Letter from the Chairman
Board of Directors
Report from the CEO
Turkey & The Telecom Industry
Services & Products
Network Expansion &Integration Human Capital Social Responsibility Financial Review Auditors’ Report 4 6 7 8 10 12 16 18 20 21 22 26 30 36 37 40 44
Making life easier
Turkcell, with 10.1 million subscribers as of December 31, 2000, is the leading provider of mobile services in Turkey using Global System for Mobile Communications (GSM) technology, a pan-European system based on digital transmission. Turkcell is the first GSM operator in Turkey to receive the ISO 9001 quality assurance certificate.
Turkcell readied itself for a more competitive environment during 2000 by investing heavily in network infrastructure, decentralized control, customer care, marketing, brand image, value added data services and converging
Turkcell powered ahead towards its vision of becoming the leading player in the infocom (i.e. GSM, Internet, Digital TV) industry in Turkey as well as in the surrounding region. To achieve this vision, Turkcell took a 25% stake in Fintur Holdings B.V. in partnership with Çukurova Group and Sonera Holding B.V. Directly and through Fintur, Turkcell has stakes in a portfolio of telecom and technology businesses in Turkey, Germany, Moldova, Georgia, Azerbaijan, Kazakhstan and Northern Cyprus.
Turkcell is listed on the New York Stock Exchange under the symbol TKC as American Depository Shares (ADS). Ordinary shares are traded under the symbol TCELL on the Istanbul Stock Exchange.
Principal founding shareholders are Sonera Holding B.V., an international forerunner in mobile communications and the leading Finnish telecommunications company with operations in 19 countries, and Çukurova Group Companies, the dominant player in banking and financial services, insurance, media, industry, trade, services, tourism and communication.
The issued share capital of Turkcell is TL 240 trillion (equivalent of US$458 million as of December 31, 2000) consisting of 240 billion ordinary shares, nominal value TL 1000 per share.
Turkcell completed its initial public offering of 25,102,963,000 shares in the form of ordinary shares and American Depository Shares (with
each ADS representing 250 ordinary shares) on July 11, 2000. The ordinary shares are listed on the Istanbul Stock Exchange and the American Depository Shares are listed on the New York Stock Exchange. The ADSs are quoted on SEAQ International as well. Turkcell’s registered shareholders are summarized in the table below. On March 31, 2001, our General Assembly Meeting authorized an increase in our authorized share capital from TL 240 trillion to TL 500 trillion. In May 2001, we announced that we would increase our capital from TL 240 trillion to approximately TL 263.7 trillion through a bonus share issue. The TL 23.7 trillion increase was profit gained from the sale of certain of our subsidiaries in June 2000.
Shareholder Structure51.0 15.5 13.3 13.2 7.0 Others Çukurova Group Companies Sonera Holding B.V.
Turkcell Holding A.ﬁ. Publicly Traded
The lock-up period that we and each of our shareholders agreed to at the time of our initial public offering ended on January 6, 2001. A number of our shareholders have subsequently announced their intentions to sell 6,032,764,000 of our shares on the Istanbul Stock Exchange. Due to expected sale of these shares, we estimate that the number of our shares held by the public will increase from 10.46% to 13.22%.
Turkcell aims to exceed its customers’ expectations by delivering
exceptional levels of added value while continuing to build its
subscriber base for both prepaid and postpaid services.
Turkcell achieved a 84% increase in subscribers in 2000. Growth was driven by a
800% increase in prepaid subscribers.
Revenues climbed by 41% in 2000 to US$2,224.9 million
Operating income decreased by 26% to US$425.6 million in 2000 from US$574.0
million in 1999.
Adjusted EBITDA increased 14% to US$703.2 million in 2000 from US$616.7
million in 1999.
Turkcell spent approximately US$1.0 billion for capital expenditures during 2000.
Adjusted EBITDA US$ mn 400 500 600 700 800 300 200 100 616.7 343.8 703.2 0 Revenues 2,500 US$ mn 2,000 1,500 1,000 500 722 1,581 2,225 -Number of Subscribers at year-end
10 12 mn 8 6 4 2 2.34 2.34 - 0.52 5.61 4.46 -1998 1999 2000 ◆ ◆ ◆ 4.94 5.46 10.07
2000 was a pivotal year for Turkcell. We achieved our objectives in key areas and powered ahead with ambitious investments that will position Turkcell at the cutting edge of the infocom industry in Turkey as well as in the surrounding region.
We expanded our ownership base through a share offering, floating 10.5% of our shares on the Istanbul Stock Exchange and the New York Stock Exchange. Trading in Turkcell’s American Depository Shares commenced on July 11 on the big board, a first for a Turkish company. This was an historic moment for Turkcell, for me personally and for Turkey.
With a mobile penetration rate roughly half of the European Union, Turkey offers significant growth opportunities for mobile communications. A vibrant economy, the size and varied
topography of the country and the short supply of public phones create a real need for mobile communications services. The population is young, mobile and ambitious.
In 2000, Turkcell increased its customer base by 84% to over 10.1 million, and we believe that steady demand will push subscriber numbers even higher in the coming year. Encouragingly, we also saw growth in the use of value added services such as short message services and are
betting that utilization of these and other services will continue to expand. Accordingly, we stepped up our commitment to new services and
technologies that are offered through mobile phones. Turkcell is working systematically to bring meaning to the concept of customer focus by customizing and personalizing our services through use of new technologies.
We consolidated the complex shareholding structure of the Çukurova Group, Sonera Holding B.V. and Turkcell by acquiring Fintur Holdings B.V. Turkcell has a 25% stake in Fintur. Fintur provides a coherent corporate structure and strategic direction for 13 companies in Turkey and abroad. The paid-in capital of Fintur was increased from 386 million Euros to 540 million Euros in March 2001. Fintur’s board proposed to its shareholders on June 8, 2001 to increase its authorized paid-in capital by 75 million Euros. We believe the future of Turkcell and infocom industry lies in synergy through convergence. Investments in ISPs, digital broadcasting, broadband and corporate data services will position Turkcell to benefit as new technologies such as WAP, GPRS and Multimedia Service Provider (MSP) take off. Turkcell has
established itself in five emerging markets in the region -- Azerbaijan, Georgia, Kazakhstan, Moldova through Fintur and through Turkcell’s direct subsidiary in Northern Cyprus -- and seeks to exploit this presence by expanding the range of technological intensive products and services offered in these markets.
Looking ahead, we are committed to maintaining our dominant position in the Turkish mobile communications market while moving ahead with complementary investments in other regional markets. We are convinced that Turkey--due to its size, vitality and resources-- will continue to demonstrate strong growth in the years ahead despite volatility in the economy. We are also confident that telecommunications industry worldwide will rebound as the
global economy grows and demand strengthens. In closing, I would like to thank the
shareholders, management and dealers for their commitment to Turkcell. Looking ahead to what promises to be a difficult year, the continuing allegiance of all of Turkcell's stakeholders will be a decisive factor in the continuing success of the company.
Mehmet Emin Karamehmet Chairman
Board Member Çukurova Holding-Turkey
Kim Ignatius Board Member Sonera Holding B.V.-Finland Mehmet Emin Karamehmet
oard of Directors
Kim Ignatius, Executive Vice President and CFO of Sonera, has been appointed to the Board of Turkcell Iletisim Hizmetleri A.S. on July 20, 2001. Mr Ignatius replaces Kaj Erik Relander, former CEO of Sonera.
Murat Varg› Board Member MV Holding-Turkey Reha Uz Board Member Çukurova Holding-Turkey Esko Rytkönen Board Member Sonera Holding B.V.-Finland
Kari Oittinen Board Member Sonera Holding B.V.-Finland
In 2000, Turkcell became the mobile communica-tions provider to more than ten million customers, the result of seven years of investment in
networks, customer service and brand image. We are pleased to report that we were able to accommodate this steep increase in the number of subscribers with no deterioration in quality through the introduction of improved and diversified products and services. The very satisfying increase in the number of subscribers reflects the superior quality of Turkcell’s network, service and marketing strategy, confirming our dominant position in the mobile communications sector in Turkey.
Our performance was on target in most areas. Revenues increased to US$2.2 billion, 41% over 1999. Operating profit was down 26% over the preceding year. Net income totaled US$227.9 million for the year compared to US$369.1 million a year earlier. The decline is due mainly to heavy investments, financing costs, higher tax burden and changes in the operating environment. A new era in mobile communications
As the number of mobile telephone users in Turkey soared, important changes occurred in the market. The imposition of the earthquake tax on
mobile subscribers encouraged a trend toward prepaid services as consumers sought to manage the cost of having a mobile phone. Taxes for prepaid subscribers are included in the price of calling cards, rather than charged as a separate item in monthly bills. This has led to a perception that prepaid subscriptions are more cost effective. Prepaid subscribers enjoy the advantage of easy tracking of usage expenses and can receive incoming calls at no charge. As a result, at year-end 2000, 44% of our subscriber base were prepaid compared with 10% in 1999. This resulted to US$23.3 ARPU in 2000.
In 2000, the mobile information society started to become a reality with products such as WAP, e-trading, online banking, push and pull SMS services. The widespread acceptance of SMS indicates that our subscribers adapt quickly to new technologies. Our goal now is to get benefit from the data side through application of GPRS (General Packet Radio Service) which allows information and data to be sent and received across a mobile telephone network. We are committed to making wireless mobility accessible for all of our subscribers through our
multi-access portal, mobile positioning system, and development of WAP with Turkish
We are also investing in ISPs, portals and digital broadcasting in order to create convergence of technologies and give all service from handsets. We believe that introduction of a wide range of
user-friendly services heralds a new era in mobile communications.
At year-end 2000, mobile penetration in Turkey almost equaled fixed line penetration, an amazing growth in seven years. Considering the size of the population (65 million), half of whom are under the age of 30, better education, high mobility, the favorable response to new technologies and the resilience of the economy, we believe the market still has terrific potential to grow. Mobile communication in Turkey has long since ceased to be a luxury; it has become a standard mode of communication for all
segments of society. Nevertheless, we anticipate a period of more controlled growth ahead and are taking steps to adapt to this reality.
We are also ready to compete in a more crowded marketplace. The tender of two GSM 1800 licenses in 2000, one to a private entity and one to the incumbent fixed line provider Türk Telekom, will also change the market. The growth of the market will bring positive changes: a more competitive environment and increased pressure on the state for deregulation.
We also have a seven-year lead in the market, excellent brand recognition and a state-of-the-art network that covers 99.8% of the population living in towns of 10,000 or more people, as well as the 81 largest cities and the majority of the country's touristic areas and principal intercity highways.
We intend to maintain our leadership in the Turkish market by continuing to expand and improve our operations. Decentralized quality control and subscription centers provide strong support for growth. Enhancement of prepaid ser-vices and diversification of distribution
channels make Turkcell more useful and more accessible to customers in all areas and social groups. The new Network Control Center monitors all Turkcell switches, radio base stations and transmission systems from a digital map of Turkey, giving it the ability to react to problems and emergency situations instantly. This reflects our commitment to invest in order to give better services to our customers. Turkcell is and will remain a customer focused company, dedicated to providing functional and handy services that add value to our individual and corporate customers. We are working to intensify customer relationship management in order to boost satisfaction and thus ensure loyalty. More and more we are looking at our business lines as an integrated multimedia package. We have created a common portal infrastructure to serve all voice, data and media needs of Turkcell, Superonline, the leading Turkish Internet service provider and DigiTurk, the first digital
broadcasting company in Turkey.
Indeed, our vision is to become a key regional player not only as a mobile operator but as a leader in converging technologies in Turkey and the region.
To ensure that Turkcell remains at the forefront of the quickly developing infocom industry, we are doing our utmost to obtain and implement the best and newest technologies in order to provide a wider range of higher quality services over a larger coverage area to more customers. To achieve this, we are focusing on further strengthening our financial capabilities, the quality of our human resources, and our reputation as a socially responsible, customer friendly company.
I am grateful to our customers, employees, dealers, shareholders and business partners for believing in Turkcell and working with us to make the company better, bigger and more profitable.
1- Cüneyt Türktan
Chief Executive Officer
2- Handan Yargan
Director, Human Resources and Administration
3- Okﬂan Atilla Sanön
Director, Corporate Communications
4- Ekrem Tokay
5- ﬁevket Sezen
Director, Network Operations
6- Ruhi Do¤usoy
Director, Network Group
7- Mine Alpar
8- Koray Öztürkler
Director, Investor Relations
9- Tülin Karabük
10- Sait Ergüven
Director, Network Planning
11- Gürkan Sar›o¤lu
Director, Customer Relations
12- Fuat Ertüzün
Director, Information Technology
1 2 3 4 5 6 7 8 9 10 11 12
New corporate structure facilitates
converging technologies and
Fintur Holdings B.V., was established as a partnership of Turkcell, the Çukurova Group and Sonera Holding B.V., to manage and guide investments in converging technologies, specifically in mobile telecommunications, broadband and the Internet.
Initial Public Offering elevates
Turkcell to an international platform.
Turkcell completed its initial public offering on July 11, 2000, placing 10.5% of its share capital with the domestic market on the Istanbul Stock Exchange and with international investors on the New York Stock Exchange and SEAQ International. Turkcell is the first Turkish company to be listed on the NYSE.
Turkcell strengthens its competitive
edge in the Turkish market by
enhancing its network to meet
increased user demands for more
sophisticated wireless datacom services.
In February 2000, Turkcell and Ericsson signed a record-breaking US$850 million contract — one of the biggest single contracts in Ericsson’s history — to enhance its GSM system infrastructure to meet a rapidly increasing user base in more geographic areas and offer increased capacity in high-user areas. In July 2000, Turkcell became one of the first mobile operators in the world to purchase Ericsson’s GPRS technology providing
end-to-end solutions including core network ele-ments, transmission backbone, interfaces, implementation and relevant end-user terminals and applications.
In August 1999, Turkcell was the first operator to invest in Ericsson’s WISE High-Speed Internet solution, which blends carrier-class products from Ericsson’s wireless and datacom portfolios. In January 2001, Turkcell signed a US$400 million contract with Ericsson to upgrade and develop its GSM system infrastructure to meet the demands of its rapidly increasing user base, expand in additional geographic areas and offer increased capacity in high-density areas.
Turkcell accesses US$500 million in
medium-term funding from Turkish
banks to finance ongoing network
Turkcell signed two loan agreements for a total of US$250 million with Akbank T.A.ﬁ. The milestone transactions, which have three years maturities, will be used to finance ongoing network investment expenditures. Three-year loans were also obtained from Vak›fbank for US$100 million and from Garanti Bank for US$150 million. The size and term of the funding from Turkey’s top-tier banks underlined
Turkcell’s high credibility in its local market.
Turkcell’s overall aim is to introduce
the latest mobile communication
technologies into the Turkish market
and to promote their use.
In 2000, Turkcell continued to take the lead in rolling out new products and services. These include WAP services for both post and prepaid subscribers, New Generation Sim Card “SIM Plus”, Mobile Positioning Service, “Call A Song” service which enables Turkcell postpaid
subscribers to download the latest hits by various artists before release to the general public in Turkey, and “My Colleagues” tariff, a subscription-based service that allows medium-sized companies with three to nine Turkcell lines to save up to 30% on their GSM bills. GPRS field trials were held. Short Message Service (SMS) has become an increasingly popular form of communication among both prepaid and postpaid subscribers with daily volume peaking at 31 million messages on December 27, 2000.
Investment in network improvements
Following the opening of the Ankara and Istanbul Operation Headquarters in November 1999, Izmir Plaza came into service in March 2000, providing an extra capacity of 1.7 million lines as of July 2000. In November, three additional switches started serving Izmir and its surrounding area, providing an additional 800,000 line capacity to the region. In January 2001, the Network Control Center started operations at the Turkcell Maltepe Plaza in
Istanbul to monitor all Turkcell switches, radio base stations and transmission systems from a digital map of Turkey, and react to problems and emergency situations instantly.
Turkcell supports education for girls
and introduction of technology to
Modern Turkey’s Modern Girls education project, organized by Turkcell in coordination with the Association in the Support of a
Contemporary Life granted 5,000 girls from rural areas in Turkey’s 32 provinces one-year scholar-ships to enable them to continue their education. Signal Tour 2000 brought GSM technology to the lives of people who had little exposure to technology by visiting 82 different cities and towns, in seven different regions of Turkey, over a seven month period. Signal Tour 2000 informed thousands of people in Turkey about recent developments in technologies such as mobile phone, SMS and WAP technology by building direct relationships.
Turkcell is committed to maintaining its position as
the largest and most coveted provider of mobile
communications services in Turkey.
To achieve this, we intend to:
Ensure subscriber loyalty and satisfaction through customer focused
policies that deliver the highest quality services available in the market.
Operate a superior quality network.
Compete primarily on the basis of service and quality.
Provide an expanding bundle of services to our customers to increase
minutes of use per customer and revenues.
Increase penetration of our services.
Lead the market in providing mobile data, Internet and mobile
Turkcell was founded in 1993 and commenced operations in 1994 pursuant to a revenue sharing agreement with Türk Telekom to establish and administer a Global System for Mobile Communication (GSM) network in Turkey.
Turkcell obtained a 25-year GSM license in April 1998 for an upfront fee of US$500 million and monthly payments equal to 15% of gross revenue. An Interconnection Agreement with Türk Telekom provides interconnection of our network with Türk Telekom’s fixed-line network. Today Turkcell is the largest mobile operator in Turkey with 10.1 million subscribers as of year-end 2000.
Turkey, located at the juncture of Europe and Asia between the Mediterranean and Black Seas, is a vibrant democracy with a history stretching back to the beginnings of civilization. A republic since 1923, Turkey has a population of over 65 million, approximately half of whom live in urban areas, of which Istanbul, Ankara, Izmir and Adana are the largest. The country has developed rapidly over the past two decades. It is a founding member of NATO and a candidate member of the European Union. Turkey offers significant growth opportunities for mobile communications. The mobile penetration rate is roughly half of the European Union average of 40%. Average age is 27, compared to an average age of 42 in the
European Union. A young, mobile and ambitious population with rising educational levels and a short supply of public phones create further needs for mobile communications services.
During 2000, the Turkish government opened a tender for two new 1800 Mhz licenses, and two new licences were issued.
A new telecom law approved by Turkey’s Grand National Assembly in January 2000 set up an independent regulatory body to oversee the telecommunications industry. This is expected to create a more level and transparent business environment for the market’s mobile operators. A constitutional change ensured international arbitration, another important factor for the development of foreign investment in Turkey as major holdings in telecommunications,
transportation and energy begin to be privatized. With the recent 2001 changes described in Amending Law No. 4673, Turk Telekom is the monopoly provider of national and international voice telephone services until December 31, 2003, subject to some limitations. However, Turk Telekom will lose its monopoly in all fields when the State’s share in Turk Telekom drops below 50%, even if it is before the 2003 deadline. Value-added telecommunications services, including GSM services, may be provided by capital companies incorporated in Turkey that duly conclude a concession agreement or obtain a telecommunications license or general permission under the provisions of the Telecommunications Law and the Telecommunications Services Regulation. Some services can only be carried out by an operator through a concession agreement to be concluded with the Telecommunication Authority.
Turkcell intends to increase GSM
usage among existing customers while
fostering the acquistion of new
customers by offering access to a full
range of voice and value-added
services and innovative data services.
Successful strategies underlie
Turkcell’s high level of growth
Turkcell is the best-known and most coveted mobile communications operator in Turkey. In 2000, we nearly doubled our customer base through diversification of distribution channels, enhancement of prepaid services, sales
campaigns and introduction of a range of attractive tariffs.
Implementation of a market segmentation strategy enables Turkcell to tailor its marketing, services and tariff packages proactively with the aim of increasing penetration and optimizing usage patterns by existing customers. Strong relationships and brand loyalty with primary dealers have been developed through a variety of support programs, including training seminars, advertising support and incentive campaigns. This is a key element of Turkcell’s success in the market as is the addition of new distribution channels for prepaid cards in supermarkets and newsstands across the country.
A superior level of customer service has been
instrumental in distinguishing Turkcell from its competitors. Top priority is given to increasing customer satisfaction levels through application of customer relationship management techniques. Analysis of individual customer usage patterns enables Turkcell to match individual customer needs with specific products or services. Our strategy is to deliver personalized services in order to enhance loyalty and boost usage of various services, thus creating a basis for profitable long-term relationships with customers.
A customer centric outlook will define Turkcell in the coming period in line with changing market conditions and the identity of the Company as a leader in converged technologies. In the past year, Turkcell has made a successful bid to increase the variety of services it offers to both postpaid and prepaid customers.
Postpaid Services: A full choice package
Postpaid service includes network access, call forwarding, call barring, call holding, call waiting, SMS based information services, mobile positioning system, voicemail, fax data, caller identification, dual numbering, twin cards, unified messaging, high memory SIM card options, directory assistance, a financial information line, a general information line, data services and international roaming.
SMS ServicesTurkcell pioneered SMS based services in Turkey.
In addition to basic messaging between
customers, the SMS service enables customers to access a variety of information:
● Invoice Info Line to obtain information regarding phone bills.
● Flash News and Information services to receive news.
● National Lottery to retrieve results of the latest lottery draw.
● Horoscope to read daily horoscopes.
● Banking Service to check current balances and obtain other banking information.
● SMS Chat to interact in chat groups.
● CNN News to retrieve pre-specified categories of information ranging from sports to
● Turkcell Goal to reach Turkish Premier League live soccer game results.
● Mobile Mail to send e-mails.
● Mobile Positioning Service to learn the location of nearby hospitals, police stations, Yapı Kredi and Pamukbank branches, and Turkcell dealers.
Unified MessagingTurkcell led the market in offering Unified Messaging Service, which enables easy and seamless message management over the internet and the mobile phone.
SIM Plus CardHigh memory SIM cards feature a built- in menu that allows customers to reach
Turkcell’s SMS based information services easily.
Data ServicesWAP based data service was launched on March 1, 2000. Currently, Turkcell offers mobile access to data services including location-based information such as restaurant and cinema guides, news services such as CNN and financial information. Interactive mobile banking services enable subscribers to check stock prices, account information and execute account transactions. In the future, this will be expanded to include interactive banking services and stock trading.
International Roaming Turkcell offers customers international roaming in 96 countries pursuant to commercial roaming agreements with 206 operators as of July 23, 2001, as well as in several states in the United States and provinces in Canada, pursuant to roaming agreements with five operators.
Prepaid ServicesIntroduced in the first quarter of 1999 under the two brandnames - Haz›r Kart (Ready to Go Card) and Muhabbet Kart (Chat Card) - prepaid service has generated new demand for Turkcell mobile communications. As of December 31, 2000, the number of prepaid customers had reached 4,5 million.
In 2000, a new tariff package named “Hazır Kart Weekend” was introduced, targeting customers whose utilization is higher on weekends by offering a 50% discount for weekend use.
Scratch cards marketed under the Hazır Kart name are sold through Turkcell dealer networks and alternative channels such as gas stations and supermarket chains. Muhabbet Kart scratch cards are sold through a nationwide chain comprised of thousands of newsstands.
Prepaid customers are now offered a package of services almost equalling that of our postpaid customers. Prepaid services include network access, call forwarding, call waiting, call holding, caller identification, SMS, SMS based information services, voice- mail, mobile-mail, access to WAP and international roaming.
The quality of Turkcell’s network,
measured in terms of network
coverage and capacity, has been an
important factor in the company’s
success. Turkcell is continuing to
invest in its network to increase
capacity and speed, improve quality
and expand coverage in order to
maintain its competitive advantages in
Turkcell designed, constructed and operates its network by using Ericsson as its GSM supplier for network infrastructure and pursuant to a technical assistance agreement, Sonera provides Turkcell with technical assistance in the areas of network planning, operations and maintenance. The agreement with Sonera expired at the end of 2000 and has not yet been renewed. In 1999, Turkcell became the first operator to invest in Ericsson’s WISE High-Speed Internet solution, which blends carrier-class products from Ericsson’s wireless and datacom portfolios. During 2000, Turkcell and Ericsson signed an agreement valued at US$850 million to enhance its GSM system infrastructure to meet a rapidly increasing user base in more geographic areas and offer increased capacity in high-user areas, followed by an addition of US$400 million contract in January 2001. In July 2000, Turkcell became one of the first mobile operators in the world to purchase Ericsson’s GPRS technology providing end-to-end solutions including relevant end-user terminals and applications.
The network is designed to provide high quality coverage to the majority of Turkey’s population. The build-out of the network is now substantially complete with coverage as of December 31, 2000 of approximately 99.8% of the Turkish population living in cities of 10,000 or more people. Turkcell already covered more than 95% of small towns of 5,000 people.
Network development continues in order to improve quality and expand capacity. In urban areas indoor coverage and capacity have been improved by using in-building sites. Istanbul, home to some 11 million people, has the highest covarage density. At present, Turkcell has sufficient bandwidth to serve its current and projected customer base and meet the capacity requirements of its license.
The Turkcell network consists of stand-alone home location registers, or SHLRs, base station controllers or BSCs, and combined mobile switch centers visitor location registers, or MSC/VLRs, and base transmitter stations, or BTSs. BTSs are the fixed transmitter and receiver equipment in each cell, or coverage area of a single antenna, of a mobile communications network that communicates by radio signal with mobile telephones in the cell. Each BTS is connected to a BSC via leased lines and/or minilinks. The BSC monitors and controls the BTS. Cascading the BTSs to each other is possible, thereby realizing considerable cost savings in transmission.
As of December 31, 2000, the network had the following characteristics:
● 33 Gateway MSC’s, or GMSC’s, to direct the incoming and outgoing traffic to and from a fixed-line network toward the GSM network;
● an aggregate of 100 MSC’s and 141 BSC’s in Istanbul, Ankara, Izmir, Adana, Antalya, Samsun, Trabzon, Erzurum, Diyarbak›r, Konya, Mu¤la, Bodrum, Denizli, Ayd›n and Bursa to reroute calls to end users and to collect billing information for the calls;
● 23 SHLR’s to maintain user data in the system and to manage security for the user and the
handset data; and
● 6655 base station sites.
In 2000, the network was upgraded to
accommodate High Speed Circuit Switched Data, or HSCSD-based high speed data services, increasing network speed three times upto 28.8 Kbps. Work continues to test and implement a higher transmission speed network infrastructure to support rapid transfer of data to our customer handsets.
Most of Turkcell’s switches and BTS units are currently in private sites where 2/8/34/155mbps
1998 1999 2000
leased lines are already available. With the expansion of our network capacity, Turkcell is installing switches in its own buildings with our synchronized digital hierarchy rings of leased lines to provide transmission connection. Turkcell also installs BTSs in private sites where
leased lines are not available. Where private sites are used, we use a high bit rate Digital Subscriber Line, or HDSL, link for distances of up to 2km (from the BTS site to the nearest Türk Telekom location) or radio link equipment for longer distance BTS connections.
Mobile Switches (MSC) 17 62 100
Base Station Controllers (BSC) 17 62 141
Gateway Switches (GW) 5 26 33
Tandem Switches 0 2 10
Home Location Registers (SHLR) 5 12 23
Base Station Sites 1,630 3,655 6,655
Transmitter Units (TRX/TRU) 8,382 22,654 38,639
Superonlineis the leading Internet Service Provider (“ISP”) and one of the biggest portals in Turkey, hosting half a million visitors per day.
Established in June 1995, Superonline (SOL) set the standards for Internet service provision in Turkey. It began operating in December 1996. It was voted the Best Consumer ISP in Europe at the 3rd European ISP Forum held in Rome, October 2-5, 2000.
As of December 31, 2000, Superonline serves approximately 734,000 individual and 1500 corporate subscribers -with a 63,000 phone line capacity provided by a dedicated nationwide backbone made up of high capacity leased lines and 41 Points of Presences (“POP”).
Superonline’s mission is to stimulate Internet usage throughout the Turkish speaking community.
DigiTurkThe digital TV broadcasting company in Turkey, was established in 1999. The company aims to be the dominant Direct-to-Home (DTH) carrier in the Turkish market by offering entertainment, educational and information services as well as interactive applications and broad-band Internet access to subscribers in Turkey. On the air since the beginning of April 2000, DigiTurk offers 96 channels and two different package alternatives to 195,110 subscribers as of December 31, 2000. Interactive services, which are set to be introduced in 2001, include homeshopping and homebanking activities that will allow subscribers to access large quantities of information and perform online operations. DigiTurk also offers a University Entrance Exam preparation program and an education channel called MEF Digital.
xpansion & Integration
Turkcell is primed to lead the
revolution in Turkey and the
wider region through a group
of mobile, Internet and digital
communication companies owned by
Fintur Holdings B.V., in which Turkcell
has a 25% stake.
Developing technologies and converging platforms is speeding up the creation of new products and services. Working with its partners,
affiliates and suppliers, Turkcell is attuned to the vast possibilities of convergence of technologies and excited to offer these to its customers. The next stage of innovation will center on data usage for communication, transforming Turkcell into a multimedia service provider. Mobile video and mobile broadcasting-conferencing, video telephony, mobile banking, m-money and m-commerce, will shape market dynamics. Turkcell is positioned to lead the introduction of these new technologies.
Mapco (Multi Access Portal Company) and
Platco (Platform Company) were established in 2000 with the aim of providing customers with always available service. Mapco is responsible for content aggregation and content management while Platco supports Mapco by providing the technology infrastructure needed to deliver content to customers. The portal will provide personalized information in two main components: one targeting the interaction between the subscribers and their physical environment and one
delivering personalized information on a variety
of topics such as weather forecasts, news, travel, health, etc.
Corbusswas formed in 2000 to provide individualized and innovative solutions to the communications needs of business customers. Corbuss aims to increase mobility in companies by using Turkcell GSM, satellite and Mobitex infrastructures. Corbuss provides the turnkey solutions to corporates such as Mobile company (MVPN), Unified Messaging, High Speed Data, In-building coverage, Wireless ATM, Satellite Data Communication, Vehicle Tracking Systems.
Mobicom,a wireless data network provider in Turkey, was established in 1996. Mobicom is able to provide turnkey solutions to corporations including wireless EFT- POS applications, wireless ATMs and bank branches, various alarm systems, AVL (Automatic Vehicle Tracking),
telemetry (remote data collection and reading) and field sales applications. Mobicom serves leading banks and corporations in the Aegean and the Mediterranean regions as well as the major cities in Turkey with a 99.5% network availability commitment.
Verinetuses the VSAT (Very Small Aperture Terminal) technology. A revenue sharing contract with Türk Telekom enables Verinet to provide satellite (ISBN-Integrated Satellite Business Network) communications to governmental and private organizations in Turkey and abroad via TÜRKSAT satellites through its Earth Station (HUB) located on the Asian side of Istanbul. In addition to its core business of ISBN services, Verinet provides national and international SCPC links and Internet Backbone (USA) connections and nationwide integrated (Satellite & Terrestrial) VPN solutions for its customers.
Topazoperates Broad Band Cable Networks with Türk Telekom on a revenue sharing contract in six Turkish cities - Adapazarı, Balıkesir, Tekirda¤, Gaziantep, Kayseri and Izmir-Bornova. These networks provide access for data and a base for interactive applications as well as TV/Radio broadcasting. Topaz utilizes Ericsson technical infrastructure and technology for the CATV Network. Future service planning covers data, Internet and interactive data applications in addition to pay TV, NVOD and IPPV applications.
Azercell,founded in 1996, is a groundbreaking joint venture between Azertel and the Ministry of Communication of
Azerbaijan. In four years, Azercell gained the leading position in the Azeri market, with 381,000 subscribers as of December 31, 2000. Fintur owns 87.5% of Azertel, which is the owner of Azercell with a stake of 64.3%. Azercell’s success reflects its quality service and competitive pricing. The poor infrastructure of fixed PSTN lines -and the long waiting time for installation- has also encouraged mobile phone usage. The introduction of prepaid card service SimSim in December 1998 also served as a catalyst for the Company. The inexpensive, practical, user-friendly format of SimSim is responsible for 90% of Azercell’s subscriptions. Azercell has roaming agreements with 127 operators in 66 countries and is working to establish an Internet infrastructure that aims to become the country’s leading Internet service provider. Its strong GSM infrastructure and Internet infrastructure will create a valuable synergy in providing products and services through both platforms in Azerbaijan.
Geocell,the first GSM Operator in Georgia, was founded in 1996 and
became operational in March 1997. Fintur owns 100% of Gürtel, which is the owner of Geocell with a stake of 78%. At the end of 2000, Geocell had 69,000 subscribers and roaming agreements with 69 operators in 134 countries. During 2000, investments amounting to US$22.8 million were undertaken to develop new technologies to inten-sively expand the coverage area to include almost all populated regions and roads in Georgia. An innovative express-payment card system was developed and was launched by Geocell in 2000. Fintur, which was the direct owner of 80% interest in GT Mobile, the first GSM 1800 operator in Georgia decided to restructure its operations in Georgia under one corporate identi-ty, to create synergies between the assets owned by its subsidiaries and creating efficiencies. After the planning stage, partners of both Geocell and GT Mobile agreed on the merger of Geocell and GT Mobile and the merger agreement was registered in the Georgian courts on 27 March 2001.
K’Cell,is one of the biggest cellular operators in Central Asia and the leading GSM Operator in Kazakhstan in terms of network subscribers, rate of growth, volume of investments (US$114
million) and variety of services. K’Cell
represents Fintur’s first venture in Central Asia. Fintur is a 51% partner of K’Cell with the national operator, Kazakhtelecom and holds a renewable 15-year license for providing a GSM standard cellular network. K’Cell started its commercial activity in February 1999. Within the first year of operations, K’Cell started to offer both postpaid and prepaid services.
As of December 31, 2000, K’Cell has 142,000 subscribers.
The launch of Moldcell in April 2000 marks the beginning of a new era in mobile communications in Moldova that will greatly benefit individuals and business. Moldcell, owned 77% by Fintur, received a license to operate a GSM Network covering the territory of the Republic of Moldova in
November 1999. It became operational in April 2000. The fundamentals of Moldcell’s strategy are customer satisfaction and the implementation of advanced technology. The company offers ser-vices to the consumer at very competitive prices with a wide range of complimentary
services. Moldcell’s subscribers can access Customer Care Assistance 16 hours a day. Moldcell proved its ability to implement new technology in Moldova by being the first to offer Short Messaging Service (SMS). This is just the first step in offering innovative services that will make GSM communications an inseparable part of the lives of many Moldovans.
Telecommunications Holding AG (ETH)
Founded in 1998, ETH is 60% owned by Fintur. Targeting Turkish ethnic segments across Europe, ETH uses a limited Pan-European network backbone to provide services and products within the T.I.M.E. (Telecommunications, Information Technology, Media, Entertainment) spectrum through subsidiaries in Germany and Austria.
ALO VATAN Germany serves 40,000 households primarily with long-distance fixed telecommunications, Internet, digital TV, and prepaid mobile communications (limited to use in Turkey) products. In Vienna, ALO VATAN Austria serves the country’s Turkish émigré market with a similar product portfolio.
Kuzey K›br›s Turkcell,
On March 25, 1999, K›br›s Mobile Telekomunikasyon Limited ﬁirketi, a 100% owned subsidiary of Turkcell, was established to operate a GSM network in Northern Cyprus. The Company entered into a revenue sharing agree-ment with the governagree-ment of the Republic of Northern Cyprus. Kuzey K›br›s Turkcell began operations in July 1999.
Founded under 75% ownership of Fintur, Novacell has applied for a GSM 1800 license to provide mobile communications
services in Ukraine. Upon receipt of the license, Novacell will begin to build a nationwide network.
Turkcell Iletiﬂim Hizmetleri A.ﬁ.
Fintur Telecom Fintur Technology
Azercell K’Cell Geocell–GT Mobile Moldcell ETH Novacell Turktell MapCo PlatCo
Hayat Boyu E¤itim Siber Digikids Biliﬂim DigiTurk Superonline Mobicom Verinet Topaz Turkcell 25% Sonera 35% Çukurova 40% Turkcell’s share ranges between 70-100% Global (100%) Corbuss (99%) Kuzey K›br›s Turkcell (100%)
Turkcell employees are highly motivated and involved, with superior interpersonal, technical, marketing and management skills.
Motivation, vision and technical expertise characterize Turkcell’s employees. Growth in employee numbers parallels the increase in business volume: the number of employees increased from approximately 91 employees in 1993 to 2,523 employees as of December 31, 2000.
Turkcell is able to recruit highly qualified employees due to its position of leadership in telecommunications, its strong corporate identity and reputation as a fair employer. Stringent hiring and training standards have resulted in a professional organization with high-caliber employees and a challenging workplace.
Every Turkcell employee undergoes two weeks of orientation training, which includes corporate culture and ethics, and an introduction to our services, facilities, methods and functions of departments. Turkcell has developed an e-learning platform and gives the opportunity to employees to take technical and non-technical courses on their computers. In addition, each employee receives specific training for his or her particular job. Customer support employees, for example, undergo an additional two weeks of training, work as interns alongside experienced employees and are spot-tested. Network training takes place at Ericsson Turkey’s GSM Training Center in Istanbul.
0 1998 1212 1909 2523 1999 2000 1000 2000 3000
Employee BreakdownFinancial Admin.: 17% Customer Care: 26% Sales and Marketing: 8% Technical: 49%
Turkcell gave the gift of education to 5,000 girls from rural districts as well as sponsoring major cultural and technological events.
As a socially responsible company, Turkcell believes in promoting the development of education and technology as well as supporting art and culture.
During 2000, Turkcell developed the “Modern Turkey’s Modern Girls” education project in coordination with the Association for the Support of Modern Life. The project grants one-year scholarships to 5,000 female students from rural areas of 32 provinces in Turkey to enable them to continue their education and promote family planning and social health.
To acquaint rural inhabitants with GSM technology, Turkcell organized the Signal
Tour, a seven month tour of 82 cities and towns all over Turkey, covering a distance of 22,000 km. A 35 person team demonstrated wireless communication from a Turkcell Communications Truck equipped with laptop computers, mobile phones with WAP technology, interactive kiosks, plasma-screen televisions and projection equipment.
Turkcell enhanced its reputation as a pioneer in mobile communications by sponsoring “Biliﬂim 2000”, the major Information Technology Fair in the Middle East and Balkans.
Turkcell is a public spirited company that believes in supporting the arts, sports and cultural heritage. In 2000, Turkcell sponsored the Istanbul Film and Jazz Festivals and the publication of an illustrated book on Anatolian Cities.
Total revenues for the year ended December 31, 2000 increased 41% to US$2,224.9 million from US$1,580.8 million for the same period in 1999. The increase in revenues for the year ended December 31, 2000 resulted primarily
from Turkcell’s larger customer base. Turkcell’s revenues are mostly derived from communication fees. Revenues from communication fees for the year ended December 31, 2000 increased by 44% to US$1,973.8 million from US$1,372.5 million for the same period in 1999.
Turkcell acquired approximately 1.4 million net new subscribers in the fourth quarter of 2000. New gross subscribers acquired in the fourth quarter of 2000 consist of 87% prepaid and 13% postpaid subscribers.
Turkcell’s subscriber base increased 84% to 10.1 million at December 31, 2000 from 5.5 million at December 31, 1999.
The overall subscriber base at December 31, 2000 consisted of 5.6 million postpaid and 4.5 million prepaid subscribers.
Number of Subscribers at year-end
Postpaid Prepaid Total
10 12 mn 8 6 4 2 2.34 2.34 - 0.52 5.61 4.46 -1998 1999 2000 ◆ ◆ ◆ ◆ 4.94 5.46 10.07
Revenues 2000 Revenue Breakdown 2,500 US$ mn Adjusted EBITDA US$ mn 2,000 1,500 1,000 500 722 1,581 2,225 -1998 1999 2000
SIM card sales
0.1% Call center revenues
0.3% Monthly fixed fees 9.6% Communication fees 88.7% Subscription fee 0% 400 500 600 700 800 300 200 100 616.7 343.8 703.2 0 1998 1999 2000 EBITDA
Adjusted EBITDA increased 14% to US$703.2 million in 2000 from US$616.7 million in 1999. The increase in adjusted EBITDA was not as great as the increase in revenue growth principally because of the Interconnection Fee Dispute, regarding the 15% fund and the 2.5% Turkish Radio and Television Institution share. As a result of the dispute Turkcell included US$87.3 million in the direct cost of revenues for the year ended December 31, 2000, which caused approximately 4% decline in EBITDA margin. The Earthquake Tax, enacted at the end of 1999 negatively affected our 2000 revenues and adjusted EBITDA. Maintenance expenses, and other operational costs associated with the network expansion, as well as acquisition costs attributable to the increased customer base have also contributed to a lower rate of increase
in our adjusted EBITDA margin.
Operating income, affected by the same costs except for the effects of depreciation and amortization expenses and translation losses, decreased by 26% to US$425.6 million in 2000 from US$574.0 million in 1999.
Turkcell’s average monthly revenue per customer per month decreased 33% to US$23.3 in 2000 from US$34.9 in 1999. Turkcell’s average revenue per postpaid customer per month decreased 23% to US$28.3 in 2000 from
US$36.7 in 1999 whereas its average revenue per
prepaid customer per month increased 9% to US$12.7 in 2000 from US$11.6 in 1999.
Average postpaid revenue per customer was neg-atively impacted by the implementation of the Earthquake Tax. Prepaid ARPU improved as a result of our expanded distribution channels and the introduction of new value-added services.
Direct cost of revenues. Direct cost of revenues increased 76% to US$1,197.1 million for 2000 from US$679.4 million for the same period in 1999, due to increased depreciation expenses on new investments and additional amounts required to be paid to the Treasury for ongoing license fees in connection with the dispute over the calculation of the license fee with the Treasury and the Ministry of Transportation and 15% Fund and 2.5% TRT Share expensed in 2000. As a result of the Interconnection Fee Dispute,
regarding the 15% fund and the 2.5% Turkish Radio and Television Institution share, Turkcell included US$87.3 million in direct cost of revenues for the year ended December 31, 2000. Interconnection costs and license fees paid to the Treasury increased 143% and 40% to US$191.0 million and US$346.3 million, respectively, for the year ended December 31, 2000 from US$78.7 million and US$246.6 million, respectively, for the same period in 1999. ARPU (Blended) 50 US$ 40 30 20 10 45 23.3 0 1998 1999 2000 34.9
Turkcell increased its total assets by 36% to US$3,884.9 million at December 31, 2000 from US$2,851.3 million at December 31, 1999 mainly due to network expansion.
Direct Cost of Revenues
1,000.0 1,200.0 1,400.0 US$mn 800.0 600.0 400.0 200.0 295.1 -1998 1999 2000 679.4 1,197.1 Total Assets 2,500 3,000 3,500 4,000 4,500 US$mn 2,000 1,500 1,000 500 1,565 0 1998 1999 2000 2,851 3,885