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Investor Presentation
TURKCELL INVESTOR PRESENTATION
May 2020
Investor Presentation
STRATEGIC FOCUS AREAS& 3-YEAR PLAN
2
33
Investor Presentation
CORE COMPETENCIES
STRATEGIC FOCUS AREAS
Digital Business Solutions Techfin ServicesDigital Services
Strong Bond With Customers
State-of-the-art Infrastructure
Advanced Analytics & Technology
Strong & Agile Team
Telecom Services
Well-Positioned to Create More Value
44
Investor Presentation
Enlarge subscriber base with dedicated focus on postpaid segment
Grow in fixed broadband through fiber and FWA
Utilize the digital channel for acquisition, device sales and growth
Leverage continued demand
Ensure standalone growth
Expand globally
Boost overall corporate business with multiplay focus
Provide end-to-endIT solutions for corporates
Trusted partner of corporates through their digital transformation
Reach wider customer base with complete portfolio of solutions
Reach out to long tail of 1.6Mn+merchants in Turkey
Launch new consumerfinance solutions
GROW IN TELECOM SERVICES
MONETIZEDIGITAL SERVICES
LEVERAGEDIGITAL BUSINESS SOLUTIONS
LEAD TECHFIN SERVICES
+1 Million Subscribers/year
in Turkey
2.5x Standalone revenue
growth in 3 years
#1 Solution Provider
in 3 years
17 Million Active Paycell users
by 2022
Strategic Focus Areas
55
Investor Presentation
MPOS
PSD2
E-money
Micro Lending
Potential regulatory changes in the definition of loan facilitations
Benefit: Potential to give micro loans to consumers
The potential adaptation of PSD2 Payment Services Directive of EU in Turkey
Benefit: Ability to reach banking system, becoming single interface for customers
Using smartphone or tablet to perform the functions of a cash register
Benefit: Increased penetration of longtail merchants
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
Techfin: Regulation Becoming More Supportive
66
Investor Presentation
Turkish Techfin Ecosystem
DCB Wallet
Bill Payment
Payment Facilitators
Money Transfer
Paycell App Strategy
E-Money
VISION: Being an enabler on financial inclusion with the combination of technology and financial services
Paycell: Super App for All Techfin Solutions
77
Investor Presentation
Merchants
Go-to Market Strategy
(MPOS & QR)
Go-to Market Strategy
(App)
Customers
6,000Turkcell Stores
37 MnCustomers
4,000Direct Sales Force
TurkcellTechnology
Paycell: Go to Market Strategy
88
Investor Presentation
1 Bn
2.5 Bn
2019 2022E
Paid Subscriptions
Platform Licensing
Discovery Services
Traffic Monetization
Data Monetization
Operator Co-operations
Standalone Revenue (TRY)
DSS: The Dynamics of New Standalone Strategy
99
Investor Presentation
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.
TELCO BUSINESS / EXISTING BUSINESS
41%
24
DIGITAL & ICT BUSINESS / GROWTH ENGINE
5%
HARDWARE & SOFTWARE BUSINESS / OPPORTUNISTIC APPROACH
• Superior network perception• Net add, increase in ARPU• Opportunity of multiplay, new services• High margin
• Fragmented market• Lack of strong system integrator• Increase in demand for digitilization
• Profitable growth with integrated solutions
TelcoMarket Share
ICTMarket Share
Billion TRY
DBS: Market & Turkcell Positioning
1010
Investor Presentation
Inflationary Pricing
Effective Balance Sheet
Risk Management
Strong Free Cash Flow
Generation
Efficient Capital Allocation
• Key to sustainable growth and profitability
• Assurance for required return on investment
• Above-market ARPU growth
• Liquidity management• Net fx position
• Sustainable revenue growth• Continued operational
profitability• Controlled capex
• Review of investment requirement in conventional services
• Investment in high growth businesses
• Ensure returns above WACC
Turkcell Finance: Key Priorities
1111
Investor Presentation
Reduce funding needsin capex heavy traditional business
Invest in new high growth areas
Global Telco Industry Challenges
Flow of funds
Turkcell’sResponses
Digital services (TV, music, etc.)
Techfin services
ICT solutions (datacenter, cloud etc.)
IPO/M&A activities
Infrastructure sharing
Sell & leaseback transactions
Heavyinvestment
need
Slowrevenuegrowth
Improve returns over WACC11
Efficient Capital Allocation
Investor Presentation
OUR INITIAL TAKE ON
COVID-19
13
Investor Presentation
Our Initial Take on the Impacts of COVID-19
KEY POINTS
At Turkcell, we are closely monitoring the situation, and act via work groups/squads at each function
We prioritize employee health, keeping our services and operations uninterrupted, and management of any potential risks related with balance sheet with an increased emphasis on liquidity management
Telecom services have become more critical for work, education & life, and demand has surged
We are also aware of potential risks due to limited mobility (roaming etc.) and a prolonged scenario
Fast forward digitalization enhances the opportunities in business & entertainment for the long run
Our unique portfolio of digital services and solutions positions us favorably in the post-crisis era
We have a robust balance sheet with strong liquidity
Turkcell has a strong balance sheet with strong liquidity and limited financial risk exposure
14
Investor Presentation
Initial Management ResponseEMPLOYEES
Remote working since March 13 including more than 10,000 call center agents
Provided field employees with necessary hygiene equipment
CUSTOMERS
Free 6 GB/mo for mobile remote education portal; free 10GB/mo TV+ users for remote education channels
Plans to provide free 6GB/mo to university students to access online education platforms (under discussion)
Free 500 minutes and 5 GB/mo provided to subscribers in health sector; 10,000 free minutes for family physicians
Collection terms eased for subscribers in health sector and subscribers above age 65
Free calls to Consulate Call Center for Turkcell subscribers abroad
RETAIL CHANNEL
Stores at malls closed (170 out of 1,300 exclusive stores. 4,000+ non-exclusive stores open)
Street stores work 6 days of the week between 12pm to 6pm; these stores are provided with hygiene materials
NETWORK
Network optimization based on AI to manage traffic load actively
Network operations teams on alert mode and back-up core capacity is ready for any need
Critical equipment orders brought forward and inventory replenished
FINANCIAL
Increased emphasis on liquidity management and collection risks
Daily financial risk management meeting with CFO; weekly status updates with Group CFOs ; monitoring cash flow on a daily basis
Dynamic revenue forecasting and cost control measures
OTHER
Three operators initiated a project with the cooperation of Ministry of Health aimed at identifying high risk groups to virus based on AI, ensuring compliance to lock up rules based on location data and developing a mobile app including updated information on pandemic
Note: Retail channel reflects the picture prior to the ease of lockdown actions
15
Investor Presentation
COVID-19 Impacts – Recap
• Rise in data usage in total network: 35%
• Customer acquisitions are:
• Mobile (postpaid): 35% lower• Fixed: 52% higher
• Churn:
• Mobile (postpaid): 37% lower• Fixed: 28% lower
• Accelerated demand for digital channel
• %30 more visitor• %76 more sales volume
• Digital Services
• Group video call in BiP increased 10x
• TV+ Login & session time: up by 15%
• Digital Business Solutions
• higher demand for cloud, security services
• city hospital projects accelerated & new ones
• Techfin solutions
• 30% increase in online payments
• 42% increase in DCB
• Quarantine rules apply in Ukraine and TRNC
• Stores open
• Customers are encouraged to use online channels
• Higher consumption (Ukraine):
• Voice traffic: 9%
• Data: 3%
OPERATIONS IN TURKEY STRATEGIC FOCUS AREAS INTERNATIONAL BUSINESS
Note: Impact figures compare last week of March to last week of February
RISKS
IMPACTS
• Roaming revenue
• Prepaid revenue
• SME segment and equipment sales
• Lower acquisition
• Lower handset sales
• Roaming revenue
• Lower acquisition
• Prepaid dominated markets
• Price increase limitations
• Digital Business Solutions
• deferral of projects
• collection risk
• Techfin solutions
• decline in consumer finance business
16
Investor Presentation
Major Challenges and RisksCONSUMER SEGMENT
Declining traffic in physical channel impacting customer acquisitions (similar but positive impact on churn levels)
Pre-paid line top-ups in physical channels (low pre-paid subs share of 38%, rev. share is <20% in mobile in Turkey)
Declining device sales due to limited mobility
CORPORATE SEGMENT
Certain industries are impacted directly by the pandemic which might lead to requests from clients regarding:
Deferral on payments; temporary discount of services
SMEs vulnerable to prolonged time and macro risks (rev. share is <10% in Turkey)
ROAMING REVENUES
Roaming income in consumer and corporate segments at risk with suspension of inbound and outbound travels (rev. share is <3%), but also lower roaming costs
CONSUMER FINANCE BUSINESS
Potential of further slow down in consumer finance business with the decline in device sales
Potential increase in cost of risk on BRSA’s resolution on deferral of loan payments
OTHER
Stricter lock down conditions might impact fixed broadband service set-ups
Any rise in unemployment or decreasing purchasing power may impact our overall business
Higher vulnerability to cyber-attacks due to remote working
17
Investor Presentation
Long Term OpportunitiesDIGITALIZATION OF CUSTOMER
Fast forward digitalization enhances the opportunities in business & entertainment
Our digital business solutions needed for online education platforms, remote work, e-commerce
Rising use of our digital services portfolio leading to established habits
DIGITALIZATION OF SERVICE CHANNELS
Optimization of our channel costs with faster shift to digital channels
Call center agents switched to home agents reducing overhead costs
FIXED WIRELESS ACCESS (FWA)
Superbox, the brand for FWA in Turkey, stands out as the sole alternative to fiber offering fiber-like speed
Faster penetration of Superbox than our plans; 125% increase in acquisitions (last week of March vs last week of Feb)
TECHFIN
Acceleration of payment habits into cashless methods
Surge in demand for digital content: Opportunity for mobile payment growth
Increase in QR based and contactless payments
18
Investor Presentation
Telecom services have become more critical for work, education & life
• Need for Turkcell’s quality service is more important than ever• We see strong demand leading to overage, upsell and behavior change
Fast forward digitalization enhances the opportunities in business & entertainment
• Our digital business solutions needed for online education platforms, remote work, e-commerce • Rising usage of our digital services portfolio• Optimization of our channel costs with faster shift to digital channels
Potential risks lie in certain area and segments
• Roaming income at risk if situation extends beyond summer (rev share is <3%) • Top-up of pre-paid cards in physical channels (we have a low pre-paid share of 38%, rev. share is <20% in mobile in Turkey)• Risk of disruption to the global supply chain depending on the duration of this crisis• Rising vulnerability to cyber-attacks given significant remote working
Quality of balance sheet and cash strength is key
• Turkcell has a robust balance sheet with strong liquidity: USD1.4Bn cash at hand (Mar-20)• We carry a long FX position of USD114Mn as of Mar-20
Conclusions
Investor Presentation
19
Q1 2020 RESULTS
20
Investor Presentation
Q1 2020: Strong Start to the Year
REVENUE GROWTH
17.3%
6.7Bn TL
EBITDA MARGIN
42.2%
Up 2pp yoy
TOTAL SUBSCRIBERNET ADD
614K
towards 1Mn/y target
POSTPAIDSHARE
63.2%
Up 8pp yoy
MOBILEARPU GROWTH
21.5%
Double-digit growth
RESIDENTIAL FIBER ARPU GROWTH
13.4%
• Strong growth
Solid profitability
Strong net add
2 week/limited impact of COVID-19
21
Investor Presentation
Note: TRY figures are based on IFRS. 1Excluding license fees
Turkcell Group Financials
Highlights
• Double digit revenue growth and strong operational profitability
• 2 week/limited impact of COVID-19
• Excluding the 772Mn TL transaction gain in Q119, yearly net income growth is 93%
Revenue 6,658 (0.4%) 17.3%
EBITDA 2,809 2.0% 23.1%
EBITDA Margin 42.2% 1.0pp 2.0pp
EBIT 1,437 6.5% 30.3%
EBIT Margin 21.6% 1.4pp 2.2pp
Net Income 873 15.5% (28.7%)
Opr. Capex/Sales1 12.6% (12.8pp) (3.0pp)
QoQ % YoY %Q1 2020MILLION TL
22
Investor Presentation
1.9%
4.5%
2.0%
1.9% 2.1%1.7%
Q1 19 Q4 19 Q1 20
TURKEY SUBSCRIBERS ARPU
MONTHLY AVERAGE MOBILE CHURN RATE
21.0
12.2
Postpaid Prepaid
QoQ 679K↑ 113K↓ 34K↑ 28K↑
Net add
Operational Highlights
23K↓
1.5
0.7
59K
Fixed subscribers
0.7
IPTV
fiber ADSL
fiber
cable
ADSL
2.3
MILLIONTL
62.870.4 71.2
38.1
45.9 46.3
Mobile blended (excl.M2M)Q1 19 Q1 20
21.5% YoY
Fiber ResidentialQ1 19 Q1 20
13.4% YoY
Q4 19 Q4 19
63%Postpaid
Share
Total
614K↑
excluding the impact of regulatory change &
involuntary deactivated lines
23
Investor Presentation
MOBILE POSTPAID SUBSCRIBERS
Shifting to a More Valuable Portfolio
18.718.9
19.4
20.4
21.0
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
MILLION
(155K) 215K 503K 679KNet add 984K
55.4% 55.7% 56.3% 63.2%Postpaid
share 62.2%
• Solid performance in a seasonally weak quarter
• Strong start to 2020 with 679K postpaid net adds
• Rising postpaid share is encouraging
• More secure for upsell & collection during this fragile period
• Supportive of blended ARPU growth
24
Investor Presentation
56
130
217
323
400
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
SUBSCRIBER TREND
23K 73K 88K 106KNet Add
~2xthe ARPU of
fixed broadband
THOUSAND
76K
Superbox«The Brand for FWA»
• Sole alternative to fiber, offering fiber-like speed
• Demand rose %125 in late Mar; doubled in the first week of Apr
25
Investor Presentation
• Standalone revenue growth: 29% yoy
• First enterprise customer on BiP Multicloud
• New: Digital Security Service
• Turkcell Data Management Platform: 1st phase concluded
• Efforts and campaigns in all our apps to motivate «stay-at-home»
Strategic Focus Areas: First Quarter Highlights
DIGITAL SERVICES
DIGITAL BUSINESS SOLUTIONS
TECHFIN SERVICES
• Strong topline growth continued: 42% yoy
• Secured nearly 700 new projects in Q1 2020
• Rise in demand for our services for remote working &education, security & cloud
• New city hospital inauguration on 20 April: earlier than scheduled
• Highest-ever yoy transaction volume growth in March with 146%
• Active Paycell app user growth 50%; active Paycell Card users doubled yoy
• Paycell integration with Istanbulkart mobile application
• Acceleration of payment habits into cashless methods
26
Investor Presentation
3.44.4 4.7
7.4
10.8 11.6
5.9
9.0 9.8
Q1 19 Q4 19 Q1 20
Non 4.5G Users 4.5G Users Total Users
MOBILE DATA USAGE 4.5G SUBSCRIPTION
Growth Engine: Mobile Data
94% are 4.5G
subscribers
20 million with
4.5G compatible SPs89% are 4.5G
compatible SPs
Monthly data consumption of a 4.5G user reached to 13GB in March 2020
78% smartphone
penetration
31.0 30.7 31.4
18.5 19.2 20.4
Q1 19 Q4 19 Q1 20
4.5G subscribers 4.5G compatible smartphone
66%YoY data
usage growth
AV. GB/USER MILLION
27
Investor Presentation
23 22
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Turkcell Op1 Op2
Leadership in Quality & ExperienceCUSTOMER EXPERIENCECONSUMER NET PROMOTER SCORE (POINTS)
LEADER IN QUALITY
Source: Future Bright
• Widest: 234 MHz spectrum
• Fastest: 1.2 Gbps LTE-Advanced/5G ready
• AI-based Smart network operation
• Fiber-to-the-home: 10Gbps NETWORK
SALES CHANNEL
• 1,315 exclusive stores
• 5,200+ non-exclusive stores
• Digital channel: Turkcell website and app
LEADER IN DISTRIBUTION
28
Investor Presentation
16%
1 Figures are based on IFRS
Turkcell International
SUBSIDIARIES AT A GLANCE
Note: Remaining 5% comprises lifecell Germany, other international operations and intra-company eliminations. Ukraine, Belarus and TRNC local currency growth figures are based on stand-alone financials.
• 12% yoy revenue growth in local currency
• 4G user data usage: 10GB/month, ↑42% yoy
• 2% yoy revenue growth in local currency
• 4G user data usage: 11GB/month, ↑35% yoy
Lifecell Ukraine
Life :) Belarus
Revenue 560 (0.2%) 31.7%
EBITDA 250 2.5% 29.0%
EBITDA Margin 44.6% 1.1pp (1.0 pp)
FINANCIAL HIGHLIGHTS1
10%
69%
KKTCell TRNC
• 14% yoy revenue growth
• Increasing contribution of fixed & corporate business
Q1 2020 Revenue ShareMILLION TL
QoQQ1 2020 YoY
29
Investor Presentation
*Excluding license
2020 Guidance Revisited
REVISEDEXISTING IMPACTS
Long Term Opportunities
Techfin
Fixed Wireless Access
Faster Digitization of Service Channels
Faster Digitization of Customer
REVENUE GROWTH 10% - 12%13% - 16%
• Lower roaming revenues• Less mobility, store working hours• Lower handset sales, consumer finance• Risk at SME and equipment revenues
EBITDA MARGIN 40% - 42%39% - 42%• S&M savings • Overhead savings
OP.CAPEX/SALES* 17% - 19%16% - 18%• Revised revenue guidance• Level to preserve quality
EBIT MARGIN 19% - 21%18% - 21%• S&M savings • Overhead savings
Important notice: Revised guidance is based on a scenario where gradual normalization of pandemic related impacts starts in 3Q 2020
30
Investor Presentation
• Yearly incremental revenue generation of 1.0 bn TL in Q120
• Top-line impacted by slowdown in TCF and exit from Inteltek
• Growth excluding TCF and Inteltek: 20.8% yoy
Revenue
* Turkcell Consumer Finance Company (Financell)
5,675
6,658
905
135 (79) 22
RevenueQ119
Δ TurkcellTurkey
Δ TurkcellInternational
ΔTCF* Δ OtherSubsidiaries
RevenueQ120
17.3%
MILLION TL
31
Investor Presentation
• 23.1% EBITDA growth via revenue increase & effective OPEX management
• 2.0pp yoy EBITDA margin improvement driven mainly by lower S&M expenses
2,281
2,2812,797 2,797 2,799 2,809
2,809983
(467)2 54 (44)
EBITDAQ119
Δ in Revenues
Δ in Direct cost of
revenues**
Δ in G&Aexpenses
Δ in S&Mexpenses
Δ Doubtful trade
receivables***
EBITDAQ120
EBITDA & EBIT
** Excluding depreciation and amortization *** net impairment losses on financial and contract assets
MILLION TL
23.1%Margin 40.2%
Margin 42.2%
EBIT: 1.10319.4%
EBIT: 1,43721.6%
32
Investor Presentation
Techfin: Consumer Finance Business
HANDSET FINANCING
0.3 0.4 0.4
3.62.4 2.1
Q1 19 Q4 19 Q1 20
Turkcell Contracted Receivables Financell Consumer Loans
3.9
2.8
MILLION TLBILLION TL
• Declining portfolio due to regulation
• Potential further decline expected due to lower handset sales
• Potential increased CoR on BRSA’s resolution on deferral of payments
Revenue 162.5 (19.2%) (32.8%)
EBITDA 101.5 (21.0%) (7.2%)
EBITDA Margin 62.5% (1.4pp) 17.2pp
Net Income 64.3 (36.6%) (21.2%)
YoYQoQQ1 20202.5
33
Investor Presentation
69%171 Million TL
DCB transactions
Techfin: Payment Services Platform
HIGHLIGHTS
• Value focus: 82% increase in non-group revenues, representing majority of revenues
• Change of payment habits towards cashless payment has set the scene for further growth for Paycell
• Big data analytics helping Paycell to achieve micro-segment marketing
• Upcoming: wide-spread use of QR code
FOUR PILLARS OF REVENUE GENERATION
DIRECT CARRIERBILLING
BILL PAYMENT
PAYCELL CARD
MERCHANT SOLUTIONS
216%3.2 million
3rd party Bill Payments
9.3KPoints Paycell Is
Accepted
73%52.6 million TL
Paycell Card transactions
61 57 58
7764
43 44 4232 36
71%77%
72%
42%
57%
Q119 Q219 Q319 Q419 Q120
Revenue EBITDAEBITDA Margin
MILLION TL
Note: Growth figures are based on non-group transactions and indicate y-o-y growth in Q1 2020.
4.6 million Paycell 3MAU*
2.4 billion TL Total transaction volume*
* includes direct carrier billing, bill payments and Paycell Cardtransaction volumes, both group and non-group
34
Investor Presentation
Solid Balance Sheet
NET DEBT/ EBITDA
1 Excludes Turkcell Consumer Finance Company’s loan portfolio
TCF loan portfolio
Net Debt1
6,9757,658 8,213
2,7242,409 2,075
1.0x 1.0x 0.9x
0.7x 0.8x 0.8x
Q3 19 Q4 19 Q1 20
Net Debt/EBITDA Net Debt/EBITDA 1
Total Cash 10,975 10,239 9,212
Total Assets 45,515 45,715 45,329
Total Debt 20,675 20,306 19,500
Lease Obligations 1,544 1,533 1,482
Total Equity 17,431 18,083 18,678
Net Debt 9,700 10,067 10,288
Net Debt1 6,975 7,658 8,213
SUMMARYMILLION TL
Q3 19 Q4 19 Q1 20
35
Investor Presentation
Liquidity Management• Maturity risk management: Average debt maturity around 5 years. Working capital is funded mainly through bank
loans matching the maturity of our obligations.
• Liquidity: Sufficient buffer to sustain operations with:
• ~1.4Bn USD equivalent cash, mostly in hard currency
• Lower debt service until 2023 (~1Bn USD in 3 years excluding short term local currency loans)
• Available credit lines from diversified funding sources
• Potential for further slow down in consumer finance business will mean additional working capital release
PRINCIPAL & INTEREST PAYMENTS*
*Data of Turkcell Group companies, excluding TCF
253 221 271 211
1,675
335
2020 2021 2022 2023 2024+
FX Local Currency
588
221 271 211
1,675~USD1.4Bn cash covers payments until 2024
USD MILLION
36
Investor Presentation
(224)
216 207155
115 114
Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
FX Exposure
USD MILLIONNET FX POSITION2
2 Including advance payments, derivative transactions for hedging purposes and excluding FX swap transactions1 Excluding FX swap transactions.
9.2Bn TLNominal
52%28%
11%
9%
CASH1 DEBT
Before Hedging After Hedging
19.5Bn TL
Share
USD EUR TRY Other
88%
5%7%
36%
4%
53%
8%
Investor Presentation
APPENDIX
3838
Investor Presentation
Top-Notch Features
TranslationGroup Video CallSecret Message
Telco-OTT Power
App2NW2nd NumberFixed Number
Quality of ServiceDedicated BandwithOTT Box
Integrated Experiences
fizyDigital MagsTV+
Timeshift & Cloud RecordingLyricsMusic VideoLive Broadcasting
CrossPlatform
Recommendation
Strategic Focus:Digital Services
Differentiation with Unique Skills
3939
Investor Presentation
TURKEY
Potential
Subsidiaries
Done Deal
Negotiation
Global Expansion
Strategic Focus:Digital Services
4040
Investor Presentation
16KCOMPANY
COMPANY
COMPANY
528K
2.5Mn
OPTIMIZECOSTS
INCREASEREVENUES
Strategic Focus:Digital Business Solutions
3 MILLION COMPANIES
Corporate Customers’ Needs in Turkey
4141
Investor Presentation
Strategic Focus:Techfin Services
400 Mn**
900 Mn*
>1 Bn*
* Active users**Registered users
286 Mn*310 Mn*383 Mn**
23 Mn*140 Mn*
E-Commerce Tech Savvy Regulatory Environment
KEY DRIVERS IN WEST
Unbanked Population Tech Savvy Regulatory Environment
KEY DRIVERS IN EAST
Global Techfin Revolution
4242
Investor Presentation
77%
Smartphonepenetration
82Mn
Youngest & largest
population in Europe
1.6Mn
Merchant
60%
Cashspending
30Mn
Unbankedpopulation
17th
Largest economyin the World
Strategic Focus:Techfin Services
Turkey: Attractive Dynamics
4343
Investor Presentation
MPOS
PSD2
E-money
Micro Lending
Potential regulatory changes in the definition of loan facilitations
Benefit: Potential to give micro loans to consumers
The potential adaptation of PSD2 Payment Services Directive of EU in Turkey
Benefit: Ability to reach banking system, becoming single interface for customers
Using smartphone or tablet to perform the functions of a cash register
Benefit: Increased penetration of longtail merchants
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
Strategic Focus:Techfin Services
Regulation Becoming More Supportive
4444
Investor Presentation
Strategic Focus:Techfin Services
Key Performance Metrics
2019 2022E
3-Month Active User 4.5Mn 17Mn
Volume (TRY) 5.7Bn 41Bn
Revenue (TRY) 252Mn 750Mn
4545
Investor Presentation
234.4 MHz
TOTAL FREQUENCYBEFORE TENDER
Turkcell Vodafone Türk Telekom
62.0 57.064.8
172.4
82.8
110.2
AWARDED FREQUENCY IN
TENDER
TOTAL FREQUENCYAFTER TENDER
139.8 MHz
175.0 MHz
€0.3
€0.4
€0.5
• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost
Frequencies Before and After 4.5G Tender
4646
Investor Presentation
234.4 MHz
Turkcell Vodafone Türk Telekom
62.0 57.064.8
172.4
82.8
110.2
139.8 MHz
175.0 MHz
Main layer for 4.5G Terminal support, capacity and coverage layer
2600 MHz
2100 MHz
1800 MHz
900 MHz
800 MHz 4.5G main coverage layer
2G/3G coverage and voice layer
Mobile broadband layer for 3G4.5G usage for mid/long term
4.5G capacity boost layer for hot spots
€0.3
€0.4
€0.5
• Price / MHz / Population in Turkey: €0.12 per MHz per sub cost
60.040.0 35.0
70.0
35.0 30.0
59.6
20.070.0
24.8
24.8
20.0
20.0
20.0
20.0
Frequency Bands After 4.5G Tender
4747
Investor Presentation
SPEED
1,200 Mbps
2018
* Source: https://gsacom.com/paper/progress-gigabit-lte-networks-2/
QUALITY
CarrierAggregationall network
The BestExperts
4x44x4 MIMOall network
MIMO: Multi Input Multi Output
SPEED QUALITY
Fastest & Best & Widest
4848
Investor Presentation
Source: IRIS Telecommunication Engineering Services, January 2019
USER EXPERIENCE
82
7574
0-100
DATA SPEED
49
21
13
17
11 10
Download(Mbps)
Upload(Mbps)
Turkcell Telco1 Telco2
Differentiated Through Quality
4949
Investor Presentation
46.2%
Incumbent51.2%
Other players2.6%
6.6 6.6 6.8 7.27.8
8.79.5 9.7
0.551.2
1.461.67
1.93
2.29
2.803.21
0.490.49
0.560.63
0.74
0.83
0.93
1.08
10.2%11.0% 11.5%
12.1%13.2%
14.7%
16.3%17.1%
2012 2013 2014 2015 2016 2017 2018 2019
xDSL Fiber Cable PenetrationNote: Company calculation based on data in ICTA Q4 2019 Report
14.2 mnTotal
Subscribers
3 majorOperators
17.1%Penetration
TURKISH FIXED BROADBAND MARKET FIXED BROADBAND MARKET BY TECHNOLOGY (MN)
FIBER SUBSCRIBER MARKET SHARE
Q4 2019
Fixed Broadband Market
5050
Investor Presentation
21 28Number of cities
In partnership withTürksat & Vodafone
Turkcell (stand-alone)
Turkcell infrastructure
Overlapping
Türksat infrastructure
First in Europe
10 GbpsFiber to the home
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.
3.6 mn 3.6 mn fiber + 3.0 mn cable (HFC)Homepass
Well-invested Infrastructure: Focus on Sharing
5151
Investor Presentation
MassiveMachine Type
Communication
Ultra ReliableLow-LatencyCommunication
EnhancedMobileBroadband
5G is an Evolution
5252
Investor Presentation
5%
10%
15%
20%
25%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Turkcell Group EEMEA
Source: Bloomberg Industry Data and company announcements*Excluding licence fees
Turkcell Group Average: 18.0%*
EEMEA Average: 16.9%Between 2009 and 2019
Capex/Sales Trend
5353
Investor Presentation
Internet ~59%
Pay TV ~30%
~24 MnHouseholds
Determining household via network and social network analysis
Capturing potential via house profiling by using big data
Raising wallet share with cross contracting, household offers and new products
s Share
53%
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
New Definition of The Customer
5454
Investor Presentation
AnalyzeCustomer Behaviour
Social networkApplication usage
Location baseNetwork metrics
BIG DATA
Adaptive learningRule-based
management
ARTIFICIAL INTELLIGENCE
+8%+20%Lower benefit
Lower price
Higher benefitHigher price
Multiple layered offersfor value maximization
Special offer for customers with churn risk
RIGHT OFFER TO THE RIGHT CUSTOMER AT THE RIGHT TIME
Utilize Big Data to Maximize Consumer Surplus
5555
Investor Presentation
1HYBRIDOFFERS
Mix of postpaid & prepaid offers
Flexible postpaid management
No bill shock
2YEARLY
PACKAGES
Data benefit which can be used flexibly
during 12 months
3SEMI
CONTRACTS
Contract based on benefit
Flexible price
4PURE
DIGITAL OFFER
Game changer tariff
Low cost play
Digital channels only
New Pricing Approach
5656
Investor Presentation
POTENTIAL ACTIONS
• Established in 2015, fully owned by Turkcell
• Standalone payment and e-money company
• Payment institution and e-money licenses from BRSA
• Mobile payment solutions in several verticals
• Share know-how
• Invest jointly
• Diversify risk
STRATEGIC PARTNER
INORGANIC GROWTH
• Acquire local techfin companies to
expand vertical solutions
• Look for synergies
Paycell: Turkey’s Leading Techfin Company
5757
Investor Presentation
548900
1,276
2,070
2,429
2015 2016 2017 2018 2019
1,719
2,429
3,210
4,076
4,823
2015 2016 2017 2018 2019
NET REVENUE TREND EBITDA TREND
TRY Mn TRY Mn
• 46 thousand km rollout, 21 cities
• 1.5 Mn fiber customers
• Data speed up to 10Gbps
• Infrastructure sharing (Turksat & Vodafone)
• 3.6 Mn fiber homepass
INITIAL PUBLIC OFFERING
• More transparent articulation of equity story
• Diversify risk
• Invest jointly
• Share know-how
STRATEGIC PRE-IPO PARTNER
INORGANIC GROWTH
• Acquire local or regional fiber assets, smart-home and security companies
• Look for synergies
INFRASTRUCTURE SHARING
• Asset light model
POTENTIAL ACTIONS
Turkcell Superonline: Turkey’s Fastest Fiber
5858
Investor Presentation
68
112139
223
290
2015 2016 2017 2018 2019
168212
257
338
431
2015 2016 2017 2018 2019
Note: Tower portfolio includes owned and managed towers and towers for which contract management services are provided.
NET REVENUE TREND EBITDA TREND
TRY Mn TRY Mn
• First and only TowerCo of Turkey
• Tower portfolio of 10,726 (owned + right of use)
• Regional player operating in 4 countries
• Long term, visible revenue stream & strong profitability
• More transparent articulation of equity story
POTENTIAL ACTIONS
INFRASTRUCTURE SHARING
INITIAL PUBLIC OFFERING
• Asset light model
Tenancy ratio
1.7x
Global Tower: Turkey’s First & Only TowerCo
5959
Investor Presentation
87
207
346
803
314
2015 2016 2017 2018 2019
• 112k m2 datacenter space
• 33.5k m2 white space
• 8 locations
• Ankara datacenter: 44k m2 datacenter space, 12k m2 white space
• Gebze datacenter: 33k m2 datacenter space, 10k m2 white space
• İzmir datacenter: 15k m2 datacenter space, 2.4k m2 white space
CUMULATIVE DATACENTER INVESTMENTS
TRY Mn
• Asset light model
FUTURE FUNDING
SELL AND LEASE BACK
FREE CASH FLOW GENERATION
Datacenters: Largest White Space Capacity in Turkey
6060
Investor Presentation
100105113
119118119126124
129134
149144147
157
175177178
100101103105110113114118122
127136
145146150154160163
Q1
16
Q2
16
Q3
16
Q4
16
Q1
17
Q2
17
Q3
17
Q4
17
Q1
18
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
TCELL ARPU (exl. M2M) CPI
Q1
16
Q2
16
Q3
16
Q4
16
Q1
17
Q2
17
Q3
17
Q4
17
Q1
18
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
TCELL Operator 1 Operator 2
TURKCELL ARPU VS. CPI TREND MOBILE ARPU COMPARISONQ116=100Company and TUIK announcements
Q116=100Based on ICTA market report
Key for sustaininggrowth & margins
Secure ROI of projects & investments
Reflecting coststo the prices
ARPU growth above competition
60
Inflationary Pricing
6161
Investor Presentation
Short FX
position
Limited Short FX
position
Positive/NeutralFX
position
253 221 271 211
1,675
335
2020 2021 2022 2023 2024+
FX Local Currency
221 271 211
1,675
• US$1.4 Bn equivalent of cash holdings covers maturities until 2024
• Strong free cash flow generation
• Available credit lines from diversified funding sources
• Almost all cash in hard currency
• 50% of FX denominated debt is hedged
• Hedging for whole maturity (principal & interest)
LIQUIDITY MANAGEMENT NET FX POSITIONPrincipal & Interest Payments1
(1) Data of Turkcell Group, excluding consumer finance business.
Dec15 Dec16 Dec18 Dec19
US$ Mn
Effective Balance Sheet Risk Management
588
6262
Investor Presentation
Major Funding & Hedging Details
TYPE & DATE AMOUNT MATURITY INTERESTPURPOSE OF
FUNDINGUTILIZATION HEDGING DETAILS
Bond(October 2015)
USD 500M 15.10.20255.75%
(fixed rate)CAPEX and inorganic growth opportunities
- -
China Development Bank(October 2015)
EUR 500M3-year grace
period, 10-year maturity
EURIBOR+2.20%
Debt restructuring Fully utilized in Oct 15 100% hedged with PCCS
EUR 750MEUR: EURIBOR+2.15%
USD: LIBOR+2.17%CNY: 5.51%
CAPEX~EUR 560M fully utilized and availability period has expired
~84% hedged with PCCS & CCS
Bond(April 2018)
USD 500M 11.04.20285.80%
(fixed rate)Repayment of existing
indebtedness- -
EKN-Covered(March 2019)
USD 150M 10-year maturity1st Tranche: LIBOR+2.10%2nd-3rd Tranche: 5.35%
CAPEXUSD 50M utilized
as of March 20Interest Rate Swap: 56% of the
utilized amount
Sustainability Linked Loan(May 2019)
EUR 50M 3-year maturity EURIBOR + 1.95%General Corporate
PurposesFully utilized
in May 19-
Green Loan(Mar 2020)
EUR 50M 5-year maturity EURIBOR + 1.95%General Corporate
PurposesFully utilized
in Mar 20-
6363
Investor Presentation
LIFECELL UKRAINE LIFE :) BELARUS KKTCell TRNC LIFECELL VENTURES NL
• Growth driven by data
• Expand digital services
• Net profit by 2021
• Growth driven by data
• Expand digital services
• Grow in fixed broadband
• New revenue streams(Corporate & SystemIntegration)
• Expand DSS footprint
• Make new strategic alliances
• Revenue generation
Strategic Focus Areas of Turkcell International
6464
Investor Presentation
lifecell PERFORMANCE
HIGHLIGHTS
UKRAINE MOBILE MARKET FACTS*
55.1mTotal
subscribers
3Operators
132% Mobile
Penetration
Ownership 100% Turkcell
Ownership 100% VEON
Ownership 100% MTS
*Source: Global Wireless Matrix Q4 2019 ** MTS announced the sale of its Ukrainian operations to Bakcell (Azerbaijan) on Nov 25, 2019.
UAH MILLION Q1 2020 YoY% FY19 YoY%
Revenue 1,580 11.6% 5,984 13.6%
EBITDA 798 (2.1%) 3,243 17.4%
EBITDA Margin 50.5% (7.1pp) 54.2% 1.8pp
**
• Operational performance (3 months active):
• 7.5 million subscribers in Q1 2020
• UAH 69.5 ARPU (up 4.2% yoy)
• 80% SP penetration (market leader)
• First to launch 4G services in Ukraine on 2600 MHz
• 4.5G services on the 1800 MHz frequency since Jul 1st, 2018
• NCCIR issued license for both GSM and LTE in 900 MHz band
• New license will become valid July 1st, 2020 (for 5 years)
Operations in Ukraine
6565
Investor Presentation
49.1%
37.0%
13.9%
KYIVSTAR
VDF
lifecell
17% 16%12% 10% 12%
20% 24%18% 16% 16%19% 21%
30%
-11%
Q119 Q219 Q319 Q419 Q120
FINANCIALS
57.6% 53.9% 53.0% 52.6% 50.5%
52.8% 51.7%54.6%
49.1%
62.9% 65.0% 64.8%69.5% 67.9%
Q119 Q219 Q319 Q419 Q120
Mobile Revenue
Subscriber*
(*) 3 month active subscribers
Mobile Revenue Growth (in UAH)(YoY)
lifecell VDF Kyivstar
EBITDA Margin (%)
Source: Company announcements (Q4 2019)
MARKET SHARE
53.9%30.6%
15.5%
KYIVSTAR
VDF
lifecell
Ukraine: Mobile Market Performance
6666
Investor Presentation
*Source: Company calculation based on Q4 2019 results
BeST PERFORMANCE
HIGHLIGHTS
BELARUS MOBILE MARKET FACTS*
11.9mTotal
subscribers
3Operators
125% Mobile
Penetration
Ownership 80% Turkcell20% Belarusian State
Ownership51% Belarusian State49% MTS
Ownership100% Telekom Austria
Q1 2020 YoY% FY19 YoY%
Revenue 32.5 1.9% 135.0 8.1%
EBITDA 8.4 13.5% 35.5 27.2%
EBITDA Margin 26.0% 2.9pp 26.3% 4.0pp
BYN MILLION
• 1.0 million subscribers in Q1 2020 (3-month active)
• Provides 4G LTE services in 6 regions and ~191 cities
• Average monthly data consumption grew by 35% yoy to 11GB
• 4G users reached 58% of 3-month active users, driving further data and digital services usage.
Operations in Belarus
6767
Investor Presentation
47.0%
41.0%
12.0%
MTS
A1
life:)
FINANCIALS
9% 10% 10%
3% 2%7% 6% 5%
9%
19%20%18% 19%
15%
Q119 Q219 Q319 Q419 Q120
49.5%44.7%
5.8%
MTS
A1
life:)
Source: Company announcements (Q4 2019)
Subscriber*
Revenue
(*) 3 month active subscribers
life :) EBITDA Margin Trend*
Mobile Revenue Growth (in BYN)(YoY)
23.1%
32.9%
27.2%
21.7%
26.0%
Q119 Q219 Q319 Q419 Q120
life:) A1 MTSMARKET SHARE Belarus: Mobile Market Performance
6868
Investor Presentation
10%
20%
30%
40%
50%
60%
70%
Turkey Hungary Jordan UK Croatia Greece Italy Spain Egypt
Special Communication Tax (SCT) 7.5% 7.5%
VAT 18% 18%
Treasury Share1 15% 1%
TRX fees 5%(of net sales)
-
Contribution Share to Telecom Authority
0.35%(of net sales)
0.35%(of net sales)
New subscription SCT2
(at first enrollment)TRY 79.00 -
Wireless license fees (per acquisition)
TRY 34.15 -
Wireless usage fees (annual)
TRY 34.15 -
TAX MOBILE FIXED TURKEY HAS THE WORLD’S HIGHEST MOBILE SERVICE TAXES3
1Under the license agreement Turkcell pays a treasury share equal to 15% of its gross revenue from Turkish GSM operations2 Excluding M2M SIMs3 GSMA/Turkey Report, 2016
Taxation in Turkey
6969
Investor Presentation
13.6
9.1
6.6
3.1 3.1 3.12.5 2.5 2.5 2.5 2.5 2.5
2.5
17.2 15.714.4
11.1 11.1
8.16.5
4.94.8 4.2 4.4 4.5
5.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
MTR-Turkcell Europe-MTR
MTR: Mobile Termination Rate Source: BEREC July 2019 report, Cullen International
EVOLUTION OF MTR TRY kuruş per min.
MTR RATESTRYkr.
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%
Mobile Voice Rates SMS Rates
Turkcell MTR is halfof the European
MTR level
Mobile/SMS Termination Rates in Turkey
7070
Investor Presentation
4.11
5.606.33
6.794.52
6.036.65
7.22
2017 2018 2019 Q1 2020
Average Period-End
3.63
4.765.66
6.143.77
5.265.94
6.52
2017 2018 2019 Q1 2020
1.93 2.03 2.10 2.24
1.972.16 2.10
2.60
2017 2018 2019 Q1 2020
26.64 27.32
25.90
25.12
28.07 27.69
23.69
28.06
2017 2018 2019 Q1 2020
USD / TRY EUR / TRY
USD / BYN USD / UAH
Currency Trends
71
Investor Presentation
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 ExchangeAct 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 2020 or for the medium term 2020 to 2022. More generally, all statements other than statements of historical facts included in thispresentation, including, without limitation, certain statements regarding the launch of new businesses, our operations, financial position and business strategymay constitute forward-looking statements. 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 no assurance that suchexpectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety byreference to these cautionary statements. For a discussion of certain factors that may affect the outcome of such forward looking statements, see our AnnualReport on Form 20-F for 2019 filed with the U.S. Securities and Exchange Commission, and in particular the risk factor section therein. We undertake no duty toupdate 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 toverification, 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 oralinformation 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 thispresentation totals may not foot due to rounding differences. The figures used in this presentation are rounded while percentage changes are calculated based onthe figures disclosed in the press release.
72
Investor Presentation
THANK YOUFor further information please e-mail
[email protected] call Turkcell Investor Relations at
(+90 212 313 1888)
Turkcell IR Website
THANK YOU