Turkcell Iletisim Hizmetleri AS

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your course call operator. Welcome and thank you for joining the Turkcells Conference Call and live webcast to present and discuss the Turkcells Third Quarter 2021 Financial Results Conference Call. At this time, I would like to turn the conference over to Mr. Alistair Dal Yadzi, Investor Relations and Corporate Finance Director. Mr. Yadzi, you may now proceed.

Thank you, Konstantinos. Hello, everyone. Welcome to Turkcells Third Quarter Financial and Operational Results Call. Today's speakers are our CEO, Mr. Murat Erkan, and our CFO, Mr. Osman Yilmaz. They will be delivering a brief presentation and afterwards taking your questions. Before we start, I'd 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.

Thank you, Serdar. Good morning and good afternoon to all. Welcome to our presentation and thank you for joining us. In the third quarter, we recorded 22.3% revenue growth and our EBITDA reached 4 billion TL for the first time, implying an EBITDA margin of 43.1%. Growing 18% year-on-year, we recorded a net income of 1.4 billion TL, an all-time high quarterly figure. net income settled above 1 billion Turkish lira run rate per quarter. Our customer-centric strategy, diversified business model, and focus on mobile and fixed network quality are the key factors of the sustainable performance, which was further supported by increased mobility in this quarter. This strategy has enabled us to continue outstanding growth in total subscribers by 1.2 million which marks the record of the past 14 years. In the first nine months of the year, we gained a total of 2.5 million subscribers, further strengthening the subscriber base for the upcoming terms. The ARPU trend remained robust at 12% for mobile and 10% for residential fiber. Lastly, this quarter, the revenue share of digital channels in consumer sales rose to 17%, increasing 5 percentage points year-on-year. We have also distributed the last installment of the 2021 dividend on October 27. In consideration of these solid results, we further increased our full-year guidance, which I will elaborate on my last slide. Next slide. Here we see the operational performance of the third quarter. In all three fronts, mobile, fixed, broadband, and IPTV, we delivered a strong net ad performance. On the mobile front, we gained a net 464,000 postpaid and 643,000 prepaid subscribers. This outstanding performance was achieved through our customer-focused offer, innovative service portfolio, and also supported by increased mobility thanks to vaccination. High net-add performance in prepaid subscribers is due to the visit of Turks living abroad after lifting of restrictions in international travel. The average monthly mobile toll rate was at 1.9%, well below that of last year. and we believe around 2% monthly churn is a healthy level in this market. Blended mobile ARP rose to 58%, 58 TL on 12% increase thanks to higher post-paid subscriber base, upsell to higher tariffs, price adjustments, and increased data and digital service usage. Also, Our AI-based analytical capabilities, we observed strong upsell levels and incremental that an upsell postpaid customer pays in two times that of same quarter last year. In the fixed broadband segment, amid the prevailing demand for high-speed connections with the back-to-school period, we gained net 60,000 fiber subscribers with our high-speed fiber internet offers. Our rollout plans are on track as we exceeded 400,000 new home passes in the first nine months. This quarter, we also welcome our 25th city in our fiber network. We are pleased to register a further 51,000 net addition to our IPTV subscriber, exceeding 1 million customers this quarter. IPTV's penetration within the residential fiber subscriber reach 63% accordingly. Residential fiber ARPA rose to 79 Turkish lira on 10% growth. 13% annual fiber subscriber growth should be taken into consideration, where we aim to manage a delicate balance between ARPA growth and net addition. Next, an update on the data usage and foreign house cheese subscription trends. Average mobile data usage rose 12% year-on-year to 13.7 GB per user. The rise in data consumption was due mainly to higher content consumption, boosted by seasonality and lifted restrictions. Out of the 34 million subscribers signed up for foreign house cheese services, Around 70% have 4.5G compatible smartphones, still indicating growth potential for the upcoming quarters and implying further room for growth in data consumption. Overall, smartphone penetration is at 84%, with 92% of these units being 4.5G compatible. Moving on to Phase 6. We reap the benefit of our careful plan efforts to provide best-in-class services, which is evident by the outstanding NetEd figures in this quarter. Our well-invested, high-quality network and strong infrastructure is once again confirmed in the GSA report. With its rich spectrum assets and well-planned modern infrastructure, Turkcell is able to provide speed of up to 1.6 gigabit per second. which even exceeded the five GCPs provided by certain operators with this capability. Turkcell ranks among the world's top three operators and is the fastest foreign energy network infrastructure in Europe. Our long-time invested customer-centric approach, which enables Turkcell to provide service addressing customer exact needs, has made us a winner at the European Customer Centricity Awards. At the Turkcell team, we have realized over 100 projects that touched the hearts of our customers. Additionally, our key strengths, including data-driven personalized offers and extensive distribution channels, both physical and digital, stand out as core factors influencing customer decision-making. With all of EBO, customers have continued to recommend Turkcell over the competition this quarter. even extended the wide gap with the second best. Next. Now our strategic focus areas, let's zoom into digital services and solutions. The standalone revenue from digital services and solutions continued its strong growth at 31% year-on-year, reaching 435 million TL. The paid user base reached 3.6 million TL, up 0.9 million from last year. We are delighted to have reached another remarkable milestone for our digital services as the IPTV user base exceeded 1 million in September. TVPlus has continued to increase its share in the TV market, reaching just above 13% in Q2, and it is the only TV platform have steadily increased its share for the past 12 quarters. Content and product quality enable us to increase prices, whereby the product enjoys rising retention levels. With its robust infrastructure, BIP, our instant messaging platform, provides seamless communication and has reached 27 million 3-month active users this quarter, tripled from the same quarter last year. A quarter of the active user base is abroad, where the leading countries are highly populated countries like Nigeria, Indonesia, and Bangladesh. Our constant efforts in our digital services are improving the user experience of the application, and we achieve this by responding to our customer needs. For instance, new features in BIP this quarter include the status posting and video group call with up to 15 people, On Fizi, our digital music services, we have added over 120 podcast series. Next slide. Next is the digital business services. We continue to lead end-to-end digital journey of corporate in Turkey. This has resulted in a revenue of 499 million Turkish lira from digital business services this quarter. Of the total revenues, 75% are service revenue, which rose by 28% year-on-year. From the service revenues, we have seen continuous strong demand, particularly in data center and cloud business, cybersecurity services, and IoT. We signed 575 new contracts with a total contract value of 221 million. Overall, backlog from the system integration project signed to date is at 832 million TL, which will be contributing to the top line in the upcoming quarters. This quarter, we continue our product launch in cybersecurity and cloud services. WatchGuard is an economic and flexible firewall solution that works in physical and virtual systems, and as the first in the country. object storage is a cloud-based solution for the further support, the vision of keeping corporate data in Turkey. Next slide. Last but not least in our TechWin focus. TechWin services revenue rose to 281 billion TL on 37% year-on-year growth. Paycell saw another remarkable quarter, topping 6 million active users on a 30% rise year-on-year. The revenue saw 53% year-on-year growth, mainly with traction in the PayLetter product. We started to monetize POS solution, which includes virtual and physical Android POS services. We have installed 1.7 thousand devices at local SMEs, and also launched our virtual post solution with 900 e-commerce merchants, including Tübsel Sales Channel. This quarter, Finansel's revenue rose 28% year-on-year, due to higher interest rates and support from emerging insurance businesses. Finansel continues to finance technological needs of a broad range of customers, including individual residentials, SMEs, and corporates. To date, we have scored 11 million customers and we have 24% market share in consumer loans below 5,000 TL. One of the financial key strengths is the assigning right limit to the right customer based on Turkcell VAS data. We have recently launched a new credit model based on machine learning. Initial results indicate higher approval rates and higher limits without negatively impacting the historically low cost of risk levels. Next slide. Let's look at our performance in the international segment, which now generates 10 percent of group revenues. In this quarter, international revenue grew by 39 percent year-on-year, thanks to the expanding subscriber base in all three regions. Higher mobile data consumption and the positive impact of currency movement, organic growth and excluding the currency impact was at 18%. Our Ukraine business has continued its strong operational performance in this quarter by reaching 8.9 million mobile subscribers on a 14% rise year-on-year. Revenue growth in local currency terms was 24% yearly. exceeding 20% for the last four quarters. This business has seen a 4.6 percentage point EBITDA margin improvement year-on-year on the back of limited interconnection costs and well-controlled operational expenses. In local currency terms, Belarus' revenue declined 2% due mainly to lower handset sales, which on the other hand affected the EBITDA margin positively. In Belarus, we focus on digital subscription. In the third quarter, one out of five new customers opted for live through digital channels. Our subsidiary in Turkish Republic of Northern Cyprus recorded strong 24% growth with rising voice revenues and data usage due to increased mobility after the recovery of education services and tourism in the island. I would like to end my presentation by sharing our new guidance for the full year. Taking into consideration our outstanding nine-month performance and expectation for the remainder of the years, we once again revised our guidance upwards. Accordingly, we raised our revenue growth guidance to around 20%. Generating real revenue growth in a high inflationary environment, we revised our nominal EBITDA expectation to around 14.5 billion TL and expect to register an operational CAPEX over sales ratio around 21%. Lastly, as you remember, we held our last capital market day back in November 2019. Since then, COVID-19 pandemic has significantly impacted our industry and the way we do business. This necessities us to revisit our plan and target in relation to the core business and strategic focus area. We plan to organize a capital market day after the announcement of full year 2021 results, where we aim to reveal our revised three-year business plan and targets. We will make necessary announcements regarding the details of the event in time. I will now leave the floor to our CFO, Osman, for the financial discussion.

Thank you, Murat Bey. Now let's take a closer look into our Q3 financials. In Q3, we recorded a 9.4 billion TL top line on 22% year-on-year growth thanks to subscriber base expansion, higher data and digital service revenues, coupled with contributions from international operations, tech and equipment sales. The first nine-month growth exceeded 21%. Our EBITDA reached 4 billion TL level on a 19% increase. Net income was solid at 1.4 billion TL, marking 18% yearly growth, mainly driven by solid top-line growth. The bottom line has settled consistently above 1 billion TL with the contribution of disciplined financial risk management. We are pleased with our solid performance, which exceeded our expectations. Next slide. Now some details on revenue and EBITDA developments. This quarter, with contribution of all segments, we generated 1.7 billion TL incremental revenue. 1 billion TL derives from Turkcell, Turkey. This was possible with a larger subscriber base, ARPA growth and upsell efforts with price adjustments. 258 million TL from international subsidiaries supported the top line mainly due to robust subscriber and ARPA performance of Ukrainian operations as well as the positive impact of currency movements. Our Techfin segment had a 76 million TL positive impact. Paycel and Financel has supported this with an annual growth of 53 and 28% respectively. The other segment contribution of 334 million TL was mainly driven by increased equipment sales. This quarter, our EBITDA margin was at 43%. The main factors behind the 1.3 percentage points marginal contraction year-on-year were as follows. First, minus 0.6 percentage points from gross margin impacted by our energy businesses increased cost of goods sold and rising radio costs due to higher energy prices. And secondly, minus 0.7 percentage points from SNM expenses mainly due to increased selling expenses on back of record high net ads during the quarter. Next slide. Now a few words on our balance sheet and leverage. Our total debt increased by 700 million TL in this quarter, mainly due to the currency movements. A cash position of around $1.4 billion equivalent, which is mainly in FX, covers our debt service until 2025. We maintained our leverage below one time in this quarter, despite the second installment of last year's dividend amounting to 862 million TL. Excluding the financing business, this was at 0.8 times the same level as the previous quarter. We generated just over 1 billion TL of free cash flow thanks to strong operational performance as well as relatively lower CAPEX in this quarter. Next slide. Now I will go into the management of foreign currency risk. We continue to hold the bulk of our cash in hard currencies as a natural hedging tool. With hedging instruments in place, the share of FX debt declined from 83% to 51% as of the end of this quarter. Our hedge contracts are cash flow hedges and covering the full maturity of related FX liabilities. We were in a long net FX position of $122 million as at the end of Q3, and we continue to target a neutral to long FX position going forward. Next slide. Now let's take a closer look at our FinTech companies' performance and start with our financing business, Financel. As we communicated before, in line with our expectations, the negative trend in Financel's portfolio ended in Q2 and the growth has gradually started. The revenues rose by 28% year-on-year on the back of higher average interest rate on the portfolio versus last year and growing insurance revenue. We expect to sustain the loan portfolio at around 2 billion TL by the year-end. EBITDA rose by 24% to around 120 million TL with a margin of 73%. The 2.3 percentage points margin contraction is due to the base effect as we saw some of our debt receivables in Q3 2020. As a result of strong collection performance and improvements in the customer portfolio, cost of risk has been declining since the start of this year. Cost of risk has remained nearly unchanged at 0.3% for this quarter. Next slide. Lastly, our payments business, PayCell. In line with the global trends, PayCell users continue their payment habits in the post-pandemic period, which is reflected in PayCell's solid operational and financial performance. PayCell continued to see increased recognition with the contribution of rising active customers and merchant numbers in Q3. In fact, PayCell's 3-month active users reached 6 million and the number of merchants hit 14,000. The most popular product on our platform, PayLater, delivered another strong performance in Q3. PayLater volume rose by 84% to 455 million TL year-on-year. Transaction volume of PayCell card has increased to 6-fold of the same period last year and reached 657 million TL. As you may remember, at the beginning of the year, we launched Android POS for our corporate customers. Focusing on virtual POS as well, we shifted Turkcell payment channels to Paysal's virtual POS, providing a revenue channel for Paysal and saving for Turkcell. Thanks to our increased focus on this business, POS transaction volume reached 475 million TL in this quarter. Overall, in Q3, PayCell revenues increased by 53% to 119 million TL, 55% of which are non-group revenues. A VTM margin was at 46%, impacted by increased human capital investments and S&M expenditures. With its unique product range and disruptive nature, PayCell has already taken its place among regional fintech leaders. As disclosed earlier, we are seeking growth capital to... to scale this business further in Turkey and then globally. This concludes our presentation. We are now ready to take your questions. Thank you very much.

The first question is from the line of Kennedy Good-Jonathan with J.P. Morgan. Please go ahead.

Good evening, and thanks for the opportunity to ask questions. My first question on PayCell, could you give us a sense of what the total payment value across the platform is at the moment and the growth rate there? And then just wanted to understand why bill payments have declined during the quarter. That's first question. Second question, wanted to understand how your pricing strategy is evolving at the moment given inflation rates and whether you can push mobile ARPU growth at higher rates than what you've seen at the moment. That's hoping for too much into the New Year.

Okay, Jonathan, thank you very much.

For the first question regarding total payment, it's around 500 million Turkish lira. It's up and down, around 500. And the bill payment is, you know, because it moves from physical channel to the digital channel. So that's why you might see the decline, but we see growth. But when it moves to the digital channel, we can get it. For the pricing strategy, obviously, to be able to grow the business, there are two options in your hand. One of them is growing subscriber base, and the other one is growing the ARPU. So we would like to push both of them. This is our strategy since two years back. So we would like to push ARPU. And on the other hand, the inflation was increasing more than expected by the market. So our initial plan was in terms of inflation, it's not going to grow that much. But we're adopting ourselves based on pricing. But as you know, we have a contract with the customer for 12 months so it will take some time to catch up the real inflation but we're going to push to reach on inflationary pricing as I mentioned it was quite fast in terms of our expectation but we'll catch it up but on the other hand I would like to emphasize our customer growth because if you want to pick one I would prefer on the customer growth side because at the end of the day, we can create more value from one customer, especially we have other businesses like pay cell and finance cell and digital services and so on. If we catch customers, we can easily increase their ARPA level in near term. So that's why we would like to continue on the thing. So regarding growth rate, it is around 85% for payment in pay cell. 84% range, yeah. Sorry, I came back to the first question.

Yeah.

The next question is from a line of Kim Ivan with Excel's Capital. Please go ahead.

Yes, hi. Three questions from my side, actually, if I may. Firstly, on 5G auction, when do you expect the 5G auction and what spectrum do you expect to be sold? Is it C-band and 700 MHz? That's one. Two, on capital intensity in 2022, so how do we think about it compared to 2021? Do you think capital intensity will increase in 2022 compared to 2021 given where Alira is? And then thirdly, on PayPal's take rate, it's pretty high, 3% in 2020 and like 3.5% if you look at the third quarter of 2021. Where do you expect the take rate to evolve when the business scales? Thank you.

Thank you very much, Ivan Kim. First of all, regarding 5G roadmap and auction, Obviously, there is no official timeline for 5G announced by the regulator. There are number of, you know, number of explanation or number of announcement coming from ministry, but obviously we have to wait for official announcement. 5G is vital technology. We would like to facilitate this on the digitalization of industry and contribute to the economic development of our country. However, we believe there are some issues that need to be addressed for the healthy launch. First is the fiber connection of base station. Currently, similar to the low household penetration, fiber connectivity of base station is not enough for the full-fledged transition to 5G. Secondly, we believe we have not reached a desired localization rate in the development of 5G network equipment. We think localization rate can only be reached around 20% 2023. This could be even lower for the core network and base station level. Therefore, we believe there are some risks for the full-fledged transition to the local 5G network. Regarding the license costs of CapEx side, first of all, auction structure is not clear yet. And we don't have an official timeline, which limits us in making an estimate regarding a possible capex or frequency payment. The difference between Foreigner House G and 5G is that Foreigner House G was a great leap over 3G in terms of speed, particularly for the individual user. Therefore, we need some time to see how it's going to end up for the probably end of this year. For the CAPEX plan 2022 and allocation, we have not finalized our budget planning for the next year, and we will give 2022 guidance when we announce our full year result. But I don't expect a major increase on the CAPEX side, even a little bit decrease. because we spent capex earlier than expected this year and we get positive result due to the FX fluctuation so next year probably we gonna spend little more capex on the fixed line on the fiber side little less on the mobile so more or less we gonna we would like to keep similar level on the on the capex side Sorry for the third question. Could you repeat the third question? It was regarding PayCell, but I couldn't catch the third question.

Yes, of course. On PayCell, just a quick question on its take rate. So basically, if you take PayCell's revenue and divide it by total payment volume, so it's pretty high by international standards, 3% in 2020. And if you look at the third quarter, 2021, it's 3.5%. I was just wondering where to expect that to settle when the business scales. Thank you.

Okay, let me give the word to Osman. He'll answer your question.

Yes, actually Paysal started its business as a business unit within the group and then it became a standalone company and now we are expanding Paysal revenues outside of the group and now more than half of the revenues are coming out of the group. Actually, the intensity of revenues over total turnover is partly on back of the two factors. First factor is group revenues, and the second but more important factor is our lending business, pay later business. Many payment companies do not have this pay later business, which is relatively more profitable part of the fintech business. You can see some international examples. There are Companies, fintech companies, payment service companies, which are only processing payments and doing remittances. And on the other hand, there are pay later businesses, which have higher profitability and higher growth scale. We are a combination of both. We either have a high turnover. On the other hand, we have a higher profitability, thanks to our strong penetration in PaySan network. What we are aiming going forward is first to penetrate in overall Turkish market. We are expanding our footprint outside of Turkcell Group. We are aiming to double our customer base in a couple of years. And then we want to expand regionally and then later on globally. That is why we are seeking growth capital for this business. But we will not be doing that at the expense of... negative EBITDAs and negative profitability. We will keep the healthy balance sheet while doing this growth.

That's great. That's very helpful. Thank you.

The next question is from the line of Kabecek Andre with UBS. Please go ahead.

Hello, and thank you for the presentation. I have one follow up and three questions, if I may. The follow up pertains to the fiber connectivity on towers that you mentioned as a kind of prerequisite to, you think, you know, running the 5G auction properly. So can you expand on that? Does that mean perhaps that you are, you know, kind of, or you would be kind of pushing for a There's some kind of large scale regulated fiber access needed across the market to connect base stations across the operators for 5G to really be successful. Is this what you mean? And then the three questions, I believe you mentioned 400,000 homes passed in terms of fiber year to date. Can you give us an idea in terms of the take-up on that footprint so far and where this take-up is coming from, whether these are greenfield customers or whether you're perhaps taking market share in some areas? Second question, if I may understand, in terms of your COPEX guidance, you are now guiding for the low end. I know it's not a huge difference, but with the LIRA having depreciated again in the fourth quarter, what has changed in your plans? And third question, a quick one on Ukraine, please. One of your peers is looking at doing something with their towers in Ukraine. Is this also an area, I know you're doing that in Turkey, but is it also something that you're looking at in Ukraine? Thank you.

Thank you very much for the fiber connectivity. In Turkey, overall, I'm talking about all operators, the reaching to the base station with the fiber is around less than 40%. And even incumbent operator has less than 50%. So in this case, without fiber reaching to the base station, it is difficult to give proper 5G services. On the other hand, For existing base station numbers like around 100,000 for whole operator, probably when we go to the 5G, it's going to be maybe 10 times higher, the base station. So the fiber connectivity and fiber reaching fiber with the proper connection, this is mandatory, I believe. Regarding 400K home pass years, right? So... It is, yeah, we're going to see the increased demand on the fiber. So our take-up rate for this segment is around more than 20% for the first year. But to reach the real take-up rate is around 45%. So we are faster than our business case. so there are you know existing greenfield customer as well as the customer from the competition so in terms of market share i believe we have more than 50 percent in the area where we reach for the guidance of lower capex you know there are two things about capex We did two important actions for this year. First of all, we did advance payment to the supplier by lowering the cost of equipment, which helped us our CapEx management. The second one is we decided to invest earlier than expected, which means first half of this year, which is front-loaded investment. This is going to help us to address the CAPEX guidance level. So for the CAPEX guidance, even though we see a dramatic increase on the FX side, we don't want to change our guidance. For the Ukraine, actually I have no idea what the peers are doing on the Tower side. So I don't want to comment on Things that I have no clue about it.

Thank you very much. If I may, just a quick follow-up in terms of the connectivity. You mentioned, you know, sub-50% of towers, even for the incumbent, for the market, about 40%. But what is your proposal, then? What do you think needs to be sorted for the 5G auction to make sense at this stage?

Obviously, we publicly announced our proposal. Turkey needs common infrastructure company, common investment portfolio, because if everybody invests on expensive fiber side, it doesn't help country's economy, it doesn't help for services side of it. If we invest CapEx underground, we will probably run out of money to give services to the customer. digital services, I mean. So that's the, you know, there's one proposal on the table. Let's have common investment on fiber. Let's compete on the services side, not the infrastructure side, because infrastructure competition is all worth competition.

Understood. And if I may, sorry, one final one. What do you think needs to happen for, you know, a common infrastructure project? company to be a reality in Turkey? What do you think needs to happen? Thank you.

I think the wise way and intelligent way to establish this thing, I think the ministry has the vision to implement such a common infrastructure company and the intention to do so So we'll see what's going to happen. But I think the vision is there. The vision of the Prime Minister, sorry, President is there. The vision of the Minister of Transportation and Communication is there. So I think this is the wise way. And obviously, telecom concession has uncertainty. Recently, the Minister of Communication also said told that this uncertainty sometimes blocks some of the things. But I think, you know, reasonable people understand that Turkey needs common fiber infrastructure.

That's clear. Thank you very much.

The next question is from the line of Nagin Nora with Erste Group. Please go ahead.

Hi, good evening. Thank you for the presentation. Only one question from my side, please. Do you plan to take the fixed accessory valuation by a new legislation so that to use that as deferred tax income release as we have seen in case of third telecom? Thank you.

Okay. Let's ask Osman to take this question.

Actually, we disclosed the same application in our Q2 financials, and there are further opportunities on our balance sheet, which we are evaluating further, and we will decide on this issue in our year-end financials.

I see. Thank you.

The next question is a follow-up question from the land of Kabacek Andre with UBS. Please go ahead.

Thank you. Just one follow-up, please, in terms of the other headlines that we saw today with you looking for monetizing the fintech business. Is it still the case that you prefer a strategic partner who would help you develop this business from a minority? perspective or are you in a different place compared to the past couple of quarters where you were kind of suggesting this would be the preferred option? Thank you.

Okay, thank you. First of all, regarding the monetization or strategic partnership things, it was a secret. It was, you know, we were talking about SuperOnline, we were talking about our tower business, we were talking about PayCell and FinTech side so I think this is a good opportunity and we are planning to offer minority stake and the partner we are looking for should ideally be able to contribute to PayCell's growth story not only provide growth capital we should be able to share know-how, make expansion plans and make sure that the business further evolves and potentially get ready for an IPO in the next couple of years.

Thank you.

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

Hi, thank you very much for the presentation. On the pay-sale side, do you have some kind of the valuation range for the stake sale? And the second question related to the first remark about the inflationary pricing and the current inflationary environment. If I understand right, do you expect the blended ARPA growth at least to converge to somewhere close to the inflation? And the third question is about the Ukrainian operations. I think for the past couple of quarters, the operations are performing quite well. some color on that. I think particularly subscriber additions are strong because of market sharing or market is growing. Thank you.

Thank you very much. First of all, regarding Paysa, obviously Paysa is one of our most important and valuable assets. Not just Paysa, also we have other assets as well. We disclosed the company's financial and operational metrics every quarter in our presentation, and we were quite open to the market as well. And we all know the fintechs and payment companies around the world enjoy quite high multiples, and thanks to their disruptive nature and unique growth profiles. And these companies are mostly having negative EBITDAs. which makes their valuation to be based on their revenues. But our PayCell has a positive EBITDA margin with strong growth profile, thanks to its diversified business model involving group and non-group revenue, as well as individual users and merchants. Both in terms of revenue growth and EBITDA margin, PayCell is a unique business. Everybody can do the math for the valuation by using the global revenue and EBITDA multiples. That's the valuation of Paysal per global average. Regarding about inflation pricing, ARPU growth, and so on, I think I've tried to explain that we would like to keep our ARPU in line with the inflation increase. As I said, our initial plan was Not expected that much increase on the inflation side. So to be able to adapt inflation increase, sometimes we need time. So I believe that we're going to catch the inflation. I hope inflation is not going to go same speed as we see today. So we can catch this in a while. But on the other hand, we shouldn't forget that we're gaining customers. 2.5 million customers at the beginning of the year. So this customer, when we get the customer, we put them into the system and provide upsell opportunities for this customer and sell other products like paysell, digital services, TV and so on. So it will take some time to get acceptable ARPU level for the customer who come recently. So we have quite important system in terms of using AI and other technology, customer centricity and so on. We're going to get to the acceptable level. Regarding Ukraine operation, actually this is not the result of last quarter. We have focus on Ukraine last couple of years. We invested in the area where we have weak network and captured the customer. So we probably going to continue on the customer side in a similar level. But I would like to remind that our subscriber growth is 14% year over year. Our ARPA growth is 9%. It's above the inflation of Ukraine, plus we are doing better than the competition, and we are gaining market share in terms of revenue, in terms of customer as well. And we're growing almost double percentage point versus the competition. So we're going to keep grabbing market share, and our expectation is there as well.

Thank you. And as a follow-up on the subscriber edition, do you think we can keep the current pace of editions developing to 1 million per year or is that a more realistic number for the next year?

To be honest, we are in telephone business, we are in technology business, we are in services business, and we are in tech field business. and so on. So to be able to be successful on this area you need to get more customers. So our gaining customers strategy will continue. We hope to see another million next year. As I mentioned this year is our sending year and having such a customer is very important for next year revenues as well because you gain this year, you spend subscriber acquisition cost this year, but you get the real revenue for next year. So I think the strategy is in line. We are executing well on the operation side, and we hope to continue this level.

Okay, thank you, and congratulations on the results.

Thank you very much. I appreciate it.

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

First of all, I would like to thank everyone who joined our conference call. I hope to see you in our capital market days at the beginning of next year. Thank you very much. Have a good day.

So this concludes our call. Thank you for joining. Have a nice day or evening. Thank you.