Turkcell Iletisim Hizmetleri AS

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your Chorus Call Operator. Welcome and thank you for joining the Turkcell Conference Call and live webcast to present and discuss the Turkcell Second Quarter 2023 Financial Results Conference Call. All participants will be in listening 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 like to turn the conference over to Mr. Alistair Dariagi, Investor Relations and Corporate Finance Director. Mr. Dariagi, you may now proceed.

Thank you, Konstantinos. Hi, everyone. Welcome to Turkcell's second quarter 2023 results call. Today, our CEO, Mr. Murat Erkan, and Acting CFO, Mr. Kamil Kalyon, will be delivering a brief presentation covering operational and financial results, which will be followed by a Q&A. Before we kick off, I'd like to kindly remind you to review our safe harbor statement placed at the end of the presentation. Now, I'm handing over to Mr. Erkan.

Thank you, Serdar. Hello, everyone. Thank you for joining us. We delivered outstanding results in the second quarter. Our determined inflationary pricing strategy plays an instrumental role in delivering an ever-accelerating performance. Pacing the inflation, our revenue growth ramped up to 74% on a record ARPA growth and expanding subscriber base. Strategic focus area also supported top-line growth as always. On the profitability side, our EBITDA almost doubled, reaching 9.5 billion TL. Driven mostly by strong top-line growth and reduced energy prices in Q2, we achieved a remarkable 44% EBITDA margin. This strong operational performance coupled with dynamic and prudent risk management enabled a solid net profit of 3.2 billion Turkish lira on a 70% year-on-year rise. Considering these results, we further increased our full-year guidance. Next slide. Let's take a closer look at our mobile operational performance. Our focus on post-paid subscriber yielded a sustaining substantial gain of 404,000 subscribers in Q2. topping a 70% post-paid share of the mobile base. Following the gloomy Q1, we resumed price adjustment in April. And as the competitors followed us, overall price level escalated in a market. However, temporary competitive offers were observed in the market, triggering an increase in M&P volumes. Rising acquisition price level and alternative data solution for tourists impacted prepaid subscribers. The inflation figure for July indicates a surge in inflation during the second half of the year. Yet we are committed to price adjustments. Accordingly, we rise our prices in August. As anticipated, the ripple effect of preceding price adjustment and intact upsell effort propelled a remarkable 84% acceleration in mobile ARPA. The ARPA versus CPI spread widened further. Despite a slight increase due to the line closure deferral from Q1, our mobile churn rate stood at 1.9%. Next slide. In the fixed broadband, our focus persists on fiber. Accordingly, we gained 40,000 fiber subscribers in Q2. The IPTV platform, a supportive factor in subscriber retention, grew with 35,000 net additions. We achieved 165,000 additional home paths during Q2. We are delighted to exceed our annual target of 300,000 in the first half, benefiting from more favorable FX rates. In line with our fiber extension, the take-up ratio decreased to just below 40%. However, it is fair to expect the rate to rebound for the remainder of the years as we aim to monetize these investments. This quarter, residential fiber ARPU grew strongly by 49% yearly, surpassing quarterly average annual inflation after a long break, thanks to price adjustments. Longer contract duration and the reluctance of incumbent operator to make price adjustments have been affecting this segment adversely. To mitigate these factors, we have shifted our focus over the past year to offering 12-month contract or contract-free tariffs, resulting in 53% of our Fibers customers opting for this plan by June. Lastly, We are pleased to see continued interest in high-speed plants. The rate of these packages in the total fiber portfolio has increased by 11% year-on-year. Next slide. On strategic focus areas, let's start with digital services and solutions. The standard revenue of digital services and solutions grew by 87% year-on-year due to price adjustment and expansion of paid users. We have reached significant milestones in our flagship services. OTT TV services has surpassed the 1 million mark, while the Cloud Storage services exceeded 2 million users. By surpassing 1 million active users in Pakistan, BIP further expanded its user base through the partnership with JAWS. Our standalone paid user base reached 5.5 million, rising 22% annually. On the other hand, TV Plus is intensifying its collaboration with both local and international business platforms and partnering with leading global studios. Moving on to our next focus area, digital business services, constitute 10% of Turkish Revenue. having registered 82% year-on-year growth. The main growth drivers were system integration projects, data center, and cloud businesses, each doubling their revenues annually. Notably, the backlog from system integration projects has reached 2.9 million Turkish lira. Next slide. Our third focus area is Techfin. In the second quarter, PayCell revenue rose 95% year-on-year. PayLater has more than doubled its volume and remained the key driver of PayCell revenues. This growth was supported by increased payment in mobile app stores and expanded user base, a volume of ready-to-use limits. PayCell Card has also supported this remarkable performance thanks to increased money transfer and higher card fees. In May, the nationwide joint QR project was launched, which enabled our customer to make payment using PayCell app at any location with QR code. Turning to finance cell into its revenue group by 87% with an expanding loan portfolio and rising interest rates. The loan book reached 4.7 billion Turkish lira on an 88% growth. Next slide. Now, international subsidies. The Turkcell international segment, which accounts for 10% of the group top line, grew by 48% year on year in Q2. Excluding the currency impact, the organic growth was 38%. Thanks to increasing data roaming revenue and also price adjustment, lifestyle revenue in Ukraine rose 36% year on year. in its local currency, well above the inflation. The EBITDA margin improvement of 1.2 percentage point was mainly driven by lower interconnection and energy expenses as a percentage of revenue. Best revenue rose 22% year-on-year in its local currency, comfortably exceeding the inflation. The MTR rate revision at 2022 year-end year-end and a disciplined OPEX result in a 20 points margin improvement. Next slide. I would like to end my presentation by sharing our updated guidance for 2023. Taking into consideration our outstanding first-half performance, we have revised our revenue growth target to around 71%. EBITDA guidance to around 37 billion Turkish Lira and maintain capex intensity at around 22%. I will now leave the floor to our CFO, Mr. Kamil Kalyan.