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Turkish mobile operator reports net income increased to $311.8M from $86.8M in Q3
November 9, 2006
ISTANBUL, Turkey -- Turkcell (NYSE: TKC, ISE: TCELL), (www.turkcell.com.tr), the leading provider of mobile communications services in Turkey, today announced results for the quarter ended September 30, 2006. All financial results in this press release are unaudited, prepared in accordance with International Financial Reporting Standards ("IFRS") and expressed in US$.
Figures in parentheses following the operational and financial results for the third quarter of 2006 refer to the same item in the second quarter of 2006. For further details, please refer to the consolidated interim financial statements and notes for the quarter ended September 30, 2006 which can be accessed at our web site on our investor relations pages.
Please note that all financial data are consolidated and comprise Turkcell Iletisim Hizmetleri A.S., (the "Company", "Turkcell") and its subsidiaries and its associates (together referred to as the "Group") whereas non-financial data are unconsolidated. The terms "we", "us", and "our" in this press release refer only to the Company, except in discussions of financial data, where such terms refer to the Group, and where context otherwise requires.
Highlights of the Quarter
Turkcell added approximately 1.0 million (1.1 million) net new subscribers in the third quarter of 2006. The subscriber base grew by 3.4% to 30.8 million (29.8 million) as of September 30, 2006
Minutes of usage per subscriber ("MoU") in the third quarter of 2006 increased by 21% to 81.8 minutes (67.5 minutes) mainly due to the introduction of new incentive programs as well as seasonality
Turkcell recorded quarterly churn rate of 4.1% (3.6%) in the third quarter of 2006 mainly due to overall high market growth in the previous quarters and competition
Turkcell recorded average revenue per user ("ARPU") of US$12.1 (US$12.5) in the third quarter of 2006. The decrease was mainly due to the loyalty programs, and 4% depreciation of TRY against US$ on an average basis combined with the dilutive impact of prepaid subscribers
Revenue increased to US$1,199.4 million (US$1,165.3 million) in the third quarter of 2006 mainly due to the higher MoU and increasing subscriber base, despite the 4% depreciation of TRY against US$
Turkcell recorded EBITDA* of US$477.1 million (US$463.5 million) in the third quarter of 2006 as a result of maintained operational efficiency in line with increased revenues
Net income increased to US$311.8 million (US$86.8 million) in the third quarter of 2006 mainly due to strong operational performance, the absence of second quarter's one-time deferred tax charge and foreign exchange losses incurred during the second quarter
*EBITDA is a non-GAAP financial measure. See page 20 for the reconciliation of EBITDA to net cash used for operating activities.
QUARTER OVERVIEW
The macroeconomic volatility in global markets during the second quarter of 2006, which also led to foreign currency exchange rate fluctuations in Turkey stabilized during the third quarter of the year to a large extent.
During the third quarter of 2006, the Turkish GSM market continued its strong growth trend in number of subscribers through customer acquisition based campaigns and community offers.
Our continued actions led us to maintain strong operational performance during the third quarter of 2006 given our on-going focus on maintaining the right balance between customer expectations and profitability margins, as well as high seasonal trends.
As far as the competitive environment is concerned, the change in Avea's shareholder structure continued with Telecom Italia's exit from Avea and our competitors continued to emphasize their lower prices while introducing some upward price adjustments or limiting some of the usage incentive campaigns.
In this environment, we continued to build on our areas of strength and continued to differentiate Turkcell as the leading GSM operator in Turkey through various proactive offerings and campaigns while continuing to benefit from a high quality network and extensive capabilities of our sales channels.
While it is very early and many uncertanties remain regarding the competitive outlook in our market for next year, looking into 2007, we intend to keep our leading position in the market. While providing differentiated services for different subscribers' needs and expectations and we intend to maintain our operational efficiency. In 2007, we expect the subscriber market to continue to grow and we estimate that the mobile line penetration rate may reach above 80% levels at the end of the year from approximately 69% based on operators' announcements as of September 30, 2006. We intend to maintain our leading position in the gross subscriber additions market next year. Our on-going emphasis on retention will remain. We intend to continue to highlight 'better value for money' advantages that we have been providing to our customers, while aiming to achieve our earnings objectives.
Turkcell Iletisim Hizmetleri A.S. (NYSE: TKC)
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