TURKCELL Iletisim Hizmetleri AS Q3 FY2024 earnings call

• Mobile: Faced aggressive market pricing, made 25% price adjustment in July, added 515,000 new postpaid subscribers in Q3, mobile ARPU up 6.9% y-o-y, churn rate 2.2%.
• Fixed broadband: 47,000 net fiber additions, residential fiber ARPU up 15% y-o-y, share of high-speed packages increased by 10 percentage points y-o-y.
• Digital Services & Solutions: Standalone paid users reached 5 million, IPTV users rose 7% y-o-y.
• Digital Business Services: Revenue TRY 2.9 billion, recurring services up 18%, data center/cloud up 43%.
• Techfin: Paycell revenues up 20%, Financell sales up 38%, net interest margin 4.1%.

Turkcell Türkiye segment saw a 7% top line growth, reaching TRY 40.2 billion. EBITDA rose 10% to TRY 17.8 billion with a 44.2% margin. Techfin segment contributed TRY 0.5 billion to the top line, with Paycell revenues growing 20% and Financell sales up 38%. The other segment was negatively impacted due to reduced demand in consumer electronics. Turkcell Türkiye's postpaid base grew by 1.9 million, pushing the postpaid customer share to 74%. Fixed broadband had 47,000 net fiber additions, and residential fiber ARPU grew 15% year-on-year. Digital Services & Solutions had standalone paid users reach 5 million, and IPTV users rose 7% year-on-year. Digital Business Services generated TRY 2.9 billion in revenue, with data center and cloud growth at 43%. Techfin's Paycell EBITDA increased by 9.2% year-on-year, and Financell sales saw a 38% growth.

• Adjusted 2024 revenue growth guidance to around 7% due to increased CPI outlook. EBITDA margin and CapEx intensity guidance maintained.
• 2025 to be CapEx intensive with focus on 5G preparation, data centers, and renewable energy. Anticipates 5G auction in 2025 and expects CapEx to be heavy in mobile and fixed services, data centers, and renewable energy.

• Aggressive market pricing leading to increased MNP activity and churn.
• Macroeconomic headwinds impacting hardware sales.
• Foreign currency risk due to FX-denominated financial liabilities and management of hedging costs.

Q: Could you share more on divestment proceeds, 2025 CapEx outlook, and ideal net leverage?

A: Divestment proceeds from Ukraine sale will be determined by closing adjustments. 2025 to be CapEx intensive with focus on 5G, data centers, and renewables. Ideal net leverage target is around 1.5 times.

Q: Please provide color on bond issuance timing, split, and type?

A: Intends to issue around TRY 1 billion Eurobond, likely 50% conventional and 50% sustainable, with approval from CMB expected in first quarter of 2025.

Q: Plans for data centers/cloud and impact of US elections on projects?

A: Focus on data centers/cloud to keep Türkiye's data in Türkiye, anticipating growth due to AI. No immediate impact seen from US election results on current plans.

Q: Operational performance pricing outlook, data center targets, and M&A strategy?

A: Q3 growth driven by subscriber base expansion and ARPU growth. Data center capacity to increase by at least 30% organically. No immediate M&A plans, but open to opportunities if beneficial.

Q: Thoughts on potential sale of Türkiye Wealth Fund stake in Turkcell?

A: This is a matter for the Turkish Wealth Fund, out of scope of the current call.