Turkcell Iletisim Hizmetleri A.S.

The stable outlook on Turkcell reflects our stable outlook on Turkey (unsolicited foreign currency B+/Stable/B; unsolicited local currency BB-/Stable/B), and our expectation of continued solid operational performance. In 2020-2021, we expect the company's adjusted debt-to-EBITDA ratio will be close to 1.0x and that FOCF to debt will exceed 10%. A negative rating action on Turkey could trigger the same action on Turkcell. We could also downgrade Turkcell if we revised down our T&C assessment on Turkey, due to deterioration in Turkish corporations' access to domestic and external liquidity, or if we believed the business risk of operating in Turkey had materially increased. We could upgrade Turkcell if we took the same action on the sovereign and revised upward the T&C

...Our macroeconomic assumptions support strong credit metrics in 2020-2021. We believe Turkcell will perform with relative stability through the COVID-19 outbreak because of the telecom sector's low cyclicality and significant utility-like demand characteristics, which limit the correlation of its performance to macroeconomic conditions. However, we will continue to monitor the company's exposure to the situation, and could revise downward our forecast due to: weaker trading conditions stemming from a deterioration in our macroeconomic and GDP expectations; directly affected revenue streams like roaming fees or equipment sales; or higher working capital from accelerated supplier payables or slower collection of customer receivables. We expect the Turkish lira will continue gradually to depreciate versus the U.S. dollar throughout our forecast period, with the exchange rate remaining below Turkish lira (TRY)8 to $1 until year-end 2022. In our base case, we expect the annual average lira exchange...

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