Turkcell Q2 revenue up 1.1%, EBITDA down 10% y-o-y

Turkcell Q2 revenue up 1.1%, EBITDA down 10% y-o-y

by Alexandra Hudson

Turkcell, Turkey's leading mobile phone company on Thursday: * posts Q2 net profit of $245.8 million down 42 pct * posts Q2 revenue of $1.398 billion, down 20 pct * posts Q2 EBITDA of $448.8 million, down 30 pct * Net profit was seen at $320 million according to the average forecast in a Reuters poll of 9 analysts.

Mobile phone operator Turkcell posted a 42 percent fall in second-quarter net profit to $245.8 million, blaming a weaker lira and provisions set aside for litigation which impacted net profit by 123 million lira ($84.4 million).

The average forecast in a Reuters poll of nine analysts was for net profit of $320 million, on sales of $1.389 billion.
Turkey's telecoms operators have challenged each other through the courts, amid a competitive environment, and have also challenged legislative changes.

The provisions had been made for pending legal cases relating to the period 2003-2005, the company said.
Sales amounted to $1.398 billion, Turkcell said in a statement early on Thursday, slightly beating forecasts and posting a rise of 9 percent from the first three months of 2009, although they were down 20 percent on the year.
ARPU (average monthly revenue per user), rose to $11.8 in the second quarter, up from $10.4 in the previous quarter and slightly above a consensus forecast for $11.6.

Turkcell had warned early in 2009 its performance would be adversely affected by the poor macroeconomic environment in Turkey, where the economy contracted a record 13.8 percent in the first quarter of the year, and is seen falling around 5 percent in 2009 as a whole.

Turkcell's Ukrainian unit Astelit and betting business Inteltek reported weaker results that weighed on performance. Astelit was hit by a gross domestic product drop in Ukraine of 20 percent and by devaluation, while Inteltek faced an excess payout.

Turkey's economic downturn, which has seen people drastically reduce their phone use, and multiple SIM users discard extra cards in favour of one operator, has coincided with a period of new market liberalisation in Turkey, intensifying competition to an unprecedented degree.

The company said this intensified in the second quarter and mobile penetration in Turkey fell to 88 percent in the period down from 90 percent in the second quarter.

But Turkcell said it had a net subscriber loss of only 42,750 whereas the market contracted by approximately 800,000.

Turkcell is the country's market leader with a subscriber share of some 56 percent, but it has needed increasingly aggressive pricing and marketing to defend its position.

Analysts are hopeful that new 3G services launched in the country in July will see mobile phone operators ease their price war, to compete on new technology instead.

Of 10 analysts that cover Turkcell, six rate it a "hold," one an "underperform," and three a "buy" or an "outperform."
Turkcell shares have rallied since the start of August as investors snapped up companies which had lagged huge gains in the Istanbul index , which is up 60 percent since the start of the year. By contrast Turkcell stock has risen only 18 percent since the start of 2009.

In Turkish lira terms Turkcell's net profit fell 26.2 percent on the year.