TURKCELL INVESTOR PRESENTATION
January 2020
1 STRATEGIC FOCUS AREAS & 3-YEAR PLAN WELL-POSITIONED TO CREATE MORE VALUE
Digital Services Digital Business Solutions Techfin Services
STRATEGIC FOCUS AREAS
Telecom Services
CORE COMPETENCIES Strong Bond With State-of-the-art Advanced Analytics Strong & Customers Infrastructure & Technology Agile Team
3 STRATEGIC FOCUS AREAS
GROW IN MONETIZE LEVERAGE LEAD TELECOM SERVICES DIGITAL SERVICES DIGITAL BUSINESS SOLUTIONS TECHFIN SERVICES
Enlarge subscriber base with Leverage continued demand Boost overall corporate business Reach wider customer base dedicated focus on postpaid segment with multiplay focus with complete portfolio of solutions
Grow in fixed broadband through Ensure standalone growth Provide end-to-end Reach out to long tail of 1.6 mn+ fiber and FWA IT solutions for corporates merchants in Turkey
Utilize the digital channel for Expand globally Trusted partner of corporates Launch new consumer acquisition, device sales and growth through their digital transformation finance solutions
+1 Million 2.5x #1 17 Million Subscribers/year Standalone revenue Solution Provider Active Paycell users in Turkey growth in 3 years in 3 years by 2022
4 TECHFIN: REGULATION BECOMING MORE SUPPORTIVE
Using smartphone or tablet to perform the functions of a cash register Benefit: Increased penetration of longtail merchants MPOS
The potential adaptation of PSD2 Payment Services Directive of EU in Turkey Benefit: Ability to reach banking system, becoming single interface for customers PSD2
Potential legislative measure to remove the requirement to keep e-money funds in escrow account Benefit: Potential to attract more users offering return on e-money accounts E-money
Potential regulatory changes in the definition of loan facilitations Benefit: Potential to give micro loans to consumers Micro Lending
5 PAYCELL: SUPER APP FOR ALL TECHFIN SOLUTIONS
VISION: Being an enabler on financial inclusion with the combination of technology and financial services
Turkish Techfin Ecosystem Paycell App Strategy
DCB Wallet
Payment Facilitators E-Money
Money Bill Transfer Payment
6 PAYCELL: GO TO MARKET STRATEGY
Merchants Customers
Go-to Market Strategy Go-to Market Strategy (MPOS & QR) (App)
6,000 4,000 Turkcell 37 Mn Turkcell Stores Direct Sales Force Technology Customers
7 DSS: THE DYNAMICS OF NEW STANDALONE STRATEGY
Standalone Revenue (TRY) Paid Subscriptions
Platform Licensing
Discovery Services 2.5 Bn Traffic Monetization
Data Monetization 1 Bn
Operator Co-operations 2019E 2022E
8 DBS: MARKET & TURKCELL POSITIONING
TELCO BUSINESS / EXISTING BUSINESS DIGITAL & ICT BUSINESS / GROWTH ENGINE
Telco ICT 41% Market Share 5% Market Share • Superior network perception • Fragmented market • Net add, increase in ARPU • Lack of strong system integrator • Opportunity of multiplay, new services 24 • Increase in demand for digitilization • High margin Billion TRY
HARDWARE & SOFTWARE BUSINESS / OPPORTUNISTIC APPROACH • Profitable growth with integrated solutions
Telco market figures consist of mobile and fixed voice & data figures and exclude hardware sales. Mobile figures are based on Futurebright 2018Q4 Field Research. Fixed figures are based on ICTA Report 2018Q4 and Turkcell Estimation. ICT, Hardware & Software figures are based on IDC Blackbook 2019. 9 TURKCELL FINANCE: KEY PRIORITIES
Effective Strong Efficient Inflationary Balance Sheet Free Cash Flow Capital Allocation Pricing Risk Management Generation
• Key to sustainable growth and • Liquidity management • Sustainable revenue growth • Review of investment profitability • Net fx position • Continued operational requirement in conventional • Assurance for required return on profitability services investment • Controlled capex • Investment in high growth • Above-market ARPU growth businesses • Ensure returns above WACC
10 EFFICIENT CAPITAL ALLOCATION
Global Telco Industry Challenges
Heavy Slow investment revenue need growth
IPO/M&A activities Digital services (TV, music, etc.) Turkcell’s Infrastructure sharing Techfin services Responses Sell & leaseback transactions ICT solutions (datacenter, cloud etc.)
Reduce funding needs Flow of funds Invest in new high growth areas in capex heavy traditional business
Improve returns over WACC 11 TURKCELL GİZLİ 2019 OUTLOOK & 3-YEAR GUIDANCE
2019 2020-2022
REVENUE GROWTH (CAGR) ~18% 13%-16%
EBITDA MARGIN 41%-42% 39%-42%
EBIT MARGIN 20%-21% 18%-21%
OP.CAPEX/SALES* ~18% 16%-18%
*Excluding license
12 Q3 2019 RESULTS Q3 2019: SOLID PERFORMANCE
ROBUST REVENUE GROWTH STRONG EBITDA TURKEY-CONSUMER 2.8 Bn TL
6.6 Bn TL 43.1% margin 15.0% YoY 13.6% YoY SOLID NET INCOME TURKEY-CORPORATE 43.3% 2-yr growth 801 Mn TL
27.9% YoY 3.3x YoY
SOLID ARPU GROWTH GROWING CUSTOMER BASE CONTINUED DELEVERAGING
17.6% YoY mobile blended 526K mobile net add 1.0x Net Debt/EBITDA 19.8% YoY 503K postpaid net add 0.8x yoy improvement residential fiber
14 TURKCELL GROUP FINANCIAL HIGHLIGHTS
Consolidated TRY Million1 Q3 2019 QoQ % YoY % 9M 2019 YoY % Revenue 6,587 6.4% 13.6% 18,453 17.8%
EBITDA 2,839 11.2% 18.6% 7,673 17.2% EBITDA Margin 43.1% 1.9pp 1.8pp 41.6% (0.2pp) EBIT 1,641 27.5% 15.7% 4,031 13.6% EBIT Margin 24.9% 4.1pp 0.5pp 21.8% (0.8pp) Net Income 801 72.1% 231.9% 2,491 115.3%
Op.Capex/Sales2 15.0% (0.4pp) (0.6pp) 15.3% (0.6pp)
• Revenue growth performance in line with guidance • Strong operational profitability and bottomline
1 TRY figures are based on IFRS. 2 Excluding license fees 15 REVENUE & REVENUE BREAKDOWN REVENUE REVENUE BREAKDOWN TRY MILLION YoY Growth 101 (33) (25) 3.7% OTHER 2.9% (11.4%) 745 3.3% (13.3%) 4.3% TCF
TURKCELL 8.0% 23.8% 7.3% INTERNATIONAL 6,587 5,799
84.6% TURKCELL TURKEY 85.8% 15.2%
13.6% Higher Revenue Δ Turkcell Δ Turkcell ΔTCF* Δ Other Revenue Q3 18 Q3 19 contribution of Q3 18 Turkey International Subsidiaries Q3 19 Turkcell Turkey
• 0.8 bn TL yearly revenue increase in Q319; Turkcell Turkey is the main growth driver • Top-line mainly impacted by fx change in international business and slow down in TCF due to regulation
* Turkcell Consumer Finance Company, Financell 16 OPERATIONAL HIGHLIGHTS
TURKEY SUBSCRIBERS (million) ARPU (TL) YoY 68.4 66.1 56% 19.4 19.8% of total Residential fiber 57.1 mobile 45.5 17.6%
Mobile blended 40.7 (excl.M2M) 38.7 15.0 like-for-like* growth 20.5% 20.1% 2.2 cable 33K Q3 18 Q2 19 Q3 19 ADSL 0.8 * The ARPU of mobile customers who have stayed with Turkcell for at least 14 months. 0.7 MONTHLY AVERAGE MOBILE CHURN RATE fiber 1.5
Postpaid Prepaid IPTV 2.5% 0.1 pp impact due Fixed subscribers 2.2% 2.0% to mandatory Net add fiber ADSL IPTV registration requirement QoQ 503K↑ 23K↑ 29K↑ 39K↓ 30K↑
Q3 18 Q2 19 Q3 19 17 STRONG NET ADD WITH ACCELERATING ARPU GROWTH
MOBILE ARPU GROWTH vs INFLATION (%) MOBILE NET ADD (K) yoy Inflection point in Q319 23
19.9% 503 3x the 18.0% 17.6% Mobile ARPU(excl. M2M) prepaid 215 73 ARPU 16.6% 13.5% Change in CPI -155 -1 13.4% Prepaid Q1 19 Q2 19 Q3 19 Q1 19 Q2 19 Q3 19 Postpaid
FIBER RESIDENTIAL ARPU GROWTH (%) FIBER NET ADD (K)
All time high 19.8% Continued subscriber growth 17.2% 29 12.3% 25 15
Q1 19 Q2 19 Q3 19 Q1 19 Q2 19 Q3 19 18 SUPERBOX: THE BRAND FOR FWA
SUPERBOX SUBSCRIBER TREND (K)
2x ARPU of fixed 217 broadband
130
56 33 • FWA: broadband via mobile network
• Best solution for clients without fiber access Q4 18 Q1 19 Q2 19 Q3 19 • Providing a 5G service on our strong 4.5G network Net add 14K 23K 73K 88K QoQ • Becoming «the brand» for FWA in Turkey 19 LEADERSHIP IN QUALITY AND EXPERIENCE
SMART CAMPAIGNS IN Q319 CUSTOMER EXPERIENCE
Consumer Net Promoter Score (Points) Youngster Digital Services Campaign Turkcell 11 mn participant/gifts Score 21
Customized gifts +22 +21
Turkcell’s «Comfortable» Tariff Model +10 +9 Hybrid (post&pre) model ~55% new to Turkcell
Q2 19 Q3 19
AI based Social Responsibility Project Points over next best Points over third best 0.3 mn participants
Source: Future Bright 20 GROWTH ENGINE: MOBILE DATA
MOBILE DATA USAGE (Av. GB/User) 4.5G SUBSCRIPTION (million)
31.5 31.4 32.2 10.0 8.2 8.1 7.0 6.6 5.4 19.0 19.6 4.2 18.2 3.4 3.7
Q3 18 Q2 19 Q3 19 Q3 18 Q2 19 Q3 19 Non 4.5G Users 4.5G Users Total Users 4.5G subscribers 4.5G compatible smartphone
75% smartphone 85% are 4.5G 94% are 4.5G 20 million with penetration compatible SPs subscribers 4.5G compatible SPs
Data consumption of a 4.5G user tapped 10 GB per user per month on average 21 TECHFIN: FINANCIAL & OPERATIONAL PERFORMANCETURKCELL GİZLİ
CONSUMER FINANCE HANDSET FINANCING TRY BILLION TRY MILLION 9M 2018 9M 2019 YoY % Revenues 694.5 695.8 0.2% 5.2 EBITDA 301.2 378.4 25.6% 3.6 3.1 EBITDA Margin 43.4% 54.4% 11.0pp 4.8 Net Income1 307.6 83.1 (73.0%) 3.2 2.7 Financell Consumer Loans Net income in 2019 is impacted by swap m-t-m losses arising from declining 0.4 0.3 0.4 Turkcell Contracted interest rates. Receivables Q3 18 Q2 19 Q3 19 PAYMENT SERVICES 3.0% cost of risk2 96% penetration of TRY MILLION 9M 2018 9M 2019 YoY % loan insurance3 Revenues 144.0 175.1 21.6% EBITDA 108.4 128.1 18.1% 4.6Mn 3-month 1.4Bn TL transaction EBITDA Margin 75.3% 73.1% (2.2pp) active user of Paycell size in Q319
1 including the 57 mn TL and 45 mn TL dividend from Paycell in 9M18 and 9M19, respectively 2 per IFRS 3 in the past one year 22 TURKCELL INTERNATIONAL
HIGHLIGHTS TURKCELL INT’L REVENUE BREAKDOWN Q319 5% Other2 1 TRY MILLION Q3 2019 YoY% 9M 2019 YoY% 10% TR Northern Cyprus Belarus 19% • 10% yoy revenue growth in local currency Revenue 525 23.8% 1,442 39.3% Ukraine
EBITDA 236 57.1% 660 80.5% • 12% yoy revenue growth in local currency 66% • 8.8 GB/month 4G subs data consumption EBITDA 45.0% 9.5pp 45.8% 10.5pp • 79% smartphone penetration Margin
• Like-for-like EBITDA margin improvement is 2.3 pp in Q319 and 3.3 pp in 9M 2019
2 Other comprises lifecell Germany, other international operations and intra- 1 Figures are based on IFRS company eliminations. Ukraine, Belarus and Turkish Republic of Northern Cyprus figures are based on stand-alone financials. 23 SOLID BALANCE SHEET
SUMMARY NET DEBT/ EBITDA
TRY Mn Q1 2019 Q2 2019 Q3 2019
Total Cash1 11,118 10,687 10,975 1.3x 1.2x Total Assets 46,079 45,608 45,515 3,641 3,215 Total Debt 22,867 22,062 20,675 1.0x TCF loan portfolio 2,724 1,410 1,577 1,544 Lease Obligations 0.9x 0.9x Total Equity 17,102 17,331 17,431 0.7x
Net Debt 11,749 11,375 9,700 8,108 8,160 6,975 Net Debt2
Net Debt2 8,108 8,160 6,975 Q1 19 Q2 19 Q3 19
Net Debt/EBITDA Net Debt/EBITDA2 1 Q119 figure includes proceeds from the Fintur transaction closed on April 2, 2019. 2 Excludes Turkcell Consumer Finance Company’s loan portfolio 24 FX EXPOSURE
CASH1 DEBT NET FX POSITION2
Before Hedging After Hedging USD MILLION
11% 9% 8% 9% 216 207 17% 155 Share 50% 32% 51% 72% 32% 10% (224) (255) Nominal 11.0Bn TL 20.7Bn TL Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 USD EUR TRY Other
1 Excluding FX swap transactions for TL borrowing. 2 Including advance payments, hedging and excluding FX swap transactions for TL borrowing. Derivatives (VIOP) and forward transactions are included. 25 APPENDIX - Strategic Focus - Network Dynamics - Pricing - Active Portfolio Management - Financial Risk Management - International Business - Regulatory - Currency Trends
26 DIFFERENTIATION WITH UNIQUE SKILLS
Strategic Focus: Digital Services
Top-Notch Features Telco-OTT Power Integrated Experiences Timeshift & Cloud Recording Translation App2NW Quality of Service fizy Cross Lyrics Group Video Call 2nd Number Dedicated Bandwith Digital Mags Platform Music Video Secret Message Fixed Number OTT Box TV+ Recommendation Live Broadcasting
27 27 GLOBAL EXPANSION
Strategic Focus: Digital Services
TURKEY
Negotiation Subsidiaries Done Deal Potential
28 28 DIGITAL SERVICES: UNIQUE PORTFOLIO TURKCELL GİZLİ
Strategic Focus: Digital Services
INSTANT DIGITAL MUSIC MOBILE PERSONAL DIGITAL SEARCH ENGINE MESSAGING PUBLISHING2 PLATFORM TV3 CLOUD OPERATOR4 & BROWSER Download1 39.8Mn 12.8Mn 24.6Mn 14.3Mn 12.5Mn 45.8Mn 8.5Mn YoY +11.4M +5.2M +5.7M +4.5M +4.1M +10.7M +2.2M
3-Month Active User 9.9Mn 2.7Mn 3.3Mn 3.7Mn 2.7Mn 21.5Mn 3.4Mn YoY +0.2M +0.1M +0.1M +0.7M +0.6M +2.9M +0.8M
Service KPIs 336Mn 252K 7.1Mn 3.3Mn 38 29% 1.2Mn messages copies read songs streamed TV sessions docs uploaded more search per day per day per day per day per person / day ARPU per day
1: Refers to downloads as of September 30, 2019. 2: Starting from this quarter onwards, our MAU reporting for this service will exclude users who utilised the zero rating benefit of Dergilik magazines and newspapers via browser. 3: 3-month active users also include IPTV users 4: My Account is renamed as Digital Operator in 4Q 2018. 29 CORPORATE CUSTOMERS’ NEEDS IN TURKEY TURKCELL GİZLİ
Strategic Focus: Digital Business Solutions
3 MILLION COMPANIES
OPTIMIZE 16K INCREASE COSTS COMPANY REVENUES 528K COMPANY 2.5Mn COMPANY
30 GLOBAL TECHFIN REVOLUTION TURKCELL GİZLİ
Strategic Focus: Techfin Services
KEY DRIVERS IN WEST KEY DRIVERS IN EAST
E-Commerce Tech Savvy Regulatory Environment Unbanked Population Tech Savvy Regulatory Environment
>1 Bn*
900 Mn*
400 Mn** 383 Mn** 310 Mn* 286 Mn*
140 Mn* * Active users 23 Mn* **Registered users
31 TURKEY: ATTRACTIVE DYNAMICS TURKCELL GİZLİ
Strategic Focus: Techfin Services
17th 77% 30Mn
Largest economy Smartphone Unbanked in the World penetration population 82Mn 1.6Mn 60%
Cash Youngest & largest Merchant spending population in Europe
32 REGULATION BECOMING MORE SUPPORTIVE TURKCELL GİZLİ
Strategic Focus: Techfin Services
Using smartphone or tablet to perform the functions of a cash register Benefit: Increased penetration of longtail merchants MPOS
The potential adaptation of PSD2 Payment Services Directive of EU in Turkey Benefit: Ability to reach banking system, becoming single interface for customers PSD2
Potential legislative measure to remove the requirement to keep e-money funds in escrow account Benefit: Potential to attract more users offering return on e-money accounts E-money
Potential regulatory changes in the definition of loan facilitations Benefit: Potential to give micro loans to consumers Micro Lending
33 SUPER APP FOR ALL TECHFIN SOLUTIONS TURKCELL GİZLİ
Strategic Focus: Techfin Services VISION: Being an enabler on financial inclusion with the combination of technology and financial services
Turkish Techfin Ecosystem Paycell App Strategy
DCB Wallet
Payment Facilitators E-Money
Money Bill Transfer Payment
34 GO TO MARKET STRATEGY TURKCELL GİZLİ
Strategic Focus: Techfin Services
Merchants Customers
Go-to Market Strategy Go-to Market Strategy (MPOS & QR) (App)
6,000 4,000 Turkcell 37 Mn Turkcell Stores Direct Sales Force Technology Customers
35 KEY PERFORMANCE METRICS TURKCELL GİZLİ
Strategic Focus: Techfin Services
2019E 2022E
Monthly Active User 4Mn 17Mn
Volume (TRY) 4.4Bn 41Bn
Revenue (TRY) 250Mn 750Mn
36 FREQUENCIES BEFORE AND AFTER 4.5G TENDER
€0.3 €0.5 TOTAL FREQUENCY 234.4 MHz AFTER TENDER €0.4 175.0 MHz
AWARDED 139.8 MHz FREQUENCY IN 172.4 110.2 TENDER 82.8
64.8 TOTAL FREQUENCY 62.0 57.0 BEFORE TENDER Turkcell Vodafone Türk Telekom
• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost 37 37 FREQUENCY BANDS AFTER 4.5G TENDER
€0.3
234.4 MHz €0.5 4.5G main coverage layer 800 MHz 20.0 €0.4 24.8 175.0 MHz 900 MHz 2G/3G coverage and voice layer 59.6 20.0 172.4 139.8 MHz 20.0 20.0 1800 MHz Main layer for 4.5G Terminal support, capacity and coverage layer 24.8 110.2 70.0 70.0 82.820.0 2100 MHz Mobile broadband layer for 3G 4.5G usage for mid/long term 35.0 30.0 64.8 62.060.0 57.0 40.0 35.0 2600 MHz 4.5G capacity boost layer for hot spots Turkcell Vodafone Türk Telekom
• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost 38 38 FASTEST & BEST & WIDEST
SPEED QUALITY SPEED QUALITY
4x4 1,200 Mbps 4x4 MIMO all network
Carrier Aggregation all network
2018 The Best Experts
* Source: https://gsacom.com/paper/progress-gigabit-lte-networks-2/ MIMO: Multi Input Multi Output 39 39 DIFFERENTIATED THROUGH QUALITY
DATA SPEED USER EXPERIENCE
Download Upload 0-100 (Mbps) (Mbps) 82 49
75 74 21 17
13 11 10
Turkcell Telco1 Telco2
Source: IRIS Telecommunication Engineering Services, January 2019 40 40 FIXED BROADBAND MARKET
TURKISH FIXED BROADBAND MARKET FIXED BROADBAND MARKET BY TECHNOLOGY (MN)
16.3% 16.6% 14.7% 0.98 0.93 14.1 mn 17.2% 3 major 13.2% Total Penetration Operators 12.1% 0.83 11.5% 2.96 Subscribers 11.0% 2.80 10.2% 0.74 2.29 0.63 0.56 1.93 0.49 1.67 FIBER SUBSCRIBER MARKET SHARE 1.46 0.49 1.2 Q3 2019 0.55 9.5 9.6 8.7 7.8 6.6 6.6 6.8 7.2 Incumbent 50.4% 47.1% Other 2012 2013 2014 2015 2016 2017 2018 2019 Q3 players 2.5% xDSL Fiber Cable Penetration
Note: Company calculation based on data in ICTA Q3 2019 Report 41 41 WELL-INVESTED INFRASTRUCTURE: FOCUS ON SHARING
Turkcell In partnership with (stand-alone) Türksat & Vodafone
Homepass 3.6 mn 3.6 mn fiber + 3.0 mn cable (HFC)
Number of cities 21 28
First in Europe Turkcell infrastructure 10 Gbps Fiber to the home Türksat infrastructure
Overlapping
The map displays the cities in Turkey where Turkcell offers fiber and cable internet services through its partnership with Türksat and Vodafone. HFC stands for hybrid fiber-coaxial. 42 5G IS AN EVOLUTION
Enhanced Mobile Broadband
Massive Ultra Reliable Machine Type Low-Latency Communication Communication
43 CAPEX/SALES TREND
Turkcell Group Average: 17.7%* 25% EEMEA Average: 17.6% Between 2008 and 2018
20%
15%
10%
5% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Turkcell Group EEMEA
Source: Bloomberg Industry Data and company announcements *Excluding licence fees 44 44 NEW DEFINITION OF THE CUSTOMER
~24 Mn Households
Internet Pay TV ~59% s Share ~30% 53%
Determining household Capturing potential via house Raising wallet share with cross contracting, via network and social network analysis profiling by using big data household offers and new products
Source: Turkey Household: Turkcell expectation based on TurkStat 2018 announcement Internet & Pay TV: ICTA Q219 Turkcell’s Share: Future Bright Convergence & Household Penetration Research Q119 45 45 UTILIZE BIG DATA TO MAXIMIZE CONSUMER SURPLUS
RIGHT OFFER TO THE RIGHT CUSTOMER AT THE RIGHT TIME BIG DATA Social network Application usage Multiple layered offers Location base Network metrics for value maximization
+20% +8% Analyze Customer Behaviour Higher benefit Lower benefit Higher price Lower price ARTIFICIAL INTELLIGENCE Adaptive learning Special offer for Rule-based management customers with churn risk
46 46 NEW PRICING APPROACH
1 2 3 4 PURE HYBRID YEARLY SEMI DIGITAL OFFERS PACKAGES CONTRACTS OFFER
Mix of postpaid & Game changer prepaid offers Data benefit Contract based tariff which can be on benefit Flexible postpaid used flexibly Low cost play management during 12 months Flexible price No bill shock Digital channels only
47 47 PAYCELL: TURKEY’S LEADING TECHFIN COMPANY
POTENTIAL ACTIONS
STRATEGIC PARTNER
• Share know-how • Established in 2015, fully owned by Turkcell • Invest jointly • Standalone payment and e-money company • Diversify risk
• Payment institution and e-money licenses from BRSA INORGANIC GROWTH
• Mobile payment solutions in several verticals • Acquire local techfin companies to expand vertical solutions • Look for synergies
48 48 TURKCELL SUPERONLINE: TURKEY’S FASTEST FIBER
• 45 thousand km rollout, 21 cities • 1.5 Mn fiber customers POTENTIAL ACTIONS • Data speed up to 10Gbps
• Infrastructure sharing (Turksat & Vodafone) INITIAL PUBLIC OFFERING STRATEGIC PRE-IPO PARTNER • 3.5 Mn fiber homepass • More transparent articulation of • Diversify risk equity story • Invest jointly NET REVENUE TREND EBITDA TREND • Share know-how TRY Mn TRY Mn 4,076 INORGANIC GROWTH INFRASTRUCTURE SHARING 3,210 2,070 • Acquire local or regional fiber assets, • Asset light model 2,429 smart-home and security companies 1,719 1,276 • Look for synergies 900 548
2015 2016 2017 2018 2015 2016 2017 2018
49 49 GLOBAL TOWER: TURKEY’S FIRST & ONLY TOWERCO
• First and only TowerCo of Turkey POTENTIAL ACTIONS • Tower portfolio of 10,878 (owned + right of use) • Regional player operating in 4 countries Tenancy INITIAL PUBLIC OFFERING • Long term, visible revenue stream & strong profitability ratio 1.7x • More transparent articulation of equity story
NET REVENUE TREND EBITDA TREND INFRASTRUCTURE SHARING TRY Mn 338 TRY Mn • Asset light model 257 212 223 168 139 112 68
2015 2016 2017 2018 2015 2016 2017 2018
Note: Tower portfolio includes owned and managed towers and towers for which contract management services are provided. 50 50 DATACENTERS: LARGEST WHITE SPACE CAPACITY IN TURKEY
• 111k m2 datacenter space • 33.5k m2 white space FUTURE FUNDING • 8 locations • Ankara datacenter: 44k m2 datacenter space, 12k m2 white space • Gebze datacenter: 33k m2 datacenter space, 10k m2 white space SELL AND LEASE BACK • İzmir datacenter: 15k m2 datacenter space, 2.4k m2 white space • Asset light model
CUMULATIVE DATACENTER INVESTMENTS FREE CASH FLOW GENERATION TRY Mn 803
346 207 87
2015 2016 2017 2018 51 51 INFLATIONARY PRICING
TURKCELL ARPU VS. CPI TREND MOBILE ARPU COMPARISON Q116=100 Q116=100 Company and TUIK announcements 175 Based on ICTA market report
149 157 144 147 134 129 150 154 126 124 146 119 119 145 113 118 136 105 127 100 118 122 110 113 114 105
100 101 103
Q316 Q116 Q216 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319
Q316 Q416 Q117 Q217 Q116 Q216 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219
TCELL ARPU (exl. M2M) CPI TCELL Operator 1 Operator 2
Key for sustaining Secure ROI of Reflecting costs ARPU growth growth & margins projects & investments to the prices above competition
52 52 EFFECTIVE BALANCE SHEET RISK MANAGEMENT
LIQUIDITY MANAGEMENT NET FX POSITION Principal & Interest Payments1
US$ Mn 1,913 Short Limited Short Positive/Neutral FX FX FX position position position 1,913 620 590 326 250 299 590 294 250 299 Dec15 Dec16 Dec18 Dec19 Q419 2020 2021 2022 2023+
FX Local Currency
• US$1.9 Bn equivalent of cash holdings covers maturities until 2023 • Almost all cash in hard currency
• Strong free cash flow generation • 50% of FX denominated debt is hedged
• Committed lines of US$100 million • Hedging for whole maturity (principal & interest)
(1) Data of Turkcell Group, excluding consumer finance business. 53 53 MAJOR FUNDING & HEDGING DETAILS
54 54 STRATEGIC FOCUS AREAS OF TURKCELL INTERNATIONAL
LIFECELL UKRAINE LIFE :) BELARUS KKTCell TRNC LIFECELL VENTURES NL
• Growth driven by data • Growth driven by data • Grow in fixed broadband • Expand DSS footprint • Expand digital services • Expand digital services • New revenue streams • Make new strategic alliances • Net profit by 2021 (Corporate & System • Revenue generation Integration)
55 55 OPERATIONS IN UKRAINE
UKRAINE MOBILE MARKET FACTS* lifecell PERFORMANCE
UAH MILLION Q3 2019 YoY% FY18 YoY% 55.0m 131% 3 Revenue Total Mobile Operators 1,529 11.8% 5,269 8.0% subscribers Penetration EBITDA 811 32.9% 2,762 108.2%
EBITDA Margin 53.0% 8.4pp 52.4% 25.2pp
HIGHLIGHTS • Operational performance (3 months active): • 6.9 million subscribers in Q3 2019 Ownership Ownership Ownership • UAH 74.7 ARPU (up 24.7% yoy) ** 100% Turkcell 100% VEON 100% MTS • 79% SP penetration (market leader) • Launched Mobile ID (digital signature) • First to launch 4G services in Ukraine on 2600 MHz • 4.5G services on the 1800 MHz frequency since Jul 1st, 2018 *Source: Global Wireless Matrix Q2 2019 ** MTS announced the sale of its Ukrainian operations to Bakcell (Azerbaijan) on Nov 25, 56 2019. 56 UKRAINE: MOBILE MARKET PERFORMANCE
MARKET SHARE FINANCIALS lifecell VDF Kyivstar Subscriber* Mobile Revenue Growth (in UAH) (YoY) 28% 13.0% 24% 20% 19% 18% 18% 16% KYIVSTAR 14% 17% 17% 12% 12% 49.7% VDF 14% 9% 37.3% lifecell 9%
Q318 Q418 Q119 Q219 Q319 (*) 3 month active subscribers
Mobile Revenue EBITDA Margin (%)
13.5% 76.6% 65.0% 64.8% 57.6% 57.5% KYIVSTAR 55.8% 62.9% 51.7% 54.6% 48.3% VDF 54.9% 52.7% 52.8% 53.9% 53.0% lifecell 38.2% 44.6%
Q318 Q418 Q119 Q219 Q319
Source: Company announcements (Q3 2019) 57 57 OPERATIONS IN BELARUS
BELARUS MOBILE MARKET FACTS* BeST PERFORMANCE
BYN MILLION Q3 2019 YoY% FY18 YoY%
11.9m 124% 3 Revenue 35.3 9.6% 124.9 11.7% Total Mobile Operators subscribers Penetration EBITDA 9.6 74.5% 27.9 548.8%
EBITDA Margin 27.2% 10.1pp 22.3% 18.5pp
HIGHLIGHTS
Ownership Ownership Ownership • 1.1 million subscribers in Q3 2019 (3 months active) 80% Turkcell 51% Belarusian State 100% Telekom Austria 20% Belarusian State 49% MTS • Provides 4G LTE services in 6 regions and ~190 cities • Average monthly data consumption grew by 58% yoy to 6.9GB • Subscribers who use at least one digital service reached 26% of 3-mo active subs base *Source: Company calculation based on Q3 2019 results 58 58 BELARUS: MOBILE MARKET PERFORMANCE
MARKET SHARE FINANCIALS life:) A1 MTS Subscriber* Mobile Revenue Growth (in BYN) (YoY) 12.1% 20% 19% 19% 17% 18% MTS 47.0% 10% A1 8% 7% 9% 10% life:) 8% 40.9% 8% 7% 6% 5%
(*) 3 month active subscribers Q318 Q418 Q119 Q219 Q319
Revenue life :) EBITDA Margin Trend* 6.2% 38.6% 32.9% MTS 27.2% 23.2% 48.2% A1 17.1% 45.6% life:)
Q318 Q418 Q119 Q219 Q319 59 Source: Company announcements (Q3 2019). 59 TAXATION IN TURKEY
TAX MOBILE FIXED TAXES AND FEE PAYMENTS REPRESENTED APPROXIMATELY 29% 35% 3 Special Communication Tax (SCT) 7.5% 7.5% OF TURKEY TELECOM MARKET REVENUE
30% VAT 18% 18%
25% Treasury Share1 15% 1%
20% TRX fees 5% - (of net sales) 15% Contribution Share to 0.35% 0.35% Telecom Authority 10% New subscription SCT2 TRY 65.00 - (at first enrollment) 5% Wireless license fees TRY 27.86 - (per acquisition) 0% Wireless usage fees TRY 27.86 - (annual)
1Under the license agreement Turkcell pays a treasury share equal to 15% of its gross revenue from Turkish GSM operations 2 Excluding M2M SIMs 60 3 GSMA/Turkey Report, 2019. Data as of 2017. 60 MOBILE/SMS TERMINATION RATES IN TURKEY
MTR RATES Mobile Voice Rates SMS Rates TRYkr.
OLD Since 2013 Asymmetry OLD Since 2013 Asymmetry
Turkcell 3.13 2.50 - 1.70 0.43 -
Vodafone TR 3.23 2.58 3% 1.73 0.43 -
TTKOM 3.70 2.96 18% 1.87 0.47 9% EVOLUTION OF MTR TRY kuruş per min. Turkcell MTR is half 17.2 15.7 of the European 13.6 14.4 MTR level 11.1 11.1 9.1 8.1 MTR-Turkcell Europe-MTR 6.6 6.5 4.9 5.0 4.8 4.2 4.4 4.5 3.1 3.1 3.1 2.5 2.5 2.5 2.5 2.5 2.5 2.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 MTR: Mobile Termination Rate 61 Source: BEREC July 2019 report, Cullen International 61 CURRENCY TRENDS
Average Period-End USD / TRY 5.66 EUR / TRY 5.26 6.03 6.18 5.70 3.77 4.52 6.34 3.52 4.76 3.71 2.91 3.18 5.60 3.63 4.11 2.73 3.01 3.02 3.32
2015 2016 2017 2018 Q319 2015 2016 2017 2018 Q319
USD / BYN USD / UAH
27.19 28.07 27.69 2.16 2.07 24.00 24.08 1.86 1.96 1.97 26.64 27.32 2.06 25.56 25.15 1.98 1.93 2.03 21.79 1.59
2015 2016 2017 2018 Q319 2015 2016 2017 2018 Q319
62 62 THANK YOU For further information please e-mail [email protected] or call Turkcell Investor Relations at (+90 212 313 1888) Turkcell IR Website
63 NOTICE
This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities 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, EBIT and capex in 2019 or for the medium term 2020 to 2022. More generally, all statements other than statements of historical facts included in this presentation, 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 written or oral use of forward-looking terminology such as, among others, "will," "expect," "intend," "estimate," "believe", "continue" and “guidance”.
Although Turkcell believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give 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 2018 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 presentation, 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 presentation or any other written or oral information made available to any interested party or its advisers.
Please note that all financial data are consolidated whereas non-financial data are unconsolidated unless otherwise specified. In the charts or tables used in this presentation totals may not foot due to rounding differences. The figures used in this presentation are rounded while percentage changes are calculated based on the figures disclosed in the press release.
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