Turkcell Iletisim Hizmetleri AS

Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call Operator. Welcome and thank you for joining the Turkcells Conference to present and discuss the second quarter 2020 financial results. At this time, I would like to turn the conference over to Mr. Korhan Bilek, Treasury and Capital Markets Director. Please, Mr. Bilek, you may now proceed.

Thank you, Maria. Hello, everyone. Welcome to Turkcells second quarter 2020. 2020 results poll. Today's speakers are our CEO, Mr. Murat Erkan, and our CFO, Mr. Osman Yilmaz. We will have a brief presentation, and afterwards, we will be taking your questions. Before we start, I would like to kindly remind you to review the last page of this presentation for our safe harbor statement. Now, I hand over to Mr. Erkan.

Good afternoon and good evening, everyone. Welcome to Turkcell's second quarter 2020 result call. It was a challenging quarter during which we all felt the impact of the COVID-19 pandemic. I will shortly talk about its impact on our business, but before I do that, I would like to start by mentioning the highlights of the quarter. We recorded solid performance with our strong business model and prudent financial management discipline. On a consolidated basis, we delivered 11.8% revenue growth this quarter. Despite limited mobility during the quarter, we gained 181,000 customers, 144,000 of which were postpaid. Mobile app growth of 14% exceeded the inflation. Our strategy of prioritizing our digital channels has helped us during the period. 11% of our mobile customer sales were through our website and our application. Furthermore, Paycell's outstanding performance once again proved that we are on the right track with our investment in payment systems. Overall, we generated 1.3 billion TL free cash flow during the quarter, strengthening our balance sheet. We improved the leverage ratio by 0.4 points year-on-year reaching 0.8 times at the end of the quarter too. Moving to the next slide. As was the case with all operators, the COVID-19 pandemic has led to a sharp drop in roaming revenues. For us, it was by 2.6 points down to 0.9% of Turkish and Turkey revenues. We expect this factor to continue impacting us in the third quarter. Mobility was constrained, but still the drop in gross mobile subscriber acquisition was at an acceptable level. Customers have continued to choose our service offering and quality thanks to our widespread and convenient channels, including digital. On the topic of digital, we encourage our subscribers to use our online platforms for telco services, top-up and technological product purchases. Accordingly, our digital channel's revenue share rose to 11%, up from 4% a year ago. Going forward, we are motivated to take this to a higher level. As our customers are spending more time at home, we observed an increased time spent on our digital services. This is particularly visible in our TV product with the OTT service reaching 70 minutes a day per user. In addition, we observed an increasing transaction volume on PayCell with digital payments rising by 84% to 215 million TL during the quarter. All in all, This quarter has also been instrumental in driving certain structural changes in our cost base. We expect certain OPEC-saving actions will be there to stay in upcoming periods. As of June, normalization has begun in Turkey. Precautions for the pandemic are maintained, but at the same time, steps towards normal life are being taken. travel bans are removed, flights are partially resumed, and many workplaces are now open. Yet despite normalization action, many of the trends that emerged in the COVID era are set to remain. Remote working, remote education, and remote healthcare services will continue to be key trends of the post-pandemic era. More individuals and corporates will demand to be digital in their lives and during their operation. As Suge said, we are ready to benefit from these trends with our proven solution. Our fixed wireless access product, Sugebox, is even more popular thanks to strong demand for fast and quality connection at home. We expect to serve both customers and corporates with our unique digital service portfolio. The digitalization of business has created further demand and new opportunities for our data center business, cloud and security services, and overall business solutions. In Techfin, our digital and cashless payment solutions are prime for the new era, as evidenced by the over 80% growth in online payment transactions. We can proudly state that all of our strategy focus areas have proven our readiness for the more extensive digital world expected in the post-COVID era. We owe our advantageous position to our strategic foresight, the ability to accurately identify industry and customer needs, and our timely actions. Moving to the next slide, please. Now, some further details on our financial performance. We recorded a 6.9 billion TL top line in the second quarter. Despite the challenging condition of the pandemic, we were able to generate 4% quarterly growth. Our EBITDA reached 2.8 billion TL on a 10.6% increase and EBIT reached 1.4 billion TL with 19.8% margin. Coupled with lower SNM costs and OPEX, our low finance costs on a year-on-year basis lifted our net income to 852 million TL. Hence, our second quarter net income is up 83% versus last year. In the first half, our net profit rose 88% when we excluded the filtered transaction gain recorded last year. Overall, these results were in line with our guidance announced earlier this year. Next slide. Let's take a look at our operational performance. Our total subscriber base expanded by 181,000 this quarter. With this, we already realized 80% of our 1 million target for the year. In mobile, we gained a net 144,000 postpaid subscribers, reflecting our focus on this segment. The postpaid share in total mobile subscribers was at 63%. The monthly mobile churn rate was down to 1.9% from 2% last year at the previous quarter. and the previous quarter. We believe a 2% monthly churn rate in a healthy level. Blended mobile ARP rose to 46.4 Turkish Lira on a 14% increase thanks to rising data and digital service usage and upsell to the higher tariffs. In fixed broadband, we gained a net 36,000 Fiber subscriber, 7,000 ADSL subscriber, and 25,000 IPTV subscriptions. Residential fiber output growth was 9.1% on a year-on-year basis. Next slide. Now, let's look at the performance of our fixed wireless access product, Superbox. Accelerated demand for Superbox continued this quarter, given its convenience. With 91,000 net as this quarter, Superbox subscribers almost quadrupled from a year ago. We are pleased to have marked a half million milestone in July. In July, we launched a new version called Superbox Plug and Play with an easy setup feature, further contributing to its convenience. Next slide. We continued effort to reinforce our bond with our customers. During this period, our primary focus has been on meeting their communication and technological needs with our digital services, communication solutions, and our strong network. We prioritized the segments that will require our service the most, namely healthcare workers, youngsters, and elderly, offering them generous data. We also provided additional benefits from our rich portfolio of digital services, including zero-rated video calls on BIP, live concerts on Fizi, and additional data quota on TVPlus for remote education. All these were possible through the combination of a strong network ability to provide value-added services, and existing convenient online platforms. And these were instrumental in consumers recommending Turkcell over the competition, even more so in challenging times. Moving to the next slide. Over the past few years, one of our priorities has been to increase the revenue share of our online channels. As disclosed on the Capital Market Day in November 2019, our target was to reach 12% by 2022. As at the end of Q2, the level has reached 11% given the demand during the outbreak. Our customer used this channel to make top-ups on their prepaid lines and to buy additional packages, digital service subscriptions, handsets, and wearable technology. In the second quarter, our website had 38 million monthly visits on average and application had 23 million active users. Our ability to provide tailored offers through our digital channel, flash sales campaign, and win-win brand cooperation have also been instrumental in this performance. Overall, The rising popularity and revenue share of digital channels bring us flexibility and speed in reaching customers at lower costs. Moving to the next slide. As to our performance in strategic focus areas, digital services' standalone revenue growth was 23% year-on-year this quarter. We launched the beta version of our own video conferencing platform called Deep Conference. We are confident that we will bring it up to speed with its competitor within a short time frame. Yaani's main solution for corporates and our digital identity management application developed with blockchain technology were the other highlights of the quarter. As part of our standalone strategy of digital services, We have completed the establishment of individual companies for Lifebucks, Fizi, and TV+. Lifebucks, named under Bilo brand, and BIP are now available in the Caribbean market through DigiCell. Our digital business solution registered 15% yearly revenue growth. Our 1.4 billion Turkish lira back-off of contract value is promising for the road ahead. Also, three additional hospitals were introduced, with a fourth one scheduled to open in the upcoming period. COVID-19 has brought about a possible pipeline of remote working and education services. What's more, we contribute to the risk reduction with our smart solution. These include thermal camera system, air quality, social distance measurements. in-store customer count, cybersecurity services. In tech film, PayCell has accelerated its penetration with the rising use of contactless and online payment solutions. App users have more than doubled from the same period of last year, and there were 70% more transactions on PayCell card. Online payment transactions have also increased by 84%. This quarter, we also launched 24x7 money transfer to IBAN on a PayCell application. Moving to the next slide. And now, an update on data usage and for our household subscription trend. Average mobile data usage rose 7% in a year to 11.7 gigabytes per user. This is the highest growth level since the fourth quarter of 2012. The rising data consumption was due mainly to higher content consumption, to growing share of Forerunner House G users and Superbug subscribers. Out of 31.6 million customers signed up for Forerunner House G services, 1 million have Forerunner House G compatible smartphones, still indicating room for growth. In the second quarter, we achieved 79% smartphone penetration, with 90% being foreign-house compatible. There were 2 million net addition of foreign-house compatible smartphones on a yearly basis. Next slide. Let's look at our performance in the international market, which generates 8% of group revenues. Our international operation grew by 17.5% year-on-year. This was mainly on rising data usage and the positive impact of currency movement in these countries. In local currency terms, the top-line growth rate of our Ukrainian subsidiary was 7.7%. Last year, Ukraine recorded its first monthly operational net income in June. Our aim is to continue the trend going forward. Belarus' revenue declined 3.3% due mainly to lower handset sales given limited mobility. Meanwhile, mobile art books grew 10.4% year-on-year in local currency terms with higher data consumption and the demand for digital services. While subsidiary in the Turkish Republic of Northern Cyprus recorded 3.5% revenue growth, mainly reflecting the heat on tourism and education sector. Next slide. I would like to say a few words about another promising investment area, Turkey's automobile project. As we announced a while ago, we are one of the founding partners of automobile company, holding a 19% share. The company was established to develop and produce a range of battery electric cars in This company will be the first non-traditional manufacturer in Europe to produce native battery electric SUV. The start of production is scheduled for the last quarter of 2022. This quarter is July. The company marked a milestone with the groundbreaking ceremony for the environmental-friendly factory. The plan is to complete its construction within 18 months. The factory will have an annual capacity of 175,000 vehicles. The company will own its intellectual property for its authentic vehicle platform, enabling flexibility, creativity, and independence. This initiative is expected to grasp new growth opportunity as being one of the first mover in the electric cars and providing by providing new value-added services around the cars as a smart device within a mobility ecosystem. The project is supported with comprehensive incentives and tax breaks, and our capital commitment, as TÜV said, is capped at €95 million. Considering the benchmark in the field, we believe that this investment has the potential to be valued accretive for Turkish Al-Gurub in the medium term, as e-mobility and sustainable energy continue to be the rising trends. Next slide. We are happy to note that the second quarter results confirm our full year expectation, which were announced on 28th of April. We have been among the few companies to provide visibility to market during such uncertain times. And this confirmation proves how well we were able to analyze the situation and control its effects. As such, we reiterate our full year guidance of 10-12% revenue growth, a 40-42% EBITDA margin, a 19% to 21% EBIT margin, and a 17% to 19% operation CapEx over sales ratio. Although negative pressure is expected to prevail in the third quarter, given the higher share of roaming and the impact of the late corporate project, we see upside risk to this guidance level. We aim to achieve the high end of the top line and the guidance range for 2020. I will now leave the floor to our CFO, Osman.

Thank you, Murat. Now let's take a closer look into the financials. In the second quarter, group revenues rose by 11.8% year-on-year, corresponding to an incremental 733 million TL. Of this increase, 740 million TL derives from Turkcell, Turkey. This was possible with the rising share of Postbase subscribers. Upsell efforts and stock data demand despite the sharp decline in roaming and slowdown in top-up revenues. Looking at the first half, top-line growth was 14.5%. The slowdown in our consumer finance business and exit from the sports business a year ago had a 3.3% negative impact on our top-line growth. Next slide. In the second quarter, Group EBITDA rose by 10.6% year-on-year to 2.8 billion TAs. During this period, the use of digital channels and remote working practices have led to savings in OPEX contributing to our profitability. Meanwhile, the higher share of relatively lower margin segments, such as smart devices and corporate projects, has resulted in a margin decline by 0.4% to 40.8% year-on-year. Turkcell Turkey's EBITDA rose by 15.8% year-on-year to around 2.5 billion TL. it has continued to improve its profitability margin with a 0.5 percentage point rise year on year to 41%. In the first half, EBITDA rose by 16.5% year on year to 5.6 billion TL. EBIT rose by 15.6% year on year to 2.8 billion TL with a margin of 20.7%. Next slide. Now, more detail on our free cash flow generation capacity. As discussed, our operations generated 5.6 billion TL of EBITDA in the first half, up 17% from the previous year. Thanks to a strong collection performance and smart capex management, we recorded a 1.6 billion TL free cash flow in the first half. Of this amount, 0.6 billion TL is related to the leveraging of our consumer finance business, with the remaining 1 billion TL being related to telco operations. The major items of 1.6 billion TL pre-cash flow include acquisition of intangible assets, property, land and equipment of 2.8 billion TL, change in operating asset and liabilities of negative 366 million TL, payment of lease liabilities of 705 million TL, and income tax paid of 235 million TL. Continued improvement of free cash flow over the past four years confirms our dedication to generate strong cash flow since the completion of our LTE investments. Our aim is to sustain this trend in the upcoming periods. Next slide. Now let's take a closer look at our tech firm company's performance, and first with Financel. In Q2, Financel's contraction has continued with revenues declining by 44% year-on-year. This is mainly due to declining loan portfolio with regulatory decisions taken a while ago, as well as COVID-19 pandemic limitations. Financials' loan portfolio fell by 44% year-on-year to 1.8 billion TL in Q2 2020. Its EBITDA declined by 38.6% to 76.9 million TL, indicating a margin of 58.3%. Yearly margin improvement of 5 percentage point is due mainly to a lower cost of funding, shrinking portfolio, and the rising share of equity in total funding. Cost of risk rose to 3.4%, still below the market average for general purpose loans, while loan insurance penetration was at 93%. The potential further decline in this business due to COVID-19 could be positive from a working capital perspective. Next slide. It's been another busy quarter for PayCell. Cashless payment methods have become more popular than ever, with more people willing to experience these alternatives. Three-month active PayCell users reached 4.7 million, with a total transaction volume of 2.1 billion TL for the quarter. We observed a solid rise in direct carrier billing and bill payment, despite the limited working hours of our physical channels impacting the latter. Record high mobile payment volumes are recorded in both April and May. Also, DCB volume increased by 84% to 215 million TL year-on-year, corresponding to 26% quarterly growth. Third-party bill payments almost doubled. Transaction volume on the Paysal card was 72 million TL, marking a 70% yearly and 37% quarterly increase. PayCell has also continued to expand its reach and service portfolio. It is now expected at more than 10,000 merchant points. In Q2, PayCell generated 63 million TL of revenues, 64% of which are non-group. Its 43% EBITDA margin was impacted by higher S&M expenditure, reflecting its non-group growth strategy. In July, PayCell card users, who are also Turkcell Postbase subscribers, have been introduced what we call instant limit. As such, they are now able to assign their mobile payment limits to their PayCell cards, allowing them to spend at any merchant where card payments are accepted. We are also in the process of launching the PayCell Android POS devices, an ecosystem enabling a convenient and safe alternative payment platform for the merchant. PayCell Android POS will support both card payments as well as the QR code payments and will offer merchants the PayCell App Store for their inventory tracking and campaign management. We will share more about PayCell PayOS device in the coming period. Next slide. Now a few words on our balance sheet and leverage. As at the end of the quarter, our gross debt position increased slightly to 19.8 billion TL from 19.5 billion TL due to a nominal 737 million TL negative impact of currency movements despite debt repayments. In Q2, the dollar appreciated by 5% and the euro by 7%. As we do not net off our derivative receivables from debt, our reported debt in TL terms rises as FX appreciates. As of Q2, net debt was 8.8 billion TL with a 0.8x leverage ratio, down from 0.9x in the previous quarter. Excluding our fintech business, this was at 0.7x, the lowest in the sector. In Q2, we saw a nominal 1.4 billion TL decrease in net debt on the back of strong cash flow generation, despite currency depreciation with a net impact of 517 million TL. On average, every 10% depreciation of Turkish lira causes 0.1% increase on our leverage. Next slide. This is our last slide, and it's about our FX management. Our strong balance sheet remains to be a key investment highlight with around $1.6 billion equivalent cash in hand and a long FX position of $50 million. This asset has proved to be particularly important in a challenging environment such as the one we experienced this quarter. We continue to hold the bulk of our cash in hard currency as a natural hedging tool. With hedging instruments in place, the share of FX debt has declined from 79% to 42% as of the end of Q2. Financial derivative instruments that we are engaged in include cross-currency swaps and participating cross-currency swaps, which protects us against both currency and interest rate fluctuations. In line with IFRS, the hedge accounting practice protects us at volatile times while reflecting mark-to-market valuation of these instruments. Furthermore, we closely monitor the market to ensure the effectiveness of participating cross-currency swaps, revising their protection levels if need be. For example, we have restructured one quarter of our existing participating cross-currency swap portfolio during Q2. We registered a slightly positive net FX gain in the quarter, excluding swap interest, supporting our strong bottom line of 852 million TL. This concludes our presentation. We are now ready to take your questions. Thank you very much.

The first question comes from the line of Kabizak Andre with UBS. Please go ahead.

Hi, thanks for taking my questions and congratulations on the results. I had three questions, please. On your net promoter score, so you're highlighting that in the second quarter you widened the gap between yourself and your competitors. Can you just explain a bit what contributed to this? Second question is around the sustainability of some of these selling and marketing cost declines. With a lot of digitization going on, as you're highlighting, What do you think is sustainable of the cost that you've seen decrease? What sort of levels do you think are sustainable long-term relative to sales? And third question regarding the Superbox progress. So you've added something like 90,000 subscribers this quarter compared to something like 70 in the first quarter. Is this more or less in line with what you were expecting? Because your competitor reported record numbers of fixed broadband additions. So I was wondering how you're looking at this, if perhaps you might be rethinking your approach to the provision of fixed broadband services as opposed to services based on mobile and whether you're currently maybe pushing more for some sort of regulatory changes around fiber provision. Thank you.

Okay. Thank you very much for the question. Let's start with the Net Promoter Score. This is mainly when the time is challenging, customers are looking for quality in terms of network quality, infrastructure quality, and service richness. So during this period, COVID-19 period, customers confirm that our services quality, infrastructure quality, as well as the service quality, and high customer experience management quality as well. So I think this is main driver, especially coverage services, digital services. For the second question, sales and marketing, first of all, in the sales side, I think this is sustainable. But we shouldn't forget that our sales costs little bit move to digital as we expected. But during the COVID-19 period, we see that it become more faster than they expected. For the marketing side, due to COVID-19, we either postpone or cancel part of marketing expenses This will bounce back to normal trend when the thing's getting normal. So for the marketing side, I think we will get back to the similar level that we were spending before. We were hoping that the COVID-19 will go away. For the Superbuck side, it is 91,000 netheads, but we also add 36,000 Fiber subscribers as well. So this is for the broadband demand is there and Superbox success shows that customers need higher speed at their home and they are ready to pay almost more than double actually close to triple ARPU level to our Superbox product to get proper services. This shows Fiber is very important in Turkey, and customer needs quality service at their home. And when they couldn't get it, they go for more expensive but higher quality services, I would say. For the fiber footprint, I can a little bit elaborate on this side. We continue investing in fiber infrastructure using existing permits. And we also started to get new permits from the fiber deployment and still limited in the scale through. But this shows that when we get this right-of-way license or investment permits, we can go further, fix that investment. In order to accelerate fiber rollout, our goal is to make fiber investment jointly. This was also supported by our president in his speeches. Since otherwise there could be a significant waste of resource in the country, we expect development on the infrastructure sharing in upcoming period as well.

That's very clear. Thank you very much.

Thank you.

The next question comes from the line of Mandasi Isi with Unlu Securities. Please go ahead.

Hi, thank you for the presentation and congratulations on the strong results. I have a few questions as well. Firstly, could you please elaborate on the RP growth trends for the second quarter for the post-paid and prepaid segments? And could you also remind us if super-buckets are pooled was included under the post-paid segment still, because given the around about 20% price increase in the Superbox packages, I was expecting myself a higher post-paid output growth for the second quarter, and how we should see for the third quarter the growth trend on that front. And my second question is on your commitment regarding this automotive project. So I think if I did not hear wrong, you will commit in total 95 million euros for the project, and how much of it will be in 2020 and 2021? Thank you very much.

Thank you. First of all, thank you very much for the question. The first part, Superbox ARPU, it is included post-pay segment. But if we look at like or like ARPU, it's like 13, around 13.5% level. So even though Superbox ARPU included, it has limited impact on the ARPU growth of the post-pay segment. The second thing about the first question, for the, you know, in the postpaid ARPU, there is also roaming ARPU as well. Mainly our postpaid customers utilize abroad traffic, abroad services as well. So unfortunately during COVID, we cannot get this revenue from our postpaid subscribers. So even though Superbox contributed on the one side, but roaming side get another minus for us. But we managed to keep over the inflation, which is very important on our side. For the commitment for the automotive project, I believe, let me check the numbers. The majority of that, as our commitment is 95 million euro, as far as I remember, first 19 million euro has been released. The rest will be released until 2020, end of 2020. 22. 22, sorry, 22.

So for 2020, how much we should assume?

19 million euro so far.

So far. Partly for the second half, you should expect.

Yes, the rest will continue until the end of 2023.

So you highlighted the missing warming revenues, unfortunately, for the full-space segment. That will be the case for the third quarter as well, right? So for the third quarter as well, even though there was an additional price increase in the third quarter for Superbox, you are saying it had a limited effect also, probably, in the third quarter. Yes.

Exactly. Obviously, you know, we shouldn't forget that inflation is going down quarter over quarter in Turkey. So we're trying to be in line with the inflation, and the expectation is around maybe single digit maximum 11% inflation rate. So we are still over and above the inflation, but we would like to keep similar levels. you know, plus and minus on the inflation growth as well. On the other hand, with growing number of subscribers, this is also helping our revenue growth on top of revenue.

Okay, thank you very much.

Regarding roaming command, it is valid for Q3, I would say, because we will see roaming impact on Q3 because Q3 is one of the biggest quarter in terms of roaming revenue, how we will manage it.

Okay, thank you very much.

The next question is from the line of Kim Ivan with Extellis Capital. Please go ahead.

Yes, good afternoon. Two questions, please. I firstly just wanted to talk about this letter comment that you made that inflation is going down. On top of that, with the roaming falling out, what sort of mobile ARPOOL growth do you think you can show in the second half of the year? It doesn't look like it will be easy to even match high single-digit inflation from what I can see. So any comments on that would be highly appreciated. Secondly, I just wanted to ask about the working capital dynamics in the second half. So the first half, obviously, was quite strong, and only part of that was driven by the consumer finance company. There were some trade tables released, too. What do you expect for the second half of full year, whichever is easier for you to talk about? Thank you.

Is management ready to answer?

Sorry about that. Let me start with the inflation question. As you know, inflationary pricing is a key pillar of our business model. Yet our price actions are reflected in pricing with a lag due to the contracted nature of our business. Accordingly, our ARPU growth was much higher than the inflation rate in the last 3-4 quarters. It is reasonable to see some normalization in ARPU growth with the declining inflation over the last year. I would be reasonable to expect our pricing to converge to a reasonable range around inflation level in the upcoming quarters. So I expect higher single digit, maybe double digit level. For the second quarter, we expect to stable around this level for the rest of the year for the working, I think the question was related to working capital. So we expect similar level that we are seeing in the first half.

Okay, thank you.

The next question comes from the line of Ibrahimova Delia with Citibank. Please go ahead.

Thanks very much for the opportunity. I have a question to follow up on your comment on cyber investments and the rights-of-way license that you set. Could you maybe give a bit more detail first on what the implications would be on your investments? sorry, on your investment intensity, especially if you were to get a bit more permits going into 2021. And then just maybe give a bit more color as to is it, who is the, which agency issues this license and how long do you expect this license to be available for? Some color on what it is, how it works. and what changed.

Thank you. First of all, last couple of years, we couldn't get, I couldn't say license, kind of permit. So when you try to deploy fiber in Turkey, you need to get permit from Ministry of Transportation and municipality that is the area that you would like to roll out. So, so far, we couldn't get, last couple of years, we couldn't get permit from Minister of Communication for rolling out fiber. But recently, we get some of the permits so that we can deploy more fiber for our infrastructure. As everybody knows, fiber is very important for fixed line as well as the 5G infrastructure. that is in front of us. So deploying fiber is very important. For 2021, we would like to see, we would like to invest in fiber, but we would like to invest in jointly, because investing in infrastructure is not good for the economy of country. So if we jointly invest in fiber infrastructure in Turkey, then we can compete on the services level. As everybody knows that if three parties deploy fiber into the same place, then it's not a very efficient way to deploy fiber. So we would like to push joint investment. And I see that in the government authority level, there is an ambition to do in a joint way as well. So this is good news for us.

Thank you.

We have a follow-up question from the line of Kabizik Andre with UBS. Please go ahead.

Yes, hi, thank you. Two follow-ups for me, please. One regarding the fiber. You mentioned that there is now more political will for some of the sharing or joint venture projects. Can you just give us a bit more color as to what scenarios are in play? i.e., now that, for example, both you and Tech Telecom have a common shareholder, is there a possibility that the entire networks sort of merge somehow over the medium term, for example? Is there, you know, you mentioned joint ventures in terms of investing. Should we expect only that or is there potential for something more sort of market-wide to happen? That's my first follow-up. And the second follow-up, just on the inflationary pricing, do I read or do we read your answer to the previous question in the way that you feel more comfortable about raising prices currently? Because at the one-quarter results, you were sort of hesitant to comment on inflationary pricing during the pandemic. So is that situation better now? Thank you.

Thank you very much. First of all, for the first question, my comment is more, I mean, I don't believe that we have common shareholder. Shareholder structure is a little bit different. But on this side, I would like to mention that looking at telco asset portfolio of Turkey wealth fund, we believe that a fair and convenient environment for infrastructure sharing is also possible. Because Turkish Melfan has cable infrastructure, will probably share in Turkcell and has limited sharing in Turktelecom. So in this perspective, it is wise to have common infrastructure for the country. And this is good for the country for the future as well. We can expand our fiber infrastructure and reach equally to all over the countries. And coming up 5G in front of us, you know, other, I mean, high-speed Internet need at home, these are driving force for the carbon fiber investment. And as I mentioned, Turkey needs more fiber. The Superbox penetration shows the demand. Demand is there. Customer is ready to pay. higher for the better services. For the inflation, I mean, the track record of Turkcell shows what we're going to do for next coming quarter. We always say that we're going to follow inflationary pricing. We would like to continue on this side. As we said before, It was difficult to increase the price during the pandemic area, but we do see that there are more comfortable times to increase pricing. So we will do our best to meet our inflation pricing approach.

That's very clear.

Thank you. And also, by the way, just to remind that we have already started to increase our acquisition prices. And we hope our competition will like to follow us.

Okay, thank you.

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

I would like to thank all the participants.