Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) (BIST:TCELL):
  • 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.
  • As previously announced, starting from Q115, we now have three reporting segments:
    • "Turkcell Turkey" which comprises all of our telecom related businesses in Turkey (as used in our previous releases, this term covered only 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.
    • "Turkcell International" which comprises all of our telecom related businesses outside of Turkey.
    • "Other subsidiaries" which is mainly comprised of our information and entertainment services, call center business revenues and inter-business eliminations. Call centers were previously included in Turkcell Turkey but are, with effect from the fourth quarter of 2015, now included in "Other subsidiaries". We have made this change because we believe that our third party call center revenues are not telecom related. 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 December 31, 2015 refer to the same item as at December 31, 2014. For further details, please refer to our consolidated financial statements and notes as at and for December 31, 2015, which can be accessed via our website in the investor relations section ( www.turkcell.com.tr).
  • With effect from Q4 2015, our financial statements will be presented in TRY only, the currency in which we recognize the majority of our revenues and expenses. We will no longer present financial statements in USD. This change will allow us align our Turkish and US reporting.
  • In the tables used in this press release totals may not foot due to rounding differences. The same applies for the calculations in the text.
  • Year-on-year percentage comparisons appearing in this press release reflect mathematical calculation.

HIGHLIGHTS

FULL YEAR
  • In 2015 we delivered on our guidance for revenue growth, EBITDA 1 margin and Capex.
  • Turkcell Turkey and Turkcell Group both registered record full year revenue and EBITDA.
  • Turkcell Turkey revenues, comprising 90% of Group revenues, grew by 9.5% to TRY11,481 million (TRY10,480 million) with a 1.0pp increase in EBITDA margin to 32.7% (31.7%).
    • Turkcell Turkey proforma net income 2 rose by 17.9% to TRY2,256 million (TRY1,913 million). Net income as per IFRS rose by 3.3% to TRY2,484 million (TRY2,406 million).
  • Group revenues rose by 6.0% to TRY12,769 million (TRY12,044 million) with EBITDA 1 reaching TRY4,141 million (TRY3,762 million) on 10.1% growth. This led to a 1.2pp higher EBITDA margin of 32.4% (31.2%) marking the highest full year EBITDA margin print of the past five years.
    • Group proforma net income 2 increased by 18.3% to TRY2,590 million (TRY2,190 million). Group net income as per IFRS rose by 10.9% to TRY2,068 million (TRY1,865 million).
  • Turkcell International revenues, constituting 7% of Group revenues, were at TRY856 million (TRY1,138 million), reflecting yearly currency devaluations in our countries of operation and the decline in Turkcell Europe revenues due to change in business model, while the EBITDA margin was up by 4.0pp to 28.7% (24.7%), reflecting cost-efficiencies.

FOURTH QUARTER 2015
  • Turkcell Turkey and Turkcell Group registered record high fourth quarter revenue and EBITDA.
  • Turkcell Turkey revenues increased by 10.1% to TRY2,998 million (TRY2,723 million) driven by the growth in mobile and fixed broadband, as well as services and solutions revenues.
  • Turkcell Turkey's EBITDA margin rose notably by 2.1pp to 31.9% (29.8%) due to efficiency measures and a focus on higher value generating customers.
  • Turkcell Turkey proforma net income 2 rose by 26.0% to TRY564 million (TRY448 million). Turkcell Turkey net income as per IFRS was at TRY518 million (TRY583 million).
  • Group revenues rose by 7.5% to TRY3,334 million (TRY3,103 million) with EBITDA increasing 15.4% to TRY1,058 million (TRY917 million), leading to a solid EBITDA margin rise of 2.1pp to 31.7% (29.6%).
    • Group proforma net income 2 rose by 28.7% to TRY671 million (TRY521 million). Group net income as per IFRS rose by 126.5% to TRY584 million (TRY258 million).
  • Turkcell International revenues stood at TRY224 million (TRY254 million), reflecting the impact of yearly currency devaluations, while the EBITDA margin ramped up significantly by 5.6pp to 30.2% (24.6%).

(1) EBITDA is a non-GAAP financial measure. See page 18 for the reconciliation and the explanation of how we calculate Adjusted EBITDA to net income.(2) We use "proforma net income" as a means of presenting our income net of certain non-operating items and items that we believe are non-recurring. We define "proforma net income" in this document as Net Income excluding FX Gain / (Loss) (including tax and minority impact), monetary Gain (inflation impact), interest Income on time deposits of Turkcell Iletisim Hizmetleri, one -off items. One-off items are detailed below. Please note that this is a non-GAAP measure and that we may in future presentations change the scope of items that we deduct from net income to arrive at "proforma net income."(*) For further details, please refer to our consolidated financial statements and notes as at and for December 31, 2015 which can be accessed via our web site in the investor relations section ( www.turkcell.com.tr).

COMMENTS FROM CEO, KAAN TERZIOGLU

Record Growth through Data and Digital Services

We concluded the year of 2015 having accomplished all of our targets with an improving performance every quarter. We recorded historic high revenue and EBITDA, as both Turkcell Turkey and Turkcell Group. Turkcell Turkey, generating 90% of Group revenues, grew 9.5% with an EBITDA margin of 32.7%. Turkcell Group revenues rose 6.0% yearly to TRY12.8 billion with EBITDA reaching TRY4.1 billion, while the EBITDA margin rose 1.2 percentage points to 32.4%. Proforma Group net income 1 increased 18.3% to TRY2.6 billion whereas net income as per IFRS was at TRY2.1 billion. We ended the year with 20% operational capex over sales ratio. Over the next three years, we have planned to accelerate our investments through a total investment of around TRY13 billion including 4.5G license payable.

2015 was a year where we set the medium term targets for Turkcell and took bold steps towards achieving them on the back of harmonious work between our Board of Directors, executive team and our employees.

With a view to creating greater value for our shareholders, we first completed the organizational change in order to position Turkcell as a converged communications and technology services company. For a more efficient balance sheet, we increased our stake in lifecell, our subsidiary in Ukraine to 100%; restructured the debt of our subsidiaries; established a consumer finance company and raised USD2.9 billion in funds at favorable terms having secured an investment grade from three rating agencies. Moreover, having purchased the highest number of frequencies at the 4.5G spectrum tender, we have solidified our leadership in terms of the superior network.

Before the year was over, we reached an agreement with Turk Telekom to mutually settle the numerous disputes to eliminate potential risks. Furthermore, we invited all stakeholders to establish a joint infrastructure company to ensure an efficient use of resources and a fair competitive environment with respect to fiber mobilization.

Strong increase in customer figures and ARPU

In 2015, the total number of subscribers in the five countries where we have direct operations reached 51.4 million. In Turkey, this was 35.8 2 million. Turkcell gained the highest number of subscribers in postpaid, fiber and IPTV during the year 3. While postpaid customers increased by 1.4 million, fiber subscribers were up by 164 thousand, reaching 899 thousand. Total fixed subscribers amounted to 1.5 million. Turkcell TV+, which has been growing fast, reached 558 thousand subscribers, 224 of which were IPTV users.

Our focus on triple play has continued as part of our convergence strategy. On the mobile front, the triple play ratio which includes voice, data and service user reached 14% 4 while the triple play ratio in the fixed business which comprises voice, data and TV increased 4 percentage points during the quarter to 23%.

Mobile ARPU rose 9.1% to TRY25.1 and fixed residential ARPU grew 4.6% to TRY50.3 in Q415 on the back of a larger postpaid subscriber base, increased data and services revenues and higher triple play ratio on the fixed side with the immediate positive impact of our new business model.

Key Growth Driver: Data and Services

Our data revenues increased 38.1% in 2015, reaching TRY3.5 billion on the back of a superior network experience while our service revenues grew 38.5% to TRY659 million. The data per user per month was 1.7GB and smartphone penetration reached 52%, supporting data revenue growth. Rising trend in penetration is set to continue with the flexible financing options our consumer finance company has begun to offer.

BIP in 189 Countries

Our innovative services, which play a significant role in Turkcell's ambition of expanding in the region and offering globally relevant services have stood out among our considerable achievements.

The total download of our IP based communication platform BiP, which differentiates itself with its voice and video call service has reached 6.2 million. Launched in Germany, Ukraine, Belarus and the Turkish Republic of Northern Cyprus after Turkey, BiP has since been downloaded in 189 countries.

Turkcell Smart Storage which is the most widely used personal cloud service in Turkey has 1.7 million users while Turkcell Muzik downloads have reached 5.4 million.

Our new brand in Ukraine: lifecell

We have taken another solid step in solidifying our position in our markets of operation with the vision of becoming a regional player. The brand of our Ukraine business which serves as a pilot subsidiary for our international operations has changed. In order to bring it closer to Turkcell brand identity, our Ukrainian subsidiary, which has entered a new era with the launch of 3G+ services, continues to operate under the lifecell brand.

Continued growth with differentiation through 4.5G

The highlight of the sector in 2016 will be the implementation of 4.5G infrastructure. Turkcell will yet again be the first and only operator to offer over 1000 Mbps speed on mobile devices through Carrier Aggregation Technology in the coming years.

2016 will be year in which we strengthen our position as a converged player in the Turkish telecommunication market with 4.5G, and where we continue to invest in our superior network infrastructure and evaluate international expansion opportunities to support our growth strategy.We would like to congratulate the Turkcell team and all of our stakeholders for their contribution to our success, and to thank our Board of Directors for their continued support.

We would also like to express our gratitude towards our customers, who have trusted in our success story.

(1) We use "proforma net income" as a means of presenting our income net of certain non-operating items and items that we believe are non-recurring. We define "proforma net income" in this document as Net Income excluding FX Gain / (Loss) (including tax and minority impact), monetary Gain (inflation impact), interest Income on time deposits of Turkcell Iletisim Hizmetleri, one -off items. One-off items are detailed below. Please note that this is a non-GAAP measure and that we may in future presentations change the scope of items that we deduct from net income to arrive at "proforma net income."(2) Total of mobile, fixed and IPTV subscribers(3) Based on operators' announcements(4) Breakdown among mobile voice users which excludes subscribers who do not use their line in the last 3 months(*) Please note that this section 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 2014 filed with U.S. Securities and Exchange Commission, and in particular, the risk factor section therein.

FINANCIAL AND OPERATIONAL REVIEW

The following discussion focuses principally on the developments and trends in our business in the fourth quarter and full year 2015 in TRY terms. Selected financial information presented in this press release for the fourth quarters and for the full year 2015 and 2014 is based on IFRS figures.

Selected financial information for the fourth quarter of 2014, third and fourth quarters of 2015 and full year 2014 and 2015, prepared in accordance with IFRS and Turkish Accounting standards, is also included at the end of this press release.

Financial Review of Turkcell Group

Profit & Loss Statement (million TRY)

 
  Quarter   Year
Q414   Q415   y/y %   FY14   FY15   y/y %
Total Revenue 3,103.2 3,334.5 7.5% 12,043.6 12,769.4 6.0%
Direct cost of revenues 1 (1,972.2) (2,054.8) 4.2% (7,383.9) (7,769.5) 5.2%
Direct cost of revenues 1 /revenues (63.6%) (61.6%) 2.0pp (61.3%) (60.8%) 0.5pp
Depreciation and amortization (450.7) (437.0) (3.0%) (1,639.4) (1,667.8) 1.7%
Gross Margin 36.4% 38.4% 2.0pp 38.7% 39.2% 0.5pp
Administrative expenses (146.8) (165.9) 13.0% (562.7) (625.3) 11.1%
Administrative expenses/revenues (4.7%) (5.0%) (0.3pp) (4.7%) (4.9%) (0.2pp)
Selling and marketing expenses (517.8) (492.6) (4.9%) (1,974.6) (1,901.9) (3.7%)
Selling and marketing expenses/revenues (16.7%) (14.8%) 1.9pp (16.4%) (14.9%) 1.5pp
EBITDA 2 917.1 1,058.2 15.4% 3,761.8 4,140.5 10.1%
EBITDA Margin 29.6% 31.7% 2.1pp 31.2% 32.4% 1.2pp
EBIT 3 466.4 621.2 33.2% 2,122.4 2,472.7 16.5%
Net finance income / (expense) (176.9) 12.5 (107.1%) (291.6) (43.4) (85.1%)
Finance expense (400.1) (141.0) (64.8%) (1,247.0) (799.5) (35.9%)
Finance income 223.2 153.5 (31.2%) 955.4 756.1 (20.9%)
Share of profit of associates (6.9) 98.4 n.m 207.3 367.3 77.2%
Other income / (expense) 1.4 (31.1) n.m (76.3) (225.9) 196.1%
Monetary gains / (losses) 32.3 - - 205.1 - -
Non-controlling interests 128.9 (7.6) (105.9%) 428.2 164.1 (61.7%)
Income tax expense (187.3) (109.2) (41.7%) (730.4) (667.1) (8.7%)
Net Income 257.9 584.2 126.5% 1,864.7 2,067.7 10.9%
 
Proforma Net Income 4   521.4   671.2   28.7%   2,190.3   2,590.1   18.3%

(1) Including depreciation and amortization expenses.(2) EBITDA is a non-GAAP financial measure. See page 18 for the reconciliation and an explanation of how we calculate Adjusted EBITDA to net income.(3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.(4) We use "proforma net income" as a means of presenting our income net of certain non-operating items and items that we believe are non-recurring. We define "proforma net income" in this document as Net Income excluding FX Gain / (Loss) (including tax and minority impact), monetary Gain (inflation impact), interest Income on time deposits of Turkcell Iletisim Hizmetleri, one -off items. One-off items are detailed below. Please note that this is a non-GAAP measure and that we may in future presentations change the scope of items that we deduct from net income to arrive at "proforma net income."

Revenues of the Group rose by 7.5% year-on-year to TRY3,334 million (TRY3,103 million) in Q415.

Turkcell Turkey revenues, which constituted 90% of Group revenues, grew by 10.1% to TRY2,998 million (TRY2,723 million) driven by a 10.2% rise in consumer segment revenues to TRY2,391 million (TRY2,170 million) and a 6.0% rise in corporate segment revenues to TRY529 million (TRY499 million).
  • Consumer and Corporate revenues in total rose by 9.4% to TRY2,920 million (TRY2,669 million).
    • Voice revenues fell by 1.8% to TRY1,495 million (TRY1,523 million). The slowdown in voice revenue decline in Q315 continued in Q415, mainly due to our upsell focus and higher consumption.
    • Data revenues grew by 30.1% to TRY968 million (TRY744 million) driven by a 30.6% rise in mobile broadband and 28.3% climb in fixed broadband revenues with higher smartphone penetration, a larger number of data users and the continued rise in data consumption.
    • Services and solutions revenues rose by 28.6% to TRY179 million (TRY139 million) due to the higher penetration of innovative services.
    • Messaging revenues fell by 5.1% to TRY143 million (TRY151 million) in line with industry trends.
    • Other revenues comprising mainly hardware and software sales grew by 20.3% to TRY135 million (TRY112 million).
  • Wholesale revenues grew by 32.8% to TRY93 million (TRY70 million) positively impacted by depreciation of the Turkish Lira.

Turkcell International revenues, comprising 7% of Group revenues, declined by 12.0% to TRY224 million (TRY254 million), mainly due to yearly currency devaluations in Ukraine and Belarus, and the decline in Turkcell Europe revenues due to the change in its business model to a marketing partnership.Other subsidiaries' revenues, comprising 3% of Group revenues, which includes information and entertainment services in Turkey and Azerbaijan and call center revenues, contracted by 10.8% to TRY113 million (TRY126 million) mainly due to economic conditions in Azerbaijan.
  • Call centers were previously included in Turkcell Turkey but are, with effect from the fourth quarter of 2015, now included in "Other subsidiaries". We have made this change because we believe that our third party call center revenues are not telecom related. All figures presented in this document for prior periods have been restated to reflect this change.

Full Year Revenue Trend

For the full year, Group revenues grew by 6.0% to TRY12,769 million (TRY12,044 million).

Turkcell Turkey revenues increased by 9.5% to TRY11,481 million (TRY10,480 million) on the back of a 10.2% rise in consumer segment revenues to TRY9,127 million (TRY8,282 million) and 6.5% growth in corporate segment revenues to TRY2,032 million (TRY1,907 million).

  • Consumer and corporate revenues in total grew by 9.5% to TRY11,159 million (TRY10,190 million).
    • Voice revenues declined by 2.7% to TRY6,016 million (TRY6,180 million) in parallel to industry trends.
    • Data revenues rose by 38.1% to TRY3,540 million (TRY2,562 million) driven by 40.5% growth in mobile broadband and a 31.0% rise in fixed broadband revenues with increased smartphone penetration to 52% up by 12pp in a year, a higher number of data users and increased data usage.
    • Services and solutions revenues increased by 38.5% to TRY659 million (TRY476 million). This reflected our continued focus on developing innovative solutions for our customers and the increased number of paid for service subscriptions.
    • Messaging revenues contracted by 13.5% to TRY558 million (TRY645 million) in parallel to industry trends.
    • Other revenues comprising mainly hardware and software sales increased by 18.5% to TRY387 million (TRY326 million).
  • Wholesale revenues rose by 9.4% to TRY386 million (TRY353 million), mainly due to the positive impact of Turkish Lira devaluation.

Turkcell International revenues decreased by 24.8% to TRY856 million (TRY1,138 million) mainly due to yearly currency devaluation in Ukraine and Belarus, and decline in Turkcell Europe revenues due to change in its business model.

Other subsidiaries' revenues, comprised of our information and entertainment services and call center revenues, grew by 1.6% to TRY432 million (TRY425 million).

Operational expenses:

The direct cost of revenues as a percentage of revenues declined to 61.6% (63.6%) in Q415, mainly due to the decrease in depreciation and amortization expenses (1.4pp) and interconnect costs (0.6pp).For the full year, the direct cost of revenues as a percentage of revenues fell to 60.8% (61.3%) driven by the decrease in interconnect costs (0.7pp) and depreciation and amortization expenses (0.6pp), more than offsetting the rise in various other cost items (0.8pp).

Administrative expenses as a percentage of revenues rose to 5.0% (4.7%) in Q415, and to 4.9% (4.7%) for the full year due to the increase in various cost items as a percentage of revenues.

Selling and marketing expenses as a percentage of revenues fell by 1.9pp to 14.8% (16.7%) in Q415, mainly due to lower selling expenses (0.9pp) on the back of the value focused approach of our customer acquisition strategy, and decreased marketing expenses (0.8pp) and other cost items (0.2pp).

For the full year, selling and marketing expenses as a percentage of revenues declined to 14.9% (16.4%) due to lower selling expenses (1.0pp), marketing expenses (0.4pp) and other cost items (0.1pp).

EBITDA 1 rose by 15.4% to TRY1,058 million (TRY917 million) year-on-year in Q415, while the EBITDA margin improved by 2.1pp to 31.7% (29.6%) on the back of efficiency measures and our focus on higher value generating customers. The decline in selling and marketing expenses of 1.9pp and in the direct cost of revenues (excluding depreciation and amortization) by 0.5pp more than offset the rise in general administrative expenses of 0.3pp.

For the full year, Group EBITDA rose by 10.1% to TRY4,141 million (TRY3,762 million) with an EBITDA margin improvement of 1.2pp to 32.4% (31.2%). This was achieved by a decline in selling and marketing expenses of 1.5pp as opposed to the rise in direct cost of revenues of 0.1pp and general administrative expenses of 0.2pp.

Net finance income of TRY12 million (net finance expense of TRY177 million) was recorded in Q415. This mainly resulted from translation gains of TRY45 million registered in Q415 as opposed to translation losses of TRY383 million in Q414. This positive impact more than offset the decline in interest income from time deposits and the rise in interest expenses. The former resulted due to a lower cash balance, while the latter resulted mainly from settlement costs incurred regarding ongoing lawsuits, enforcement procedures and disputes with Turk Telekom Group and discounting the impact of 4.5G VAT receivables according to IFRS rules.

For the full year, Turkcell Group registered a net finance expense of TRY43 million (TRY292 million), mainly due to lower translation losses of TRY489 million (TRY1,111 million), despite the increase in interest expenses and decline in interest income from time deposits.

(1) EBITDA is a non-GAAP financial measure. See page 18 for the reconciliation of an explanation of how we calculate Adjusted EBITDA to net income.

Table: Translation gain and loss details
Million TRY   Quarter   Year
Q414   Q415   y/y %   FY14   FY15   y/y %
Turkcell Turkey 64.3 45.9 (28.6%) 188.4 402.1 113.4%
Turkcell International (447.6) 2.2 (100.5%) (1,299.6) (892.3) (31.3%)
Other Subsidiaries 0.3 (2.9) n.m 0.4 0.9 125.0%
Turkcell Group   (383.0)   45.2   (111.8%)   (1,110.8)   (489.3)   (56.0%)

Income tax expense details for Q415 and FY15 are presented in the table below:
Million TRY   Quarter   Year
Q414   Q415   y/y %   FY14   FY15   y/y %
Current Tax expense (170.3) (46.3) (72.8%) (709.4) (591.3) (16.6%)
Deferred Tax Income/expense (17.0) (62.9) 270.0% (21.0) (75.8) 261.0%
Income Tax expense   (187.3)   (109.2)   (41.7%)   (730.4)   (667.1)   (8.7%)

Net income of Turkcell Turkey as per IFRS reporting declined by 11.1% to TRY518 million (TRY583 million) in Q415, despite increased EBITDA. This resulted from lower interest income, lower translation gains, increased interest expense on loans and one-off items. Proforma net income* in the quarter rose by 26.0% to TRY564 million (TRY448 million).

For the full year, Turkcell Turkey's net income as per IFRS grew by 3.3% to TRY2,484 million (TRY2,406 million). Growth was curbed by lower interest income on time deposits, higher interest expense on loans and one-off items. Proforma net income* rose by 17.9% to TRY2,256 million (TRY1,913 million) for the full year.

Below table presents reconciliation of Turkcell Turkey proforma net income to net income per IFRS:

Net income impacts (million TRY)   Q414   FY14       Net income impacts (million TRY)   Q415   FY15
 
Proforma net income 448 1,913 Proforma net income 564 2,256
FX impact 51 151 FX impact 37 302
Interest income 104 470 Interest income 16 181
 
One-off impacts One-off impacts
Commercial Agreement Termination (2) (129)
A-Tel - 24 Turk Telekom Settlement (51) (51)
Reimbursements (10) (36) 4.5G VAT receivables discount (30) (30)
ICTA penalties (2) (108) ICTA penalties (10) (10)
Other impacts (8) (8) Other impacts (6) (35)
Net income - IFRS   583   2,406 Net income -IFRS   518   2,484

Group net income as per IFRS increased by 126.5% to TRY584 million (TRY258 million) in Q415 year-on-year, mainly due to higher EBITDA, lower translation losses and a positive contribution from Fintur, despite higher interest expense on loans and one-off items. Furthermore, no monetary gain was registered in Q415 as inflationary accounting in Belarus was discontinued in starting from Jan 1, 2015. Proforma net income * rose by 28.7% to TRY671 million (TRY521 million) in Q415.

(*) We use "proforma net income" as a means of presenting our income net of certain non-operating items and items that we believe are non-recurring. We define "proforma net income" in this document as Net Income excluding FX Gain / (Loss) (including tax and minority impact), monetary Gain (inflation impact), interest Income on time deposits of Turkcell Iletisim Hizmetleri, one -off items. One-off items are detailed below. Please note that this is a non-GAAP measure and that we may in future presentations change the scope of items that we deduct from net income to arrive at "proforma net income."

Group net income as per IFRS rose by 10.9% to TRY2,068 million (TRY1,865 million) year-on-year, mainly due to higher EBITDA, lower translation losses recorded and higher contribution from Fintur despite the decline in interest income earned on time deposits, rise in interest expenses on loans and one-off impacts. Proforma net income grew by 18.3% to TRY2,590 million (TRY2,190 million) for the full year.

Below table presents reconciliation of Group proforma net income to net income per IFRS:
Net income impacts (million TRY)   Q414   FY14       Net income impacts (million TRY)   Q415   FY15
 
Proforma net income 521 2,190 Proforma net income 671 2,590
FX impact (tax & minority included) (264) (703) FX impact (tax & minority included) 38 (404)
Interest income 104 470 Interest income 16 181
Monetary Gain 32 205 Monetary Gain - -
 
One-off impacts One-off impacts
Fintur Impact (79) (111)
BeST Impairment (35) (35)
A-Tel - 24 Commercial Agreement Termination (2) (129)
Reimbursements (10) (36) Turk Telekom Settlement (51) (51)
ICTA penalties (2) (108) 4.5G VAT receivables discount (30) (30)
Other impacts (9) (31) Other impacts (58) (89)
Net income - IFRS   258   1,865 Net income - IFRS   584   2,068

Total debt as of December 31, 2015 rose to TRY4,214.2 million from TRY3,466.6 million as of September 30, 2015, in consolidated terms. We issued a Eurobond with an aggregate principal amount of US$500 million and utilized EUR500 million of debt under our loan agreement with China Development Bank, while we performed loan repayments of US$700 million this quarter following the debt restructuring of lifecell and BeST.

Turkcell Turkey's debt balance was TRY3,766.2 million, of which TRY1,630.8 million (US$560.9 million) was denominated in US$ and TRY1,627.7 (EUR512.2 million) in EUR. The debt balance of lifecell was TRY441.8 million, denominated in UAH. Meanwhile, BeST had a debt balance of TRY6.2 million, denominated in BYR.

TRY1,775 million of our consolidated debt is set at a floating rate, while TRY726 million will mature within less than a year. (Please note that the figures in parentheses refer to US$ or EUR equivalents).

Cash flow analysis: Capital expenditures, including non-operational items and the 4.5G license, amounted to TRY6,188.9 million in Q415, of which TRY6,218.1 million was related to Turkcell Turkey. The net change in debt mainly relates to the bond issuance, the loan utilized from China Development Bank and repayments to banks following lifecell's and BeST's debt restructuring in Q315. The cash flow item noted as "other" includes cash outflows in relation to 4.5G license VAT payment (TRY933 million), corporate tax payment (TRY179 million) and a positive impact from the payable in relation to the 4.5G license (TRY3,947 million) and other working capital (TRY386 million).

For the full year, capital expenditures, including non-operational items and 4.5G license, were at TRY8,536.2 million, of which TRY7,751.7 million was related to Turkcell Turkey and TRY770.2 million toTurkcell International. The cash flow item noted as "other" mainly comprised cash outflows in relation to the 4.5G license VAT payment (TRY933 million), corporate tax payment (TRY640 million), the acquisition of lifecell's remaining shares (TRY268 million) and payments for commercial agreement terminations (TRY158 million), in contrast to the positive impact of payables in relation to the 4.5G license (TRY3,947 million) and other working capital (TRY39 million).

In 2015, operational capex as a percentage of revenues was realized at around 20%.
Consolidated Cash Flow (million TRY)   Quarter   Year
Q414   Q415   FY14   FY15
EBITDA 1 917.1 1,058.2 3,761.8 4,140.5
LESS:
Capex and License (935.3) (6,188.9) (2,144.8) (8,536.2)
Turkcell Turkey (867.5) (6,218.1) (1,982.3) (7,751.7)
Turkcell International 2 (67.2) 28.1 (158.0) (770.2)
Other Subsidiaries 2 (0.6) 1.1 (4.5) (14.3)
Net interest Income/ (expense) 206.1 (32.8) 819.3 445.8
Other 57.8 3,220.9 (1,633.8) 1,987.0
Net Change in Debt 94.2 958.9 100.5 (225.3)
Cash generated / (used) 339.9 (983.7) 903.0 (2,188.1)
Cash balance before dividend payment 9,031.9 2,918.8 9,031.9 6,843.8
Dividend paid - - - (3,925.0)
Cash balance after dividend payment   9,031.9   2,918.8   9,031.9   2,918.8

(1) EBITDA is a non-GAAP financial measure. See page 18 for the reconciliation of an explanation of how we calculate Adjusted EBITDA to net income.

(2) The impact from the movement of reporting currency (TRY) against local currencies of subsidiaries in other countries is included in these lines.

Operational Review in Turkey
Summary of Operational Data   Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
Number of subscribers (million) 35.9 35.8 (0.3%) 35.9 35.8 (0.3%)
Mobile Postpaid (million) 15.2 16.6 9.2% 15.2 16.6 9.2%
Mobile M2M (million) 1.5 1.9 26.7% 1.5 1.9 26.7%
Mobile Prepaid (million) 19.4 17.4 (10.3%) 19.4 17.4 (10.3%)
Fiber (thousand) 735.1 899.4 22.4% 735.1 899.4 22.4%
ADSL (thousand) 456.2 620.8 36.1% 456.2 620.8 36.1%
IPTV (thousand) 60.1 223.7 272.2% 60.1 223.7 272.2%
Churn (%)
Mobile Churn (%) 1 7.7%

7.9%
0.2pp 28.3% 27.3% (1.0pp)
Fixed churn (%) 4.9% 5.2% 0.3pp 17.7% 16.7% (1.0pp)
ARPU (Average Monthly Revenue per User)
Mobile ARPU, blended (TRY) 2 23.0 25.1 9.1%

22.5
24.5 8.9%
Postpaid 38.0 38.5 1.3% 37.7 38.5 2.1%
Postpaid (excluding M2M) 41.9 42.8 2.1% 41.5 42.7 2.9%

M2M
3.1 3.5 12.9% 3.2 3.3 3.1%
Prepaid 11.6 12.8 10.3% 11.6 12.4 6.9%
Fixed Residential ARPU, blended (TRY) 48.1 50.3 4.6% 47.4 48.7 2.7%
Mobile MOU (Average Monthly Minutes of usage per subs)blended   279.3   299.3   7.2%   275.3   296.6   7.7%

(1) As per our churn policy, prepaid subscribers are disconnected from the system if they do not top-up above TRY10 during a nine month period. Additionally, in the fourth quarter of 2015, 379 thousand subscriptions which had not topped-up at all within the stipulated period were also disconnected.

(2) In our Q414 release and 2014 20-F, we presented mobile ARPU blended, postpaid and prepaid for 2014 of $11.2, 18.8 and $ 5.8, respectively. These figures have since been revised to $10.3, $17.2 and $5.3, respectively. No changes have been made to the corresponding TRY figures.

On the mobile side, our postpaid customer base continued to expand and reached 16.6 million on 1.4 million net additions during the year, we believe driven by our value focus. Accordingly the postpaid share in the total subscriber base reached 48.7% (43.9%). Total mobile customers declined by 624 thousand to 34.0 million in 2015 due to the contraction in the more price sensitive prepaid segment. In the fourth quarter our mobile customer base declined by 234 thousand mainly due to the disconnection of 379 thousand subscriptions from the system which had not topped-up at all within the stipulated period.

On the fixed front, our growth momentum continued, with customers exceeding 1.5 million on the back of our expanding fiber network, strong sales force and customer care efforts. We registered 329 thousand net additions during the year, of which 164 thousand were fiber and 165 thousand were ADSL subscribers. The Turkcell TV platform continued its firm growth reaching 224 thousand users with 164 thousand net additions during the year. Including mobile TV and web TV users, Turkcell TV users reached 558 thousand as at the end of 2015.

Mobile churn rate was at 7.9% (7.7%) in Q415 and 27.3% (28.3%) for the full year. Fixed churn rate stood at 5.2% (4.9%) in Q415 and 16.7% (17.7%) for the full year.

ARPU rose by 9.1% to TRY25.1 (TRY23.0) in Q415 with the continued favorable change in subscriber mix, our upsell strategy, increased mobile broadband usage, mobile services revenue growth and our focus on high value customer groups. For the full year ARPU rose by 8.9% to TRY24.5 (TRY22.5) driven by the same factors.

Fixed Residential ARPU improved by 4.6% to TRY50.3 (TRY48.1) in Q415 and 2.7% to TRY48.7 (TRY47.4) for the full year, positively impacted by the growth in triple play customers, constituting 23% of total fiber residential customers.

Mobile MoU rose by 7.2% to 299.3 minutes (279.3 minutes) in Q415 and by 7.7% to 296.6 minutes (275.3 minutes) for the full year with our increased postpaid base and upsell strategy.

Smartphone penetration on our network reached 52%, supporting higher data usage. We registered 843 thousand* quarterly and 3.4 million* yearly additions and reached 16.1 million smartphones on our network of which over one third is already 4G enabled.

TURKCELL INTERNATIONAL

lifecell: 2015 was an important year for our Ukrainian business, in which we took significant actions with a view to managing it more effectively and increasing its contribution to the Group.
  • We were awarded the most favorable 3G frequency for investment in February and were the first operator to launch 3G+ services at the highest speed of 63.3Mbps, shortly after the tender.
  • We acquired the remaining 44.96% stake of the business, becoming the sole owner.
  • Immediately following this transaction, we restructured lifecell's debt such that the company's financial debt is in local currency and at a level that we believe to be optimum.
  • We appointed a new CEO and CFO from within the Group to facilitate transfer of knowledge and experience from our home market.
  • Recently in 2016, the company launched its new brand name, "lifecell", bringing it closer to the brand identity of Turkcell, along with a change in legal company name from LLC "Astelit" to LLC "lifecell".

Overall, these actions, despite a challenging political and macroeconomic environment in Ukraine since 2014, reflect our commitment to the country, which we have defined as a "pilot" for our international operations to transfer experience from our home market with a view to serving Ukrainian citizens with the best quality services and the most advanced technology.

This quarter, lifecell registered solid revenue growth of 10.7% in local currency terms, reflecting rising mobile broadband and value added services revenues driven by the momentum achieved with 3G+ services. EBITDA margin improved remarkably by 6.6pp to 36.3% (29.7%). This was mainly due to increased share of mobile broadband in revenue mix of lifecell and as well as effective cost management efforts. Meanwhile, mobile termination rates as of October 1, 2015 were cut by 36% which did not have a material impact on lifecell's EBITDA margin.

lifecell's financials in Turkish Lira terms continued to be impacted by year-on-year local currency devaluation. Accordingly, lifecell's revenues declined by 12.1% to TRY147 million (TRY167 million) in Q415, while EBITDA rose by 7.2% to TRY53 million (TRY50 million).

For the full year, revenues in local currency terms rose by 10.5% with an EBITDA margin improvement of 2.7pp to 33.2% (30.5%). Impacted by the year-on-year devaluation of the local currency, revenues in Turkish Lira terms declined by 25.6% to TRY564 million (TRY758 million), while EBITDA decreased by 19.2% to TRY188 million (TRY232 million).

On the operational front, lifecell registered 265 thousand net additions in 2015, increasing its three-month subscriber base to 10.6 million (10.3 million). Blended ARPU (3-month active) rose by 8.7% to UAH36.2 in Q415 and 2.9% to UAH35.5 in for the full year on higher mobile broadband usage. MoU (12-months active) declined by 10.3% to 146.0 minutes in Q415, and by 10.0% to 150.0 minutes in for the full year, due to changing consumer behavior.

(*) Approximately 268 thousand of these smartphone net additions in Q415 and 1.1 million for the full year were due to an adjustment in relation to devices which were not previously classified as smartphones.

Furthermore, lifecell has continued its 3G network roll-out in Q415, reaching around 2 million three-month active 3G data users and a smartphone penetration of 46%. Post introduction of 3G+, lifecell has recorded a 50% increase in data usage per user with a doubling of quarterly mobile broadband revenues.
lifecell*   Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
Number of subscribers (million) 1 13.9 13.5 (2.9%) 13.9 13.5 (2.9%)
Active (3 months) 2 10.3 10.6 2.9% 10.3 10.6 2.9%
MOU (minutes) (12 months) 162.8 146.0 (10.3%) 166.7 150.0 (10.0%)
ARPU (Average Monthly Revenue per User), blended (UAH) 25.4 28.4 11.8% 25.9 27.0 4.2%
Active (3 months) (UAH)   33.3   36.2   8.7%   34.5   35.5   2.9%
Revenue (million UAH) 1,046.7 1,158.9 10.7% 4,051.7 4,476.5 10.5%
EBITDA (million UAH) 310.4 421.0 35.6% 1,237.3 1,485.2 20.0%
EBITDA margin (UAH) 29.7% 36.3% 6.6pp 30.5% 33.2% 2.7pp
Net loss (million UAH) (2,078.7) (130.2) (93.7%) (5,593.2) (4,438.7) (20.6%)
Capex (million UAH)   327.2   490.3   49.8%   688.9   5,959.1   765.0%
Revenue (million TRY) 167.1 146.9 (12.1%) 758.2 564.3 (25.6%)
EBITDA (million TRY) 49.7 53.3 7.2% 232.2 187.7 (19.2%)
EBITDA margin (TRY) 29.7% 36.3% 6.6pp 30.6% 33.3% 2.7pp
Net loss (million TRY)   (323.2)   (16.8)   (94.8%)   (1,066.9)   (541.3)   (49.3%)

(1) 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.(2) Active subscribers are those who in the past three months made a revenue generating activity.(*) Since July 10, 2015, we hold a 100% stake in lifecell.

During the 3rd quarter of 2015, foreign exchange gains and losses arising from receivables from or payables to a foreign operation, the settlement of which is neither planned nor likely occur in the foreseeable future, have been considered to form part of a net investment in a foreign operation and are recognized directly in equity in the foreign currency translation differences in the consolidated financial statements. Exchange differences arising in the foreign operations' individual financial statements which have been recognized directly in equity in the foreign currency translation differences in the consolidated financial statements have been eliminated from the individual financial statements above for reporting purposes.

BeST registered solid revenue growth of 17.1% in Q415 in local currency due to expansion of the subscriber base along with increased voice, mobile broadband and mobile services revenues. The EBITDA margin improved notably by 6.9pp to 3.7% (negative 3.2%). In Q414 the EBITDA margin was negatively impacted by a one-off item in relation to collection fees. In Q415, BeST revenues in Turkish Lira terms declined by 6.4% year-on-year to TRY38 million (TRY41 million) and continued to be impacted by yearly devaluation of the local currency.

For the full year, revenues in local currency terms increased by 13.0%, mainly due to the same drivers mentioned above, while the EBITDA margin improved by 1.9pp to 2.2% (0.3%). Revenues in Turkish Lira terms declined by 9.1% to TRY142 million (TRY156 million) due to yearly devaluation of the local currency.
BeST*   Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
Number of subscribers (million) 1.4 1.5 7.1% 1.4 1.5 7.1%
Active (3 months) 1.0 1.1 10.0% 1.0 1.1 10.0%
Revenue (billion BYR) 198.3 232.3 17.1% 731.1 825.8 13.0%
EBITDA (billion BYR) (6.3) 8.7 (238.1%) 2.3 18.1 687.0%
EBITDA margin (BYR) (3.2%) 3.7% 6.9pp 0.3% 2.2% 1.9pp
Net loss (billion BYR) (941.3) (123.7) (86.9%) (1,993.7) (3,035.3) 52.2%
Capex (billion BYR) 85.9 53.4 (37.8%) 173.3 116.5 (32.8%)
Revenue (million TRY) 40.7 38.1 (6.4%) 155.7 141.6 (9.1%)
EBITDA (million TRY) (1.2) 1.4 (216.7%) 0.6 3.1 416.7%
EBITDA margin (TRY) (3.0%) 3.7% 6.7pp 0.4% 2.2% 1.8pp
Net loss (million TRY) (172.2) (20.3) (88.2%) (399.1) (531.3) 33.1%
Capex (million TRY)   15.1   7.3   (51.7%)   33.9   18.2   (46.3%)

(*)BeST, in which we hold an 80% stake, has operated in Belarus since July 2008. As inflation accounting is ended starting from Q1'15, Q414 and FY14 figures presented in the table are not inflation adjusted for comparative purposes.

During 3rd quarter of 2015, foreign exchange gains and losses arising from receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely occur in the foreseeable future, have been considered to form part of a net investment in a foreign operation and are recognized directly in equity in the foreign currency translation differences in the consolidated financial statements. Exchange differences arising in the foreign operations' individual financial statements which have been recognized directly in equity in the foreign currency translation differences in the consolidated financial statements have been eliminated from the individual financial statements above for reporting purposes.

KKTCELL's revenues fell by 7.7% to TRY33 million (TRY36 million) with its EBITDA declining by 19.5% to TRY12 million (TRY15 million) leading to an EBITDA margin of 37.1% (42.7%) in Q415. This was mainly driven by regulatory amendments which included maximum price ceiling change, termination rates cut and additional frequency fees.For the full year, KKTCELL's revenues declined by 7.6% to TRY131 million (TRY142 million) and its EBITDA contracted by 12.5% to TRY50 million (TRY57 million) resulting in an EBITDA margin of 38.4% (40.6%). This was mainly due to same factors mentioned above.
KKTCELL (million TRY)*   Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
Number of subscribers (million) 0.4 0.4 - 0.4 0.4 -
Revenue 36.2 33.4 (7.7%) 141.7 130.9 (7.6%)
EBITDA 15.4 12.4 (19.5%) 57.5 50.3 (12.5%)
EBITDA margin 42.7% 37.1% (5.6pp) 40.6% 38.4% (2.2pp)
Net income 10.2 7.9 (22.5%) 34.8 30.1 (13.5%)
Capex   12.6   14.1   11.9%   22.7   29.6   30.4%

(*) KKTCELL, in which we hold a 100% stake, has operated in Northern Cyprus since 1999.

Fintur's consolidated revenues fell by 48.2% to US$219 million (US$423 million) in Q415 and by 26.4% to US$1,325 million (US$1,801 million) for the full year. This mainly resulted from local currency devaluation in Fintur's markets of operation along with price competition in Kazakhstan. Fintur's subscriber base declined by 0.9 million during the year mainly due to the contraction in Kcell's subscriber base reflecting market competition.

The contribution of Fintur to Group net income was US$34 million in Q415 compared to the US$3 million negative impact of Q414. The contribution of Fintur in Q414 had been negative as a consequence of US$88 million non-cash impairment charges recorded at Fintur in relation to goodwill and fixed assets. For the full year, Fintur's contribution to Group net income rose to US$136 million (US$95 million). In 2014, Fintur's contribution was lower due to US$125 million non-cash charges, stemming from the write down of operational assets and impairment charges relating to goodwill and fixed assets at Fintur.
Fintur*   Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
Subscribers (million) 18.2 17.3 (4.9%) 18.2 17.3 (4.9%)
Kazakhstan 11.2 10.4 (7.1%) 11.2 10.4 (7.1%)
Azerbaijan 4.2 4.1 (2.4%) 4.2 4.1 (2.4%)
Moldova 0.9 0.9 - 0.9 0.9 -
Georgia 1.9 1.9 - 1.9 1.9 -
Revenue (million US$) 423 219 (48.2%) 1,801 1,325 (26.4%)
Kazakhstan 248 92 (62.9%) 1,052 758 (27.9%)
Azerbaijan 127 90 (29.1%) 549 408 (25.7%)
Moldova 17 15 (11.8%) 72 64 (11.1%)
Georgia 31 22 (29.0%) 128 95 (25.8%)

Fintur's contribution to Group's net income
  (3)   34   n.m   95   136   43.2%

(1) TeliaSonera disclosed a change to the definition of prepaid mobile subscription for all countries of operations in its Q115 results announcement on April 21, 2015. Prepaid subscriptions are counted if the subscriber has been active during the last three months. In line with Telia Sonera's reporting, we disclose Fintur operations' subscriber numbers as three-month active. Prior periods are restated accordingly.(*) We hold a 41.45% stake In Fintur, which has interests in Kazakhstan, Azerbaijan, Moldova and Georgia.

Turkcell Group Subscribers

Turkcell Group subscribers amounted to approximately 68.8 million as of December 31, 2015. This figure is calculated by taking the number of subscribers of Turkcell Turkey and each of our subsidiaries and unconsolidated investees. It includes the total number of mobile, fiber, ADSL and IPTV subscribers of Turkcell Turkey, mobile subscribers of lifecell and BeST, as well as of our operations in the Turkish Republic of Northern Cyprus ("Northern Cyprus"), Turkcell Europe and Fintur.
Turkcell Group Subscribers (million)   2014   2015   y/y %
Mobile Postpaid (million) 15.2 16.6 9.2%
Mobile Prepaid (million) 19.4 17.4 (10.3%)
Fiber (thousand) 735.1 899.4 22.4%
ADSL (thousand) 456.2 620.8 36.1%
IPTV (thousand) 60.1 223.7 272.2%
Turkcell Turkey subscribers (million) 1 35.9 35.8 (0.3%)
Ukraine 13.9 13.5 (2.9%)
Belarus 1.4 1.5 7.1%
Northern Cyprus 0.4 0.4 -
Turkcell Europe 2 0.4 0.3 (25.0%)
Consolidated Subscribers (million) 52.0 51.4 (1.2%)
Fintur 3 18.2 17.3 (4.9%)
Turkcell Group Subscribers* (million)   70.1   68.8   (1.9%)

(*) Turkcell Group subscribers figure includes the subscriber figures of our non-consolidated subsidiaries.(1) Subscribers to more than one service are counted separately for each service.(2) 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.(3)TeliaSonera disclosed a change to the definition of prepaid mobile subscription for all countries of operations in its Q115 results announcement on April 21, 2015. Prepaid subscriptions are counted if the subscriber has been active during the last three months. In line with TeliaSonera's reporting, we disclose Fintur operations' subscriber numbers as three-month active. Prior periods are restated accordingly.

OVERVIEW OF THE MACROECONOMIC ENVIRONMENT

The foreign exchange rates that have been used in our financial reporting, along with certain macroeconomic indicators, are set out below.
  Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
US$ / TRY rate
Closing Rate 2.3189 2.9076 25.4% 2.3189 2.9076 25.4%
Average Rate 2.2421 2.9366 31.0% 2.1850 2.7271 24.8%
EUR / TRY rate
Closing Rate 2.8207 3.1776 12.7% 2.8207 3.1776 12.7%
Average Rate 2.7999 3.2000 14.3% 2.9004 3.0219 4.2%
Consumer Price Index (Turkey) 1.6% 2.4% 0.8pp 8.2% 8.8% 0.6pp
GDP Growth (Turkey) 2.7% n.a n.a 2.9% n.a n.a
US$ / UAH rate
Closing Rate 15.77 24.00 52.2% 15.77 24.00 52.2%
Average Rate 14.09 23.18 64.5% 11.87 21.79 83.6%
US$ / BYR rate
Closing Rate 11,850 18,569 56.7% 11,850 18,569 56.7%
Average Rate   10,912   17,909   64.1%   10,255   15,917   55.2%

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, Direct Cost of Revenue excluding depreciation and amortization, Selling and Marketing expenses and Administrative expenses, but excludes translation gain/(loss), finance income, share of profit of equity accounted investees, gain on sale of investments, income/(loss) from related parties, 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)   Quarter   Year
Q414   Q415   y/y%   FY14   FY15   y/y%
Adjusted EBITDA 917.1 1,058.2 15.4% 3,761.8 4,140.5 10.1%
Finance income 223.2 153.5 (31.2%) 955.4 756.1 (20.9%)
Finance costs (400.1) (141.0) (64.8%) (1,247.0) (799.5) (35.9%)
Monetary gain 32.3 - - 205.1 - -
Other income / (expense) 1.4 (31.0) n.m (76.3) (225.9) 196.1%
Share of profit of equity accounted investees (6.9) 98.4 n.m 207.3 367.3 77.2%
Depreciation and amortization (450.7) (437.1) (3.0%) (1,639.4) (1,667.8) 1.7%
Consolidated profit before income tax & minority interest 316.3 701.0 121.6% 2,166.9 2,570.7 18.6%
Income tax expense (187.3) (109.2) (41.7%) (730.4) (667.1) (8.7%)
Consolidated profit before minority interest   129.0   591.8   358.8%   1,436.5   1,903.6   32.5%

FORWARD-LOOKING STATEMENTS: 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 in 2015 and our 4G and 3G development in Turkey and Ukraine, respectively. More generally, all statements other than statements of historical facts included in this press release, including, without limitation, certain statements regarding 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 2014 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.

ABOUT TURKCELL: Turkcell is a converged communication and technology services player in Turkey. Turkcell Group has approximately 68.8 million mobile, fixed and IPTV subscribers as of December 31, 2015. Turkcell was one of the first among the global operators to have implemented HSPA+. It has announced two new HSPA+ Technologies on its 3G network to meet rising data usage. Having successfully integrated 3C-HSDPA and DC-HSUPA Technologies, it became the first mobile operator in the world to enable peak speed of 63.3 Mbps downlink while also enabled an 11.5 Mbps uplink on a 3G network. Turkcell is the first telecom operator to offer households fiber broadband connection at speeds of up to 1,000 Mbps in Turkey. As of December 2015, Turkcell's population coverage is at 99.85% in 2G and 95.03% in 3G. Turkcell Group reported a TRY12.8 billion (US$4.7 billion) revenue with total assets of TRY26.2 billion (US$9.0 billion) as of December 31, 2015. 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

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.

Appendix A - Mobile Interconnect Revenues and Costs

Table: Mobile interconnect revenues and costs of Turkcell Turkey
Million TRY   Quarter   Year
Q414   Q415   y/y %   FY14   FY15   y/y %
Interconnect revenues 281.3 317.4 12.8% 1,116.5 1,244.0 11.4%
as a % of revenues 10.3% 10.6% 0.3pp 10.7% 10.8% 0.1pp
Interconnect costs (267.1) (303.3) 13.6% (1,049.7) (1,171.5) 11.6%
as a % of revenues   (9.8%)   (10.1%)   (0.3pp)   (10.0%)   (10.2%)   (0.2pp)

TURKCELL ILETISIM HIZMETLERI A.S. IFRS SELECTED FINANCIALS (TRY Million)
 
 
         
Quarter Ended Quarter Ended Quarter Ended 12 Months Ended 12 Months Ended
December 31, September 30, December 31, December 31, December 31,

2014

2015

2015

2014
2015

 
 
Consolidated Statement of Operations Data
TURKCELL TURKEY 2,722.5 3,034.7 2,997.8 10,480.2 11,480.9
Consumer 2,169.7 2,403.8 2,391.0 8,282.3 9,127.3
Corporate 499.4 518.6 529.2 1,907.4 2,031.7
Other 53.4 112.3 77.6 290.5 321.9
TURKCELL INT'L 254.3 234.7 223.8 1,137.9 856.1
OTHER 126.4 94.4 112.9 425.5 432.4
Total revenues 3,103.2 3,363.8 3,334.5 12,043.6 12,769.4
Direct cost of revenues (1,972.2) (1,987.8) (2,054.8) (7,383.9) (7,769.5)
Gross profit 1,131.0 1,376.0 1,279.7 4,659.7 4,999.9
Administrative expenses (146.8) (168.2) (165.9) (562.7) (625.3)
Selling & marketing expenses (517.8) (474.1) (492.6) (1,974.6) (1,901.9)
Other Operating Income / (Expense) 1.4 (18.4) (31.1) (76.3) (225.9)
 
Operating profit before financing costs 467.8 715.3 590.1 2,046.1 2,246.8
Finance costs (400.1) (144.7) (141.0) (1,247.0) (799.5)
Finance income 223.2 175.1 153.5 955.4 756.1
Monetary gain/(loss) 32.3 - - 205.1 -
Share of profit of equity accounted investees (6.9) 80.1 98.4 207.3 367.3
Income before taxes and minority interest 316.3 825.8 701.0 2,166.9 2,570.7
Income tax expense (187.3) (183.2) (109.2) (730.4) (667.1)
Income before minority interest 129.0 642.6 591.8 1,436.5 1,903.6
Non-controlling interests 128.9 (12.2) (7.6) 428.2 164.1
Net income 257.9 630.4 584.2 1,864.7 2,067.7
 
Net income per share 0.12 0.28 0.27 0.85 0.94
 
Other Financial Data
 
Gross margin 36.4% 40.9% 38.4% 38.7% 39.2%
EBITDA(*) 917.1 1,160.6 1,058.2 3,761.8 4,140.5
Capital expenditures 935.3 634.4 6,188.9 2,144.8 8,536.2
 
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 9,031.9 3,902.5 2,918.8 9,031.9 2,918.8
Total assets 23,694.2 20,579.0 26,207.3 23,694.2 26,207.3
Long term debt 1,247.9 582.2 3,487.8 1,247.9 3,487.8
Total debt 3,697.7 3,466.6 4,214.2 3,697.7 4,214.2
Total liabilities 6,983.6 6,781.3 11,788.4 6,983.6 11,788.4
Total shareholders' equity / Net Assets 16,710.6 13,797.7 14,418.9 16,710.6 14,418.9

TURKCELL ILETISIM HIZMETLERI A.S. TURKISH ACCOUNTING STANDARDS SELECTED FINANCIALS (TRY Million)

 
         
 
                   
Quarter Ended Quarter Ended Quarter Ended 12 Months Ended 12 Months Ended
December 31, September 30, December 31, December 31, December 31,

2014

2015

2015

2014

2015
 
 
Consolidated Statement of Operations Data

 
TURKCELL TURKEY 2,722.5 3,034.7 2,997.8 10,480.2 11,480.9
Consumer 2,169.7 2,403.8 2,391.0 8,282.3 9,127.3
Corporate 499.4 518.6 529.2 1,907.4 2,031.7
Other 53.4 112.3 77.6 290.5 321.9
TURKCELL INT'L 254.3 234.7 223.8 1,137.9 856.1
OTHER 126.4 94.4 112.9 425.5 432.4
Total revenues 3,103.2 3,363.8 3,334.5 12,043.6 12,769.4
Direct cost of revenues (1,972.2)   (1,987.1)   (2,054.2)   (7,380.8)   (7,766.5)
Gross profit 1,131.0 1,376.7 1,280.3 4,662.8 5,002.9
Administrative expenses (146.8) (168.2) (165.9) (562.7) (625.3)
Selling & marketing expenses (517.8) (474.1) (492.6) (1,974.6) (1,901.9)
Other Operating Income / (Expense) 269.4   218.0   (15.9)   1,053.6   925.0
Operating profit before financing and investing costs 735.8 952.4 605.9 3,179.1 3,400.7
Income from investing activities 5.4 3.0 6.2 20.0 14.9
Expense from investing activities 9.3 (20.0) (27.5) (16.8) (74.3)
Share of profit of equity accounted investees (6.9)   80.1   98.4   207.3   367.3
Income before financing costs 743.6 1,015.5 683.0 3,389.6 3,708.6
Finance expense (459.8) (188.8) 18.6 (1,424.9) (1,135.1)
Monetary gain/(loss) 32.3   -   -   205.1   -
Income before tax and non-controlling interest 316.1 826.7 701.6 2,169.8 2,573.5
Income tax expense (187.1)   (183.2)   (109.4)   (731.1)   (667.7)
Income before non-controlling interest 129.0 643.5 592.2 1,438.7 1,905.8
Non-controlling interest 128.9   (12.2)   (7.6)   428.2   164.1
Net income 257.9 631.3 584.6 1,866.9 2,069.9
 
Net income per share 0.12 0.29 0.27 0.85 0.94
 
Other Financial Data
 
Gross margin 36.4% 40.9% 38.4% 38.7% 39.2%
EBITDA(*) 917.1 1,160.6 1,058.2 3,761.8 4,140.5
Capital expenditures 935.3 634.4 6,188.9 2,144.8 8,536.2
 
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 9,031.9 3,902.5 2,918.8 9,031.9 2,918.8
Total assets 23,668.3 20,555.1 26,184.2 23,668.3 26,184.2
Long term debt 1,247.9 582.2 3,487.8 1,247.9 3,487.8
Total debt 3,697.7 3,466.6 4,214.2 3,697.7 4,214.2
Total liabilities 6,979.5 6,777.8 11,784.9 6,979.5 11,784.9
Total shareholders' equity / Net Assets 16,688.8 13,777.3 14,399.3 16,688.8 14,399.3
 
 
 
 
** For further details, please refer to our consolidated financial statements and notes as at 31 December 2015 on our web site.

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