Results for Second Quarter August 9, 2002

Transcription

1 Results for Second Quarter 2002 August 9, 2002

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. 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, CEO

4 4 Overview of Turkcell in 2nd Quarter Increased subscriber base to 13.8 million by adding 1.1 million net new adds in April June period Increased minutes of usage per subscriber by 9% to 57.5 despite absence of full economic recovery (52.7 in Q1 2002) Consecutive revenue growth of 14% to $497 million 1 in Q2 ensured ($437 million in Q1 2002) Cumulative tariff increases reached 31% in first half Debt payments for the first half of 2002 totaled approximately $427 million, including $225 million trade payables, and reduced total bank debt to $1.5 billion at the end of Q Cash on hand remained strong $168 million EBITDA before FX rose by 13% and was $177 million ($157 million in Q1 2002) and the margin was 36% 1 - EITF adjusted, please refer to slide number 15 for further details

5 5 Signs of Recovery in the Macro Economy Industrial Production & Capacity Ut. Rate January Jan 02 Feb 02 Mar-02 Apr 02 May-02 Jun 02 Ind.Pro.Index CUR Inflation Data (CPI vs WPI ) (%) 5.3 WPI February March April May June Industrial production and capacity utilization rates improved in Q GDP growth turned positive in Q by 2.3% after several quarters Signs of recovery in economy contributed to operational results of Turkcell Full recovery in economy is still yet to come Political volatility overshadow signs of recovery in economy Source: State Institute of Statistics

6 6 Subscriber Growth Doubled at Reasonable Cost Net New Subscribers Added (thousands) SAC (US$, quarterly) 1, % Net new subscriber additions doubled in Q compared to Q in line with positive sentiment in the market Increased competition and lagged demand in the market contributed to the faster subscriber growth in the market The cost of adding per new subscribers in Q kept under control for Turkcell Churn rate remained stable at 3.3% in Q compared to 3.1% in Q which was mainly due to operator initiated disconnections

7 7 Subscriber Growth Fueled by Prepaid Subscribers Breakdown of gross adds in 2Q 2002 Subscriber base as of 2Q 2002 Postpaid 9% 9.2m 4.6m Postpaid 33% Prepaid 91% Prepaid 67% Total 13.8m On average about 65% of our total subscribers are on our Super on Net tariff package. The majority of remaining subscribers are on standard tariff Growth in prepaid subscriber additions is an indication of further penetration in the mass market

8 8 Tariffs & Minutes of Usage Tariff Increase vs. Depreciation of TL against US$ Minutes of Usage (MoU) Depreciation Tariff Increase % 57.5 Q1 +8% Q2-17% Q1 15.3% Q2 13.3% Turkcell increased its tariffs by a total of app. 31% on average during the first half of 2002 Tariff increases achieved in real terms while gaining in minutes of usage Increase in usage in Q is mainly due to positive sentiment and seasonality

9 9 Building on our Priorities We are building on our priorities mainly through the following actions: Continued focus on voice services Increased share of VAS services New product offerings Usage based volume discounts Suitable tariff packages Emphasis on retention of our high value segments Focus on awareness and user friendliness of our services Increased corporate communication activites Continued development of alternative channel activities

10 10 Competitive Landscape Large subscriber base of 13.8 million Strengthened brand image Succesful retention policy Leading position in introducing innovative services Turkcell s Strengths Superior customer service Increased public appearance with sponsorships Superior network Operational efficiency Turkcell s Actions Highlight the importance of 13.8 million subscribers Offer block tariffs bundled with free SMS to ensure flow of revenue Introduce volume discount and bonus schemes Create new tariff packages that will satisfy customers with specific call patterns Do not pursue price war Actions by Competetion Increased marketing activity Focus on new investments as opposed to National Roaming agreement Occasional direct price competition On-net price structures Variety of tariff packages Generally call prices that are inexpensive are highlighted

11 11 Capital Expenditure and Network Quality Total capex & capex per sub (US$) 3, Coverage : Over 10,000 pop % Over 5,000 pop % Total population 87.9% Drop rate : 1.2% Congestion : 0.1% ** 2001 Q Q Cumulative Capex (million US$) Cumulative Capex per Subscriber* Network quality maintained Capital expenditure totaled $32 million for the first half of 2002 Major capex items are network software upgrade, new services, and non operational IT *Turkcell only ** Including Licence

12 12 Recent Developments and Fintur On June 18, Turkey s banking regulator took over Pamukbank, one of our shareholders whose majority shares are owned by Cukurova Group Pamukbank has app. 0.5% direct and 7.9% indirect stake in Turkcell Based on media reports dated August 8, Turkey s banking regulator announced that the shares of Turkcell held directly by Pamukbank will be transferred to the Savings Deposit Insurance Fund Turkcell has no loans or letters of guarantees outstanding with Pamukbank Due to recent developments, Fintur restructuring is now planned to be completed during the second half of the year

13 13 Fintur Overview 1 Operator Country Market Subscribers share (%) ( 000) Revenue (US$ million) EBITDA (US$ million) Net Profit (US$ million) Azerbaijan Kazakhstan Georgia (5) (3.3) Moldova Fintur Combined NA 1, All figures are as of Q Financial figures are unaudited.

14 Overview of Financial Results 14

15 15 EITF s 09 s Impact on Financial Statements EITF rule is applicable starting from Q The numbers provided below are EITF adjusted numbers Effects of EITF on Turkcell financials: 1) Decrease in revenue 2) Decrease in ARPU 3) Decrease in Sales and Marketing (S&M) expenses 4) No change in EBITDA and Net Income amounts 5) Increase in EBITDA and Net Income margins EITF adjusted figures for previous relevant quarters: (In US$) Q Q YE 2001 Q Revenue (in millions) , EITF Net-off (in millions) ARPU Blended Postpaid ARPU Prepaid ARPU

16 16 ARPU ARPU (Blended, quarterly, US$) ARPU by Subscriber Type (Quarterly, US$) Prepaid Postpaid ARPU increased between Q and Q as a result of tariff increases, increase in revenues and increase in usage. Increase in ARPU is accompanied by the increase in the number of subscribers by 9% from 12.7 million in Q1 02 to 13.8 million in Q2 02.

17 17 Financial Results Revenue (US$ millions) Pre-FX EBITDA and Margin (US$ millions, %) % % % Post-FX EBITDA and Margin (US$ millions, %) Net Income (US$ millions) % 37% 33% -41

18 18 Improved Efficiency S & M Expenses (US$ millions) G & A Expenses (US$ millions) % 10% 11% 8% 6% 5% SAC (US$ per subscriber, quarterly) Direct Cost of Revenues (US$ millions) % 72% 69%

19 19 Turkcell Debt Maturities Q1 Q2 Q3 Q BANK FACILITY DOMESTIC LOANS 12.75% BOND DUE % BOND DUE 2005 OTHER TOTAL PRINCIPLE TOTAL INTEREST GRAND TOTAL Akbank May June 2002 principal payments extended for 1 year

20 20 Financing* AVAILABLE FUNDS US$ million Cash and cash equivalents FORCASTED MAJOR CASH OUTFLOWS FOR H Debt amortization and interest -268 Capex -116 REALIZED CASH OUTFLOWS IN H Debt amortization and interest -202 Ericsson trade payables -225 Capex -34 Covenants met and room for additional borrowing is approximately $1billion Required Actual Total Debt/EBITDA 4.00x 2.46x EBITDA/Interest 2.00x 4.80x Turkcell is still planning to meet its obligations mainly through its cash at hand and cash to be generated from operations No Fintur related cash effect assumed * All figures are approximate and as of end of Q2 2002