Turkcell(US:TKC)2020-04-01 22:44Financial Performance - Net cash inflow from operating activities increased to TRY 9,026.6 million in 2019, up from TRY 5,829.9 million in 2018, representing a 55% increase[846][847] - The increase in profit of TRY 1,099.4 million compared to 2018 positively impacted net cash inflow from operating activities[847] - The subtotal after adjustments for profit for the period increased to TRY 11,915.6 million in 2019 from TRY 9,821.9 million in 2018[847] Cash Flow and Investments - Net cash outflow from investing activities decreased to TRY 3,027.3 million in 2019, compared to TRY 4,535.6 million in 2018, primarily due to increased proceeds from the sale of a subsidiary[849] - Cash generation from issuance of loans and borrowings decreased to TRY 29,060.5 million in 2019 from TRY 44,341.1 million in 2018, while cash generation from bond issuance fell to TRY 311.6 million from TRY 2,188.3 million[850] - The company received TRY 2,219.6 million from the sale of a subsidiary in 2019, compared to TRY 118.5 million in 2018[849] - The net cash outflow from financing activities for 2019 was TRY 3,478.0 million, significantly higher than the TRY 534.4 million in 2018[850] Debt and Liquidity - The company has a strong liquidity position with cash-equivalent of USD 1.7 billion, approximately equal to its debt service due in the next three years, excluding the consumer finance unit[865] - The debt to equity ratio is 112% as of December 31, 2019, down from 126% in 2018, indicating improved leverage management[866] - As of December 31, 2019, the company's borrowings consist of USD 752 million and EUR 846 million based on floating-rate pricing, with USD 300 million and EUR 480 million still outstanding as of January 1, 2022[864] Operational Strategy - The company expects total operational capital expenditures as a percentage of revenues in 2020 to be around 16%-18%[870] - The company is facing increased capital needs for technological and geographic expansion, which may lead to higher net cash used for investing activities[868] - The company plans to selectively seek new investment opportunities, including the purchase of licenses and acquisitions in domestic and international markets[866] Market and Economic Conditions - Turkey's economic growth slowed to 0.9% in 2019, with expectations of acceleration to around 3.3% in 2020, although COVID-19 measures may negatively impact this growth[873] - The Turkish Lira depreciated by 12.9% in 2019 compared to a 39.5% depreciation in 2018[894] Customer and Subscriber Trends - The proportion of postpaid subscribers in Turkey's subscriber base increased to 62% in 2019 from 54% in 2017, reflecting a shift towards value-focused offerings[881] - The company anticipates increased revenues from mobile data and digital services due to rising smartphone penetration and data consumption, while revenues from voice and SMS are expected to decline[882] COVID-19 Impact - The impact of COVID-19 on business operations remains uncertain, with potential adverse effects on revenues and liquidity[893] - Measures taken in response to COVID-19, such as travel restrictions and store closures, have significantly impacted customer behavior and sales[893] - The company is monitoring the effects of currency devaluation and macroeconomic conditions on asset values[895] Contingent Liabilities and Obligations - As of December 31, 2019, the company has contingent liabilities from bank letters of guarantee amounting to TRY 1,518.7 million[898] - Total contractual cash obligations amount to TRY 27,989.7 million, with payments due in less than one year totaling TRY 10,768.0 million[901] - Outstanding purchase commitments for property, plant, equipment, and services amounted to TRY 819.5 million as of December 31, 2019[903] - The company provided guarantees to distributors amounting to TRY 294.4 million[898] - The company utilized currency swaps and other derivative financial liabilities amounting to TRY 86.6 million to mitigate foreign exchange risk[904]