Form 6-K TURKCELL ILETISIM HIZMET For: May 08
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated May 8, 2019
Commission File Number: 001-15092
TURKCELL ILETISIM HIZMETLERI A.S.
(Translation of registrant’s name in English)
Aydınevler Mahallesi İnönü Caddesi No:20
Küçükyalı Ofispark
34854 Maltepe
Istanbul, Turkey
Istanbul, Turkey
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(7):
Yes ☐ No ☒
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby
furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
__________
Enclosure: A press release dated May 7, 2019 announcing Turkcell’s First Quarter 2019 results and Q1 2019 IFRS Report.
TURKCELL ILETISIM HIZMETLERI
FIRST QUARTER 2019 RESULTS
“STRONG START TO THE YEAR AND TARGETS RAISED”
First Quarter 2019 Results
|
Contents
HIGHLIGHTS
|
||
COMMENTS BY MURAT ERKAN, CEO
|
4
|
|
FINANCIAL AND OPERATIONAL REVIEW
|
||
FINANCIAL REVIEW OF TURKCELL GROUP
|
6
|
|
OPERATIONAL REVIEW OF TURKCELL TURKEY
|
9
|
|
TURKCELL INTERNATIONAL
|
||
lifecell
|
10
|
|
BeST
|
11
|
|
Kuzey Kıbrıs Turkcell
|
11
|
|
FINTUR
|
11
|
|
TURKCELL GROUP SUBSCRIBERS
|
11
|
|
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
|
12
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS
|
13
|
|
Appendix A – Tables
|
15
|
● |
Please note that all financial data is consolidated and comprises that of Turkcell Iletisim Hizmetleri A.S. (the “Company”, or “Turkcell”) and its subsidiaries and associates (together
referred to as the “Group”), unless otherwise stated.
|
● |
We have three reporting segments:
|
o |
“Turkcell Turkey” which comprises all of our telecom related businesses in Turkey (as used in our previous releases in periods prior to Q115, this term covered only the mobile businesses).
All non-financial data presented in this press release is unconsolidated and comprises Turkcell Turkey only figures, unless otherwise stated. The terms “we”, “us”, and “our” in this press release refer only to Turkcell Turkey, except
in discussions of financial data, where such terms refer to the Group, and except where context otherwise requires.
|
o |
“Turkcell International” which comprises all of our telecom related businesses outside of Turkey.
|
o |
“Other subsidiaries” which is mainly comprised of our information and entertainment services, call center business revenues, financial services revenues and inter-business eliminations. Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., our subsidiary responsible for payment services, was previously reported under Turkcell Turkey but with effect from the first quarter of 2019 is now
included in “Other Subsidiaries”. We made this change due to the fact that its non-group revenues, which are not telco related, and consumer finance business related revenues now comprise the majority of its total revenues.
All figures presented in this document for prior periods have been restated to reflect this change.
|
● |
In this press release, a year-on-year comparison of our key indicators is provided, and figures in parentheses following the operational and financial
results for March 31, 2019 refer to the same item as at March 31, 2018. For further details, please refer to our consolidated financial statements and notes as at and for March 31, 2019, which can be accessed via our website in the
investor relations section (www.turkcell.com.tr).
|
● |
Selected financial information presented in this press release for the first and fourth quarters of 2018 and the first quarter of 2019 is based on IFRS figures in TRY terms unless
otherwise stated.
|
● |
In accordance with our strategic approach and IFRS requirements, Fintur is classified as ‘held for sale’ and reported as discontinued operations as of October 2016. Certain operating data
that we previously presented with Fintur included has been restated without Fintur.
|
● |
In the tables used in this press release totals may not foot due to rounding differences. The same applies to the calculations in the text.
|
● |
Year-on-year and quarter-on-quarter percentage comparisons appearing in this press release reflect mathematical calculation.
|
2
First Quarter 2019 Results
|
FINANCIAL HIGHLIGHTS
TRY million
|
Q118
|
Q418
|
Q119
|
y/y %
|
q/q %
|
Revenue
|
4,762
|
5,626
|
5,675
|
19.2%
|
0.9%
|
EBITDA1
|
2,022
|
2,239
|
2,281
|
12.8%
|
1.9%
|
EBITDA Margin (%)
|
42.5%
|
39.8%
|
40.2%
|
(2.3pp)
|
0.4pp
|
Net Income
|
501
|
864
|
1,224
|
144.5%
|
41.7%
|
FIRST QUARTER HIGHLIGHTS
● |
Strong set of financials:
|
o |
Group revenues of TRY5,675 million, up 19.2% year-on-year
|
o |
Group EBITDA of TRY2,281 million, with an EBITDA margin of 40.2%
|
o |
Positive quarterly trend in EBITDA margin, up 0.4pp for the Group and up 2.2pp for Turkcell Turkey
|
o |
Group net income of TRY1,224 million on strong operating performance, disciplined financial risk management and contribution of Fintur sale
|
● |
Solid operational performance:
|
o |
Mobile ARPU2 growth of 13.4% year-on-year, like-for-like ARPU3 growth of 19.6%
|
o |
Residential fiber ARPU growth of 12.3% year-on-year
|
o |
Digital services downloads reached 178 million
|
o |
Mobile multiplay subscriber ratio4 reached 68.6%, up 9.9pp year-on-year; multiplay with TV subscribers5 reached 49.5%, up 3.8pp year-on-year
|
o |
Data usage of 4.5G users at 7.8GB in March
|
● |
The transfer of our stake in Fintur to Sonera Holding B.V. was completed. The final transaction value was EUR352.9 million. TRY772.4 million profit was generated from the transaction.
|
● |
Restructuring of the sales organization enables us to closely focus on customer needs and respond with more effective services and solutions.
|
● |
We revise our guidance6 for 2019. Accordingly, we now target revenue growth of 17%-19% up from 16%-18% and
an EBITDA margin of 38%-40% compared to 37%-40% previously. We maintain our target operational capex over sales ratio7 of 16%-18%.
|
(1) EBITDA is a non-GAAP financial measure. See page 13 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to
net income.
(2) Excluding M2M
(3) The ARPU of customers who have stayed with Turkcell for at least 14 months
(4) Share of mobile voice line users which excludes subscribers who have not used their line in the last 3 months. Multiplay refers to mobile
customers who use voice, data and one of core digital services.
(5) Multiplay subscribers with TV: Fiber internet + IPTV users & fiber internet + IPTV + fixed voice users
(6) Please note that this paragraph contains forward looking statements based on our current estimates and expectations
regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual
Report on Form 20-F for 2018 filed with U.S. Securities and Exchange Commission, and in particular, the risk factor section therein
(7) Excluding license fee
For further details, please refer to our consolidated financial statements and notes as at and for March 31, 2019 which can be
accessed via our website in the investor relations section (www.turkcell.com.tr).
3
First Quarter 2019 Results
|
COMMENTS BY MURAT ERKAN, CEO
Economic fragility has prevailed in the emerging markets in the first quarter of 2019. Regardless, as Turkcell Group, we have delivered robust results on the back
of our solid business model built on strong pillars. Our consolidated revenues grew yearly by 19.2% to TRY5.7 billion with an EBITDA1 of TRY2.3 billion, resulting in an
EBITDA margin of 40.2%. Including the TRY772 million profit generated from the Fintur transaction, we reported TRY1.2 billion net income, 1.4 times higher than for the same period of last year. Accordingly, we revise our full-year guidance2 for 2019 upwards to 17% - 19% for revenue growth and 38% - 40% for the EBITDA margin. In addition to our solid financial performance, our leverage ratio has declined to
1.3x with the contribution of the Fintur transaction, and we expect it to further decline over the coming periods.
Demand for mobile data has remained strong this quarter with the contribution of our digital services. Monthly average data consumption of customers on our 4.5G
network has increased 28% yearly to 7.4GB. Total downloads of our digital services reached 178 million, while we have continued efforts to increase the time spent on these services. In the fixed segment, Superbox, our Fixed Wireless Access (FWA)
product providing fiber-like speeds at locations not covered by our fiber network, has earned customer appreciation, reaching 56 thousand subscribers. Our capability to provide the Superbox service for the first time in Turkey through our wide
frequency and strong infrastructure has also proven our readiness for 5G.
As Turkcell, with our “customer first” motto we continue to contribute to our people and our country.
We marked our twenty-fifth anniversary in February. Over the past 25 years, Turkcell has transformed from a conventional telco into the world’s first digital
operator. We have developed digital services; and what’s more, we export technology. Following the one signed with Moldcell, we have also signed cooperation agreements with ALBtelecom of Albania, CG Corp Global of Nepal and Digicel Group of the
Caribbean to allow the use of our digital services. Our customer-focused approach, which we have always pursued in achieving this success, will only gain strength in the upcoming periods as we contribute to their lives with new smart technologies. In
this new era, we aim to strengthen our emotional ties with our customers and have redesigned our sales organization accordingly. We now have a structure enabling us to focus on customer needs more closely, and design more effective services and
solutions.
We have three strategic focus areas.
We believe we can sustain profitable growth with a strategic focus on three key areas: Our digital services, digital business solutions and our techfin platform.
While continuing to work on increasing the usage of our locally-developed digital services, we plan to establish new commercial partnerships for digital exports, the destinations of which today number 38 countries. We will serve the digital
transformation of both private and public sectors through Digital Business Solutions, our new subsidiary. The digitization of financial services, which in our view offers great potential, as well as other new opportunities in this field form the
third focus area.
We continue our efforts towards a shared infrastructure.
As we offer our services through a strong mobile and fixed infrastructure, we continue to work towards accomplishing a shared infrastructure; one that best serves the
interests primarily of our country, but also of all parties involved. In this context, we already provide fixed broadband to additional households through bilateral agreements with Türksat and Vodafone Turkey. Regarding the next phase, we believe
in the necessity of joint investments into infrastructure to position Turkey’s communication infrastructure among the best in the world. We particularly perceive the importance of joint infrastructure in the era of 5G, which will serve as the
platform for Industry 4.0.
4
First Quarter 2019 Results
|
We are determined to pioneer Turkey’s technological advancement.
In April, we hosted the technology summit, which coinciding with our 25th
anniversary, was particularly significant. The latest advances, particularly of locally manufactured technologies formed the agenda of the summit in its 10th year. The
summit hosted over 70 opinion and business leaders in around 30 sessions where 5G, artificial intelligence, Industry 4.0, smart technologies, entrepreneurship, cyber security, robotics and cloud technologies were the key topics of discussion. Over
10,000 attendees in person witnessed the introduction of our locally-developed AI-powered personal assistant “Yaani Assistant”.
We will continue to serve our country and people through our investments.
Turkcell has accomplished its pioneering role in the technological transformation of Turkey with its well-established infrastructure. We have been the fastest
growing telco globally on the back of our services and solutions developed for our customers over the past three years. We own a strong mobile network operating over the widest frequency in Turkey. We have laid 43 thousand km of fiber and built
eight data centers, enabling us to provide high-quality services. For this, we have already invested TRY50 billion in our technological infrastructure over the past 25 years, and going forward we will continue our investments.
We will announce our 3-year targets in New York.
We have seen a strong start to 2019 and have revised our full-year targets upwards. Accordingly, we are scheduled to announce our 3-year targets on October 31,
2019 in New York at the Turkcell Capital Markets Day.
We thank all our colleagues for the part they have played in our success, along with our Board of Directors for their unyielding trust and support. We also express
our gratitude to our customers and business partners, who have remained with us throughout our success story.
(1) EBITDA is a non-GAAP financial measure. See page 13 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to
net income.
(2) Please note that this paragraph contains forward looking statements based on our current estimates and expectations
regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual
Report on Form 20-F for 2018 filed with U.S. Securities and Exchange Commission, and in particular, the risk factor section therein
5
First Quarter 2019 Results
|
FINANCIAL AND OPERATIONAL REVIEW
Financial Review of Turkcell Group
Profit & Loss Statement (million TRY)
|
Q118
|
Q418
|
Q119
|
y/y %
|
q/q %
|
Revenue
|
4,761.6
|
5,626.3
|
5,675.3
|
19.2%
|
0.9%
|
Cost of revenue1
|
(2,134.9)
|
(2,607.3)
|
(2,730.2)
|
27.9%
|
4.7%
|
Cost of revenue1/Revenue
|
(44.8%)
|
(46.3%)
|
(48.1%)
|
(3.3pp)
|
(1.8pp)
|
Gross Margin1
|
55.2%
|
53.7%
|
51.9%
|
(3.3pp)
|
(1.8pp)
|
Administrative expenses
|
(154.3)
|
(198.2)
|
(190.6)
|
23.5%
|
(3.8%)
|
Administrative expenses/Revenue
|
(3.2%)
|
(3.5%)
|
(3.4%)
|
(0.2pp)
|
0.1pp
|
Selling and marketing expenses
|
(356.6)
|
(500.8)
|
(403.1)
|
13.0%
|
(19.5%)
|
Selling and marketing expenses/Revenue
|
(7.5%)
|
(8.9%)
|
(7.1%)
|
0.4pp
|
1.8pp
|
Net impairment loses on financial and contract assets
|
(93.8)
|
(81.0)
|
(70.3)
|
(25.1%)
|
(13.2%)
|
EBITDA2
|
2,022.0
|
2,239.0
|
2,281.1
|
12.8%
|
1.9%
|
EBITDA Margin
|
42.5%
|
39.8%
|
40.2%
|
(2.3pp)
|
0.4pp
|
Depreciation and amortization
|
(979.8)
|
(1,287.0)
|
(1,178.1)
|
20.2%
|
(8.5%)
|
EBIT3
|
1,042.1
|
952.0
|
1,103.0
|
5.8%
|
15.9%
|
Net finance income / (costs)
|
(313.5)
|
(18.5)
|
(420.4)
|
34.1%
|
n.m.
|
Finance income
|
355.6
|
(1,225.9)
|
583.0
|
63.9%
|
(147.6%)
|
Finance costs4
|
(669.1)
|
1,207.4
|
(1,003.4)
|
50.0%
|
(183.1%)
|
Other income / (expense)
|
(33.5)
|
46.5
|
(51.8)
|
54.6%
|
(211.4%)
|
Non-controlling interests
|
(24.2)
|
(77.7)
|
(19.8)
|
(18.2%)
|
(74.5%)
|
Share of profit of equity accounted investees
|
-
|
0.3
|
0.8
|
n.a.
|
166.7%
|
Income tax expense
|
(170.2)
|
(38.7)
|
(159.8)
|
(6.1%)
|
312.9%
|
Discontinued operations
|
-
|
-
|
772.4
|
n.a.
|
n.a.
|
Net Income
|
500.8
|
863.9
|
1,224.5
|
144.5%
|
41.7%
|
(1) Excluding depreciation and amortization expenses.
(2) EBITDA is a non-GAAP financial measure. See page 13 for the explanation of how we calculate Adjusted EBITDA and its
reconciliation to net income.
(3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.
(4) Fair value loss and interest expense in relation to derivative instruments reported under finance cost were netted off
from respective fair value gain and interest income in relation to derivative instruments reported under finance income. Historical periods were restated to reflect this change.
Revenue of the Group rose 19.2% year-on-year in Q119. This was driven mainly by growth in Turkcell Turkey
revenues on the back of successful execution of digital services focused strategy and upsell performance.
Turkcell Turkey revenues, at 85% of Group revenues, increased 18.7% to TRY4,833 million (TRY4,072 million).
- |
Data and digital services revenues rose by 18.1% to TRY3,215 million (TRY2,722 million).
|
o |
Higher number of data users, increased data consumption per user, rise in 4.5G smartphone penetration as well as the rise in penetration of digital services were the main drivers of
growth on the mobile front.
|
o |
Larger fiber subscriber base, price adjustments and upsell efforts, as well as the increased ratio of multiplay subscribers with TV, were the main drivers of growth on the fixed front.
|
- |
Wholesale revenues rose by 38.9% to TRY232 million (TRY167 million) due to increased carrier traffic and the positive impact of currency movements.
|
Turkcell International revenues, comprising 7% of Group revenues, grew
by 52.0% to TRY425 million (TRY279 million), resulting mainly from the rise in lifecell and BeST revenues.
Other subsidiaries’ revenues, at 7% of Group revenues, and which includes information and entertainment services, call
center revenues and revenues from financial services were at TRY417 million (TRY410 million).
- |
Please note that we completed the sale of our shares in Azerinteltek, our sports betting business in Azerbaijan, as of January 11, 2019. As we received the transfer of proceeds on
December 27, 2018 and transferred the control of the subsidiary, we did not report any revenues in Q119 in relation to Azerinteltek operations.
|
6
First Quarter 2019 Results
|
- |
Our consumer finance company’s revenues grew by 14.1% to TRY242 million (TRY212 million). Revenue growth was impacted by the decline in consumer loan portfolio from TRY4.4 billion as
of Q118 to TRY3.6 billion as of Q119 due to the installment limitation on consumer loans for telecom devices.
|
- | Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., our subsidiary responsible for payment services, was previously reported under Turkcell Turkey but with effect from the first quarter of 2019 is now included in “Other Subsidiaries”. We made this change due to the fact that its non-group revenues, which are not telco related, and consumer finance business related revenues now comprise the majority of its total revenues. All figures presented in this document for prior periods have been restated to reflect this change. |
Cost of revenue (excluding depreciation and amortization) increased to 48.1% (44.8%) as a percentage of
revenues in Q119. This was mainly due to the rise in cost of goods sold (4.6pp), despite the decline in other cost items (1.3pp) as a percentage of revenues.
Administrative expenses were at 3.4% (3.2%) as a
percentage of revenues in Q119.
Selling and marketing expenses declined to 7.1% (7.5%) as a percentage of revenues in Q119. This was mainly due to the decline in selling expenses (0.7pp), despite the rise in other cost items (0.3pp) as a percentage of revenues.
Net impairment loses on financial and contract assets were at TRY70 million (TRY 94 million) in Q119.
EBITDA1 rose
by 12.8% year-on-year in Q119, leading to an EBITDA margin of 40.2% (42.5%).
- |
Turkcell Turkey’s EBITDA grew by 9.7% to TRY1,910 million (TRY1,741 million) resulting in an EBITDA margin of 39.5% (42.8%). Turkcell Turkey’s
EBITDA margin improved by 2.2pp compared to Q418 (37.3%).
|
- |
Turkcell International EBITDA2 increased to TRY194 million
(TRY93 million) with an EBITDA margin of 45.6% (33.2%).
|
- |
The EBITDA of other subsidiaries was at TRY178 million (TRY188 million).
|
Depreciation and amortization expenses increased by 20.2% in Q119.
Net finance expense increased to TRY420 million
(TRY313 million) in Q119, mainly due to the higher interest expense of loans. Please note that the Group started to apply hedge accounting as of July 1, 2018 for existing participating cross currency swap and cross currency swap
transactions, in accordance with the IFRS 9 hedge accounting requirement. Please see the IFRS report for details.
See Appendix A for details of net foreign exchange gain and loss.
Income tax expense declined 6.1% year-on-year in
Q119. Please see Appendix A for details.
Net income of the Group rose to TRY1,224 million (TRY501 million) in Q119, mainly driven
by strong operating performance, disciplined financial risk management and contribution of the Fintur sale, which had a positive impact of TRY772 million.
Total cash & debt: Consolidated cash as of
March 31, 2019 increased to TRY8,888 million from TRY7,419 million as of December 31, 2018. Excluding the FX swap transactions for TRY borrowing, 79% of our cash is in US$ and 21% is in EUR.
Consolidated debt as of March 31, 2019 increased to TRY22,867 million from TRY20,156 million as of December 31,
2018. Please note that TRY1,410 million of our consolidated debt is comprised of lease obligations resulting from the implementation of IFRS 16.
● |
Consolidated debt breakdown excluding lease obligations resulting from the implementation of IFRS 16:
|
- |
Turkcell Turkey’s debt balance was TRY16,771 million, of which TRY9,727 million (US$1,728 million) was denominated in US$, TRY6,299 million
(EUR997 million) in EUR, TRY214 million (CNY257 million) in CNY and the remaining TRY531 million in TRY.
|
(1) EBITDA is a non-GAAP financial measure. See page 13 for the explanation of how we calculate adjusted EBITDA
and its reconciliation to net income.
(2) We started to capitalize the frequency usage fees of lifecell in Q418 in accordance with IFRS16 which led to a
positive impact on Turkcell International EBITDA. The change was implemented retrospectively; impact regarding previous quarters of 2018 was booked in Q418.
7
First Quarter 2019 Results
|
- |
The debt balance of lifecell was TRY1,071 million all denominated in UAH.
|
- |
Our consumer finance company had a debt balance of TRY3,610 million, of which TRY1,759 million (US$312 million) was denominated in US$, and
TRY1,077 million (EUR170 million) in EUR with the remaining TRY774 million in TRY.
|
● |
TRY705 million of IFRS 16 lease obligations is denominated in TRY, TRY39 million (US$7 million) in US$, TRY178 million (EUR28 million) in EUR
and the remaining balance in other local currencies (please note that the figures in parentheses refer to US$ or EUR equivalents).
|
TRY13,342 million of our consolidated debt is set at a floating rate. Excluding the consumer finance business
borrowings, TRY5,048 million of consolidated debt will mature within less than a year.
Net debt as of March 31, 2019 was at TRY13,979 million. Including the proceeds of the Fintur deal of EUR352.9
million (equivalent of TRY2,230 million as of March 31, 2019), which is booked under due from related parties, net debt was TRY11,749 with a net debt to EBITDA ratio of 1.3 times. Excluding consumer finance company consumer loans, our telco
only net debt was at TRY8,108 million with a leverage of 0.9 times.
Turkcell Group has a long FX position of US$216 million as at the end of Q119. (Please note
that this figure takes into account advance payments and hedging but excludes FX swap transactions for TL borrowing. Derivatives (VIOP) and forward transactions are included).
Capital expenditures: Capital expenditures, including non-operational items, amounted to TRY1,352.6 million in Q119. In Q119, operational capital expenditures (excluding
license fees) at the Group level were at 15.6% of total revenues.
Capital expenditures (million TRY)
|
Q118
|
Q418
|
Q119
|
Operational Capex
|
(526.3)
|
(1,448.6)
|
(883.6)
|
License and Related Costs
|
(188.0)
|
(1.7)
|
(0.7)
|
Non-operational Capex (Including IFRS15 & IFRS16)
|
(1,845.9)
|
(784.3)
|
(468.4)
|
Total Capex1
|
(2,560.1)
|
(2,234.6)
|
(1,352.6)
|
(1) Breakdown of capex for Q118 has been restated.
8
First Quarter 2019 Results
|
Operational Review of Turkcell Turkey
Summary of Operational Data
|
Q118
|
Q418
|
Q119
|
y/y %
|
q/q %
|
Number of subscribers (million)
|
37.3
|
36.7
|
36.6
|
(1.9%)
|
(0.3%)
|
Mobile Postpaid (million)
|
18.6
|
18.8
|
18.7
|
0.5%
|
(0.5%)
|
Mobile M2M (million)
|
2.4
|
2.4
|
2.4
|
-
|
-
|
Mobile Prepaid (million)
|
16.0
|
14.9
|
15.0
|
(6.3%)
|
0.7%
|
Fiber (thousand)
|
1,248.7
|
1,385.6
|
1,411.1
|
13.0%
|
1.8%
|
ADSL (thousand)
|
916.6
|
905.6
|
861.7
|
(6.0%)
|
(4.8%)
|
Superbox (thousand)1
|
3.5
|
33.5
|
56.4
|
n.m
|
68.4%
|
Cable (thousand)
|
-
|
-
|
9.7
|
n.a.
|
n.a.
|
IPTV (thousand)
|
535.0
|
613.4
|
632.0
|
18.1%
|
3.0%
|
Churn (%)2
|
|
||||
Mobile Churn (%)3
|
1.4%
|
2.9%
|
1.9%
|
0.5pp
|
(1.0pp)
|
Fixed Churn (%)
|
1.8%
|
2.2%
|
2.0%
|
0.2pp
|
(0.2pp)
|
ARPU (Average Monthly Revenue per User) (TRY)
|
|
||||
Mobile ARPU, blended
|
31.5
|
35.0
|
35.7
|
13.3%
|
2.0%
|
Mobile ARPU, blended (excluding M2M)
|
33.6
|
37.4
|
38.1
|
13.4%
|
1.9%
|
Postpaid
|
45.4
|
49.5
|
50.6
|
11.5%
|
2.2%
|
Postpaid (excluding M2M)
|
51.5
|
56.4
|
57.4
|
11.5%
|
1.8%
|
Prepaid
|
15.3
|
17.4
|
17.2
|
12.4%
|
(1.1%)
|
Fixed Residential ARPU, blended
|
55.3
|
56.6
|
59.8
|
8.1%
|
5.7%
|
Residential Fiber ARPU
|
55.9
|
58.2
|
62.8
|
12.3%
|
7.9%
|
Average mobile data usage per user (GB/user)
|
4.4
|
5.9
|
5.9
|
34.1%
|
-
|
Mobile MoU (Avg. Monthly Minutes of usage per subs) blended
|
344.8
|
356.4
|
393.1
|
14.0%
|
10.3%
|
(1) Superbox subscribers are included in mobile subscribers.
(2) Presentation of churn figures has been changed to demonstrate average monthly churn figures for the respective quarters.
(3) 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.
Our mobile subscriber base stood at 33.7 million by the end of Q119. While we registered 73 thousand quarterly
prepaid subscriber net additions, our postpaid subscribers declined by 155 thousand during the quarter. The share of postpaid subscribers was at 55.4% (53.8%) of our mobile subscriber base.
Our fixed subscriber base was at 2.3 million by the end of Q119. Our fiber customer base exceeded 1.4 million on 25
thousand quarterly and 162 thousand annual net additions. Superbox, our fixed wireless access product, exceeded 56 thousand subscribers in Q119. IPTV subscribers reached 632 thousand on 19 thousand quarterly and 97 thousand annual net
additions. Total TV subscribers, including OTT only users, reached 4.1 million4. As of April, the Turkcell TV+ mobile application has been downloaded 12.6
million times.
In Q119, our average monthly mobile churn rate was at 1.9% and our average monthly fixed churn rate was at 2.0%.
Mobile ARPU (excluding M2M) rose by 13.4% year-on-year in Q119, mainly driven by the rise in penetration of
digital services, increased data consumption per user and price adjustments as well as our upsell efforts. The increased share of multiplay customers, who use voice, data and digital services
combined, to 68.6%5, contributed to the ARPU rise as well.
Our residential fiber ARPU grew by 12.3% in Q119 year-on-year. This was driven by upsell efforts and price
adjustments, as well as by the rise in multiplay subscribers with TV6 to 49.5% of total residential fiber subscribers.
Average mobile data usage per user rose by 34.1% in Q119 year-on-year, on the back of rising number and data
consumption of 4.5G users and rising digital services usage. Average mobile data usage of 4.5G users was at 7.8 GB in March.
4.5G compatible smartphones increased to 18.5 million in Q119 on 0.5 million quarterly additions, comprising 82% of
total smartphones on our network by the end of Q119.
(4) IPTV users and OTT only
cumulative active users
(5) Share among mobile voice users excluding subscribers who have not used their lines in the last 3 months.
Multiplay refers to mobile customers who use voice, data and one of core digital services
(6) Multiplay subscribers with TV: Fiber internet + IPTV users & fiber internet + IPTV + voice users
9
First Quarter 2019 Results
|
TURKCELL INTERNATIONAL
lifecell1
Financial Data
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Revenue (million UAH)
|
1,207.9
|
1,417.0
|
1,415.5
|
17.2%
|
(0.1%)
|
EBITDA (million UAH)
|
504.9
|
1,083.5
|
815.5
|
61.5%
|
(24.7%)
|
EBITDA margin (%)
|
41.8%
|
76.5%
|
57.6%
|
15.8pp
|
(18.9pp)
|
Net income / (loss) (million UAH)
|
(178.2)
|
(730.1)
|
(267.2)
|
49.9%
|
(63.4%)
|
Capex (million UAH)
|
2,588.7
|
2,694.9
|
357.8
|
(86.2%)
|
(86.7%)
|
Revenue (million TRY)
|
167.9
|
273.3
|
275.8
|
64.3%
|
0.9%
|
EBITDA (million
TRY)
|
69.8
|
205.9
|
159.0
|
127.8%
|
(22.8%)
|
EBITDA margin (%)
|
41.6%
|
75.3%
|
57.7%
|
16.1pp
|
(17.6pp)
|
Net income / (loss) (million TRY)
|
(24.9)
|
(126.3)
|
(52.1)
|
109.2%
|
(58.7%)
|
(1) Since July 10, 2015, we hold a 100% stake in lifecell.
lifecell (Ukraine) revenues rose by 17.2% year-on-year in Q119 in local currency terms
mainly on the back of increased mobile data revenues with rising penetration of 4.5G users and higher data consumption. EBITDA in local currency terms increased 61.5% year-on-year to UAH816 million, which led to an EBITDA margin of 57.6%.
Please also note that starting from Q418, lifecell started to capitalize its radio frequency usage costs in accordance with IFRS16. The overall impact, including the retrospective adjustments for previous quarters of 2018, was booked in Q418.
lifecell revenues in TRY terms increased 64.3% year-on-year, while its EBITDA rose to TRY159 million in Q119.
lifecell Operational Data
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Number of subscribers (million)2
|
10.3
|
9.9
|
9.4
|
(8.7%)
|
(5.1%)
|
Active (3 months)3
|
7.7
|
7.3
|
6.9
|
(10.4%)
|
(5.5%)
|
MOU (minutes) (12 months)
|
138.5
|
148.6
|
141.4
|
2.1%
|
(4.8%)
|
ARPU (Average Monthly Revenue per User), blended (UAH)
|
37.7
|
47.2
|
49.0
|
30.0%
|
3.8%
|
Active (3 months) (UAH)
|
51.4
|
63.1
|
66.7
|
29.8%
|
5.7%
|
(2) We may occasionally offer campaigns and tariff schemes that have an active subscriber life differing from the one
that we normally use to deactivate subscribers and calculate churn.
(3) Active subscribers are those who in the past three months made a revenue generating activity.
lifecell’s three-month active subscriber base declined to 6.9 million in Q119, mainly due to the declining multiple SIM
card usage trend in the country. lifecell continued its strong ARPU performance with 29.8% growth in Q119, mainly on increased mobile data consumption and upsell efforts. Leveraging the quality of its 4.5G and 3G networks and attractive
digital services, lifecell continued to attract high ARPU generating subscribers, which supported the solid ARPU performance.
The 4.5G subscriber base of lifecell continued to expand in Q119. 4.5G users reached 36% of total mobile data users.
The penetration of 4.5G services continued to rise as reflected by the increased number of 3-month active 4.5G users, which exceeded 1.6 million. Average data consumption per user rose by 117% year-on-year, mainly driven by the higher data
consumption of 4.5G users. lifecell continued its leadership of the Ukrainian market in smartphone penetration, which reached 77% as at the end of Q119.
In accordance with Turkcell’s global digital services strategy, lifecell continued to increase the penetration of its digital services within its customer
base. Accordingly, the number of three-month active digital services users exceeded 1 million in Q119. Furthermore, lifecell continued to enrich its digital services portfolio launching new offerings during the quarter in order to meet the
digital needs of both retail and corporate customers.
10
First Quarter 2019 Results
|
BeST1
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Number of subscribers (million)
|
1.6
|
1.6
|
1.6
|
-
|
-
|
Active (3 months)
|
1.2
|
1.2
|
1.2
|
-
|
-
|
Revenue (million BYN)
|
29.2
|
32.9
|
31.9
|
9.2%
|
(3.0%)
|
EBITDA (million BYN)
|
5.3
|
12.7
|
7.4
|
39.6%
|
(41.7%)
|
EBITDA margin (%)
|
18.2%
|
38.6%
|
23.2%
|
5.0pp
|
(15.4pp)
|
Net loss (million BYN)
|
(10.0)
|
(8.3)
|
(8.8)
|
(12.0%)
|
6.0%
|
Capex (million BYN)
|
29.5
|
18.3
|
10.8
|
(63.4%)
|
(41.0%)
|
Revenue (million TRY)
|
56.6
|
83.8
|
79.5
|
40.5%
|
(5.1%)
|
EBITDA (million TRY)
|
10.3
|
31.3
|
18.4
|
78.6%
|
(41.2%)
|
EBITDA margin (%)
|
18.2%
|
37.4%
|
23.1%
|
4.9pp
|
(14.3pp)
|
Net loss (million TRY)
|
(19.4)
|
(21.3)
|
(21.9)
|
12.9%
|
2.8%
|
(1) BeST, in which we hold an 80% stake, has operated in Belarus since July 2008.
BeST revenues grew by
9.2% year-on-year in Q119 in local currency terms, mainly driven by growth in mobile data revenues. Digital services revenue growth also contributed to the revenue increase. BeST’s EBITDA rose by 39.6% year-over-year to BYN7.4 million, which
led to an EBITDA margin of 23.2%.
BeST’s revenues in TRY terms grew by 40.5% year-on-year in Q119, with an EBITDA margin of 23.1%.
BeST continued to increase the penetration of its 4G services as reflected by the number of 4G users, which reached 40% of its 3-month active subscriber
base, resulting in increased data consumption and digital services usage. Average monthly data consumption of subscribers rose by 76% year-over-year to 6.3GB in Q119. Digital services penetration continued to increase within its customer
base. Accordingly, subscribers who use at least one digital service comprise 21% of the 3-month active subscriber base. Meanwhile, BeST launched its new digital offering PLAY, which includes 7 digital services.
Kuzey Kıbrıs Turkcell2 (million TRY)
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Number of subscribers (million)
|
0.5
|
0.5
|
0.6
|
20.0%
|
20.0%
|
Revenue
|
43.5
|
45.8
|
47.9
|
10.1%
|
4.6%
|
EBITDA
|
14.1
|
11.6
|
16.7
|
18.4%
|
44.0%
|
EBITDA margin (%)
|
32.4%
|
25.3%
|
34.9%
|
2.5pp
|
9.6pp
|
Net income
|
5.2
|
8.9
|
7.6
|
46.2%
|
(14.6%)
|
Capex
|
15.2
|
23.3
|
10.6
|
(30.3%)
|
(54.5%)
|
(2) Kuzey Kıbrıs Turkcell, in which we hold a 100% stake, has operated in Northern Cyprus since 1999.
Kuzey Kıbrıs Turkcell revenues
grew by 10.1% year-on-year in Q119, mainly driven by mobile data revenue growth. EBITDA increased by 18.4% resulting in an EBITDA margin of 34.9%.
Fintur: In accordance with our strategic approach and IFRS requirements, Fintur is
classified as ‘held for sale’ and reported as discontinued operations as of October 2016.
On December 12, 2018, Turkcell signed a binding agreement and on April 2, 2019 completed the transfer of its shares in Fintur to Sonera Holding B.V., the
majority shareholder of Fintur. The final value of the transaction was EUR352.9 million. As the conditions precedent required for the share transfer were completed within Q119, TRY772 million profit generated from the transaction is reflected
in Q119 financial statements.
Turkcell Group Subscribers
Turkcell Group subscribers amounted to approximately 48.4 million as of March 31, 2019.
This figure is calculated by taking the number of subscribers of Turkcell Turkey and each of our subsidiaries. It includes the total number of mobile, fiber, ADSL, cable and IPTV subscribers of Turkcell Turkey, and the mobile subscribers of
lifecell and BeST, as well as those of Kuzey Kıbrıs Turkcell and lifecell Europe.
11
First Quarter 2019 Results
|
Turkcell Group Subscribers
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Mobile Postpaid (million)
|
18.6
|
18.8
|
18.7
|
0.5%
|
(0.5%)
|
Mobile Prepaid (million)
|
16.0
|
14.9
|
15.0
|
(6.3%)
|
0.7%
|
Fiber (thousand)
|
1,248.7
|
1,385.6
|
1,411.1
|
13.0%
|
1.8%
|
ADSL (thousand)
|
916.6
|
905.8
|
861.7
|
(6.0%)
|
(4.9%)
|
Superbox (thousand)1
|
3.5
|
33.5
|
56.4
|
n.m
|
68.4%
|
Cable (thousand)
|
-
|
-
|
9.7
|
n.a.
|
n.a.
|
IPTV (thousand)
|
535.0
|
613.4
|
632.0
|
18.1%
|
3.0%
|
Turkcell Turkey subscribers (million)2
|
37.3
|
36.7
|
36.6
|
(1.9%)
|
(0.3%)
|
lifecell (Ukraine)
|
10.3
|
9.9
|
9.4
|
(8.7%)
|
(5.1%)
|
BeST (Belarus)
|
1.6
|
1.6
|
1.6
|
-
|
-
|
Kuzey Kıbrıs Turkcell
|
0.5
|
0.5
|
0.6
|
20.0%
|
20.0%
|
lifecell Europe3
|
0.3
|
0.2
|
0.2
|
(33.3%)
|
-
|
Turkcell Group Subscribers (million)
|
50.1
|
48.9
|
48.4
|
(3.4%)
|
(1.0%)
|
(1) Superbox subscribers are included in mobile subscribers.
(2) Subscribers to more than one service are counted separately for each service.
(3) The “wholesale traffic purchase” agreement, signed between Turkcell Europe GmbH operating in Germany and
Deutsche Telekom for five years in 2010, had been modified to reflect the shift in business model to a “marketing partnership”. The new agreement between Turkcell and a subsidiary of Deutsche Telekom was signed on August 27, 2014. The
transfer of Turkcell Europe operations to Deutsche Telekom’s subsidiary was completed on January 15, 2015. Subscribers are still included in the Turkcell Group Subscriber figure. Turkcell Europe was rebranded as lifecell Europe on January
15, 2018.
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
The foreign exchange rates used in our financial reporting, along with certain macroeconomic indicators, are set out below.
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
|
GDP Growth (Turkey)
|
7.4%
|
(3.0%)
|
n.a.
|
n.a.
|
n.a.
|
Consumer Price Index (Turkey) (yoy)
|
10.2%
|
20.3%
|
19.7%
|
9.5pp
|
(0.6pp)
|
US$ / TRY rate
|
|
||||
Closing Rate
|
3.9489
|
5.2609
|
5.6284
|
42.5%
|
7.0%
|
Average Rate
|
3.8077
|
5.4369
|
5.3378
|
40.2%
|
(1.8%)
|
EUR / TRY rate
|
|
||||
Closing Rate
|
4.8673
|
6.0280
|
6.3188
|
29.8%
|
4.8%
|
Average Rate
|
4.6795
|
6.2121
|
6.0777
|
29.9%
|
(2.2%)
|
US$ / UAH rate
|
|
||||
Closing Rate
|
26.54
|
27.69
|
27.25
|
2.7%
|
(1.6%)
|
Average Rate
|
27.42
|
28.18
|
27.41
|
-
|
(2.7%)
|
US$ / BYN rate
|
|
||||
Closing Rate
|
1.9501
|
2.1598
|
2.1285
|
9.1%
|
(1.4%)
|
Average Rate
|
1.9663
|
2.1307
|
2.1470
|
9.2%
|
0.8%
|
12
First Quarter 2019 Results
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS: We
believe Adjusted EBITDA, among other measures, facilitates performance comparisons from period to period and management decision making. It also facilitates performance comparisons from company to company. Adjusted EBITDA as a performance
measure eliminates potential differences caused by variations in capital structures (affecting interest expense), tax positions (such as the impact of changes in effective tax rates on periods or companies) and the age and book depreciation
of tangible assets (affecting relative depreciation expense). We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties in evaluating the performance of other
mobile operators in the telecommunications industry in Europe, many of which present Adjusted EBITDA when reporting their results.
Our Adjusted EBITDA definition includes Revenue, Cost of Revenue excluding depreciation and amortization, Selling and
Marketing expenses and Administrative expenses, but excludes translation gain/(loss), finance income, finance expense, share of profit of equity accounted investees, gain on sale of investments, minority interest and other income/(expense).
Nevertheless, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation from,
or as a substitute for analysis of, our results of operations, as reported under IFRS. The following table provides a reconciliation of Adjusted EBITDA, as calculated using financial data prepared in accordance with IFRS as issued by the
IASB, to net profit, which we believe is the most directly comparable financial measure calculated and presented in accordance with IFRS as issued by the IASB.
Turkcell Group (million TRY)
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Adjusted EBITDA
|
2,022.0
|
2,239.0
|
2,281.1
|
12.8%
|
1.9%
|
Depreciation and amortization
|
(979.8)
|
(1,287.0)
|
(1,178.1)
|
20.2%
|
(8.5%)
|
Finance income
|
355.6
|
(1,225.9)
|
583.0
|
63.9%
|
(147.6%)
|
Finance costs
|
(669.1)
|
1,207.4
|
(1,003.4)
|
50.0%
|
(183.1%)
|
Other income / (expense)
|
(33.5)
|
46.5
|
(51.8)
|
54.6%
|
(211.4%)
|
Share of profit of equity accounted investees
|
-
|
0.3
|
0.8
|
n.a.
|
166.7%
|
Consolidated profit from continued operations before income tax & minority interest
|
695.2
|
980.4
|
631.6
|
(9.1%)
|
(35.6%)
|
Income tax expense
|
(170.2)
|
(38.7)
|
(159.8)
|
(6.1%)
|
312.9%
|
Consolidated profit from continued operations before minority interest
|
525.0
|
941.7
|
471.8
|
(10.1%)
|
(49.9%)
|
Discontinued operations
|
-
|
-
|
772.4
|
n.a.
|
n.a.
|
Consolidated profit before minority interest
|
525.0
|
941.7
|
1,244.3
|
137.0%
|
32.1%
|
13
First Quarter 2019 Results
|
NOTICE: This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act 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 and capex for 2019. More generally, all statements other than statements of historical facts included in this press release,
including, without limitation, certain statements regarding the launch of new businesses, our operations, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally
can be identified by the use of forward-looking terminology 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 such expectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary
statements. For a discussion of certain factors that may affect the outcome of such forward looking statements, see our Annual Report on Form 20-F for 2018 filed with the U.S. Securities and Exchange Commission, and in particular the risk
factor section therein. We undertake no duty to update 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 press
release, which remains subject to verification, 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 press release or any other written or oral information made available to any interested party or its advisers.
ABOUT TURKCELL: Turkcell is a digital operator
headquartered in Turkey, serving its customers with its unique portfolio of digital services along with voice, messaging, data and IPTV services on its mobile and fixed networks. Turkcell Group companies operate in 5 countries – Turkey,
Ukraine, Belarus, Northern Cyprus, Germany. Turkcell launched LTE services in its home country on April 1st, 2016, employing LTE-Advanced and 3 carrier aggregation technologies in 81 cities. Turkcell offers up to 10 Gbps fiber internet speed with its FTTH services. Turkcell Group reported TRY5.7 billion revenue in
Q119 with total assets of TRY46.1 billion as of March 31, 2019. It has been listed on the NYSE and the BIST since July 2000, and is the only NYSE-listed company in Turkey. Read more at www.turkcell.com.tr
For further information please contact Turkcell
Investor Relations
Tel: + 90 212 313 1888
|
Corporate Communications:
Tel: + 90 212 313 2321
|
This press release can also be viewed using the Turkcell Investor Relation app, which can be downloaded here for iOS, and here for Android mobile devices.
14
First Quarter 2019 Results
|
Appendix A – Tables
Table: Net foreign exchange gain and loss details
Million TRY
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Turkcell Turkey
|
(367.5)
|
1,030.1
|
(558.5)
|
52.0%
|
(154.2%)
|
Turkcell International
|
(9.4)
|
5.7
|
(25.8)
|
174.5%
|
(552.6%)
|
Other Subsidiaries
|
(117.1)
|
434.3
|
(128.1)
|
9.4%
|
(129.5%)
|
Net FX loss before hedging
|
(494.0)
|
1,470.1
|
(712.5)
|
44.2%
|
(148.5%)
|
Fair value gain on derivative financial instruments1
|
213.7
|
(1,551.9)
|
452.3
|
111.7%
|
(129.1%)
|
Net FX gain / (loss) after hedging
|
(280.3)
|
(81.8)
|
(260.2)
|
(7.2%)
|
218.1%
|
(1) Definition of fair value gain on derivative financial instruments has been extended to include the impact of
interest income and expense in relation to derivative instruments and fair value of FX swaps, option contracts engaged in during the period to manage operational cash flow balance.
Table: Income tax expense details
Million TRY
|
Q118
|
Q418
|
Q119
|
y/y%
|
q/q%
|
Current Tax expense
|
(180.2)
|
(114.9)
|
(153.8)
|
(14.7%)
|
33.9%
|
Deferred Tax income / (expense)
|
10.0
|
76.2
|
(6.0)
|
(160.0%)
|
(107.9%)
|
Income Tax expense
|
(170.2)
|
(38.7)
|
(159.8)
|
(6.1%)
|
312.9%
|
15
TURKCELL ILETISIM HIZMETLERI AS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
As at 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Note
|
31 March 2019 |
31 December 2018 |
||||||||||
Assets
|
||||||||||||
Property, plant and equipment
|
9
|
11,249,245
|
11,116,316
|
|||||||||
Right-of-use assets
|
11
|
1,663,102
|
1,649,602
|
|||||||||
Intangible assets
|
10
|
10,307,373
|
10,050,172
|
|||||||||
Investment properties
|
17,484
|
15,425
|
||||||||||
Trade receivables
|
118,752
|
115,001
|
||||||||||
Receivables from financial services
|
542,202
|
884,686
|
||||||||||
Contract assets
|
4,588
|
3,513
|
||||||||||
Deferred tax assets
|
155,648
|
152,732
|
||||||||||
Investments in equity accounted investees
|
29,699
|
19,413
|
||||||||||
Other non-current assets
|
950,229
|
421,306
|
||||||||||
Total non-current assets
|
25,038,322
|
24,428,166
|
||||||||||
Inventories
|
235,735
|
180,434
|
||||||||||
Trade receivables
|
2,627,033
|
2,505,990
|
||||||||||
Due from related parties
|
12
|
2,234,297
|
13,533
|
|||||||||
Receivables from financial services
|
3,098,489
|
3,286,243
|
||||||||||
Contract assets
|
557,436
|
711,928
|
||||||||||
Derivative financial instruments
|
1,580,607
|
1,356,062
|
||||||||||
Hold to collect financial asset
|
2,939
|
9,409
|
||||||||||
Financial asset at fair value through other comprehensive income
|
143,191
|
42,454
|
||||||||||
Cash and cash equivalents
|
8,888,251
|
7,419,239
|
||||||||||
Other current assets
|
1,672,285
|
1,091,512
|
||||||||||
Subtotal
|
21,040,263
|
16,616,804
|
||||||||||
Assets classified as held for sale
|
12
|
-
|
1,720,305
|
|||||||||
Total current assets
|
21,040,263
|
18,337,109
|
||||||||||
Total assets
|
46,078,585
|
42,765,275
|
||||||||||
Equity
|
||||||||||||
Share capital
|
2,200,000
|
2,200,000
|
||||||||||
Share premium
|
269
|
269
|
||||||||||
Treasury shares
|
(151,532
|
)
|
(141,534
|
)
|
||||||||
Additional paid-in capital
|
35,026
|
35,026
|
||||||||||
Fair value reserves
|
(979
|
)
|
-
|
|||||||||
Reserves
|
2,175,815
|
2,503,537
|
||||||||||
Remeasurements of employee termination benefit
|
(34,871
|
)
|
(34,871
|
)
|
||||||||
Retained earnings
|
12,727,673
|
11,359,317
|
||||||||||
Total equity attributable to equity holders of
Turkcell Iletisim Hizmetleri AS (“the Company”) |
16,951,401
|
15,921,744
|
||||||||||
Non-controlling interests
|
150,880
|
131,810
|
||||||||||
Total equity
|
17,102,281
|
16,053,554
|
The above condensed interim statement of financial position should be read in conjunction with the accompanying notes.
1
TURKCELL ILETISIM HIZMETLERI AS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
As at 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Note
|
31 March 2019
|
31 December 2018
|
||||||||||
Liabilities
|
||||||||||||
Borrowings
|
14
|
15,407,679
|
13,119,636
|
|||||||||
Employee benefit obligations
|
238,979
|
224,747
|
||||||||||
Provisions
|
277,652
|
268,722
|
||||||||||
Deferred tax liabilities
|
899,447
|
862,360
|
||||||||||
Contract liabilities
|
123,242
|
131,598
|
||||||||||
Other non-current liabilities
|
414,048
|
364,610
|
||||||||||
Total non-current liabilities
|
17,361,047
|
14,971,673
|
||||||||||
Borrowings
|
14
|
7,459,191
|
7,035,909
|
|||||||||
Current tax liabilities
|
162,644
|
133,597
|
||||||||||
Trade and other payables
|
3,447,495
|
3,788,174
|
||||||||||
Due to related parties
|
43,510
|
45,331
|
||||||||||
Deferred revenue
|
58,367
|
8,948
|
||||||||||
Provisions
|
114,730
|
307,068
|
||||||||||
Contract liabilities
|
291,656
|
255,756
|
||||||||||
Derivative financial instruments
|
37,664
|
165,265
|
||||||||||
Total current liabilities
|
11,615,257
|
11,740,048
|
||||||||||
Total liabilities
|
28,976,304
|
26,711,721
|
||||||||||
Total equity and liabilities
|
46,078,585
|
42,765,275
|
The above condensed interim statement of financial position should be read in conjunction with the accompanying notes.
2
TURKCELL ILETISIM HIZMETLERI AS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS
For the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Three months ended
31 March |
||||||||||||
Note
|
2019
|
2018
|
||||||||||
Revenue
|
8
|
5,433,471
|
4,549,650
|
|||||||||
Revenue from financial services
|
8
|
241,888
|
211,945
|
|||||||||
Total revenue
|
5,675,359
|
4,761,595
|
||||||||||
Cost of revenue
|
(3,829,729
|
)
|
(3,039,877
|
)
|
||||||||
Cost of revenue from financial services
|
(78,568
|
)
|
(74,882
|
)
|
||||||||
Total cost of revenue
|
(3,908,297
|
)
|
(3,114,759
|
)
|
||||||||
Gross profit
|
1,603,742
|
1,509,773
|
||||||||||
Gross profit from financial services
|
163,320
|
137,063
|
||||||||||
Total gross profit
|
1,767,062
|
1,646,836
|
||||||||||
Other income
|
12
|
26,662
|
13,894
|
|||||||||
Selling and marketing expenses
|
(403,153
|
)
|
(356,595
|
)
|
||||||||
Administrative expenses
|
(190,569
|
)
|
(154,332
|
)
|
||||||||
Net impairment losses on financial and contract assets
|
(70,335
|
)
|
(93,758
|
)
|
||||||||
Other expenses
|
(78,481
|
)
|
(47,365
|
)
|
||||||||
Operating profit
|
1,051,186
|
1,008,680
|
||||||||||
Finance income
|
6
|
583,029
|
355,600
|
|||||||||
Finance costs
|
6
|
(1,003,409
|
)
|
(669,070
|
)
|
|||||||
Net finance costs
|
(420,380
|
)
|
(313,470
|
)
|
||||||||
Share of profit of equity accounted investees
|
787
|
-
|
||||||||||
Profit before income tax
|
631,593
|
695,210
|
||||||||||
Income tax expense
|
7
|
(159,774
|
)
|
(170,195
|
)
|
|||||||
Profit from continuing operations
|
471,819
|
525,015
|
||||||||||
Profit from discontinued operations (attributable to owners of the Company)
|
12
|
772,436
|
-
|
|||||||||
Profit for the year
|
1,244,255
|
525,015
|
||||||||||
Profit for the year is attributable to:
|
||||||||||||
Owners of the Company
|
1,224,451
|
500,780
|
||||||||||
Non-controlling interests
|
19,804
|
24,235
|
||||||||||
Total
|
1,244,255
|
525,015
|
||||||||||
Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL)
|
0.56
|
0.23
|
||||||||||
Basic and diluted earnings per share for profit from continuing operations attributable to owners of the
Company (in full TL)
|
0.21
|
0.23
|
||||||||||
Basic and diluted earnings per share for profit /(loss) from discontinued operations attributable to owners of
the Company (in full TL)
|
0.35
|
-
|
||||||||||
The above condensed interim statement of financial position should be read in conjunction with the accompanying notes.
3
TURKCELL ILETISIM HIZMETLERI AS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME
For the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Three months ended
31 March |
||||||||||||
Note
|
2019
|
2018
|
||||||||||
Profit for the year
|
1,244,255
|
525,015
|
||||||||||
Other comprehensive income/(expense):
|
||||||||||||
Items that may be reclassified to profit or loss:
|
||||||||||||
Exchange differences on translation of foreign operations
|
145,214
|
97,736
|
||||||||||
Exchange differences arising from discontinued operations
|
12
|
104,986
|
50,565
|
|||||||||
Fair value reserve
|
(979
|
)
|
-
|
|||||||||
Cash flow hedges - effective
portion of changes in fair value
|
271,667
|
-
|
||||||||||
Cash flow hedges -
reclassified to profit or loss
|
(221,367
|
)
|
-
|
|||||||||
Cost of hedging reserve -
changes in fair value
|
(124,838
|
)
|
-
|
|||||||||
Cost of hedging reserve -
reclassified to profit or loss
|
39,344
|
-
|
||||||||||
Income tax relating to these items
|
(31,424
|
)
|
(56,272
|
)
|
||||||||
-Income tax relating to exchange
differences
|
(39,167
|
)
|
(56,272
|
)
|
||||||||
-Income tax relating to cash
flow hedges
|
(11,066
|
)
|
-
|
|||||||||
- Income tax relating to cost of hedging reserve
|
18,809
|
-
|
||||||||||
Other comprehensive income/(loss) for the year, net of income tax
|
182,603
|
92,029
|
||||||||||
Total comprehensive income for the year
|
1,426,858
|
617,044
|
||||||||||
Total comprehensive income for the year is attributable to:
|
||||||||||||
Owners of the Company
|
1,407,788
|
592,584
|
||||||||||
Non-controlling interests
|
19,070
|
24,460
|
||||||||||
Total
|
1,426,858
|
617,044
|
||||||||||
Total comprehensive income for the year attributable to owners of the Company arises from:
|
||||||||||||
Continuing operations
|
530,366
|
550,908
|
||||||||||
Discontinued operations
|
877,422
|
41,676
|
||||||||||
Total
|
1,407,788
|
592,584
|
The above condensed interim statement of financial position should be read in conjunction with the accompanying notes.
4
TURKCELL ILETISIM HIZMETLERI AS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
For the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Share
capital
|
Treasury shares
|
Additional paid-in
capital
|
Share
premium
|
Legal
Reserve
(*)
|
Fair
value
Reserve
(*)
|
Hedging reserve
|
Cost of
hedging reserve
|
Reserve for non-
controlling interest put option (*)
|
Foreign currency translation reserve (*)
|
Remeasurements of employee
termination benefit |
Retained
earnings |
Total
|
Non-controlling interests
|
Total
equity |
||||||||||||||||||||||||||||||||||||||||||||||
Balance at 1 January 2018
|
2,200,000
|
(56,313
|
)
|
35,026
|
269
|
1,643,024
|
-
|
-
|
-
|
(540,045
|
)
|
439,700
|
(44,776
|
)
|
11,312,276
|
14,989,161
|
55,927
|
15,045,088
|
||||||||||||||||||||||||||||||||||||||||||
Changes in accounting policy
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
543
|
-
|
516,761
|
517,304
|
-
|
517,304
|
|||||||||||||||||||||||||||||||||||||||||||||
Restated total equity at 1 January 2018
|
2,200,000
|
(56,313
|
)
|
35,026
|
269
|
1,643,024
|
-
|
-
|
-
|
(540,045
|
)
|
440,243
|
(44,776
|
)
|
11,829,037
|
15,506,465
|
55,927
|
15,562,392
|
||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
500,780
|
500,780
|
24,235
|
525,015
|
|||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation differences
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(32,112
|
)
|
123,916
|
-
|
-
|
91,804
|
225
|
92,029
|
||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income, net of income tax
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(32,112
|
)
|
123,916
|
-
|
-
|
91,804
|
225
|
92,029
|
||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(32,112
|
)
|
123,916
|
-
|
500,780
|
592,584
|
24,460
|
617,044
|
||||||||||||||||||||||||||||||||||||||||||||
Transfer to legal reserves
|
-
|
-
|
-
|
-
|
169,921
|
-
|
-
|
-
|
-
|
-
|
-
|
(169,921
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||||||||||
Dividends paid (Note 13)
|
-
|
5,886
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,900,000
|
)
|
(1,894,114
|
)
|
(37,704
|
)
|
(1,931,818
|
)
|
|||||||||||||||||||||||||||||||||||||||||
Balance at 31 March 2018
|
2,200,000
|
(50,427
|
)
|
35,026
|
269
|
1,812,945
|
-
|
-
|
-
|
(572,157
|
)
|
564,159
|
(44,776
|
)
|
10,259,896
|
14,204,935
|
42,683
|
14,247,618
|
||||||||||||||||||||||||||||||||||||||||||
Balance at 1 January 2019
|
2,200,000
|
(141,534
|
)
|
35,026
|
269
|
2,235,922
|
-
|
(271,130
|
)
|
14,942
|
(810,192
|
)
|
1,333,995
|
(34,871
|
)
|
11,359,317
|
15,921,744
|
131,810
|
16,053,554
|
|||||||||||||||||||||||||||||||||||||||||
Total comprehensive income/(loss):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,224,451
|
1,224,451
|
19,804
|
1,244,255
|
|||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income/(loss):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation differences
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(66,675
|
)
|
278,442
|
-
|
-
|
211,767
|
(734
|
)
|
211,033
|
|||||||||||||||||||||||||||||||||||||||||||
Net change in fair value of AFS
|
-
|
-
|
-
|
-
|
-
|
(979
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
(979
|
)
|
-
|
(979
|
)
|
||||||||||||||||||||||||||||||||||||||||||
Change in cash flow hedge reserve
|
-
|
-
|
-
|
-
|
-
|
-
|
(66,685
|
)
|
39,234
|
-
|
-
|
-
|
-
|
(27,451
|
)
|
-
|
(27,451
|
)
|
||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income, net of income tax
|
-
|
-
|
-
|
-
|
-
|
(979
|
)
|
(66,685
|
)
|
39,234 |
(66,675
|
)
|
278,442
|
-
|
-
|
183,337
|
(734
|
)
|
182,603
|
|||||||||||||||||||||||||||||||||||||||||
Total comprehensive income/(loss)
|
-
|
-
|
-
|
-
|
-
|
(979
|
)
|
(66,685
|
)
|
39,234
|
(66,675
|
)
|
278,442
|
-
|
1,224,451
|
1,407,788
|
19,070
|
1,426,858
|
||||||||||||||||||||||||||||||||||||||||||
Acquisition of treasury shares (-)
|
-
|
(9,998
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(9,998
|
)
|
-
|
(9,998
|
)
|
||||||||||||||||||||||||||||||||||||||||||
Sale of investment (Note 12)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
876,867
|
(1,388,905
|
)
|
-
|
143,905
|
(368,133
|
)
|
-
|
(368,133
|
)
|
||||||||||||||||||||||||||||||||||||||||||
Balance at 31 March 2019
|
2,200,000
|
(151,532
|
)
|
35,026
|
269
|
2,235,922
|
(979
|
)
|
(337,815
|
)
|
54,176
|
-
|
223,532
|
(34,871
|
)
|
12,727,673
|
16,951,401
|
150,880
|
17,102,281
|
(*) Included in Reserves in the condensed consolidated interim statement of financial position.
The above condensed interim statement of financial position should be read in conjunction with the accompanying notes.
5
TURKCELL ILETISIM HIZMETLERI AS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
For the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Three months ended
31 March
|
||||||||||||
Note
|
2019
|
2018
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Profit before income tax from
|
||||||||||||
Continuing operations
|
471,819
|
525,015
|
||||||||||
Discontinued operations
|
772,436
|
-
|
||||||||||
Profit before income tax including discontinued operations
|
1,244,255
|
525,015
|
||||||||||
Adjustments for:
|
||||||||||||
Depreciation and impairment of property, plant and equipment and investment properties
|
9
|
519,797
|
428,923
|
|||||||||
Amortization of intangible assets and right of use assets
|
10,11
|
658,300
|
550,895
|
|||||||||
Net finance (income)/expense
|
398,807
|
129,709
|
||||||||||
Fair value adjustments to derivatives
|
15
|
(618,583
|
)
|
(306,712
|
)
|
|||||||
Income tax expense
|
159,774
|
170,195
|
||||||||||
Gain on sale of property, plant and equipment
|
(9,266
|
)
|
(8,694
|
)
|
||||||||
Unrealized foreign exchange losses on operating assets
|
771,395
|
551,010
|
||||||||||
Provisions
|
160,283
|
152,644
|
||||||||||
Share of equity accounted investees
|
(787
|
)
|
-
|
|||||||||
Adjustments to losses (earnings) due to disposal of assets held for sale or to associates
|
12
|
(772,436
|
)
|
-
|
||||||||
Deferred revenue
|
49,054
|
16,483
|
||||||||||
2,560,593
|
2,209,468
|
|||||||||||
Change in operating assets/liabilities
|
||||||||||||
Change in trade receivables
|
(131,542
|
)
|
(40,972
|
)
|
||||||||
Change in due from related parties
|
9,597
|
(1,935
|
)
|
|||||||||
Change in receivables from financial services
|
498,296
|
(230,402
|
)
|
|||||||||
Change in inventories
|
(55,301
|
)
|
(11,916
|
)
|
||||||||
Change in other current assets
|
(572,030
|
)
|
(117,138
|
)
|
||||||||
Change in other non-current assets
|
(4,359
|
)
|
(84,208
|
)
|
||||||||
Change in due to related parties
|
(2,149
|
)
|
(18,828
|
)
|
||||||||
Change in trade and other payables
|
(447,903
|
)
|
(804,110
|
)
|
||||||||
Change in other non-current liabilities
|
(26,033
|
)
|
(15,255
|
)
|
||||||||
Change in employee benefit obligations
|
(6,561
|
)
|
(2,387
|
)
|
||||||||
Change in short term contract asset
|
154,492
|
(24,778
|
)
|
|||||||||
Change in long term contract asset
|
(1,075
|
)
|
(1,096
|
)
|
||||||||
Change in short term contract liability
|
35,900
|
33,335
|
||||||||||
Change in long term contract liability
|
(8,356
|
)
|
5,809
|
|||||||||
Changes in other working capital
|
(270,265
|
)
|
(315,039
|
)
|
||||||||
Cash generated from operations
|
1,733,304
|
580,548
|
||||||||||
Interest paid
|
(605,625
|
)
|
(143,582
|
)
|
||||||||
Income tax paid
|
(137,257
|
)
|
(167,300
|
)
|
||||||||
Net cash inflow from operating activities
|
990,422
|
269,666
|
||||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition of property, plant and equipment
|
9
|
(515,623
|
)
|
(548,057
|
)
|
|||||||
Acquisition of intangible assets
|
10
|
(607,238
|
)
|
(419,174
|
)
|
|||||||
Proceeds from sale of property, plant and equipment
|
16,034
|
19,724
|
||||||||||
Proceeds from advances
given for acquisition of property, plant and equipment
|
(524,508
|
)
|
(84,696
|
)
|
||||||||
Contribution of increase of share capital in joint ventures/associates
|
(10,286
|
)
|
-
|
|||||||||
Cash inflows from sale of shares or borrowing instruments of other enterprises or funds
|
30,335
|
-
|
||||||||||
Cash outflows from sale of shares or borrowing instruments of other enterprises or funds
|
(124,602
|
)
|
(2,645
|
)
|
||||||||
Interest received
|
167,343
|
117,141
|
||||||||||
Net cash outflow from investing activities
|
(1,568,545
|
)
|
(917,707
|
)
|
||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from derivative instruments
|
114,709
|
-
|
||||||||||
Repayments of derivative instruments
|
(19,910
|
)
|
-
|
|||||||||
Proceeds from issues of loans and borrowings
|
8,163,348
|
10,082,368
|
||||||||||
Proceeds from issues of bonds
|
100,000
|
125,000
|
||||||||||
Repayment of borrowings
|
(6,297,565
|
)
|
(9,477,504
|
)
|
||||||||
Repayment of bonds
|
(125,794
|
)
|
-
|
|||||||||
Dividends paid to shareholders
|
-
|
(19,201
|
)
|
|||||||||
(Increase)/decrease in cash collateral related to loans
|
11,078
|
(47,076
|
)
|
|||||||||
Payments of lease liabilities
|
(269,567
|
)
|
(232,223
|
)
|
||||||||
Acquisition of treasury shares
|
(9,998
|
)
|
-
|
|||||||||
Net cash (outflow)/inflow from financing activities
|
1,666,301
|
431,364
|
||||||||||
Net (decrease)/increase in cash and cash equivalents
|
1,088,178
|
(216,677
|
)
|
|||||||||
Cash and cash equivalents at 1 January
|
7,419,239
|
4,712,333
|
||||||||||
Effects of exchange rate changes on cash and cash equivalents
|
380,834
|
93,998
|
||||||||||
Cash and cash equivalents at 31 March
|
8,888,251
|
4,589,654
|
||||||||||
The above condensed interim statement of financial position should be read in conjunction with the accompanying notes.
6
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
Notes to the condensed consolidated interim financial statements
Page
|
|
1. Reporting entity
|
8
|
2. Basis of preparation
|
8
|
3. Significant accounting policies
|
9
|
4. Segment information
|
11
|
5. Seasonality of operations
|
13
|
6. Finance income and costs
|
14
|
7. Income tax expense
|
14
|
8. Revenue
|
15
|
9. Property, plant and equipment
|
18
|
10. Intangible assets
|
19
|
11. Right of use assets
|
20
|
12. Asset held for sale and discontinued operation
|
21
|
13. Equity
|
22
|
14. Loans and borrowings
|
23
|
15. Derivative financial instruments
|
25
|
16. Financial instruments
|
34
|
17. Guarantees and purchase obligations
|
39
|
18. Commitments and contingencies
|
39
|
19. Related parties
|
41
|
20. Subsidiaries
|
43
|
21. Subsequent events
|
44
|
7
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
1. |
Reporting entity
|
Turkcell Iletisim Hizmetleri Anonim Sirketi (the “Company” or “Turkcell”) was incorporated in
Turkey on
5 October 1993 and commenced its operations in 1994. The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark / Istanbul. The Company operates under a 25-year GSM license granted in and effective from April 1998, a 20-year 3G license granted in and effective from April 2009 and a 13-year 4.5G license granted in August 2016 and effective from April 2016. The Company’s shares are listed on Borsa Istanbul A.Ş. (“BIST”) and New York Stock Exchange (“NYSE”).
5 October 1993 and commenced its operations in 1994. The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark / Istanbul. The Company operates under a 25-year GSM license granted in and effective from April 1998, a 20-year 3G license granted in and effective from April 2009 and a 13-year 4.5G license granted in August 2016 and effective from April 2016. The Company’s shares are listed on Borsa Istanbul A.Ş. (“BIST”) and New York Stock Exchange (“NYSE”).
The condensed consolidated interim financial statements of the Company as at and for the three months ended 31 March
2019 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in an associate.
These condensed consolidated interim financial statements were approved for issue on 30 April 2019.
The Company transfered its total shareholding in Fintur to other shareholder of Fintur, Sonera Holding B.V. (“Sonera
Holding”). Transfer to Sonera Holding and the transfer of proceeds completed on 2 April 2019 subsequent to obtainment of regulatory approvals on 29 March 2019. (Note 12).
The Company’s parent is Turkcell Holding A.S., which holds 51% of the Company’s shares as of 31 March 2019. The main
shareholders of Turkcell Holding A.S. are TeliaSonera Finland Oyj (Sonera), Cukurova Group and Alfa Telecom Turkey Limited (“Alfa”) according to the information obtained from public sources.
After failure to comply with corporate governance principles for election of independent board members, the CMB
appointed 3 independent board members in 2013. Additionally, two board members were appointed at the General Assembly dated 29 April 2013 as per the resolution of CMB. Also in 2013, 2 members were chosen from the independent nominees list
submitted by Sonera. All board members were appointed until new members are elected by the general assembly as per the legislation or until appointment of new members by the CMB. On 29 March 2018, in accordance with the shareholder proposal at
the Ordinary General Assembly, 3 new members were elected to serve for 3 years instead of 3 members who are not among independent members appointed by the CMB.As a result of the appointments dated 7 and 8 March 2019, Turkcell’s Board of Directors
consists of a total of 7 non-executive members including 3 independent members as of
31 March 2019.
31 March 2019.
2. |
Basis of preparation
|
These condensed consolidated interim financial statements for the three months ended 31 March 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting.
These condensed consolidated interim financial statements do not include all the notes of the
type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual financial statements for the year ended 31 March 2019 and any public announcements made by the Company
during the interim reporting period.
The accounting policies, presentation and methods of computation are consistent with those of the previous financial
year and corresponding interim reporting period, except for the adoption of new accounting policies for transactions occurred during the three months ended 31 March 2019 as set out in Note 3.
As at 31 March 2019, interest expense/income and fair value and interest of derivative financial instruments are shown
netted off on condensed consolidated interim statement of profit or loss (Note 6). The Company has presented financials of 31 March 2018 accordingly which amount is TL 109,212. This classification has no impact on operating profit, profit for the
year and cash flow statement.
8
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
2. |
Basis of preparation (continued)
|
As at 31 March 2018, TL 93,758 has been classified between net impairment losses on financial and
contract assets and administrative and selling and marketing expenses according to IFRS 9.
As of 31 March 2018 in the condensed consolidated interim financial statements, Turkcell Ödeme Hizmetleri A.Ş (Turkcell Ödeme) has been reported under Turkcell Turkey segments because of its revenue and operational structure. As of 31 March 2019 in the condensed
consolidated interim financial statements, the company is classified in other segment due to the fact that a significant portion of revenue consists of non-group and consumer financing services. The Company made the relevant reclassifications in
the condensed consolidated interim financial statements as of 31 March 2018 (Notes 4 and 8). This classification has no impact on operating profit, profit for the year and cash flow statement.
3. |
Significant in accounting policies
|
New standards and interpretations
i) |
Standards, amendments and interpretations effective as at 31 March 2019
|
- |
Amendment to IFRS 9, ‘Financial instruments’; effective
from annual periods beginning on or after 1 January 2019. This amendment confirm that when a financial liability measured at amortised cost is modified without this resulting in de-recognition, a gain or loss should be recognised
immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate. This means that the difference
cannot be spread over the remaining life of the instrument which may be a change in practice from IAS 39.
|
- |
Amendment to IAS 28, ‘Investments in associates and joint
venture’; effective from annual periods beginning on or after 1 January 2019. These amendments clarify that companies account for long-term interests in associate or joint venture to which the equity method is not applied
using IFRS 9.
|
- |
IFRIC 23, ‘Uncertainty over income tax treatments’; effective
from annual periods beginning on or after 1 January 2019. This IFRIC clarifies how the recognition and measurement requirements of IAS 12 ‘Income taxes’, are applied where there is uncertainty over income tax treatments. The IFRS IC
had clarified previously that IAS 12, not IAS 37 ‘Provisions, contingent liabilities and contingent assets’, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and
current income tax assets and liabilities where there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by
the tax authority. For example, a decision to claim a deduction for a specific expense or not to include a specific item of income in a tax return is an uncertain tax treatment if its acceptability is uncertain under tax law. IFRIC 23
applies to all aspects of income tax accounting where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates.
|
9
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
3. |
Significant in accounting policies (continued)
|
New standards and interpretations (continued)
i) |
Standards, amendments and interpretations effective as at 31 March 2019 (continued)
|
- |
Annual improvements 2015-2017; effective from annual
periods beginning on or after 1 January 2019. These amendments include minor changes to:
|
· |
IFRS 3, ‘Business combinations’, – a company remeasures its previously held interest in a joint operation when it obtains control of the business.
|
· |
IFRS 11, ‘Joint arrangements’, – a company does not remeasure its previously held interest in a joint operation when it obtains joint control of
the business.
|
· |
IAS 12, ‘Income taxes’ – a company accounts for all income tax consequences of dividend payments in the same way.
|
· |
IAS 23, ‘Borrowing costs’ – a company treats as part of general borrowings any borrowing originally made to develop an asset when the asset is
ready for its intended use or sale.
|
- |
Amendments to IAS 19, ‘Employee benefits’ on plan amendment,
curtailment or settlement’; effective from annual periods beginning on or after 1 January 2019. These amendments require an entity to:
|
· |
use updated assumptions to determine current service cost and net interest for the reminder of the period after a plan amendment, curtailment or
settlement; and
|
· |
recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was
not previously recognised because of the impact of the asset ceiling.
|
ii) |
Standards, amendments and interpretations that are issued but not effective as at 31 March 2019:
|
- |
Amendments to IAS 1 and IAS 8 on the definition of material; effective
from Annual periods beginning on or after 1 January 2020. These amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in accounting estimates and errors’, and consequential amendments to
other IFRSs:
|
· |
use a consistent definition of materiality throughout IFRSs and the Conceptual Framework for Financial Reporting;
|
· |
clarify the explanation of the definition of material; and
|
· |
incorporate some of the guidance in IAS 1 about immaterial information.
|
- |
Amendments to IFRS 3 - definition of a business; effective
from Annual periods beginning on or after 1 January 2020. This amendment revises the definition of a business. According to feedback received by the IASB, application of the current guidance is commonly thought to be too complex, and
it results in too many transactions qualifying as business combinations.
|
- |
IFRS 17, ‘Insurance contracts’; effective from annual
periods beginning on or after 1 January 2021. This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities
that issue insurance contracts and investment contracts with discretionary participation features.
|
The Company does not expected material impact of new standards and interpretations on Company’s accounting policies.
10
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
4. Segment
information
In accordance with its integrated communication and technology services strategy, Group has reportable segments which
are Turkcell Turkey, Turkcell International and Other. While some of these strategic segments offer the same types of services, they are managed separately because they operate in different geographical locations and are affected by different
economic conditions.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker function is carried out by the Board of Directors, however Board of Directors may transfer the authorities, other than recognized by the law, to the General Manager and other directors.
Turkcell Turkey reportable segment includes the operations of Turkcell, Turkcell Superonline Iletisim Hizmetleri A.S.
(“Turkcell Superonline”), Turkcell Satis ve Dijital Is Servisleri Hizmetleri A.S. (“Turkcell Satis”), group call center operations of Global Bilgi Pazarlama Danismanlık ve
Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Turkcell Teknoloji Arastirma ve Gelistirme A.S. (“Turkcell Teknoloji”), Kule Hizmet ve Isletmecilik A.S. (“Global Tower”), Rehberlik
Hizmetleri Servisi A.S. (“Rehberlik”) and Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”). Turkcell International reportable segment includes the operations of Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), East
Asian Consortium B.V. (“Eastasia”), Lifecell LLC (“lifecell”), Lifecell Ventures Coöperatief U.A (“Lifecell Ventures”), Beltel Telekomunikasyon Hizmetleri A.S. (“Beltel”), CJSC Belarusian Telecommunications Network (“Belarusian Telecom”), LLC
UkrTower (“UkrTower”), LLC Global Bilgi (“Global LLC”), Turkcell Europe GmbH (“Turkcell Europe”), Lifetech LLC (“Lifetech”), Beltower LLC (“Beltower”) and Lifecell Digital Limited (“Lificell Digital”). The operations of these legal entities
aggregated into one reportable segment as the nature of services are similar and most of them share similar economic characteristics. Other reportable segment mainly comprises the information and entertainment services in Turkey and Azerbaijan,
non-group call center operations of Turkcell Global Bilgi, Turkcell Finansman A.Ş.(“ Turkcell Finansman”), Turkcell Odeme Hizmetleri A.S. (“Turkcell Odeme”), Turkcell Özel Finansman A.Ş. (“TÖFAŞ”), Turkcell Enerji Cozumleri ve Elektrik Satıs Ticaret A.S (“Turkcell Enerji”) Paycell LLC (“Paycell”), Turkcell Sigorta Aracılık Hizmetleri A.Ş
(“Turkcell Sigorta”), Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş.(“Türkiye’nin Otomobili”) and Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş.(“Sofra”).
The Board primarily uses adjusted EBITDA to assess the performance of the operating segments. Adjusted EBITDA
definition includes revenue, cost of revenue excluding depreciation and amortization, selling and marketing expenses and administrative expenses.
Adjusted EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and may not be
comparable to other similarly-titled indicators used by other companies. Reconciliation of Adjusted EBITDA to the consolidated profit for the year is included in the accompanying notes.
11
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
4. Segment information
(continued)
Turkcell Turkey
|
Turkcell International
|
All other segments
|
Intersegment eliminations
|
Consolidated
|
||||||||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||||
Total segment revenue
|
4,833,274
|
4,072,021
|
424,794
|
279,406
|
546,919
|
487,538
|
(129,628
|
)
|
(77,370
|
)
|
5,675,359
|
4,761,595
|
||||||||||||||||||||||||||||
Inter-segment revenue
|
(16,403
|
)
|
(11,413
|
)
|
(18,917
|
)
|
(13,898
|
)
|
(94,308
|
)
|
(52,059
|
)
|
129,628
|
77,370
|
-
|
-
|
||||||||||||||||||||||||
Revenues from external customers
|
4,816,871
|
4,060,608
|
405,877
|
265,508
|
452,611
|
435,479
|
-
|
-
|
5,675,359
|
4,761,595
|
||||||||||||||||||||||||||||||
Adjusted EBITDA
|
1,909,823
|
1,741,262
|
193,551
|
92,826
|
190,656
|
190,204
|
(12,928
|
)
|
(2,323
|
)
|
2,281,102
|
2,021,969
|
12
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
4. Segment
information (continued)
2019
|
2018
|
|||||||
Profit for the period
|
1,244,255
|
525,015
|
||||||
Add(Less):
|
||||||||
Profit/(loss) from discontinued operations
|
(772,436
|
)
|
-
|
|||||
Profit from
continuing operations
|
471,819
|
525,015
|
||||||
Income tax expense
|
159,774
|
170,195
|
||||||
Finance income
|
(583,029
|
)
|
(355,600
|
)
|
||||
Finance costs
|
1,003,409
|
669,070
|
||||||
Other income
|
(26,662
|
)
|
(13,894
|
)
|
||||
Other expenses
|
78,481
|
47,365
|
||||||
Depreciation and amortization
|
1,178,097
|
979,818
|
||||||
Share of loss of equity accounted investees
|
(787
|
)
|
-
|
|||||
Consolidated adjusted EBITDA
|
2,281,102
|
2,021,969
|
5. |
Seasonality of operations
|
The Turkish mobile communications market is affected by seasonal peaks and troughs. Historically, the effects of
seasonality on mobile communications usage had positively influenced the Company’s results in the second and third quarters of the fiscal year and negatively influenced the results in the first and fourth quarters of the fiscal year. Recently,
however, due to changing market dynamics, such as the Information Technologies and Communications Authority (“ICTA”)’s intervention in tariffs and increasing competition in the Turkish
telecommunications market, the effects of seasonality on the Company’s subscribers’ mobile communications usage has decreased. National and religious holidays in Turkey also affect the Company’s operational results.
13
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
6. Finance income and costs
2019
|
2018
|
|||||||
Fair value gains on derivative financial instruments and interest
|
270,290
|
213,742
|
||||||
Cash flow hedges – reclassified to profit or loss
|
182,023
|
-
|
||||||
Interest income on bank deposits
|
79,124
|
59,257
|
||||||
Interest income on financial assets measured
at amortized cost |
35,105
|
25,879
|
||||||
Credit finance income
|
3,656
|
56,652
|
||||||
Other
|
12,831
|
70
|
||||||
Finance income
|
583,029
|
355,600
|
||||||
Net foreign exchange losses
|
(712,507
|
)
|
(494,020
|
)
|
||||
Interest expenses for financial liabilities
measured at amortized cost
|
(286,422
|
)
|
(172,540
|
)
|
||||
Other
|
(4,480
|
)
|
(2,510
|
)
|
||||
Finance costs
|
(1,003,409
|
)
|
(669,070
|
)
|
||||
Net finance costs
|
(420,380
|
)
|
(313,470
|
)
|
As of 31 March 2018, Credit finance income mainly consists of discount interest income on dividends TL 75,134.
Foreign exchange losses mainly include foreign exchange losses on borrowings and bonds issued
amounting to TL 538,875 and TL 363,203 as of 31 March 2019.
7. |
Income tax expense
|
Income tax expense is recognised based on management’s estimate of the weighted
average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the three months ended 31 March 2019 is 11%, compared to 24% for the three months ended 31 March 2018. The decrease in the
effective tax rate is mainly due to the gains arising from the sale of the shares of Fintur are exempt from the corporate tax in accordance with the Article 10/13-h of the Law no. 7143.
14
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
8. Revenue
31 March 2019
|
||||||||||||||||||||||||||||||||||||||||
Turkcell Turkey
|
Turkcell International
|
Other
|
Intersegment
eliminations
|
Consolidated
|
||||||||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||||
Telecommunication services
|
4,295,758
|
3,766,666
|
380,176
|
243,954
|
53,710
|
41,850
|
12,678
|
16,415
|
4,716,966
|
4,036,055
|
||||||||||||||||||||||||||||||
Equipment revenues
|
512,962
|
272,825
|
20,620
|
20,777
|
-
|
-
|
-
|
-
|
533,582
|
293,602
|
||||||||||||||||||||||||||||||
Revenue from financial services
|
-
|
-
|
-
|
-
|
241,888
|
211,945
|
-
|
-
|
241,888
|
211,945
|
||||||||||||||||||||||||||||||
Call center revenues
|
-
|
407
|
2,852
|
2,108
|
54,311
|
61,866
|
5,738
|
1,704
|
51,425
|
62,677
|
||||||||||||||||||||||||||||||
Commission fees on betting business
|
-
|
-
|
-
|
-
|
56,629
|
53,584
|
-
|
-
|
56,629
|
53,584
|
||||||||||||||||||||||||||||||
Revenue from betting business
|
-
|
-
|
-
|
-
|
-
|
56,768
|
-
|
-
|
-
|
56,768
|
||||||||||||||||||||||||||||||
Other
|
24,554
|
32,123
|
21,146
|
12,567
|
140,381
|
61,525
|
111,212
|
59,251
|
74,869
|
46,964
|
||||||||||||||||||||||||||||||
Total
|
4,833,274
|
4,072,021
|
424,794
|
279,406
|
546,919
|
487,538
|
129,628
|
77,370
|
5,675,359
|
4,761,595
|
15
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
8. Revenue (continued)
31 March 2019
|
||||||||||||||||||||
Turkcell
Turkey
|
Turkcell
International
|
Other
|
Intersegment
eliminations
|
Consolidated
|
||||||||||||||||
Telecommunication Services
|
4,295,758
|
380,176
|
53,710
|
12,678
|
4,716,966
|
|||||||||||||||
At a point in time
|
37,317
|
-
|
53,710
|
-
|
91,027
|
|||||||||||||||
Over time
|
4,258,441
|
380,176
|
-
|
12,678
|
4,625,939
|
|||||||||||||||
Equipment Related
|
512,962
|
20,620
|
-
|
-
|
533,582
|
|||||||||||||||
At a point in time
|
485,382
|
20,620
|
-
|
-
|
506,002
|
|||||||||||||||
Over time
|
27,580
|
-
|
-
|
-
|
27,580
|
|||||||||||||||
Call Center
|
-
|
2,852
|
54,311
|
5,738
|
51,425
|
|||||||||||||||
At a point in time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Over time
|
-
|
2,852
|
54,311
|
5,738
|
51,425
|
|||||||||||||||
Commision fees on betting business
|
-
|
-
|
56,629
|
-
|
56,629
|
|||||||||||||||
At a point in time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Over time
|
-
|
-
|
56,629
|
-
|
56,629
|
|||||||||||||||
Revenue from betting business
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
At a point in time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Over time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Revenue from financial operations
|
-
|
-
|
241,888
|
-
|
241,888
|
|||||||||||||||
At a point in time
|
-
|
-
|
9,499
|
-
|
9,499
|
|||||||||||||||
Over time
|
-
|
-
|
232,389
|
-
|
232,389
|
|||||||||||||||
All other segments
|
24,554
|
21,146
|
140,381
|
111,212
|
74,869
|
|||||||||||||||
At a point in time
|
-
|
1,811
|
2,182
|
-
|
3,993
|
|||||||||||||||
Over time
|
24,554
|
19,335
|
138,199
|
111,212
|
70,876
|
|||||||||||||||
Total
|
4,833,274
|
424,794
|
546,919
|
129,628
|
5,675,359
|
|||||||||||||||
At a point in time
|
522,699
|
22,431
|
65,391
|
-
|
610,521
|
|||||||||||||||
Over time
|
4,310,575
|
402,363
|
481,528
|
129,628
|
5,064,838
|
16
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
8. Revenue (continued)
31 March 2018
|
||||||||||||||||||||
Turkcell Turkey
|
Turkcell International
|
Other
|
Intersegment eliminations
|
Consolidated
|
||||||||||||||||
Telecommunication Services
|
3,766,666
|
243,954
|
41,850
|
16,415
|
4,036,055
|
|||||||||||||||
At a point in time
|
34,850
|
-
|
41,850
|
-
|
76,700
|
|||||||||||||||
Over time
|
3,731,816
|
243,954
|
-
|
16,415
|
3,959,355
|
|||||||||||||||
Equipment Related
|
272,825
|
20,777
|
-
|
-
|
293,602
|
|||||||||||||||
At a point in time
|
270,810
|
20,777
|
-
|
-
|
291,587
|
|||||||||||||||
Over time
|
2,015
|
-
|
-
|
-
|
2,015
|
|||||||||||||||
Call Center
|
407
|
2,108
|
61,866
|
1,704
|
62,677
|
|||||||||||||||
At a point in time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Over time
|
407
|
2,108
|
61,866
|
1,704
|
62,677
|
|||||||||||||||
Commision fees on betting business
|
-
|
-
|
53,584
|
-
|
53,584
|
|||||||||||||||
At a point in time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Over time
|
-
|
-
|
53,584
|
-
|
53,584
|
|||||||||||||||
Revenue from betting business
|
-
|
-
|
56,768
|
-
|
56,768
|
|||||||||||||||
At a point in time
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Over time
|
-
|
-
|
56,768
|
-
|
56,768
|
|||||||||||||||
Revenue from financial operations
|
-
|
-
|
211,945
|
-
|
211,945
|
|||||||||||||||
At a point in time
|
-
|
-
|
9,023
|
-
|
9,023
|
|||||||||||||||
Over time
|
-
|
-
|
202,922
|
-
|
202,922
|
|||||||||||||||
All other segments
|
32,123
|
12,567
|
61,525
|
59,251
|
46,964
|
|||||||||||||||
At a point in time
|
1,436
|
-
|
1,786
|
-
|
3,222
|
|||||||||||||||
Over time
|
30,687
|
12,567
|
59,739
|
59,251
|
43,742
|
|||||||||||||||
Total
|
4,072,021
|
279,406
|
487,538
|
77,370
|
4,761,595
|
|||||||||||||||
At a point in time
|
307,096
|
20,777
|
52,659
|
-
|
380,532
|
|||||||||||||||
Over time
|
3,764,925
|
258,629
|
434,879
|
77,370
|
4,381,063
|
17
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
9. Property,
plant and equipment
Cost
|
Balance as at 1 January 2019
|
Additions
|
Disposals
|
Transfers
|
Impairment expenses/ (reversals)
|
Effects of movements in exchange rates
|
Balance as at
31 March 2019 |
|||||||||||||||||||||
Network infrastructure (All operational)
|
19,132,278
|
85,446
|
(260,716
|
)
|
183,025
|
-
|
317,795
|
19,457,828
|
||||||||||||||||||||
Land and buildings
|
929,901
|
2,403
|
-
|
-
|
-
|
2,396
|
934,700
|
|||||||||||||||||||||
Equipment, fixtures and fittings
|
803,500
|
22,358
|
(26,309
|
)
|
913
|
-
|
4,672
|
805,134
|
||||||||||||||||||||
Motor vehicles
|
40,106
|
-
|
-
|
-
|
-
|
534
|
40,640
|
|||||||||||||||||||||
Leasehold improvements
|
327,492
|
658
|
(7
|
)
|
-
|
-
|
713
|
328,856
|
||||||||||||||||||||
Construction in progress
|
512,087
|
402,680
|
-
|
(183,938
|
)
|
(744
|
)
|
6,266
|
736,351
|
|||||||||||||||||||
Total
|
21,745,364
|
513,545
|
(287,032
|
)
|
-
|
(744
|
)
|
332,376
|
22,303,509
|
|||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||||||||||
Network infrastructure (All operational)
|
9,446,217
|
451,653
|
(256,613
|
)
|
-
|
5,798
|
180,591
|
9,827,646
|
||||||||||||||||||||
Land and buildings
|
239,088
|
20,496
|
-
|
-
|
-
|
1,419
|
261,003
|
|||||||||||||||||||||
Equipment, fixtures and fittings
|
633,507
|
32,742
|
(23,651
|
)
|
-
|
-
|
3,766
|
646,364
|
||||||||||||||||||||
Motor vehicles
|
34,230
|
700
|
-
|
-
|
-
|
498
|
35,428
|
|||||||||||||||||||||
Leasehold improvements
|
276,006
|
7,413
|
-
|
-
|
-
|
404
|
283,823
|
|||||||||||||||||||||
Total
|
10,629,048
|
513,004
|
(280,264
|
)
|
-
|
5,798
|
186,678
|
11,054,264
|
||||||||||||||||||||
Net book amount
|
11,116,316
|
541
|
(6,768
|
)
|
-
|
(6,542
|
)
|
145,698
|
11,249,245
|
Depreciation expense for the three months ended 31 March 2019 amounting to TL 519,546 including
impairment losses are recognized in cost of revenues.
The impaired network infrastructure mainly
consists of damaged or technologically inadequate mobile and fixed line infrastructure investments.
Impairment losses on property, plant and equipment for the three months ended 31 March 2019
amounting to TL 6,542 are included in depreciation expense.
18
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
10. Intangible assets
Cost
|
Balance at 1 January 2019
|
Additions
|
Disposals
|
Transfers
|
Effects of movements in exchange rates
|
Balance at
31 March 2019
|
||||||||||||||||||
Telecommunication licenses
|
8,722,998
|
1,019
|
-
|
418
|
112,983
|
8,837,418
|
||||||||||||||||||
Computer software
|
8,539,038
|
380,646
|
(3,848
|
)
|
5,951
|
22,833
|
8,944,620
|
|||||||||||||||||
Transmission line software
|
73,139
|
519
|
-
|
-
|
-
|
73,658
|
||||||||||||||||||
Central betting system operating right
|
11,981
|
93
|
-
|
-
|
-
|
12,074
|
||||||||||||||||||
Indefeasible right of usage
|
117,618
|
-
|
-
|
-
|
-
|
117,618
|
||||||||||||||||||
Brand name
|
7,040
|
-
|
-
|
-
|
-
|
7,040
|
||||||||||||||||||
Customer base
|
15,512
|
-
|
-
|
-
|
-
|
15,512
|
||||||||||||||||||
Goodwill
|
32,834
|
-
|
-
|
-
|
-
|
32,834
|
||||||||||||||||||
Subscriber acquisition cost
|
2,034,053
|
204,502
|
-
|
-
|
6,842
|
2,245,397
|
||||||||||||||||||
Other
|
50,005
|
3,006
|
-
|
-
|
-
|
53,011
|
||||||||||||||||||
Construction in progress
|
18,007
|
17,453
|
-
|
(6,369
|
)
|
2,133
|
31,224
|
|||||||||||||||||
Total
|
19,622,225
|
607,238
|
(3,848
|
)
|
-
|
144,791
|
20,370,406
|
|||||||||||||||||
Accumulated amortization
|
||||||||||||||||||||||||
Telecommunication licenses
|
2,948,235
|
148,219
|
-
|
-
|
22,866
|
3,119,320
|
||||||||||||||||||
Computer software
|
5,481,895
|
190,284
|
(3,848
|
)
|
-
|
24,271
|
5,692,602
|
|||||||||||||||||
Transmission line software
|
67,017
|
1,163
|
-
|
-
|
-
|
68,180
|
||||||||||||||||||
Central betting system operating right
|
12,074
|
-
|
-
|
-
|
-
|
12,074
|
||||||||||||||||||
Indefeasible right of usage
|
31,855
|
2,141
|
-
|
-
|
-
|
33,996
|
||||||||||||||||||
Brand name
|
7,040
|
-
|
-
|
-
|
-
|
7,040
|
||||||||||||||||||
Customer base
|
12,211
|
109
|
-
|
-
|
-
|
12,320
|
||||||||||||||||||
Subscriber acquisition cost
|
974,200
|
98,747
|
-
|
-
|
4,369
|
1,077,316
|
||||||||||||||||||
Other
|
37,526
|
2,659
|
-
|
-
|
-
|
40,185
|
||||||||||||||||||
Total
|
9,572,053
|
443,322
|
(3,848
|
)
|
-
|
51,506
|
10,063,033
|
|||||||||||||||||
Net book amount
|
10,050,172
|
163,916
|
-
|
-
|
93,285
|
10,307,373
|
Amortization expense on intangible assets other than goodwill for the three months ended 31 March 2019
amounting to TL 443,322 including impairment losses are recognized in cost of revenues.
There is no impairment losses on intangible assets recognized for the three months ended 31
March 2019.
Computer software includes internally generated capitalized software development costs that meet the definition of an
intangible asset. The amount of internally generated computer software is TL 44,613 for the three months ended 31 March 2019.
19
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off
to the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
11.
|
Right of use assets
|
Closing balances of right of use assets as of 1 January and 31 March 2019 and depreciation and amortization expenses
for the period ended 31 March 2019 is stated as below:
Site Rent
|
Building
|
Network
equipment
|
Right of
way
|
License
|
Other
|
Total
|
|
Balance at 1 January
|
1,021,638
|
135,158
|
50,538
|
8,643
|
323,742
|
109,883
|
1,649,602
|
Depreciation and amortization charge for the year
|
(125,159)
|
(18,845)
|
(44,172)
|
(1,126)
|
(10,925)
|
(14,751)
|
(214,978)
|
Balance at 31 March
|
1,066,513
|
118,944
|
5,472
|
10,965
|
345,855
|
115,353
|
1,663,102
|
As at 31 March 2019, additions to right of use assets amount to TL 232,169 and interest expense on lease liabilities is TL
61,584.
20
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off
to the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
12. |
Asset held for sale and discontinued operations
|
In 2016, the Group has committed to plan to exit from Fintur operations in relevant jurisdictions and initiated an active program to locate a buyer for its associate. In this regard, Fintur has been classified as held for sale and reported as discontinued operation starting from 1 October 2016.
Equity accounting for Fintur ceased starting from 1 October 2016, and in accordance with IFRS 5, Fintur has been
measured at the lower of carrying amount and fair value less costs to sell.
The delay during 2018 in the sales process was caused by events and circumstances beyond the Company’s control.
Fintur, has transferred its total shareholding in Azertel Telekomunikasyon Yatırım Dış Ticaret A.Ş. (“Azertel”) to Azerbaijan International Telecom LLC (“Azintelecom”) at the price of EUR 221,687 on 5 March 2018. The signing of definitive agreement, the transfer of shares to Azintelecom
and the transfer of proceeds to Fintur were completed simultaneously.
Fintur has completed the transfer of all its shares in Geocell LLC to Silknet JSC on 20 March 2018, a joint
stock company organized under the laws of Georgia, for a total consideration of USD 153,000 upon receiving the necessary regulatory approvals.
Fintur, has transferred its total shareholding in Kcell JSC to Kazakhtelecom JSC (“Kazakhtelecom”), established
in Kazakhstan, a fixed line operator controlled by the government of the Republic of Kazakhstan through sovereign wealth fund Samruk-Kazyna for a total consideration of USD 302,571. The definitive agreement has been signed on 12 December
2018. The transfer of shares to Kazakhtelecom and the transfer of proceeds to Fintur were completed simultaneously on 21 December 2018.
The Company has signed the definitive agreement on 12 December 2018 to transfer its total shareholding in Fintur
to other shareholder of Fintur, Sonera Holding B.V. (“Sonera Holding”). Transfer to Sonera Holding and the transfer of proceeds completed on 2 April 2019 subsequent to obtainment of regulatory approvals on 29 March 2019. The final value of
the transaction is realized as TL 2,229,595 (EUR 352,851) and recorded under due from related party. As the conditions precedent required for the share transfer have been completed within the three months period ended 31 March 2019, gain on
sale of the associate, amounting to TL 772,436 has been recognized under profit from discounting operations in the condensed consolidated interim financial statements.
Reconciliation of Fintur sales for the period ended 31 March 2019 is stated as below:
31 March 2019
|
||||
Consideration received or receivable:
|
||||
Cash
|
-
|
|||
Receivable
|
2,229,595
|
|||
Total disposal consideration
|
2,229,595
|
|||
Carrying amount of net assets sold
|
(1,825,292
|
)
|
||
Gain on sale before income tax and reclassification of foreign
currency translation reserve
|
404,303
|
|||
Reclassification of foreign currency translation reserve
|
368,133
|
|||
Income tax expense on gain
|
-
|
|||
Gain on sale after income tax
|
772,436
|
21
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim consolidated interim financial statements and notes
have been rounded off to the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
13. Equity
Dividends
Turkcell:
On 29 March 2018, the Company’s General Assembly has approved a dividend distribution for the year ended 31 December 2017 amounting to TL 1,900,000; this representsa gross cash dividend of full TL 0.86364 per
share. The Company paid TL 1,900,000 in total including withholding taxes in three instalments on 18 June, 17 September and 17 December 2018 to the shareholders. As of 31 March 2019, the
Company has no accrued and paid dividends.
Inteltek:
According to Board of Directors Resolution of Inteltek dated 18 December 2017 the advanced dividend payment
has been made in January 2018 amounting to TL 28,402 for the first nine months of 2017 profit. According to the resolution of the Ordinary General Assembly Meeting of Inteltek dated 30 March 2018, the shareholders resolved to pay a
dividend amount equal to TL 60,011 out of profits for the year ended 31 December 2017 (remaining amount after deducting interim dividends for the nine-month period ended 30 September 2017 amounting to TL 28,402) and a dividend out legal
reserves amount equal to TL 9,507. The aggregate amount of dividends has been paid on May 2018. As of 31 March 2019, the Company has no accrued and paid dividends.
According to the resolution of the Ordinary General Assembly Meeting of Inteltek dated 15 March 2019, the
shareholders resolved to pay a dividend amount equal to TL 232,875 out of profits for the year ended 31 December 2018 and a dividend out legal reserves amount equal to TL 9,742. The aggregate amount of dividends has been paid on April
2019.
Azerinteltek:
According to the two resolution of the General Assembly Meeting of Azerinteltek within 2018, shareholders decided
to pay dividend amounting to AZN 5,959 (TL 13,103) from the profit realized for the last quarter of 2017 dividend payment was made in 2018. The share purchase agreement of Azerinteltek was signed on 15 November 2018 and the transfer of
proceeds to Inteltek was completed on 27 December 2018. Group have lost the control over the subsidiary unconditionally on 27 December 2018 with transfer of money. The transfer of shares to Baltech was completed subsequently on 11 January
2019.
22
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim consolidated interim financial statements and notes
have been rounded off to the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
14. Loans and borrowings
31 March
2019 |
31 December
2018 |
|||||||
Non-current liabilities
|
||||||||
Unsecured bank loans
|
9,162,067
|
7,244,992
|
||||||
Secured bank loans
|
2,079
|
1,862
|
||||||
Lease liabilities
|
1,034,994
|
1,026,955
|
||||||
Debt securities issued
|
5,208,539
|
4,845,827
|
||||||
15,407,679
|
13,119,636
|
|||||||
Current liabilities
|
||||||||
Unsecured bank loans
|
3,723,550
|
3,737,393
|
||||||
Current portion of unsecured bank loans
|
2,947,632
|
2,544,462
|
||||||
Current portion of secured bank loans
|
1,886
|
2,318
|
||||||
Current portion of lease liabilities
|
17,527
|
20,156
|
||||||
Current portion of long-term debt securities issued
|
311,395
|
289,738
|
||||||
Debt securities issued
|
99,999
|
74,997
|
||||||
Lease liabilities
|
357,202
|
366,845
|
||||||
7,459,191
|
7,035,909
|
The scope of the EUR 690,000 unutilized portion of the EUR 750,000 loan agreement signed with China Development Bank (CDB) has
been expanded in 2018.In this respect, in addition to Turkcell, the Company’s subsidiaries Turkcell Superonline, Turkcell Finansman and lifecell LLC will also be able to utilize the corresponding loan. Furthermore, in addition to the right to
utilize in EUR terms, relevant loan may also be utilized in USD and Renminbi (RMB) with respective annual interest rates of LIBOR + 2.2% and 5.5%.There have been no changes to maturity and the repayment schedule of the loan. As at 31 March 2019, the Company has utilized, USD 225,000 (equivalent to TL 1,266,390 as at 31 March 2019) and
EUR 35,000 (equivalent to TL 221,158 as at 31 March 2019) comparatively, under this agreement.
The Company signed a loan agreement of USD 150,000 with J.P.Morgan Chase Bank N.A., London Branch and AB Svensk
Exportkredit within the framework of the insurance of the Swedish Export Credit Agency (EKN). The availability period of the loan is until April 2021, to be utilized in three equal tranches each with a maturity of 10 years. The total annual
cost of the loan is LIBOR+2.1% for the first tranche and fixed 5.4% for the second and third tranches. As at 31 March 2019, the Company has utilized USD 50,000 (equivalent to TL 281,420 as at 31 March 2019) under this agreement.
Within the scope of buy-back decisions on 27 July 2016 and 30 January 2017, the Company purchased their debt
securities issued with a total nominal value of USD 10,000 as at 31 March 2019.
In the year 2019, the Company has approved issuance of management agreement based lease certificates in accordance
with capital markets legislation in the domestic market, in Turkish Lira terms, at an amount of up to TL 500,000, on various dates and at various amounts without public offering, as private placement and/or to be sold to institutional
investors. As at 31 March 2019, the Company has issued management greement based lease certificates through KT Sukuk Varlık Kiralama A.S. amounting to TL 100,000 (not
discounted).
One of the main reason of increase in borrowings arises from funds received by Turkcell Finansman in order to provide
loans to its customers and bond issuance.
23
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off
to the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
14. |
Loans and borrowings (continued)
|
Terms and conditions of outstanding loans are as follows:
31 March 2019
|
31 December 2018
|
||||||||||||||||||||||||||||||||||||||||||
Currency
|
Interest rate type
|
Nominal interest rate
|
Payment
period |
Carrying amount
|
Nominal interest
Rate
|
Payment period
|
Carrying amount
|
||||||||||||||||||||||||||||||||||||
Unsecured bank loans (*)
|
USD
|
Floating
|
Libor+2.0%-Libor+4.4%
|
2019-2028
|
5,966,014
|
Libor+2.0%-Libor+4.1%
|
2019-2026
|
4,589,157
|
|||||||||||||||||||||||||||||||||||
Unsecured bank loans (*)
|
EUR
|
Floating
|
Euribor+1.2%-
Euribor+3.4%
|
2019-2026
|
7,376,153
|
Euribor+1.2%-
Euribor+3.4%
|
2019-2026
|
6,975,890
|
|||||||||||||||||||||||||||||||||||
Unsecured bank loans
|
TL
|
Fixed
|
12.6%-23.9%
|
2019
|
1,205,032
|
12.6%-25.0%
|
2019
|
873,914
|
|||||||||||||||||||||||||||||||||||
Unsecured bank loans
|
UAH
|
Fixed
|
16.8%-23.0%
|
2019
|
1,071,721
|
21.5%-22.5%
|
2019
|
894,511
|
|||||||||||||||||||||||||||||||||||
Unsecured bank loans
|
RMB
|
Fixed
|
5.5%
|
2019-2026
|
214,329
|
5.5%
|
2019-2026
|
193,375
|
|||||||||||||||||||||||||||||||||||
Secured bank loans (**)
|
BYN
|
Fixed
|
12-16%
|
2019-2020
|
3,965
|
12-16%
|
2019-2020
|
4,180
|
|||||||||||||||||||||||||||||||||||
Debt securities issued
|
USD
|
Fixed
|
5.8%
|
2019-2028
|
5,519,934
|
5.8%
|
2019-2028
|
5,135,565
|
|||||||||||||||||||||||||||||||||||
Debt securities issued
|
TL
|
Fixed
|
21.8%
|
2019
|
99,999
|
24.5%
|
2019
|
74,997
|
|||||||||||||||||||||||||||||||||||
Lease liabilities
|
EUR
|
Fixed
|
1.0%-8.3%
|
2019-2031
|
178,022
|
1.0%-7.9%
|
2019-2031
|
194,645
|
|||||||||||||||||||||||||||||||||||
Lease liabilities
|
TL
|
Fixed
|
15.9%-45.0%
|
2019-2064
|
705,010
|
16.1%-45.0%
|
2019-2048
|
719,718
|
|||||||||||||||||||||||||||||||||||
Lease liabilities
|
USD
|
Fixed
|
4.0%-10.1%
|
2019-2052
|
38,881
|
3.9%-10.8%
|
2019-2027
|
40,351
|
|||||||||||||||||||||||||||||||||||
Lease liabilities
|
UAH
|
Fixed
|
16.1%-24.0%
|
2019-2068
|
442,991
|
16.6%-24.0%
|
2019-2067
|
418,390
|
|||||||||||||||||||||||||||||||||||
Lease liabilities
|
BYN
|
Fixed
|
13.0%-15.0%
|
2019-2025
|
44,819
|
12.0%-15.0%
|
2019-2028
|
40,852
|
|||||||||||||||||||||||||||||||||||
22,866,870
|
20,155,545
|
(*) |
Turkcell Finansman’s liabilities originated from banks abroad are subject to certain reserve requirements as obliged by Central Bank of the Republic of Turkey
(CBRT). As at 31 March 2019, blocked deposit in connection with the foreign currency loans utilized by Turkcell Finansman from banks outside of Turkey amounting to TL 180,870 is accounted in other current assets.
|
(**) | Belarusian Telecom pledged its certain property, plant and equipment to secure these bank loans. Also, these bank loans are secured by the Government of the Republic of Belarus. |
24
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15.
|
Derivative financial instruments
|
Fair value of derivative financial instruments at 31 March 2019 and 31 December 2018 are attributable to the
following:
31 March 2019
|
31 December 2018
|
||||
Assets
|
Liabilities
|
Assets
|
Liabilities
|
||
Held for trading
|
925,529
|
14,649
|
709,617
|
131,097
|
|
Derivatives used for hedging
|
809,215
|
-
|
730,924
|
-
|
|
Total
|
1,734,744
|
14,649
|
|
1,440,541
|
131,097
|
At 31 March 2019, total held for trading derivative financial assets also include net accrued interest expense of TL 154,137 (31
December 2018: TL 84,479) and total held for trading derivative financial liabilities include net accrued interest expense of TL 23,015 (31 December 2018: TL 34,168).
Derivatives used for hedging
Participating cross currency swap and cross currency swap contracts
The notional amount and the fair value of participating cross currency swap and cross currency swap contracts for
hedging purposes at 31 March 2019 and 31 December 2018 are as follows:
As at 31 March 2019
|
||||||
Sell
|
Buy
|
|||||
Currency
|
Notional amount
|
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
|
Participating cross currency swap contracts
|
||||||
TL
|
1,650,000
|
EUR
|
500,000
|
207,790
|
23 October 2025
|
|
TL
|
275,850
|
EUR
|
60,000
|
77,343
|
22 April 2026
|
|
TL
|
435,000
|
USD
|
150,000
|
173,036
|
16 September 2020
|
|
TL
|
293,500
|
USD
|
100,000
|
112,944
|
16 September 2020
|
|
TL
|
194,000
|
USD
|
50,000
|
47,521
|
16 September 2020
|
|
TL
|
386,500
|
USD
|
100,000
|
96,107
|
16 September 2020
|
|
TL
|
91,700
|
USD
|
20,000
|
15,573
|
22 April 2026
|
|
Cross currency swap contracts
|
||||||
TL
|
123,878
|
RMB
|
202,600
|
78,901
|
22 April 2026
|
|
Derivatives used for hedge accounting financial assets |
809,215 |
25
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15.
|
Derivative financial instruments (continued)
|
Derivatives used for hedging (continued)
Participating
cross currency swap and cross currency swap contracts (continued)
As at 31 December 2018
|
||||||
Sell
|
Buy
|
|||||
Currency
|
Notional amount
|
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
|
Participating cross currency swap contracts
|
||||||
TL
|
1,650,000
|
EUR
|
500,000
|
208,462
|
23 October 2025
|
|
TL
|
275,850
|
EUR
|
60,000
|
64,670
|
22 April 2026
|
|
TL
|
435,000
|
USD
|
150,000
|
167,116
|
16 September 2020
|
|
TL
|
293,500
|
USD
|
100,000
|
108,777
|
16 September 2020
|
|
TL
|
194,000
|
USD
|
50,000
|
39,394
|
16 September 2020
|
|
TL
|
386,500
|
USD
|
100,000
|
79,688
|
16 September 2020
|
|
TL
|
91,700
|
USD
|
20,000
|
9,234
|
22 April 2026
|
|
Cross currency swap contracts
|
||||||
TL
|
123,878
|
RMB
|
202,600
|
53,583
|
22 April 2026
|
|
Derivatives used for hedge accounting financial assets |
730,924 |
26
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Held for trading (continued)
Currency swap, cross currency swap and participating cross currency swap
contracts (continued)
The notional amount and the fair value of currency swap, participating cross currency swap and cross currency swap
contracts for trading purposes at 31 March 2019 and 31 December 2018 are as follows:
As at 31 March 2019
|
|||||||||||
Sell
|
Buy
|
||||||||||
Currency
|
Notional amount
|
|
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
|||||
Currency
Swap
|
|||||||||||
TL
|
3,801
|
USD
|
640
|
88
|
16 July 2019
|
||||||
TL
|
5,319
|
USD
|
900
|
167
|
22 July 2019
|
||||||
TL
|
217,600
|
USD
|
40,000
|
9,044
|
24 June 2019
|
||||||
TL
|
272,000
|
USD
|
50,000
|
10,521
|
26 April 2019
|
||||||
EUR
|
10,000
|
USD
|
11,310
|
522
|
30 April 2019
|
||||||
EUR
|
27,000
|
USD
|
30,426
|
766
|
30 April 2019
|
||||||
EUR
|
53,000
|
USD
|
60,129
|
3,942
|
26 April 2019
|
||||||
EUR
|
186,000
|
USD
|
211,110
|
14,474
|
24 April 2019
|
||||||
EUR
|
50,000
|
USD
|
56,375
|
1,955
|
16 April 2019
|
||||||
EUR
|
50,000
|
USD
|
56,495
|
2,769
|
10 April 2019
|
||||||
EUR
|
70,000
|
USD
|
79,275
|
4,943
|
9 April 2019
|
||||||
EUR
|
45,000
|
USD
|
51,102
|
4,144
|
2 April 2019
|
||||||
EUR
|
30,000
|
USD
|
34,170
|
3,314
|
2 April 2019
|
||||||
Cross
currency swap contracts
|
|||||||||||
TL
|
98,625
|
EUR
|
25,000
|
65,562
|
13 June 2019
|
||||||
TL
|
52,164
|
USD
|
14,620
|
33,705
|
16 July 2019
|
||||||
TL
|
69,744
|
USD
|
19,780
|
46,585
|
22 July 2019
|
||||||
TL
|
203,600
|
EUR
|
50,000
|
126,900
|
23 July 2019
|
||||||
TL
|
242,873
|
USD
|
70,500
|
198,560
|
16 September 2020
|
||||||
TL
|
97,997
|
EUR
|
21,500
|
48,371
|
19 December 2019
|
||||||
TL
|
269,451
|
USD
|
70,500
|
174,382
|
22 December 2020
|
||||||
TL
|
105,280
|
EUR
|
18,800
|
20,982
|
23 September 2021
|
||||||
TL
|
130,488
|
USD
|
24,000
|
11,317
|
20 March 2023
|
||||||
TL
|
268,200
|
USD
|
50,000
|
23,037
|
14 June 2019
|
||||||
TL
|
128,436
|
USD
|
24,000
|
11,149
|
19 June 2019
|
||||||
TL
|
6,231
|
EUR
|
1,000
|
396
|
19 December 2019
|
||||||
TL
|
84,848
|
USD
|
16,000
|
8,424
|
29 July 2019
|
||||||
TL
|
185,100
|
EUR
|
30,000
|
22,368
|
22 April 2026
|
||||||
TL
|
183,300
|
EUR
|
30,000
|
22,203
|
22 April 2026
|
||||||
Participating
cross currency swap contracts
|
|||||||||||
TL
|
193,800
|
EUR
|
30,000
|
5,150
|
16 September 2020
|
||||||
TL
|
244,000
|
EUR
|
40,000
|
20,644
|
22 April 2026
|
||||||
TL
|
263,500
|
USD
|
50,000
|
23,107
|
22 April 2026
|
||||||
Total Held for trading derivative financial assets
|
919,491
|
|
27
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Held for trading (continued)
Currency swap, cross currency swap and participating cross currency swap
contracts (continued)
As at 31 December 2018
|
||||||||
Sell
|
Buy
|
|||||||
Currency
|
Notional amount
|
|
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
||
Cross currency swap contracts
|
||||||||
TL
|
67,410
|
USD
|
18,000
|
27,928
|
28 January 2019
|
|||
TL
|
95,550
|
USD
|
25,000
|
36,751
|
24 January 2019
|
|||
TL
|
52,164
|
USD
|
14,620
|
27,870
|
16 July 2019
|
|||
TL
|
69,744
|
USD
|
19,780
|
38,636
|
22 July 2019
|
|||
TL
|
242,873
|
USD
|
70,500
|
160,594
|
16 September 2020
|
|||
TL
|
269,451
|
USD
|
70,500
|
131,437
|
22 December 2020
|
|||
TL
|
191,300
|
USD
|
50,000
|
74,095
|
13 February 2019
|
|||
TL
|
98,625
|
EUR
|
25,000
|
57,161
|
13 June 2019
|
|||
TL
|
203,600
|
EUR
|
50,000
|
109,610
|
23 July 2019
|
|||
TL
|
97,997
|
EUR
|
21,500
|
37,825
|
19 December 2019
|
|||
TL
|
105,280
|
EUR
|
18,800
|
7,710
|
23 September 2021
|
|||
Total held for trading derivative financial assets
|
709,617
|
|
As at 31 March 2019
|
|||||||
Sell
|
Buy
|
||||||
Currency
|
Notional amount
|
|
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
|
Participating
cross currency swap contracts
|
|||||||
TL
|
113,400
|
USD
|
20,000
|
(4,067)
|
22 April 2026
|
||
Cross
currency swap contracts
|
|||||||
TL
|
118,800
|
EUR
|
18,000
|
(6,072)
|
23 September 2021
|
||
TL
|
151,776
|
EUR
|
24,000
|
628
|
9 April 2019
|
||
Option
contracts
|
|||||||
USD
|
5,000
|
XAU
|
3,937
|
(22)
|
10 June 2019
|
||
USD
|
5,000
|
XAU
|
3,968
|
(67)
|
8 May 2019
|
||
USD
|
5,000
|
XAU
|
3,984
|
(193)
|
8 April 2019
|
||
EUR
|
20,000
|
TL
|
126,000
|
(376)
|
1 April 2019
|
||
Total Held for trading derivative financial liabilities
|
(10,169)
|
|
28
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Held for trading (continued)
Currency swap, cross currency swap and participating cross currency swap
contracts (continued)
As at 31 December 2018
|
||||||
Sell
|
Buy
|
|||||
Currency
|
Notional amount
|
|
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
Currency
Swap
|
||||||
TL
|
266,760
|
USD
|
50,000
|
(3,715)
|
2 January 2019
|
|
TL
|
266,510
|
USD
|
50,000
|
(3,465)
|
2 January 2019
|
|
TL
|
719,996
|
USD
|
135,000
|
(9,774)
|
2 January 2019
|
|
TL
|
212,736
|
USD
|
40,000
|
(2,300)
|
2 January 2019
|
|
TL
|
265,925
|
USD
|
50,000
|
(2,880)
|
2 January 2019
|
|
TL
|
1,366
|
USD
|
253
|
(48)
|
19 March 2019
|
|
TL
|
4,199
|
USD
|
680
|
(939)
|
16 January 2019
|
|
TL
|
5,681
|
USD
|
920
|
(1,277)
|
22 January 2019
|
|
TL
|
6,040
|
EUR
|
1,000
|
(41)
|
2 January 2019
|
|
USD
|
68,654
|
EUR
|
60,000
|
(861)
|
15 January 2019
|
|
USD
|
11,462
|
EUR
|
10,000
|
(4)
|
8 January 2019
|
|
Cross currency swap contracts
|
||||||
TL
|
6,159
|
USD
|
1,000
|
(912)
|
28 January 2019
|
|
TL
|
6,159
|
USD
|
1,000
|
(910)
|
24 January 2019
|
|
TL
|
130,488
|
USD
|
24,000
|
(9,365)
|
20 March 2023
|
|
TL
|
268,200
|
USD
|
50,000
|
(5,791)
|
14 June 2019
|
|
TL
|
128,436
|
USD
|
24,000
|
(2,652)
|
19 June 2019
|
|
TL
|
169,368
|
EUR
|
24,000
|
(24,895)
|
8 January 2019
|
|
TL
|
118,800
|
EUR
|
18,000
|
(22,051)
|
23 September 2021
|
|
TL
|
111,732
|
EUR
|
18,867
|
1,920
|
14 February 2019
|
|
TL
|
185,100
|
EUR
|
30,000
|
(8,296)
|
22 April 2026
|
|
TL
|
183,300
|
EUR
|
30,000
|
(8,642)
|
22 April 2026
|
|
Participating cross currency swap contracts
|
||||||
TL
|
193,800
|
EUR
|
30,000
|
(7,148)
|
16 September 2020
|
|
TL
|
113,400
|
USD
|
20,000
|
(17,051)
|
22 April 2026
|
|
Total Held for trading derivative financial liabilities
|
(131,097)
|
|
29
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Held for trading (continued)
Currency forward contracts
The notional amount and the fair value of currency forward contracts for trading purposes at 31 March 2019 are as
follows:
Buy
|
||||
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
|
USD
|
10,000
|
428
|
29 August 2019
|
|
USD
|
35,000
|
3,965
|
22 April 2019
|
|
USD
|
15,000
|
1,645
|
22 April 2019
|
|
Total Held for trading derivative financial assets
|
6,038
|
Buy
|
||||||
Currency
|
Notional amount
|
Fair Value
|
Maturity
|
|||
USD
|
10,000
|
(477)
|
29 August 2019
|
|||
USD
|
10,000
|
(247)
|
29 August 2019
|
|||
USD
|
25,000
|
(3,756)
|
9 April 2019
|
|||
Total Held for
trading derivative financial liabilities |
(4,480) |
30
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Fair value of derivative instruments and risk management
This section explains the judgements and estimates made in determining the fair values of the financial instruments
that are recognized and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels
prescribed under the accounting standards. An explanation of each level is as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
Fair values
|
|||||||
31 March
2019 |
31 December
2018 |
Fair Value hierarchy
|
Valuation Techniques
|
||||
a)Participating cross currency swap contracts (*)
|
775,148
|
653,142
|
Level 3
|
Pricing models based on discounted cash Present value of the estimated future cash flows based on unobservable
yield curves and end period FX rates
|
|||
-Held for trading
|
44,834
|
(24,199)
|
|||||
-Derivatives used for
hedging
|
730,314
|
677,341
|
|||||
b)FX swap and option contracts
|
943,389
|
656,302
|
Level 2
|
Present value of the estimated future cash flows based on observable yield curves and end period FX rates
|
|||
-Held for trading
|
864,488
|
602,719
|
|||||
-Derivatives used for
hedging
|
78,901
|
53,583
|
|||||
c)Currency forward
contracts
|
1,558
|
-
|
Level 2
|
Forward exchange rates at the balance sheet date
|
|||
-Held for trading
|
1,558
|
-
|
|||||
(*) TL 177,152 accrual of net interest expense has been reflected to condensed consolidated interim financial statements as at 31 March
2019 (31 December 2018: TL 118,647). Since bid-ask spread is unobservable input; in valuation of participating cross currency swap contracts, prices in bid-ask price range which were considered the most appropriate were used instead of mid prices. If
mid prices were used in the valuation the fair value of participating cross currency swap contracts would have been TL 23,555 lower as at 31 March 2019 (31 December 2018: TL 123,995).
There were no transfers between fair value hierarchy levels during the year.
31
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Fair value of derivative instruments and risk management (continued)
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 31 March 2019 and
31 December 2018 on a hedge accounting basis:
Currency
|
|
Nominal Value
|
|
Maturity Date
|
|
31 March
2019
|
|
31 December
2018
|
|
Fair Value hierarchy
|
|
Hedge Ratio
|
Participating cross currency swap contracts
|
||||||||||||
EUR Contracts
|
500,000
|
23 October 2025
|
207,790
|
208,462
|
Level 3
|
1:1
|
||||||
EUR Contracts
|
60,000
|
22 April 2026
|
77,343
|
64,670
|
Level 3
|
1:1
|
||||||
USD Contracts
|
400,000
|
16 September 2020
|
429,608
|
394,975
|
Level 3
|
1:1
|
||||||
USD Contracts
|
20,000
|
22 April 2026
|
15,573
|
9,234
|
Level 3
|
1:1
|
||||||
Cross currency swap contracts
|
||||||||||||
CNY Contracts
|
202,600
|
22 April 2026
|
78,901
|
53,583
|
Level 2
|
1:1
|
32
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
15. |
Derivative financial instruments (continued)
|
Fair value of derivative instruments and risk management (continued)
Movements in the participating cross currency swap contracts for the years ended 31 March 2019 is stated below:
31 March 2019
|
|
Opening balance
|
653,142
|
Cash flow effect
|
(54,647)
|
Total gain/loss:
|
|
Gains recognized in profit or loss
|
176,653
|
Closing balance
|
775,148
|
Net off / Offset
The Company signed a Credit Support Annex (CSA) against default risk of the parties in respect of a EUR 500,000
participating cross currency swap transaction executed on 15 July 2016 and restructured respectively on 26 May 2017 and 9 August 2018. As per the CSA, the swap’s current (mark-to-market) value will be determined on the 10th and 24th calendar day
of each calendar month and if the mark-to-market value is positive and exceeds a certain threshold, the bank will be posting cash collateral to the Company which will be equal to an amount exceeding the threshold (i.e. if the mark-to-market value
is negative, the Company would be required to post collateral to the bank by an amount exceeding the threshold).
With respect to the valuations on a bi-weekly basis, a transfer will take place between the parties only if the
mark-to-market value changes by at least EUR 1,000. Following the execution of CSA, the bank transferred EUR 166,360 as collateral to the Company (31 March 2019: TL 1,051,196) which was the amount exceeding the threshold (EUR 10,000) and the
Company transferred EUR 43,130 as collateral to the bank (31 March 2019: TL 272,530) which was the amount exceeding the threshold (EUR 10,000). The Company clarified this with
the derivative assets included in the statement of financial position because it has the legal right to offset the collateral amount TL 778,666 that it recognizes under the borrowings and intends to pay according to the net fair value. This
amount was netted from the borrowings and deducted from the derivative instruments in the balance sheet. As of 31 March 2019, if this transaction was not conducted, derivative financial instruments assets would have been TL 2,359,273 and current
borrowings would have been TL 8,237,857.
33
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
16. |
Financial instruments
|
Impairment losses
Movements in the provision for impairment of trade receivables and due from related parties are as follows:
31 March 2019
Contract Asset
|
31 March 2019
Other Asset |
|||||||
Opening balance
|
7,370
|
730,811
|
||||||
Provision for impairment recognized during the year
|
30
|
64,168
|
||||||
Amounts collected
|
-
|
(25,805
|
)
|
|||||
Receivables written off during the year as uncollectible
|
-
|
(29,841
|
)
|
|||||
Exchange differences
|
-
|
3,983
|
||||||
Closing balance
|
7,400
|
743,316
|
Movements in the provision for impairment of receivables from financial services are as follows:
31 March
2019
|
||||
Opening balance
|
200,273
|
|||
Provision for impairment recognized during the year
|
59,776
|
|||
Amounts collected
|
(27,834
|
)
|
||
Closing balance
|
232,215
|
34
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
16. |
Financial instruments (continued)
|
Foreign exchange risk
The Group’s exposure to foreign exchange risk at the end of the reporting period, based on notional amounts, was as
follows:
31 December 2018
|
||||||||||||
USD
|
EUR
|
RMB
|
||||||||||
Foreign currency denominated assets
|
||||||||||||
Other non-current assets
|
222
|
11
|
-
|
|||||||||
Financial asset at fair value through other comprehensive income
|
-
|
7,043
|
-
|
|||||||||
Due from related parties-current
|
1,965
|
223
|
-
|
|||||||||
Trade receivables and contract assets
|
15,786
|
52,140
|
-
|
|||||||||
Other current assets
|
70,710
|
18,977
|
-
|
|||||||||
Cash and cash equivalents
|
786,322
|
384,800
|
-
|
|||||||||
875,005
|
463,194
|
-
|
||||||||||
Foreign currency denominated liabilities
|
||||||||||||
Loans and borrowings-non current
|
(481,438
|
)
|
(748,142
|
)
|
(224,519
|
)
|
||||||
Debt securities issued-non- current
|
(921,102
|
)
|
-
|
-
|
||||||||
Lease obligations-non-current
|
(4,719
|
)
|
(24,068
|
)
|
-
|
|||||||
Other non-current liabilities
|
(68,107
|
)
|
-
|
-
|
||||||||
Loans and borrowings-current
|
(390,876
|
)
|
(523,595
|
)
|
(29,244
|
)
|
||||||
Debt securities issued-current
|
(55,074
|
)
|
-
|
-
|
||||||||
Lease obligations-current
|
(2,951
|
)
|
(8,223
|
)
|
-
|
|||||||
Trade and other payables-current
|
(233,805
|
)
|
(32,946
|
)
|
(70,553
|
)
|
||||||
Due to related parties
|
(686
|
)
|
(52
|
)
|
-
|
|||||||
(2,158,758
|
)
|
(1,337,026
|
)
|
(324,316
|
)
|
|||||||
Exposure related to derivative instruments
|
1,082,036
|
811,167
|
202,600
|
|||||||||
Net exposure
|
(201,717
|
)
|
(62,665
|
)
|
(121,716
|
)
|
35
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
16. |
Financial instruments (continued)
|
Foreign exchange risk (continued)
31 March 2019
|
||||||||||||
USD
|
EUR
|
RMB
|
||||||||||
Foreign currency denominated assets
|
||||||||||||
Other non-current assets
|
69
|
11
|
-
|
|||||||||
Financial asset at fair value through other comprehensive income
|
297
|
22,397
|
-
|
|||||||||
Due from related parties-current
|
1,864
|
353,061
|
-
|
|||||||||
Trade receivables and contract assets
|
17,576
|
47,887
|
-
|
|||||||||
Other current assets
|
25,328
|
12,870
|
-
|
|||||||||
Cash and cash equivalents
|
551,563
|
733,612
|
-
|
|||||||||
596,697
|
1,169,838
|
-
|
||||||||||
Foreign currency denominated liabilities
|
||||||||||||
Loans and borrowings-non current
|
(716,490
|
)
|
(775,700
|
)
|
(227,595
|
)
|
||||||
Debt securities issued-non-current
|
(925,403
|
)
|
-
|
-
|
||||||||
Lease obligations-non-current
|
(4,230
|
)
|
(21,557
|
)
|
-
|
|||||||
Other non-current liabilities
|
(72,542
|
)
|
-
|
-
|
||||||||
Loans and borrowings-current
|
(343,494
|
)
|
(514,865
|
)
|
(29,641
|
)
|
||||||
Debt securities issued-current
|
(55,326
|
)
|
-
|
-
|
||||||||
Lease obligations-current
|
(2,678
|
)
|
(6,616
|
)
|
-
|
|||||||
Trade and other payables-current
|
(141,819
|
)
|
(25,450
|
)
|
(91,337
|
)
|
||||||
Due to related parties
|
(1,017
|
)
|
(54
|
)
|
-
|
|||||||
(2,262,999
|
)
|
(1,344,242
|
)
|
(348,573
|
)
|
|||||||
Exposure related to derivative instruments
|
1,514,474
|
401,300
|
202,600
|
|||||||||
Net exposure
|
(151,828
|
)
|
226,896
|
(145,973
|
)
|
36
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
16.
|
Financial instruments (continued)
|
Exposure to currency risk (continued)
Sensitivity analysis
The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The
aggregate foreign exchange exposure is composed of all assets and liabilities denominated in foreign currencies, the analysis
excludes net foreign currency investments.
10% strengthening/weakening of the TL, UAH and BYN against the following currencies at 31 March 2019 and 31 December 2018 would
have increased/ (decreased) profit or loss before by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
Sensitivity analysis
|
||||
31 March 2019
|
||||
|
Profit/(Loss)
|
Equity
|
||
|
Appreciation of foreign currency
|
Depreciation of foreign currency
|
Appreciation of foreign currency
|
Depreciation of foreign currency
|
1- USD net asset/liability
|
(85,455)
|
85,455
|
-
|
-
|
2- Hedged portion of USD risk (-)
|
-
|
-
|
(10,680)
|
10,680
|
3- USD net effect (1+2)
|
(85,455)
|
85,455
|
(10,680)
|
10,680
|
4- EUR net asset/liability
|
143,372
|
(143,372)
|
-
|
-
|
5- Hedged portion of EUR risk (-)
|
-
|
-
|
(27,138)
|
27,138
|
6- EUR net effect (4+5)
|
143,372
|
(143,372)
|
(27,138)
|
27,138
|
7- Other foreign currency net asset/liability (RMB)
|
(12,163)
|
12,163
|
-
|
-
|
8- Hedged portion of other foreign currency risk (-) (RMB)
|
-
|
-
|
1,454
|
(1,454)
|
9- Other foreign currency net effect (7+8)
|
(12,163)
|
12,163
|
1,454
|
(1,454)
|
Total (3+6+9)
|
45,754
|
(45,754)
|
(36,364)
|
36,364
|
Sensitivity analysis
|
||||
31 December 2018
|
||||
|
Profit/(Loss)
|
Equity
|
||
|
Appreciation of foreign currency
|
Depreciation of foreign currency
|
Appreciation of foreign currency
|
Depreciation of foreign currency
|
1- USD net asset/liability
|
(106,121)
|
106,121
|
-
|
-
|
2- Hedged portion of USD risk (-)
|
-
|
-
|
(9,596)
|
9,596
|
3- USD net effect (1+2)
|
(106,121)
|
106,121
|
(9,596)
|
9,596
|
4- EUR net asset/liability
|
(37,775)
|
37,775
|
-
|
-
|
5- Hedged portion of EUR risk (-)
|
-
|
-
|
(23,613)
|
23,613
|
6- EUR net effect (4+5)
|
(37,775)
|
37,775
|
(23,613)
|
23,613
|
7- Other foreign currency net asset/liability (RMB)
|
(9,275)
|
9,275
|
-
|
-
|
8- Hedged portion of other foreign currency risk (-) (RMB)
|
-
|
-
|
364
|
(364)
|
9- Other foreign currency net effect (7+8)
|
(9,275)
|
9,275
|
364
|
(364)
|
Total (3+6+9)
|
(153,171)
|
153,171
|
(32,845)
|
32,845
|
37
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
16. |
Financial instruments (continued)
|
Fair values
Valuation inputs and relationships to fair value
The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair
value measurement of contingent consideration,
Fair value at
|
Inputs
|
||||||||||
31 March 2019
|
31 December 2018
|
Unobservable
Inputs
|
31 March 2019
|
31 December 2018
|
Relationship of unobservable inputs to fair value
|
||||||
Contingent consideration
|
408,295
|
358,304
|
Risk-adjusted discount rate
|
8,4%
|
9,5%
|
A change in the discount rate by 100 bps would increase/decrease FV by TL (14,742) and TL 15,438 respectively.
|
|||||
Expected settlement date
|
first quarter of 2023
|
first quarter of 2023
|
If expected settlement date changes by 1 year FV would increase/decrease by TL (31,548) and TL 34,093
respectively.
|
Changes in the consideration payable in relation to acquisition of Belarusian
Telecom for the years ended 31 March 2019 is stated below:
2019
|
||||
Opening balance
|
358,304
|
|||
Gains recognized in profit or loss
|
49,991
|
|||
Closing balance
|
408,295
|
38
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
17. Guarantees and purchase obligations
At 31 March 2019, outstanding purchase commitments with respect to property, plant and equipment,
inventory, advertising and sponsorship amount to TL 1,580,102 (31 December 2018: TL 1,353,789). Payments for these commitments will be made within 4 years.
The Group is contingently liable in respect of letters of guarantee obtained from banks and given
to public institutions and private entities, and financial guarantees provided to subsidiaries amounting to TL 6,268,827 at 31 March 2019 (31 December 2018: TL 6,530,374).
18. Commitments and
contingencies
18.1 |
Disputes on Special Communication Tax and Value Added Tax
|
a) |
Disputes on SCT for the year 2011
|
Large Tax Payers Office levied Special Communication Tax (SCT) and tax penalty on the Company as a result of the Tax
Investigation for the year 2011. The Company filed lawsuits for the cancellation of the notification regarding the aforementioned SCT assessment. The court partially accepted and partially rejected the cases and the parties appealed the decisions
regarding the parts against them. The Large Tax Payers Office has collected TL 80,355 calculated for the parts against the Company for the assessment of the SCT for the year 2011 by offsetting the receivables of the Company from Public
Administrations.
As per the Law no. 6736, the Company filed applications for the restructuring of penalties and interest on the SCT
regarding the dispute on the tax, while the cases are pending before the court of appeal. Tax Office rejected the application for the year 2011. The Company also filed a case for the cancellation of aforementioned rejection act of the Tax Office
for the year 2011. The case is pending as well as the cases regarding the cancellation of the SCT assessment for the year 2011.
b) |
Disputes on SCT and VAT for the years 2015 and 2016
|
Turkish telecom sector players including Turkcell has been subjected to a limited tax audit with respect from VAT and SCT
for 2015 and 2016. At the end of the tax audit process for the Company no issues to be criticized were identified for 2015. However, some of bundle offers and some services offered by the Company are subjected to criticism by tax authority for
2016.
As of 31 March 2019, respectively tax claims arising from SCT and VAT amounting to TL 134,537 and TL 113,367 including
the principal and penalty amounts have been notified to the Company. Administrative process has been initiated in accordance with the relevant legislation while reserving right to take legal action.
Based on the management opinion, an outflow of resources embodying economic benefits is deemed to be less than probable,
thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 31 March 2019 (31 December 2018: None).
18.2 |
Disputes regarding the Law on the Protection of Competition
|
The investigation initiated by the Competition Board with respect to the practices of the Company regarding the
distributors and their dealers in the distribution network. With this decision The Competition Board rejected the claims that Turkcell determined the resale price. But with the same decision, The Competition Board decided to apply administrative
fine on the Company amounting to TL 91,942, on the ground that Turkcell forced its sub dealers to actual exclusivity. The Company filed a lawsuit for the stay of execution and cancellation of the aforementioned Board decisions regarding the parts
against itself. The Court rejected the case. The Company appealed the decision with the request of the stay of the execution. The appeal process is pending.
39
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the nearest
thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
18. Commitments and contingencies
(continued)
18.2 |
Disputes regarding the Law on the Protection of Competition (continued)
|
Three private companies filed a lawsuits against the Company in relation with this case claiming in total of TL 112,084
together with up to 3 times of the loss amount to be determined by the court for its material damages by reserving its rights for surpluses allegedly. The cases are still pending.
On the other hand, a lawsuit was filed by a third party, for the cancellation of the part of the aforementioned
Competition Board decision, regarding the rejection of the claims that Turkcell determined the resale price. The Council of State cancelled this part of the aforementioned Competition Board decision. Therewith Competition Board launched a new
investigation. As a result of the new investigation The Competition Board decided to apply administrative fine amounting to TL 91,942 on the Company. After the receiving of the reasoned decision, the Company will take legal action.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain,
thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 31 March 2019 (31 December 2018: None).
18.3 |
Ministry of Trade Administrative Fine
|
Ministry of Trade prepared a report upon the investigation initiated against the Company on subscriber agreements,
distance contracts, value added services and commitment campaigns including device procurement for the year 2015. The Company filed a lawsuit for the stay of execution and cancellation of the Notice of Administrative Fine imposed by Istanbul
Governorship Directorate of Commerce based to the aforementioned report of the Ministry, amounting to TL 138,173 and the Decision of Administrative Fine of Istanbul Governorship Directorate of Commerce. Furthermore, the Company demanded the Court
to recourse to the Constitutional Court for the cancellation of the related part of the 19th paragraph of the article 77 of the Law on the Protection of Consumers numbered 6502. The Court rejected the stay of execution request of the Company. The
Company objected to the decision, objection was rejected. Case is pending.
Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain,
thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 31 March 2019 (31 December 2018: None).
18.4 |
Other ongoing lawsuits and tax investigations
|
Within condensed consolidated interim financial statements prepared as of 31 March 2019, obligations which are related
to following ongoing disputes have been evaluated.
Subject
|
31 March 2019
Anticipated Maximum
Risk
(excluding accrued
interest)
|
31 December 2018
Anticipated Maximum
Risk
(excluding accrued
interest)
|
31 March 2019
Provision
|
31 December 2018
Provision
|
Disputes related with ICTA
|
13,367
|
13,367
|
-
|
-
|
The Company is under tax investigation with respect to application of the Turkish Special Communication Tax to prepaid TL/card sales
made via its sales channels for the years 2015, 2016 and 2017. Investigation has been started on December 2018. Closing minutes of the tax investigation has been signed for 2015 fiscal year. Meeting with the Tax Authority has been held on 18 April
2019 in Ankara related to tax investigation report for 2015 fiscal year and final result of the investigation has not been declared to the Company yet.
40
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to
the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
18. Commitments
and contingencies (continued)
18.4 |
Other ongoing lawsuits and tax investigations (continued)
|
In addition following tax and treasury share investigations have started in the Company: (i)
for 2017 fiscal year with regard to SCT, (ii) 2018 fiscal year with regard to SCT, Corporate Income Tax and Value Added Tax, (iii) treasury share investigation with regard to 2018 October-December period.
Based on the management opinion, an outflow of resources embodying economic benefits is deemed
to be less than probable, thus, no provision is recognized in the condensed consolidated interim financial statements as at and for the period ended 31 March 2019 (31 December 2018: None).
19. Related
parties
Transactions with key management personnel
Key management personnel comprise of the Group’s members of the Board of Directors and chief officers.
There are no loans to key management personnel as of 31 March 2019 and 2018.
The Group provide additional benefits to key management personnel and contribution to retirement plans based on a
pre-determined ratio of compensation.
31 March
2019 |
31 March
2018 |
||
Short-term benefits (*)
|
23,977
|
16,030
|
|
Termination and other benefits
|
49,471
|
34
|
|
Long-term benefits
|
150
|
104
|
|
73,598
|
16,168
|
(*) Includes share-based payment.
Transactions with related parties
The following transactions occurred with related parties:
Three months ended
31 March |
||||||||
Revenue from related parties
|
2019
|
2018
|
||||||
Sales to Sonera Holding
B.V
|
||||||||
Revenue from sales of discontinued operations
|
772,436
|
-
|
||||||
Sales to Kyivstar GSM JSC (“Kyivstar”)
|
||||||||
Telecommunications services
|
11,918
|
8,673
|
||||||
Sales to Vimpelcom OJSC
(“Vimpelcom”)
|
||||||||
Telecommunications services
|
972
|
1,252
|
||||||
Sales to Telia Sonera
International Carrier AB (“Telia”)
|
||||||||
Telecommunications services
|
618
|
3,055
|
||||||
Sales to other related
parties
|
403
|
2,084
|
||||||
786,347
|
15,064
|
41
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed
in the condensed consolidated interim financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
19. |
Related parties (continued)
|
Transactions with related parties
Three months ended 31 March
|
||||||||
Related party expenses
|
2019
|
2018
|
||||||
Charges from Kyivstar
|
||||||||
Telecommunications services
|
18,064
|
13,635
|
||||||
Charges from Telia
|
||||||||
Telecommunications services
|
430
|
1,651
|
||||||
Charges from Vimpelcom
|
||||||||
Telecommunications services
|
603
|
850
|
||||||
Charges from other related parties
|
1,134
|
3,487
|
||||||
20,231
|
19,623
|
42
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
20. |
Subsidiaries
|
The Group’s ultimate parent company is Turkcell Holding, Subsidiaries, associates and a joint venture of the Company as
at 31 March 2019 and 31 December 2018 are as follows:
Effective Ownership Interest
|
||||
Subsidiaries
|
Country of
|
31 March
|
31 December
|
|
Name
|
Incorporation
|
Business
|
2019 (%)
|
2018 (%)
|
Kibris Telekom
|
Turkish Republic of Northern Cyprus
|
Telecommunications
|
100
|
100
|
Turkcell Global Bilgi
|
Turkey
|
Customer relations and human resources management
|
100
|
100
|
Turktell
|
Turkey
|
Information technology, value
added GSM services and entertainment investments
|
100
|
100
|
Turkcell Superonline
|
Turkey
|
Telecommunications, television services and content services
|
100
|
100
|
Turkcell Satis
|
Turkey
|
Sales, delivery and digital sales services
|
100
|
100
|
Eastasia
|
Netherlands
|
Telecommunications investments
|
100
|
100
|
Turkcell Teknoloji
|
Turkey
|
Research and development
|
100
|
100
|
Global Tower
|
Turkey
|
Telecommunications infrastructure
business
|
100
|
100
|
Rehberlik
|
Turkey
|
Directory Assistance
|
100
|
100
|
Lifecell Ventures
|
Netherlands
|
Telecommunications investments
|
100
|
100
|
Beltel
|
Turkey
|
Telecommunications investments
|
100
|
100
|
Turkcell Gayrimenkul
|
Turkey
|
Property investments
|
100
|
100
|
Global LLC
|
Ukraine
|
Customer relations management
|
100
|
100
|
UkrTower
|
Ukraine
|
Telecommunications infrastructure
business
|
100
|
100
|
Turkcell Europe
|
Germany
|
Telecommunications
|
100
|
100
|
Turkcell Odeme
|
Turkey
|
Payment services and e-money license
|
100
|
100
|
lifecell
|
Ukraine
|
Telecommunications
|
100
|
100
|
Turkcell Finansman
|
Turkey
|
Consumer financing services
|
100
|
100
|
Beltower
|
Republic of Belarus
|
Telecommunications Infrastructure business
|
100
|
100
|
Turkcell Enerji
|
Turkey
|
Electricity energy trade and wholesale and retail electricity sales
|
100
|
100
|
Paycell
|
Ukraine
|
Consumer financing services
|
100
|
100
|
Lifecell Digital
|
Turkish Republic of
Northern Cyprus |
Telecommunications
|
100
|
100
|
TÖFAŞ
|
Turkey
|
Interest free consumer financing services
|
100
|
100
|
Turkcell Sigorta
|
Turkey
|
Insurance agency activities
|
100
|
100
|
Belarusian Telecom
|
Republic of Belarus
|
Telecommunications
|
80
|
80
|
Lifetech
|
Republic of Belarus
|
Information technology, programming and technical support
|
80
|
80
|
Inteltek
|
Turkey
|
Information and Entertainment Services
|
55
|
55
|
Effective
Ownership Interest
|
||||
Associates
|
Country of
|
31 March
|
31 December
|
|
Name
|
Incorporation
|
Business
|
2019 (%)
|
2018 (%)
|
Fintur
|
Netherlands
|
Telecommunications investments
|
-
|
41
|
Türkiye’nin Otomobili
|
Turkey
|
Electric passenger car development, production and trading activities
|
19
|
19
|
Effective
Ownership Interest
|
||||
Joint Venture
|
Country of
|
31 March
|
31 December
|
|
Name
|
Incorporation
|
Business
|
2019 (%)
|
2018 (%)
|
Sofra
|
Turkey
|
Meal coupons and cards
|
33
|
33
|
43
TURKCELL ILETISIM HIZMETLERI AS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at and for the three months ended 31 March 2019
(All amounts disclosed in the condensed consolidated interim financial statements and notes have been rounded off to the
nearest thousand currency units and are expressed in Turkish Liras unless otherwise stated.)
21. |
Subsequent events
|
The transfer of total shareholding in
Fintur to Sonera Holding completed on 2 April 2019. The final value of the transaction is realized as EUR 352,851. As the conditions precedent required for the share transfer have been completed within the three months period ended 31
March 2019, gain on sale of the associate, amounting to TL 772,436 has been recognized under profit from discounting operations in the condensed consolidated interim financial statements.
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Turkcell Iletisim Hizmetleri A.S.
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TURKCELL ILETISIM HIZMETLERI A.S.
|
||
Date: May 8, 2019
|
By:
|
/s/ Zeynel Korhan Bilek
|
Name:
|
Zeynel Korhan Bilek
|
|
Title:
|
Treasury & Capital Markets Management Director
|
TURKCELL ILETISIM HIZMETLERI A.S.
|
||
Date: May 8, 2019
|
By:
|
/s/ Osman Yilmaz
|
Name:
|
Osman Yilmaz
|
|
Title:
|
Chief Financial Officer
|
TURKCELL ILETISIM HIZMETLERI A.S.
|
||
Date: May 8, 2019
|
By:
|
/s/ Kamil Kalyon
|
Name:
|
Kamil Kalyon
|
|
Title:
|
Reporting Director
|
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPS Releases 1Q 2024 Earnings
- Neo-Concept International Group Holdings Limited Announces Pricing of Initial Public Offering and Listing on Nasdaq
- LKQ Corporation Announces Results for First Quarter 2024
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!