| 4. | Segment information |
The Group has two reportable segments in accordance with its integrated communication and technology services strategy – Turkcell Turkey and Turkcell International. While some of these strategic segments offer the same types of services, they are managed separately because they operate in different geographical locations and are affected by different economic conditions.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker function is carried out by the Board of Directors, however Board of Directors may transfer the authorities, other than recognized by the law, to the General Manager and other directors.
Turkcell Turkey reportable segment includes the operations of Turkcell, Turkcell Superonline Iletisim Hizmetleri A.S. (“Turkcell Superonline”), Turkcell Satis ve Dagitim Hizmetleri A.S. (“Turkcell Satis”), group call center operations of Global Bilgi Pazarlama Danisma ve Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Turkcell Teknoloji Arastirma ve Gelistirme A.S. (“Turkcell Teknoloji”), Kule Hizmet ve Isletmecilik A.S. (“Global Tower”), Rehberlik Hizmetleri Servisi A.S. (“Rehberlik”), Turkcell Odeme Hizmetleri A.S. (“Turkcell Odeme”) and Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”). Turkcell International reportable segment includes the operations of Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), East Asian Consortium B.V. (“Eastasia”), LLC lifecell (“lifecell”), Lifecell Ventures Coöperatief U.A (“Lifecell Ventures”), Beltel Telekomunikasyon Hizmetleri A.S. (“Beltel”), CJSC Belarusian Telecommunications Network (“Belarusian Telecom”), LLC UkrTower (“UkrTower”), LLC Global Bilgi (“Global LLC”), Turkcell Europe GmbH (“Turkcell Europe”), Lifetech LLC (“Lifetech”), Beltower LLC (“Beltower”), Lifecell Digital Limited and Fintur. The operations of these legal entities aggregated into one reportable segment as the nature of services are similar and most of them share similar economic characteristics. Other reportable segment mainly comprises the information and entertainment services in Turkey and Azerbaijan, non-group call center operations of Turkcell Global Bilgi, Turkcell Finansman, Turkcell Enerji Cozumleri ve Elektrik Satıs Ticaret A.S (“Turkcell Enerji”) and Paycell LLC (“Paycell”).
The Board primarily uses adjusted EBITDA to assess the performance of the operating segments. Adjusted EBITDA definition includes revenue, cost of revenue excluding depreciation and amortization, selling and marketing expenses and administrative expenses.
Adjusted EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and may not be comparable to other similarly-titled indicators used by other companies. Reconciliation of Adjusted EBITDA to the consolidated profit for the year is included in the accompanying notes.
| Turkcell Turkey | Turkcell International | All other segments | Intersegment eliminations |
Consolidated | ||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||||||||
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Total segment revenue |
15,450,136 | 12,787,592 | 1,067,078 | 874,692 | 1,187,454 | 661,923 | (72,604 | ) | (38,646 | ) | 17,632,064 | 14,285,561 | ||||||||||||||||||||||||||||
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Inter-segment revenue |
(31,690 | ) | (19,680 | ) | (40,897 | ) | (18,964 | ) | (17 | ) | (2 | ) | 72,604 | 38,646 | — | — | ||||||||||||||||||||||||
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Revenues from external customers |
15,418,446 | 12,767,912 | 1,026,181 | 855,728 | 1,187,437 | 661,921 | — | — | 17,632,064 | 14,285,561 | ||||||||||||||||||||||||||||||
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Adjusted EBITDA |
5,593,837 | 4,160,861 | 263,962 | 235,348 | 374,314 | 222,849 | (3,859 | ) | 451 | 6,228,254 | 4,619,509 | |||||||||||||||||||||||||||||
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Bad debt expense |
49,468 | (195,472 | ) | (6,070 | ) | (5,956 | ) | (79,676 | ) | (9,956 | ) | — | — | (36,278 | ) | (211,384 | ) | |||||||||||||||||||||||
| Turkcell Turkey | Turkcell International | All other segments | Intersegment Eliminations |
Consolidated | ||||||||||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||||
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Total segment revenue |
12,787,592 | 11,480,890 | 874,692 | 856,147 | 661,923 | 458,563 | (38,646 | ) | (26,185 | ) | 14,285,561 | 12,769,415 | ||||||||||||||||||||||||||||
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Inter-segment revenue |
(19,680 | ) | (14,608 | ) | (18,964 | ) | (11,731 | ) | (2 | ) | 154 | 38,646 | 26,185 | — | — | |||||||||||||||||||||||||
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Revenues from external customers |
12,767,912 | 11,466,282 | 855,728 | 844,416 | 661,921 | 458,717 | — | — | 14,285,561 | 12,769,415 | ||||||||||||||||||||||||||||||
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Adjusted EBITDA |
4,160,861 | 3,759,590 | 235,348 | 245,959 | 222,849 | 134,484 | 451 | 511 | 4,619,509 | 4,140,544 | ||||||||||||||||||||||||||||||
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Bad debt expense |
(195,472 | ) | (187,963 | ) | (5,956 | ) | (8,292 | ) | (9,956 | ) | (333 | ) | — | — | (211,384 | ) | (196,588 | ) | ||||||||||||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
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Profit for the period |
2,037,759 | 1,543,803 | 1,903,551 | |||||||||
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Add(Subtract): |
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Profit/(loss) from discontinued operations |
— | 42,164 | (367,336 | ) | ||||||||
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Profit from continuing operations |
2,037,759 | 1,585,967 | 1,536,215 | |||||||||
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Income tax expense |
571,758 | 423,160 | 667,112 | |||||||||
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Finance income |
(1,090,449 | ) | (1,064,794 | ) | (756,039 | ) | ||||||
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Finance costs |
1,413,315 | 1,237,593 | 799,514 | |||||||||
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Other income |
(74,438 | ) | (78,569 | ) | (44,454 | ) | ||||||
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Other expenses |
773,329 | 312,801 | 270,446 | |||||||||
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Depreciation and amortization |
2,596,980 | 2,203,351 | 1,667,750 | |||||||||
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Consolidated adjusted EBITDA |
6,228,254 | 4,619,509 | 4,140,544 | |||||||||
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Geographical information
In presenting the information on the basis of geographical segments, segment revenue is based on the geographical location of operations and segment assets are based on the geographical location of the assets.
| 2017 | 2016 | 2015 | ||||||||||
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Revenues |
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Turkey |
16,431,863 | 13,321,503 | 11,779,345 | |||||||||
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Ukraine |
664,643 | 573,951 | 571,630 | |||||||||
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Belarus |
209,884 | 149,005 | 141,219 | |||||||||
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Azerbaijan |
174,021 | 108,329 | 145,654 | |||||||||
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Turkish Republic of Northern Cyprus |
148,637 | 129,785 | 125,668 | |||||||||
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Germany |
3,016 | 2,988 | 5,899 | |||||||||
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| 17,632,064 | 14,285,561 | 12,769,415 | ||||||||||
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| Non-current assets | 31 December 2017 |
31 December 2016 |
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Turkey |
18,098,228 | 16,548,162 | ||||||
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Ukraine |
1,408,783 | 1,211,789 | ||||||
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Turkish Republic of Northern Cyprus |
141,802 | 117,243 | ||||||
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Belarus |
138,371 | 291,498 | ||||||
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Azerbaijan |
13,663 | 13,563 | ||||||
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Unallocated non-current assets |
112,516 | 67,057 | ||||||
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| 19,913,363 | 18,249,312 | |||||||
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