Turkcell Iletisim Hizmetleri AS

Ladies and gentlemen, thank you for standing by. I am Gary, 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 2026 financial results. All participants will be in listen-only 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 Ms. Ozlem Yardim, Investor Relations and Corporate Finance Director. Ms. Yardim, you may now proceed.

Thank you, Deli. Good evening, everyone, and welcome to Truxel's 2026 Second Quarter Earnings Call. Before we begin, I would like to kindly remind you to review our Safe Harbor Statement, which is available at the end of our presentation. Our earnings release and today's presentation are available on our Investor Relations website. Our CEO, Mr. Ali Taha Koc, will begin with an overview of our business performance, followed by our CFO, Mr. Kamil Kalyon, who will take you through our financial results. After the presentation, we will open the line for your questions. It's now my pleasure to hand over to our CEO, Mr. Ali Taha Koc.

Thank you very much, Ozlem. Good evening, everyone. Welcome to Turkcell's second quarter 2026 results call. Today I will take you through our operational and strategic performance for the quarter. After my remarks, Kamil will cover the financial results in more detail, and then we will be happy to take your questions. The key message this quarter is clear. We continue to deliver real growth in a challenging environment. Macro conditions remain demanding, with inflation still above 30%. We keep on delivering real revenue growth for the 8th consecutive quarter, supported by disciplined pricing, continued postpaid additions, and improved churn. And our strategic growth areas, digital business services, fixed wireless access , data centers, TV, and Techwind took another step forward. Throughout all these slides, you will see one consistent story. Disciplined Value Focused Execution. Let's begin with the numbers. Group revenue reached 71.8 billion Turkish Liras up 2.5% year on year. I want to underline this. With inflation at 32%, this is genuine real growth, driven by consistent pricing actions and healthy commercial momentum across our businesses. EBITDA was 30 billion Turkish Liras with a margin of 41.8% and net income was 5.2 billion Turkish Liras. Our profitability continues to reflect the strength of our disciplined operations and balanced capital allocation approach. On the operational side, momentum was strong across the board. We added 284,000 postpaid subscribers in a single quarter. Turkcell Fiber Business added 31,000 net subscribers. Mobile ARPU was realized at 448 Turkish Liras, while residential fiber ARPU reached 570 Turkish Liras. TechWin revenue was up 7% to 4.1 billion Turkish Liras. Digital Business Services revenue grew 33% to 8.7 billion Turkish Liras. Data Center and Cloud Revenue increased 10% to 1.6 billion, and Superbox, our fixed WXS technology, added 64,000 subscribers. These businesses are becoming core engines of Turkcell's growth and reinforce our strategy of building a more diversified and resilient business model. Now let me go deeper into each business, starting with mobile business. Our mobile business delivered an outstanding quarter. We crossed the 40 million mobile subscriber milestone for the first time in Turkcell's history. This is a testament to the strength of our network, our brand, and our commercial execution. Our post-paid mails reached 32.5 million subscribers, driven by 284,000 net additions in the quarter. and 2.4 million over the last 12 months. Prepaid performance remained broadly stable this quarter, as we successfully continued the transition of our mix toward postpaid, which now accounts for 81% of our mobile base. This mixed shift is significant, as postpaid customers deliver higher lifetime value through lower churn and multi-service adaption. Churn tells the same compelling story. Monthly average churn improved to 1.6%, down significantly from a year ago. Strong net additions combined with declining churn prove one thing. Customers are choosing truck sales with long-term loyalty. On pricing, mobile ARPA excluding M2M grew 27% year-on-year. Given the predominantly contractual nature of our post-paid pay, pricing actions are gradually reflected in ARPU as contracts renew. Our strategy remains consistent. We take disciplined pricing actions to sustain real revenue growth supported by our strong brand and superior service quality. One of the most dynamic drivers of our connectivity business today is fixed wireless access. Let me now turn to our FWA performance. Supervox is our fixed wireless access FWA offering, which we view as the next wave of growth in home internet. We are the undisputed market leader with a 74% share of FWA, fixed wireless access market. After a soft start at 2025, Growth has accelerated for four consecutive quarters. We added 64,000 subscribers this quarter alone, expanding our total superbox base to 818,000. The strong momentum we are building here is particularly encouraging. Looking ahead, 5G will act as a catalyst. Superbox, our FWA offering, delivers fast, reliable, plug-and-play home internet today. And 5G will elevate that experience to an entirely new level, further accelerating market demand. Superbox enables us to capture broadband demand quickly and efficiently while working hand-in-hand with our fiber strategy. And fiber remains the backbone of that strategy. Let's move to fixed broadband. Our fixed broadband strategy is straightforward. Grow on our own fiber, price with discipline, and deliver a premium service and experience. Sucell fiber reached 2.6 million subscribers with 31,000 net additions in the quarter and 138,000 over the last 12 months. We continue to increase the share of customers through our own fiber infrastructure, reaching 80% of 3 percentage points year-on-year. The increased effects are a sharp focus on expanding the highest value part of our fiber business. The strength of our fiber business goes beyond scale, reflecting the quality of our subscriber base. 88% of our residential fiber subscribers are on 12-month contracts, while monthly churn improved to 1.1%. Together, these metrics provide exceptional revenue visibility and reinforce the resilience of our fiber business. On pricing, residential fiber output grew 37% year-on-year, outpacing the inflation rate. Combined with continuous improvements in churn, these results demonstrate the strength of our fiber proposition and the value customers place on our service. At the same time, we continue to expand in Turkey with strong discipline. We passed 194,000 new homes in this quarter, bringing total home passes to 6.7 million across 31 different cities, with a take-up rate of 41%. Take-up rate is one of the metrics we track closely, as it demonstrates that we are expanding where demand is strongest. Connectivity also opens the door to our digital customer services, starting with TV Plus. TV Plus now serves 2.7 million subscribers. Subscriber momentum continues to gather pace throughout the year. Net additions increased from 62,000 in the fourth quarter of last year to 106,000 in the first quarter of this year and accelerated further to 123,000 this quarter. Content is the key driver of the TV business. Our strategic partnership with HBO Max launched in November has significantly enriched our content offering and resonated well with customers. As a result, viewing time increased by 14% quarter-on-quarter and 64% year-on-year. TV Plus is about more than just the numbers of subscribers. It strengthens engagement across our ecosystem. Us hosts that actively use TV Plus interact with TruXell more frequently, adopt more of our services, and build deeper, longer-lasting relationships with us. Now let's move to fastest growing part of the group, Digital Business Services. Digital Business Services delivered an outstanding quarter with revenue up 33% year-on-year to 8.7 billion Turkish Liras. This strong performance reflects the depth, scalability, and market strength of the digital infrastructure platform we have built over the years. Today our data center footprint spans four different locations Kocaeli, Ankara, Tekirdağ and İzmir. Following the activation of a new module during the quarter, our active IT capacity reached 54 megawatts. We are now taking this platform to the next level. Construction of hyperscale data center facilities dedicated to Google Clouds Turkey region in Ankara is underway. A partnership of this caliber is a strong endorsement of the quality of our infrastructure and further strengthening Turkcell's position at the center of Turkey's digital transformation. Including our hyperscale data center investments, our total investment amount reached 612 million euros. As of Q2, data center and cloud represent 2.3% of our group revenues. While still a developing revenue stream today, we see this business as one of the Trixia's most promising long-term growth platforms. Growth in system integration was supported by both hardware and services. More importantly, we entered the second half of the year with more than 1,500 new contracts and a system integration backlog of 16 billion TL. This contracted backlog provides exceptional revenue visibility and reinforces our confidence in the sustainability of future growth. Finally, let me turn to our Techcrim businesses, another critical pillar of the Turkcell ecosystem. Our Techcrim businesses contribute 6% of the group revenue this quarter and continue to strengthen the diversity of our earnings base. Paycell delivered another strong quarter, with revenue increasing 22% year-on-year to 2.4 billion TL, pay later transaction volume surged Iletisim Hizmetleri AS, Figen Kilic, Ozlem Gungor, Ali Uysal Together, these customer and merchant capabilities continue to reinforce the scale and the resilience of our payment platform. At Financel, our focus remained firmly on profitability and portfolio quality. This approach resulted in a significant improvement in net interest margin, while increase from 4.5% to 7.8%, while the cost of risk remained well under control at 3.4%. Revenue was 12% lower year-on-year, reflecting our disciplined approach to portfolio management. Finansel continues to lead the customer finance market with a 43% market share by number of loans. Our 16.1 million pre-approved credit customers provide significant potential for future growth. As we close the quarter, one key message stands out. Our core connectivity business continues to perform with resilience, while the businesses we have been investing in are becoming increasingly important drivers of our growth and profitability. We remain committed to executing our strategy with discipline, investing in high return, long-term growth, while continuously enhancing operating margins. Before I conclude, let me briefly touch on our outlook. Since the beginning of the year, the macroeconomic environment has evolved, and we now anticipate the year-end inflation to settle around 28%, compared with our previous assumptions of 23%. Even with this revised inflation assumption, our financial guidance remains unchanged. Finally, I want to express my sincere gratitude to the entire Truxel team, their dedication, and Commitment are behind every achievement we have shared today. With that, I will hand it over to Kamil for a more detailed review of our financial results.

Thank you, Ali Tadej. Let me now take you through our financial results. During the second quarter, inflation proved more persistent than anticipated, with regional geopolitical tensions adding further pressure to the macro outlook. Despite these headwinds, delivering positive real growth clearly underscores the inherent stability of our business model. This performance is a direct result of our strong planned equity, disciplined pricing strategy, and solid commercial momentum across every segment. Simply put, these results give us full confidence in the quality and long-term sustainability of our growth trajectory. Turning to our financial performance in this environment, we generated 71.8 billion TL in revenues, marking an impressive 2.5 year-on-year growth. Suksal Türkiye continued to drive group expansion, delivering 1 billion TL in incremental revenue, with accelerated momentum across the corporate segment played a pivotal role in supporting this performance. On the profitability side, I want to highlight our deliberate strategy around 5G. As the clearest leader at every stage of the 5G transition, we intentionally stepped up our marketing investments this quarter to further solidify customer adoption and translate our 5G-like leadership into long-term commercial value. Even when measured against an exceptionally strong comparable base, we delivered a healthy EBITDA margin of 41.8%, which sits fully in line with our full year expectations. Moving on to net income, I would like to briefly outline the key dynamics shaping our financial performance this quarter. Following the commercial launch of 5G, depreciation of the associated assets commenced this quarter. Roughly half of the year-on-year increase in depreciation is attributable to this 5G license. As expected, the resulting increase in depreciation impacted the bottom line, while marking an important transition as our 5G investments moved into active deployment and monetization. This impact was partially offset by higher monetary gains associated with the capitalization of the 5G license compared with the same period last year. Despite the year-on-year increase in our net debt position, our active treasury management continues to deliver tangible benefits, excluding effects We generated higher financial income while reducing financial expenses with both contributing positively to our bottom line year on year. Moving to our equity-accounted investments, TOGG, in which we are proud to be a founding shareholder, continued to scale its operations during the quarter. As the business matured, The heavy startup losses of its early years have now largely normalized, delivering a more favorable contribution to the group year-on-year. On the tax side, our tax expense was significantly lower year-on-year, supported by the fixed asset revaluation effect and tax incentives tied to our growing data center business, leading to a meaningful improvement in our effective tax rate. Bringing all these factors together, we delivered a strong bottom line performance, translating into an income of 5.2 billion TL. Next, I'd like to walk you through the main drivers behind our net effect loss. Before discussing this quarter's FX impact, let me first emphasize that we continue to manage both FX and interest rate risk proactively with a disciplined approach that balances risk, hedging costs, and financial returns. On the borrowing side, the $1 million U.S. dollar Muraba facility we secured last quarter increased the FX component of our debt portfolio. This exposure is largely balanced by our sizable FX denominated cash and financial assets which provide a natural offset against all our FX liabilities. At the same time, we actively manage these assets under our treasury strategy to optimize returns while maintaining a disciplined approach to FX risk. and other sectors contributing to the FX impact this quarter was our remaining 5G license installments. With two payments still outstanding, these obligations remain subject to FX revaluation. Furthermore, the accelerated pace of TL depreciation compared to previous periods has naturally added to our reported FX expenses. We constantly evaluate alternative hedging strategies. However, under current market dynamics, the cost of fully hedging our FX exposure remains elevated. We believe our current approach strikes an effective balance between managing FX risk and maintaining cost efficiency. Finally, it is essential to evaluate our finance expenses holistically rather than focusing solely on reported FX loss. As part of our proactive liquidity management, we utilize FX swaps to convert hard currency liquidity into TL and deploy the resulting funds into high-yielding money market instruments and deposits. While the cost of these transactions is recognized as FX losses for accounting purposes, The resulting Turkish Lira liquidity generates meaningful interest income, which is recorded separately and therefore is not captured in the FX loss line. Therefore, reported FX loss should not be viewed in isolation as it captures only one component of the broader economic outcome of our treasury strategy. Next slide, please. Turning to our investments, our operational capex to sales ratio stood at 25% in the second quarter, bringing our first half ratio to 23.2%. We allocated the 81% of our operational capex directly to our core business, primarily supporting 5G network rollout and the continuous expansion of our fiber infrastructure. During the quarter, we added 194,000 new fiber homepaces, expanding our total footprint to 6.7 million. Meanwhile, the fiberization rate of our base stations reached 47.5%, further strengthening the quality and the resilience of our integrated network. Beyond our core telecom infrastructure, we continue to expand our renewable energy portfolio. In April, we acquired a 12.1 megawatt solar power plant in Mersin, bringing our active solar generation capacity to 74.4 megawatts. We expect this capacity increase further over the coming quarters as projects currently under the development become operational. We also made further progress in our data center investments. We activated the final module of our Ankara data center and broke ground on the data center infrastructure supporting the Google Cloud region in Turkey. With these investment milestones covered, let me now turn to our balance sheet position. Turning to our balance sheet, our financial position remained strong with cash and cash equivalents reaching 89 billion TL at quarter end. Our cash position remained resilient compared to year end 2025 despite significant planned cash outflows including the first 5G license installment, the annual wireless usage fee and bonus payments. The Muraba financing completed during the period further strengthened our liquidity position and provided additional financial flexibility. We remain focused on proactive liquidity management, balancing efficient funding with the preservation of a strong balance sheet. As anticipated, these planned cash outflows resulted in net debt of 44 billion TL. Importantly, our leverage ratio remains very low at just 0.4 times well within our comfort zone and among the strongest levels in our peer group. Looking ahead, our robust liquidity fully covers all remaining 5G license obligations and debt maturities over the next four years. Next, let's take a closer look at our FX exposures. Finally, let me touch upon our foreign currency risk management. As part of our proactive treasury strategy, we selectively use FX swaps to optimize returns on our cash balances, converting a portion of our hard currency liquidity into Turkish lira to benefit from attractive TL yields. At the same time, we maintained a substantial portion of our cash in hard currencies, providing a natural hedge against our FX liabilities. At quarter end, 60% of our cash was held in hard currencies, while 87% of our financial debt was denominated in hard currencies. At the end of second quarter, we had 4.3 billion USD equivalent of SX denominated financial liabilities balanced by 2.6 billion USD equivalent of SX denominated financial assets and effective hedging portfolio of 1.2 billion USD. The year-on-year increase in FX liabilities primarily reflects our 5G license obligations and related investments, the expansion of our data center capacity, and the botash candle, all directly linked to the execution of our long-term investment strategy. As a result, our net short FX position remained comfortably within our medium term target range of ±1.5 billion USD. With that, I will hand the call back to the operator and we would be happy to take your questions. Thank you very much.

Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by 1 on their telephone. If you wish to remove yourself from the question queue, then you may press star and 2. Please use your handset when asking your question for better quality. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. The first question is from the line of Suzette Liron with Bank of America. Please go ahead.

Hi, good evening, everyone. Good evening, everyone. Thanks for the call and the opportunity to ask questions and congratulations on the results. I have three questions. Sorry about that. The first one is very easy. Just wanted to understand what would be the drivers that would help you reaccelerate growth in the second part of the year so that it's more in line with the guidance you provided. I'm talking about revenue growth. The second question, I would like to understand a little bit better why the margins at pay cell and finance cell are so volatile. So, for example, if I look at the pay cell margins, there was a 5.5% decrease this quarter versus last year. To the opposite, the financial margins increased by almost 20% at once. So I'd like to understand that a little bit better. And then the third question is on the CapEx. We've seen, I think, your key competitor increasing slightly CapEx guidance in light with... Thank you so much.

Thank you very much. I will start from the third question. Yes, we are still confident about to reach our guidance in the CAPEX side, even if there would be, how can I say, effects increases. As you know, coming from the history, we are very disciplined about the CAPEX spending side. Therefore, we will be carefully spending our money and we think that we do not Expect more deviation in the CAFEX guidance site. In the second question, Paysal site For, I think, last two years period in PayCell, we are focusing on the POS solutions, in physical POS solutions and the other side. Therefore, the profitability of these transactions a little bit eroding the PayCell's RTA margin. While we have a very important amount of growth in the PayCell side, But sometimes these post-transactions can be a little bit eroded a bit, but in total we are very happy to see the performance of the PayPal side. Regarding the financial side, due to the economical conditions in Turkey, there are, how can I say, tightening policies, therefore the demand for the terminal or the equipment side is a little bit How can I say? Poor this year. Therefore, this directly affects the financials, the credit lines and activities. But since the cost of financing is reducing in this rate, therefore you can see higher EBITDA margins in the financial side. Therefore, the volatility is coming from this one. But we are still very happy to the Contribution of the Tech Insight into our overall picture.

So for the first part, we are expecting the growth in the second half because currently in the telecom market, the competition is naturalizing and it's becoming a more realistic competition in the market right now compared to mobile number portability if you compare to last year. This year is a little bit better. And we have a dynamic pricing action we put in the first half of the year. So the impact of that price change is going to support our second half growth. And I'm pretty sure that the DBS and FinTech continues to support our growth in the second half of the year.

Thank you so much. That was very clear. Thank you.

The next question is from the line of Mandy Sai with HSBC. Please go ahead.

Hi. Thanks a lot for taking my question. My question is a follow-up on the growth outlook. So, you know, just wondering when do you see the impact of recent price hikes to become, you know, fully visible in the growth and, you know, it goes towards Your guidance of high technology level. So if you could give some color around that, that will be very helpful. And then the second question is on your FWA offering. Very interesting to see the growth in that segment. So if you could help understand, you know, of your current customer base of around 800,000, if I remember correctly, are they all on 4G devices or those devices they have are capable of using 5G as well so do they need to upgrade their device basically to benefit from the 5G condition so that will be you know helpful to understand and in terms of the pricing of FWA you know what kind of discount or If you could talk about the offering itself, what speed customers are getting now and what speed they are likely to get at 5G, if you could give some dynamics around the product, that would be very helpful.

Thank you very much for the question. First of all, the first part, the growth impact. Because of the lag effect of our price change and also the 12-1 contract, so beginning from the end of the Q4, you're going to see the impact and the growth much clearer. For the FWA part, FWA is currently, as you may know, we got the highest frequency band and we had the biggest investment in the 5G. So we have a higher capacity and our 5G offerings are with supporting Wi-Fi 7 as well. So what we are doing right now is we are just offering this product to all of the customers in Turkey who has old-fashioned technologies using like DSL. And then on top of it, it is a very portable and plug-and-play easy-to-use device, so there is a huge appetite from the market They want to buy it. And at the beginning, we just, for our own 4G users, 4G Superbox users, we started to swap them with our 5G devices because currently, 4G, current 5G Superbox only support 4G technology, but we deploy 5G all around the world, all around Turkey. So that's reason in order to utilize that kind of capacity, they need to have a 5G equipment. And If you compare the pricing of our Superbox compared to fiber, Superbox pricing is a little bit above fiber prices, but there is a huge impact of the usability. So it's very easy. You can go and grab that device, and then you can plug and play, and then you can use it very easily.

Did I hear that correctly? The Superbox is more expensive than fiber?

Comparable prices, you know, you can just a little bit, you know, so just they're close because you put some limits on the Superbox tariffs. So it is 250 gigabytes or 500 or 1 terabyte. So depending on the limits that you have, the price can change, but in comparable prices. And that's good. And in terms of any response from competition on that site, have you seen anything? So 74% market share, I think, answer your questions.

Okay, thank you.

The next question is from the line of Gemma. Please go ahead.

Thank you for the presentation and congratulations for good results. My first question is about the strategic perspective. I remember that when you were, you know, appointed as the CEO, In your mind, you were, you know, maybe expecting or you were foreseeing to have 2% of the project size in the future. You have, you know, ambitious targets at that time. And, you know, you are progressing the company every year. But I would like to ask a, you know, strategic perspective question. You are more diverse right now. But you are getting more than the mobile operator. When do you think we will see the other areas like digital platforms, data center, to have the most significant contribution in your revenues? Could we expect any three-year plan that, you know, at least give us a direction, maybe in the following quarters, maybe it's not very clear now, but at least that kind of thing will be across your pollution, get that digital platform more than helping operations. Actually, it would be very, you know, good thing to point out, Because currently, you know, the society is a bit on the rise. In our view, we have difficulty understanding the justification, but we understand that democracy is focusing on the weak article, at least at this moment. I think any clarification on that or, you know, any long-term perspective as you did in the past in data samples, it could be very helpful. Sorry for the long question. And the second one is about the short-term perspective. In your opening release, You mentioned that our poor performance could come in the fourth quarter. And if we assume that in the fourth quarter, are we going to see some performance? Or you mean, you know, it could be in 2027? Thank you. Thank you very much.

Thank you very much for the question. So when I start this role, I have a dream, you know, so I have still that dream, but I'm going to execute it firmly and with a disciplined approach. So what will happen in 2016, Truxel started its journey in the DC provider. It built its first DC in 2016, and then it started the DC business as a collocation provider. So collocation business is very good, profitable, good business, but in order to come up with a dream of becoming another Truxel, you need to add the service business on top of it. So that's the reason that we have a huge agreement with Google Cloud, Thank you very much. The price of each server is getting higher and higher. So on top of it, everyone is looking for the services, cloud services. So that's the reason that we have a huge agreement with the Google Cloud. Currently this year, our revenue of the DCN cloud revenue reached 2.3% of overall revenues. It was 1% or something a couple of quarters back. It went up to 2.3%. But we are constantly improving that percentage and revenue. and we started the construction of our Google Cloud data centers and in 18 months, hopefully we're going to start, in two years, we're going to start selling services. and the service business is going to bring them more revenue. And I'm pretty sure that in five to six years, you're going to see more revenues coming out of that. You know, we are expecting at 2030, 31, 10 to 10, 15% of the revenue is going to come from our data center business. But that is a long-term story. And then also with the AI, I'm pretty sure that the value, this investment value is going to be more recognized because in order to have AI capability, you definitely need a data center. And guess what? Currently we have 54 megawatts of capacity for AI usage. And if anybody can bring their servers or the AI chips, we have the location for them. So that's the reason that I'm very optimistic about the revenue and it's going to come.

Any other questions?

Jamal, can you repeat the second question? Second question, I'm sorry, I forgot that, the second question, Jamal.

About the art pool, art supplies, you know, in your early career, yes, it's a recovery in the art pool, you know, in fourth quarter and onwards. Do you mean, you know, after fourth quarter, in the two times seven, three to seven, or you are going to see it in the fourth quarter? Thank you.

So what we just put the dip in the ARPU levels and then I'm pretty sure that it's going to slowly increase but we are going to see the real impact in 2027.

Yeah but you will get the signals the positive signals because we are investing a lot of things to make our ARPU high starting from this year. Therefore you will be seeing the signals in the third quarter of 2026 Most probably in fourth quarter, but the exact results will be taken in 2027.

and one follow-up related to your backlog from system integration project. You see that 16 billion versus the previous quarter. Should we expect gradual increase in the following quarters or should we expect more significant improvements maybe late 2027 or 2028 on that front? Thank you.

Yes, when you look at our Q1 results and Q2 results, we had very very important significant projects. coming from the governmental bodies and the other side. Therefore, we see the valuable effects of these projects this year. Most probably, they will come because when you start a big project in a company or in the governmental side, there are a lot of followings projects are coming from this project. Therefore, our expectation in 2027, these projects will be continuing in the 2027. Because as we explained previously, the most important or strong muscles of our company, we are not only focusing on the individual side only, we are also very, very strong in the enterprise side in the market. Therefore, that's why Google or the other big companies are choosing us as a partnership. Yes, we have a very good technical expertise, but our sales force regarding this enterprise side is very strong. Therefore, we invested this service line six years ago or seven years ago, but we are now harvesting this investment in these years. And most probably it will continue in the coming years. Thank you. Thank you for your answers.

Good.

The next question is from the line of Yenia Bisorova with Barclays. Please go ahead.

Hello, good evening, and thank you for the presentation. I have just one quick question, and apologies if you covered it in the past, but I wanted to understand better, or maybe you could break down for me the expected payments for the 5G tender. I know there was a payment in Q1 including the VAT, but correct me if I'm wrong, So what was the specifically 5G payment in Q1 and what are the expected payments in the next quarter and what is the timing for that?

Thank you. This is three installments. The first installment also included the VAT. It happened in January of this year. The second installment is going to be in December this year. It's around $400 million. And the third and the last installment is going to be next year. As a reminder, if you would like to ask a question, please press star and 1 on your telephone.

The next question is from the line of Yasin Sarihan with Yapi Credit Ethereum. Please go ahead.

Thank you so much for the presentation. I have two questions. So do you expect any changes to the credit limits? As far as I know, there is a limit to installments of devices. And this is so important for the 5G penetration and also for the finance stuff. And my second question is that have you started seeing the contribution from the 5G on ARP growth? And my last question is related to data centers. So how much data centers generate in the second part of this year? And if you have any, you know, could you share us details about the data center or any other, I mean, segment for digital business services? Thank you so much.

Thank you very much for the question. The first part is very important for us, especially with the 5G penetration. It's around 35% right now of all of our users, 30 to 35% of them has the 5G phones. But in order to support that, we are supporting the local production. Also, late last year, we had an agreement with Samsung to produce in Turkey, which is going to be included. That production is going to be an A-series phone, and it's going to be below 20,000 Turkish dirhams. But with the latest developments, especially on the RAM crisis and then also supply chain issues, we are seeing that the production of the phones are getting more expensive. So that's the reason that we are doing lots of lobbying in order to increase that. Iletisim Hizmetleri AS, Figen Kilic, Ozlem Yardim, Kadri Ozdal, Ali Uysal I'm pretty sure that soon, because we are not going to be able to find any phone which is smaller than $20,000, so we cannot do any installments. But on top of it, you can do three installments. Besides 12,000 installments, you can do three installments. But overall, I'm pretty sure that for the penetration, that limit needs to be changed. The second thing that the 5G, we can see that the usage amount of the usage and then the data usage is increased. And on top of it, the 5G is going to improve our ARPA slowly. And I'm pretty sure that the user who are using 5G, They have higher ARPUs and when we move them all to our customers from 4G to 5G with the 5G capable phones, I'm pretty sure that our ARPU is going to have a positive impact on that.

Regarding the EBITDA margins of the DC operation, we are not expecting any erosion in our EBITDA margins when we look at our business plans. We see that the EBITDA margins that will come from this EC operation will not erode our EBITDA margins.

But with the 5G ARPU levels, we are bringing a new concept called 5FWA fixed wireless access. So we are double using our 5G spectrum for the cell phones as well as the home internet. So we are going to see a growth and a revenue growth from the FWA part as well.

Thank you so much. 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 and see you in a third o'clock to call. Thank you very much for spending time.

Thank you for going now.

Bye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant evening.