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.