3<\/sup> was at TRY49.1 on an annual rise of 15.0% with the effect of the larger postpaid subscriber base, rising data and digital service usage and upsell to higher tariffs.\n<\/p>\n\nWe gained a net 180 thousand fiber subscribers on increased demand for our fixed broadband offers in 2020 as our customers spent more time at home. At the same time, residential fiber ARPU reached TRY70.9 on a rise of 9.2%. Superbox, through which we offer uninterrupted home internet at fiber speed over our mobile network, has become one of our most successful products. The Superbox subscriber number reached 591 thousand with an additional net 268 thousand subscriptions reflecting accelerating demand. Additionally, we reached 871 thousand IPTV subscribers in total by gaining a net 152 thousand additions this year.\n<\/p>\n
We met the changing needs of our individual and corporate customers with our digital applications and services<\/b><\/p>\n
\nIn a period of increased time spent at home, we stood by our customers with our digital services portfolio. We enriched this portfolio with many new services, while at the same time, registering the incorporation of individual digital services companies, marking a significant milestone for their competition strategies. Along with new services such as TV+ Ready, Turkcell Digital Security Service, lifebox transfer, individual and corporate YaaniMail e-mail, we also launched the BiP Meet application in response to the rising need for video conferencing. Demand for our BiP application, which does not enforce data share permission or discriminate among its users – topics of considerable public debate amid rising concern over personal data security – has also increased rapidly. In the first two months of 2021, BiP registered 27 million new users. The stand-alone revenue of our digital services had increased by 26% year-on-year in 2020. In 2021, our aim is to increase the number of paid users, accelerate B2B opportunities, gain strength with our large screen strategy in the TV segment and take bold strides in new areas such as cloud gaming and game broadcasting businesses and grow the stand-alone revenue of this strategic focus by 25%.\n<\/p>\n
The institutions of Turkey are being renewed with Turkcell Digital Business Services<\/b><\/p>\n
\nThe revenue of digital business services, one of our focal points, and with which we accompany private companies and public institutions on their digital transformation journeys increased by 30% in 2020. We successfully met the increased demand for new generation technologies such as data centers, cloud, cyber security, managed services, system integration projects, internet of things, big data and business applications, in addition to the conventional telecom services in our portfolio. We took the lead in corporate digital transformations having been awarded over 2,300 projects with a total contract value of TRY1 billion in 2020. Of these, 420 were system integration projects for which we provided end-to-end solutions. We have a backlog in the amount of TRY967 million from the system integration projects signed to date. As the largest data center operator of Turkey, we offered our more than 1,600 corporate customers the opportunity to manage their data remotely, supporting their business continuity. We put into use the cloud section of Ankara Temelli Data Center, Turkey\u2019s largest data center, launching \u201cGovernment Cloud\u201d specifically designed for public institutions. Meanwhile, having implemented the technological infrastructure of 4 new hospitals in the health sector, two of which are field hospitals, we have reached a bed capacity of over 8 thousand at 9 hospitals in total, also continuing our market leadership of this sector. Additionally, this year, we increased the number of global vendor partnerships to 21 through strengthened cooperation. By further increasing our competencies in this field over the coming period, we will remain the digital transformation partner of corporations and become the leader in the information technologies services market.\n<\/p>\n
Paycell, our new generation payment platform, sees growth with solutions that make a difference<\/b><\/p>\n
\nIn techfin, another focal point of ours, the demand for digital payment services increased rapidly in a period of changing payment habits. Duly, our customers were able to realize all their payment transactions swiftly and securely using Paycell, our new generation payment services platform. The annual transaction volume of Paycell reached TRY9.0 billion. We continued our dual strategy throughout the year, introducing member merchants and customers new offerings and taking fresh actions. The 3-month active users of Paycell, hugely popular for its convenience and secure payment infrastructure, reached 4.7 million. Thanks to the \u201cReady-to-use Limit\u201d offered by Paycell since July, 190 thousand individual users have made purchases by transferring their mobile payment limits to their Paycell cards. Also this year, we enabled 24\/7 money transfer service to IBAN numbers at banks party to the program. We also added the mobile POS product this year to the Paycell merchant solutions offered to 12 thousand-member merchants. We provided member merchants cost advantage and efficiency by offering the means of managing processes such as collection, inventory monitoring, and e-invoice over a single platform using the Paycell Android POS device. Going forward, we aim to diversify Paycell\u2019s services with wealth management solutions and focus on commercial enterprises via our POS solutions while achieving 3-month active Paycell users of 6 million by the end of 2021.\n<\/p>\n
Revenues through digital channels rose incrementally; Turkcell Pasaj became the new address of technological shopping<\/b><\/p>\n
\nIn promoting wider usage of our digital platforms, one of our strategic focus areas, we registered a strong rise in demand that partly reflected changing customer behavior. As the number of visitors to our digital sales channels reached 30 million on a monthly basis in 2020, the conversion (to sales) rate doubled on a year-on-year basis. 14% of Turkcell Turkey consumer sales (excluding fixed broadband) was derived from digital channels in the fourth quarter of 2020. Furthermore, and within the same scope, in December we launched Turkcell Pasaj, Turkey\u2019s technological marketplace. At Turkcell Pasaj, hundreds of electronic goods, including smartphones, new generation technologies, household electrical appliances and personal care products from Turkey\u2019s leading suppliers are offered with Turkcell assurance.\n<\/p>\n
We generated free cash flow of TRY3.4 billion with our effective and successful financial management<\/b><\/p>\n
\nThanks to our strong operational performance, disciplined cost management practices, effective working capital management and efficient capex planning, we generated TRY3.4 billion free cash4 <\/sup>flow from our operations in 2020, whereby the leverage ratio declined to 0.8x on a 0.2x year-on-year improvement. Our use of hedging products and foreign currency cash at hand to mitigate foreign currency risk underpinned our strong net income performance.\n<\/p>\n\nWe also enter the coming investment periods prepared with long term financing secured in the amount of around USD700 million equivalent in total signed this year, and which may be utilized over the next 3 years in EUR, USD and RMB.\n<\/p>\n
We work towards delivering our customers 5G with Turkcell quality <\/b><\/p>\n
\nOne of the major topics of the upcoming period will be 5G technology. Having commenced use in over 60 countries, 5G technology will play an important role in the digital transformation of institutions and sectors with the novel services it has to offer. While participating in studies both locally and at the international level towards bringing the technology of the future to our customers, we work towards making our infrastructure ready for the 5G transition. Within this framework, we take part in a variety of 5G projects in international technological collaborations such as those of NGMN, GSMA, and ITU. Additionally, this year, we also continued our support for the \u201cEnd-to-End Domestic and National 5G Communication Network Project\u201d established under the leadership of the Information and Communication Technologies Authority and with the support of T\u00dcB\u0130TAK, together with Communication Technologies Clustering firms.\n<\/p>\n
Sustainability is at the heart of our business strategy<\/b><\/p>\n
\nAs Turkcell, we attach priority to creating sustainable value, realizing social responsibility projects and leveraging the power of technology and communication to create social benefit. Within this scope, we have also strengthened our sustainability credentials this year through important initiatives on environmental, social and governance matters.\n<\/p>\n
\nAccording to the results of our \u201cCarbon Disclosure Project\u201d, one of world\u2019s preeminent sustainability initiatives geared at curbing the environmental impact of climate change, we are Turkey\u2019s industry leader. This year, we reaffirmed our resolve on this matter with the rollout of the Turkcell Environmental Policy. Meanwhile, we also undersigned the longest term corporate green loan agreement in Turkey to date; a green loan finance agreement of EUR50 million with 5-year maturity geared at financing our sustainable investments.\n<\/p>\n
\nWe continue to offer diverse solutions that allow the disabled to participate more fully in daily life through our No Barriers Project. Our support for education has included the rich content of our Whiz Kids Project, while on the environmental front our Recycle to Education Project geared at reducing electronic waste commenced. Additionally, we accepted and implemented our Turkcell Domestic Violence Procedure and Turkcell Human Rights Policy.\n<\/p>\n
\nOn the governance front, we put into practice the Integrated Value Creation Committee and Sustainability Committee to elevate Turkcell to international benchmarks and to implement the preeminent practices in the field. Within the framework of Turkcell\u2019s sustainability policies we determined the duties of these committees as formulating medium and long-term action plans and overseeing their efficient implementation.\n<\/p>\n
\nWe contributed to the drafting of the Finance and Investment Principles for Sustainable Development Objectives of the United Nations Global Compact CFO Taskforce, of which we are a founding member, in an initiative to guide the finance leaders of global companies in the practice of sustainable finance. These principles were disclosed at the 75th<\/sup> General Assembly meeting of the UN in September.\n<\/p>\n\nWithin the framework of these focus areas, as of 2020, we have adopted integrated reporting as our primary corporate reporting tool. This reporting model enables us to present the environmental, social and corporate information demanded by key stakeholders, mainly our investors, more holistically and transparently.\n<\/p>\n
We continue to take firm steps towards our goals<\/b><\/p>\n
\nThe beginning of 2021 was marked with the hope arising from the vaccination against COVID-19, and by the hope that the restrictions introduced during the pandemic would soon be lifted. This year, with a view to increasing value creation for all our stakeholders, joint infrastructure sharing and the delivery of new technologies and applications continues to top our agenda. We also continue to implement our digital strategy set on strong fundamentals, and take solid steps to meet our targets announced for the period of 2020-2022. Within this scope, we target5<\/sup> revenue growth of around 14%-16%, and an EBITDA of around TRY14 billion for 2021. In doing so, our aim will be to add another million of subscribers and pass through additional 500 thousand homes with our fiber. We forecast an operational capex over revenues ratio6<\/sup> of around 20%.\n<\/p>\n\nI extend my thanks to all our employees who have made our success possible during a challenging year where we recognized more than ever the indispensable nature of communication and technology for humanity, to our management team cementing our permanent success, and to our Board of Directors for their confidence in us and their invaluable support. I also express gratitude to our customers and business associates who have stood by us at all times on our journey to success.\n<\/p>\n
\n(1) EBITDA is a non-GAAP financial measure. See page 17 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income.
\n
(2) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.
\n
(3) Excluding M2M
\n
(4) Free cash flow calculation includes EBITDA and the following items as per IFRS cash flow statement; acquisition of property, plant and equipment, acquisition of intangible assets, change in operating assets\/liabilities, payment of lease liabilities and income tax paid.
\n
(5) 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 2019 filed with the U.S. Securities and Exchange Commission, and in particular, the risk factor section therein.
\n
(6) Excluding license fee\n<\/p>\n
FINANCIAL AND OPERATIONAL REVIEW <\/b><\/p>\n
Financial Review of Turkcell Group <\/b><\/p>\n\n\n| \n Profit & Loss Statement (million TRY)<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n Quarter<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n Year<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Q419 <\/b><\/p>\n<\/td>\n | \n Q420 <\/b><\/p>\n<\/td>\n | \n y\/y%<\/b><\/p>\n<\/td>\n | \n FY19<\/b><\/p>\n<\/td>\n | \n FY20<\/b><\/p>\n<\/td>\n | \n y\/y%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Revenue<\/b><\/p>\n<\/td>\n | \n 6,683.8 <\/b><\/p>\n<\/td>\n | \n 7,872.2<\/b><\/p>\n<\/td>\n | \n 17.8%<\/i><\/b><\/p>\n<\/td>\n | \n 25,137.1<\/b><\/p>\n<\/td>\n | \n 29,103.7<\/b><\/p>\n<\/td>\n | \n 15.8%<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nCost of revenue1<\/sup><\/p>\n<\/td>\n| \n \n(3,206.3)\n<\/p>\n<\/td>\n | \n \n(3,938.1)\n<\/p>\n<\/td>\n | \n 22.8%<\/i><\/p>\n<\/td>\n | \n \n(12,036.9)\n<\/p>\n<\/td>\n | \n \n(14,361.3)\n<\/p>\n<\/td>\n | \n 19.3%<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n Cost of revenue1<\/sup>\/Revenue<\/b><\/p>\n<\/td>\n| \n (48.0%)<\/b><\/p>\n<\/td>\n | \n (50.0%)<\/b><\/p>\n<\/td>\n | \n (2.0pp)<\/i><\/b><\/p>\n<\/td>\n | \n (47.9%)<\/b><\/p>\n<\/td>\n | \n (49.3%)<\/b><\/p>\n<\/td>\n | \n (1.4pp)<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Gross Margin1<\/sup><\/b><\/p>\n<\/td>\n| \n 52.0%<\/b><\/p>\n<\/td>\n | \n 50.0%<\/b><\/p>\n<\/td>\n | \n (2.0pp)<\/i><\/b><\/p>\n<\/td>\n | \n 52.1%<\/b><\/p>\n<\/td>\n | \n 50.7%<\/b><\/p>\n<\/td>\n | \n (1.4pp)<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nAdministrative expenses\n<\/p>\n<\/td>\n | \n \n(217.4)\n<\/p>\n<\/td>\n | \n \n(210.7)\n<\/p>\n<\/td>\n | \n (3.1%)<\/i><\/p>\n<\/td>\n | \n \n(779.8)\n<\/p>\n<\/td>\n | \n \n(749.6)\n<\/p>\n<\/td>\n | \n (3.9%)<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n Administrative expenses\/Revenue<\/b><\/p>\n<\/td>\n | \n (3.3%)<\/b><\/p>\n<\/td>\n | \n (2.7%)<\/b><\/p>\n<\/td>\n | \n 0.6pp<\/i><\/b><\/p>\n<\/td>\n | \n (3.1%)<\/b><\/p>\n<\/td>\n | \n (2.6%)<\/b><\/p>\n<\/td>\n | \n 0.5pp<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nSelling and marketing expenses\n<\/p>\n<\/td>\n | \n \n(384.9)\n<\/p>\n<\/td>\n | \n \n(400.8)\n<\/p>\n<\/td>\n | \n 4.1%<\/i><\/p>\n<\/td>\n | \n \n(1,555.2)\n<\/p>\n<\/td>\n | \n \n(1,373.0)\n<\/p>\n<\/td>\n | \n (11.7%)<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n Selling and marketing expenses\/Revenue<\/b><\/p>\n<\/td>\n | \n (5.8%)<\/b><\/p>\n<\/td>\n | \n (5.1%)<\/b><\/p>\n<\/td>\n | \n 0.7pp<\/i><\/b><\/p>\n<\/td>\n | \n (6.2%)<\/b><\/p>\n<\/td>\n | \n (4.7%)<\/b><\/p>\n<\/td>\n | \n 1.5pp<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nNet impairment losses on financial and contract assets\n<\/p>\n<\/td>\n | \n \n(121.3)\n<\/p>\n<\/td>\n | \n \n(79.5)\n<\/p>\n<\/td>\n | \n (34.5%)<\/i><\/p>\n<\/td>\n | \n \n(338.9)\n<\/p>\n<\/td>\n | \n \n(349.6)\n<\/p>\n<\/td>\n | \n 3.2%<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n EBITDA2<\/sup><\/b><\/p>\n<\/td>\n| \n 2,753.8 <\/b><\/p>\n<\/td>\n | \n 3,243.0<\/b><\/p>\n<\/td>\n | \n 17.8%<\/i><\/b><\/p>\n<\/td>\n | \n 10,426.4<\/b><\/p>\n<\/td>\n | \n 12,270.3<\/b><\/p>\n<\/td>\n | \n 17.7%<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n EBITDA Margin <\/b><\/p>\n<\/td>\n | \n 41.2%<\/b><\/p>\n<\/td>\n | \n 41.2%<\/b><\/p>\n<\/td>\n | \n –<\/i><\/b><\/p>\n<\/td>\n | \n 41.5%<\/b><\/p>\n<\/td>\n | \n 42.2%<\/b><\/p>\n<\/td>\n | \n 0.7pp<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nDepreciation and amortization\n<\/p>\n<\/td>\n | \n \n(1,404.9)\n<\/p>\n<\/td>\n | \n \n(1,634.6)\n<\/p>\n<\/td>\n | \n 16.3%<\/i><\/p>\n<\/td>\n | \n \n(5,046.6)\n<\/p>\n<\/td>\n | \n \n(5,974.8)\n<\/p>\n<\/td>\n | \n 18.4%<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n EBIT3<\/sup><\/b><\/p>\n<\/td>\n| \n 1,348.9<\/b><\/p>\n<\/td>\n | \n 1,608.4<\/b><\/p>\n<\/td>\n | \n 19.2%<\/i><\/b><\/p>\n<\/td>\n | \n 5,379.9<\/b><\/p>\n<\/td>\n | \n 6,295.5<\/b><\/p>\n<\/td>\n | \n 17.0%<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n EBIT Margin<\/b><\/p>\n<\/td>\n | \n 20.2%<\/b><\/p>\n<\/td>\n | \n 20.4%<\/b><\/p>\n<\/td>\n | \n 0.2pp<\/i><\/b><\/p>\n<\/td>\n | \n 21.4%<\/b><\/p>\n<\/td>\n | \n 21.6%<\/b><\/p>\n<\/td>\n | \n 0.2pp<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nNet finance income \/ (costs)\n<\/p>\n<\/td>\n | \n \n(214.3)\n<\/p>\n<\/td>\n | \n \n(381.8)\n<\/p>\n<\/td>\n | \n 78.2%<\/i><\/p>\n<\/td>\n | \n \n(1,727.7)\n<\/p>\n<\/td>\n | \n \n(1,131.7)\n<\/p>\n<\/td>\n | \n (34.5%)<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nFinance income4<\/sup><\/p>\n<\/td>\n| \n \n44.9\n<\/p>\n<\/td>\n | \n \n(316.0)\n<\/p>\n<\/td>\n | \n (803.8%)<\/i><\/p>\n<\/td>\n | \n \n297.5\n<\/p>\n<\/td>\n | \n \n2,119.5\n<\/p>\n<\/td>\n | \n 612.4%<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nFinance costs4<\/sup><\/p>\n<\/td>\n| \n \n(259.2)\n<\/p>\n<\/td>\n | \n \n(65.8)\n<\/p>\n<\/td>\n | \n (74.6%)<\/i><\/p>\n<\/td>\n | \n \n(2,025.1)\n<\/p>\n<\/td>\n | \n \n(3,251.2)\n<\/p>\n<\/td>\n | \n 60.5%<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nOther income \/ (expense)\n<\/p>\n<\/td>\n | \n \n(128.2)\n<\/p>\n<\/td>\n | \n \n(366.9)\n<\/p>\n<\/td>\n | \n 186.2%<\/i><\/p>\n<\/td>\n | \n \n(346.6)\n<\/p>\n<\/td>\n | \n \n(523.3)\n<\/p>\n<\/td>\n | \n 51.0%<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nNon-controlling interests\n<\/p>\n<\/td>\n | \n \n2.0\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n n.a<\/i><\/p>\n<\/td>\n | \n \n(30.2)\n<\/p>\n<\/td>\n | \n \n(2.5)\n<\/p>\n<\/td>\n | \n (91.7%)<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nShare of profit of equity accounted investees\n<\/p>\n<\/td>\n | \n \n(19.1)\n<\/p>\n<\/td>\n | \n \n(5.2)\n<\/p>\n<\/td>\n | \n (72.8%)<\/i><\/p>\n<\/td>\n | \n \n(15.7)\n<\/p>\n<\/td>\n | \n \n(13.8)\n<\/p>\n<\/td>\n | \n (12.1%)<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nIncome tax expense\n<\/p>\n<\/td>\n | \n \n(233.7)\n<\/p>\n<\/td>\n | \n \n447.6\n<\/p>\n<\/td>\n | \n n.m<\/i><\/p>\n<\/td>\n | \n \n(785.6)\n<\/p>\n<\/td>\n | \n \n(387.2)\n<\/p>\n<\/td>\n | \n (50.7%)<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n \nDiscontinued operations\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n –<\/i><\/p>\n<\/td>\n | \n \n772.4\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n –<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n Net Income<\/b><\/p>\n<\/td>\n | \n 755.6<\/b><\/p>\n<\/td>\n | \n 1,302.0<\/b><\/p>\n<\/td>\n | \n 72.3%<\/i><\/b><\/p>\n<\/td>\n | \n 3,246.5<\/b><\/p>\n<\/td>\n | \n 4,237.1<\/b><\/p>\n<\/td>\n | \n 30.5%<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n<\/table>\n \n(1) Excluding depreciation and amortization expenses.
\n
(2) EBITDA is a non-GAAP financial measure. See page 17 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income.
\n
(3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.
\n
(4) Fair value loss and interest expense regarding derivative instruments and the respective fair value gain and interest income regarding derivative instruments are represented on a net basis. Starting from Q219, interest income on financial assets and interest expenses for financial liabilities, both measured at amortized cost, are represented on a net basis. Historical periods were restated to reflect this change.\n<\/p>\n Revenue <\/b>of the Group rose 17.8% year-on-year in Q420. This was driven mainly by Turkcell Turkey\u2019s strong performance, supported by increased data and digital services usage, upsell efforts, and a larger postpaid subscriber base, as well as higher equipment revenues backed by sales on digital channels and corporate projects. Turkcell International\u2019s solid revenue growth also supported the Group revenue increase.\n<\/p>\n \nTurkcell Turkey revenues, comprising 86% of Group revenues, rose 17.9% to TRY6,771 million (TRY5,741 million).\n<\/p>\n \n– Consumer segment revenues grew 16.1% on the back of upsell efforts, rising postpaid subscriber share, increased data and digital services usage, as well as equipment sales.\n<\/p>\n \n– Corporate segment revenues rose 26.1% driven mainly by the strong performance of digital business services, which grew 31.6% year-on-year.\n<\/p>\n \n– Wholesale revenues grew 19.3% to TRY363 million (TRY304 million), mainly on the positive impact of currency movements despite lower roaming revenues impacted by limited mobility.\n<\/p>\n \nTurkcell International revenues, comprising 9% of Group revenues, increased 33.2% to TRY747 million (TRY561 million), mainly with the contribution of our Ukrainian operations and the positive impact of currency movements.\n<\/p>\n \nOther subsidiaries’ revenues, at 4% of Group revenues, which includes call center revenues, revenues from financial services and energy business revenues were at TRY354 million (TRY382 million).\n<\/p>\n \n– Finance company\u2019s revenues were at TRY145 million (TRY201 million) in Q420 impacted by contraction in the consumer loan portfolio, which declined from TRY2.4 billion as of Q419 to TRY1.9 billion as of Q420. This was due mainly to the installment limitation on consumer loans for telecom devices.\n<\/p>\n \nExcluding the finance business, our consolidated revenue growth was 19.2% year-on-year in Q420.\n<\/p>\n \nStandalone digital services revenues grew 23.1% year-on-year in Q420 backed by the increase in the number of standalone users.\n<\/p>\n \nFor the full year, Turkcell Group revenues rose 15.8%.\n<\/p>\n \nTurkcell Turkey revenues grew 17.1% to TRY25,160 million (TRY21,487 million).\n<\/p>\n \n– Consumer business increased 15.7% driven by strong ARPU performance on the back of data and digital services usage, as well as residential business growth.\n<\/p>\n \n– Corporate revenues rose 23.5% supported by digital business services revenue growth of 30.1%.\n<\/p>\n \n– Wholesale revenues grew 12.3% to TRY1,293 million (TRY1,152 million).\n<\/p>\n \nTurkcell International revenues rose 26.9% to TRY2,542 million (TRY2,003 million).\n<\/p>\n \nOther subsidiaries\u2019 revenues were at TRY1,401 million (TRY1,647 million).\n<\/p>\n \nExcluding finance business and sports betting operations, our consolidated revenue growth was 18.4% year-on-year in FY20.\n<\/p>\n \nStandalone digital services revenues grew 25.6% year-on-year in FY20.\n<\/p>\n Cost of revenue<\/b> (excluding depreciation and amortization) rose to 50.0% (48.0%) as a percentage of revenues in Q420. This was driven mainly by the increase in cost of goods sold (2.7pp), despite the decline in other cost items (0.7pp) as a percentage of revenues.\n<\/p>\n \nFor the full year, cost of revenue (excluding depreciation and amortization) increased to 49.3% (47.9%) as a percentage of revenues. This was due mainly to the rise in cost of goods sold (2.3pp), despite the decline in cost of revenue of financial services (0.5pp) and other cost items (0.4pp) as a percentage of revenues.\n<\/p>\n Administrative Expenses <\/b>declined to 2.7% (3.3%) as a percentage of revenues in Q420, driven mainly by lower office overhead costs and travel expenses.\n<\/p>\n \nFor the full year, administrative expenses fell to 2.6% (3.1%) as a percentage of revenues, due mainly to the same drivers.\n<\/p>\n Selling and Marketing Expenses<\/b> declined to 5.1% (5.8%) as a percentage of revenues in Q420. This was driven mainly by the decline in marketing expenses (0.3pp), selling expenses (0.2pp) and other cost items (0.2pp) as a percentage of revenues.\n<\/p>\n \nFor the full year, selling and marketing expenses declined to 4.7% (6.2%) as a percentage of revenues driven by the decline in selling expenses (0.8pp), marketing expenses (0.5pp) and other cost items (0.2pp) as a percentage of revenues.\n<\/p>\n Net impairment losses on financial and contract assets <\/b>was at 1.0% (1.8%) as a percentage of revenues in Q420. For the full year, net impairment losses on financial and contract assets was at 1.2% (1.3%) as a percentage of revenues.\n<\/p>\n EBITDA1 <\/sup><\/b>rose by 17.8% year-on-year in Q420 leading to an EBITDA margin of 41.2% (41.2%), driven mainly by\n<\/p>\n\nstrong topline growth and disciplined cost controls.\n<\/p>\n \n– Turkcell Turkey\u2019s EBITDA rose 16.6% year-on-year to TRY2,751 million (TRY2,360 million) leading to an EBITDA margin of 40.6% (41.1%) in Q420.\n<\/p>\n \n– Turkcell International EBITDA grew 43.8% year-on-year to TRY350 million (TRY244 million) with an EBITDA margin of 46.9% (43.5%) in Q420.
\n
(1) EBITDA is a non-GAAP financial measure. See page 17 for the explanation of how we calculate adjusted EBITDA and its reconciliation to net income.\n<\/p>\n \n– The EBITDA of other subsidiaries stood at TRY142 million (TRY150 million) in Q420.\n<\/p>\n \nFor the full year, EBITDA<\/b>grew by 17.7% resulting in an EBITDA margin of 42.2% (41.5%) on 0.7pp improvement.\n<\/p>\n \n– Turkcell Turkey\u2019s EBITDA rose 20.4% to TRY10,585 million (TRY8,789 million) leading to an EBITDA margin of 42.1% (40.9%) on 1.2pp improvement.\n<\/p>\n \n– Turkcell International EBITDA increased 29.4% to TRY1,169 million (TRY904 million) driving an EBITDA margin of 46.0% (45.1%) on 0.9pp improvement.\n<\/p>\n \n– The EBITDA of other subsidiaries was at TRY516 million (TRY733 million).\n<\/p>\n Depreciation and amortization expenses<\/b> increased 16.3% year-on-year in Q420. For the full year depreciation and amortization expenses increased 18.4%.\n<\/p>\n Net finance expense <\/b>increased to TRY382 million (TRY214 million) in Q420. This was driven mainly by a higher net FX loss after hedging, and a higher interest expense on financial assets and liabilities, despite higher interest income on time deposits.\n<\/p>\n \nFor the full year net finance expense decreased to TRY1,132 million (TRY1,728 million). This was due mainly to lower foreign exchange losses after hedging and higher interest income on time deposits.\n<\/p>\n \nSee Appendix A for the details of net foreign exchange gain and loss.\n<\/p>\n Income tax expense: <\/b>The current tax expense of TRY136 million was more than offset by TRY584 million deferred tax income reported in Q420. Please note that in Q420 lifecell registered TRY689 million deferred tax income having recognized its accumulated losses as deferred tax assets.\n<\/p>\n \nFor the full year, income tax expense declined 50.7% due mainly to lifecell\u2019s deferred tax income.\n<\/p>\n \nPlease see Appendix A for details.\n<\/p>\n Net income <\/b>of the Group rose 72.3% to TRY1,302 million (TRY756 million) in Q420. Net income was positively impacted by TRY689 million deferred tax income registered by lifecell. Excluding this impact and other one-off expenses, we registered a robust net income of TRY1,025 million on solid operational performance.\n<\/p>\n \nFor the full year, group net income increased 30.5% to TRY4,237 million (TRY3,246 million). Excluding the deferred tax income impact and other one-off expenses, we registered a net income of TRY3,953 million on a 39% rise on the back of strong operational performance and prudent financial risk management.\n<\/p>\n \nPlease see Appendix A for details of one-off items.\n<\/p>\n Total cash & debt: <\/b>Consolidated cash as of December 31, 2020 decreased to TRY11,861 million from TRY13,524 million as of September 30, 2020 due mainly to the dividend payment, and the impact of TRY appreciation on our FX denominated cash. Excluding FX swap transactions, 74% of our cash is in US$, 4% in EUR, and 22% in TRY.\n<\/p>\n \nConsolidated debt as of December 31, 2020 decreased to TRY21,586 million from TRY22,841 million as of September 30, 2020 due mainly to the impact of TRY appreciation on FX denominated debt. Please note that TRY2,099 million of our consolidated debt is comprised of lease obligations.\n<\/p>\n \nConsolidated debt breakdown excluding lease obligations:\n<\/p>\n \n– Turkcell Turkey\u2019s debt was at TRY17,469 million, of which TRY10,197 million (US$1,389 million) was denominated in US$, TRY5,624 million (EUR624 million) in EUR, TRY283 million (CNY253 million) in CNY, and the remaining TRY1,364 million in TRY.\n<\/p>\n \n– Finance company had a debt balance of TRY1,038 million, of which TR259 million (US$36 million) was denominated in US$, and TRY465 million (EUR52 million) in EUR with the remaining TRY314 million in TRY.\n<\/p>\n \n– The debt balance of lifecell was TRY980 million, fully denominated in UAH.\n<\/p>\n \nTRY1,202 million of lease obligations is denominated in TRY, TRY56 million (US$8 million) in US$, TRY186 million (EUR21 million) in EUR, and the remaining balance in other local currencies (Please note that the figures in parentheses refer to US$ or EUR equivalents).\n<\/p>\n \nNet debt as of December 31, 2020 was at TRY9,726 million with a net debt to EBITDA ratio of 0.8 times. Excluding finance company consumer loans, our telco only net debt was at TRY7,788 million with a leverage of 0.7 times.\n<\/p>\n \nTurkcell Group had a long FX position of US$132 million as at the end of the year. (Please note that this figure takes advance payments into account).\n<\/p>\n Capital expenditures: <\/b>Capital expenditures, including non-operational items, amounted to TRY2,885 million in Q420. For the full year, capital expenditures including non-operational items were at TRY9,079 million.\n<\/p>\n \nFor Q420 and the full year, operational capital expenditures (excluding license fees) at the Group level were at 24.2% and 18.5% of total revenues, respectively.\n<\/p>\n \n\n| \n Capital expenditures (million TRY)<\/b><\/p>\n<\/td>\n | \n Quarter<\/b><\/p>\n<\/td>\n | \n Year<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Q419<\/b><\/p>\n<\/td>\n | \n Q420<\/b><\/p>\n<\/td>\n | \n FY19<\/b><\/p>\n<\/td>\n | \n FY20<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nOperational Capex\n<\/p>\n<\/td>\n | \n \n1,696.0\n<\/p>\n<\/td>\n | \n \n1,904.2\n<\/p>\n<\/td>\n | \n \n4,525.1\n<\/p>\n<\/td>\n | \n \n5,391.6\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLicense and Related Costs\n<\/p>\n<\/td>\n | \n \n0.1\n<\/p>\n<\/td>\n | \n \n9.3\n<\/p>\n<\/td>\n | \n \n1.8\n<\/p>\n<\/td>\n | \n \n42.8\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNon-operational Capex (Including IFRS15 & IFRS16)<\/i><\/p>\n<\/td>\n | \n \n749.2\n<\/p>\n<\/td>\n | \n \n971.2\n<\/p>\n<\/td>\n | \n \n2,697.8\n<\/p>\n<\/td>\n | \n \n3,644.6\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Total Capex<\/b><\/p>\n<\/td>\n | \n 2,445.4<\/b><\/p>\n<\/td>\n | \n 2,884.7<\/b><\/p>\n<\/td>\n | \n 7,224.7<\/b><\/p>\n<\/td>\n | \n 9,078.9<\/b><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n\n| \n Summary of Operational Data<\/b><\/p>\n<\/td>\n | \n Quarter<\/b><\/p>\n<\/td>\n | \n Year<\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Q419<\/b><\/p>\n<\/td>\n | \n Q420<\/b><\/p>\n<\/td>\n | \n y\/y % <\/i><\/b><\/p>\n<\/td>\n | \n FY19<\/b><\/p>\n<\/td>\n | \n FY20<\/b><\/p>\n<\/td>\n | \n y\/y % <\/i><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |