Turkcell Iletisim Hizmetleri AS

Ladies and gentlemen, thank you for standing by. I'm Hayley, your chorus call operator. Welcome and thank you for joining the Turkcell conference call and live webcast to present and discuss the Turkcell first quarter 2021 financial results conference call. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would now like to turn the conference over to Mr. Ali Sidhar Yaki, Investor Relations and Corporate Finance Director. Mr. Yaki, you may now proceed.

Thank you, Hayley. Hello, everyone. Welcome to Truxas First Quarter 2021 Results Call. Today's speakers are our CEO, Mr. Murat Erkan, and our CFO, Mr. Osman Yilmaz. We have a brief presentation, and afterwards, we will be taking your questions. Before we start, I'd like to kindly remind you to review the last page of this presentation for our safe fiber statement. Now, I hand over to Mr. Erkan.

Thank you, Adis Erdar. Good morning and good afternoon. Thank you for joining us today. We had a strong start to year delivering robust financial results despite the prevailing challenges of pandemic. This performance was possible due to our customer-centric strategy built on a diversified business model. This strategy has enabled the continuation of solid growth in total subscribers by 705,000, marking the highest level of the past three years. Our strong and fast network, convenient digital sales channel, and value offer have been instrumental in this success. Accordingly, We recorded 17.5% top-line growth, generating 7.8 billion TL consolidated revenue. EBITDA reached 3.3 billion TL on 17.7% growth with a 42.2% EBITDA margin. Net income was 1.1 billion TL on 26.6% year-on-year growth. Overall, these results have confirmed our confidence in achieving our full-year guidance levels. Next slide. Let's have a look at our operational performance in the first quarter. On the mobile front, we gained a net 410,000 postpaid and 190,000 prepaid subscribers. Our postpaid customer base reached 22.4 million. reflecting 66% of total on a 3-point rise year-over-year. Strong momentum in a net addition is a reflection of our commitment to strengthening our subscriber base. Our efforts to establish a customer-driven mentality throughout the company have played an important role in this performance. As such, our mobile churn rate was 1.8%, the lowest level of the past three years. In the fixed broadband segment, strong demand has continued under prevailing mobile limitations and remote working conditions. We recorded 50,000 fiber subscriber addition with our high speed and unlimited fiber internet offers designed to meet the need for speed at home office. In addition, there were 23,000 net additions to our fixed wireless access service Superbox this quarter. Further, we are pleased to see robust demand for our TV services. With the addition of net 49,000 IPTV customers, we now offer this service to 61 out of every 100 households among our residential fiber customers. Blended mobile ARPA rose to 49.9% – sorry, 49.9 Turkish lira on an 8.7% rise. We felt the negative effect of pandemic on the roaming revenue generation and are on the trend for additional data quota purchases. Despite this growth was driven by a larger post-paid subscriber base, higher data consumption and price adjustments. Fiber residential ARPU growth was at 8.8% to 74.3 Turkish lira, mainly on demand for higher speeds as well as price adjustment. Reflecting the rising trend in inflation, we expect to record double-digit ARPU growth next quarter. Next, an update on data usage and foreign house cheese subscription trends. Average mobile data usage rose 29% year-on-year to 12.6 GB per user. Limited mobility and continuing lockdowns have impacted the mobile usage growth. Foreign and healthy users on our network have continued their growth trend, contributing to mobile data usage. Out of 32.4 million customers signed up for foreign and healthy services, Around 70% had foreign health-shell compatible smartphones, still indicating significant room for growth. Overall, smartphone penetration has reached 84%, with 91% of these being foreign health-shell compatible. Next slide. We work with the mindset that prioritize our customers' needs in our decision-making. To achieve this, a segmented approach helps us address those needs more effectively. In that regard, we have applications designed to address our core segments. Their active users have increased 16% year-on-year growth, suggesting more engagement on this platform. Additionally, our key strengths, including our well-invested network infrastructure, extensive distribution channel, and strong brand loyalty stands out as a core factor in customer decision making. With all of the above, customers have continued to recommend Turkcell over the competition this quarter, even widening the large gap to the second best. Next slide. I will go into detail on action in our strategic focus area on the next three slides. First, let's consider our digital services. The standalone revenue from digital services continued their strong growth at 28% year-over-year, reaching 367 million TL. The paid user base reached 3.2 million, up by 200,000 during the quarter. It has been an exceptional quarter for BIP. There were 32 million downloads in a single quarter. Half of those were from beyond Turkey. Overall, three-month active users have reached 40 million. BIP differentiates itself from the competition, acting on its data-only with users' permission policy. With BIP, we continue to enhance user experience positioned it as the best communication platform. It has also been a good quarter for our TV business. With greater content and penetration on big screens, we have gained a remarkable number of new users both on IPTV and the OTT platform. Another highlight on the quarter was the launch of our cloud gaming platform GamePlus in March, in collaboration with Nvidia. It captured over 10,000 paid users in just 15 days. Thanks to cloud-based game technology, eliminating the need for high-speed hardware, users can access over 950 games. Going forward, we aim to launch our own mobile game publishing business. Over the coming quarters, we will focus on launch of the B2B models of Fizi, Lifebox, and Bipmeet with a view to further monetization. Next slide. Next are our digital business services. We continue to pioneer to digital transformation of corporates in Turkey. This strategy has brought a 27% increase in digital business service revenues, reaching 452 million Turkish lira. We are glad to see the strong demand for our digital business services, particularly data center and cloud, security services, new generation technologies and managed services. We signed over 700 new contracts with a total contract value of nearly half a billion Turkish Lira. Overall, the backlog from system integration and managed services projects signed to date has reached 1.1 billion Turkish Lira. We strengthened our global partner ecosystem with the addition of Palo Alto networks. Our team has gained further expertise with certification program. Also this quarter, we have been busy with several launches in the area of cybersecurity, IoT and cloud services. The security orchestration automation and response service facilities faster action in the event of cyber attack. Forensic services enable an understanding of the underlying weakness in a cyber attack along with the action plan. In IoT, the Turkcell Digital Facility with diversified services enrich service at co-pilot as well as new user experience on Turkcell Cloud. were among the other highlights of the quarter. Next slide. Third is our TechWin focus. Total TechWin services revenue were 223 million Turkish Lira, despite the continued contraction in finance sales revenue due to the regulatory limitation. Pay sales growth was robust at 53% on a year-on-year basis. It has been yet another successful quarter for PayCell. With its active user reaching 5.3 million, mobile payment transaction volume has doubled year on year. Furthermore, the volume of business realized through the PayCell card was four times that of last year. As to handset sales, while there is contraction in the market due to regulatory limitation, as well as the pandemic, we observed that some demand has shifted to cash sales over the past two years. As Turkcell, we are also relevant in cash sales through our sales channels. Financial, in its fifth year, has diversified its focus to cover new segments, including residential, SMEs, and corporates, in addition to consumers. Finansel is the market leader in the finance sector, including banks, with a 25% market share in consumer loans below the 5,000 Turkish lira threshold. In InsurTech, our subsidiary Güvensel's product portfolio, including insurance for devices, woman health and accidents, is now available through our digital platforms. We believe that the InsurTech business complements our TechMins service portfolio well. In March, U.S. has begun to offer unemployment insurance that ensures success subscription for up to six months in case of unemployment. Next slide. Now, a few words on our performance through our digital channel. There were 32 million visits per month to our website. Our digital application had 23 million three-month active users. Overall, the conversion of visits to actual transactions was 1.7 times that over the previous year. In particular, data plan purchase and Turkish data top-up transaction volume over this platform were even higher at 3.7 times. As an update to our tech and electronic marketplace, our customer can now easily see and access Passage through our digital operator application. Passage has gained pace in expanding its portfolio and a reliable supplier base. Overall, with a 9 percentage point increase, the percentage of the customer sales of Turkcell Turkey generated on these digital channels. has reached 15.7% in the first quarter. Now, let's take a look at our performance in the international markets. Turkish international revenue comprising 9% of consolidated revenue grew by around 27% year-on-year in the first quarter, mainly on strong growth in Ukraine operation, as well as the positive impact of currency movements. Lifestyle Ukraine revenue grew by 20% in local currency terms. This was driven mainly by subscriber base growth, price increases, and higher data usage, despite the hit on the roaming business. Its three-month active mobile subscriber reached 8 million on approximately 7% growth. LifeSell positively contributes to group performance with its increased net income and cash generation ability. Next slide. Before I finish my part, I would like to touch upon our action on the ECG front. On the environmental front, we have committed to energy use exclusively from renewable source before 2013. We are confident that we can achieve this target. which we recently also shared at the GSMA Mobile Net Zero event in late April. On the social investment front, we are glad to have become the sponsor of Turkey's Women's National Football Team. Also, given our responsibility regarding wider digital inclusion, we are building technology rooms in nursing homes for the elderly. Also, starting in Q1, we have put into practice our flexible working model, shifting to remote working for good. By doing so, we aim to increase overall productivity, also contributing to our sustainability targets. Further, we have continued working on new projects that aim to increase the number of women in the Turkcell Group workforce. On the governance front, As I believe all of you may have noted, we held our annual General Assembly on the 15th of April. With the appointments made at the meeting, all seats on our board are now filled in line with corporate governance principles. A dividend of 2.6 billion TL has also been approved at the same meeting, the first installment of which was distributed last Friday. I will now hand over to Osman for a look at financials. Hope you all stay safe and healthy. Thank you.