Turkcell. Results for Third Quarter October 31, 2003

Transcription

1 1 Turkcell Results for Third Quarter 2003 October 31, 2003

2 2 Notice The information contained in this document has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither the company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Certain statements made in this presentation, including information with respect to our plans and strategy for our business, are forward-looking statements. The statements contained in this discussion of operating results, which are not historical facts, are forward-looking statements with respect to our plans, projections or future performance, the occurrence of which involves certian risks and uncertainties. For a discussion of important factors that could cause actual results to differ materially from such forward-looking statements see Item 3D. Risk Factors in our 20-F. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

3 3 Overview of Operations Muzaffer Akpınar nar,, CEO

4 Extraordinary general shareholders meeting postponed 4 Q Quarter of continued improvement Improvement in macroeconomic indicators Positive impact of seasonality and consumer sentiment 5.4% subscriber growth in Q K net new additions Improved usage per subscriber; 66 minute blended MoU per subscriber 31% increase in revenue in Q to $765 million US$351 million EBITDA and 46% EBITDA margin in Q Early redemption of US$300 million senior subordinated Cellco bonds Interconnection agreement with Turk Telekom ensured and call termination fees announced for all operators by Telecommunications Authority Evaluating the acquisition of 72.57% stake in Digiturk

5 5 Q Results Key Figures Q Q % Chg. Subscriber number ( 000) 17,244 18, % ARPU blended (US$) % MoU blended (US$) % (Million US$) Revenues % Gross profit (incl. depr.) % EBITDA* % EBITDA margin 37% 46% 24% Net Income % Capex % Cash at hand % *For reconciliation of EBITDA to its most directly comparable GAAP measure please see slide 15

6 6 YTD 16% increase in subscriber base Total Subscribers Churn (quarterly ) Postpaid (million) Prepaid % 3.4% 4.0% 3.9% Maintained leading market position Aria Aycell merger is in process Subscriber growth continues Churn levels stabilized on quarterly basis

7 7 Continued improvement of usage MoU Data / Revenue % (minutes) % 66 10% 10% 11% 11% MoU increased 10% to 66 in Q3 mainly due to seasonality and positive sentiment in the market supported by our volumebased segmented campaigns Data revenue mainly composed of value added services and SMS usage constituted app. 11% of the revenue in Q3 2003

8 8 Recent developments on regulation and legal issues Interconnection agreements New interconnection agreement signed with Turk Telekom Telecommunications Authority determined and announced call termination rates for each mobile operator Traffic patterns, consumer behaviour are expected to change as a consequence of new call termination rates Legal developments Treasury share on interconnection revenues dispute The International Court of Arbitration ordered that the interconnection revenues should be included in the calculation of the 15% Treasury Share to the Turkish Treasury. Turkcell will continue to take the necessary legal action against the ICC ruling. Turkcell has US$485 million as provision in its financials of Q Frequency usage fee dispute The court concluded that Turkcell is obligated to collect the frequency usage fees from the prepaid subscribers. Turkcell already paid the fees for the year Turkcell has US$78 million as provision in its financials of Q for the year The payment is expected to be made in the near future

9 9 Investment in Digiturk Turkcell continuously focuses its efforts to identify both local and international investment opportunities in strategic areas The evaluation of Digiturk acquisition is consistent with these efforts On September 4, 2003, Turkcell Board of Directors unanimously agreed to evaluate the acquisition of 72.57% stake in Digiturk, the leading digital satellite TV broadcaster in Turkey The acquisition is contingent on several conditions such as; agreement on the fair-value assesments and opinion to be provided by a third party, financial and legal due diligence, obtaining necessary approvals and board approvals, and signing the final share purchase agreement. The evaluation process is still continuing

10 Overview of Financial Results 10

11 11 Improved Revenue (million US$) Revenues Impact of interconnection dispute on financials:* % 765 Q Q TOTAL Revenue reduction (55.5) (47.7) (103.2) Increase in interconnect cost (1.1) Net impact (56.6) (45.1) (101.7) *The impact is net of Special Communication Tax and VAT

12 12 ARPU ARPU (Blended) ARPU (Prepaid, Postpaid) (US$) % 14.2 (US$) Prepaid Postpaid Postpaid and prepaid ARPU in Q3 was positively impacted by 3% appreciation of TL against US$, and seasonality impact on usage levels supported by volume based campaigns

13 13 Closely monitored costs (million US$) Direct Cost of Revenue, % of Revenue Sales & Marketing, % of Revenue General & Administration, % of Revenue 69% % % % 11% 53 8% 45 10% 9% % 5% 5% 4%

14 14 EBITDA* (million US$) EBITDA Net Income 37% EBITDA 43% 37% EBITDA Margin 46% Main reasons for improvement; Increased revenue despite Turk Telekom deduction Decrease in costs as a percentage of revenue Lower translation loss of US$22 million

15 15 Reconciliation of EBITDA In accordance with the new rules recently adopted by the SEC regarding the use of non-gaap financial measures, please find below a reconciliation of EBITDA used in our presentation to its most directly comparable GAAP measure. (million US$) Net cash provided by (used for) operating activities (47.5) EBITDA Minority interest Equity in net (income)loss of unconsolidated investees (4.3) Interest expense (77.3) ( 67.8) (80.6) (85.3) Net increase (decrease) in assets and liabilities (160.1)

16 16 Balance Sheet (million US$) Q Q Q Q Cash & Cash Equivalents Short-term Debt Long-term Debt , Total Debt Net Debt Total Equity 1,510 1,426 1,035 1,011 1,342 1, ,291 1,348 1,444 1,561 Total Debt / EBITDA* Net Debt / EBITDA* EBITDA / Interest*

17 17 Improved Cashflow (million US$) Q Q Q Q EBITDA LESS: Capex Licence & Investments Interest Other Net Change in Debt Equity (21) (97) (56) (39) (53) (45) (73) (77) (180) (54) (81) (13) (22) Cash Generated Cash Balance (122)

18 18 Financing (million US$) 2003-Q1 Q2 Q3 Q4* Principles Interest Total *Revised Debt Repayment Schedule includes early redemption of $300 million bonds Net debt decreased to US$315 million as of end Q3, 2003 vs US$1.121 million as of end Q Turkcell repaid US$406 million principle and interest during first three quarters of 2003 Early redemption of US$300 million 15% Cellco Senior Subordinated Notes on November 10, 2003 will aim to reduce total debt and average cost of outstanding debt Turkcell has given mandate to IDB and HSBC to arrange financing in the form of a syndication for up to US$100 million and with a maturity of two years YKB submitted a Commitment Letter to grant a one year cash loan facility for US$150 million, with an availability period of one year which can be extended further with the consent of two parties

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