Turkcell Q4 net profit below forecast

Turkcell Q4 net profit below forecast
By Daren Butler

* Q4 net profit falls 20.7 percent to $319.8 million
* Q4 sales fall 12.3 percent to $1.585 billion
* Economic slowdown may affect 2009 performance

Turkey's top mobile phone operator Turkcell said on Wednesday net profit fell 20.7 percent in the fourth quarter and warned its 2009 performance may be affected by the economic slowdown. It said fourth-quarter net profit fell to $319.8 million, below a Reuters poll forecast of $404.7 million. The company's fourth-quarter sales dropped 12.3 percent to $1.585 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 29.6 percent to $524.5 million.

CEO Sureyya Ciliv said Turkcell's 2009 operations and financial performance may be adversely affected by the macroeconomic environment, consumer confidence and competitive dynamics in Turkey. "In 2009, the GDP growth rate in Turkey is expected to weaken further in line with the global economy, which may have some impact on our operational performance," he said. Annual Turkish economic growth slowed to just 0.5 percent in the third quarter of last year. "In determining our business plans we will continue to closely monitor developments in these areas and take into consideration the potential impact of global volatility on the Turkish economy," he added.

CHALLENGING ENVIRONMENT
Last year as a whole, the company posted a net profit up 36 percent at $1.8 billion. According to the average forecast given in a Reuters poll of 11 analysts, Turkcell was expected to report a net profit for the year of $1.92 billion.
"We are pleased with our 2008 performance in one of the most challenging environments in business history," Ciliv said. "The global crisis had an impact on our key markets where GDP growth has slowed down significantly, consumer confidence declined and the currencies were sharply devalued," he said.

EBITDA in 2008 stood at $2.6 billion, down 1.8 percent, and sales in 2008 rose 10.1 percent to $7.0 billion.
Average revenue per user (ARPU) remained flat at $14.5, while the subscriber base grew 4.5 percent on an annual basis to 37.0 million as of end-2008. Last November's introduction of mobile number portability in Turkey, allowing customers to switch operators while keeping their numbers, heightened competition in the market, which has some of the highest penetration rates in Europe.

This, analysts say, forced Turkcell to boost customer incentives and its marketing expenditure to gain new customers and retain existing ones -- hitting margins. The EBITDA margin fell to 37 percent from 41.5 percent a year earlier.
Turkcell, Turkey's largest company by market value, saw its shares drop some 30 percent during 2008, but it outperformed Istanbul's index of leading shares which halved in value over the same period. (Writing by Daren Butler, editing by Leslie Gevirtz, Richard Chang)