We Are Very Beautiful Together
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Investor Relations Gayrettepe Mahallesi Yıldızposta Caddesi No:40 Beşiktaş İstanbul/Türkiye Telephone: (+90) 212 309 96 30 Fax: (+90) 212 352 96 10 www.turktelekom.com.tr www.ttinvestorrelations.com [email protected] twitter.com/ttkomir We are very Türk Telekom beautiful together 2016 Annual Report 2016 Türk Telekom 2016 Annual Report This annual report is printed on 100% recycled paper. Contents Türk Telekom in Brief 10 Türk Telekom Group 11 Vision and Values 12 History 2016 At a Glance 16 Türk Telekom Main Highlights 18 Highlights 26 Key Performance Indicators 36 2016 Highlights 40 Awards Management 44 Message from the Chairman 46 Assessments by the Board of Directors 51 The Board of Directors 56 Board Committees 57 Statutory Audit Board 58 Message from the CEO 62 Türk Telekom Group Management 68 CEOs of Türk Telekom Group Companies 70 Organizational Structure and Changes 71 Capital Structure and Changes Activities in 2016 72 Sector Outlook 76 Türk Telekom’s Operations 108 Investments and Infrastructure Projects 111 Research and Innovation Activities 113 Human Resources 117 Investor Relations 118 Corporate Social Responsibility 121 Sustainability Initiatives 122 Türk Telekom Group Companies 122 Argela 124 AssisTT 126 Innova 130 Sebit 134 Türk Telekom International Corporate Governance 136 Important Developments after the Accounting Period 138 Dividend Distribution Proposal 138 Conclusion of Affiliation Report 139 Corporate Governance Principles Compliance Report 158 Statement of Independence Financial Information 162 Statement of Responsibility 164 Independent Auditors’ Report Related to Annual Report 165 Independent Auditors’ Report and Consolidated Financial Statements Glossary The events of 2016 bolstered Turkey’s feelings of national unity and solidarity. The country grew ever stronger and demonstrated a development performance that served as an example in many areas. During these challenging times, we have all seen what a vital role “communication” plays. As the Türk Telekom family, we will continue working “together” with self-sacrifice for our country, as always.. We are growing together! As the leading communication and entertainment service provider in Turkey, we continued our strong operational performance this year. We added 1.5 million new subscribers, expanding our subscriber base to 38.9 million. Türk Telekom in Brief 2016 At a Glance Management Activities in 2016 Corporate Governance Financial Information 1.5 Million New subscribers 38.9 Million Total subscriber number As the leading communication and entertainment service provider in Turkey, we continued our strong operational performance this year. We added 1.5 million new subscribers, expanding our subscriber base to 38.9 million. We are rising together! Smartphone penetration rose to 75%, while 53% of smartphone users are on LTE-compatible devices. Since the LTE launch, our customers’ data usage has increased significantly. Türk Telekom in Brief 2016 At a Glance Management Activities in 2016 Corporate Governance Financial Information 75% Smartphone penetration 53%* Ownership of smartphone users on LTE devices devices Smartphone penetration rose to 75%, while 53% of smartphone users are on LTE-compatible devices. Since the LTE launch, our customers’ data usage *Among smartphones. has increased significantly. We are selfy’ing together! Following the brand integration process, we took yet another innovative step, rebranding our mobile services sub-brand aimed at young people as Selfy. We aim to reinforce our position in the youth market with the Selfy brand. Our innovative offerings and services give young people the opportunity to make their own choices. Türk Telekom in Brief 2016 At a Glance Management Activities in 2016 Corporate Governance Financial Information Enthusiasm + Energy + Happiness Following Advantages the brand + Privileges integration process, we took yet another innovative step, rebranding our mobile services sub-brand aimed at young people as Selfy. We aim to reinforce our position in the youth market with the Selfy brand. Our innovative offerings and services give young people the opportunity to make their own choices. We are speeding up together! We continued to build on our strengths in fixed services. We extended our fiber network to 228 thousand km, covering the entire country, while our fiber homepass coverage reached 13.9 million households. Türk Telekom in Brief 2016 At a Glance Management Activities in 2016 Corporate Governance Financial Information 228 thousand km Fiber infrastructure 13.9Million Fiber Homepass Coverage We continued to build on our strengths in fixed services. We extended our fiber network to 228 thousand km, covering the entire country, while our fiber homepass coverage reached 13.9 million households. Türk Telekom Annual Report 2016 Türk Telekom Group As the “Multi play provider of Turkey,” Türk Telekom Group Companies offer a complete range of mobile, internet, phone, TV and innovative digital services. Türk Telekomünikasyon A.Ş., with 176 years of Türk Telekomünikasyon A.Ş., providing PSTN history, is the first integrated telecommunications and wholesale broadband services, owns 100% company in Turkey. In 2015, Türk Telekomünikasyon of mobile operator Avea İletişim Hizmetleri A.Ş.; A.Ş. adopted a “customer-oriented” integrated retail internet services, IPTV, satellite TV, Web TV, structure in order to respond to the rapidly Mobile TV, Smart TV services provider TTNET changing communication and technology needs A.Ş.;TV Broadcasting and VOD services provider of customers in the most powerful and accurate Net Ekran Companies; convergence technologies manner, while maintaining the legal entities of Avea company Argela Yazılım ve Bilişim Teknolojileri A.Ş.; İletişim Hizmetleri A.Ş. and TTNET A.Ş. intact and IT solution provider Innova Bilişim Çözümleri A.Ş.; complying with the rules and regulations to which online education software company Sebit Eğitim ve they are subject. Turk Telekom – which has a wide Bilgi Teknolojileri A.Ş.; call center company AssisTT service network and rich range of products in the Rehberlik ve Müşteri Hizmetleri A.Ş.; wholesale field of consumer and corporate services – brought data and capacity service provider Türk Telekom its mobile, broadband, fixed voice and TV products International and its subsidiaries. and services together under the single brand name of “Türk Telekom” as of January 2016. As the “Multi play provider of Turkey,” Türk Telekom Group Companies have 13.1 million fixed access lines, 8.7 million broadband and 18.6 million mobile subscribers as of December 31, 2016. Türk Telekom Group Companies provide services in all 81 cities of Turkey with 33,224 employees with the vision of introducing new technologies to Turkey and accelerating Turkey’s transformation into an information society. 10 Türk Telekom in Brief 2016 At a Glance Management Activities in 2016 Corporate Governance Financial Information Vision and Values Türk Telekom, with 176 years of history, is the first integrated telecommunications company in Turkey. Our Vision As Turkey’s undisputed leader in communication and technologies, Türk Telekom, by excelling in every field, enriches its customers’ businesses and lives. Shared Values and Attitudes Customer Focus: Trust: • We listen to our customers and make their lives • We believe in open communication and share easier with solutions customized to their needs. our knowledge with each other. • We take all decisions in due consideration of • We trust on the competencies of our colleagues their possible effect on our customers. and work collaboratively. • We provide our customers timely and accurate • We work for the success of everyone among us, information, as well as high standards of services. appreciate each other, and celebrate success together. Innovation: • We anticipate market trends and sign the new Agility: initiatives in the industry. • We take swift decisions and get immediate • We press ahead, live up to challenges and boldly results. implement new ideas. • We work with passion and responsibility to reach • We learn from mistakes, as well as achievements our goal. and strive for perfection. • We share our authority with others and empower them. People Focus: • By taking the initiative, we both facilitate and • We respect differences of opinion and view improve our work. diversity as our key power. • We invest in people, learn constantly, develop and enable to develop. • We establish frank, fair and constructive relations among ourselves. 11 Türk Telekom Annual Report 2016 History Türk Telekom was named “Turkey’s most valuable telecommunication brand” in 2016 on the “Telecoms 500” list of the world’s 500 most valuable telecommunication brands. 1994 2006 » Türk Telekom was established on June 30, » Türk Telekom subsidiary TTNET was 1994. established on April 26, 2006, commencing operations on May 14 by obtaining an 1995 internet service provider license. » PTT’s telecommunication and postal » Türk Telekom increased its shareholding services divisions were separated on April in Avea to 81.12% with the acquisition of 24, 1995. All personnel, assets and liabilities 40.56% of the shares of İş-TİM for USD 500 related to the telecommunications services million on September 15, 2006. of PTT were subsequently transferred to Türk Telekom, which was wholly owned 2008 by the Republic of Turkey Prime Ministry » 15% of Türk Telekom shares were offered to Undersecretariat of the Treasury. the public and listed on the Istanbul Stock Exchange