Turkcell Iletisim Hizmetleri AS

Ladies and gentlemen, thank you for standing by. I am Mina, your chorus call operator. Welcome and thank you for joining the Turkcell conference call and live webcast to present and discuss Turkcell's second quarter 2024 financial results. At this time, I would like to turn the conference over to Mrs. Özlem Yardın, Investor Relations and Corporate Finance Director.

Mrs. Yardın, you may now proceed. And for earnings calls.

Today, our CEO, Ali Taha Koç, and CFO, Kamil Kalyon, will be delivering a brief presentation covering operational and financial results, which will be followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statements available at the end of our presentation. Now, I'm handing the meeting over to Mr. Ali Taha.

Thank you, Özlem. Good afternoon, everyone, and thank you for joining us today. This year marks a special milestone for us. our 30th year anniversary, which we proudly celebrate with all our stakeholders. On July 8, I had the honor of hosting a closing bell ceremony at the New York Stock Exchange, the world's largest financial center, to commemorate this occasion. What stands out over the past 30 years is what has remained constant. Our core value of placing technology at the center of our business, leading innovation in Turkey, and nurturing the expertise of our people. We are committed to growing our business and meeting the needs of our customers across all the sectors we serve. Our commitment has made Truxell resilient during extraordinary times. In the second quarter of 2024, annual inflation peaked in May, exerting pressure on the financial performance of leading Turkish companies. However, Truxell with its diversified business portfolio and disciplined management demonstrated financial resilience. Our top line reached 35 billion TL. Reflecting a strong focus on profitability, we delivered an EBITDA of 15 billion TL and a solid 42.6% EBITDA margin. This is enabled by the Turkcell Turkey segment mainly due to our rational pricing strategy and successive upsell campaigns, which allow us to sustain real ARPU growth. On the other hand, macroeconomic pressure impacted equipment revenues for both consumer and corporate segments. Our focus on value generating postpaid and fiber customer acquisition resulted in 346,000 net additions. Supported by operational profitability, and strategic financial risk management, we delivered a net income of 2.9 billion Turkish Liras. Next slide, please. Let's take a look at our operational performance. On the mobile front, as the market leader, we focus on market rationalization. During the second quarter, we faced the aggressive pricing actions of peers starting in May. which triggered mobile number portability market activity. Despite this, we implemented a 25% price adjustment in July. Focusing on value generating customers, we gained 477,000 PostBait subscribers. Over the last year, our PostBait base grew by 1.8 million net additions. With the PostBait customer share reaching 73%, marking a three-point rise year-on-year. The widespread use of alternative data providers resulted in a net loss of 232,000 prepaid subscribers. Despite this, through innovative campaigns like the Smart Control Service and the 30th Year Double-Up Campaign, along with our retention strategy, we maintain a churn rate of 1.5%, the lowest of the past six years, 1.5%, the lowest of the past six years. Driven by sequential price adjustment and upsell efforts, mobile ARPU rose by 82% year-on-year, delivering 5% real growth and continued to outpace CPI. The quarter-on-quarter weakening in ARPU growth was expected, as the earthquake disaster negatively impacted the first quarter's base. Next slide, please. In the fixed broadband market, we remain focused on fiber, adding 42,000 subscribers. The share of 12-month contracted customers in the residential fiber customers reached 78%, raising 28% year-on-year. Complementing our fiber services, IPTV sold 34,000 net additions. The fixed broadband market remained rational in Q2, allowing us to implement a price adjustment in August, following the incumbent's move in June. In addition to market rationalization with support from TV Plus and poor fiber technology, we achieved a record low churn rate of 1.2%, the lowest in 18 years. The residential fiber ARPU grew 84% year-on-year, with a quarterly rise when excluding the earthquake's base effect. The take-up rate rose 2.2 points year-on-year as we continued to prioritize fiber subscriber net additions over home passes. Lastly, we are pleased to see continued interest in high-speed plants. The weight of these packages in the total residential fiber portfolio has increased by 10% points year-on-year. Next slide, please. Let's discuss our strategic focus areas, starting with digital services and solutions. Our digital services and solutions enable us to connect with our customers and meet their evolving needs. Our goal is to ensure these services reach the right audience, those who truly value them, with the right positioning. In recent quarters, for profitable growth, we have focused on attracting customers who are genuinely engaged with our services. In line with this strategy, we saw a 4% decrease in our standalone paid user base, now at 5.3 million. However, revenue from standalone digital services and solutions grew by 5% year-on-year, driven by our pricing actions. Additionally, this quarter, we are pleased to see Lifebox and TVplus integrated into our national car brand TOG, Turkey's electrical vehicle, alongside with Fizi. Moving on to our next focus area, digital business services generated 2.6 billion Turkish Liras in revenue this quarter. Recurring service revenues rose 8% year-on-year. However, hardware revenues were impacted by macroeconomic challenges, including reduced demand, particularly in the public sector, due to austerity measures and the absence of one-off projects from Q2 of last year. We remain committed to maintain our leadership in the data center market, combined with our cloud services, Revenue from these services grew by 57% to 540 million Turkish Liras. Next slide, please. The last strategic focus area is Techfin. In the second quarter, payslide revenues grew by 16%, driven primarily by increased commissions and transaction volumes from Paylater and PostSolutions. The active users for Paylater rose by 10%, thanks to wider usage in app stores and nationwide QR payment eligibility. Meanwhile, pay sales EBITDA increased by 14% year-on-year. Financing the technological needs of customers, finance sales revenue rose by 34%, supported by a larger loan portfolio and higher average interest rate. However, the net interest margin declined by 1.6 percentage points due to higher funding costs. At the same time, our cost of risk stands at 2.2%. Next slide, please. Lastly, our performance in the international markets. Turkcell international revenues, which account for 3% of group revenues, rose 2.7% to 890 million Turkish Liras. Best revenues rose 22% on a yearly basis in local currency terms, primarily driven by a focus on high segment tariffs exposure, enabling higher voice and data revenues. Better interconnection costs and lower energy expenses sustained the 1.5 percentage point improvement in EBITDA margins. We successfully finalized the share sale of our Ukraine operations in this Monday. Moving forward, our primary focus will be on driving value creation within our domestic operations. Before diving into financials, I would like to briefly touch on our 2024 guidance. With monthly inflation trending higher than expected recently, and the revised year-end projections announced in Turkey's medium-term program last week, we are now in a period that we closely follow our guidance. We plan to provide an update along with our third-quarter results, if needed. I will now leave the floor to our CFO, Mr. Kamil Kalyon.

Thank you very much, Ali Tabeh. Now, let's move on to our financial results. Despite the inflationary headwinds, our revenues have remained in line with last year, with only a modest decline amounting to 35 billion TL. The Turkcell Türkiye and Techfin segments were the supporters of the group's top-line growth. Turkcell Türkiye revenues rose 1.5% year-on-year, driven mainly by an expanding subscriber base, higher postage share in mobile segments, and real ARPA growths. It's worth noting that the segment's growth was also pressured by a decline in large projects, including hardware sales within the digital business services. The TechWin segment contributed 333 million TL to the top line, bolstered by the performances of PayCell and FinanceCell, which grew by 34 and 16 percent respectively. Conversely, the other segment faced challenges due to reduced demand in consumer electronics sales. Next slide, please. EBITDA grew by 0.3 percent year-over-year, reaching 14.9 million TL. Lower equipment sales cost more than compensates higher G&A and S&M expenses. Our EBITDA margin reached 42.6%. While wage increases and higher funding costs in financial services put pressure on profitability, the stabilization of electricity prices, reduced demand for equipment, and a decline in MTR had a positive impact on EBITDA margin. As a reminder, we implemented a wage increase in the third quarter to mitigate inflationary pressures and ensure that our employees, who are invaluable assets to our business, are well supported. However, we expect the ongoing MTR decline to support profitability through 2024. Next slide, please. Let's take a closer look at our CAPEX management. The capex-to-sales ratio for the second quarter of 2024 increased to 22.5%, aligning with our plans. Investments in both mobile and fixed infrastructure were balanced, each representing 31%. We anticipate an acceleration in tower fiberization during the second half of the year, aiming to achieve our 41% year-end target as a significant portion of digging permits were secured in the first half after the elections. The rise in data center investments this quarter is the ongoing investments of adding new modules to meet growing demands. By end of Q2, we had completed 45 megawatt of solar energy investments, but we are awaiting legal approvals from the relevant authorities. Once received, these investments will be reflected in our financials and green energy production will commence. Given the seasonality of higher investments in the second half, we expect CAPEX intensity to reach 23% for 2024.

Next slide please.

Now let's turn our attention to the balance sheet. In Q2 2024, our cash position stood at 51 billion TL. Gross debt reached 99 billion TL, leaving us with a net debt position of 32 billion TL at the end of the quarter. Our net debt leverage ratio slightly rose to 0.6 times. We expect an improved position in Q3, supported by proceeds from the Ukraine asset sale. Our FX debt service for the year stands at around US$189 million, which is manageable given our strong cash reserves. We have sufficient cash to cover the redemption of the 10-year Eurobond in 2025 and are actively exploring funding options for the potential reissuance. A large portion of our cash is held in hard currencies. Excluding effect swaps, 41% is in US dollars and 28% in euros. Next slide, please. Lastly, the management of foreign currency risk. At the end of the second quarter, our balance sheet had around 1.9 billion US dollar equivalent in FX financial liabilities. Against this, we had 1.4 billion US dollar equivalent in FX denominated financial assets, along with an effective hedging portfolio of 0.5 billion US dollar, primarily composed of futures, forwards, and NDFs. As part of our strategic management of FX exposure during a more stable Turkish Lira period, our derivative portfolio decreased quarterly, also contributing to lower finance costs. This resulted in a short FX position of $123 million in line with our expectations. Our target remains to stay within a neutral FX range of minus and plus $200 million. This concludes our presentation, and we can now open the floor for the questions.

The first question comes from the line of Tyron Caesar with Bank of America. Please go ahead.

Yes, hi. Good evening, everyone. Thanks for the call and the opportunity to ask questions. I have two, if that's okay. Just wanted to understand better what will drive a reacceleration of the top-line growth in the second part of the year And then second, do you have an update on what you intend to do with the proceeds from the Ukrainian asset sale? Thank you so much.

In real terms, our revenues remain flat at 34.9 billion Turkish liras in the second quarter. Please keep in mind that last year we had the earthquake in southeastern Turkey, which resulted in a positive base impact in the first quarter's growth. This positive base impact is absent in the second quarter. Moreover, the economic conjecture is suppressing our equipment sales on the consumer and corporate segments. Accordingly, there were fewer large-budget projects within our digital business services compared to last year. The negative impact of these large-budget projects on our revenue growth in Q2 2024 is around 4 percentage points. And for the second question regarding the sale of Ukraine assets, we expect the sale process to be fully completed within this year. The final sales value will be determined based on the closing adjustments to be made, based on the level of net cash debt on financial statements to be prepared as of the closing date. Although we do not have a board decision regarding the proceeds we will obtain from the sale of our assets in Ukraine, Prospectively, we might have important investments, some of them depending on regulatory authorities' decisions to come, such as 5G tender and its rollout plan, or any other big-scale business initiatives creating value for our shareholders in the upcoming years. Although we are diligently exploring a range of competitive and rational alternatives, we have the redemption of our Eurobond in 2025. It should also be noted that the sales value will have an impact on our net income. Our company's dividend policy allows a payout of at least 50% of distributable net income as cash once conditions contained in the SAIT policy are made.

Great. Thank you so much.

The next question comes from the line of Mandaji Eje with Unlu Securities. Please go ahead.

Hi. Thank you for taking my question. I was going to ask more about your revenue growth prospects for the rest of the year. First off, we are seeing a 5% revenue growth and a 5% ARPA growth. So after your price adjustment in July, should we expect a better real ARPA growth performance on the mobile side or should it stay around five or single digit maybe? And you have mentioned about your, within your guidance that, within your potential guidance review that the macro assumptions had effect, but also we are seeing a decline in your corporate revenues, maybe could that be also a reason why you will want to, you will review your revenue guidance for the rest of the year? So could that be a downside risk compared to your low double digit real revenue growth estimate? By the way, Wayne, even I look at your revenue growth of only 5%. There is a significant 10% growth as of first off in your EBITDA number. So could it be due to do better cost management than ARPA growth, sustainable ARPA growth, real ARPA growth? And will this be sustainable also, this EBITDA growth? Thank you very much.

Ece, thank you very much for your question. When we look at our first-half performance, as you know, the inflation trend is going over the expectations. Therefore, the government, as you know, revised the year-end inflation rate in the mid-term program of 2024. This actually affects our revenue growth in-house too. But I would like to say that, yes, inflation rates are going more than expected, but In 2023, we have a big mega project, single one of projects as far as I remember in April and May. Therefore, since these one-off projects are not done this year, this also affects the revenue growth in half too. Our real ARPA growth is going well, but I would like to remind you that we had a tragic earthquake issue, as you know, last year. Therefore, when we look at the base effect in the first quarter, our output and the revenue growth are going very well. But in the second quarter, we see the base effect. Therefore, it's coming from this one. From our perspective, we do not expect any erosion in the EBITDA level because As I mentioned in my speech, when we look at the EBITDA side, the MTR prices are going in favor of our company. Also, the energy electricity prices are going very disciplined and stabilization. Therefore, it really have a positive effect to our cost efficient cost base. And the other one, the significant importance EBITDA effect is, As I said, last year we had a lot of terminal sales and hardware sales in the corporate side. This year, due to the government policies, these such kind of projects are going very low level. Therefore, it affects our EBITDA level very positively in the EBITDA level side. When we look at our ARPU side in the half two, yes, we are currently doing, as you know, inflationary pricing. We can easily apply. In Q2, we couldn't make any price increases. But in July, we had a price increase in the mobile side and the August side in the fixed side. Therefore, we will see the effects of these increases in the remaining period of the 2024. in the remaining part as i would like to repeat that the one of big projects of last year in q2 affects our growth levels right now but we will try to do our best to catch our guidance we would like to be clear to mention or to declare a certain amount regarding the, especially in the growth side. We will wait and see the results of Q3. Most probably we will be giving, how can I say, exact picture or a good understanding at the end of Q3 regarding the growth rate.

Thank you very much for your answers. Could you also please speak about the Talk about the growth trend in your subscriber base as of July and August.

In July and August, our churn rates are going down. Since the competition has some aggressive campaigns, but when we look at, we give some answer to response to their aggressive campaigns in August and July. When we look at the July and August levels, we have net ads in both months. Therefore, the subscriber base is going very well, especially in the July and August also.

Thank you very much.

The next question comes from the Land of Think, Mark Devendra with HSBC. Please go ahead.

Yes, hi. Thanks. I have a first question actually on the revenue growth still. I mean, it is slightly confusing to me that you are having regular price increases. So year-on-year basis, your prices in second quarter should have been higher than last year. which is also reflected in your ARPU growth. But overall revenue growth is still flat quarter on quarter. I understand your point about 1Q23 being a weak quarter because of earthquake. But second quarter 23 would also have been from a pricing perspective much lower than where we are right now. So just break it down for me what really drove the revenues down. Your ARPU grew 6%. your prepaid, postpaid subscriber base grew, but your prepaid subscriber base seems to have been lower. Is that the reason why you have some pressure on the revenues? And I understand the part about your equipment side, excluding that, if you could discuss. And then with that, I was also wondering about if you could give us a base, you know, like the restated number for third quarter 23 and fourth quarter 23 quarterly revenue base because otherwise it becomes quite a difficult guesswork trying to guess historical number as well as then forecasting, you know, next quarters. Thank you.

Yes, thank you very much for your question. First of all, I would like to say that when you look at the results of the other companies, for example, you will see the growth rates less than the inflation rate. Currently, we have, for example, flat. We are not under the inflation rate. Therefore, we are keeping inflation. at least we make the pricing or we grant development in the growth side at the amount of the inflation. But as you said that the hardware sales is very important because in the same period, if we do not have one of projects, for example, in 2023, our growth rate would be around 4 or 5% right now. Since the economic tight monetary policies are tightening the market, if you do not make this such kind of one of projects or one of hardware sales in 2024, it really affects our growth rate. As I said, if you do not have one of projects, for example, in 2023, in April and May, our growth rate would be around 4% level. Therefore, it seems that we are making a growth rate over the inflation rate. But I would like to remind you that our figures are not negative. At least we keep on the increase in the inflation rate. On the other hand, as you know, we have some tight economical policies right now regarding or minimizing the consumption in Turkey. This also affects the consumer handset market. deals right now. Also, when we compare the sales of handsets, for example, with last year, we have a significant decrease this year. This also affects our growth rate, but our main business for the recurred income, we do not have any problem regarding the inflationary pricing mechanism. Regarding the Q3, for Q3 23 and Q4 23 inflated base revenue, we cannot say anything as we do not know the monthly inflation rates for the upcoming months. Therefore, unfortunately, I cannot give any color about this issue. Sorry for this inconvenience.

Okay. And just going back on the pricing part, I understand that you raised prices in July. Before that, when was the previous price hike done? And how frequently do you actually undertake the price hikes?

In February, we had a price increase right now, and we did it in the mobile side in July, and the fixed side, we made a price increase in the August side. We will chase the competition and the economical environment in the coming period. If we can do, we would like to, if need, if it is necessary, we may need a price increase in the coming period, but we do not have any plan about this issue right now. We are looking at the conditions because sometimes the competitors can be a little bit aggressive campaigns about this issue. We do not want to erode our base.

We are definitely closely following the market and then we are closely following the competition if they have a very huge campaign discount. So we are just hesitant to do the price increases, but we are just very closely following the market. If there is a need, that's the reason that we are calling this a rationalization of the market. It's true that we are trying to rationalize the market, and then we are trying to figure out the perfect time and perfect amount if there's a need for the increase in the tariffs. That makes sense.

And if you could just inform which is the operator being most aggressive right now?

I think it would not be useful to provide such kind of a brand name in this call.

Okay.

We have two competitors, you know.

In Turkey there are three operators, one of them is Turkcell and the other is two. So it's not going to be that hard for you to guess.

Not sure. Okay. Thank you.

The next question comes from the line of Moe Steele with Schroders. Please go ahead.

Hello. Can you hear me?

Yeah.

Thank you. Yeah. Loud and clear.

Hello. Thanks for taking my question and for the presentation today. My question is about the U-bond that you already mentioned on this call. I think that the nuisance window for Turkish corporates in the dollar market have been wide open throughout the year. So I was trying to understand what's keeping you from coming to market thus far

and what are the parameters that you're looking at yes thank you very much for your question till now we have adequate cash reserves to fulfill our bond redemption as i mentioned in my speech we have around 1.5 1.5 billion us dollar equivalent cash in our hands but as i say that we have some developments in the sector like 5G and the other big investment side. Maybe we are looking for the alternatives to encompass potential solutions such as launching a fresh bond, sukuk offering or securing a bank loan. By closely monitoring economic condition and interest rates, we can proceed with issuance and euro bonds, for example, at an opportune time. We are looking at the windows.

Okay. Well, I hope the new window stays open while you consider all these aspects. Can you walk me a bit more through your 5G spending plans, both in terms of auctions and regular capex associated with the rollout? Say, for example, all Inc. what kind of ballpark capex to sales are we talking about for 2025 and 2026?

Okay, thank you very much. We are just closely following the regulatory bodies and we are just talking to them as well. And lately we have lots of meetings with the Minister of Transport as well. And then we are expecting that to 2025 there is going to be a tender and auction for the 5G frequency. And 2026 we are going to rely on 5G. That's what we heard from the government entities. And there's no official timeline yet, but this is just a ballpark timeline in 2025 and 2026. However, the recent statistics indicate that the 5G transition will be at some time in 2026. And also, let me tell you, we are just still doing some investment on the 4.5G, but when we are doing this 4.5G investment, we are just closely getting the equipment, which is the latest equipment, which is compatible with the 5G as well. So we are just doing an extra investment for our base stations and towers, the fiberization of our towers. So as Chuck said, we are determined to establish our 5G infrastructure with local and national technologies as much as possible, and we will continue our ongoing efforts to support the development of these technologies. But to say the truth, the auction, the amount, and the frequency auction terms are not set yet, so it's not going to be that clear for us right now, because 2025, when we discuss the auction terms, We can tell you much more information because it's going to be totally different. But we are expecting that it's going to be a full frequency auction, both 700 megahertz and 3.5 gigahertz. And then the amount that they're going to ask for it is going to be different. But we are talking to them and we are doing lots of meetings with them to convince them to make it as much profitable and much better for the future investment. Because if you pay too much money for the frequencies, you're going to have less money for doing the infrastructure investment. So we are just talking to them and hopefully we are going to be fine on that respect. And then government is going to understand that the 5G infrastructure investment is much more valuable than getting a lump sum of money for the frequency.

Okay, thank you. And Remind me of one thing. You still own all the towers, or would you have to pay for the lease amendments and upgrades to external tower operators?

No. In Turkcell, we own all of our towers, and then we don't need to do any lease. We're just going to put extra equipment, 5G equipment, and then we're just going to dig more fiber connections to our towers, but all towers belong to us.

Yes, but we are providing lease services to our competitors.

Yeah. Also, we just share our towers with our competitors as well, though, and we are making money out of those tower leases.

Okay. Thank you.

The next question comes from the line of Campos Gustavo with Jefferies.

Please go ahead.

Hello. Thank you very much for taking my questions. Just very briefly on my side, Would you mind providing a quick review on your mobile contract structure in terms of tenor, CPI adjustments that you may make? How's the situation looking as of this moment? That would be my first question. Thank you.

All of our contracts are 12-month period. And then we just on the CPI adjustments like around 73% year-on-year. And then lately we did some increments and then a change in the price and tariffs. Last, one month ago, last July, 25% increase on the tariffs. So overall we are closely following the CPI and year-on-year it is 73%.

Okay, so my understanding is that this is the 25% adjustment is a bit below the inflation rate during the year. Is that correct?

No, not at all, because we just did it at a similar kind of increase in February. So this is the second time that we are increasing the tariffs. So if you look at the year-on-year, so it is going to be, we did it one in February,

and then the uh in the one in uh in july so if you look at the year-on-year increase around 90 oh okay i see thank you thank you for the clarification so they're they're 12 months in tenor and then uh maybe like semi-annually you may you could make like a tariff adjustment yeah

You have that option. This is our postpaid customers. But we have a strategy to move back to all of our prepaid customers to postpaid. So we have a huge margin and then the percentage rate of our customers are postpaid customers. So because competition is a little bit different than prepaid, but postpaid customers are 12 months.

Understood. 12 months.

12 months for the post base. Great. Thank you. That is very clear. Appreciate it. And then secondly, the base case is for you to refinance the euro bond. Would that be correct?

Sorry, I could not catch the question again, please.

Refinance euro bond. Yeah, we can hear you. Yeah. Refinancing the euro bond, you asked, right?

Yes, if that's your base case, coming back to the market and issuing again.

As I mentioned in the previous question, we are thinking to be in the market for the refinancing of the Eurobonds, which will expire in October 2025. Most probably you will be seeing us in the market in the near future.

Okay, great. Thank you. And the last question for me, thanks a lot again. Where do you see net leverage going? Because you might increase some of your investments in 5G, as you mentioned. Would that provide, you know, make some pressure in your capital structure or is that not something that will budge your credit profile?

Our net leverage rate is around 0.66. When you compare it with the market level, it's under the market level. Therefore, as I said, we would have some maybe reissues and we would have some cash from Ukraine sales will come to our treasury. Therefore, regarding the leverage rate, we are keeping our leverage rate in these levels because making operations in Turkey is a little bit how can I say, makes us or force us to be careful about this issue. We are confident about this issue. Most probably at the end of year we will be keeping these levels, but in next year we will be looking at our financing, how can I say, financing structure and the money, the cash that will come from the Ukraine sales will also help us to keep the leverage levels. in the, how can I say, logical levels.

OK, perfect. Thanks a lot. I appreciate it.

You're welcome.

The next question comes from the line of with Barclays. Please go ahead.

Yes, hello. Thank you very much for the presentation and for all the colors that you're providing. I just have one quick question regarding 5G. Do you already understand how it's going to be rolled out in terms of do you target to first roll it out for corporate clients or it will be immediately rolled to retail clients as well? Yeah, thank you.

So if you look at around the world, there are different models and it depends on how the auction is going to happen. But if you think about it, as you may know, that the 4G is the last technology that's built for the human being 5g is built for the things and the uh for the industry so we are expecting that the the digitalization of the industry is going to be very a huge market for the 5g technologies but currently it's going to be more most probably hybrid version of uh in turkey that's what we are expecting so we are just going to provide the 5g services for the car customers as well as the industry and then there are lots of big industry firms and we are to keep on talking about like private LTE, private 4G networks, most probably they're going to have the similar kind of structure in when the 5G happens. But it's going to be, the easy answer is just going to be a hybrid model. Both of them, yeah.

Okay, thank you very much. And also one quick follow-up on the cash position. You mentioned it's 1.5 billion. That does not include Ukraine process, right?

Yes, you're right.

Okay, thank you. You're welcome.

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.

Thank you very much for listening to us and it's a great pleasure. It was a very strong quarter. And then we just grew close to the inflation rate. And then with the inflation, we are just following our management. And then the cost structure, our EBITDA is growing very nicely. And our net cash is also growing nicely. So overall, we are expecting the third quarter and fourth quarter is going to be much, much better. And then hopefully in the future, we are going to see the results and we're going to share our results. But overall, what I want to say is in Turkey nowadays, as you may know, that because of the inflationary pricing and inflationary regulations, the every month inflation ratios are so important. So that's the reason that even the government entities are changing their mid-year plans. So that's the reason that we are closely following the future trends and we will inform you when the time is needed.

Thank you for your participation.

Thank you very much for your valuable time. Have a good evening.