TKC - Earnings call transcript Q2 2021 | Turkcell Iletisim Hizmetleri A.S.

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Operator

Ladies and gentlemen, thank you for standing by. I am Galilea, Chorus Call Operator. Welcome and thank you for joining the Turkcell's Conference Call and Live Webcast to present and discuss the Turkcell Second Quarter 2021 Financial Results Conference Call. At this time, I would like to turn the conference over to Mr. Ali Serdar Yagci, Investor Relations and Corporate Finance Director. Mr. proceed. now may you Yagci,

Ali Serdar Yagci

Mr. Thank you, to speakers afternoon, Welcome our and our Good second quarter morning CFO, and Turkcell's Erkan; Today's Mr. good Yilmaz. XXXX CEO, everyone. Murat Galilea. Osman results are call.

we We Q&A. be and doing will have presentation a brief afterwards,

the Safe start, like Harbor review statement. we of our remind you to Before page kindly presentation, I to would last for our

hand Now, Mr. to over I Erkan.

Murat Erkan

and Thank today. good Serdar. you, morning afternoon. us Good for you Thank joining Ali

would second I Turkey the like extend climate Before year, we wildfire we result, quarter importance one severe dive delivering which waves, including accelerated world recorded Net beloved the of a our condition, most to EBITDA condolences was We prevailing and own diversified due pandemic by XX.X% this growth, disaster TRYX.X results. business outstanding mobile year-on-year base The segments. remarkable country, Despite XX% that digital change to every underlines dealing operational strategy, recently. customer-centric model, into sustainable addressing my was refocus of performance, fighting financial on the value growth growth enabled to income ARPU with is and and XXX,XXX growth. the revenue billion. performance TRYX.X reached of of and and double-digit our subscriber robust flood the heat and this In is was fiber with offers. in high All and residential possible billion ecosystem strategy.

second in XXXX April we XX, distributed the sales planned quarter, XX%. note, Additionally, channel last first helped July distributed in whereby October. and our be has second during their us of share installment and reached dividend strategy the our to and digital the prioritizing To installment on of the our

led update us Our the outstanding full-year half, and for the to guidance. our have second expectation result

slide. Next

and In segment, second the business, Let's base grew operational continued in the XXX,XXX postpaid on look on by the reached the a XX% quarter. take at of our rise focus the performance total, our year-over-year. postpaid share mobile a with X-point

our share. in and after keep instrumental addition increased and in customer-centric approach to were aim the postpaid churn postpaid mobility. we some the in increase lockdowns forward, gained of ease net we momentum the AI-based measures further through focus pandemic the and Going June, analytical May, in Initially, affecting numbers, the retention. our acquisition Despite capabilities

on churn was of level the larger to As mobile the rate increase, a thanks higher to price Blended mobile and upsell subscriber years. usage. such, postpaid TRYXX higher lowest data past adjustment, a our X.X%, ARPU tariffs rose three XX% to share,

and double-digit pricing Our level the growth strong has offers. mobile year. XX% market, In ARPU is competition. internet Enabling ARPU XX% subscriber we We mobility under prevailing XX,XXX made the continued in broadband limitations. remaining quarters with expect fiber of rational demand the the higher fiber the additions fixed for high-speed than segment, environment a our

focus on continue. Our fiber will customer

amongst customers. service are further subscribers, our register this out We residential house-holds every of reached IPTV our addition to now the net customers. to offer XX XX,XXX XXX,XXX homes of to pleased XXX fiber a We having

Our residential our for growth, an and to upsell speeds, XX% on demand adjustments. ARPU higher TRYXX, price mainly rose efforts,

our fixed operator XX% level the market, the As ARPU incumbent. the in challenged above is broadband

Next slide.

quarter usage last data also was and trends. XX.X gigabyte year growth. record user. mobile on quarter, in growth for the data year-on-year rose update an previous usage years. the that The to mobile XX% lockdown data highest Next, affect the in the X.XG per subscription period this eight Average Recall

of penetration services XX% sign still is XX for compatible potential. growth Overall significant XX% This trends. up indicating X.XG quarter's ARPU these mobile is compatible. have X.XG usage around and growth on smartphones, with data monetizing of being million growth, which indicates that smartphone reflected the are we customer at Out XX%, X.XG

We technology. they within Next well who regardless our services individual unique Turkcell by Turkcell our use. enterprise customers roof. customer with any aim is of under last point We digital digital An serve of a the of ecosystem, slide. the ecosystem digital a served digital ecosystem, to satisfaction customer experience infrastructure. The uses customer, as all Turkcell digital and network the our reunites services which all all received operator will be high-quality invested, accepted our and strong

right right AI-based of almost let An retention instrumental needs us in extensive customer decision strategy product. distribution channels, customer, points time, This that reach the are X,XXX nationwide making. quarter, the right to the to our tailored our are customer digital at channel with in

As we invest continued their we further a the appreciation. than our to recommend see Net confirmed degree Score. to higher to happy are in Turkcell as have customer, the relationship Promoter significantly with competition, by our Customers

slide. Next

on has TV been price we paid Smart for devices. experience, X.X those strategic up for last in services. and good year, digital TRYXXX continued content of services user XX% we TV In strategy, past X.X is to big reached The let's business. mobile stand-alone user last have chats users, we and XX a years. reached And our focus TV+ for are that four million million and to almost TV+ have active Now, at Since product of users integrated, areas, move groups with X solutions the screen being our platform, strong best the TV Ready and than quarter The million start has every now been creation. that are over not half year-on-year, million messaging BiP XX reaching digital produced we offer million, year. quarter the It imported also from other our our as level base downloads churn active abroad. from today. added have revenue chat BiP, a The ability platform, growth million. more its the has

experience, increased user improvement features, a We are for the apps million. remarkable new user base reached collaboration X cloud personal lifebox on as user have glad stand-alone our milestone base. exceeded application to have and paid has Consistent the

launched model digital with business quarter, evident market. last services, our of BXB from communicated the demand the the we As have

aim cooperation our with local ready the education services, and a As we serve remote of demand and to for part process. continues, working digitalization their be to are

slide. Next

digital leadership our from TRYXXX latest a cloud year-on-year backlogs Next, a total services. own our value nearly to have and By Recently, our services, promising for Revenues million. operational, new with data total, configurations. our in TRYXXX which launched to periods center is their interface business. rose we for services We sustained rendering customers we XX% enables data this contract quarter make contracts, center further TRYXXX million. cloud system of XXX our project of digital business ahead. new signed integration million the business

services. continue our Utility These have introduced RPA for On focused customer have fraud cybersecurity Management financial and of new journey. variety prevention end-to-end We services. automation the digital of strengthen robotic will developed launched to On firewall corporates solution. vertical, institution on their process. in Smart services to IoT we was Turkcell we assist vertical, for transformation

Next slide.

focus. sheet instant due Aiming produce nearly provide and for Financell Third on to our three-fold are is providing scoring to million we contraction an revenue TRYXXX year-on-year clients growth. in a X,XXX Techfin Paycell interest balanced all with market the Techfin to on this products grew The eased almost sales Turkish and year-on-year much system our approval quarter flat to higher rose from revenue our share. credit specialized loan to portfolio receivable that Pay trend off leader with a serve transparent. risk year-on-year. growth is to the and XX% more quarter X.X segment with banks. focus the transaction transaction million, customer, management This XX% higher the Turkcell's of topping With rate year-on-year a revenue finance quarter, services especially result financing rates. started another double the has fast-growing this in products. on robust in loan The Financell will were to XX% or the Card mobile metro whereas has reaching showed differentiates Later service, Buy traction solution active strategy, keep than financing It solutions, a Mobile million for segment, corporate improve Paycell company back payment volume seen company. aim today. TRYXXX while Now remarkable balance with payment users. its

slide. Next

the application, apply an can channel. lockdowns. up our even Digitalization customer packages the top our operator digital from extreme subscription. the non-Turkcell providing portfolio, part of lira, words purchase integral user complete data in top or while even like extensive among our priorities. customer our XX/X, a for digital a Now, From in play Turkish on our smart devices of a can channels few situation Digital services performance is

volume Turkish numbers a even lira As have the have purchase sales we increase, times. as Notably, channels currently users, though through this operator digital plan and XX% data at digital with were doubled percentage user. platforms, in X.X generate limited acquisition witness transaction have consumer such, quarter digital for year-on-year. XX X.X active Turkey's platform quarter. this refer up share the reached were we the over Even to there point digital million second on top Overall, which the of Turkcell higher

Next slide.

our Let's Turkcell international business. take XX% our look of has XX% reached at a grew consolidated in international performance year-on-year. revenues revenue,

of the the On local currency This Ukraine and on movements, driven base solid revenue XX%. million growth by XX%. subscriber organic in positive X.X the ARPU business segment Ukrainian higher consumption subscriber impact grew of currency terms. Mobile the year-on-year of flourishing growth on an by excluding corresponding has growth. was XX% and mainly back Lifecell growth, data reached XX% impact,

Next slide.

TOGG on update Design most automobile prestigious of initiative. the the SUV its our Design TOGG. an electric has model. Turkey's Award, fully e-mobility project iF world’s one Award for for Now, received

first the continues the made a planned the of construction and facility in produced to full SUV assembled production milestone, vehicle In parts. As domestically quarter entirely as XXXX. company July rollout model at speed of is last buggy first

investment Considering be in next TOGG June, effective TOGG, area company potential Group Turkcell. with existing exploring, line the we this stake present XX%. the in increasing we announced in focus are with our XX% opportunities potential believe the In field also for a the that we this, to be in it strategic to the medium-term. and Turkcell potential e-mobility, As to has from valued the has for synergies

Next on slide. like ESG front the I action second upon would our touch the to quarter. in

fulfilling Our exclusively XX our subsidiary, capacity. are panels aimed Furthermore, megawatt in an by wind power XXXX. investments Izmit, recently These source at Turkcell center. energy installed we located as from data commitment solar with procurements a renewable of Energy plant solar acquired

the the we year this talent welcomed fresh graduate process, where year, we This than focus the underline ecosystem. only As human commitment our vendors, our These children's in and behavior, employees, responsible Turkcell to established relations of sensitivity endearment and Governance and a woman company, rights, To of more Turkcell AI Sustainable shortly and male. note, our into applicant. socially recruitment Principles. within designed on AI-based customers ethical the we principles with graduates

are we solidarity Southern wildfires Lastly, and in fighting the who victims Turkey. disaster are in with heroes,

We the various free local have date. saplings donated only with Voice base and have a station companies NGO is veterinaries saplings, thousands we to donated provided Nature region. action data a Turkcell, in disaster-related in setup not and built as to Conservancy hospital of mobile packages,

environment. our expectation we billion. aiming with like I of half our presentation would guidance high our our Accordingly, EBITDA growth for of still the to Next TRYXX.X raised around healthy my guidance to into our to performance real around the We XXXX. remainder revenue and full-year Taking revised our slide. a first end sharing growth for upwards. the revenue in the year, XX%, consideration by we new integration for expectation revised

of an register The to to operational fiber ratio home to led plan us the between has to expect XXX,XXX full-year. increase nationwide CapEx for strong based XX% over sales demand our We XX%. for

from now affected will arising FX demand is CapEx Our operational for expectation and Osman. fluctuations. leave strong the in our also business CFO, I Ukrainian the performance floor by

Osman Yilmaz

Thank you, Murat.

Now, our a closer financials. take into look let's

an outstanding year-on-year. an quarter-on-quarter growth the Our TRYX.X the restrictions, we COVID-XX growth. Despite performance on top accelerated line were able strict to quarter in resulted second and was X% billion generate XX.X% in

year, half first the the For line growth top of exceeded XX%.

TRYX.X with XX.X% Our a EBITDA margin. billion on increase, XX.X% a reached

[TRYX.X a in registered XX.X% to rise to spending QX. due to advanced income CapEx rose of on in with capital a XX% billion] line our plan. sales in net ratio We Our QX,

disclosed our Tax tax assessment Law for week, As last have we pursuant number XXXX, the to years we XXXX restructured XXXX. and

allows more letter of law compensated part a the fixed-asset our us has former. impact based revalue article upon domestic The Another of investments to than to the PPI. same the of

slide. Next

billion. Turkcell revenue development. from Group revenues TRYX year-on-year, quarter, details the on Turkey. was Of to some second XX.X% billion incremental Now This TRYX.X rose corresponding increase, In the this an drives of lifecell result operational year-on-year, of currency mainly and the positive movements. performance, strong base. strong revenues postpaid in performance ARPU Turkcell the netted the impact to and rose thanks international XX%

of TRYXXX Our line, grew digital by contributed sales, contributing top segment the Other back million million channels. TRYXX quarter equipment Techfin by to in on XX.X%, this driven revenues. the segment by fully Paycell supported higher

FX cost to collection by OpEx expenses marketing The been were points, minus Next increasing the XX% affecting the EBITDA an contribution made decrease decreased points, and Group performance. at periods, mainly due in margin, measures EBITDA a that slide. Turkcell our minus billion, this the growth. year-on-year during gross mainly XX% impact, subsidiaries, slightly points in sales, increase in level. Rising mainly driven instrumental margin to had Strong line X.X doubtful year-on-year, TRYX.X coupled the higher of international performance. Group lockdown rose EBITDA percentage EBITDA of factors better plus XX.X% suspended receivables to COVID-XX strong in with in of equipment performance percentage X.X The the thanks to international top operational a triggered QX. margin percentage X.X by decline change

slide. Next

talk our Now, I balance sheet leverage would like to about details. and

repayment. the in QX, total our an to at TRYXXX dividend billion position and debt TRYXXX decreased to million due increase debt currency our TRYX.X in In payment QX, As position. million mainly led billion and movements cash TRYXX.X of TRYXXX billion, million to cash a rise end from TRYXX.X

As TRYXX.X X.X with times billion to debt our billion TRYXX.X a slightly net from ratio. a leverage increased result, position

until business, same accrual at the level debt times, quarter. billion Excluding this $X.X financing the position hence the Around covers was our previous service as cash the X.X XXXX.

slide. Next

management of currency I risk. will foreign the into go Now,

share cash from to currency a hard as as our of the of XX% FX instruments With tool. bulk in the hold hedging hedging place, natural to of continue base in QX. We declined XX%

the as a second quarter. are of at million long We in position net $XXX FX of end

continue Going to we neutral to forward, target long a FX position.

slide. Next

of thanks Financell. fintech in and quarter loan collection by business are at and a rate million take financing a performance this The The portfolio firstly TRYXX the and doubtful Financell's higher a performance payment the FX mainly the after and TRYXX margin a sale of X.X% Let's of to balanced eased receivables Paycell, to in led million income margin. the EBITDA Net level, also performance and of has contraction rose flat in reached year-on-year, EBITDA revenues. revenue receivables loss increased rise cost risk doubtful look of trend dividend hedging. companies strong from our closer by to to TRYXX XX% All-in-all, revenues year-on-year interest lower QX. in driven our to sale has XX% XX%. due improvement with million, operational the

slide. Next

company, revenue of demand services as Paycell, momentum services its payments XX% rapidly range payment demand is change. on Our solutions. its well-positioned payment meet habits been with Paycell has diverse rising The continued this to growth. yearly and digital for

X.X nearly million. this transaction Paycell's volume fact, quarter TRYXXX In active three-month reached million. Mobile to users doubled payment in

million quadrupled needs data is Paycell meets the payment Later in app app financial demand, rising users. to as a of Card product QX, volume to Paycell TRYXXX transaction instrumental Pay super Buy and growth Additional that increased We services year-on-year. its Now this performance. In of position usage

We digital as supporting my its over to regulations a In will digital Digital Turkcell Paycell we much coming overall providing open questions. in momentum items our you Additional recognition, collaborations listening. line banking verticals concludes growth. open Thank a can to regulation, now for of presentation. and we services, various financial tokens is banking joint initiative, for the product. the sell first-time the quarters. support QX, of content future game set very strong through the Paycell, the This app. Group, with game care strength for sustain had act pipeline. legislation the eval and Paycell to ID There platforms are of numerous marketplace e-commerce

Operator

the The first Please line Ondrej with of question ahead. is UBS. Cabejsek from go

Cabejsek Ondrej

Hello. you Congratulations from the on for Couple thank a question. strong quarter. please. And me,

up, also on the break maybe guess, guidance, all, guidance, ahead because top here. can EBITDA of of CapEx First down line and the the is you questions guidance, I upgraded two is so, –

than the that that EBITDA kind of, the is driven you can the would businesses give In that upgrade, could is you from and in of And question in FX? are growing You by, of investments it terms between CapEx, us the then anything else? seem me, expected? impact then And faster terms of perhaps down the an non-core mentioned additional because line of idea if what break context second top please. fiber it primarily

how another market composition the huge guess, had bit highlighted in competitive that quite market please? mobile Can And quarter, where and the the You've time you about looking as the good. in during of talk are quarter I pretty Thank in the at these leader, terms your main a the net stabilized from? you, numbers you mobile, much. just competitor, very additions, coming that it’s second same situation see

Murat Erkan

Okay.

thank all, you of very much. First

supported it's I subscriber think, which the international of operation, the – of performance Turkcell the increase us mean, year. pandemics performance. And million we growth net in X.X this the revision, we on we base at top so and we also first half or the of ARPU means despite robust the side, first guidance achieved have the in at especially together see positive the Regarding quite of when our and subscriber will revenue addition second growth significant year, achieved impact We half SaaS Ukraine in Turkey, look strong organic line with strong help level environment. I the to growth. subscriber currency half challenge movement

second another for confident for situation us is this half. also the So,

fiber on increase. on from I the regarding side. customer On because invest like in the we CapEx more demand in slides, the EBITDA guidance revision, the since breakdown, presentation, depends there it are also And mentioned mainly to revenue would

XXX,XXX of home number from target to XXX,XXX. increased we So, pass

is drive mentioned, increase. market. will Also, as Ukraine the CapEx which I promising So,

we're gaining top growth. market our gaining – increasing are line share, We we're

to we more, So, would in since we get invest as well. like invest we Ukraine more

main customers, this needs customer for to invest we So, data, the more the more so since the is more And obviously, this have are side. going in reason CapEx. we

Regarding telco our services proposition rich value first have services, range offer And well this And we diversified We clearly high wide important. differentiated right go is stated right and based quality our We with also strategy business micro-segmented all the the quality, to model. AI-capabilities services. us the and approach, the as payment bases. us right second of can our customer, a all, customer enable solution. for digital of to net customers is from addition, us customers, providing to maximum Also which on our digital provide increase question, infrastructure through further as our make services, as time. to enables at products offer help to

prepaid So, customer, sorry mobile these postpaid customer, switched of them in XX% new Out active from XX% [XXX,XXX] out of customer, XXX,XXX customers, Thank you. lines. of of them where are and this of and terms – execution of postpaid them of postpaid. mainly

Cabejsek Ondrej

Thank that a on medium-term you. saying, the you higher forward this target may than I the that CapEx and just as should in would the target, be fiber be as is not the demand plan well? mentioned May just read that follow-up with X.X for strong going question is we have million would homes please? competition accelerate per may your be year XXXX what the very consistent You short well

Murat Erkan

home don't pass. Exactly, XXX,XXX because to investing after want stop we

more from fiber. have that especially demand we first, comes, we will need see the also continue, we the when So, XG XG the

pass, in invest anything, help we business as other well. on home will it when So,

we'll continue in definitely invest fiber. So, to

Cabejsek Ondrej

year Would per was million meant previous of couple of the couple be over million X.X years. X.X X.X guidance next over now next per the of year years? I because kind say, it than must million your I more say

Murat Erkan

more that. To We hope hope we honest, than than that. more be

Cabejsek Ondrej

Okay.

Murat Erkan

When machine will Because to can machine. gets the start take or the customer when actually. having time investment, accelerate you speed, you home of pass easily increase it the speed

more So, I I than think hope [XXX] – that.

Cabejsek Ondrej

very Okay. you much. Thank

Operator

Sachs. of go question the Goldman The Degtyarev Vyacheslav next ahead. Please from is line with

Degtyarev Vyacheslav

presentation. very the much of for Couple Yeah. questions. Thank you

after envisage the Firstly And on you of And spectrum the electric the synergies time potential and into allocation? the question for or into thoughts would can investments would magnitude the you the the network this significant as over implications Turkcell? the capital financial further outline on be would around be the commitments Thank also can see you auction? for certain timing, well the second projects, the as XG, your spectrum what project, the monetization, build you. vehicle you with of upcoming the the

Murat Erkan

you thank Vyacheslav, very Okay. much.

Transport XG, the a XXXX. you could that For the and as of launch couple related the XG auction be XXXX, of of announced months in commercial unofficially ago, held new with spectrum of may recall Deputy Infrastructure Minister

app working Overall, June, a recent for XG also, services, some guidance. can Since us government XG. so Meanwhile, gave And on ready spectrum of in timeline. then, XX our XG heard official from launched we have for any are and this license. use we now XG hard development, to roaming the we countries. are XG. services official we preparation So, continue preparation the as in we the on subscribers respect timeline to any XG we don't very XG don't with and announcement commercial Turkcell have get that the And

However, we transition. believe network, have is already strong the which XG X.XG we a

quality with tests use the also will help offer a extensive to different service going forward. on partners XG cases us different Our

schedule have as obviously, of XG, wait technology the auction. when the your of side the the demand decrease, CapEx CapEx I because nature clear by of said, equipment And you more, don't we cost for Regarding XG decrease.

It’s official announcement, happen, it's So, obviously the what's announcement. but to there. not we'll an see is announcement but going

Regarding project commitment is to around project, vehicle million. electrical our capital this EURXXX

invested million have already. around EURXX we far, So

plan and depends the going to and its on capital EV the on the progress phases, project we we the need, of company. during really continue need, where we So, forward, will depends when project it release

Degtyarev Vyacheslav

the elaborate with Can you see you. maybe Turkcell? you synergies Thank on

Murat Erkan

e-mobility is synergy, Regarding everywhere.

is which and engagement. high connectivity, everyone now, EV needs speed, thinking entertainment low partnership, TOGG latency So, operator customer car But was joining without and very that strong the the telco this everybody right this why when we important, partnership, trend, that is the driver consortium. since joined e-mobility

reason have main synergies. that's that the So, we

solution digital So IoT have together, model, smart-living are and in no competencies smart solution as services lasting is with smart and very is partners TOGG Turkcell and payment. suppliers including charging, important integrated well, and There on. charging there. and data-based can business infrastructure, Payment city, so

what things So, can may come during are But the has there synergy. think help map, finalize side. we I see clearly, this many, on road many we'll vision but this to Turkcell

Degtyarev Vyacheslav

Thank much. very you,

Operator

The from next line Mandaci Securities. with Please is of ahead. Ece question the UNLU go

Mandaci Ece

Hi. the of I Thank for you very have a couple presentation. questions. much

on hedging we The and include last two level loss first one average, is your when FX FX adjustments. we costs, compared years a net value to loss, the seeing – higher FX also the are fair

currency the the previous in rates So, were also and fixed volatile quarter.

this this TRYXXX asset the and such sale FX expect sale, deferred Paycell. change. provide Could official your losses I when in have the minority changed should has this will to we was quarters? see – ago of specifically stake regarding as be the potential or two in very Is generated else And accounting such also we or much. is or, effects when were is consider in million emerging also Should loss, market or news? Is you this to we there going base the prospects So, started new want sale Paycell, thank process And any could days you sale going to one-off in in number will that now? you what forward? that this for secondly, such a due the quarterly thirdly, there FX quarter one-offs income stake this talks So, ask coming also for about news the we your you quarter? for

Murat Erkan

thank Ece, much. you very

I to let three the of answer CFO, to floor comment – and all comment. the ask end at then questions, his maybe give me me Osman, Let our can

Osman Yilmaz

Thank compared you can year, three significantly We rising quarters. especially the this cost increase the average compared last FX with associate increased last of – hedging costs. and much. very to Hedging to last

revenues. short-term to negative more rates almost our impact a and swap creating make on than know, year, – doubled FX this is this You last compared

classified of lira we to for as hand, capital the we other and On FX generate generate short-term needs, hold short-term hard see generation Turkish this high swaps and adjustments, needs we working hedging swaps the cost payments. one-third are Fair our also in quarter. FX is Turkish make as that up lira needed lira the hedging lira the with for our quarter need. to currency, costs. cash FX loss of short-term in for cost majority Turkish Since increase cost FX hedging need this dividend And well under Turkish this you of this associated through value

a hedging in TRY increase the over expect gradual we unless in the We costs and see sharp quarter, next parity. other FX dollar decrease loss

some right the are is which that assets For the presentation. you to use second to made of question and by introduced the tried inventories. explain legislation that fixed the recent I recent asking, revalue changes tax our it associated of We with during in law, allows us

be able inflating these the deferred And the PPI, X% value in can fixed way, it year a following fixed to investments. and these which impact, typically to to assets high able those. our the assets be less years, due we because assets, into translates to of By network, revalue network the will law, tax This in increasing especially depreciation our balance the tax These increasing order – higher sheet. we it's costs respective and until pay income amortization. on assets, creates cash amortization Prices be a on data mobile assets, Producer of the value need Index, pay with are end. per center As the network, over to revalued

a So, balance it and into makes income. a our translates on tax on visit sheet, net deferred positive our impact

surprise. referring yesterday. that It's markets I no the to that news question, assume On the appeared the you're third merger on

stake but Superonline. We also have in been expressing not only our interest in subsidies, Paycell, potential sale, at other a including

on given continue platforms. alternatives, been I to you disclosure through to finalize work still if different can that We any process. on shareholders with haven't the this happens, so share We we mandates alternatives. explore far but our the we will by material – And say something

Mandaci Ece

you. Thank

Operator

Demirtas Ata from The the line next of question Invest. Cemal ahead. with go is Please

Demirtas Cemal

announced some on recently just some had guess, Thank you tax you. you quarter. and Could give you one-off second about us mentioned investigation in that? You recorded the clarification Difficulty] I numbers, [Technical

Operator

Demirtas, Mr. your Because sorry. you tell we I'm could question Thank can the beginning. in you. not hear you again? please

Demirtas Cemal

is question didn't I the clearly question. Okay. that my you income. question offs, during missed mentioned about you Maybe about tax My effective the mentioned the but details, know I don't first the one I tax if And rate. hear. presentation, second the you again but it, see that's during about presentation, I is recorded

results seen you sort was tax of just, record quarter? in elaborate you. And If the in you that could second investigation second impact that. the quarter? what's latest Thank Did

Osman Yilmaz

Thank much. you very

all, X% rate of our we tax one-offs, that X%. imposed and announced value-added was the respect was with tax communication XXXX. and the to First for tax, And XXXX. tax tax questions, communication assessment last relation special have expect as special investigation week, to corporate the I for is, conducted second regarding in tax a effective without tax would regarding company

to We also in of at other from shared led September. TRYXXX restructuring will this increase end million that we This assessment will expenses. an pay tax benefit and for the provisions

Demirtas Cemal

under other expenses. you. Okay. It Thank was recorded

Operator

UBS. The Ondrej Cabejsek is Please question next from a with go follow-up question ahead.

Cabejsek Ondrej

in follow-up one I costs of you. Thank as well. terms have

expense the believe, that think to about mentioned decline I it of you would moving marketing of year selling the the, I and a digital a part saw be was You ago, and half and that because lockdowns sustainable. of

of ratio of terms the or update year, in presentation, flat know was sustainable mentioned year-over-year. selling of would – and annualized another I mean the said X.X revenues Turkey, points part and marketing you is of us but decline there's a of on – of what basis, been you your are ago? about you digital that think And lockdown that sustainability selling I you in less maybe expenses in percentage of year-over-year where more versus in sales. marketing Can you. Thank there an what a as we or percentage share is terms today Now, ongoing expenses a year the be last

Murat Erkan

Thank much, you very Ondrej.

and selling the expense, mean on Ecosystem, has sales started – just the positioning expense marketing I services. First of both We and in increase all, communication campaign the the expense side. in mainly increase, comprising telco – and new been marketing a Turkcell deterioration regarding digital driven not by not selling marketing

investing in well. the We as during campaign will years continue this

due one regarding either selling But reason. flat well. is this or the lockdown happened May decreased So, expenses, of to as the in

other question? there is – Regarding any

Cabejsek Ondrej

there we marketing and proportion terms change that's was update of decrease how forward? the from last if the to was a in ago an compared there levels I rebound of sustainable just no of of But XQ the are part be you Because, a terms year mean, relevance. expected in in going as of only May terms have of selling a year, to virtually sustainable. flagged is bit may

So, today were said is said another savings you would there assessment versus it's sustainable, year you only of the you when say a roughly half more what ago today?

Murat Erkan

Yeah.

the channels. know, you and sales is First But channel. more But see on the be not declined. digital bounce If we in to we to expenses, back first of to the as half, expenses that savings. our increase and continue area. little help first the half. during going more channels But because during would obviously, same sales this like we our on focus to digital the as can would especially digital sales we the all, invest will selling, second we it's channels will half, spending us like to invest more bit see continue with the This

more little during bit OpEx the expect increase second half. the We on

Cabejsek Ondrej

Thank you.

Operator

The Investment. next is of the Please ahead. line Demirak go question Kayahan Ak from with

Demirak Kayahan

mean, on questions. [$XXX a I presentation upper compared ask quarter. the very million] side, you previous your higher looking you're roughly thank the CapEx, guidance for of for based to the on follow-up much Hi, opportunity the to end as and CapEx

contributions home for roughly, what XXX,XXX what incremental of this, mean, the you. is trying And also what payback are the, pass? investment? Thank home other that percentage what related from understand, taxes. additional expected this very I'm revenue to words, to you in I XXX,XXX Or So, is period looking

Murat Erkan

Okay. Thank you much. very

them fiber comes question, base increase, including as subscriber from of mobile business, one-third from investment, and the well. first increase and CapEx the For them Ukraine FX one-third regarding of comes one-third growth them almost increase, of

decreasing. payback we we see fiber cycle the ROI. is long-term return see period the is usually investment payback, Regarding But that during pandemic,

mainly acceptable private years, So, the payback is this nine side, years to we'd but on like on is eight investment. benefit obviously,

Demirak Kayahan

Okay. Thank you.

Murat Erkan

so XX years, years okay. eight Because economical is – almost lifetime the fiber actually is

Operator

UBS. ahead. Mr. is The next Please question Cabejsek with question follow-up from go Ondrej the a – from

Cabejsek Ondrej

me, So, one follow-up more from please.

are is, this has a peak forward? the I from Is replace any anymore. you fiber? the how about update with product trying In net noticed because ago. presentation by you quite you. down your now? to terms of going on actively for it additions of the bit Superbox, Or Or And product in a year that that that of even trend Thank been kind going of think about talk you see the specifically saturated you market don't

Murat Erkan

okay. base, in has subscriber Thank access fixed its backed product quality Actually, the for growth by network. providing wireless shown Superbox was Since your quite need the response demand launch, you. substantial

XXXX. on, household of Our reached transition environment. brand now the XG concentrated awareness, is and be Superbox a Superbox efficiency, in in ready XXX,XXX and success adjustment. with demand optimization network of as subscription, with usage price that also on will Superbox for on our company more period focus shown increase monetizing broadband subscriber well pandemic the subscriber we QX back demand on rising our as From

to adjustment. monetize did a would price more with more Superbox we So, We network recently like some infrastructure. efficient product

the product cheap a are So, Superbox reasons. high-quality that And not demand. a It's high is product. two with

cost as as we So – well, network focus the on like the would side cost – side but to well. OpEx

an a in or of So, a that acceptable address needs the Superbox are level. product it's ARPU it's specific is high-quality the fiber. not and a I for And so mean, And competition we needs customers mobility in high-speed environment. in increasing balance, we – and Superbox

Operator

your question? finished Mr. Cabejsek, with you are

Cabejsek Ondrej

Yes. you was on much. Thank I very mute.

Operator

the are Ladies this I and closing will you. turn Turkcell now further questions gentlemen, conference Thank you. at time. there no any over for comments. Thank management to

Murat Erkan

to evening, I morning all for listeners. much. contributors, you. Thank Good the everyone. good very all Thank the good afternoon, you would thank like

Ali Serdar Yagci

call. to taking time you the meet for in to you. of Goodbye. everyone our is the This the Well, quarters. upcoming Thank thank you end hope join us We today.

Turkcell Iletisim Hizmetleri A.S. (TKC) 13 Aug 212021 Q2 Earnings call transcript