SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated June 11, 2004
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TURKCELL ILETISIM HIZMETLERI A.S.
Turkcell Plaza
Mesrutiyet Caddesi No.153
34430 Tepebasi
Istanbul, Turkey
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(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: |X| 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: |X|
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: |X|
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: |X|
Enclosures: Press release dated June 10, 2004 - Turkcell Reports Q1 2004 Results
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: June 11, 2004 By: /s/ MUZAFFER AKPINAR
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Name: Muzaffer Akpinar
Title: Chief Executive Officer
[TURCELL logo]
FOR IMMEDIATE RELEASE
TURKCELL ILETISIM HIZMETLERI A.S. REPORTS Q1 2004 RESULTS
"Solid operational performance"
Istanbul, Turkey, June 10, 2004 - Turkcell (NYSE:TKC, ISE:TCELL),
(www.turkcell.com.tr), the leading provider of mobile communications services in
Turkey, today announced results for the quarter ended March 31, 2004. All
financial results in this press release are unaudited and reported in accordance
with accounting principles generally accepted in the United States (US GAAP).
Unlike Turkcell's previous quarterly financial results announcements, figures in
parentheses following the operational and financial results of the first quarter
of 2004 refer to the same item in the first quarter of 2003 and not to the same
item in the fourth quarter of 2003. Since the fourth quarter 2003 financial
figures include the full impact of the additional legal provisions provided for
the interconnection revenue dispute with Turk Telekom, comparisons of Turkcell's
financial and operational performance in this quarter against the fourth quarter
of 2003 does not adequately highlight the trends and developments in Turkcell's
business.
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Highlights of the Quarter
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o The continuing macroeconomic improvement, coupled with strong consumer
sentiment, bolstered Turkcell's first quarter 2004 operational results.
o Turkcell increased its subscriber base by 3.6% to 19.7 million in the first
quarter of 2004 from 19.0 million at the end of 2003.
o Revenues increased to US$746 million in the first quarter of 2004 (US$491
million).
o Turkcell's EBITDA* reached US$337 million in the first quarter of 2004
(US$232 million).
o Turkcell recorded net income of US$126 million for Q1 2004 (US$40 million).
o Turkcell shareholders have approved dividend distribution at the Annual
General Shareholders Meeting held on June 4, 2004.
o Turkcell working teams have been established for the Ukrainian and Iranian
markets. Progress is being made towards the establishment of operations.
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* EBITDA is a non-GAAP financial measure. See page 11 for the reconciliation of
EBITDA to net cash provided by operating activities.
Comments from the CEO, Muzaffer Akpinar
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Turkcell's strong operational performance has extended into 2004 and we recorded
a successful first quarter. We maintained our stable subscriber growth in the
first quarter of 2004, with subscribers at the end of the period totaling 19.7
million, a 3.6% increase from the end of 2003. More importantly, we increased
our profitability and further created value for our shareholders and business
partners.
The operating environment in the first quarter of 2004 did not differ
significantly from year-end 2003, remaining stable with positive macroeconomic
indicators in the first quarter. However, during the first two months of second
quarter, the turbulence in the financial markets following the Cyprus
referendum, the unfavorable outlook created by expectations of an interest rate
increase by the U.S. Federal Reserve Bank and internal political developments
resulted in some volatility in the foreign exchange and fixed income markets.
Our expectations, however, still remain in line with the government's year-end
macroeconomic targets and we expect that the volatility we have seen so far will
have only a limited impact on our operations.
In the telecommunications sector, an important development was that the
Telecommunication Authority started to issue new licenses for long distance
carriers. Although the liberalization of the telecommunications sector was
announced in the beginning of 2004, the granting of long distance licenses
represents the first stage of the liberalization of the sector. It is still too
early to comment on the impact of this development on mobile phone carriers. On
another front, the Privatization Administration continued to take steps
regarding the privatization of Turk Telekom. The bidding phase is due to start
on July 15, 2004. As one of the leading players of the telecommunications
sector, we will continue to closely monitor the transformation of the sector.
Meanwhile, Turkcell finalized the acquisition of Digital Cellular Communication
("DCC") in the Ukraine and began setting up our GSM1800 operations there. In
Iran, the groundwork continues to be laid as we approach the establishment of
Irancell and the signing of our license agreement. We have set up working groups
to carry out the necessary studies and to fulfill registry requirements. Our
negotiations with vendors and banks continue for both vendor and bridge
financing to be provided to Irancell and DCC.
Following our improved performance, which was boosted by an improved macro
environment in Turkey in 2003, Turkcell had a strong first quarter in 2004 in
terms of earnings and expansion, which we believe is an indication of a
promising year ahead. Although it is too early to draw any conclusions with the
Turkish telecommunications sector set for a year of transformation, we will
remain alert to ensure the right balance between our revenue goals and customer
needs and perceptions.
2
Overview
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Summary of Financial and Operational Data
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Q4 2003* Q1 2003 Q1 2004
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Number of total subscribers (million) 19.0 16.3 19.7
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Number of post-paid subscribers (million) 4.8 4.7 4.9
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Number of pre-paid subscribers (million) 14.2 11.6 14.8
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Average revenue per user, blended (US$) 6.7 10.1 12.7
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Average revenue per user, postpaid (US$) 19.3 20.7 28.8
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Average revenue per user, prepaid (US$) 2.4 5.7 7.4
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Churn (%) 3.1 4.5 3.2
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Minutes of usage, blended, per month 57.5 50.8 56.4
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Revenue (US$ million) 379.8 491.1 745.5
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EBITDA** (US$ million) (158.3) 232.3 337.2
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Translation Gain/(Loss) (US$ million) (26.3) (1.1) (20.2)
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Net Income/(Loss) (US$ million) (14.3) 39.5 126.2
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All figures are quarterly other than subscriber numbers.
* The fourth quarter of 2003 summary financial data exhibit the full effect of
the additional net legal provisions provided during the fourth quarter of 2003,
which was in the amount of US$539 million. Although Turkcell had not made any
major provision with respect to the interconnection revenue dispute with Turk
Telekom prior to the fourth quarter of 2003, recent developments had created
uncertainties concerning the case and, accordingly, Turkcell management decided
to set aside an additional provision of US$462 million, including interest,
related to this case as of December 31, 2003. Please refer to our 2003 year-end
financial announcement press release dated April 21, 2004 for a detailed
explanation of the additional legal provisions set aside in the fourth quarter
of 2003. The effects of the additional legal provisions should be taken into
account when reading the comparables made between related quarterly results.
* EBITDA is a non-GAAP financial measure. See page 11 for the reconciliation of
EBITDA to net cash used for operating activities.
Favorable operating environment continued in 2004
The improvement in the macroeconomic environment and the positive consumer
sentiment created after the first quarter of 2003 continued through to the
beginning of 2004. Consequently, Turkcell extended its strong operating
performance into 2004 and generated US$745.5 million (US$491.1 million) in
revenues in the first quarter of 2004, a year-on-year increase of 52%. Revenue
generation was also stronger than the US$379.8 million in the last quarter of
2003 (US$619.6 million before the impact of new additional legal provisions -
please refer to our 2003 year-end financial
3
announcement press release dated April 21, 2004, for a detailed explanation of
the additional legal provisions set aside in the fourth quarter of 2003).
The strong revenue growth also affected the bottom line and Turkcell's net
profit amounted to US$126.2 million (US$39.5 million) in the first quarter of
2004 compared to the same period in 2003.
Funding
As previously stated, Turkcell secured US$100 million in the form of syndicated
Murabaha on January 16, 2004, to be used for equipment purchases. Turkcell has
drawn US$75 million of this facility to date. In addition, Turkcell secured a
US$200 million bank loan provided equally by Akbank and Garanti, two of the
leading banks in Turkey, in February 2004. All these transactions were part of
Turkcell's efforts to actively manage its debt portfolio, lower its borrowing
costs and extend the maturity of its debt. These borrowings elevated Turkcell's
gross debt to US$853 million at March 31, 2004 from US$630 million at year-end
2003.
Subscribers choice
Turkcell's Customer Relationship Management, churn prevention efforts, coupled
with macroeconomic improvement, led to favorable subscriber growth in the first
quarter of 2004. Despite the growing number of subscribers and in particular the
increasing percentage of prepaid customers, Turkcell's churn level was 3.2% in
Q1 2004, which was significantly lower than last year's first quarter figure of
4.5% and almost the same as the previous quarter figure of 3.1%. In the
meantime, Turkcell's acquisition cost per customer ("SAC"), dropped to US$22.5
in Q1 2004 from US$28.8 in the previous quarter.
Turkcell continued to be the first choice of new subscribers and its subscriber
base expanded to 19.7 million in the first quarter of 2004, from 19.0 million at
the end of 2003. Turkcell added 677,948 net new subscribers in the first
quarter, a 15% increase on the 589,000 net new subscribers in the first quarter
of 2003. Turkcell's number of postpaid subscribers increased to 4.9 million and
the number of prepaid subscribers reached 14.8 million, bringing the percentage
of prepaid subscribers to 75%.
Positive consumer sentiment continues
The favorable macroeconomic environment continues to fuel positive consumer
sentiment. Accordingly, despite the 2% slide in Turkcell's blended monthly
minutes of usage ("MoU") in the first quarter of 2004 compared to the previous
quarter, MoU rose to 56.4 minutes (50.8 minutes) in the first quarter of 2004,
recording a year-on-year growth of 11%. Regarding the year-on-year comparison,
it should be kept in mind that the war in Iraq had an adverse impact on Q1
2003's consumer sentiment and thus on operating performance.
Nevertheless, the blended average revenue per user ("ARPU") improved in the
first quarter of 2004 compared to both the previous quarter and the first
quarter of last year. ARPU during the first quarter of 2004 reached US$12.7
(US$10.1), a 26% rise
4
mostly attributable to the appreciation of the TL, price adjustments that
totaled 7% in 2003 and an increase in MoU. Please refer to our 2003 year-end
financial announcement press release dated April 21, 2004 for a detailed
explanation of the additional legal provisions set aside in the fourth quarter
of 2003.
Major Regulatory Developments
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As a part of the liberalization efforts in the Turkish telecommunications
sector, the initial steps are being taken regarding long distance carrier
business. The Telecommunication Authority ("TA") has commenced granting long
distance carrier licenses as of May, 2004. The new operators are allowed now to
offer domestic and international Long Distance services. As a result, a decrease
in international and domestic long distance pricing is expected. It is still too
soon to assess the possible impact of lowering of long distance pricing on
mobile operators. The new long distance companies may become operational in
several months, upon signing of the relevant interconnection agreements.
Turkcell will continue to monitor the market and evaluate the impact of new long
distance and international tariffs as well as the calling behavior of consumers.
On June 5, 2004 a new directive was printed on the Official Gazette and the TA
nominated Turkcell as in "dominant position" in the Turkish mobile
telecommunication services market. Along with Turkcell `TA' has also declared
Turk Telekom ("TT") to be considered as "actual monopoly," changing its earlier
nomination of TT from "dominant position" player in the fixed line business.
Previously on September 2003, the TA had also designated Turkcell as an
`'operator holding significant market power" in the mobile telecommunications
market. We believe Turkcell will be subject to similar regulation as before.
Major Legal Developments
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Turkcell had set aside US$1,181 million as net legal provisions in 2003
year-end, including US$539 million that was recorded during the fourth quarter
mostly relating uncertainties that emerged regarding the interconnection revenue
dispute with Turk Telekom. Turkcell's legal provisions totaled US$1,278 million
as of March 31, 2004, a net increase of US$97 million.
As highlighted in Turkcell's YE 2003 press release, its estimates of the
required provisions are based upon an analysis of potential outcomes to these
cases, assuming a combination of litigation and settlement strategies.
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Dispute concerning the definition of the gross revenue and the calculation of
the 15% Treasury share
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Previously, Turkcell stated that the International Court of Arbitration of the
International Chamber of Commerce ("ICC") had issued its verdict regarding
Turkcell's petition for the definition of items that should be included within
the "gross revenue" item used for the calculation of the 15% Treasury share
payment (please refer to our press release dated January 9, 2004). The ICC's
decision stated that all
5
the revenue items originating from telecommunication services should be included
in the calculation of gross revenue, while the late payment interest charges and
taxes collected by Turkcell under its "tax responsibility" should be excluded.
Subsequently, the Treasury and the Telecommunication Authority ("TA") filed a
petition in the Ankara 20th Civil Court, requesting cancellation of parts of the
aforementioned decision in favor of Turkcell by the ICC. The Civil Court granted
the petition of the Turkish Treasury and the TA and thus cancelled the ICC
ruling with respect to the taxes and the late payment interest charges on the
grounds that it conflicts with a ruling issued by the Danistay, the highest
administrative court in Turkey.
Turkcell will file an appeal against this ruling when it receives the official
written statement of the Civil Court.
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Dispute concerning infrastructure usage with Turk Telekom
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In 2001, Turk Telekom issued a new "Infrastructure Usage Directive," demanding
price increases in infrastructure usage fees, which Turkcell considered
unacceptable. Consequently, Turkcell filed a petition at the Ankara 1st
Commercial Court for the cancellation of the new Directive. At the same time,
Turkcell obtained an injunction from the Ankara 22nd Civil Court and secured the
continuation of Turk Telekom's services, subject to conflict, without
interruption.
During the session dated May 13, 2004, the Ankara 1st Commercial Court rejected
Turkcell's filing and ruled that the new "Infrastructure Usage Directive" should
be effective and for the removal of the injunction obtained by Turkcell.
Turkcell will file an appeal against this ruling after receiving the official
written statement of the Court.
International Structure
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Turkcell incorporated a new holding company, Turktell Uluslararasy Yatirim
Holding Anonim Sirketi (i.e., Turktell International Investment Holding A.S.),
with a 99.9% shareholding. The registered capital of the company is TL63
trillion (equivalent to US$50 million during the establishment of the company.
The new company will become the holding company for Turkcell's GSM operations
abroad in Iran and Ukraine, while CIS operations will continue to be managed
through Fintur International.
Fintur International: Growth continues...
Fintur International continued its strong growth in the first quarter of 2004
and the GSM businesses in Azerbaijan, Kazakhstan, Georgia and Moldova added
294,000 net new subscribers, raising the total number of subscribers to
approximately 2.7 million as of March 31, 2004 (2.4 million as of December 31,
2003). Furthermore, the first quarter 2004 revenues were US$109 million (US$65
million), a 68% increase
6
compared to the first quarter of 2003. Turkcell owns 41.45% of Fintur and
accounts for its investment using the equity method.
Fintur has limited contribution to Turkcell, as its financials are reflected on
Turkcell's financials according to the equity pickup method. Nevertheless,
although Fintur has smaller scale of operations, the respective companies
operate in markets with low penetration levels, promising major growth
potential. All of Fintur's subsidiaries lead their respective markets. Turkcell
is quite pleased with current contribution of its Fintur companies
Ukraine: Work in progress...
The acquisition of DCC has been completed and the new company has begun work
under the guidance of the new Board of Directors and management team. DCC's
financial statements will be consolidated in Turkcell's financials beginning in
the second quarter of 2004. For background information regarding Turkcell's
investment in the Ukraine, please refer to our 2003 year-end financial results
announcement dated April 21, 2004.
Iran: Working teams are being formed...
As in the case of DCC, management team is being established for Iran and has
started conducting the necessary studies prior to the establishment of Irancell
and signing of the license agreement. In the meantime, the necessary documents
are being prepared and the steps taken for registering Irancell. In addition to
these efforts, Turkcell continues to shape the funding structure of Irancell.
Recently, Turkcell's Board of Directors decided to participate in the capital
increase of the East Asian Consortium B.V., established in the Netherlands for
Irancell investment, and to guarantee the (euro)100 million credit that will be
obtained from a Turkish bank. The details of these decisions can be found in our
announcement dated May 27, 2004. For background information regarding Turkcell's
investment in Iran please refer to our 2003 year-end financial results
announcement dated April 21, 2004.
Dividend
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Until this year, Turkcell was unable to make dividend payments due to its
accumulated balance sheet loss under the previous Turkish Accounting Standards.
However, as of year-end 2003, Turkcell began reporting its financial results
according to the new accounting standards which generally comply with
International Financial Reporting Standards ("IFRS"), thereby eliminating the
accumulated loss.
Following the approval of shareholders at the Annual General Assembly dated June
4, 2004, Turkcell will distribute TL236,317,210 million in dividends from its
2003 distributable net income to its shareholders. The dividend will be in the
form of a 50% cash and 50% share distribution. The stock dividend will be
distributed by adding TL118,158,605 million of the total dividend amount to
Turkcell's paid-in capital, which will translate into a 23.63% dividend per
share. The rest of the distributable income, totaling TL118,158,605 million,
will be distributed to Turkcell shareholders in cash. As all of this amount was
generated with incentives granted
7
before April 24, 2003, it will not be subject to withholding tax and will be
distributed equally to shareholders. Accordingly, the cash dividend will be
TL236.32 per ordinary share for all shareholders.
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Financial and Operational Review
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Unlike Turkcell's previous quarterly financial results announcements, figures in
parentheses following the operational and financial results of the first quarter
of 2004 refer to the same item in the first quarter of 2003 and not to the same
item in the fourth quarter of 2003. Since the fourth quarter of 2003 financial
statements include the full impact of the additional legal provisions provided
for the interconnection revenue dispute with Turk Telekom, comparisons of
Turkcell's financial and operational performance in this quarter against the
fourth quarter of 2003 does not adequately highlight the trends and developments
in Turkcell's business. Please refer to our 2003 year-end financial announcement
press release dated April 21, 2004, for a detailed explanation of the additional
legal provisions set aside in the fourth quarter of 2003. Please note that the
impact on the Turkish economy of military action against Iraq reflected
negatively on the operating environment in the first quarter of 2003. For your
information, selected financial information for the fourth quarter of 2003 is
included at the end of this press release.
Subscribers
Turkcell's net new additions totaled 677,948 (589,000), an increase of 15%, and
climbed to 19.7 million in the first quarter of 2004. New gross subscribers
acquired in the first quarter of 2004 consisted of 15% postpaid and 85% prepaid,
a change in favor of postpaid subscribers (11% in the fourth quarter of 2003).
Turkcell's subscriber base expanded to 19.7 million as of March 31, 2004, from
19.0 million as of December 31, 2003, an increase of 3.6%.
Revenues
Turkcell sustained strong revenue growth in the first quarter of 2004 compared
to both the same quarter last year and the previous quarter. Turkcell generated
US$745.5 million (US$491.1 million) in revenues in the first quarter of 2004, a
year-on-year rise of 52% mostly attributable to consistent subscriber growth,
appreciation of the TL against US$ and increase in MoU. The upward price
adjustments in March and December of 2003, amounting to 7%, were an additional
factor.
ARPU
Similar to the revenue increase, Turkcell's blended ARPU also improved in the
first quarter, climbing to US$12.7 (US$10.1), a 26% increase year-on-year. This
was a result of the continued positive consumer sentiment that started building
up after the first quarter of 2003. Furthermore, price adjustments were another
factor that supported the upswing in blended ARPU relative to the last quarter
of 2003 and relative to the 2003 blended ARPU of US$10.6. Turkcell made a 2.2%
price adjustment in the beginning of December 2003.
8
In the first quarter of 2004, postpaid ARPU reached US$28.8 (US$20.7)
registering growth of 39%, while prepaid ARPU also surged by 30% and totaled
US$7.4 (US$5.7).
MoU
Turkcell's blended monthly minutes of usage (MoU) amounted to 56.4 minutes (50.8
minutes) and registered a significant development in the first quarter of 2004
compared to the same period last year (up 11%). However, due to seasonality, the
MoU in the first quarter of 2004 posted a slight decline of 2% from 57.5 minutes
in the fourth quarter of 2003. The superior MoU compared to the same period in
2003 is mainly attributable to improved consumer sentiment following the Iraq
dispute's negative impact on the first quarter of 2003 coupled with volume and
segment based campaigns.
EBITDA
The favorable revenue generation also impacted on EBITDA, as Turkcell's EBITDA
jumped to US$337.2 million (US$232.3 million), a year-on-year rise of 45%.
Translation loss
Turkcell posted a translation loss of US$20.2 million (US$1.1 million) in the
first quarter of 2004. As most of the legal reserves are TL denominated, the
appreciation of the TL against the US$ elevated the translation loss.
Churn rate
Churn refers to disconnected subscribers, whether disconnected voluntarily or
involuntarily. Turkcell's Q1 2004 churn rate remained stable at 3.2% (4.5%)
compared to the previous quarter (3.1%). Nevertheless, as with our improved
revenue generation, the improvement in consumer sentiment and Turkcell's
enhanced retention efforts including mass loyalty programs resulted in a 29%
year-on-year contraction in churn in the first quarter of 2004.
Profit & Loss And Balance Sheet Statements
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Net income
The strong operational performance yielded strong earnings as Q1 2004 net profit
totaled US$126.2 million (US$39.5 million), compared to the same period in 2003.
Turkcell realized a US$14.3 million net loss in the previous quarter, which was
distorted by the additional legal provisions amounting to US$539 million.
Direct cost of revenues
The direct cost of revenues, including depreciation and amortization, was
US$433.0 million for the first quarter 2004 (US$326.7 million). As a result of
the rise in revenue, the treasury share and interconnection expenses also
increased in the first quarter of
9
2004. The appreciation of TL against US$ is another important reason for the
increase.
Depreciation and amortization
Depreciation and amortization expenses remained stable at US$104.5 million
(US$105.1 million) in the first quarter of 2004.
Selling and marketing expenses
Selling and marketing expenses climbed to US$76.0 million (US$49.0 million) in
the first quarter of 2004, a 55% increase compared to the first quarter of 2003.
The rise in selling and marketing expenses was in line with Turkcell's growth,
as its proportion to revenues remained flat at 10% in the first quarter of 2004
versus the same period last year. Besides, Q1 2003 was the period of Iraqi war,
which resulted in a decrease in overall advertisement expenses in Turkey.
General and administrative expenses
As in the case of selling and marketing expenses, the proportion of Turkcell's
general and administrative expenses to revenues fell to 4% in the first quarter
of 2004 compared to 5% in the first quarter of 2003. Turkcell spent US$29.3
million (US$22.2 million) in the first quarter of 2004, a year-on-year increase
of 32%.
Equity in net income of unconsolidated investees
Equity in net income of unconsolidated investees was US$7.9 million (US$2.2
million) in the fourth quarter of 2004.
Net interest expense
Net interest expense decreased 33% to US$40.5 million (US$60.2 million) for the
first quarter of 2004 due to the repayment of principal portion of loans.
Total assets
In the first quarter of 2004, Turkcell's total assets increased 42% to
US$4,364.3 million (US$3,071.9 million) compared to the first quarter of 2003.
Total assets amounted to US$3,867.3 million as of December 31, 2003.
Capex
Turkcell's capital expenditures amounted to US$53.2 million (US$50.6 million) in
the first quarter of 2004, which is in line with the previous guidance for 2004
at approximately US$200 million.
Debt
As of March 31, 2004, Turkcell has a total indebtedness of US$852.6 million
(US$1,048.9 million).
10
Reconciliation of Non-GAAP Financial Measures
The SEC recently adopted new rules regarding the use of non-GAAP financial
measures. We believe that EBITDA is a measure commonly used by companies,
analysts and investors in the telecommunications industry that enhance the
understanding of our operating results and assist in the evaluation of our
capacity to meet our financial obligation. We also use EBITDA as an internal
measurement tool and accordingly, we believe that the presentation of EBITDA
provides useful and relevant information to analysts and investors. We are
continuing to monitor developments in the interpretation of these new rules and
will make adjustments to the use of non-GAAP measures as may be required.
EBITDA equals net income (loss) before depreciation and amortization, interest
expense and income tax benefit (expense). EBITDA is not a measurement of
financial performance under US GAAP and should not be construed as a substitute
for net earnings (loss) as a measure of performance or cash flow from operations
as a measure of liquidity.
The following table provides a reconciliation of EBITDA, which is a non-GAAP
financial measure, to net cash provided by operating activities, which we
believe is the most directly comparable financial measure calculated and
presented in accordance with US GAAP.
Q1 2003 Q4 2003 Q1 2004
------- ------- -------
EBITDA 232.3 (158.4) 337.2
Minority interest 0.4 1.1 1.0
Equity in net income of unconsolidated investees 2.2 5.8 7.9
Interest expense (87.7) (230.0) (77.4)
Net increase (decrease) in assets and liabilities 74.2 703.2 (49.8)
Net cash provided by operating activities 216.2 307.9 201.1
Forward Looking Statements
This release may include 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. 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 "may," "will," "expect," "intend," "plan,"
"estimate," "anticipate," "believe" or "continue."
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. Given these uncertainties,
readers are cautioned not to place undue reliance on such forward-looking
statements. All subsequent written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by reference to
these cautionary statements.
11
SELECTED FINANCIALS
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Quarter Ended Quarter Ended Quarter Ended
March 31, December 31, March 31,
2003 2003 2004
---- ---- ----
Consolidated Statement of Operations Data
Revenues
Communication fees 475.9 355.7 721.8
Monthly fixed fees 9.0 11.0 11.9
SIM card sales 4.3 9.6 8.3
Call center revenues 1.6 2.8 2.2
Other 0.3 0.7 1.3
Total revenues 491.1 379.8 745.5
Direct cost of revenues (326.7) (481.5) (433.0)
----------- ----------- -----------
Gross profit 164.4 (101.7) 312.5
General & administrative expenses (22.2) (58.1) (29.3)
Selling & marketing expenses (49.0) (120.9) (76.0)
----------- ----------- -----------
Income from operations 93.2 (280.7) 207.2
Income (loss) from related parties, net 2.0 0.5 0.5
Net interest expense (60.2) (197.6) (40.5)
Other Income (expense), net 3.0 2.4 (0.5)
Equity in net income (loss) of unconsolidated investees 2.2 5.8 7.9
Minority interest 0.4 1.1 1.0
Translation Gain / Loss (1.1) (26.3) (20.2)
----------- ----------- -----------
Income (loss) before taxes 39.5 (494.8) 155.4
Income tax benefit (expense) 0.0 480.5 (29.2)
----------- ----------- -----------
Net income (loss) 39.5 (14.3) 126.2
=========== =========== ===========
Net income (loss) per share 0.00008 (0.00003) 0.00025
Other Financial Data
Gross margin 33.5% -26.8% 41.9%
EBITDA(*) 232.3 (158.4) 337.2
Capital expenditures 50.6 44.2 53.2
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 308.9 582.7 939.3
Total assets 3,071.9 3,867.3 4,364.3
Long term debt 922.7 522.2 707.6
Total debt 1,048.9 630.2 852.6
Total liabilities 1,701.3 2,320.0 2,689.7
Total shareholders' equity / Net Assets 1,370.6 1,547.3 1,674.6
Capital stock 636.1 636.1 636.1
Consolidated Cash Flow Information
Net cash provided by operating activities 216.2 307.9 201.1
Net cash used in by investing activities (60.1) (44.2) (66.5)
Net cash used in by financing activities (241.2) (377.2) 222.0
* Please refer to the notes on reconciliation of Non-GAAP Financial measures on
page 11
Q1 2003 Q4 2003 Q1 2004
------- ------- -------
EBITDA 232.3 (158.4) 337.2
Minority interest 0.4 1.1 1.0
Equity in net income of unconsolidated investees 2.2 5.8 7.9
Interest expense (87.7) (230.0) (77.4)
Net increase (decrease) in assets and liabilities 74.2 703.2 (49.8)
Net cash provided by operating activities 216.2 307.9 201.1