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TURKCELL GROUPQ2 2018
July 25, 2018
BUSINESS OVERVIEWKaan TerzioğluTurkcell CEO
3
3.3583.658
4.044 4.053 4.3164.597 4.666 4.762
5.105
1.029 1.218 1.371 1.400 1.457 1.632 1.7392.022 2.134
30,7%33,3% 33,9% 34,5% 33,8% 35,5% 37,3%
42,5% 41,8%
Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218
Revenue (Mn TL) EBITDA (Mn TL) EBITDA Margin (%)
Over 100Mn core digital services* downloaded
Mobile triple play at 60.5%, up 13.8 pp yoy
4.5G user data usage reached 7GB in June 18
18Mn 4.5G compatible smartphones, ~1Mn QoQ
Record top line at 5.1 bn TL, up 18.3% yoy, 52% 2yr growth
EBITDA Margin at 41.8%
Revenue guidance revised upwards to 16% - 18%
Asset light strategy: infrastructure sharing protocol
First installment of dividend distributed
FINANCIAL OPERATIONAL
Revenue and EBITDA Margin Mobile Triple Play Multiplay with TV
SECOND QUARTER HIGHLIGHTS
46,7%
58,7%60,5%
Q217 Q317 Q417 Q118 Q218
40,5%
45,7% 46,8%
Q217 Q317 Q417 Q118 Q218
* Core digital services include BiP, Dergilik, Fizy, My Account, Lifebox, Academy, Sports app, Upcall, TV+ and Yaani
41 TRY figures are based on IFRS.2 Excluding license fees
• Growth momentum continued; 52% two-year cumulative revenue growth
• Limited net income volatility QoQ despite TL depreciation in Q2
• Operational capex as a percentage of sales in line with expectations in H136% 40% 37% 40% 48% 52%
51% 46% 41%
64%
102% 107%
Q117 Q217 Q317 Q417 Q118 Q218
Revenue EBITDA
TURKCELL GROUP FINANCIAL HIGHLIGHTS
ConsolidatedTRY Million1 Q1 2018 Q2 2018 QoQ % YoY % H1 2018 YoY %
Revenue 4,762 5,105 7.2% 18.3% 9,867 17.9%
EBITDA 2,022 2,134 5.5% 46.5% 4,156 45.5%
EBITDA Margin 42.5% 41.8% (0.7pp) 8.0pp 42.1% 8.0pp
Net Income 501 415 (17.1%) (41.0%) 916 (21.2%)
Op.Capex/Sales2 11.5% 20.2% 8.6pp 3.5pp 16.0% 1.0pp
Two-year Cumulative Growth Rates
5
8,0%
4,2%5,5%
Q216 Q217 Q218
~7%competitors’ average in
Q217-Q118**
51,3 52,7 55,4
27,130,8
34,9
Q216 Q217 Q218
Fixed Residential Mobile Blended (excl. M2M)
Note: TV subscribers include 2.1 million of «OTT only» customers and it is excluded from net add & total subs
TURKEY SUBSCRIBERS (million)
5.1%YoY
13.3%YoY
ARPU (TL)
MOBILE CHURN RATE 1,3
0,9
2,6
Fiber ADSL TV
Total Turkey subscribers
37.6 mn18,8
16,0
Postpaid Prepaid
YoY 664K↑ 18K↓ 10K↑171K↑ 124K↑
Net add
54%of total mobile
950K↑ net add YoY
OPERATIONAL HIGLIGHTS
205K↑ 31K↓ -40K↑ 25K↑QoQ
15.0%Mobile ARPU like-for-likeGrowth YoY*
* The ARPU of customers who have stayed with Turkcell for at least 14 months.
Note: In Q117, our churn policy was revised to extend from 9 months to 12 months (the period at the end of which we disconnect prepaid subscribers who have not topped up above TRY10). Additionally, under our revised policy, prepaid customers who last topped up before March will be disconnected at the latest by year-end. Please note that figures for prior periods have not been restated to reflect this change in churn policy. The net mobile subscriber addition figures and mobile churn rate for Q217 disclosed in this document have been positively impacted by this change.
** Company calculation on the basis of monthly churn rates disclosed in ICTA sector reports.
6
INCREASING APPRECIATION OF CUSTOMERS
SUPERIOR 4.5G QUALITY & SPEED PIONEER CAMPAIGNS
+9
+12
+20
+23
Q118 Q218
Points over next best Points over third best
• #1 in NPS reflecting superior overall customer satisfaction
• Continued to widen the gap in the second quarter
*NPS score comparison is for consumer segment in mobile. (Source: Future Bright)
NET PROMOTER SCORE* OVER COMPETITION
DIGITAL SERVICESPORTFOLIO
ENHANCED SHOPPING EXPERIENCE
7
1519
2326 28 29 30 31 31
8 10 11 13 14 15 16 17 18
Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218
4.5G subscribers 4.5G compatible smartphone*
1,82,7
3,2
4,3
5,86,6
2,3
3,9
5,0
Q216 Q217 Q218
Non 4.5G Users 4.5G Users Total Users
MOBILE DATA USAGE (Av. GB/User) 4.5G SUBSCRIPTION (million)
• 4.5G users are driving data usage
o 2x consumption vs. 2G&3G users
• Significant room for further 4.5G adoption
• 77% of smartphones on our network are 4.5G compatible
• Up by 12pp yoy
CONTINUED RISE IN DATA USAGE
* adjusted to reflect the updated 4.5G smartphone figures on our network
7GB4.5G data usage
in June 18
8
46.7%
58,7% 60,5%
MOBILE* (TRIPLE PLAY«3P»)
40.5%
45,7% 46,8%
Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218
FIBER RESIDENTIAL (MULTIPLAY WITH TV)
*Share of mobile voice line users which excludes subscribers who do not use their line in the last 3 months. Triple Play refers to mobile customers who use voice, data and one of core digital services.
INCREASING MULTIPLAY
65% 75% 77%
Q217 Q118 Q218
MOBILE MULTIPLAY
TRIPLE PLAY SHARE IN MOBILE REVENUE
12ppYoY
9
55 minwatching
23 minreading
23 minlistening
32 mincalling
16 mininteracting
39 minfor VOIP users
We aim to increase customer engagement……from basic communication to potentially all digital activities
DIGITAL COMPANION THROUGHOUT THE DAY
10*Refers to downloads as of July 16, 2018** Includes users who utilised the zero rating benefit of Dergilik magazines and newspapers via browser.
Download*
MonthlyActive User
Service KPI’s
INSTANT MESSAGING
21.3Mn
6.5Mn
70Mnmessages per day
UPCALL
3.2Mn
1.0Mn
1Mncalls
per day
DIGITALPUBLISHING
6.5Mn
7.9Mn**
176Kcopies read
per day
MUSIC
17.6Mn
1.8Mn
6.8Mnsongs streamed
per day
TV
8.7Mn
1.9Mn
2.8MnTV sessions
per day
PERSONAL CLOUD(lifebox)
7.7Mn
1.3Mn
46docs uploaded
per personper day
MY ACCOUNT(Hesabım)
32.1Mn
11.8Mn
33%More ARPU
INTERACT, READ, LISTEN, WATCH, STORE & SEARCH
5.4Mn
0.9Mn
2.0Mn Searchper day
Web version launched
Paycellintegration
Q2Updates
Infrastructure renewed
International magazines introduced
Peak trafficduring elections and World Cup
2nd number on one phone
New interface
85MnShake&Win
11
PAYCELL CARD
PAYCELL APP
1.6MnRegisteredcredit cards
1.5Mndownloads
PAYCELL 5MnMobile Payment
users
277Kusers
PAYCELL: DIGITAL PAYMENT COMPANION
Available at:and
counting
Direct Carrier Billing
Mobile wallet Paycell top-ups Utility payments Money transfer QR code payment
Paycell launch campaign
169 Mn TLtransaction
in Q218*
*Excludes TCF transactions
12
• 300Mn TL of Asset Backed Securities were issued to date
TCF KEY FINANCIALS*
CONSUMER FINANCE BUSINESS
0,8 0,4 0,4
3,5 4,4 4,7
Q217 Q118 Q218Turkcell Contracted Receivables TCF Consumer Loans
Handset Financing
4.2
(TRY billion)
* Turkcell Consumer Finance Company (TCF) net income includes 30 mn TL and 57 mn TL dividend from Paycell retained earnings in Q217 and Q218 , respectively
Smartphone95%
Other**
5%
Loan Breakdown
**Other includes tablet, accessories, smart watch and VINN sales.
• 4.7Mn loans outstanding
• 1,526 TL average ticket size
• 85 TL average monthly installment
• Loan protection insurance on over 90% recently
TCF Loan Portfolio detailsTRY MILLION
Q2 2018 YoY % H1 2018 YoY %
Revenues 231 63.4% 443 72.2%
Net Income 123 235.2% 162 122.5%
4.8 5.1
13
GAMING BUSINESS
• Safe zone for kids up to age 12
• Available in web & mobile
• 1.4Mn users in June 18
• Umbrella platform
• New interface
• 5Mn games played in June 18
• Launched TavlaGO (Backgammon)
• Multi player online game
• Attractive gaming market* in Turkey
• 31Mn gamers
• USD774 Mn market
• Aim to create the largest gaming brand in Turkey
• Segmented approach
• Subscription based business model
• Coming soon for age 12+
* Source: Market Report, Newzoo, 2017
14
LIFECELL: TREND IN DIGITAL BRAND CONTINUES
195
401
879
Q417 Q118 Q218
SUBSCRIBERS (thousand)
1.4xARPU
(vs. Turkcell consumersubscriber)
70%of postpaid Lifecell
acquisitions are new customers
21%Lower churn rate
(vs. Turkcell subscriber)
8 GBav. data usage of a
Lifecell user(in June 2018)
2x
>1Mnas of
July 18
15
lifecell
BeST
Kuzey Kıbrıs Turkcell
EBITDA Margin(Q218)
47.6%31.6%
16.0%25.0%
38.0%13.0%
YoY Revenue Growth(Q218, in TRY)
1 TRY figures are based on IFRS
HIGHLIGHTS
TURKCELL INTERNATIONAL
4Ggrowth
on track
Nowoffering
fixedbroadband
4.5G launched on
1800MHzTRY MILLION1 Q2 2018 YoY% H1 2018 YoY %
Revenue 332 28.6% 611 20.8%
EBITDA 122 85.4% 215 70.3%
EBITDA
Margin36.9% 11.3pp 35.2% 10.2pp
lifecell Europe
260K subscribers
16
GLOBAL DIGITAL SERVICES
*Refers to downloads as of June 30, 2018
LIFECELLEUROPE
32K
7K
157K
10K
Downloads*
UKRAINE
83K
177K
582K
14K
BELARUS
0.9K
153K
-
1.2K
MOLDOVA(by LIFECELL VENTURES)
-
-
OTHER COUNTRIES
108K
1.4Mn
9K
18K
TRNC
42K
118K
15K
5K
Available at
Available at
• Digital services are available at our international subsidiaries and other operators through lifecell Ventures
• International downloads of our services reached almost 3 million
17
ASSET LIGHT STRATEGY ON TRACK
Turkcell Fiber Backbone
• Infrastructure sharing protocol signed by Turkcell, Türk Telekom, Vodafone TR, Türksat and Telkoder in May
• Bilateral agreements to follow: 3.6Mn additional homepass through Türksat and potential for more
• A new capex model on fixed business
• 41.8 thousand km rollout
• 19 cities
• Data speed up to 10Gbps
• 41% take up rate
NEW BUSINESS MODEL ON FIXED INFRASTRUCTURE
18
GUIDANCE REVISED UPWARDS
OLD
OP. CAPEX / SALES*
TURKCELL GROUP
2018 GUIDANCE
REVENUE GROWTH
EBITDA MARGIN
NEW
14% - 16% 16% - 18%
37% - 40% 37% - 40%
19% - 18%19% - 18%
*Excluding licence fees
FINANCIAL OVERVIEWOsman YılmazTurkcell CFO
20
REVENUE & EBITDA
4.316
5.105
601
74 89 25
RevenueQ217
Δ TurkcellTurkey
Δ TurkcellInternational
ΔTCF* Δ OtherSubsidiaries
RevenueQ218
18.3%
* Turkcell Consumer Finance Company, Financell
REVENUETRY MILLION
• 0.8 bn TL revenue add in Q218 yoy, Turkcell Turkey and TCF are main growth contributors
• EBITDA margin improvement of 8.0pp yoy in Q2 including new IFRS impacts
EBITDA & EBITDA MARGIN
1.457
2.134789
(170)(10) 68
EBITDAQ217
Δ in Revenues
Δ in Direct cost of
revenues**
Δ in G&Aexp.
Δ in S&Mexp.
EBITDAQ218
Margin33.8%
Margin41.8%46.5%
TRY MILLION
** Excluding depreciation and amortization
21
NET INCOME DEVELOPMENT
704
415
677
(429)
(269)
(313)
3 42
Net income Q217 Δ in EBITDA Δ in D&A Δ in InterestInc./Exp.
Δ in FX Gain/Loss*
Δ in Other Inc/Exp.
Δ in Taxation Net income Q218
Q217 vs. Q218TRY MILLION
* FX Gain/Loss includes impact of fair market value change of swap contract
22
SOLID BALANCE SHEET
TRY Mn Q4 2017 Q1 2018 Q2 2018
Total Cash 4,712 4,590 7,081
Total Assets 33,982 37,073 41,026
Total Debt* 12,536 14,002 17,313
Lease
Obligations- 1,128 1,136
Total Equity 15,045 14,248 14,952
Net Debt* 7,824 9,413 10,231
Net Debt** 3,576 5,014 5,541
NET DEBT/ EBITDASUMMARY
* Impact of IFRS 16 (capitalised lease obligations) are excluded**Turkcell Consumer Finance Company’s (TCF) loan portfolio and capitalized lease obligations related to IFRS 16 are excluded
TCF loan porfolio
Net Debt**
3.5765.014
5.541
4.248
4.3994.691
1,26x
1,44x1,49x
0,59x
0,80x0,84x
Q417 Q118 Q218
Net Debt/EBITDA* Net Debt/EBITDA**
23
CASH DEVELOPMENT
4.590
6.983 7.081
2.134(1.230)
474
1.646(631)
98
Cash Q118 EBITDA Capex* Net intincome/(expense)
Net chg inborrowing
Dividend Payment Other Cash Q218
* Including operational and non-operational Capex and excluding the impact of new IFRS changes
TRY MILLION
Q118 vs. Q218
24
78%
22%
FX EXPOSURE
7.1Bn TLNominal
42%58%
82%
18%
FX Local Currency
CASH DEBT
Before Hedging
* Including advance payments, hedging and assuming the 4.5G license payables in TRY for the periods before April 2017 and excluding FX swap transactions for TL borrowing. Q218 figures include USD 86 Mn stemming from lease obligations.
After Hedging
NET FX POSITION*
18.5Bn TL
USD MILLION
Share
(1.239)
(688)
(125) (91) (203)
(330)
(144) (109)(215)(95)
(86)
Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218
Comfort Zone(USD 500Mn)
IMPACT OF HEDGING TOOLS ON Q218 FX LOSS
TRY MILLION
961
279
682
Total FX Loss Hedge Portfolio Gain Net FX Loss
25
NOTICE
This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21Eof the Securities Exchange Act of 1934 and the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Thisincludes, in particular, our targets for revenue, EBITDA and capex in 2018 or for the medium term 2018 to 2020. More generally, allstatements other than statements of historical facts included in this presentation, including, without limitation, certain statementsregarding the launch of new businesses, our operations, financial position and business strategy may constitute forward-lookingstatements. In addition, forward-looking statements generally can be identified by the written or oral use of forward-lookingterminology 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 noassurance that such expectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to usare expressly qualified in their entirety by reference to these cautionary statements. For a discussion of certain factors that may affectthe outcome of such forward looking statements, see our Annual Report on Form 20-F for 2017 filed with the U.S. Securities andExchange Commission, and in particular the risk factor section therein. We undertake no duty to update or revise any forward lookingstatements, 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, whichremains subject to verification, completion and change. No responsibility or liability is or will be accepted by the Company or any of itssubsidiaries, board members, officers, employees or agents as to or in relation to the accuracy or completeness of the informationcontained 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 thecharts or tables used in this presentation totals may not foot due to rounding differences. The figures used in this presentation arerounded while percentage changes are calculated based on the figures disclosed in the press release.
For further information please e-mail
[email protected] call Turkcell Investor Relations at
(+90 212 313 1888)
Have you updated Turkcell IR app?
For Android For iOS
THANK YOU
APPENDIX
28
SUMMARY INCOME STATEMENT AS PER CMB1 FINANCIALS
(TRY MILLION)
Summary income statement Q2 2017 Q1 2018 Q2 2018 YoY (%) QoQ (%)
Revenue 4,316 4,762 5,105 18% 7%
Direct Cost of Revenues2 (2,784) (3,115) (3,392) 22% 9%
S&M (508) (390) (432) (15%) 11%
G&A (184) (215) (194) 5% (10%)
EBITDA 1,457 2,022 2,134 46% 6%
EBITDA Margin 33.8% 42.5% 41.8% 8.0pp (0.7pp)
Net Income 704 501 415 (41%) (17%)
1 Capital Markets Board of Turkey2 Depreciation and amortization is included
29
CONSOLIDATED BALANCE SHEET (IFRS)(Million TL)
Consolidated Balance Sheet (TRY mn) Q2 2017 Q1 2018 Q2 2018 YoY (%) QoQ (%)
Cash & Bank 4,995 4,590 7,081 42% 54%
CURRENT ASSETS 13,402 14,532 17,691 32% 22%
TOTAL NON-CURRENT ASSETS 18,512 22,541 23,335 26% 4%
TOTAL ASSETS 31,914 37,073 41,026 29% 11%
S/T Debt 4,042 5,716 6,688 65% 17%
TOTAL CURRENT LIABILITIES 9,193 11,704 12,451 35% 6%
L/T Debt 7,156 9,414 11,760 64% 25%
TOTAL NON-CURRENT LIABILITIES 8,520 11,121 13,623 60% 22%
MINORITY INTEREST 39 43 49 26% 14%
SHARE CAPITAL 2,200 2,200 2,200 - -
TOTAL EQUITY 14,201 14,248 14,952 5% 5%
TOTAL EQUITY AND LIABILITIES 31,914 37,073 41,026 29% 11%
30
CURRENCY TRENDS
3,02 3,32
4,115,06
3,183,71
4,525,31
2015 2016 2017 2Q18
Average Period-End
2,73 3,013,63
4,262,913,52 3,77
4,56
2015 2016 2017 2Q18
1,591,98 1,93 2,00
1,86 1,96 1,97 1,99
2015 2016 2017 2Q18
21,7925,56 26,64
26,2424,0027,19 28,07
26,19
2015 2016 2017 2Q18
USD / TRY EUR / TRY
USD / BYN USD / UAH