Turkcell The igital perator May 2019 1
STRATEGIC APPROACH DIGITAL SERVICES BUSINESS MODEL Q1 2019 RESULTS HEDGING APPENDIX 2
COMPANY OVERVIEW • THE DIGITAL OPERATOR • 48.4 MILLION TURKCELL GROUP SUBSCRIBERS in 5 COUNTRIES • 178 MILLION DIGITAL SERVICES DOWNLOADS GLOBALLY • 93.7 MILLION DIGITAL SUBSCRIBERS GLOBALLY • LISTED ON NYSE & BORSA ISTANBUL WITH A $4.1 BILLION MARKET CAP 1 SUBSCRIBER BREAKDOWN (m, Q1 2019) 36.6 Turkcell Turkey Ukraine 9.4 1.6 Belarus 0.6 TR Northern Cyprus 2 0.2 lifecell Europe 1 As of May 17, 2019 3 3 2 lifecell Europe GmbH operates in Germany under a “marketing partnership” agreement with Deutsche Telekom (DT). Its subscribers are owned by DT and are also included in the Turkcell Group subscriber figure
STRATEGIC APPROACH 4
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FOCUS ON CUSTOMER OUR CUSTOMERS DIGITAL DIGITAL BUSINESS TECHFIN MORE TO SERVICES SOLUTIONS PLATFORM FOLLOW WELL-INVESTED INFRASTRUCTURE 6 6
DELIVERING VALUE WITH DIGITAL SERVICES 178 million core app downloads 79 Min 12 Min Watching 22 Min Playing Reading (Playcell) 93.7 million 33 Min digital subscribers 49 Min Playing (Tavla Go) Listening 30 Min 12 Min 68.6% Contest time 63 Interacting multiplay customers 37 Min Documents uploaded For VOIP users per person per day 32 Min 2.8 M Calling Searches per day Note: Times given are in a day unless otherwise indicated. TRANSFORMING INTO THE DIGITAL OPERATOR Organizational State-of-the-art Sales Channel Shaping Techfin Convergence of OTT Transformation 4.5G Deployment Transformation in Turkey Services 2015 - 2018 7 8 7
TURKCELL GİZLİ DIGITAL SERVICES – INTERNATIONAL LICENSES 8
TURKCELL GİZLİ DIGITAL BUSINESS SOLUTIONS PUBLIC & HYBRID DIGITAL TRANSFORMATION CLOUD SERVICES SOLUTION & SERVICES PROVIDING END-TO-END ICT SERVICES CYBER DEFENSE & INTEGRATED INDUSTRY SECURITY OPERATION DIGITAL SOLUTIONS SERVICES 9
TURKCELL GİZLİ TECHFIN PLATFORM Utility Money payments transfer Paycell Carrier Top-ups Billing Device Device Loan Leasing QR code Mobile payment wallet POS Insurance 5.0 Mn 3.3 Mn 2.9 Mn 1.5 Mn 1.7 Bn TL 3.6 Bn TL 28 Mn Total Paycell Paycell app Registered Paycell Total Transaction Loan Credit scored users downloads credit cards Cards on Paycell in Q119 Portfolio customers 10
TURKCELL GİZLİ WELL-INVESTED INFRASTRUCTURE: FOCUS ON SHARING Turkcell In partnership with (stand-alone) Türksat & Vodafone Homepass 3.4 mn fiber + 3.0 mn cable (HFC) 3.4 mn 21 Number of cities 28 First in Europe 10 Gbps Turkcell infrastructure 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. 11
DIGITAL SERVICES 12
DIGITAL SERVICES PLATFORM DIGITAL COMMUNICATION MESSAGING & DIGITAL PAYMENT MANAGEMENT SMART PLACES & & ADVERTISING MARKETPLACE MEDIA PLATFORM DASHBOARD BUSINESS APPLICATIONS DIGITAL PARTNERS & TURKCELL SECURE E-COMMERCE INNOVATION CURATED SERVICES 13 13
PLATFORM of PLATFORMS BUS TAXI SERVICE TICKET SALES 24/7 ASSISTANT 14 14
DIGITAL SERVICES COLLABORATION Yaani recommends fizy & Paycell enables chat-like fizy & lifebox powers keyword search come «home» with TV+ money transfer in BiP in Dergilik 15 15
DIGITAL EXPERIENCES Shake & Win Who Wants 1 GB? Surprise Point From Classic Campaigns To Phygital Experiences 16 16
BOOSTING THE SERVICES PLATFORM WITH TELCO CAPABILITIES Digital Campaigns use TechFin built on Turkcell BiP App2Network Calls location data & assign 2 nd Number integration Credit Rating Data telco benefits 17 17
BiP – COMMUNICATION & LIFE PLATFORM Peer-to-peer money transfer 2 nd number integration HD voice & Group video calls Discover services & games BiP Web BiP Instant Translate in 106 languages 18 18
fizy – MUSIC Radio channels Live concerts Worldwide music playlists Video clips Multiplatform (Apple TV, iOS, Android, Carplay) 19 19
TV+ EPL, Bundesliga and NBA broadcast 24 hours timeshift 4K broadcast 4K Save & watch All screens + Apple TV 20 20
Dergilik- DIGITAL PUBLISHING 50+ National & local newspapers 1000+ global & local magazines 1.3M daily reading (Q119) Reading in airplane mode 21 21
lifebox – PERSONAL CLOUD Auto back-up Free-up space Face & object recognition 5GB storage space free of charge Photo print AI Integrated photo pick 22 22
Yaani – SEARCH ENGINE & MAIL & ASSISTANT Smart algorithms Location based search Service integration Search categories Yaani web Yaani Mail & Assistant 23 23
SECURE E-COMMERCE WITH CREDENTIALS MANAGEMENT Traffic Management Credentials Content / Service Management Provider Seamless Payment Fast & Secure Experience Log-in Customer Service Turkcell Data Center Cyber Security Services 24 24
BUSINESS MODEL HEDGING 25
THREE PILLARS OF OUR BUSINESS MODEL HEDGING INFLATIONARY PRICING LIQUIDITY FX & INTEREST RATE HEDGING • Key for sustaining growth & margins • Keeping all cash in hard currency • Strong cash flow for capex needs • FX hedged for whole maturity, both • Secure ROI of projects & investments • Additional committed lines on principal & interest of loans • 2.0Bn USD cash * covers principal & • Reflecting costs to the prices • Converted variable to fixed interest interest payments until 2022 • Proven track record Details of Financial Debt Principal & Interest Payments ** Turkcell ARPU vs. CPI Trend (Q115=100) 164 158 161 (After Hedging) (Million USD) 147 158 142 139 157 136 147 131 130 1,927 129 125 138 115 115 132 22 111 20% 110 128 106 123 44% 123 120 100 114 849 112 56% 110 598 109 106 1,904 103 103 80% 247 252 100 297 7 7 6 591 552 246 241 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Local Currency Fixed interest 2019 2020 2021 2022 2023+ FX Variable interest TCELL ARPU (exl. M2M) CPI FX Local Currency *Includes Fintur sale proceeds. 26 26 **Data of Turkcell Group companies, excluding TCF
MAJOR FUNDING & HEDGING DETAILS TYPE & PURPOSE OF AMOUNT MATURITY INTEREST UTILIZATION HEDGING DETAILS DATE FUNDING 3-month US$500Mn 2-year grace 80% hedged with PCCS CAPEX and inorganic Fully utilized Club Loan LIBOR/ period, 5-year (September 2015) EURIBOR growth opportunities in Jun 16 EUR445Mn maturity 7% hedged with PCCS + 2.00% CAPEX and inorganic Bond 5.75% - 15/10/2025 US$500Mn - growth opportunities (October 2015) (fixed rate) EURIBOR Fully utilized Debt restructuring 100% hedged with PCCS EUR500Mn + 2.20% China 3-year grace in Oct 15 Development period, 10-year EUR : EURIBOR + 2.20% Bank ~EUR550 Mn utilized maturity ~48% hedged with PCCS &CCS USD : LIBOR + 2.22% CAPEX (October 2015) EUR750Mn as of March 19 CNY : 5.51% 5.80% Bond Repayment of existing - 11/04/2028 US$500Mn - (April 2018) (fixed rate) indebtedness EKN-Covered 10-year US$50mn utilized 1st Tranche: LIBOR+2.10% CAPEX - US$150Mn (March 2019) maturity 2nd-3rd Tranche: 5.35% as of March 31 27 27
TURKCELL GİZLİ SOLID BALANCE SHEET SUMMARY NET DEBT/ EBITDA TRY Mn Q4 2018 Q1 2019 1.7x Total Cash 7,419 8,888 Due From Related Parties 1 - 2,230 1.4x 4,790 1.3x Total Assets 42,765 46,079 4,171 3,641 TCF loan porfolio 1.2x Total Debt 20,156 22,867 1.0x Lease Obligations 1,414 1,410 0.9x 9,516 8,565 Total Equity 16,054 17,102 Net Debt 2,3 8,108 Net Debt 2 12,736 11,749 Q318 Q418 Q119 Net Debt 3 8,565 8,108 Net Debt/EBITDA Net Debt/EBITDA 1 Corresponds to proceeds from the Fintur transaction closed on April 2, 2019. 2 Q119 balance includes Fintur sale proceeds. 28 3 Excludes Turkcell Consumer Finance Company’s loan portfolio
TURKCELL GİZLİ FX EXPOSURE CASH 1 DEBT NET FX POSITION 2 Before Hedging After Hedging USD MILLION 7% 8% 9% 216 21% 34% Share 50% 49% 33% 79% 10% (204) (224) (255) (301) Nominal 8.9Bn TL 22.9Bn TL Q118 Q218 Q318 Q418 Q119 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. 29
Q1 2019 RESULTS 30
TURKCELL GİZLİ Q1 2019: STRONG START TO THE YEAR STRONG TOPLINE RESILIENT EBITDA 5.7 Bn TL 2.3 Bn TL Performance 19.2% yoy exceeding targets 40.2% margin THE DIGITAL OPERATOR ASSET-LIGHT STRATEGY TURKEY’S TECH SUMMIT 772 Mn TL 10 K 178 Mn Fintur sale P&L contribution Participants downloads 0.2x impact 1.3x 265 K Leverage ratio Digital participants 31
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