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 2024 financial results. At this time, I would like to turn the conference over to Ms. Özdem Yardım, Investor Relations and Corporate Finance Director. Ms. Yardım, you may now proceed.

Thank you, Konstantinos. Hello, everyone. Welcome to Turkcells Third Quarter 2024 earnings call. 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 quarter marks my first full year at Turkcell. I'm honored to be a part of this journey. while hitting some major milestones along the way. In September, we completed the divestment of our Ukraine assets, creating value for our shareholders. We also opened our very first solar energy field, a big step forward in our sustainability efforts. Recently, I was elected to the board of GSMA. This is not only a personal honor, but also an opportunity to represent Truxas globally and help shape the future of our industry. I remain committed to growing our businesses and leading Turkey's digital transformation with critical innovations and industry firsts that will position us for long-term success. After a quarterly pause, we are back on growth path in the third quarter. Our top line increased by 7%, reaching 40.2 billion Turkish Liras. This growth was primarily driven by Turkcell Turkey's strong ARPU group performance and solid subscriber additions. with further support from our Techfin segment. With a clear focus on profitability, our EBITDA rose 10% to 17.8 billion Turkish Liras, delivering a robust EBITDA margin of 44.2%. Our approach to acquiring high-value postpaid and fiber customers resulted in 322,000 net additions. We reported a net income of 14.3 billion TL, which includes 3 billion TL profit from operations, along with proceeds from the sale of our Ukraine assets. Next slide, please. Let's take a look at our operational performance. On the mobile front, we have faced aggressive pricing in the market since May. We made a 25% price adjustment in July to support a more rational market environment. Despite this, extended competitive campaigns have driven up MMP activity across the market, with market value rising 47% quarter over quarter. We have also responded to some of our competitors' pricing campaigns, resulting in net additions. Focusing on value-generating customers, we remain committed to the postpaid segment, adding 515,000 new postpaid subscribers in the third quarter. Over the past year, our postpaid base grew by 1.9 million, pushing the postpaid customer share to 74%, a four-point increase year-on-year. On the other hand, the prepaid customer base declined by 266,000, primarily due to the broader adoption of alternative data solutions, which negatively impacted tourist demand. Thanks to steady price adjustments and upsell efforts, along with slowing CPI, mobile ARPU increased by 6.9% year-on-year. We expect to see real growth in Q4. However, due to market aggressiveness and lifecycle closures, we saw a churn rate of 2.2%. Next page, please. The fixed broadband market stayed rational in Q3, which gave us room to make a price adjustment in August. Following the incumbent's action, we stayed focused on fiber subscribers, and thanks to strong demand for our high-speed, end-to-end fiber service, we had 47,000 net additions. With our strategic approach, we now have 82% of our residential fiber customers on 12-month contracts, which has helped in terms of ARPU growth during this inflationary period. Residential fiber ARPU grew by 15% year on year with our price adjustments. We saw a slight increase in churn, mainly due to price increases and the shift to 12-month contracts. Meanwhile, our take-up rate rose by 2.2 points year-on-year as we focused on adding fiber subscribers over expanding HomePass coverage. Another key trend is the rise in demand for higher-speed packages. The share of packages of 100 megabits and above in our total residential fiber portfolio has increased by 10 percentage points year-on-year. To introduce more of our customers to SuperOnline fiber quality, we offered a complimentary 1,000 megabit per second upgrade for a month, which they highly appreciated. Next page, please. Let's consider our strategy focus areas, starting with digital services and solutions. In line with our goal of right positioning, We have retained our focus on profitability and ensuring that our digital service portfolio supports ARPU growth. As a result, our standalone paid users reached 5 million in the third quarter. Revenue from standalone digital services and solutions grew by 4% year-on-year, primarily driven by our pricing actions. This quarter marked a new milestone for us. as our IPTV users rose 7% year-on-year, making us the second largest player in the IPTV market. Moving on to our next focus area, digital business services generated 2.9 billion TL of revenue this quarter. Recurring service revenues rose 18% year-on-year. Macroeconomic headwinds continue to pressure demand in hardware sales, resulting in a contraction from the same period of last year. Our high potential area of data center and cloud, we maintain a strong growth rate of 43%, underlining both market demand and our price and strength as the market leader. Next slide, please. The last strategic focus area I want to talk about is Techfin. In the third quarter, PayCell revenues grew by 20%, primarily driven by increased commissions and transaction volumes from PayCell card and POS solutions. We saw a 24% rise in the transaction volume for PayLater, thanks to more people using it in app stores, with eligibility for QR payments, and an increase in active users. The transaction size in POS solutions nearly doubled. thanks to better market penetration and integrations with leading e-commerce platforms. Meanwhile, pay sales EBITDA increased by 9.2% year-on-year. When it comes to meeting our customers' technological needs, finance sales revenues rose by a solid 38%. This was due to a larger loan portfolio and higher average interest rates. the higher loan interest of our loan portfolio began to compensate for higher funding costs, raising the net interest margin to 4.1%. Despite the challenging macroeconomic conditions, our cost of risk is reasonable at 2.8%. Next slide, please. I want to add my part by sharing our guidance for 2024. When we outlined our plan in May, we penciled in inflation peaking mid-year and then easing. However, monthly inflation since June has exceeded expectations, driving higher annual inflation in the second half. Following the medium-term program update in August, we raised our year-end CPI forecast. In light of this, we are adjusting our revenue growth guidance for 2024 to around 7%. Solely due to the increased CPI outlook, our unadjusted financials remain on track. In fact, had inflation aligned with initial expectations, we would have achieved low double-digit growth. As for our EBITDA margin and CAPEX intensity, we are maintaining our guidance. Now, I hand over to our CFO, Mr. Kamil Kalyan, for the financials of this quarter.