Turkcell Iletisim Hizmetleri A S 6-K, filed May 29, 2024
Turkcell Iletisim Hizmetleri A S (TKC)
About this 6-K
Turkcell Iletisim Hizmetleri A S filed this 6-K on May 29, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2024
Commission File Number: 001-15092
TURKCELL ILETISIM HIZMETLERI A.S.
(Translation of registrant’s name into English)
Aydınevler Mahallesi İnönü Caddesi No:20
Küçükyalı Ofispark
34854 Maltepe
Istanbul, Türkiye
(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:
x Form 20-F ¨ Form 40-F
Enclosure: A press release dated May 27, 2024, announcing the registrant’s first quarter 2024 results and first quarter 2024 IFRS report.
Contents
| · | Please note that all financial data is consolidated and comprises that of Turkcell Iletisim Hizmetleri A.S. (the “Company”, or “Turkcell”) and its subsidiaries and associates (together referred to as the “Group”), unless otherwise stated. |
| · | We have four reporting segments: |
| o | "Turkcell Türkiye" which comprises our telecom, digital services and digital business services related businesses in Türkiye (as used in our previous releases in periods prior to Q115, this term covered only the mobile businesses). All non-financial data presented in this press release is unconsolidated and comprises Turkcell Türkiye only figures, unless otherwise stated. The terms "we", "us", and "our" in this press release refer only to Turkcell Türkiye, except in discussions of financial data, where such terms refer to the Group, and except where context otherwise requires. |
| o | “Turkcell International” which comprises all of our telecom and digital services-related businesses outside of Türkiye (BeST and KKTCELL). |
| · | As of December 31, 2023, our Lifecell, UkrTower, and Global LLC operations in Ukraine have been classified as a disposal group held for sale and as a discontinued operation. |
| o | “Techfin” which comprises all of our financial services businesses. |
| o | “Other” which mainly comprises our non-group call center and energy businesses, retail channel operations, smart devices management and consumer electronics sales through digital channels and intersegment eliminations. |
| o | Discontinued operations in Ukraine include Lifecell LLC, LLC Global Bilgi, and LLC Ukrtower. |
| · | This press release provides a year-on-year comparison of our key indicators and figures in parentheses following the operational and financial results for March 31, 2024 refer to the same item as at and for the three months ended March 31, 2023. For further details, please refer to our consolidated financial statements and notes as at and for March 31, 2024, which can be accessed via our website in the investor relations section (www.turkcell.com.tr). |
| · | Selected financial information presented in this press release for the first quarter of 2023, and 2024 is based on IFRS figures in TRY terms unless otherwise stated. |
| · | In the tables used in this press release totals may not foot due to rounding differences. The same applies to the calculations in the text. |
| · | Year-on-year percentage comparisons appearing in this press release reflect mathematical calculation. |
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NOTICE
This press release contains the Company’s financial information for the period ended March 31, 2024 prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This press release contains the Company’s financial information prepared in accordance with International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS29"). Therefore, the financial statement information included in this press release for the periods presented is expressed in terms of purchasing power of the Turkish Lira as of March 31, 2024. The Company restated all non-monetary items in order to reflect the impact of the inflation restatement reporting in terms of the measuring unit current as of March 31, 2024. Comparative financial information has also been restated using the general price index of the current period. This release includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, Section 21E of the U.S. Securities Exchange Act of 1934 and the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. This includes, in particular, and without limitation, our targets for revenue growth, EBITDA margin and operational capex over sales ratio for the full year 2024. In establishing such guidance and outlooks, the Company has used a certain number of assumptions regarding factors beyond its control in particular in relation to macro-economic indicators such as expected inflation levels, that may not be realized or achieved. 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. 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.”
Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. In addition, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by forward-looking statements. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected.
These forward-looking statements are based upon a number of assumptions and other important factors that could cause our actual results, performance or achievements to differ materially from our future results, performance or achievements expressed or implied by 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. 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 2023 filed with the U.S. Securities and Exchange Commission, and in particular the risk factor section therein. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release. All forward-looking statements in this press release are based on information currently available to the Company and we undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The Company makes no representation as to the accuracy or completeness of the information contained in this press release, which remains subject to verification, completion and change. No responsibility or liability is or will be accepted by the Company or any of its subsidiaries, board members, officers, employees or agents as to or in relation to the accuracy or completeness of the information contained in this press release or any other written or oral information made available to any interested party or its advisers.
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| TRY million | Q123 | Q124 | y/y% | |||||||||
| Revenue | 27,569 | 30,822 | 11.8 | % | ||||||||
| EBITDA1 | 10,354 | 12,754 | 23.2 | % | ||||||||
| EBITDA Margin (%) | 37.6 | % | 41.4 | % | 3.8 | pp | ||||||
| EBIT2 | 2,533 | 3,522 | 39.0 | % | ||||||||
| EBIT Margin (%) | 9.2 | % | 11.4 | % | 2.2 | pp | ||||||
| Net Income / (Loss) | (269 | ) | 2,635 | n.m | ||||||||
| · | Financial performance accelerated on solid results: |
| o | Group revenues up 11.8% year-on-year supported mainly by strong ARPU growth and the larger postpaid subscriber base of Turkcell Türkiye as well as the contribution of the techfin business, and digital services & solutions |
| o | EBITDA up 23.2%, leading to an EBITDA margin of 41.4%; EBIT up 39.0%, resulting in an EBIT margin of 11.4% |
| o | Net income was TRY2.6 billion |
| o | Net leverage3 level at 0.6x; net long FX position of US$158 million |
| · | Solid operational momentum: |
| o | Turkcell Türkiye subscriber base4 up by 333 thousand net additions |
| o | 472 thousand mobile postpaid net additions |
| o | 50 thousand fixed subscriber net additions; 48 thousand fiber net additions |
| o | 44 thousand new fiber homepasses |
| o | Mobile ARPU5 growth of 17.1%; residential fiber ARPU growth of 13.7% |
| · | We have upgraded our revenue growth guidance6 for 2024. Accordingly, we now target low-double-digit revenue growth rather than high single digit growth. We maintain our EBITDA margin target of around 42%, and operational capex over sales ratio7 guidance at around 23% |
| · | General Assembly meeting held on May 2nd: |
| o | TRY6.3 billion dividend distribution was approved; the payment will be made on December 5th |
(1) EBITDA is a non-GAAP financial measure. See page 14 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income.
(2) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.
(3) Starting from Q421, we have revised the definition of our net debt calculation to include "financial assets” reported under current and non-current assets. Required reserves held in CBRT balances are also considered in net debt calculation. We believe that these assets are highly liquid and can be easily converted to cash without significant change in value.
(4) Including mobile, fixed broadband, IPTV, and wholesale (MVNO&FVNO) subscribers
(5) Excluding M2M
(6) The guidance for the year 2024 includes the effects of implementing inflation accounting in accordance with IAS 29. Our 2024 guidance has been established using a certain number of assumptions regarding factors beyond our control, including in relation to macroeconomic indicators such as expected inflation levels. In particular, our 2024 guidance is based on an assumed annual inflation rate of 37%, applied on a monthly basis. Please note that this paragraph contains forward-looking statements based on our current estimates and expectations regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual Report on Form 20-F for 2023 filed with the U.S. Securities and Exchange Commission, and in particular, the risk factor section therein.
(7) Excluding license fee
For further details, please refer to our consolidated financial statements and notes as at March 31, 2024 via our website in the Investor Relations section (www.turkcell.com.tr).
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COMMENTS BY CEO, ALİ TAHA KOÇ, PhD
We are delighted to celebrate our 30th anniversary as the pioneer of Türkiye's digital transformation. As Turkcell, we have introduced numerous innovations in the industry. Today, we are entering an era wherein we will solidify our leadership of Türkiye's digital transformation by focusing on our technological capabilities and bringing global technological advancements to our country. Moreover, we are proud to enter our 30th year with strong financial and operational results.
A strong start to 2024
Although the first quarter of 2024 was impacted by economic and geopolitical uncertainties, it was a period where hopes for macroeconomic normalization began to increase. Domestically, the Central Bank of the Republic of Türkiye's controlled interest rate hikes were monitored amid reaccelerated inflation, while global attention was on the Fed's cautious approach to interest rate cuts.
In the first quarter of the year, we achieved strong growth by enlarging our subscriber base with our value-oriented postpaid and fiber subscribers, along with the support of our digital services and techfin business. Our ongoing inflationary pricing policy has significantly contributed to strengthening our company's financial performance. Our group revenues increased by 11.8% yearly to TRY 30.8 billion, while EBITDA1 rose by 23.2% to TRY 12.8 billion. The EBITDA margin reached 41.4%, improving 3.8 percentage points. We delivered a TRY 2.6 billion net profit for the quarter.
Our operational performance started the year strong, led by the mobile segment. We gained 229 thousand net mobile subscribers in the first quarter. While our postpaid subscriber base posted an increase of net 472 thousand in this quarter, our net addition for the past twelve months surpassed 1.7 million subscribers. Other sector players also made the price adjustments we made during this period. While aggressive offers from competitors were less observed this quarter, the Mobile Number Portability (MNP) market volume also contracted compared to the previous quarter. Thanks to the increasing contribution of sequential price adjustments, the postpaid subscriber base, which expanded to 72%, and our ability to upsell our customers, our Mobile ARPU2 rose 17.1%. We continued to offer innovative and comprehensive tariffs to our customers. In line with this, we are now offering the “Smart Control Service” for free, as an example of our strategy based on always being there for our customers. This service automatically suspends usage when customers reach their package limits, ensuring no additional charges on customers bills. Despite price adjustments, thanks to these initiatives, our mobile subscriber churn rate reached its lowest level in the past 6 years, at 1.5%.
We maintained our focus on fiber subscribers in the fixed broadband segment. With demand for high-speed and quality fiber services remaining strong, we gained a net of 48 thousand fiber subscribers, pushing our fiber subscriber base beyond 2.3 million. Our strategy of shifting customers to 12-month contracts contributed to limiting the delaying effect of inflation on our growth performance. Thanks to this strategy, the share of 12-month contracted subscribers in residential fiber base reached 74%. In this quarter, fiber ARPU rose 13.7% yearly. While our total fixed subscriber base surpassed 3.1 million, this quarter's fixed subscriber churn rate reached its lowest level since 2007, at 1.3%.
Digital services continue to drive our financial performance
The growth of our digital services continues to support our group revenues. Revenues from the stand-alone paid users of our digital services grew by 32% to TRY 1.6 billion. The number of stand-alone paid users3 utilizing our digital services amounted to 5.5 million.
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Digital Business Services provide cloud-based software services enabling automation in business processes, end-to-end digitalization, data center services, and next-generation technologies such as the Internet of Things to our corporate customers. The revenue generated by these services amounted to TRY 2.8 billion this quarter. The revenues from our cloud services, where we provide value-added services and operate four next-generation data centers with a total IT capacity of 54 MWs, recorded growth of 48%, reaching TRY 470 million.
Our Techfin segment, with the contributions of our subsidiaries Financell4 and Paycell, significantly contributed to the group's growth in the first quarter. Financell, with 1.1 million active customers, reached a loan portfolio of TRY 6.1 billion, and with rising interest rates, its revenues rose 53.5% yearly. On the other hand, Paycell's revenues, which offer fast and secure payment solutions, increased by 33.2% year-on-year, while its users5 reached 7.8 million.
We pioneer innovation, social responsibility, and sustainability
By carrying the 'Turkcell and Technology' focus to the international domain, we participated in the 'Sustainable Digital Transformation' panel at the GSMA Mobile World Congress in Barcelona. As Turkcell, we emphasized that we make our operations sustainable and develop products, services, and project solutions that add value to the economy. Moreover, by opening Call Center and Training Center in Hatay, where Hatay is the most affected city by the February 2023 earthquake, we strengthened our commitment to social responsibility while providing new job opportunities for the region's youth, creating long-term support with sustainable impact.
As Türkiye's leading technology integrator, we hold data, energy, artificial intelligence, and cybersecurity in sharp relief. In a digital world, we consider data generated by people and objects the most valuable raw material. In this context, as Türkiye's largest data center operator, I emphasize our company's superior position in the industry.
Our Board of Directors TRY 6.3 billion dividend proposal was approved at the Annual General Assembly meeting of May 2, 2024. We will continue to work with dedication to sustain our successful financial and operational results while maintaining our robust balance sheet.
We revise our guidance upwards
Considering our first quarter performance, we revise our guidance6 upwards. We expect low-double-digit growth of Group revenues in real terms in 2024. We maintain our EBITDA margin expectation of approximately 42% and our operational capex to sales ratio7 target of around 23%.
As we celebrate our company's 30th anniversary with joy and pride, we confidently advance towards making Turkcell the leader of Türkiye's Digital Century. We will continue to leverage the opportunities provided by technology to build on our sustainable successes and add value to our country.
(1) EBITDA is a non-GAAP financial measure. See page 16 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income
(2) Excluding M2M
(3) Including IPTV, OTT TV, fizy, lifebox and GAME+
(4) Following the change in organizational structure, the revenues of Turkcell Sigorta Aracılık Hizmetleri A.Ş. (Insurance Agency), which was previously managed under Financell, have are now classified as "Other" in the Techfin segment as of the first quarter of 2023.
(5) 3-month active user
(6) The guidance for the year 2024 includes the effects of implementing inflation accounting in accordance with IAS 29. Our 2024 guidance has been established using a certain number of assumptions regarding factors beyond our control, including in relation to macroeconomic indicators such as expected inflation levels. In particular, our 2024 guidance is based on an assumed annual inflation rate of 37%, applied on a monthly basis. Please note that this paragraph contains forward-looking statements based on our current estimates and expectations regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual Report on Form 20-F for 2023 filed with the U.S. Securities and Exchange Commission, and in particular, the risk factor section therein.
(7) Excluding license fee
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FINANCIAL AND OPERATIONAL REVIEW
Financial Review of Turkcell Group
| Profit & Loss Statement (million TRY) | Q123 | Q124 | y/y% | |||||||||
| Revenue | 27,569.1 | 30,822.3 | 11.8 | % | ||||||||
| Cost of revenue1 | (14,487.4 | ) | (14,948.1 | ) | 3.2 | % | ||||||
| Cost of revenue1/Revenue | (52.5 | )% | (48.5 | )% | 4.0 | pp | ||||||
| Gross Margin1 | 47.5 | % | 51.5 | % | 4.0 | pp | ||||||
| Administrative expenses | (916.1 | ) | (1,161.1 | ) | 26.7 | % | ||||||
| Administrative expenses/Revenue | (3.3 | )% | (3.8 | )% | (0.5 | )pp | ||||||
| Selling and marketing expenses | (1,450.5 | ) | (1,757.9 | ) | 21.2 | % | ||||||
| Selling and marketing expenses/Revenue | (5.3 | )% | (5.7 | )% | (0.4 | )pp | ||||||
| Net impairment losses on financial and contract assets | (361.2 | ) | (200.9 | ) | (44.4 | )% | ||||||
| EBITDA2 | 10,353.9 | 12,754.3 | 23.2 | % | ||||||||
| EBITDA Margin | 37.6 | % | 41.4 | % | 3.8 | pp | ||||||
| Depreciation and amortization | (7,820.4 | ) | (9,231.9 | ) | 18.0 | % | ||||||
| EBIT3 | 2,533.5 | 3,522.4 | 39.0 | % | ||||||||
| EBIT Margin | 9.2 | % | 11.4 | % | 2.2 | pp | ||||||
| Net finance income / (costs) | (872.0 | ) | 160.8 | n.m | ||||||||
| Finance income | 1,456.2 | 5,477.3 | 276.1 | % | ||||||||
| Finance costs | (1,885.5 | ) | (7,964.1 | ) | 322.4 | % | ||||||
| Monetary gain / (loss) | (442.8 | ) | 2,647.6 | n.m | ||||||||
| Other income / (expenses) | (232.8 | ) | (218.4 | ) | (6.2 | )% | ||||||
| Non-controlling interests | 0.3 | 5.4 | n.m | |||||||||
| Share of profit of equity accounted investees | 94.0 | (55.9 | ) | (159.5 | )% | |||||||
| Income tax expense | (2,319.1 | ) | (1,320.4 | ) | (43.1 | )% | ||||||
| Profit /(loss) from discontinued operations | 526.8 | 540.6 | 2.6 | % | ||||||||
| Net Income | (269.4 | ) | 2,634.6 | n.m | ||||||||
(1) Excluding depreciation and amortization expenses.
(2) EBITDA is a non-GAAP financial measure. See page 14 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income.
(3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.
Revenue of the Group grew by 11.8% year-on-year in Q124. This resulted mainly from expanding postpaid subscribers of Turkcell Türkiye and price adjustments. Additionally, our digital services & solutions, and techfin business made contributions to overall revenue growth.
Turkcell Türkiye revenues, comprising 86% of Group revenues, grew 13.1% to TRY26,516 million (TRY23,455 million).
| - | Consumer business rose4 by 19.5%, driven mainly by strong postpaid subscriber net additions, rising fiber subscriber base, price adjustments, and upsell efforts. |
| - | Corporate revenues4 decreased by 1.4% mainly due to fewer large-budget projects as compared to the prior period. |
| - | Standalone digital services revenues from consumer and corporate segments grew 32.3% driven mainly by an expanding standalone paid user base compared with the first quarter of 2023, and price adjustments. |
| - | Wholesale revenues decreased 6.1% to TRY1,450 million (TRY1,544 million). |
(4) Following the change in the organizational structure, the revenues from sole proprietorship subscribers that we define as Merchant, which were previously managed under the Corporate segment, are being reported under the Consumer segment as of and from the third quarter of 2023. Within this scope, past data has been revised for comparative purposes.
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Turkcell International revenues1, comprising 3% of Group revenues, increased 2.3% to TRY815 million (TRY797 million).
Techfin segment revenues, comprising 5% of Group revenues, increased 43.7% to TRY1,513 million (TRY1,053 million). This was driven by 53.5% growth in Financell revenues and 33.2% rise in Paycell revenues. Please refer to the Techfin section for details.
Other subsidiaries’ revenues, at 6% of Group revenues, including mainly consumer electronics sales revenues, and non-group energy business revenues, decreased 12.6% to TRY1,979 million (TRY2,263 million).
Cost of revenue (excluding depreciation and amortization) decreased to 48.5% (52.5%) as a percentage of revenues at the end of the first quarter. This was driven mainly by the decline in the cost of goods sold (2.9pp), energy cost (1.8pp), and interconnection cost (1.2pp) despite the increase in funding cost (1.3pp) and personnel expenses (0.6pp) as a percentage of revenues.
Administrative expenses increased to 3.8% (3.3%) as a percentage of revenues in Q124. This was led by higher personnel expenses.
Selling and marketing expenses increased to 5.7% (5.3%) as a percentage of revenues in Q124. This was driven by the increase in marketing expenses (0.3pp), and personnel expenses (0.2pp) despite the decline in selling expenses (0.1pp) as a percentage of revenues.
Net impairment losses on financial and contract assets was at 0.7% (1.3%) as a percentage of revenues in Q124.
EBITDA2 rose by 23.2% year-on-year in Q124 leading to an EBITDA margin of 41.4% with a 3.8pp improvement (37.6%).
| - | Turkcell Türkiye’s EBITDA rose 24.4% to TRY12,027 million (TRY9,671 million) leading to an EBITDA margin of 45.4% (41.2%). |
| - | Turkcell International (excl. Ukraine operations) EBITDA increased 16.2% to TRY297 million (TRY256 million) driving an EBITDA margin of 36.5% (32.1%). |
| - | Techfin segment EBITDA declined 17.0% to TRY345 million (TRY416 million) with an EBITDA margin of 22.8% (39.5%). The key factor behind the year-on-year decline in EBITDA margin was the rise in funding cost for Financell compared with the first quarter of 2023. |
| - | The EBITDA of other subsidiaries was TRY84 million (TRY11 million) in Q124. |
Depreciation and amortization expenses increased 18.0% year-on-year in Q124.
Net finance income of TRY160.8 million (negative TRY872 million) was recorded for Q124, including TRY2.6 billion monetary gain and net FX losses of TRY2.3 billion.
See Appendix A for details of net foreign exchange gain and loss.
Other expenses decreased to TRY218 million (TRY232 million) in Q124.
Income tax expense increased to TRY1,320 million (TRY2,319 million) due mainly to a lower corporate and deferred tax expense compared to the previous year.
Profit /(loss) from discontinued operations of TRY541 million (TRY527 million) was recorded in Q124.
Net income of the Group was TRY2.6 billion (negative TRY269 million) in Q124. This result was mainly due to significant contributions from monetary gains and strong performance at the EBITDA level.
Total cash & debt: Consolidated cash as of March 31, 2024, decreased to TRY48,779 million compared to TRY57,507 million as of December 31, 2023. Please recall that the second installment of the earthquake donation, eurobond purchasing, personnel bonus payment, and wireless fee tax were paid in this quarter. Excluding FX swap transactions, 49% of our cash is in US$, 24% in EUR, 1% BYN, and 25% in TRY.
(1) As of December 31, 2023, our Lifecell, UkrTower, and Global LLC operations in Ukraine have been classified as a disposal group held for sale and as a discontinued operation. Therefore, this segment does not include revenues from those.
(2) EBITDA is a non-GAAP financial measure. See page 14 for the explanation of how we calculate adjusted EBITDA and its reconciliation to net income.
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Consolidated debt as of March 31, 2024, increased to TRY98,050 million from TRY96,750 million as of December 31, 2023 due mainly to the impact of currency movements. Please note that TRY3,197 million of our consolidated debt is comprised of lease obligations. Please note that 43% of our consolidated debt is in US$, 33% in EUR, 3% in CNY, and 21% in TRY.
Net debt1 as of March 31, 2024, increased to TRY33,441 million from TRY27,389 million as of December 31, 2023 with a net debt to EBITDA ratio of 0.6x times.
Turkcell Group had a long FX position of US$158 million at the end of the quarter (Please note that this figure takes hedging portfolio and advance payments into account). The long FX position of US$158 million is in line with our FX neutral definition, which is between -US$200 million and +US$200 million.
Capital expenditures: Capital expenditures, including non-operational items, were at TRY7,508 million in Q124.
Operational capital expenditures (excluding license fees) at the Group level were at 18.2% of total revenues in Q124.
| Capital expenditures (million TRY) | Q1232 | Q1243 | ||||||
| Operational Capex | 6,000.0 | 5,596.7 | ||||||
| License and Related Costs | - | - | ||||||
| Non-operational Capex (Including IFRS15& IFRS16) | 2,360.0 | 1,911.3 | ||||||
| Total Capex | 8,360.0 | 7,508.0 | ||||||
(1) Starting from Q421, we have revised the definition of our net debt calculation to include "financial assets” reported under current and non-current assets. Required reserves held in CBRT balances are also considered in net debt calculation. We believe that these assets are highly liquid and can be easily converted to cash without significant change in value.
(2) Including Ukraine operations
(3) Excluding Ukraine operations
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Operational Review of Turkcell Türkiye
| Summary of Operational Data | Q123 | Q423 | Q124 | y/y % | q/q% | |||||||||||||||
| Number of subscribers1 (million) | 41.7 | 42.5 | 42.8 | 2.6 | % | 0.7 | % | |||||||||||||
| Mobile Postpaid (million) | 25.9 | 27.2 | 27.6 | 6.6 | % | 1.5 | % | |||||||||||||
| Mobile M2M (million) | 4.1 | 4.5 | 4.6 | 12.2 | % | 2.2 | % | |||||||||||||
| Mobile Prepaid (million) | 11.6 | 10.8 | 10.6 | (8.6 | )% | (1.9 | )% | |||||||||||||
| Fiber (thousand) | 2,159.7 | 2,291.0 | 2,338.6 | 8.3 | % | 2.1 | % | |||||||||||||
| ADSL (thousand) | 759.0 | 760.7 | 762.3 | 0.4 | % | 0.2 | % | |||||||||||||
| Superbox (thousand)2 | 676.5 | 719.9 | 737.6 | 9.0 | % | 2.5 | % | |||||||||||||
| Cable (thousand) | 42.4 | 38.5 | 39.2 | (7.5 | )% | 1.8 | % | |||||||||||||
| IPTV (thousand) | 1,309.3 | 1,409.2 | 1,450.1 | 10.8 | % | 2.9 | % | |||||||||||||
| Churn (%)3 | ||||||||||||||||||||
| Mobile Churn (%) | 1.7 | % | 2.4 | % | 1.5 | % | (0.2 | )pp | (0.9 | )pp | ||||||||||
| Fixed Churn (%) | 1.5 | % | 1.6 | % | 1.3 | % | (0.2 | )pp | (0.3 | )pp | ||||||||||
| Average mobile data usage per user (GB/user) | 16.2 | 17.4 | 17.8 | 9.9 | % | 2.3 | % | |||||||||||||
| (1) | Including mobile, fixed broadband, IPTV, and wholesale (MVNO&FVNO) subscribers |
| (2) | Superbox subscribers are included in mobile subscribers. |
| (3) | Churn figures represent average monthly churn figures for the respective years. |
| ARPU (Average Monthly Revenue per User) (TRY) | Q123 | Q124 | y/y % | |||||||||
| Mobile ARPU, blended | 156.0 | 180.2 | 15.5 | % | ||||||||
| Mobile ARPU, blended (excluding M2M) | 173.4 | 203.1 | 17.1 | % | ||||||||
| Postpaid | 185.5 | 208.0 | 12.1 | % | ||||||||
| Postpaid (excluding M2M) | 218.0 | 247.0 | 13.3 | % | ||||||||
| Prepaid | 91.6 | 109.3 | 19.3 | % | ||||||||
| Fixed Residential ARPU, blended | 202.3 | 228.9 | 13.1 | % | ||||||||
| Residential Fiber ARPU | 203.9 | 231.9 | 13.7 | % | ||||||||
Turkcell Türkiye's customer base continued to expand, reaching 42.8 million with a net quarterly addition of 333 thousand, driven by strong postpaid subscriber net addition performance in the first quarter of the year. This strong performance led us to achieve a total of 1.7 million postpaid net additions in the last 12 months.
On the mobile front, our subscriber base expanded to 38.2 million on 229 thousand net additions in Q124. This was driven by 472 thousand net additions from the postpaid subscriber base, which reached 72.3% (69.1%) of total mobile subscribers. We experienced a net decline of 243 thousand in our prepaid subscriber base quarter-on-quarter, due mainly to the disconnection of 319 thousand prepaid customers in Q124 in accordance with the ICTA regulation. The market was not overly aggressive compared to previous quarters, but there have been aggressive campaigns by competitors during some periods of the first quarter. Accordingly, our mobile ARPU (excluding M2M) rose by 17.1% year-on-year thanks to price adjustments, a larger postpaid subscriber base, and upsell performance in Q124. The average monthly mobile churn rate decreased to 1.5% in Q124, the lowest level since 2018.
On the fixed front, our subscriber base reached 3.1 million on 50 thousand quarterly net additions. Our fiber subscriber base expanded by 48 thousand quarterly and 179 thousand annual net additions. Meanwhile, IPTV customers reached to 1.5 million on 41 thousand quarterly and 141 thousand annual net additions. The average monthly fixed churn rate at 1.3% in Q124 which is the lowest level since 2007. Our residential fiber ARPU growth was 13.7% year-on-year, mainly on the back of 12-month commitment structure, price adjustments, and efforts to higher tariffs, as well as higher IPTV pricing.
Average monthly mobile data usage per user rose 9.9% year-on-year to 17.8 GB, with the increasing number and data consumption of 4.5G users in Q124. Accordingly, the average mobile data usage of 4.5G users reached 18.8 GB in Q124. Total smartphone penetration on our network was at 90% at the end of the quarter. 95% of those smartphones were 4.5G compatible.
10
(1) BeST, in which we hold a 100% stake, has operated in Belarus since July 2008.
BeST revenues increased 24.2% year-on-year in local currency terms mainly due to the data and outgoing voice revenues in Q124. BeST registered an EBITDA of BYN24.2 million in the first quarter, which led to an EBITDA margin increased to 49.5%. BeST’s revenues in TRY terms increased 3.0% year-on-year in Q124.
BeST continued to offer LTE services to all six regions, encompassing 4.3 thousand sites in Q124. Enhanced LTE coverage has enabled BeST to expand its 4G subscriber base. Accordingly, 4G users reached 83% of the 3-month active subscriber base, which continued to support mobile data consumption and digital services usage. Additionally, the average monthly data usage among 4G subscribers increased 11% year-on-year, reaching 20.4 GB in Q124.
(2) Kuzey Kıbrıs Turkcell, in which we hold a 100% stake, has operated in Northern Cyprus since 1999.
Kuzey Kıbrıs Turkcell revenues rose 6.7% year-on-year in Q124, driven by mobile segment revenues backed by increased ARPU. In Q124, the EBITDA of Kuzey Kıbrıs Turkcell decreased by 11.1%, leading to an EBITDA margin of 27.1%. The EBITDA was negatively affected by personnel expenses.
| Paycell Financial Data (million TRY) | Q123 | Q124 | y/y% | |||||||||
| Revenue | 511.1 | 681.0 | 33.2 | % | ||||||||
| EBITDA | 215.9 | 318.2 | 47.4 | % | ||||||||
| EBITDA Margin (%) | 42.2 | % | 46.7 | % | 4.5 | pp | ||||||
| Net Income / (Loss) | (71.7 | ) | 74.0 | n.m | ||||||||
Paycell’s revenue rose by 33.2% year-on-year for first quarter of 2024. POS solutions supported topline growth thanks to increase in the commission fee per transaction. Accordingly, Paycell’s EBITDA increased 47.4% year-on-year leading to an EBITDA margin of 46.7% on a 4.5pp improvement in Q124. The primary factor behind the rise in EBITDA margin was POS expense growth, which lagged behind the increase in revenue. Additionally, the"Pay Later" mobile payment service was another key factor of revenue growth for Paycell.
11
The Pay Later service transaction volume (non-group) increased by 57% year-on-year to TRY2.2 billion in Q124. This service was utilized by 6.0 million active Pay Later users in Q124. Additionally, Paycell card transaction volume up by 103% year-on-year to TRY5.8 billion. The overall transaction volume for POS solutions also rose to TRY7.7 billion, with a yearly increase of 51%. Meanwhile, the total transaction volume across all services increased 55% to TRY20.5 billion year-on-year in Q124.
(1) Following the change in the organizational structure, the revenues of Turkcell Sigorta Aracılık Hizmetleri A.Ş. (Insurance Agency), which was previously managed under the Financell, has been classified from Financell to "Other" in the Techfin segment as of the first quarter of 2023.
Financell’s revenues rose by 53.5% in Q124. EBITDA decreased 59.3% yielding an EBITDA margin of 11.1%. The primary reason for the decline in EBITDA margin compared to the previous year was the increase in funding costs.
Financell’s loan portfolio was at TRY6.1 billion in the first quarter of the year. Financell has provided loans to about 30 thousand corporate customers. Financell’s cost of risk was at 1.7% at the end of the Q1. Financell continued to offer innovative solutions including green loans for solar projects, car loans, and shopping loans for both individual and corporate customers.
Turkcell Group registered subscribers amounted to approximately 56.2 million as of March 31, 2024. This figure is calculated by taking the number of subscribers of Turkcell Türkiye, and of each of our subsidiaries. It includes the total number of mobile, fiber, ADSL, cable and IPTV subscribers of Turkcell Türkiye, and the mobile subscribers of lifecell*, BeST, and Kuzey Kıbrıs Turkcell.
| Turkcell Group Subscribers | Q123 | Q124 | y/y% | |||||||||
| Turkcell Türkiye subscribers1 (million) | 41.7 | 42.8 | 2.6 | % | ||||||||
| BeST (Belarus) | 1.5 | 1.5 | - | |||||||||
| Kuzey Kıbrıs Turkcell | 0.6 | 0.6 | - | |||||||||
| Discontinued operations – lifecell (Ukraine) | 10.8 | 11.3 | 4.6 | % | ||||||||
| Turkcell Group Subscribers (million) | 54.6 | 56.2 | 2.9 | % | ||||||||
(1) Subscribers to more than one service are counted separately for each service. Including mobile, fixed broadband, IPTV, and wholesale (MVNO&FVNO) subscribers
*Discontinued operations
12
DISCONTINUED OPERATIONS – lifecell (Ukraine) Standalone
(1) Since July 10, 2015, we hold a 100% stake in lifecell. A share transfer agreement was signed on December 29, 2023 for the transfer of all shares, along with all rights and debts of Lifecell LLC. Discontinued operations in Ukraine include Lifecell LLC, LLC Global Bilgi, and LLC Ukrtower. The sale of the Ukrainian assets remains subject to the completion of closing conditions. The table presents the financial figures of Lifecell LLC only.
lifecell (Ukraine) revenues in local currency terms increased 16.1%, while its EBITDA rose 5.7% resulting in an EBITDA margin of 54.4% in Q124.
In TRY terms, lifecell’s revenue increased by 7.5% in the first quarter of the year. Net income was up 4.5% to TRY469 million in Q124.
OVERVIEW OF THE MACROECONOMIC ENVIRONMENT
The foreign exchange rates used in our financial reporting, along with certain macroeconomic indicators, are set out below.
| Q123 | Q423 | Q124 | y/y% | q/q% | ||||||||||||||||
| GDP Growth (Türkiye) | 4.0 | % | 4.0 | % | n.a | n.a | n.a | |||||||||||||
| Consumer Price Index (Türkiye)(yoy) | 50.5 | % | 64.8 | % | 68.5 | % | 18.0 | pp | 3.7 | pp | ||||||||||
| US$ / TRY rate | ||||||||||||||||||||
| Closing Rate | 19.1460 | 29.4382 | 32.2854 | 68.6 | % | 9.7 | % | |||||||||||||
| Average Rate | 18.8577 | 28.4905 | 30.7624 | 63.1 | % | 8.0 | % | |||||||||||||
| EUR / TRY rate | ||||||||||||||||||||
| Closing Rate | 20.8021 | 32.5739 | 34.8023 | 67.3 | % | 6.8 | % | |||||||||||||
| Average Rate | 20.2424 | 30.7734 | 33.3856 | 64.9 | % | 8.5 | % | |||||||||||||
| US$ / UAH rate | ||||||||||||||||||||
| Closing Rate | 36.5686 | 37.9824 | 39.2214 | 7.3 | % | 3.3 | % | |||||||||||||
| Average Rate | 36.5686 | 36.6722 | 38.2281 | 4.5 | % | 4.2 | % | |||||||||||||
| US$ / BYN rate | ||||||||||||||||||||
| Closing Rate | 2.8571 | 3.1775 | 3.2498 | 13.7 | % | 2.3 | % | |||||||||||||
| Average Rate | 2.7505 | 3.1809 | 3.2100 | 16.7 | % | 0.9 | % | |||||||||||||
13
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 and intangible assets (affecting relative depreciation expense and amortization expense). We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties in evaluating the performance of other mobile operators in the telecommunications industry in Europe, many of which present Adjusted EBITDA when reporting their results.
Our Adjusted EBITDA definition includes Revenue, Cost of Revenue excluding depreciation and amortization, Selling and Marketing expenses, Administrative expenses and Net impairment losses on financial and contract assets, but excludes finance income and expense, other operating income and expense, investment activity income and expense, share of profit of equity accounted investees and minority interest.
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 to net profit, which we believe is the most directly comparable financial measure calculated and presented in accordance with IFRS.
| Turkcell Group (million TRY) | Q123 | Q124 | y/y% | |||||||||
| Consolidated profit before minority interest | (269.7 | ) | 2,629.1 | n.m | ||||||||
| Profit /(loss) from discontinued operations | 526.8 | 540.6 | 2.6 | % | ||||||||
| Income tax expense | (2,319.1 | ) | (1,320.4 | ) | (43.1 | )% | ||||||
| Consolidated profit before income tax & minority interest | 1,522.7 | 3,408.9 | 123.9 | % | ||||||||
| Share of profit of equity accounted investees | 94.0 | (55.9 | ) | (159.5 | )% | |||||||
| Finance income | 1,456.2 | 5,477.3 | 276.1 | % | ||||||||
| Finance costs | (1,885.5 | ) | (7,964.1 | ) | 322.4 | % | ||||||
| Monetary gain / (loss) | (442.8 | ) | 2,647.6 | n.m | ||||||||
| Other income / (expenses) | (232.8 | ) | (218.4 | ) | (6.2 | )% | ||||||
| EBIT | 2,533.5 | 3,522.4 | 39.0 | % | ||||||||
| Depreciation and amortization | 7,820.4 | 9,231.9 | 18.0 | % | ||||||||
| Adjusted EBITDA | 10,353.9 | 12,754.3 | 23.2 | % | ||||||||
14
RECONCILIATION OF ARPU: ARPU is an operational measurement tool and the methodology for calculating performance measures such as ARPU varies substantially among operators and is not standardized across the telecommunications industry, and reported performance measures thus vary from those that may result from the use of a single methodology. Management believes this measure is helpful in assessing the development of our services over time. The following table shows the reconciliation of Turkcell Türkiye revenues to such revenues included in the ARPU calculations for Q1 2023 and Q1 2024.
| Reconciliation of ARPU | Q123 | Q124 | ||||||
| Turkcell Türkiye Revenue (million TRY) | 23,455.1 | 26,515.8 | ||||||
| Telecommunication services revenue | 21,791.0 | 25,153.8 | ||||||
| Equipment revenue | 1,314.5 | 1,012.6 | ||||||
| Other* | 349.6 | 349.4 | ||||||
| Revenues which are not attributed to ARPU calculation1 | (3,987.5 | ) | (3,631.4 | ) | ||||
| Turkcell Türkiye revenues included in ARPU calculation2 | 19,118.0 | 22,535.0 | ||||||
| Mobile blended ARPU (TRY) | 156.0 | 180.2 | ||||||
| Average number of mobile subscribers during the year (million) | 37.5 | 38.1 | ||||||
| Fixed residential ARPU (TRY) | 202.3 | 228.9 | ||||||
| Average number of fixed residential subscribers during the year (million) | 2.6 | 2.8 | ||||||
(1) Revenue from fixed corporate and wholesale business; digital business sales; tower business, and other non-subscriber-based revenues
(2) Revenues from Turkcell Türkiye included in ARPU calculation comprise telecommunication services revenue, equipment revenue and revenues which are not attributed to ARPU calculation.
*Including call center revenues
15
ABOUT TURKCELL: Turkcell is a digital operator headquartered in Türkiye, serving its customers with its unique portfolio of digital services along with voice, messaging, data, and IPTV services on its mobile and fixed networks. Turkcell Group companies operate in 4 countries – Türkiye, Belarus, Northern Cyprus, and Ukraine (discontinued operations) Turkcell launched LTE services in its home country on April 1st, 2016, employing LTE-Advanced and 3 carrier aggregation technologies in 81 cities. Turkcell offers up to 10 Gbps fiber internet speed with its FTTH services. Turkcell Group reported TRY30.8 billion in revenue in Q124 with total assets of TRY282.3 billion as of March 31, 2024. It has been listed on the NYSE and the BIST since July 2000 and is the only dual-listed company in Türkiye. Read more at www.turkcell.com.tr.
For further information please contact Turkcell
Investor Relations Tel: + 90 212 313 1888 investor.relations@turkcell.com.tr |
Corporate Communications: Tel: + 90 212 313 2321 Turkcell-Kurumsal-Iletisim@turkcell.com.tr |
16
Table: Net foreign exchange gain and loss details
| Million TRY | Q123 | Q124 | y/y% | |||||||||
| Net FX loss before hedging | (418.5 | ) | (2,685.1 | ) | 541.6 | % | ||||||
| Swap interest income/(expense) | 89.9 | 184.6 | 105.3 | % | ||||||||
| Fair value gain on derivative financial instruments | (203.9 | ) | 193.9 | n.m | ||||||||
| Net FX gain / (loss) after hedging | (532.5 | ) | (2,306.6 | ) | 333.2 | % | ||||||
Table: Income tax expense details
| Million TRY | Q123 | Q124 | y/y% | |||||||||
| Current tax expense | (510.3 | ) | (44.7 | ) | (91.2 | )% | ||||||
| Deferred tax income / (expense) | (1,808.8 | ) | (1,275.7 | ) | (29.5 | )% | ||||||
| Income tax expense | (2,319.1 | ) | (1,320.4 | ) | (43.1 | )% | ||||||
17
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE-MONTHS INTERIM PERIOD ENDED
31 MARCH 2024
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS OF 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Notes | 31 March 2024 | 31 December 2023 | ||||||||
| Assets | ||||||||||
| Property, plant and equipment | 8 | 76,589,958 | 76,690,188 | |||||||
| Right-of-use assets | 10 | 7,654,141 | 7,060,410 | |||||||
| Intangible assets | 9 | 66,350,893 | 67,325,332 | |||||||
| Investment properties | 159,733 | 163,810 | ||||||||
| Trade receivables | 296,973 | 374,949 | ||||||||
| Receivables from financial services | 545,265 | 682,960 | ||||||||
| Contract assets | 107,973 | 116,538 | ||||||||
| Financial assets at fair value through other comprehensive income | 12 | 4,101,805 | 121,994 | |||||||
| Financial assets at fair value through profit or loss | 12 | 772,463 | 623,058 | |||||||
| Deferred tax assets | 2,007,084 | 1,298,779 | ||||||||
| Investments in equity accounted associate and joint venture | 20 | 6,697,954 | 6,753,858 | |||||||
| Other non-current assets | 7,541,662 | 5,097,744 | ||||||||
| Total non-current assets | 172,825,904 | 166,309,620 | ||||||||
| Inventories | 593,566 | 621,927 | ||||||||
| Trade receivables | 14,178,686 | 12,571,443 | ||||||||
| Due from related parties | 207,673 | 197,188 | ||||||||
| Receivables from financial services | 5,811,066 | 6,722,146 | ||||||||
| Contract assets | 3,570,939 | 3,672,531 | ||||||||
| Derivative financial instruments | 14 | 2,423,589 | 2,352,781 | |||||||
| Financial assets at fair value through other comprehensive income | 12 | 915,837 | - | |||||||
| Financial assets at fair value through profit or loss | 12 | 9,362,286 | 10,205,945 | |||||||
| Cash and cash equivalents | 11 | 48,778,706 | 57,507,322 | |||||||
| Other current assets | 4,994,188 | 4,459,604 | ||||||||
| Subtotal | 90,836,536 | 98,310,887 | ||||||||
| Assets held for sale | 21 | 18,596,150 | 19,682,519 | |||||||
| Total current assets | 109,432,686 | 117,993,406 | ||||||||
| Total assets | 282,258,590 | 284,303,026 | ||||||||
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
1
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS OF 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Notes | 31 March 2024 | 31 December 2023 | ||||||||
| Equity | ||||||||||
| Share capital | 37,205,301 | 37,205,301 | ||||||||
| Share premium | 8,840 | 8,840 | ||||||||
| Treasury shares | (852,979 | ) | (852,979 | ) | ||||||
| Reserves | 6,565,826 | 6,414,772 | ||||||||
| Remeasurements of defined benefit plans | (2,341,184 | ) | (2,355,595 | ) | ||||||
| Retained earnings | 102,876,993 | 100,242,431 | ||||||||
| Total equity attributable to equity holders of Turkcell Iletisim Hizmetleri A.S. (“the Company”) | 143,462,797 | 140,662,770 | ||||||||
| Non-controlling interests | (18,392 | ) | (14,905 | ) | ||||||
| Total equity | 143,444,405 | 140,647,865 | ||||||||
| Liabilities | ||||||||||
| Borrowings | 13 | 65,177,133 | 66,675,513 | |||||||
| Trade and other payables | 1,206,009 | 1,278,012 | ||||||||
| Due to related parties | 256 | 44,112 | ||||||||
| Employee benefit obligations | 2,401,018 | 2,361,479 | ||||||||
| Provisions | 1,516,714 | 1,587,228 | ||||||||
| Deferred tax liabilities | 4,294,314 | 2,630,543 | ||||||||
| Contract liabilities | 1,390,263 | 1,373,474 | ||||||||
| Other non-current liabilities | 1,238,677 | 1,281,197 | ||||||||
| Total non-current liabilities | 77,224,384 | 77,231,558 | ||||||||
| Borrowings | 13 | 32,872,396 | 30,074,824 | |||||||
| Current tax liabilities | 242,082 | 245,516 | ||||||||
| Trade and other payables | 18,742,787 | 23,710,267 | ||||||||
| Due to related parties | 479,100 | 635,668 | ||||||||
| Deferred revenue | 415,034 | 285,361 | ||||||||
| Provisions | 909,111 | 2,273,131 | ||||||||
| Contract liabilities | 1,374,499 | 1,510,232 | ||||||||
| Derivative financial instruments | 14 | 163,941 | 407,751 | |||||||
| Subtotal | 55,198,950 | 59,142,750 | ||||||||
| Liabilities directly associated with the assets held for sale | 21 | 6,390,851 | 7,280,853 | |||||||
| Total current liabilities | 61,589,801 | 66,423,603 | ||||||||
| Total liabilities | 138,814,185 | 143,655,161 | ||||||||
| Total equity and liabilities | 282,258,590 | 284,303,026 | ||||||||
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
2
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Notes | 31 March 2024 | 31 March 2023 | ||||||||
| Revenue | 4 | 29,474,711 | 26,600,304 | |||||||
| Revenue from financial services | 4 | 1,347,623 | 968,814 | |||||||
| Total revenue | 30,822,334 | 27,569,118 | ||||||||
| Cost of revenue | (23,208,854 | ) | (21,874,211 | ) | ||||||
| Cost of revenue from financial services | (971,162 | ) | (433,640 | ) | ||||||
| Total cost of revenue | (24,180,016 | ) | (22,307,851 | ) | ||||||
| Gross profit | 6,265,857 | 4,726,093 | ||||||||
| Gross profit from financial services | 376,461 | 535,174 | ||||||||
| Total gross profit | 6,642,318 | 5,261,267 | ||||||||
| Other income | 5 | 50,969 | 104,615 | |||||||
| Selling and marketing expenses | (1,757,911 | ) | (1,450,469 | ) | ||||||
| Administrative expenses | (1,161,057 | ) | (916,116 | ) | ||||||
| Net impairment losses on financial and contract assets | (200,938 | ) | (361,209 | ) | ||||||
| Other expenses | 5 | (269,353 | ) | (337,408 | ) | |||||
| Operating profit | 3,304,028 | 2,300,680 | ||||||||
| Finance income | 6 | 5,477,262 | 1,456,240 | |||||||
| Finance costs | 6 | (7,964,100 | ) | (1,885,526 | ) | |||||
| Monetary gain (loss) | 6 | 2,647,630 | (442,760 | ) | ||||||
| Net finance costs / income | 160,792 | (872,046 | ) | |||||||
| Share of profit of an associate and a joint venture | 20 | (55,904 | ) | 94,024 | ||||||
| Profit before income tax from continuing operations | 21 | 3,408,916 | 1,522,658 | |||||||
| Income tax income/ (expense) | (1,320,431 | ) | (2,319,147 | ) | ||||||
| Profit for the year from continuing operations | 2,088,485 | (796,489 | ) | |||||||
| Profit /(loss) from discontinued operations | 540,639 | 526,829 | ||||||||
| Profit for the year | 2,629,124 | (269,660 | ) | |||||||
| Profit for the year is attributable to: | ||||||||||
| Owners of the Company | 2,634,562 | (269,377 | ) | |||||||
| Non-controlling interests | (5,438 | ) | (283 | ) | ||||||
| Total | 2,629,124 | (269,660 | ) | |||||||
| Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL) | 1.21 | (0.12 | ) | |||||||
| Basic and diluted earnings per share for profit from continuing operations attributable to owners of the Company (in full TL) | 0.96 | (0.36 | ) | |||||||
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
3
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Notes | 31 March 2024 | 31 March 2023 | ||||||||
| Profit for the period | 2,629,124 | (269,660 | ) | |||||||
| Items that will not be reclassified to profit or loss: | ||||||||||
| Remeasurements of defined benefit plans | 14,811 | 234,926 | ||||||||
| Income tax relating to remeasurements of defined benefit plans | (400 | ) | (46,894 | ) | ||||||
| 14,411 | 188,032 | |||||||||
| Other comprehensive income/(expense): | ||||||||||
| Items that may be reclassified to profit or loss: | ||||||||||
| Exchange differences on translation of foreign operations | (202,984 | ) | 187,567 | |||||||
| Gain on financial assets measured at fair value through other comprehensive income | 12 | (7,129 | ) | 33,016 | ||||||
| Cash flow hedges - effective portion of changes in fair value | 4,733,424 | 2,476,474 | ||||||||
| Cash flow hedges - reclassified to profit or loss | (4,168,547 | ) | (2,957,508 | ) | ||||||
| Cost of hedging reserve - changes in fair value | (1,155,658 | ) | (250,888 | ) | ||||||
| Cost of hedging reserve - reclassified to profit or loss | 635,346 | 378,142 | ||||||||
| Loss on hedges of net investments in foreign operations | 35,621 | 124,124 | ||||||||
| Income tax relating to these items | 280,981 | 341,266 | ||||||||
| - Income tax relating to exchange differences | (15,599 | ) | 70,967 | |||||||
| - Income tax relating to cash flow hedges | (317,366 | ) | 22,294 | |||||||
| - Income tax relating to cost of hedging reserve | 409,223 | 161,420 | ||||||||
| - Income tax relating to financial assets measured at fair value | 12 | 5,172 | (608 | ) | ||||||
| - Income tax relating to hedges of net investments | 199,551 | 87,193 | ||||||||
| 151,054 | 332,193 | |||||||||
| Other comprehensive income/(loss) for the year, net of income tax | 165,465 | 520,225 | ||||||||
| Total comprehensive income for the year | 2,794,589 | 250,565 | ||||||||
| Total comprehensive income for the year is attributable to: | ||||||||||
| Owners of the Company | 2,800,027 | 250,848 | ||||||||
| Non-controlling interests | (5,438 | ) | (283 | ) | ||||||
| Total | 2,794,589 | 250,565 | ||||||||
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.
4
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Share capital | Treasury shares | Share premium | Legal reserves | Fair value reserve | Hedges of net investments in foreign operations | Hedging reserve | Cost of hedging reserve | Foreign currency translation reserve | Remeasurement of defined benefit plans | Retained earnings | Reserve of disposal group held for sale | Total | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at 1 January 2023 | 37,205,301 | (817,835 | ) | 8,840 | 28,058,017 | (269,365 | ) | (5,033,035 | ) | 3,022,062 | (8,396,289 | ) | (14,615,921 | ) | (2,358,381 | ) | 89,043,438 | - | 125,846,832 | 7,388 | 125,854,220 | |||||||||||||||||||||||||||||||||||||||
| Profit/ (loss) for the year | - | - | - | - | - | - | - | - | - | - | (269,377 | ) | - | (269,377 | ) | (283 | ) | (269,660 | ) | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of income tax | - | - | - | - | 32,408 | 211,317 | (458,740 | ) | 288,674 | 258,534 | 188,032 | - | - | 520,225 | - | 520,225 | ||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | - | - | - | - | 32,408 | 211,317 | (458,740 | ) | 288,674 | 258,534 | 188,032 | (269,377 | ) | - | 250,848 | (283 | ) | 250,565 | ||||||||||||||||||||||||||||||||||||||||||
| Transfers to legal reserves | - | - | - | 9,577 | - | - | - | - | - | - | (9,577 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of treasury shares | - | (58,400 | ) | - | - | - | - | - | - | - | - | - | - | (58,400 | ) | - | (58,400 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | - | - | - | - | - | - | - | - | (823 | ) | (823 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance at 31 March 2023 | 37,205,301 | (876,235 | ) | 8,840 | 28,067,594 | (236,957 | ) | (4,821,718 | ) | 2,563,322 | (8,107,615 | ) | (14,357,387 | ) | (2,170,349 | ) | 88,764,484 | - | 126,039,280 | 6,282 | 126,045,562 | |||||||||||||||||||||||||||||||||||||||
| Balance at 1 January 2024 | 37,205,301 | (852,979 | ) | 8,840 | 28,444,800 | (103,572 | ) | (6,369,179 | ) | 4,861,582 | (8,528,992 | ) | (18,954,993 | ) | (2,355,595 | ) | 100,242,431 | 7,065,126 | 140,662,770 | (14,905 | ) | 140,647,865 | ||||||||||||||||||||||||||||||||||||||
| Profit/ (loss) for the year | - | - | - | - | - | - | - | - | - | - | 2,634,562 | - | 2,634,562 | (5,438 | ) | 2,629,124 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of income tax | - | - | - | - | (1,957 | ) | 235,172 | 247,511 | (111,089 | ) | (218,583 | ) | 14,411 | - | - | 165,465 | - | 165,465 | ||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | - | - | - | - | (1,957 | ) | 235,172 | 247,511 | (111,089 | ) | (218,583 | ) | 14,411 | 2,634,562 | - | 2,800,027 | (5,438 | ) | 2,794,589 | |||||||||||||||||||||||||||||||||||||||||
| Discontinnued operations (Not 21) | - | - | - | - | - | - | - | - | 507,420 | - | - | (507,420 | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | - | - | - | - | - | - | - | 1,951 | 1,951 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at 31 March 2024 | 37,205,301 | (852,979 | ) | 8,840 | 28,444,800 | (105,529 | ) | (6,134,007 | ) | 5,109,093 | (8,640,081 | ) | (18,666,156 | ) | (2,341,184 | ) | 102,876,993 | 6,557,706 | 143,462,797 | (18,392 | ) | 143,444,405 | ||||||||||||||||||||||||||||||||||||||
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
5
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
CONDENSED CONSOLIDATED FINANCIAL STATEMENT OF CASH FLOWS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Note | 31 March 2024 | 31 March 2023 | ||||||||
| Cash flows from operating activities: | ||||||||||
| Profit for the year from continuing operations | 2,088,485 | (796,489 | ) | |||||||
| Discontinued operations | 540,639 | 526,829 | ||||||||
| Profit for the year | 2,629,124 | (269,660 | ) | |||||||
| Adjustments for: | ||||||||||
| Depreciation and impairment of property, plant and equipment and investment properties | 8-9-10 | 5,868,724 | 2,993,715 | |||||||
| Amortization of intangible assets and right-of-use assets | 4,095,529 | 5,517,965 | ||||||||
| Impairment on property, plant and equipment and intangible asset | (4,805 | ) | (25,422 | ) | ||||||
| Net finance expense | 1,452,345 | 790,042 | ||||||||
| Fair value adjustments to derivatives | 1,606,454 | 365,448 | ||||||||
| Income tax expense | 1,414,785 | 2,418,928 | ||||||||
| Gain on sale of property, plant and equipment | (26,306 | ) | 66,573 | |||||||
| Effects of exchange rate changes and inflation adjustments | (1,998,527 | ) | (1,701,803 | ) | ||||||
| Provisions | 697,287 | 1,071,363 | ||||||||
| Share of (profit)/loss of associates and joint ventures | 20 | 55,904 | (94,024 | ) | ||||||
| Fair value adjustments to financial assets through profit or loss | (693,567 | ) | (724,916 | ) | ||||||
| Non-cash other adjustments | 42,879 | (138,425 | ) | |||||||
| 15,139,826 | 10,269,784 | |||||||||
| Change in operating assets/liabilities | ||||||||||
| Change in trade receivables | (1,417,653 | ) | (3,142,112 | ) | ||||||
| Change in due from related parties | (12,142 | ) | 52,238 | |||||||
| Change in receivables from financial services | 1,064,598 | (207,066 | ) | |||||||
| Change in inventories | 41,486 | (166,346 | ) | |||||||
| Change in other current assets | (901,041 | ) | (788,335 | ) | ||||||
| Change in other non-current assets | 234,544 | (478,527 | ) | |||||||
| Change in due to related parties | (208,909 | ) | 220,497 | |||||||
| Change in trade and other payables | (5,929,295 | ) | (870,415 | ) | ||||||
| Change in other non-current liabilities | (59,075 | ) | 7,912 | |||||||
| Change in employee benefit obligations | 39,539 | (1,032,307 | ) | |||||||
| Change in short term contract asset | 101,592 | (91,216 | ) | |||||||
| Change in long term contract asset | 16,859 | 466,496 | ||||||||
| Change in deferred revenue | 102,698 | 13,250 | ||||||||
| Change in short term contract liability | (179,176 | ) | 205,749 | |||||||
| Change in long term contract liability | 16,789 | 19,409 | ||||||||
| Changes in other working capital | (1,163,372 | ) | (721,203 | ) | ||||||
| Cash generated from operations | 6,887,268 | 3,757,808 | ||||||||
| Interest paid | (1,410,907 | ) | (761,755 | ) | ||||||
| Income tax paid | 110,947 | 642,234 | ||||||||
| Net cash inflow from operating activities | 5,587,308 | 3,638,287 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Acquisition of property, plant and equipment | 8 | (4,736,694 | ) | (2,199,582 | ) | |||||
| Acquisition of intangible assets | 9 | (1,887,718 | ) | (3,343,643 | ) | |||||
| Proceeds from sale of property, plant and equipment | 339,534 | 42,897 | ||||||||
| Payments for advances given for acquisition of property, plant and equipment | (2,641,172 | ) | - | |||||||
| Cash inflows from sale of shares or borrowing instruments of other enterprises or funds | 380,976 | 2,754,381 | ||||||||
| Cash outflows from purchase of shares or borrowing instruments of other enterprises or funds | (5,681,588 | ) | (2,266,136 | ) | ||||||
| Cash (outflows)/inflows from financial assets at amortized cost | 2,582,487 | 945,912 | ||||||||
| Cash outflows from financial assets at fair value through profit or loss | (1,929,672 | ) | (2,087,851 | ) | ||||||
| Interest received | 1,817,970 | 1,277,911 | ||||||||
| Net cash outflow from investing activities | (11,755,877 | ) | (4,876,111 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from derivative instruments | 88,833 | 163,430 | ||||||||
| Repayments of derivative instruments | (179,935 | ) | (255,468 | ) | ||||||
| Proceeds from issues of loans and borrowings | 14,713,424 | 13,868,141 | ||||||||
| Proceeds from issues of bonds | 4,963,951 | 1,753,824 | ||||||||
| Repayments of borrowings | (9,996,223 | ) | (10,332,988 | ) | ||||||
| Repayments of bonds | (3,241,637 | ) | (1,036,744 | ) | ||||||
| Acquisition of treasury shares | - | (58,400 | ) | |||||||
| Payments of lease liabilities | (1,348,840 | ) | (1,244,586 | ) | ||||||
| Net cash outflow from financing activities | 4,999,573 | 2,857,209 | ||||||||
| Net increase in cash and cash equivalents | (1,168,996 | ) | 1,619,385 | |||||||
| Cash and cash equivalents at 1 January | 11 | 61,932,851 | 49,174,330 | |||||||
| Effects of exchange rate changes and inflation adjustments on cash and cash equivalents | (7,185,659 | ) | (4,806,844 | ) | ||||||
| Cash and cash equivalents at 31 March | 11 | 53,578,196 | 45,986,871 | |||||||
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
6
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 1. | Reporting entity |
Turkcell Iletisim Hizmetleri Anonim Sirketi (the “Company” or “Turkcell”) was incorporated in Turkiye on 5 October 1993 and commenced its operations in 1994. The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark/Istanbul. The Company operates under a 25-year GSM license granted in and effective from April 1998, a 20-year 3G license granted in and effective from April 2009 and a 13-year 4.5G license granted in August 2016 and effective from April 2016. The Company’s shares are listed on Borsa Istanbul A.Ş. (“BIST”) and New York Stock Exchange (“NYSE”).
The condensed consolidated interim financial statements of the Company as at and for the three months ended 31 March 2024 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in an associate.
These condensed consolidated interim financial statements were approved for issue on 27 May 2024.
As of 31 March 2024, the ownership interest and voting rights of TVF Bilgi Teknolojileri Iletisim Hizmetleri Yatırım Sanayi ve Ticaret Anonim Sirketi (“TVF BTIH”) and IMTIS Holdings S.a r l. (“IMTIS Holdings”) in the Company are 26.2% and 19.8%, respectively. The proportion of the Company’s shares that are traded in domestic and foreign stock exchanges are 53.95%.
As of 31 March 2024, the Group’s immediate shareholder is TVF BTIH, which is wholly owned by Turkiye Varlik Fonu (“TVF”). TVF has been established with the Law No. 6741 and published in the Official Gazette dated 26 August 2016.
The Company’s board of directors consists of a total of nine non-executive members including three independent members as of 31 March 2024.
| 2. | Basis of preparation of financial statements |
These condensed consolidated interim financial statements for the three months ended 31 March 2024 have been prepared in accordance with IAS 34 Interim Financial Reporting.
These interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as at 31 December 2023.
The accounting policies and presentation are consistent with those of the previous financial year and corresponding interim reporting period.
7
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 2. | Basis of preparation of financial statements (continued) |
New standards and interpretations
| i) | The new standards, amendments and interpretations which are effective as of 1 January 2024 are as follows: |
Amendments to IAS 1- Classification of Liabilities as Current and Non-Current Liabilities
In January 2020 and October 2022, IASB issued amendments to IAS 1 to specify the requirements for classifying liabilities as current or non-current. According to the amendments made in October 2022 if an entity’s right to defer settlement of a liability is subject to the entity complying with the required covenants at a date subsequent to the reporting period (“future covenants”), the entity has a right to defer settlement of the liability even if it does not comply with those covenants at the end of the reporting period. In addition, October 2022 amendments require an entity to provide disclosure when a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months. This disclosure must include information about the covenants and the related liabilities. The amendments clarify that the requirement for the right to exist at the end of the reporting period applies to covenants which the entity is required to comply with on or before the reporting date regardless of whether the lender tests for compliance at that date or at a later date. The amendments also clarified that the classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability for at least twelve months after the reporting period. The amendments must be applied retrospectively in accordance with IAS 8.
The Group does not expect any significant impact on its balance sheet as a result of this amendment.
Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback
In September 2022, the Board issued amendments to IFRS 16. The amendments specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. In applying requirements of IFRS 16 under “Subsequent measurement of the lease liability” heading after the commencement date in a sale and leaseback transaction, the seller lessee determines ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not recognize any amount of the gain or loss that relates to the right of use retained by the seller-lessee. The amendments do not prescribe specific measurement requirements for lease liabilities arising from a leaseback. The initial measurement of the lease liability arising from a leaseback may result in a seller-lessee determining ‘lease payments’ that are different from the general definition of lease payments in IFRS 16. The seller-lessee will need to develop and apply an accounting policy that results in information that is relevant and reliable in accordance with IAS 8. A seller-lessee applies the amendments retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date of initial application of IFRS 16.
The Group does not expect any significant impact on its balance sheet as a result of this amendment.
Amendments to IAS 7 and IFRS 7 - Disclosures: Supplier Finance Arrangements
The amendments issued in May 2023 specify disclosure requirements to enhance the current requirements, which are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. Supplier finance arrangements are characterized by one or more finance providers offering to pay amounts an entity owes its suppliers and the entity agreeing to pay according to the terms and conditions of the arrangements at the same date as, or a date later than, suppliers are paid. The amendments require an entity to provide information about terms and conditions of those arrangements, quantitative information on liabilities related to those arrangements as at the beginning and end of the reporting period and the type and effect of non-cash changes in the carrying amounts of those liabilities. In the context of quantitative liquidity risk disclosures required by IFRS 7, supplier finance arrangements are also included as an example of other factors that might be relevant to disclose.
The amendments did not have a significant impact on the financial position or performance of the Group.
8
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 3. | Basis of preparation of financial statements (continued) |
New standards and interpretations (continued)
| ii) | Standards, amendments and interpretations that are issued but not yet effective: |
Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the consolidated financial statements are as follows. the Group will make the necessary changes if not indicated otherwise, which will be affecting the consolidated financial statements and disclosures, when the new standards and interpretations become effective.
Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
In December 2015, IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. Early application of the amendments is still permitted.
The Group will wait until the final amendment to assess the impacts of the changes.
Amendments to IAS 21 - Lack of exchangeability
In August 2023, the Board issued amendments to IAS 21. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. When an entity estimates a spot exchange rate because a currency is not exchangeable into another currency, it discloses information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows. The amendments will be effective for annual reporting periods beginning on or after 1 January 2025. Early adoption is permitted but will need to be disclosed. When applying the amendments, an entity cannot restate comparative information.
IFRS 18 – The new Standard for Presentation and Disclosure in Financial Statements
In April 2024, IASB issued IFRS 18 which replaces IAS 1. IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. IFRS 18 requires an entity to classify all income and expenses within its statement of profit or loss into one of five categories: operating; investing; financing; income taxes; and discontinued operations. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary financial statements and the notes. In addition, there are consequential amendments to other accounting standards, such as IAS 7, IAS 8 and IAS 34. IFRS 18 and the related amendments are effective for reporting periods beginning on or after 1 January 2027, but earlier application is permitted. IFRS 18 will be applied retrospectively.
The Group is in the process of assessing the impact of the amendments on financial position or performance of the Group.
9
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 2. | Basis of preparation of financial statements (continued) |
New standards and interpretations (continued)
| iii) | The amendments which are effective immediately upon issuance |
Amendments to IAS 12 - International Tax Reform – Pillar Two Model Rules
In May 2023, the Board issued amendments to IAS 12, which introduce a mandatory exception in IAS 12 from recognizing and disclosing deferred tax assets and liabilities related to Pillar Two income taxes. The amendments clarify that IAS 12 applies to income taxes arising from tax laws enacted or substantively enacted to implement the Pillar Two Model Rules published by the Organization for Economic Cooperation and Development (OECD). The amendments also introduced targeted disclosure requirements for entities affected by the tax laws. The temporary exception from recognition and disclosure of information about deferred taxes and the requirement to disclose the application of the exception apply immediately and retrospectively upon issue of the amendments.
Based on management’s preliminary assessments, Group management does not expect significant impact on it’s consolidated financial statements due to Pillar Two amendments. However, the Company will continue to monitoring upcoming legislation changes on this matter, in Turkey and in other countries that the Group operates.
10
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 3. | Segment information |
In accordance with its integrated communication and technology services strategy, Group has reportable segments which are Turkcell Turkiye, Turkcell International and Techfin. While some of these strategic segments offer the same types of services, they are managed separately because they operate in different geographical locations and are affected by different economic conditions.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker function is carried out by the Board of Directors, however Board of Directors may transfer the authorities, other than recognized by the law, to the General Manager and other directors.
Turkcell Turkiye reportable segment includes mobile, fixed telecom, digital services and digital business services operations of Turkcell, Turkcell Superonline Iletisim Hizmetleri A.S. (“Turkcell Superonline”), Turkcell Satis A.S’s (“Turkcell Satis”) digital business services, Turkcell Dijital Is Servisleri A.S. (“Turkcell Dijital”), group call center operations of Global Bilgi Pazarlama Danismanlik ve Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Atmosware Teknoloji Egitim ve Danismanlik A.S (“Atmosware Teknoloji”), Turkcell Teknoloji Arastirma ve Gelistirme A.S. (“Turkcell Teknoloji”), Ultia Teknoloji Yazilim ve Uygulama Gelistirme Ticaret A.S. (“Ultia”), Kule Hizmet ve Isletmecilik A.S. (“Global Tower”), Rehberlik Hizmetleri Servisi A.S. (“Rehberlik”), Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”), Lifecell Dijital Servisler ve Cozumler A.S. (“Lifecell Dijital Servisler”), Lifecell Bulut Cozumleri A.S. (“Lifecell Bulut”), Lifecell TV Yayin ve Icerik Hizmetleri A.S. (“Lifecell TV”), Lifecell Muzik Yayin ve Iletim A.S. (“Lifecell Muzik”) and BiP Iletisim Teknolojileri ve Dijital Servisler A.S. (“BiP A.S.”).
Turkcell International reportable segment includes telecom and digital services related operations of CJSC Belarusian Telecommunications Network (“BeST”), Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), East Asian Consortium B.V. (“Eastasia”), Lifecell Ventures Cooperatief U.A (“Lifecell Ventures”), Lifetech LLC (“Lifetech”), Beltower LLC (“Beltower”), Lifecell Digital Limited (“Lifecell Digital”), Yaani Digital BV (“Yaani”) and BiP Digital Communication Technologies B.V (“BiP B.V.”).
Techfin reportable segment includes all financial services operations of Turkcell Finansman, Turkcell Odeme, Paycell, Paycell Europe, Turkcell Sigorta and Turkcell Dijital Sigorta. The operations of these legal entities aggregated into one reportable segment as the nature of services are similar and most of them share similar economic characteristics.
Other reportable segment mainly comprises of non-group call center operations of Turkcell Global Bilgi, Turkcell Enerji, Boyut Enerji, Turkcell GSYF, Turkcell Dijital Egitim Teknolojileri A.S. (“Dijital Egitim”). W3 Labs Yeni Teknolojiler A.S. ("W3") and Turkcell Satis’s other operations.
The Board primarily uses adjusted EBITDA to assess the performance of the operating segments. Adjusted EBITDA definition includes revenue, cost of revenue excluding depreciation and amortization, selling and marketing expenses and administrative expenses.
Adjusted EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and may not be comparable to other similarly-titled indicators used by other companies. Reconciliation of Adjusted EBITDA to the consolidated profit for the year is included in the accompanying notes.
11
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 3. | Segment information (continued) |
| Turkcell Turkiye | Turkcell International | Techfin | Other | Intersegment Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||
| Total segment revenue | 26,515,823 | 23,455,132 | 815,034 | 797,480 | 1,512,874 | 1,053,087 | 2,612,919 | 2,915,892 | (634,316 | ) | (652,473 | ) | 30,822,334 | 27,569,118 | ||||||||||||||||||||||||||||||||||
| Inter-segment revenue | (257,468 | ) | (189,436 | ) | (38,916 | ) | (57,566 | ) | (165,251 | ) | (84,273 | ) | (172,681 | ) | (321,198 | ) | 634,316 | 652,473 | - | - | ||||||||||||||||||||||||||||
| Revenues from external customers | 26,258,355 | 23,265,696 | 776,118 | 739,914 | 1,347,623 | 968,814 | 2,440,238 | 2,594,694 | - | - | 30,822,334 | 27,569,118 | ||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | 12,027,422 | 9,670,984 | 297,176 | 255,778 | 345,300 | 416,202 | 178,317 | 218,662 | (93,928 | ) | (207,703 | ) | 12,754,287 | 10,353,923 | ||||||||||||||||||||||||||||||||||
12
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 3. | Segment information (continued) |
| 31 March 2024 | 31 March 2023 | |||||||
| Profit for the period | 2,088,485 | (796,489 | ) | |||||
| Add/(Less): | ||||||||
| Income tax expense | 1,320,431 | 2,319,147 | ||||||
| Finance income | (2,322,560 | ) | (1,456,240 | ) | ||||
| Finance costs | 4,809,398 | 1,885,526 | ||||||
| Other income | (50,969 | ) | (104,615 | ) | ||||
| Other expenses | 269,353 | 337,408 | ||||||
| Monetary (gain) loss | (2,647,630 | ) | 442,760 | |||||
| Depreciation and amortization | 9,231,875 | 7,820,450 | ||||||
| Share of loss/(gain) of equity accounted investees | 55,904 | (94,024 | ) | |||||
| Consolidated adjusted EBITDA | 12,754,287 | 10,353,923 | ||||||
13
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 4. | Revenue |
| Turkcell Turkiye | Turkcell International | Techfin | Other | Intersegment Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||
| Telecommunication services | 25,153,791 | 21,791,008 | 727,900 | 676,197 | - | - | - | - | (55,225 | ) | (50,077 | ) | 25,826,466 | 22,417,128 | ||||||||||||||||||||||||||||||||||
| Equipment revenues | 1,012,604 | 1,314,517 | 36,485 | 55,991 | - | - | 1,610,377 | 1,722,127 | (7,142 | ) | (722 | ) | 2,652,324 | 3,091,913 | ||||||||||||||||||||||||||||||||||
| Revenue from financial services | - | - | - | - | 1,512,874 | 1,053,087 | - | - | (165,251 | ) | (84,273 | ) | 1,347,623 | 968,814 | ||||||||||||||||||||||||||||||||||
| Other | 349,428 | 349,607 | 50,649 | 65,292 | - | - | 1,002,542 | 1,193,765 | (406,698 | ) | (517,401 | ) | 995,921 | 1,091,263 | ||||||||||||||||||||||||||||||||||
| Total | 26,515,823 | 23,455,132 | 815,034 | 797,480 | 1,512,874 | 1,053,087 | 2,612,919 | 2,915,892 | (634,316 | ) | (652,473 | ) | 30,822,334 | 27,569,118 | ||||||||||||||||||||||||||||||||||
Revenue from financial services comprise of interest income generated from consumer financing activities, The Group has interest income amounting to 754,016 TL as of 31 March 2024. (31 March 2023: 466,245)
14
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 4. | Revenue (continued) |
| 31 March 2024 | ||||||||||||||||||||||||
| Turkcell Turkiye | Turkcell International | Techfin | Other | Intersegment eliminations | Consolidated | |||||||||||||||||||
| Telecommunication Services | 25,153,791 | 727,900 | - | - | (55,225 | ) | 25,826,466 | |||||||||||||||||
| At a point in time | 683,246 | 23,428 | - | - | - | 706,674 | ||||||||||||||||||
| Over time | 24,470,545 | 704,472 | - | - | (55,225 | ) | 25,119,792 | |||||||||||||||||
| Equipment Related | 1,012,604 | 36,485 | - | 1,610,377 | (7,142 | ) | 2,652,324 | |||||||||||||||||
| At a point in time | 904,126 | 36,485 | - | 1,610,377 | (5,817 | ) | 2,545,171 | |||||||||||||||||
| Over time | 108,478 | - | - | - | (1,325 | ) | 107,153 | |||||||||||||||||
| Revenue from financial operations | - | - | 1,512,874 | - | (165,251 | ) | 1,347,623 | |||||||||||||||||
| At a point in time | - | - | 655,841 | - | (147,554 | ) | 508,287 | |||||||||||||||||
| Over time | - | - | 857,033 | - | (17,697 | ) | 839,336 | |||||||||||||||||
| Other | 349,428 | 50,649 | - | 1,002,542 | (406,698 | ) | 995,921 | |||||||||||||||||
| At a point in time | 2,756 | 14,650 | - | 59,970 | (1,840 | ) | 75,536 | |||||||||||||||||
| Over time | 346,672 | 35,999 | - | 942,572 | (404,858 | ) | 920,385 | |||||||||||||||||
| Total | 26,515,823 | 815,034 | 1,512,874 | 2,612,919 | (634,316 | ) | 30,822,334 | |||||||||||||||||
| At a point in time | 1,590,128 | 74,563 | 655,841 | 1,670,347 | (155,211 | ) | 3,835,668 | |||||||||||||||||
| Over time | 24,925,695 | 740,471 | 857,033 | 942,572 | (479,105 | ) | 26,986,666 | |||||||||||||||||
| 31 March 2023 | ||||||||||||||||||||||||
| Turkcell Turkiye | Turkcell International | Techfin | Other | Intersegment eliminations | Consolidated | |||||||||||||||||||
| Telecommunication Services | 21,791,008 | 676,197 | - | - | (50,077 | ) | 22,417,128 | |||||||||||||||||
| At a point in time | 267,874 | 27,571 | - | - | (118 | ) | 295,327 | |||||||||||||||||
| Over time | 21,523,134 | 648,626 | - | - | (49,959 | ) | 22,121,801 | |||||||||||||||||
| Equipment Related | 1,314,517 | 55,991 | - | 1,722,127 | (722 | ) | 3,091,913 | |||||||||||||||||
| At a point in time | 1,156,234 | 55,991 | - | 1,722,127 | (722 | ) | 2,933,630 | |||||||||||||||||
| Over time | 158,283 | - | - | - | - | 158,283 | ||||||||||||||||||
| Revenue from financial operations | - | - | 1,053,087 | - | (84,273 | ) | 968,814 | |||||||||||||||||
| At a point in time | - | - | 489,986 | - | (84,273 | ) | 405,713 | |||||||||||||||||
| Over time | - | - | 563,101 | - | - | 563,101 | ||||||||||||||||||
| Other | 349,607 | 65,292 | - | 1,193,765 | (517,401 | ) | 1,091,263 | |||||||||||||||||
| At a point in time | 2,305 | 9,499 | - | 35,761 | - | 47,565 | ||||||||||||||||||
| Over time | 347,302 | 55,793 | - | 1,158,004 | (517,401 | ) | 1,043,698 | |||||||||||||||||
| Total | 23,455,132 | 797,480 | 1,053,087 | 2,915,892 | (652,473 | ) | 27,569,118 | |||||||||||||||||
| At a point in time | 1,426,413 | 93,061 | 489,986 | 1,757,888 | (85,113 | ) | 3,682,235 | |||||||||||||||||
| Over time | 22,028,719 | 704,419 | 563,101 | 1,158,004 | (567,360 | ) | 23,886,883 | |||||||||||||||||
15
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 5. | Other income and expense |
Recognized in the statement of profit or loss:
| 31 March 2024 | 31 March 2023 | |||||||
| Depositary reimbursement | 508 | 39,371 | ||||||
| Gain on sale of fixed assets | 22,178 | - | ||||||
| Rent income | 6,099 | 8,736 | ||||||
| Other | 22,184 | 56,508 | ||||||
| Other income | 50,969 | 104,615 | ||||||
| Donation expenses | (194,967 | ) | (161,367 | ) | ||||
| Litigation expenses | (3,145 | ) | (13,267 | ) | ||||
| Loss on modification of lease contract | (27,467 | ) | (29,536 | ) | ||||
| Loss on sale of fixed assets | - | (66,291 | ) | |||||
| Restructuring cost | (14,434 | ) | (48,141 | ) | ||||
| Other | (29,340 | ) | (18,806 | ) | ||||
| Other expense | (269,353 | ) | (337,408 | ) | ||||
| 6. | Finance income and costs |
Recognized in the statement of profit or loss:
| 31 March 2024 | 31 March 2023 | |||||||
| Interest income | 1,130,625 | 674,743 | ||||||
| Income from financial assetes carried at fair value | 693,567 | 724,916 | ||||||
| Cash flow hedges – reclassified to profit or loss | 3,533,201 | - | ||||||
| Other | 119,869 | 56,581 | ||||||
| Finance income | 5,477,262 | 1,456,240 | ||||||
| Net foreign exchange losses | (2,685,142 | ) | (418,487 | ) | ||||
| Net interest expenses for financial assets and liabilities measured at amortized cost | (2,103,854 | ) | (1,320,344 | ) | ||||
| Net fair value losses on derivative financial instruments and interest | (3,154,702 | ) | (2,693,415 | ) | ||||
| Cash flow hedges – reclassified to profit or loss | - | 2,579,366 | ||||||
| Other | (20,402 | ) | (32,646 | ) | ||||
| Finance costs | (7,964,100 | ) | (1,885,526 | ) | ||||
| Monetary gain (loss) | 2,647,630 | (442,760 | ) | |||||
| Net finance costs | 160,792 | (872,046 | ) | |||||
16
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 7. | Income tax expense |
The corporate tax rate is 25% for companies (31 March 2023: 20%), 30% for banks (31 March 2023: 25%), and companies within the scope of Law No. 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies.
| 8. | Property, plant and equipment |
| Cost | Balance
at 1 January 2024 | Additions | Disposals | Transfers | Impairment expenses/ (reversals) | Effects
of movements in exchange rates | Balance
at 31 March 2024 | |||||||||||||||||||||
| Network infrastructure (All operational) | 209,220,466 | 1,084,965 | (816,731 | ) | 964,560 | - | (367,942 | ) | 210,085,318 | |||||||||||||||||||
| Land and buildings | 13,193,481 | 65,584 | (1,586 | ) | - | - | (86,402 | ) | 13,171,077 | |||||||||||||||||||
| Equipment, fixtures and fittings | 13,773,007 | 248,146 | (40,536 | ) | 133,829 | - | (211,028 | ) | 13,903,418 | |||||||||||||||||||
| Motor vehicles | 216,845 | 6,587 | (2,073 | ) | - | - | (1,756 | ) | 219,603 | |||||||||||||||||||
| Leasehold improvements | 4,354,272 | 9,272 | (13 | ) | 17,620 | - | (8 | ) | 4,381,143 | |||||||||||||||||||
| Electricity production power plant | 390,225 | - | - | - | - | - | 390,225 | |||||||||||||||||||||
| Construction in progress | 2,805,703 | 2,865,791 | (56,325 | ) | (1,087,407 | ) | - | (4,228 | ) | 4,523,534 | ||||||||||||||||||
| Total | 243,953,999 | 4,280,345 | (917,264 | ) | 28,602 | - | (671,364 | ) | 246,674,318 | |||||||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||||||||||
| Network infrastructure (All operational) | 145,876,564 | 4,424,905 | (610,924 | ) | - | (3,742 | ) | (1,405,076 | ) | 148,281,727 | ||||||||||||||||||
| Land and buildings | 3,289,663 | 150,531 | - | - | - | (34,136 | ) | 3,406,058 | ||||||||||||||||||||
| Equipment, fixtures and fittings | 13,964,223 | 690,057 | (26,669 | ) | - | - | (388,394 | ) | 14,239,217 | |||||||||||||||||||
| Motor vehicles | 204,880 | 12,196 | (2,065 | ) | - | - | (29,994 | ) | 185,017 | |||||||||||||||||||
| Leasehold improvements | 3,909,483 | 11,296 | - | - | - | (109 | ) | 3,920,670 | ||||||||||||||||||||
| Electricity production power plant | 18,998 | 4,827 | - | - | - | 27,846 | 51,671 | |||||||||||||||||||||
| Total | 167,263,811 | 5,293,812 | (639,658 | ) | - | (3,742 | ) | (1,829,863 | ) | 170,084,360 | ||||||||||||||||||
| Net book value | 76,690,188 | (1,013,467 | ) | (277,606 | ) | 28,602 | 3,742 | 1,158,499 | 76,589,958 | |||||||||||||||||||
Depreciation expense for the three months ended 31 March 2024 amounting to TL 5,290,070 including impairment losses are recognized in cost of revenue.
Impaired network infrastructure mainly consists of damaged or technologically inadequate mobile and fixed network infrastructure investments. Impairment losses on property, plant and equipment for the three months period ended 31 March 2024 is TL 3,742 and are recognized within depreciation expenses.
17
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| Cost | Balance
at 1 January 2024 | Additions | Disposals | Transfers | Impairment expenses/ (reversals) | Effects
of movements in exchange rates | Balance
at 31 March 2024 | |||||||||||||||||||||
| Telecommunication licenses | 78,596,413 | 259 | (21,088 | ) | - | - | 9,581 | 78,585,165 | ||||||||||||||||||||
| Computer software | 119,302,117 | 255,149 | (4,428 | ) | 27,405 | - | 344,070 | 119,924,313 | ||||||||||||||||||||
| Transmission line software | 1,211,900 | 137 | (53 | ) | - | - | 5,868 | 1,217,852 | ||||||||||||||||||||
| Indefeasible right of usage | 1,168,629 | 228 | - | - | - | - | 1,168,857 | |||||||||||||||||||||
| Brand name | 12,390 | - | - | - | - | (884 | ) | 11,506 | ||||||||||||||||||||
| Customer base | 44,984 | - | - | - | - | (2,296 | ) | 42,688 | ||||||||||||||||||||
| Goodwill | 469,378 | - | - | - | - | - | 469,378 | |||||||||||||||||||||
| Subscriber acquisition cost | 44,320,318 | 1,415,304 | (24,898 | ) | - | - | 123,959 | 45,834,683 | ||||||||||||||||||||
| Electricity production license | 768,618 | - | - | - | - | (9,738 | ) | 758,880 | ||||||||||||||||||||
| Others | 1,435,287 | 24,539 | (23,961 | ) | (4,728 | ) | - | 14,063 | 1,445,200 | |||||||||||||||||||
| Construction in progress | 301,724 | 61,840 | - | (51,279 | ) | - | (13,598 | ) | 298,687 | |||||||||||||||||||
| Total | 247,631,758 | 1,757,456 | (74,428 | ) | (28,602 | ) | - | 471,025 | 249,757,209 | |||||||||||||||||||
| Accumulated amortization | ||||||||||||||||||||||||||||
| Telecommunication licenses | 55,331,794 | 1,141,854 | (2 | ) | - | - | 58,476 | 56,532,122 | ||||||||||||||||||||
| Computer software | 92,061,142 | 886,972 | (36,415 | ) | 16,636 | - | 190,153 | 93,118,488 | ||||||||||||||||||||
| Transmission line software | 1,200,394 | 6,839 | - | - | - | 11,183 | 1,218,416 | |||||||||||||||||||||
| Indefeasible right of usage | 739,485 | 14,753 | - | - | - | (607 | ) | 753,631 | ||||||||||||||||||||
| Brand name | 11,293 | - | - | (7,040 | ) | - | (1,478 | ) | 2,775 | |||||||||||||||||||
| Customer base | 32,611 | - | - | (9,596 | ) | - | (2,027 | ) | 20,988 | |||||||||||||||||||
| Subscriber acquisition cost | 29,883,214 | 966,533 | - | - | - | (173,727 | ) | 30,676,020 | ||||||||||||||||||||
| Electricity production license | 60,343 | - | - | - | - | (1,675 | ) | 58,668 | ||||||||||||||||||||
| Others | 986,150 | 53,001 | (18 | ) | - | 8 | (13,933 | ) | 1,025,208 | |||||||||||||||||||
| Total | 180,306,426 | 3,069,952 | (36,435 | ) | - | 8 | 66,365 | 183,406,316 | ||||||||||||||||||||
| Net book value | 67,325,332 | (1,312,496 | ) | (37,993 | ) | (28,602 | ) | (8 | ) | 404,660 | 66,350,893 | |||||||||||||||||
Amortization expenses for the three months ended 31 March 2024 amounting to TL 3,069,960 include impairment losses and are recognized in cost of revenue.
Impairment losses on intangible assets for the three months ended 31 March 2024 is TL 28,892 and are recognized in amortization expenses.
Computer software includes capitalized software development costs that meet the definition of an intangible asset. The amount of computer software within the Group is 515,455 TL for the three-months interim period ending 31 March 2024.
18
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 10. | Right-of-use assets |
Closing balances of right of use assets as of 31 March 2024 and depreciation and amortization expenses for the related period is stated as below:
| Tangible | Intangible | |||||||||||||||||||||||||||||
| Site Rent | Building | Network equipment | Vehicles | Other | Tangible Total | Right of way | License | Intangible Total | Total | |||||||||||||||||||||
| Balance at 1 January 2024 | 4,448,100 | 1,465,656 | 235,992 | 166,405 | 258,303 | 6,574,456 | 485,092 | 862 | 485,954 | 7,060,410 | ||||||||||||||||||||
| Depreciation and amortization charge for the year | (431,205 | ) | (113,493 | ) | (194,684 | ) | (49,629 | ) | (51,605 | ) | (840,616 | ) | (20,951 | ) | (7,893 | ) | (28,844 | ) | (869,460 | ) | ||||||||||
| Balance at 31 March 2024 | 4,424,630 | 1,468,331 | 734,433 | 119,160 | 363,175 | 7,109,729 | 510,806 | 33,606 | 544,412 | 7,654,141 | ||||||||||||||||||||
As at 31 March 2024, the Company has additions to right-of-use assets amounting to TL 1,470,151 and interest expense on lease liabilities amounting to TL 207,502. Depreciation and amortization expenses amounting to TL 869,460 are recognized in cost of revenues.
19
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 11. | Cash and cash equivalents |
31
March | 31 December 2023 | |||||||
| Cash in hand | 227 | 386 | ||||||
| Banks | 48,810,721 | 57,560,660 | ||||||
| - Demand deposits | 6,168,825 | 4,850,711 | ||||||
| - Time deposits | 42,539,774 | 52,709,949 | ||||||
| Other | 102,122 | - | ||||||
| Impairment loss provision | (32,242 | ) | (53,724 | ) | ||||
| 48,778,706 | 57,507,322 | |||||||
As of 31 March 2024, the average effective interest rates of TL, USD, EUR and RMB time deposits are 47.4%, 1.7%, 2.1% and 0.3% (31 December 2023: 42.2%, 4.1%, 3.7% and 0.7%) respectively.
As of 31 March 2024, average maturity of time deposits is 37 days (31 December 2023: 39 days).
Reconciliation of cash and cash equivalents in consolidated statement of cash flows:
| 31 March 2024 | 31 December 2023 | |||||||
| Cash and cash equivalents | 48,778,706 | 57,507,322 | ||||||
| Interest accrual of cash and cash equivalents | (80,973 | ) | (197,086 | ) | ||||
| Asset held for sale | 4,880,463 | 4,622,615 | ||||||
| Total | 53,578,196 | 61,932,851 | ||||||
20
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 12. | Financial assets |
The details of financial assets as of 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 | 31 December 2023 | |||||||||||||||
| Non-current | Current | Non-current | Current | |||||||||||||
| Fair value through profit or loss | 772,463 | 9,362,286 | 623,058 | 10,205,945 | ||||||||||||
| - Currency protected time deposits (*) | - | 9,362,286 | - | 10,205,945 | ||||||||||||
| - Investment funds (**) | 772,463 | - | 623,058 | - | ||||||||||||
| Fair value through other comprehensive income | 4,101,805 | 915,837 | 121,994 | - | ||||||||||||
| - Listed debt securities (***) | 4,101,805 | 915,837 | 121,994 | - | ||||||||||||
| 4,874,268 | 10,278,123 | 745,052 | 10,205,945 | |||||||||||||
(*) Currency-protected time deposit accounts are classified as financial assets at fair value through profit or loss. The Group has converted its foreign currency deposit account amounting to USD 184,568 and EUR 85,300 into “Currency Protected TL Time Deposit Accounts”.
(**) Investment funds mainly include Turkcell GSYF, established by Re-Pie., and its associate and financial assets which is carried at fair value and valuation differences are recognized in profit or loss.
(***) Listed debt securities are classified as financial assets at fair value through other comprehensive income.
| Fair Values | ||||||||||
| 31
March 2024 | 31
December 2023 | Fair value hierarchy | Valuation technique | |||||||
| Financial assets at fair value through other comprehensive income | 5,017,642 | 121,994 | Level 1 | Pricing models based on quoted market prices at the end of the reporting period, | ||||||
| Financial assets at fair value through profit or loss | 244,116 | 94,710 | Level 1 | Pricing models based on quoted market prices at the end of the reporting period, | ||||||
| Financial assets at fair value through profit or loss | 9,362,286 | 10,205,945 | Level 2 | Forward exchange rates at the reporting date | ||||||
| Financial assets at fair value through profit or loss | 528,347 | 528,348 | Level 3 | Pricing models based on discounted cash flow | ||||||
| 15,152,391 | 10,950,997 | |||||||||
21
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 12. | Financial assets (continued) |
As of 31 March 2024, the notional and fair value amounts of listed debt securities are as follows:
| 31 March 2024 | |||||||||||
| Currency | Notional
amount (original currency) | Fair value
(in TL) | Maturity | ||||||||
| USD | 55,000 | 1,978,649 | 16 October 2028 | ||||||||
| USD | 22,500 | 795,213 | 12 November 2026 | ||||||||
| USD | 20,000 | 665,990 | 16 January 2029 | ||||||||
| USD | 15,000 | 499,189 | 14 February 2029 | ||||||||
| USD | 10,000 | 330,342 | 14 November 2024 | ||||||||
| USD | 10,000 | 327,005 | 10 August 2024 | ||||||||
| USD | 4,500 | 162,765 | 19 October 2028 | ||||||||
| USD | 3,620 | 118,840 | 31 March 2025 | ||||||||
| USD | 2,000 | 65,162 | 7 September 2024 | ||||||||
| USD | 2,200 | 74,487 | 15 October 2024 | ||||||||
| Total listed debt securities | 5,017,642 | ||||||||||
As of 31 March 2024, the notional and fair value amounts of currency protected time deposits are as follows:
| 31 March 2024 | |||||||||||
| Currency | Notional amount (original currency) | Fair value
(in TL) | Maturity | ||||||||
| TL | 1,092,020 | 1,836,605 | 26 April 2024 | ||||||||
| TL | 1,071,635 | 1,777,073 | 10 May 2024 | ||||||||
| TL | 955,742 | 1,235,964 | 16 August 2024 | ||||||||
| TL | 800,000 | 880,231 | 12 August 2024 | ||||||||
| TL | 599,368 | 762,537 | 24 October 2024 | ||||||||
| TL | 505,259 | 581,793 | 26 February 2025 | ||||||||
| TL | 428,045 | 501,871 | 1 April 2024 | ||||||||
| TL | 274,462 | 348,739 | 2 October 2024 | ||||||||
| TL | 269,857 | 347,317 | 31 July 2024 | ||||||||
| TL | 246,418 | 282,661 | 21 February 2025 | ||||||||
| TL | 229,780 | 267,813 | 15 April 2024 | ||||||||
| TL | 140,639 | 183,696 | 28 August 2024 | ||||||||
| TL | 155,895 | 178,031 | 28 February 2025 | ||||||||
| TL | 155,646 | 177,955 | 27 February 2025 | ||||||||
| Total currency protected time deposits | 9,362,286 | ||||||||||
22
TURKCELL ILETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 12. | Financial assets (continued) |
During the year, the following gains (losses) were recognized in other comprehensive income.
| 31 March 2024 | 31 March 2023 | |||||||
| Gains / (Losses) recognized in other comprehensive income | ||||||||
| Related to financial assets | (7,129 | ) | 33,016 | |||||
| Related to financial assets, tax effect | 5,172 | (608 | ) | |||||
| (1,957 | ) | 32,408 | ||||||
| 13. | Loans and borrowings |
| Long-term borrowings | 31
March | 31 December 2023 | ||||||
| Unsecured bank loans | 29,399,540 | 29,335,459 | ||||||
| Secured bank loans | 4,094,738 | 4,545,578 | ||||||
| Lease liabilities | 1,797,020 | 1,905,204 | ||||||
| Debt securities issued | 29,885,835 | 30,889,272 | ||||||
| 65,177,133 | 66,675,513 | |||||||
| Short-term borrowings | ||||||||
| Unsecured bank loans | 23,629,873 | 22,517,286 | ||||||
| Secured bank loans | 938,691 | 890,319 | ||||||
| Lease liabilities | 1,400,070 | 888,066 | ||||||
| Debt securities issued | 6,903,762 | 5,779,153 | ||||||
| 32,872,396 | 30,074,824 | |||||||
The Company has used borrowings in accordance with the loan agreement previously signed with China Development Bank on 7 August 2020, and extended on 7 August 2023. As of 31 March 2024, under this agreement, the Company has used EUR 50,000 and EUR 15,000 loans on 14 March 2024 and 28 March 2024 respectively, with an interest rate of 6M Euribor+2.29%, and CNY 38,000 loan on 29 January 2024 with an annual interest rate of 5.15%.
Based on the Capital Markets Boards of Turkiye’s (“CMB”) approval dated 27 April 2023 for issuance of debt securities amounting to TL 8,000,000, the Company has issued debt securities on 31 January 2024, 8 February 2024 and 9 February 2024, respectively, at the amount of TL 2.500.000, TL 250,000 and TL 800,000 with the maturities of 12 July 2024, 2 August 2024 ve 6 August 2024. As of 31 March 2024, the remaining unutilised limit is TL 2,389,680 out of 8,000,000 TL of total limit. After the balance sheet date, new financial bond is not issued and CMB permission expired as of 27 April 2024.
On 21 December 2023, within the framework of capital markets legislation, 1 year for the issuance of lease certificates based on management contracts, up to 3,000,000 TL, in Turkish Lira, to be sold domestically, in different amounts and time periods, to private and/or qualified investors without public offering. Two lease certificates, each worth TL 300,000, were issued in January and February 2024, with maturities in April and May, respectively.
Turkcell Finansman, following the new approval from the Capital Markets Board (SPK) on 1 December 2023, a corporate bond worth 175,000 TL with a maturity date of March 8, 2024, was issued on 5 December 2023. The Company issued a total of TL 143,000 corporate bonds on 17 January 2024, with the maturity of 16 May 2024. As of 31 March 2024, TL 682,000 issuance limit remained from the TL 1,000,000 limit which taken on 1 December 2023.
On 2 May 2024, Turkcell Ödeme, within the framework of the capital markets legislation, rented up to 1,000,000 TL, in Turkish Lira, based on a management contract, to be sold to private and/or qualified investors without public offering, domestically, in different amounts and time periods. It received CMB approval again for the issuance of certificates, valid for 1 year. It has issued management agreement based lease certificates, each with a maturity of between 3 and 4 months, for a total amount of 500,000 TL on various dates between February 2024 and March 2024.
23
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 13. | Loans and borrowings (continued) |
Terms and conditions of outstanding loans are as follows:
| 31 March 2024 | 31 December 2023 | |||||||||||||||||||||||||||||
| Currency | Interest
rate type | Payment period | Nominal
interest rate | Carrying amount | Payment period | Nominal interest rate | Carrying amount | |||||||||||||||||||||||
| Unsecured Bank Loans | EUR | Floating | 2024-2030 | Euribor+2.0%-Euribor+4.0% | 31,711,147 | 2024-2028 | Euribor+2.0%-Euribor+4.0% | 29,704,733 | ||||||||||||||||||||||
| Unsecured Bank Loans | TRY | Fixed | 2024-2025 | 11.5%-59.0% | 13,469,346 | 2024-2025 | 11.5%-58.9% | 13,741,016 | ||||||||||||||||||||||
| Unsecured Bank Loans | USD | Floating | 2024-2028 | Sofr 2.2% | 4,989,013 | 2024-2028 | Sofr 2.2% | 5,158,469 | ||||||||||||||||||||||
| Unsecured Bank Loans | CNY | Fixed | 2024-2028 | 5.2%-5.5% | 2,641,881 | 2024-2028 | 5.2%-5.5% | 2,602,262 | ||||||||||||||||||||||
| Unsecured Bank Loans | EUR | Fixed | - | - | - | 2024 | 6.0% | 397,465 | ||||||||||||||||||||||
| Unsecured Bank Loans | USD | Fixed | 2024-2026 | 2.6% | 200,426 | 2024-2026 | 2.6% | 230,554 | ||||||||||||||||||||||
| Unsecured Bank Loans | BYR | Fixed | 2024 | 0.14% | 17,600 | 2024 | 14.0% | 18,246 | ||||||||||||||||||||||
| Secured bank loans | USD | Fixed | 2024-2033 | 1.5%-3.8 | 4,193,387 | 2024-2033 | 1.5%-3.8% | 4,455,809 | ||||||||||||||||||||||
| Secured bank loans | USD | Floating | 2024-2028 | Sofr+0.6% & Libor+1.6% | 840,042 | 2024-2028 | Sofr+0.6% & Libor+1.6% | 980,088 | ||||||||||||||||||||||
| Debt securities issued | USD | Fixed | 2024-2028 | 5.8% | 31,650,714 | 2024-2028 | 5.8% | 32,713,405 | ||||||||||||||||||||||
| Debt securities issued | TRY | Fixed | 2024 | 43.5%-47.0% | 5,138,883 | 2024 | 29.5%-45.0% | 3,955,020 | ||||||||||||||||||||||
| Lease liabilities | TRY | Fixed | 2024-2057 | 9.8%-45.0% | 2,333,302 | 2024-2057 | 9.8%-45.0% | 1,806,262 | ||||||||||||||||||||||
| Lease liabilities | BYN | Fixed | 2024-2037 | 10.8%-20.0% | 465,837 | 2024-2034 | 1,0%-11,0% | 469,353 | ||||||||||||||||||||||
| Lease liabilities | EUR | Fixed | 2024-2034 | 1.0%-11.0% | 362,561 | 2024-2037 | 10,8%-20,0% | 478,158 | ||||||||||||||||||||||
| Lease liabilities | USD | Fixed | 2024-2052 | 3.9%-11.6% | 35,390 | 2024-2052 | 3,9%-11,6% | 39,497 | ||||||||||||||||||||||
| 98,049,529 | 96,750,337 | |||||||||||||||||||||||||||||
24
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 14. | Derivative financial instruments |
The fair value of derivative financial instruments at 31 March 2024 and 31 December 2023 are attributable to the following:
| 31 March 2024 | 31 December 2023 | |||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||
| Held for trading | 793,733 | 126,288 | 699,023 | 361,075 | ||||||||||||
| Derivatives used for hedge accounting | 1,336,501 | 56,245 | 1,502,035 | 55,931 | ||||||||||||
| Total | 2,130,234 | 182,533 | 2,201,058 | 417,006 | ||||||||||||
At 31 March 2024, short-term derivative assets of TL 2,423,589 also include a net accrued interest income of TL 293,355 and the short-term derivative liabilities of TL 163,941 also includes a net accrued interest expense of TL 18,592.
At 31 December 2023, short-term derivative assets of TL 2,352,781 also include a net accrued interest income of TL 151,723 and the short-term derivative liabilities of TL 407,751 also includes a net accrued interest expense of TL 9,255.
25
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 14. | Derivative financial instruments (continued) |
Derivatives used for hedging
The notional amount and the fair value of derivatives used for hedging contracts at 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 | 31 December 2023 | |||||||||||||||||||||||||||
| Currency | Notional
value in original currency | Fair value | Notional value in original currency | Fair value | Maturity date | Hedge ratio | Change
in intrinsic value of outstanding hedging instruments since 1 January 2023 | Change
in intrinsic value of outstanding hedging instruments since 1 January 2022 | ||||||||||||||||||||
| Participating cross currency swap contracts | ||||||||||||||||||||||||||||
| EUR Contracts | 167,000 | 253,055 | 167,000 | 298,347 | October 2025 | 01:01 | (4,216 | ) | (8,386 | ) | ||||||||||||||||||
| EUR Contracts | 38,057 | 17,020 | 38,057 | 28,207 | April 2026 | 01:01 | (192 | ) | (201 | ) | ||||||||||||||||||
| USD Contracts | 124,186 | 572,408 | 124,186 | 652,298 | April 2026 | 01:01 | (672 | ) | 11,577 | |||||||||||||||||||
| Cross currency swap contracts | ||||||||||||||||||||||||||||
| RMB Contracts | 81,162 | 335,118 | 81,162 | 356,459 | April 2026 | 01:01 | 132,184 | 84,916 | ||||||||||||||||||||
| Interest rate swap contracts | ||||||||||||||||||||||||||||
| USD Contracts | 90,135 | 102,655 | 90,135 | 110,793 | April 2026 | 01:01 | - | - | ||||||||||||||||||||
| Derivatives used for hedge accounting | 1,280,256 | 1,446,104 | ||||||||||||||||||||||||||
EUR 191,036 (2023: EUR 322,884) participating cross currency swap contracts includes TL 1,015,183 (2023: TL 1,149,159) guarantees after the CSA agreement.
26
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 14. | Derivative financial instruments (continued) |
Held for trading
The notional amount and the fair value of derivatives used held for trading contracts at 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 | 31 December 2023 | |||||||||||||||||||||||
| Currency | Notional value in original currency | Fair value | Maturity | Notional value in original currency | Fair value | Maturity | ||||||||||||||||||
| Cross currency swap contracts | ||||||||||||||||||||||||
| USD Contracts | 7,000 | 183,809 | November 2025 | 8,000 | 212,991 | November 2025 | ||||||||||||||||||
| RMB Contracts | 19,425 | 77,295 | April 2026 | 19,425 | 81,737 | April 2026 | ||||||||||||||||||
| Currency forward contracts | ||||||||||||||||||||||||
| USD Contracts | 840,101 | 194,879 | March 2024 | 334,900 | (141,929 | ) | March 2024 | |||||||||||||||||
| EUR Contracts | - | - | - | 10,000 | (22,905 | ) | January 2024 | |||||||||||||||||
| FX swap contracts | ||||||||||||||||||||||||
| USD Contracts | 72,000 | (58,422 | ) | February 2025 | - | - | - | |||||||||||||||||
| RMB Contracts | 84,880 | (1,524 | ) | November 2024 | 353,972 | (170,998 | ) | February 2024 | ||||||||||||||||
| Participating cross currency swap contracts | ||||||||||||||||||||||||
| USD Contracts | 15,750 | 67,100 | November 2025 | 18,000 | 83,426 | November 2025 | ||||||||||||||||||
| EUR Contracts | 40,060 | 255,453 | April 2026 | 40,060 | 288,894 | April 2026 | ||||||||||||||||||
| Interest rate swap contracts | ||||||||||||||||||||||||
| USD Contracts | 64,655 | 4,401 | April 2033 | 64,655 | 27,283 | April 2026 | ||||||||||||||||||
| TL Contracts | 600,000 | (55,546 | ) | October 2024 | 600,000 | (20,551 | ) | October 2026 | ||||||||||||||||
| Derivatives held for trading | 667,445 | 337,948 | ||||||||||||||||||||||
27
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 14. | Derivative financial instruments (continued) |
Fair value of derivative instruments and risk management
Fair value
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value in the financial statements. To provide an indication of the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level is as follows:
· Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
· Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
· Level 3 inputs are unobservable inputs for the asset or liability.
| Fair Value hierarchy | Valuation Techniques | |||
| a) Participating cross currency swap contracts | Level 2 | Pricing models based on discounted cash present value of the estimated future cash flows based on observable yield curves and end period FX rates | ||
| b) FX swap, currency, interest swap and option contracts | Level 2 | Present value of the estimated future cash flows based on observable yield curves and end period FX rates | ||
| c) Currency forward contracts | Level 2 | Forward exchange rates at the balance sheet date |
As of 31 March 2024, the Company has no financial assets and liabilities carried at fair value on a non-recurring basis.
28
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 15. | Financial instruments |
Impairment losses
Movements in the provision for trade receivables, contract assets, other assets and due from related parties are as follows:
| 31 March 2024 | ||||||||
| Contract Assets | Other Assets | |||||||
| Opening balance | 3,900 | 799,089 | ||||||
| Provision for impairment recognized during the year | 265 | 279,371 | ||||||
| Amounts collected | - | (81,482 | ) | |||||
| Receivables written off during the year as uncollectible | - | (148,001 | ) | |||||
| Assets held for sale | - | (115,946 | ) | |||||
| Effect of changes in exchange rates | - | 16,684 | ||||||
| Inflation adjustment | (521 | ) | (106,333 | ) | ||||
| Closing balance | 3.644 | 643,382 | ||||||
| 31 March 2023 | ||||||||
| Contract Assets | Other Assets | |||||||
| Opening balance | 13,928 | 1,255,175 | ||||||
| Provision for impairment recognized during the year | (451 | ) | 402,040 | |||||
| Amounts collected | - | (85,678 | ) | |||||
| Receivables written off during the year as uncollectible | - | (386,152 | ) | |||||
| Transfer to asset held for sale | - | (55,396 | ) | |||||
| Effect of changes in exchange rates | (878 | ) | ||||||
| Inflation adjustment | (5,325 | ) | (470,230 | ) | ||||
| Closing balance | 8,152 | 658,881 | ||||||
Movements in the provision for impairment of trade receivables, subscriber receivables, other assets and cash and cash equivalents from financial services are as follows:
| 31 March 2024 | 31 March 2023 | |||||||
| Opening balance | 169,088 | 170,477 | ||||||
| Provision for impairment recognized during the year | 47,703 | 50,035 | ||||||
| Amounts collected | (23,088 | ) | (13,711 | ) | ||||
| Receivables transferred with receivables transfer contract (*) | (12,087 | ) | 33 | |||||
| Inflation adjustment | (22,568 | ) | (79,163 | ) | ||||
| Closing balance | 159,048 | 127,671 | ||||||
(*) Turkcell Finansman signed a transfer of claim agreement with a debt management company to transfer some of its doubtful receivables stemming from the years 2016 and 2022. Transferred doubtful receivables comprise of balances for which Turkcell Finansman had started legal proceedings.
29
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 15. | Financial instruments (continued) |
Foreign exchange risk
The Group’s exposure to foreign exchange risk at the end of the reporting period, based on notional amounts, was as follows:
| 31 March 2024 | ||||||||||||
| USD | EUR | RMB | ||||||||||
| Foreign currency denominated assets | ||||||||||||
| Other non-current assets | 69 | 11 | - | |||||||||
| Financial asset at fair value through other comprehensive income | 321,994 | 72,526 | - | |||||||||
| Due from related parties - current | 105 | - | - | |||||||||
| Trade receivables and contract assets | 12,979 | 26,081 | - | |||||||||
| Other current assets | 7,452 | 3,116 | 1 | |||||||||
| Cash and cash equivalents | 123,530 | 944,853 | 59,274 | |||||||||
| 466,129 | 1,046,587 | 59,275 | ||||||||||
| Foreign currency denominated liabilities | ||||||||||||
| Loans and borrowings - non-current | (226,857 | ) | (685,853 | ) | (514,884 | ) | ||||||
| Debt securities issued - non-current | (925,676 | ) | - | - | ||||||||
| Lease obligations - non-current | (1,021 | ) | (9,282 | ) | - | |||||||
| Other non-current liabilities | (36,125 | ) | - | - | ||||||||
| Loans and borrowings - current | (89,783 | ) | (254,497 | ) | (79,411 | ) | ||||||
| Debt securities issued - current | (54,665 | ) | - | - | ||||||||
| Lease obligations - current | (73 | ) | (1,136 | ) | - | |||||||
| Other current liabilities | (916 | ) | (8,565 | ) | - | |||||||
| Trade and other payables - current | (114,856 | ) | (84,580 | ) | (224,435 | ) | ||||||
| Due to related parties | (90 | ) | - | - | ||||||||
| (1,450,062 | ) | (1,043,913 | ) | (818,730 | ) | |||||||
| Financial liabilities defined as hedging instruments | 9,547 | 378,414 | - | |||||||||
| Exposure related to derivative instruments | ||||||||||||
| Participating cross currency swap and FX swap contracts | 581,600 | (540,000 | ) | 185,465 | ||||||||
| Currency forward contracts | 643,423 | - | - | |||||||||
| Net exposure | 250,637 | (158,912 | ) | (573,990 | ) | |||||||
30
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 15. | Financial instruments (continued) |
Exposure to currency risk
Sensitivity analysis
The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The aggregate foreign exchange exposure is composed of all assets and liabilities denominated in foreign currencies; the analysis excludes net foreign currency investments.
A 10% strengthening/weakening of the TL, UAH,
BYN, EUR against the following currencies as at
31 March 2024 would have increased/(decreased) profit or loss before by the amounts shown below. This analysis assumes that all
other variables, in particular interest rates, remain constant.
| 31 March 2024 | ||||||||||||||||
| Profit/(Loss) | Equity | |||||||||||||||
| Sensitivity analysis | Appreciation of foreign currency | Depreciation of foreign currency | Appreciation of foreign currency | Depreciation of foreign currency | ||||||||||||
| 1- USD net asset/liability | 809,192 | (809,192 | ) | - | - | |||||||||||
| 2- Hedged portion of USD risk (-) | - | - | (30,822 | ) | 30,822 | |||||||||||
| 3- USD net effect (1+2) | 809,192 | (809,192 | ) | (30,822 | ) | 30,822 | ||||||||||
| 4- EUR net asset/liability | (553,050 | ) | 553,050 | - | - | |||||||||||
| 5- Hedged portion of EUR risk (-) | - | - | (29,254 | ) | 29,254 | |||||||||||
| 6- EUR net effect (4+5) | (553,050 | ) | 553,050 | (29,254 | ) | 29,254 | ||||||||||
| 7- Other foreign currency net asset/liability (RMB) | (255,161 | ) | 255,161 | - | - | |||||||||||
| 8- Hedged portion of other foreign currency risk (-) (RMB) | - | - | 1,477 | (1,477 | ) | |||||||||||
| 9- Other foreign currency net effect (7+8) | (255,161 | ) | 255,161 | 1,477 | (1,477 | ) | ||||||||||
| Total (3+6+9) | 981 | (981 | ) | (58,599 | ) | 58,599 | ||||||||||
31
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 15. | Financial instruments (continued) |
Financial assets:
Carrying values of a significant portion of financial assets do not differ significantly from their fair values due to their short-term nature.
Financial liabilities:
As at 31 March 2024 and 31 December 2023; for the majority of the borrowings, the fair values are not materially different to their carrying amounts since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature.
The carrying amounts and fair values of non-current borrowings and current portion of non-current borrowings are as follows:
| Carrying amount | Fair value | |||||||
| As at 31 March 2024: | ||||||||
| Bank loans | 7,111,371 | 6,956,508 | ||||||
| Debt securities | 31,650,715 | 31,268,522 | ||||||
| Carrying amount | Fair value | |||||||
| As at 31 December 2023: | ||||||||
| Bank loans | 7,372,789 | 7,202,493 | ||||||
| Debt securities | 32,713,406 | 32,020,985 | ||||||
| 16. | Guarantees and purchase obligations |
At 31 March 2024, outstanding purchase commitments with respect to property, plant and equipment, inventory, advertising and sponsorship amount to TL 4,566,422 (31 December 2023: TL 5,822,044). Payments for these commitments will be made within 4 years.
The Group is contingently liable in respect of letters of guarantee obtained from banks and given to public institutions and private entities, and financial guarantees provided to subsidiaries amounting to TL 20,176,851 at 31 March 2024 (31 December 2023: TL 20,586,163).
BeST has an investment commitment that covers the years 2022-2032 with a total investment amount of not less than USD 100,000, in accordance with the agreement which is signed between the Republic of Belarus, BeST and the Company on 30 November 2022. As of 31 March 2024, the remaining investment commitment is amounting to USD 89.818 (TL equivalent of 2,899,800).
32
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 17. | Commitments and Contingencies |
The amounts related to the investigations, lawsuits, and inquiries shared below are disclosed with their nominal values as of 31 March 2024.
Disputes on Special Communication Tax
Restructuring Act Compensation Lawsuit regarding the SCT for the term 2011
The Large Taxpayers Office levied Special Communication Tax (SCT) and tax penalty on the Company for the term 2011, the Company filed application for restructuring the tax assessment as per Law no. 6736, the application has rejected. The Company filed a case for the cancellation of aforementioned rejection act, this case was finalized in favor of the Company.
Thereupon the Company, filed a lawsuit for the collection of TL 47,405 principal receivable and TL 36,000 damage accrued with a deferment interest. The Court decided to return TL 47,269 principal receivable together with the deferred interest to be calculated as of the collection date. Regional Administrative Court rejected the appeal requests. The lawsuit is ongoing in the appeal stage.
Disputes regarding the Law on the Protection of Competition
The Competition Board decided to apply administrative fine on the Company amounting to TL 91,942, on the ground that the Company violated Article 6 of Law No. 4054, but not violated Article 4, due to its actions in the distribution network. The Company filed a lawsuit for the cancellation of the Board decision regarding the parts against itself and the case which was investigated by the first instance court and the appeal was finalized against it. The Company made an individual application to the Constitutional Court, against the respective decision within due time. The Constitutional Court process is pending.
Also, the Large Taxpayers Office issued a payment order regarding the aforementioned administrative fine. The Company filed a lawsuit for the cancellation of the payment order but that case also was finalized against the Company. TL 47,780 part of the administrative fine amounting to 91,942 TL has been deducted from the receivables that the Company has earned due to application for restructuring the 2011 SCT assessment within the scope of Law No. 6736 in 2021. The remaining TL 44,162 part of the administrative fine was paid in April 2022.
On the other hand three private companies filed a lawsuits against the Company in relation with this case claiming in total of TL 112,084 together with up to three times of the loss amount to be determined by the court for its material damages by reserving its rights for surpluses allegedly.
Among these cases, in the case filed for the compensation of total TL 110,484 material damages together with compensation amounting to three times of the damage and interest, the first instance court decided to reject the case in favor of the Company. The Regional Court of Justice decided to revoke the decision of the first instance court, stating that a new decision should be made after the procedural actions within the scope of the file were re-executed and the expert report was received. After the annulment decision, the court partially accepted the case and ruled reimbursement of TL 215,555 (three times of the actual damage of TL 71,851).
As a result of the appeal, which made by the both parties, examination made by the Regional Court of Appeal, the Company's appeal request was accepted and the decision of the first instance court was revoked. The file was returned to the first instance court for a re-decision within the scope of the removal decision. In line with the objections of the parties, the court decided to obtain an additional expert report from the same expert committee in the file. The expert additional report has been submitted to the file. The company objected to the both reports in due time. While the lawsuit at the court of first instance was ongoing, the parties agreed to resolve the dispute through mediation. In this context, TL 130,000 was paid to the other party on May 3, 2024 and the dispute was concluded. Accordingly, in the lawsuit between the parties, the court decided that there was no need to decide on the merits of the lawsuit that was not subject to mediation and the decision became final.
33
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 17. | Commitments and Contingencies (continued) |
Disputes regarding the Law on the Protection of Competition (cont’d)
Among these cases, in the case filed for the compensation of total TL 500 material damages together with compensation amounting to three times of the damage and interest, the expert report has been submitted to its file, and the court decided to obtain an expert report from a new expert committee in accordance with both parties objections, The expert review is still ongoing. The other case is also pending.
On the other hand, a lawsuit was filed by a third party, for the cancellation of the part of the aforementioned Competition Board decision, regarding the rejection of the claims that the Company did not violated Article 4 of the Law. The Council of State cancelled this part of the aforementioned Competition Board decision. Thereafter Competition Board launched a new investigation and as a result of it the Competition Board decided to apply additional administrative fine amounting to TL 91,942 on the Company for 2019. Afterwards, The Competition Authority accepted some of the objections of the Company and reduced the administrative fine to TL 61,294 with its decision. The aforementioned fine that amount of TL 61,294 was paid discount, in the amount of TL 45,971which is paid in 9 April 2020. Then, a lawsuit was filed on for cancellation of the aforementioned administrative fine. A decision was made against the Company at the first instance and appeal stages. The appeal process is pending.
Disputes regarding the Law on the Protection of Competition – Investigation on gentleman's agreements for the labour market
On 07 May 2023, the Company received the Investigation Report concerning an inquiry by the Competition Authority to determine if there has been a breach of Article 4 of Law No. 4054 on the Protection of Competition, regarding any gentlemen's agreements for the labor market. The report, which includes the viewpoints and findings of the Investigation Panel is non-binding and doesn't predetermine the Competition Board's final decision. The Company has already submitted its second written pleas addressing the findings noted in the Investigation Report to the Authority. Subsequently, a verbal defense meeting was held on 13 February 2024. The short decision was notified and the Competition Board decided to impose an administrative fine of TRY 57,301. This amount, which has been accounted for as a liability in the consolidated financial statements, will be paid after the reasoned decision is written by the Competition Board and notified to the Company.
ICTA Investigation Regarding the R&D Obligations
The ICTA has initiated various investigations and may initiate new investigations to examine whether the obligations arising from the relevant legislation regarding the procurement of a certain portion of the investments related to the electronic communication network and communication services from suppliers with R&D centers in Turkey, a certain portion from products manufactured in Turkey by SMEs established to develop products/systems in Turkey, and a certain portion from products determined to be domestic goods certified are fulfilled. As a result of the first investigations on the subject, ICTA decided to impose a total administrative fine of 49,170 TL for the 2013-2016/2016-2017 reporting periods. The aforementioned administrative fines were paid in 2021 with a discount of TL 36.877 (1/4) by taking advantage of the early payment discount, but several lawsuits were filed for the cancellation of the fines. All of the lawsuits were finalized against the Company at the first instance court, but the Company appealed within the time limit.
For the following period between 27 October 2017-26 October 2018, the ICTA initiated an investigation to examine whether the Company’s obligations regarding R&D, SME and/or domestic goods investments, R&D Center, R&D Projects and SMEs were fulfilled and as a result of this investigation, the ICTA decided to impose a total administrative fine of TL 46.317 on the Company. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 34.738 (with 1/4 discount) by taking advantage of the early payment discount. In addition, an application has been made to the ICTA for the revocation of the decision. The application of the Company was tacitly rejected by ICTA. The Company filed eight separate lawsuits in total for the cancellation of the related transactions and administrative fines. The cases are pending.
34
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 17. | Commitments and Contingencies (continued) |
ICTA Investigation Regarding the R&D Obligations (cont’d)
In addition, ICTA initiated an investigation on The Company for the periods 27 October 2019-26 October 2020 (5th Period) and 27 October 2020-26 October 2021 (6th Period) in order to examine whether the Company’s obligations regarding R&D, SME and/or domestic goods investment obligations and criteria for SMEs in the 3G Concession Agreement and 4.5G Authorisation Certificate have been fulfilled. The ICTA also decided to conduct the said inspection by merging it with the inspection previously initiated for 27 October 2018-26 October 2019 (4th Period). The information and documents requested within the scope of the investigation were submitted to the ICTA. Subsequently, penalty evaluations were made in the Investigation Report prepared by the Supervisory Board. the Company’s written defenses regarding the Investigation Report were submitted to the ICTA on 19 January 2023. Within the scope of the investigation, a verbal defense meeting was held on 13 June 2023.
ICTA – Investigation on 3G and 4.5G Service Quality Obligations
ICTA initiated an investigation to examine whether the 2018 Q4 – 2019 Q3 term notifications meet the criteria and target values defined in the service quality legislation and whether or not the Company’s obligations about the service quality criteria which is set in the IMT Certificate of Authority have been fulfilled. As a result of the investigation ICTA has decided to impose an administrative fine of TL 3,622 to the Company. The administrative fine notified to the Company on 20 January 2022 and was paid on 17 March 2022 as TL 2,716 with taking on the account the early payment discount (1/4).
After notification of the Board Decision to the Company, the Company applied to ICTA with the demand of withdraw of the Board Decision. The application of the Company was tacitly rejected by ICTA. The Company filed five separate lawsuits in total for the cancellation of the related transactions and administrative fines. The cases are pending. The investigation process of a similar issue regarding Turkcell is currently ongoing.
ICTA – Inspection on Service Quality (2020 Q2)
ICTA initiated an investigation due to exceeding the target value determined for “Call Failure Rate” and “Call Blocking Rate” criteria. As a result of the investigation ICTA has decided to impose an administrative fine of TL 568 to the Company. The administrative fine notified to the Company on 20 January 2022 and was paid on 17 March 2022 as TL 426 with taking on the account the early payment discount (1/4). After notification of the Board Decision to the Company, the Company applied to ICTA with the demand of withdraw of the Board Decision. The application of the Company was tacitly rejected by ICTA. The Company filed a lawsuit for the cancellation of the related transaction and administrative fine. The Court rejected the case. The Company appealed the decision before Regional Administrative Court in due time. The Regional Administrative Court rejected the appeal request. The Company appealed the decision in due time. The appeal process is pending. The investigation processes of Turkcell 3N Mobile Service Quality (3rd and 4th Term of 2020) and 3N Mobile Service Quality (1st and 3rd Term of 2021) which are similar to this investigation is currently ongoing.
Refunds Investigation
As a result of the investigation initiated to examine the compliance of the activities carried out within the scope of the Board Decisions dated 01 March 2018 and numbered 2018/DK-THD/58(Board Decision on Refunds to Subscribers), dated 12 April 2018 and numbered 2018/DK-THD/116(Refund/Use of Remaining Amount on Prepaid Lines) and dated 16 April 2018 and numbered 2018/DK-THD/123(Transferring Non-refundable Amounts on Prepaid Lines as Universal Service Contribution),
| (i) | The ICTA has decided that the unpaid TL 412 will be transferred to the Ministry, along with the late fee from April 14, 2020 and inform the ICTA about this transfer. |
35
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 17. | Commitments and Contingencies (continued) |
Refunds Investigation (cont’d)
| (i) | The ICTA has decided to transfer the TL 161 that could not be refunded to subscribers regarding the period between 27.04.2017-31.05.2018, which were not fully paid to the Ministry. The ICTA has also decided to transfer the refund amounts related to the period between 01.04.2010-27.04.2017 -along with the late fee from July 28, 2020- and to inform the ICTA about this matter. |
| (ii) | The ICTA has decided to impose an administrative fine of TL 5,680 in total. |
The fine, which was notified to the Company on 2 January 2023, was paid as TL 4,260 (1/4 discounted) on 31 January 2023 by taking advantage of the early payment discount. Additionally, an application (İYUK 11) was made to the ICTA with request for re-evalutaion and revocation of the decison and tacitly rejected by not responding in due time by ICTA. The Company filed two separate lawsuits for the cancellation of the related transaction and administrative fine. The Court rejected the cases. The Company appealed the decisions in due time. The appeal process is pending. On the other hand, the amount stated to have been underpaid in the Board Decision was deposited to the Ministry's account with reservation on 18 May 2023 with a total amount of 98,333 TL together with default interest and the ICTA was informed about the payment. The investigation processes of the Turkcell and Superonline Refunds Investigations and Turkcell Refund Investigation Regarding Prepaid Lines which are similar to this investigation is currently ongoing.
Investigation Regarding the Subscription Agreements (Anonymous Lines)
The ICTA initiated an investigation to examine whether the obligations regarding the establishment and implementation of subscription agreements and open lines were fulfilled and as a result of this investigation, the ICTA decided to impose an administrative fine of TL 99,132 on the Company. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 74,349 (with 1/4 discount) by taking advantage of the early payment discount. In addition, an application has been made to the ICTA for the revocation of the decision. The application of the Company was tacitly rejected by ICTA. The Company filed five separate lawsuits in total for the cancellation of the related transactions and administrative fines. The cases are pending. In regard to Turkcell; although the legislative provisions of the same nature regarding subscription agreements are not examined, the examination process of open lines, subscription agreements and number portability investigation, in which the establishment of the subscription agreement is also examined, is currently ongoing. The examination process of a similar investigation about Superonline subscription agreements is also ongoing.
Investigation on Value Added Services
The ICTA initiated an investigation to examine whether the obligations imposed by the Board Decision No. 2016/DK-THD/496 and the "Procedures and Principles Regarding the Protection of Consumer Rights in the Execution of Value Added Electronic Communication Services" have been fulfilled. As a result of this investigation, the Company was imposed an administrative fine amounting to TL 9,476 and it was decided to refund the overcharges collected from the subscribers after 30 June 2017, the effective date of the Procedures and Principles Regarding Value Added Service, to the subscribers within the framework of the relevant legislation and the Procedures and Principles to be Applied in within the framework of the relevant legislation and the Procedures and Principles to be Applied in Refunds to Subscribers approved by the Board Decision No. 2018/DK-THD/57. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 7,107 (with 1/4 discount) by taking advantage of the early payment discount. In addition, an application was made to the ICTA for the revocation of the decision and the correction of the mistake in the refund paragraph. As a result of the application, the ICTA rejected the Company's request for withdrawal of the decision by not responding to it in due time and corrected the mistake in the decision and notified that the said refunds must be made to the subscribers within the framework of the Procedures and Principles to be Applied in Refunds to Subscribers approved by the Board Decision No. 2018/DK-THD/57. In this context, the refund process has been started by the relevant teams. The Company filed five separate lawsuits in total for the cancellation of the related decisions and transactions. The cases are pending.
36
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 17. | Commitments and Contingencies (continued) |
ICTA – Facility Sharing Investigation
Within the scope of the investigation initiated by the ICTA on Superonline in order to examine the compliance of the works and transactions carried out in the processes from the submission to the finalisation of the facility sharing request starting from the January 2020 period with the relevant legislation, some penalty assessments were included in the Investigation Report prepared by the Supervisory Board. Our written defenses regarding the Investigation Report were submitted to the ICTA on 02 June 2023. There have been no developments regarding the inquiry.
ICTA – Investigation on Idendity Verification Regulation
Within the scope of the investigations initiated by the ICTA separately for Turkcell and Superonline due to the fact that the subscription process applied by Our Companies for the purpose of verifying the identity of the applicant for the types of transactions in the electronic communications sector within the scope of the Identity Verification Regulation (IVR) is not in compliance with the procedures in the IVR, it was assessed that an administrative fine 1on Turkcell and Superonline within the scope of four separate violations within the scope of the relevant legislation due to the violation of the face-to-face identification verification provisions and the recording of some biometric data such during the tablet signature process in violation of the Identity Verification Regulation.
On the other hand, the ICTA has also stated that may be take necessary measures for the scope of provision "...national security, public order or the proper execution of public service and the implementation of the provisions introduced by laws, to take over the facilities in return for compensation when necessary, to cancel the authorisation granted in case of non-payment of the authorisation fee within the specified period or in case of gross negligence.". Our written defenses were submitted to the ICTA on 11 March 2024.
ICTA – Investigation of Committed Subscriptions
Within the scope of the investigation initiated by the ICTA on Our Company in order to examine whether the obligations stipulated in the Regulation on Consumer Rights in the Electronic Communications Sector and other relevant legislation regarding committed subscriptions have been fulfilled or not, the Investigation Report prepared by the Supervisory Board has been notified. It is assessed that administrative fines may be imposed for 9 different violations and for 6 of these determinations, all amounts unfairly collected from the subscribers should be refunded to the subscribers within the scope of the relevant legislation. Our written defenses regarding the Investigation Report were submitted to the ICTA on 22 January 2024.
Other ongoing lawsuits and tax investigations
Probability of an outflow of resources embodying economic benefits for 2018 and 2019 fiscal years with regards to notification of Information and Communication Technologies Authority for radio fee related to 2018 fiscal year was considered by the Company management. In this respect, TL 128,429 was paid in November 2019 by reserving our right to take legal actions and legal actions were taken for 2018 fiscal year. The Court rejected the cases. The Company appealed the decisions before the Regional Administrative Court. The Regional Administrative Court rejected the appeal request. The Company appealed the decision in due time. The appeal process is pending. On the other hand, additional TL 13,465 for December 2018 was paid with reservation on 29 January 2021 with regards to notification of Information and Communication Technologies Authority for the same reason.
37
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 17. | Commitments and Contingencies (continued) |
General assessment of ongoing cases and investigations
Based on the management opinion, an outflow of resources embodying economic benefits is deemed as probable on some of the aforementioned lawsuits and investigations, thus, TL 379,519 provision is recognized in the consolidated financial statements as at and for the period ended 31 March 2024 (31 December 2023: TL 379,519). The results of ongoing investigations, inquiries, lawsuits, and audits may differ from the Group's assessments.
| 18. | Related parties |
Transactions with key management personnel
Key management personnel comprise the Group's members of the Board of Directors and chief officers.
There are no loans to key management personnel as of 31 March 2024 and 31 December 2023.
The Group provides additional benefits to key management personnel and contributions to retirement plans based on a pre-determined ratio of compensation.
31 March 2024 | 31 March 2023 | |||||||
| Short-term benefits | 77,133 | 119,105 | ||||||
| Long-term benefits | - | 556 | ||||||
| Termination benefits | 129 | 352 | ||||||
| 77,262 | 120,013 | |||||||
The following transactions occurred with related parties:
| Revenue from related parties | 31 March 2024 | 31 March 2023 | ||||||
| Türk Telekom Mobil Iletisim Hizmetleri A.S. (“TT Mobil”) (*) | 327,814 | 345,636 | ||||||
| Enerji Piyasaları İşletme A.S. (“EPIAS”) (*) | 76,737 | 45,126 | ||||||
| Türk Hava Yolları A.S. (“THY”) (*) | 75,806 | 86,760 | ||||||
| Gunes Express Havacilik A.S. (“Sun Express”) (*) | 44,504 | 40,340 | ||||||
| Ziraat Bankası A.S. (“Ziraat Bankası”) (*) | 40,179 | 40,765 | ||||||
| Turksat Uydu Haberlesme Kablo TV ve Isletme A.S.(“Turksat”) (*) | 38,778 | 21,754 | ||||||
| Turkiye Hayat ve Emeklilik A.S.(*) | 23,152 | 8,999 | ||||||
| Turk Telekomunikasyon A.S. (“TT”) (*) | 22,271 | 33,596 | ||||||
| "Türkiye Sigorta A.Ş. (""Türkiye Sigorta"") (*)" | 14,658 | 575 | ||||||
| TOGG (**) | 12,150 | 2,226 | ||||||
| Turkiye Vakiflar Bankası TAO (“Vakifbank”) (*) | 7,716 | 24,816 | ||||||
| Turkiye Halk Bankası A.S. (“Halkbank”) (*) | 7,222 | 8,937 | ||||||
| BIST (*) | 3,751 | 14,029 | ||||||
| Ziraat Katilim Bankasi A.S. (“Ziraat Katilim”) (*) | 1,908 | 1,403 | ||||||
| Sofra (**) | 1,287 | 6,136 | ||||||
| TVF IFM Gayrimenkul Insaat ve Yonetim A.S. (*) | 388 | 53,693 | ||||||
| Other | 13,440 | 663 | ||||||
| 711,761 | 735,454 | |||||||
38
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 18. | Related parties (continued) |
| Related party expenses | 31 March 2024 | 31 March 2023 | ||||||
| EPIAS (*) | 172,463 | 272,145 | ||||||
| Türk Telekomünikasyon A.S (*) | 397,787 | 339,198 | ||||||
| TT Mobil (*) | 256,748 | 361,006 | ||||||
| Istanbul Takas ve Saklama Bankasi A.S. ("Takasbank") (*) | 331,803 | 137,994 | ||||||
| Turksat (*) | 12,782 | 36,918 | ||||||
| Sofra (**) | 72,735 | 41,078 | ||||||
| Boru Hatları ile Petrol Tasıma A.S. (“BOTAS”) (*) | 19,270 | 18,483 | ||||||
| PTT (*) | 23,792 | 10,856 | ||||||
| Others | 157,360 | 126,395 | ||||||
| 1,444,740 | 1,344,073 | |||||||
(*) Related parties, which TVF directly and / or indirectly has control or joint control or significant influence.
(**) Groups’ associate and joint ventures.
TVF is the the largest shareholder of Turk Telekom with 61.68% of the shares as of 31 March 2022. Therefore, companies of Turk Telekom have been reported as related party as of 31 March 2022. Transactions between the Group and Turk Telekom are related with telecommunication services.
Details of the financial assets and liabilities with related parties as of 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 | 31 December 2023 | |||||||
| Banks - Time deposits (*) | 30,977,310 | 36,094,962 | ||||||
| Banks - Demand deposits (*) | 1,043,077 | 829,163 | ||||||
| Currency protected time deposit (**) | 6,616,197 | 7,103,884 | ||||||
| Financial investment | 1,165,178 | - | ||||||
| Bank borrowings | (7,638,625 | ) | (8,128,288 | ) | ||||
| Debt securities issued | (1,170,937 | ) | (1,101,060 | ) | ||||
| Lease liabilities | (564,524 | ) | (168,025 | ) | ||||
| Impairment loss provision | (28,356 | ) | (36,686 | ) | ||||
| 30,399,320 | 34,593,950 | |||||||
(*) Related balances are included in cash and cash equivalents.
(**) The Group has converted its currency deposit account in Vakifbank amounting to USD 109,941 and EUR 85,000 into currency protected TL time deposit accounts.
As of 31 March 2024, the amounts of letters of guarantee given to the related parties is TL 421,564 (31 December 2023:TL 383,857).
Details of the time deposits at related parties as of 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 | 31 December 2023 | |||||||
| Ziraat Bankasi | 9,506,718 | 9,297,222 | ||||||
| Halkbank | 8,032,489 | 13,049,973 | ||||||
| Vakifbank | 9,114,443 | 9,981,709 | ||||||
| Ziraat Katilim Bankasi A.S. | 4,323,660 | 3,766,058 | ||||||
| 30,977,310 | 36,094,962 | |||||||
39
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 18. | Related parties (continued) |
Details of the time deposits at related parties
| Amount in Original Currency | Currency | Effective Interest Rate | Maturity | 31 March 2024 | |||||||||
| 715,662 | EUR | 2.2% | April - May 2024 | 24,939,845 | |||||||||
| 4,486,827 | TL | 48.7% | April - May 2024 | 4,517,112 | |||||||||
| 47,014 | USD | 2.8% | April - May 2024 | 1,520,353 | |||||||||
| 30,977,310 | |||||||||||||
Details of the bank borrowings at related parties
| Principle Amount | Currency | Effective Interest Rate | Maturity | 31 March 2024 | |||||||
| 4,956,000 | TL | %12,7 - %58,8 | April 2024 - February 2025 | 5,372,677 | |||||||
| 1,822,000 | TL | %51,3 - %52,3 | April 2024 | 1,834,715 | |||||||
| 349,100 | TL | %28,0 - %59,0 | April 2024 - March 2025 | 352,216 | |||||||
| 69,538 | TL | %28,8 - %49,8 | August 2024 - April 2025 | 79,017 | |||||||
| 7,638,625 | |||||||||||
Details of the debt securities issued at related parties
| Principle Amount | Currency | Effective Interest Rate | Maturity | 31 March 2024 | |||||||
| 1,100,000 | TL | %45,0 - %48,5 | April 2024 | 1,170,937 | |||||||
| 1,170,937 | |||||||||||
Details of the lease liabilities at related parties
| Currency | Effective Interest Rate | Payment Period | 31 March 2024 | |||||
| TL | %12.5 - %55.3 | 2024 - 2036 | 564,524 | |||||
| 564,524 | ||||||||
Interest income from related parties:
31 March 2024 | 31 March 2023 | |||||||
| Vakifbank | 715,150 | 375,177 | ||||||
| Ziraat Bankasi | 205,210 | 72,274 | ||||||
| Halkbank | 201,909 | 99,667 | ||||||
| Ziraat Katilim | 40,130 | 18,806 | ||||||
| Other | 187 | 99 | ||||||
| 1,162,586 | 566,023 | |||||||
40
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 18. | Related parties (continued) |
Interest expense to related parties:
| 31 March 2024 | 31 March 2023 | |||||||
| Vakifbank | 251,696 | 151,348 | ||||||
| Halk Varlık Kiralama A.S. ("Halk Varlık Kiralama") | 120,643 | 35,832 | ||||||
| Ziraat Bankasi | 28,208 | 36,221 | ||||||
| Halkbank | 5,549 | 2,342 | ||||||
| Ziraat Katilim | - | 2,295 | ||||||
| Other | 4,192 | 35 | ||||||
| 410,288 | 228,073 | |||||||
Revenue from related parties is generally related to telecommunication, call center and other miscellaneous services. Transactions between the Group and EPIAS are related to the energy services; transactions between the Group and Sofra are related to meal coupon services; transactions between the Group and BOTAS are related to infrastructure services; transactions between the Group and Halkbank, Ziraat Bankasi and Vakifbank are related to banking services; transactions between the Group and PTT are related to cargo transportation; transactions between the Group and Turksat are related to telecommunication services and transactions between the Group and BIST are related to stock market services. Receivables from related parties are not collateralized.
41
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 19. | Subsidiaries |
The Group’s ultimate parent company is TVF, while subsidiaries, associates and a joint venture of the Company as at 31 March 2024 and 31 December 2023 are as follows:
| Effective Ownership Interest | ||||||||
| Subsidiaries | Country of | 31 March | 31 December | |||||
| Name | Incorporation | Business | 2024 (%) | 2023(%) | ||||
| Turktell | Turkiye | Information technology, value added GSM services and entertainment investments | 100 | 100 | ||||
| Turkcell Superonline | Turkiye | Telecommunications, television services and content services | 100 | 100 | ||||
| Turkcell Dijital | Turkiye | Digitalization services and products | 100 | 100 | ||||
| Dijital Egitim | Turkiye | Dijital educations | 51 | 51 | ||||
| Turkcell Satis | Turkiye | Sales, delivery and digital sales services | 100 | 100 | ||||
| Turkcell Teknoloji | Turkiye | Research and development | 100 | 100 | ||||
| Turkcell Gayrimenkul | Turkiye | Property investments | 100 | 100 | ||||
| Turkcell Enerji | Turkiye | Electricity energy trade and wholesale and retail electricity sales | 100 | 100 | ||||
| Boyut Enerji | Turkiye | Electricity energy trade and wholesale and retail electricity sales | 100 | 100 | ||||
| Turkcell Finansman | Turkiye | Consumer financing services | 100 | 100 | ||||
| Turkcell Sigorta | Turkiye | Insurance agency activities | 100 | 100 | ||||
| Turkcell Dijital Sigorta | Turkiye | Dijital agency activities | 100 | 100 | ||||
| Turkcell Odeme | Turkiye | Payment services and e-money license | 100 | 100 | ||||
| Lifecell Dijital Servisler | Turkiye | Development and providing of digital services and products | 100 | 100 | ||||
| Lifecell Bulut | Turkiye | Cloud solutions services | 100 | 100 | ||||
| Lifecell TV | Turkiye | Online radio, television and on-demand streaming services | 100 | 100 | ||||
| Lifecell Muzik | Turkiye | Radio, television and on-demand streaming services | 100 | 100 | ||||
| Global Tower | Turkiye | Telecommunications infrastructure business | 100 | 100 | ||||
| Atmosware Teknoloji | Turkiye | Develop software products and services, training software developers | 100 | 100 | ||||
| UkrTower | Ukraine | Telecommunications infrastructure business | 100 | 100 | ||||
| Beltower | Republic of Belarus | Telecommunications infrastructure business | 100 | 100 | ||||
| Eastasia | Netherlands | Telecommunications investments | 100 | 100 | ||||
| Kibris Telekom | Turkish Republic of Northern Cyprus | Telecommunications | 100 | 100 | ||||
| Lifecell Digital | Turkish Republic of Northern Cyprus | Telecommunications | 100 | 100 | ||||
| Turkcell Dijital Technologies | Turkish Republic of Northern Cyprus | Electronic payment services | 100 | 100 | ||||
| Turkcell Global Bilgi | Turkiye | Customer relations and human resources management | 100 | 100 | ||||
| Global LLC | Ukraine | Customer relations management | 100 | 100 | ||||
| Rehberlik | Turkiye | Directory assistance | 100 | 100 | ||||
| Lifecell Ventures | Netherlands | Telecommunications investments | 100 | 100 | ||||
| lifecell | Ukraine | Telecommunications | 100 | 100 | ||||
| Paycell LLC | Ukraine | Consumer financing services | 100 | 100 | ||||
| Paycell Europe | Germany | Payment services and e-money | 100 | 100 | ||||
| Yaani | Netherlands | Internet search engine and browser services | 100 | 100 | ||||
| BiP B.V. | Netherlands | Providing digital services and products | 100 | 100 | ||||
| BiP A.S. | Turkiye | Providing digital services and products | 100 | 100 | ||||
| BeST | Republic of Belarus | Telecommunications | 100 | 100 | ||||
| Turkcell GSYF | Turkiye | Venture capital investment fund | 100 | 100 | ||||
| W3 | Turkiye | Information technology | 100 | 100 | ||||
| Lifetech | Republic of Belarus | Information technology, programming and technical support | 100 | 100 | ||||
| Effective Ownership Interest | ||||||||
| Associates | Country of | 31 March | 31 December | |||||
| Name | Incorporation | Business | 2024 (%) | 2023(%) | ||||
| TOGG | Turkiye | Electric passenger car development, production and trading activities | 23 | 23 | ||||
| Effective Ownership Interest | ||||||||
| Joint Venture | Country of | 31 March | 31 December | |||||
| Name | Incorporation | Business | 2024 (%) | 2023(%) | ||||
| Sofra | Turkiye | Meal coupons and cards | 66 | 66 | ||||
42
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 20. | Investments accounted for using the equity method |
The details of carrying values of investments accounted for using the equity method are as follows:
| a) Joint Ventures | 31 March 2024 | 31 December 2023 | ||||||
| Sofra | 20,118 | 14,207 | ||||||
| b) Associates | ||||||||
| TOGG | 6,677,836 | 6,739,651 | ||||||
The movement of investments accounted for using the equity method is as follows:
| 31 March 2024 | 31 March 2023 | |||||||
| Opening balance | 6,753,858 | 4,373,668 | ||||||
| Shares of profit | (55,904 | ) | 94,024 | |||||
| Closing balance | 6,697,954 | 4,467,692 | ||||||
| 21. | Discontinued operations |
As per the Group's Board of Directors' decision dated December 20, 2023; a share transfer agreement was signed on 29 December 2023 for the transfer of all shares, along with all rights and debts, of Lifecell LLC, Global LLC, and Ukrtower, which are the Group's wholly owned subsidiaries. The sale is expected to be completed within a year from the reporting date. As of 31 December 2023, Lifecell, UkrTower and Global LLC have been classified as a disposal group held for sale and as a discontinued operation. The statement of profit or loss of a disposal group for the year are presented below:
| 31 March 2024 | 31 March 2023 | |||||||
| Revenue | 2,544,528 | 2,358,516 | ||||||
| Cost of revenue | (1,642,958 | ) | (1,399,506 | ) | ||||
| Gross profit | 901,570 | 959,010 | ||||||
| Selling and marketing expenses | (149,039 | ) | (128,624 | ) | ||||
| Administrative expenses | (86,778 | ) | (61,086 | ) | ||||
| Other operating income/(expense), net | 13,297 | (26,169 | ) | |||||
| Operating profit | 679,050 | 743,131 | ||||||
| Net finance costs / income | (44,057 | ) | (116,521 | ) | ||||
| Profit before income tax | 634,993 | 626,610 | ||||||
| Tax benefit /(expense) | (94,354 | ) | (99,781 | ) | ||||
| Profit for the period from discontinued operations | 540,639 | 526,829 | ||||||
43
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 21. | Discontinued operations (continued) |
The major classes of assets and liabilities of the disposal group classified as held for sale as at 31 March 2024 and 31 December 2023 are, as follows:
| 31 March 2024 | 31 December 2023 | |||||||
| Assets | ||||||||
| Property, plant and equipment (Note 8) | 6,274,949 | 6,671,263 | ||||||
| Right-of-use assets (Note 10) | 1,352,160 | 1,527,398 | ||||||
| Intangible assets (Note 9) | 3,418,773 | 3,796,875 | ||||||
| Trade receivables | 250,308 | 310,554 | ||||||
| Deferred tax assets | 1,291,934 | 1,514,095 | ||||||
| Other non current asset | 138,230 | 174,633 | ||||||
| Financial assets at amortized cost | 766,113 | 847,068 | ||||||
| Cash and cash equivalents | 4,880,463 | 4,622,615 | ||||||
| Other current asset | 223,220 | 218,018 | ||||||
| Assets held for sale | 18,596,150 | 19,682,519 | ||||||
| Liabilities | ||||||||
| Borrowings | 4,549,076 | 5,205,942 | ||||||
| Employee benefit obligations | 43,167 | 39,962 | ||||||
| Current tax liabilities | 6,825 | 4,833 | ||||||
| Trade and other payables | 980,570 | 1,025,731 | ||||||
| Other non current liabilities | 11,237 | 6,141 | ||||||
| Deferred revenue | 20,560 | 20,486 | ||||||
| Contract liabilities | 486,130 | 529,573 | ||||||
| Provisions | 293,286 | 448,185 | ||||||
| Liabilities directly associated with the assets held for sale | 6,390,851 | 7,280,853 | ||||||
| Net assets directly associated with disposal group | 12,205,299 | 12,401,664 | ||||||
| Amounts included in accumulated OCI: | ||||||||
| Foreign currency translation reserve | 6,557,706 | 7,065,126 | ||||||
| Reserve of disposal group classified as held for sale | 6,557,706 | 7,065,126 | ||||||
The net cash flows incurred by the disposal group are, as follows:
| 31 March 2024 | 31 March 2023 | |||||||
| Cash flows from operating activities | 1,588,764 | 1,330,633 | ||||||
| Cash flows from investing activities | (597,049 | ) | 105,296 | |||||
| Cash flows from financing activities | (391,827 | ) | (388,421 | ) | ||||
| Net cash (outflow)/inflow | 599,888 | 1,047,508 | ||||||
44
TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS INTERIM PERIOD ENDED 31 MARCH 2024
(All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.)
| 21. | Discontinued operations (continued) |
Deferred tax asset related to discontinued operations
Lifecell, which is in the discontinued operation group, has recorded a deferred tax asset of TL 1,132,088 as of 31 March 2024, since it is highly unlikely to benefit from the deductible financial losses amounting to TL 6,289,378 (31 December 2023: TL 7,525,878) by making a taxable profit in the future (31 December 2023: TL 1,354,658). The mentioned financial losses are of unlimited duration. The group has used business plans for the following years when determining the amount of deferred tax assets available for use and evaluates that accumulated losses can be utilized within 4 years as of 31 March 2024.
| 22. | Seasonality of operations |
The Turkish mobile communications market is affected by seasonal peaks and troughs. Historically, the effects of seasonality on mobile communications usage had positively influenced the Company’s results in the second and third quarters of the fiscal year and negatively influenced the results in the first and fourth quarters of the fiscal year. Recently, however, due to changing market dynamics, such as the Information Technologies and Communications Authority (“ICTA”)’s intervention in tariffs and increasing competition in the Turkish telecommunications market, the effects of seasonality on the Company’s subscribers’ mobile communications usage has decreased.
| 23. | Subsequent events |
On 2 May 2024, the general assembly has approved a dividend distribution for the year ended amounting to TL 6,276,998; this represents a gross cash dividend of full TL 2.8531809 per share with a nominal value of TL 1. The dividend will be paid to the shareholders on 5 December 2024.
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Turkcell Iletisim Hizmetleri A.S. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TURKCELL ILETISIM HIZMETLERI A.S. | |||
| Date: May 29, 2024 | By: | /s/ Özlem Yardım | |
| Name: | Özlem Yardım | ||
| Title: | Investor Relations Corporate Finance Director | ||
| TURKCELL ILETISIM HIZMETLERI A.S. | |||
| Date: May 29, 2024 | By: | /s/ Kamil Kalyon | |
| Name: | Kamil Kalyon | ||
| Title: | Chief Financial Officer | ||
| TURKCELL ILETISIM HIZMETLERI A.S. | |||
| Date: May 29, 2024 | By: | /s/ Esat Utku Karatay | |
| Name: | Esat Utku Karatay | ||
| Title: | Turkcell Group Reporting & Subsidiaries Management Director | ||