubled year-on-year to TRY1.4
billion, which was utilized by 3-month active Pay Later users of
5.2 million in Q123. Meanwhile, the Paycell Card transaction volume
almost doubled year-on-year to TRY2.8 billion in Q123.
Additionally, in Q123 the transaction volume of POS solutions
almost quintupled year-on-year to TRY10.1 billion supported by the
Togg project (presale payments collected through Paycell wallet),
Turkey’s first domestic car designed as an electric vehicle, which
marks an important and powerful initiative in the mobility sector.
Paycell also maintained its position as a marketplace for the
trading of gold, silver, and platinum in Q123. Overall, Paycell's
total transaction volume across all services almost tripled to
TRY18.2 billion year-on-year, driven mainly by a 12% year-on-year
rise in Paycell’s total 3-month active users to 7.7 million, and
their increased usage.
Financell1 Financial Data
(million TRY)
Q122
Q422
Q123
y/y%
q/q%
Revenue
192.8
307.4
317.4
64.6%
3.2%
EBITDA
110.9
162.3
133.5
20.4%
(17.7%)
EBITDA Margin (%)
57.5%
52.8%
42.1%
(15.4pp)
(10.7pp)
Net Income
67.1
98.4
108.9
62.3%
10.7%
Financell’s revenue grew by 64.6% year-on-year in Q123. The main
factors contributing to this growth were the expansion of the loan
portfolio and a higher average interest rate on the portfolio as
compared to the same period of last year. Meanwhile, Financell
reported EBITDA growth of 20.4% year-on-year, resulting in an
EBITDA margin of 42.1% in Q123. The decrease in EBITDA margin was
due to higher funding costs compared to the Q122. Financell's net
income increased 62.3% year-on-year.
Financell’s loan portfolio increased to TRY3.9 billion at the
end of Q123. Despite the continued installment limitation on
consumer loans for telecom devices, the loan portfolio was
supported by higher lending to corporate customers and greater
mobility. Accordingly, Financell has extended loans to over 24
thousand corporate customers. Financell's higher loan portfolio,
lower receivable sales, and the negative effects of earthquake were
the main drivers behind the increase in its cost of risk from 1.0%
in Q422 to 2.7% in Q123.
(1) Following the change in the organizational structure, the
revenues of Turkcell Sigorta Aracılık Hizmetleri A.Ş. (Insurance
Agency), which was previously managed under the Financell, has been
classified from Financell to "Other" in the Techfin segment as of
the first quarter of 2023. Within this scope, all past data have
been revised for comparability purposes.
Turkcell Group Subscribers
Turkcell Group registered subscribers amounted to approximately
54.6 million as of March 31, 2023. This figure is calculated by
taking the number of subscribers of Turkcell Turkey, and of each of
our subsidiaries. It includes the total number of mobile, fiber,
ADSL, cable and IPTV subscribers of Turkcell Turkey, and the mobile
subscribers of lifecell, BeST, and Kuzey Kıbrıs Turkcell.
Turkcell Group Subscribers
Q122
Q422
Q123
y/y%
q/q%
Turkcell Turkey subscribers
(million)1
40.0
41.7
41.7
4.3%
-
lifecell (Ukraine)
10.2
10.2
10.8
5.9%
5.9%
BeST (Belarus)
1.5
1.5
1.5
-
-
Kuzey Kıbrıs Turkcell
0.6
0.6
0.6
-
-
Turkcell Group Subscribers
(million)
52.3
54.0
54.6
4.4%
1.1%
(1) Subscribers to more than one service are counted separately
for each service.
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
Q122
Q422
Q123
y/y%
q/q%
GDP Growth (Turkey)
7.6%
3.5%
n.a
n.a
n.a
Consumer Price Index (Turkey)
(yoy)
61.1%
64.3%
50.5%
(10.6pp)
(13.8pp)
US$ / TRY rate
Closing Rate
14.6458
18.6983
19.1460
30.7%
2.4%
Average Rate
13.8778
18.6010
18.8577
35.9%
1.4%
EUR / TRY rate
Closing Rate
16.3086
19.9349
20.8021
27.6%
4.4%
Average Rate
15.5203
18.9748
20.2424
30.4%
6.7%
US$ / UAH rate
Closing Rate
29.2549
36.5686
36.5686
25.0%
-
Average Rate
28.7685
36.5686
36.5686
27.1%
-
US$ / BYN rate
Closing Rate
2.9732
2.7364
2.8571
(3.9%)
4.4%
Average Rate
2.7118
2.5055
2.7505
1.4%
9.8%
The foreign exchange rates used in our financial reporting,
along with certain macroeconomic indicators, are set out below.
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS: We
believe Adjusted EBITDA, among other measures, facilitates
performance comparisons from period to period and management
decision making. It also facilitates performance comparisons from
company to company. Adjusted EBITDA as a performance measure
eliminates potential differences caused by variations in capital
structures (affecting interest expense), tax positions (such as the
impact of changes in effective tax rates on periods or companies)
and the age and book depreciation of tangible assets (affecting
relative depreciation expense). We also present Adjusted EBITDA
because we believe it is frequently used by securities analysts,
investors and other interested parties in evaluating the
performance of other mobile operators in the telecommunications
industry in Europe, many of which present Adjusted EBITDA when
reporting their results.
Our Adjusted EBITDA definition includes Revenue, Cost of Revenue
excluding depreciation and amortization, Selling and Marketing
expenses, Administrative expenses and Net impairment losses on
financial and contract assets, but excludes finance income and
expense, other operating income and expense, investment activity
income and expense, share of profit of equity accounted investees
and minority interest.
Nevertheless, Adjusted EBITDA has limitations as an analytical
tool, and you should not consider it in isolation from, or as a
substitute for analysis of our results of operations, as reported
under TFRS. The following table provides a reconciliation of
Adjusted EBITDA, as calculated using financial data prepared in
accordance with TFRS to net profit, which we believe is the most
directly comparable financial measure calculated and presented in
accordance with TFRS.
Turkcell Group (million TRY)
Q122
Q422
Q123
y/y%
q/q%
Adjusted EBITDA
4,302.0
6,671.5
6,759.2
57.1%
1.3%
Depreciation and amortization
(2,084.5)
(2,515.7)
(2,685.8)
28.8%
6.8%
EBIT
2,217.5
4,155.8
4,073.4
83.7%
(2.0%)
Finance income
72.3
(642.4)
4.6
(93.6%)
n.m
Finance expense
(3,110.7)
(2,781.8)
(2,108.8)
(32.2%)
(24.2%)
Other operating income / (expense)
1,494.1
1,028.9
1,070.6
(28.3%)
4.1%
Investment activity income / (expense)
299.2
157.6
510.1
70.5%
223.7%
Share of profit of equity accounted
investees
(23.4)
(10.0)
6.4
n.m
n.m
Consolidated profit before income tax
& minority interest
948.9
1,908.0
3,556.2
274.8%
86.4%
Income tax expense
(146.0)
4,087.3
(739.8)
406.7%
(118.1%)
Consolidated profit before minority
interest
802.9
5,995.3
2,816.4
250.8%
(53.0%)
NOTICE: 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 for 2023. More generally, all statements other
than statements of historical facts included in this press release,
including, without limitation, certain statements regarding the
launch of new businesses, 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 2022 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.
The Company makes no representation as to the accuracy or
completeness of the information contained in this press release,
which remains subject to verification, 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 press release or any other written or
oral information made available to any interested party or its
advisers.
ABOUT TURKCELL: Turkcell is a digital operator
headquartered in Turkey, serving its customers with its unique
portfolio of digital services along with voice, messaging, data and
IPTV services on its mobile and fixed networks. Turkcell Group
companies operate in 4 countries – Turkey, Ukraine, Belarus, and
Northern Cyprus. Turkcell launched LTE services in its home country
on April 1st, 2016, employing LTE-Advanced and 3 carrier
aggregation technologies in 81 cities. Turkcell offers up to 10
Gbps fiber internet speed with its FTTH services. Turkcell Group
reported TRY17.3 billion revenue in Q123 with total assets of
TRY109.8 billion as of March 31, 2023. 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.
Appendix A – Tables
Table: Net foreign exchange gain and loss details
Million TRY
Q122
Q422
Q123
y/y%
q/q%
Net FX loss before hedging
(1,077.5)
(383.0)
(432.4)
(59.9%)
12.9%
Swap interest income / (expense)
(70.8)
29.0
52.1
n.m
79.7%
Fair value gain on derivative financial
instruments
58.8
(945.3)
(108.2)
(284.0%)
(88.6%)
Net FX gain / (loss) after
hedging
(1,089.5)
(1,299.3)
(488.5)
(55.2%)
(62.4%)
Table: Income tax expense details
Million TRY
Q122
Q422
Q123
y/y%
q/q%
Current tax expense
(157.3)
192.8
(305.5)
94.2%
(258.5%)
Deferred tax income / (expense)
11.3
3,894.6
(434.3)
n.m
(111.2%)
Income Tax expense
(146.0)
4,087.4
(739.8)
406.7%
(118.1%)
TURKCELL ILETISIM HIZMETLERI
A.S. TURKISH ACCOUNTING STANDARDS SELECTED FINANCIALS (TRY
Million)
Quarter Ended
Quarter Ended
Year Ended
Quarter Ended
Mar 31,
Dec 31,
Dec 31,
Mar 31,
2022
2022
2022
2023
Consolidated Statement of Operations Data
Turkcell Turkey
7,949.7
12,448.8
40,851.1
13,490.7
Turkcell International
1,426.6
1,812.6
6,353.6
1,868.8
Fintech
352.9
583.2
1,849.1
606.1
Other
965.9
1,199.4
4,824.7
1,310.3
Total revenues
10,695.0
16,043.9
53,878.5
17,275.9
Direct cost of revenues
(7,578.0)
(10,451.0)
(36,788.6)
(11,526.4)
Gross profit
3,117.0
5,592.9
17,089.8
5,749.5
General administraive expenses
(303.7)
(473.4)
(1,519.0)
(560.5)
Selling & marketing expenses
(540.7)
(899.8)
(2,700.1)
(911.8)
Other Operating income / (expenses)
1,494.1
1,028.9
6,800.9
1,070.6
Operating profit
3,766.7
5,248.5
19,671.6
5,347.8
Impairment losses and reversals of impairment losses determined in
accordance with TFRS 9
(55.1)
(63.9)
(354.9)
(203.9)
Investment Income
299.2
157.6
1,779.9
533.5
Investment Expense
-
-
-
(23.4)
Share on (loss) profit of investments valued by equity method
(23.4)
(10.0)
(71.4)
6.4
Income before financing costs
3,987.3
5,332.2
21,025.2
5,660.4
Financial income
72.3
(642.4)
210.8
4.6
Financial expenses
(3,110.7)
(2,781.8)
(13,699.8)
(2,108.8)
Profit from Continuing Operations Before Taxation
948.9
1,908.0
7,536.1
3,556.2
Tax income from continuing operations
(146.0)
4,087.3
3,516.1
(739.8)
Profit for the period
802.9
5,995.3
11,052.2
2,816.4
Non-controlling interest
(0.0)
0.9
1.0
0.2
Owners of the Parent
802.9
5,996.3
11,053.2
2,816.6
Earnings per share
0.4
2.7
5.1
1.3
Other Financial Data
Gross margin
29.1%
34.9%
31.7%
33.3%
EBITDA(*)
4,302.0
6,671.5
21,993.8
6,759.2
Total Capex
2,918.3
6,434.3
16,360.6
5,438.5
Operational capex
1,845.3
4,454.3
10,859.4
3,442.7
Licence and related costs
-
317.5
317.5
14.4
Non-operational Capex
1,073.1
1,662.5
5,183.6
1,981.4
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents
18,804.0
25,960.7
25,960.7
27,316.6
Total assets
75,324.6
101,264.8
101,264.8
109,842.8
Long term debt
30,105.2
37,133.1
37,133.1
39,049.2
Total debt
40,855.4
53,854.4
53,854.4
58,486.4
Total liabilities
51,944.9
70,369.8
70,369.8
75,990.3
Total equity
23,379.7
30,895.1
30,895.1
33,852.5
(*) Please refer to the notes on reconciliation of Non-GAAP
Financial measures on page 15 For further details, please refer to
our consolidated financial statements and notes as at 31 March 2023
on our website
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005838/en/
For further information please contact Turkcell
Investor Relations Tel: + 90 212 313 1888
investor.relations@turkcell.com.tr
Corporate Communications: Tel: + 90 212 313 2321
Turkcell-Kurumsal-Iletisim@turkcell.com.tr
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