Ladies and gentlemen, thank you for standing by. I'm Vasilios, your Chorus call operator. Welcome and thank you for joining the Turkcell's Conference Call and Live Webcast to present and discuss the Turkcell’s First Quarter 2025 Financial Results. All participants will be in a listen-only mode and the conference has been recorded. The presentation will be followed by question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed.

Thank you, Vasilios. Hello, everyone. Welcome to Turkcell's 2025 first quarter earnings call. Today, our CEO, Ali Taha Koc, and CFO, Kamil Kalyon, will be delivering a brief presentation covering operations 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 very much, Ozlem. Good afternoon, everyone. And thank you for being with us today. Before I start my presentation, I would like to take a moment to celebrate a milestone that makes 2025 meaningful for us. This year marks the 25th anniversary of Turkcell's IPO, where we proudly remain the first and only dual-listed company. Looking back on these 25 years, we are proud and grateful to have grown alongside with you, our valued shareholders, creating lasting value together. Moving on to highlights of the first quarter, our top-line reached TRY48 billion, delivering an outstanding double-digit year-on-year growth of 12.7%. On the profitability side, we delivered an EBITDA of TRY21 billion, up 19% year-on-year. This resulted in a robust margin of 43.7%, marking the highest first quarter margin in the last decade. Last but not least, we concluded the quarter with a solid net profit of TRY3.1 billion, another compelling indicator of our strong financial performance. We gained 153,000 postpaid and 30,000 fiber customers in the first quarter, which is clear evidence of the success of our value-focused strategy. This quarter, our strategic areas also delivered impressive results. Techfin segment revenues surged by 31%, while data center and cloud revenues grew by an outstanding 48%, reflecting the strong momentum in both areas. Next page, please. Now take a closer look at our operational performance. On the mobile side, our focus on value generation continued to deliver strong results. We added 153,000 postpaid subscribers quarter-on-quarter and 1.6 million year-on-year. As a result, our postpaid share reached an all-time high of 76% up from 72% a year ago. Given the ongoing competitive landscape, our mobile churn rate remained low at 1.7%. We delivered double-digit ARPU growth of 15.9% this quarter, driven by our rational pricing strategy, effective upselling, an expanded…

Thank you very much, Ali Taha. Let's take a deeper dive into our financial performance. Before we dive into the financial overview, I'd like to clarify our new segmentation structure effective from this quarter onwards. We made two changes. After the successful sale of our premium assets, revenues from international subsidiaries now represents a smaller share in our group financials. Therefore, we have reclassified the international segment under the other segment. Additionally, the consumer business of Turkcell Satış, is now classified under Turkcell Turkiye together with its enterprise sales. These changes reflect our internal management approach to reviewing the performance of Turkcell Satış as a whole. These adjustments have no impact on our operating profit, profit for the year or cash flow statements. Next slide please. Group revenues grew by 13%, adding TRY5 billion this quarter. Our main driver is Turkcell Turkiye, which contributed TRY4.5 billion. Turkcell Turkiye achieved 12% revenue growth. This is driven by postpaid subscriber growth, ARPU increase supported by rational pricing, effective upsell efforts and driving data center and cloud revenues. This performance stands as a testament to our sustained growth momentum. We have consistently delivered real ARPU growth for 9 consecutive quarters. Our Techfin segment generated TRY667 million, primarily driven by Paycell's robust performance. Focused on profitability and dedicated cost controls, we listed EBITDA margin by [43.7%] (ph), reaffirming our leadership in the Turkish telecom market. The margin improved, thanks to lower cost of goods sold, energy expenses, funding costs and interconnection expenses as a share of revenue. Next slide please. Now CapEx management. In the first quarter of 2025, our CapEx to sales ratio is at 20.2%. Our investments have largely been concentrated in strategic areas. By making these investments in advance, we pave the way to unlock value from our assets and shape…

Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Singh Madhvendra with HSBC. Please go ahead.

Hi. Thanks a lot for taking my question. My first question is on your revenue performance. 12.7% for the group I was wondering whether given the -- you have been increasing prices, I think, around 15% in Q1. So if you could discuss how the price increase actually is spread? And are you seeing any uses impact that your revenue growth in real terms is not more than 15%. So if you could explain the gap between the price hikes you'd really do and the new growth. And also, your competitor also reported numbers, and they actually had, I think, close to 17%, 18% growth during the quarter. So was there any roll off higher or intense competition in the market as well? So that's the first question. And second question is on your -- any update on the 5G process from your side? Is there any visibility on the cost [ADC] (ph). Thank you.

Okay. Thank you very much for the question. For the first question, in the first quarter, as you said, we achieved a 13% yield revenue growth and a strong 12% growth in the same period last year. Therefore, when you look at our performance, looking at the past several years, except for few quarters, we have consistently delivered higher revenue growth, resulting in a larger revenue base. This success is coming from the diverse and high quality services we offer our customers. We are doing our homework regarding the [upsell] (ph), we are very successful about the [upsell] (ph). In addition, we have a strong -- subscriber base still continue to grow, therefore this or all these things, bringing the successful for the revenue performance from our perspective. And our goal is to share this volume regularly with our investors in the coming future. And as you say, there might be -- in the mobile market, we observed that competition intensified starting in May 2024 continued throughout the end of the year. We have not absorbed any normalization so far in 2025 either but as we mentioned previously, we are not playing only for the subscriber base play. We do not want to confess from our revenue growth as ARPU increases and ARPU growth. Therefore, as the market leader, we are observing the developments in the market regarding this. And we are, for example, how can I say, we are forcing or we are implementing our, for example aggressive campaigns when we need it. We are not making it continuously within the year.

And for the second question, let me tell you that there is no official time-line announced by the regulatory yet regarding the commercial launch of 5G. However, recent statements suggest that the spectrum auction is expected to take place within this year. With 5G service anticipated to go live in 2026. While detailed information on spectrum pricing and licensing condition is still pending, we expect a balanced regulatory approach that supports both innovation, as well as sustainable investments. As Turkcell, we are committed to building our 5G infrastructure by leveraging local and national technologies wherever possible. We continue to support the development of domestic technology ecosystem through our ongoing R&D collaboration and partnerships. We are already providing live 5G coverage at The Grand National Assembly of Turkey for major football stadiums and Istanbul Airport, delivering speeds exceeding 1 gigabit per second to our customers. This deployment showcased our readiness and as well as leadership in advanced connectivity and technology. Our robust 4.5G infrastructure along with our fiber backbone and virtualized core network position us well for efficient 5G rollout. So we are expecting the official time line from the government and regulatory bodies.

Thank you.

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

Hi, hello, good evening. Thank you very much for the presentation and congrats on results. I have just one question. It seems that in the first quarter, you beat your guidance in terms of revenue growth also for EBITDA margins. So I was just wondering how you're seeing the rest of the year play out? Do you plan to maybe update your guidance accordingly? And also, if you could please remind us what was the CPI assumption for your guidance for this year? Thank you.

Thank you very much for the question. As you mentioned, we had a strong start to the year. Therefore, the first quarter's results are very consistent with our guidance side. But in order to say it -- would be a little bit hard, how can I say early to talk about any revised in the guidance side because there are a lot of significant macroeconomic conditions internally and domestically and internationally. Therefore, we are looking forward to these developments. Currently, we are sticking on our guidance if there would be a need for the device for the -- in the future. Maybe we can make it revised, but currently, we are sticking on the guidance which we declared starting of this year. And in our CPI expectation in our guidance was -- for the year end side, we were estimating 30.5% CPI rate. But for example, we revised our estimations to 35% nowadays for the CPI side.

That's year-end or average?

Year-end. While that is our budget side, the expectation of the Turkish Central Bank expectations around 24% to 27% CPI by taking into consideration, we set our expectations at 30%, but currency export current developments, we revised it to [35%] (ph) CPI for year-end.

Yeah, thank you very much.

The next question comes from the line of Mandaci Ece with Unlu Securities. Please go ahead.

Hi. Thank you very much for the presentation. Could you provide some more insight on your subscriber numbers? I understand that there was some more competition, and you focus mainly on increasing your postpaid subscribers on the mobile side. Will this strategy continue during the year? And can we see a better quarterly subscriber additions going forward on a combined basis? And secondly, we also start to see a big jump in your fiber numbers, the lines you are leasing from other operator. So what could be the potential growth in that area, which also can contribute to your own fiber customer or subscriber base? Thank you.

Thank very much for those questions. In this quarter, our postpaid net additions decreased compared to Q1 2024 totaling 153,000. The main reason for this decline appears to be the decrease in network, mainly due to ongoing aggressive campaigns by competitors. On the prepaid segment, we registered a net loss due to reduced usage from the tourists, the widespread adoption of electronic SIM, eSIM technology and the growing competitiveness of discounted postpaid offers. Although minimum wage increase into Q1 2025, the absence of a minimum wage hike in the second half of 2024 combined with ongoing economic challenges also put pressure on prepaid subscribers consumption power. However, the net subscriber loss was lower compared to same quarter last year, supported by a decline in interest line closures. Our fixed subscriber base reached 3.3 million as of Q1 2015, with 25,000 net additions in the quarter. As a result, our dedicated investments, we recorded a net 30,000 Turkcell fiber subscriber additions. However, we experienced some customer loss on the resale segment due to price adjustments in-line with our focus on profitability. In addition, the increase in our churn driven by factors such as a rise in contract exploration following our policy shift from 24 months to 12 months' commitment also negatively impacted our fixed subscribers net addition. In line with our ARPU subscribers balanced growth strategy, we didn't make some of the customer retention campaigns in Q1 2025 that we had made in Q1 2024. For the competitors' fiber optic cables, actually, we need to make it clear that this is not an infrastructure sharing. Infrastructure sharing first in agreements where the owner of the telecom network facilities allows another operator to access and use those facilities based on a commercial agreement between both parties. We haven't signed such agreement with a competitor. This is a purely reselling operation, similar to what we do with DSL and Turkcell cable. We continue our focus and investment in fiber, our Turkcell fiber. However, in areas where we don't have our own fiber infrastructure. We plan to sell competitors' fiber instead of competitors' DSL.

Thank you very much. Could you also please comment on the potential growth in your subscriber base in the quarters ahead? If you can provide some more detail on that going forward?

We are aligned with our planning, and then we are expecting better performance in the following quarters. especially, we already had a huge investment on the fiber domain, extending our agreement with BOTAS. As you may know that there was a tender about it and then our backbone is well established with the BOTAS. And then starting from 15 years back, we had this agreement with BOTAS in 81 different cities we can reach with the BOTAS are natural gas companies pipes. So in the next date those pipes, we have our own fiber infrastructure and it consists of our main backbone. So with this infrastructure that we extend this deal for the next 15 years, we are going to invest more and more in the fiber domain. And we believe in the fiber connectivity, especially for 5G and better service to our customers.

[Operator Instructions] The next question is a follow-up question from the line of Singh, Madhvendra with HSBC. Please go ahead.

Yes, hi. Thanks for taking my question again. This question is on your data center CapEx plan. So looking at the general expectations, is it fair to assume you plan to spend around TRY6 billion to TRY7 billion on data centers this year? And then the follow-up question to that would be whether -- what is your overall data center ambition and whether this CapEx amount is how significant it is in achieving the overall objectives there? Because in dollar terms, it doesn't look like it's a huge amount.

Yes. To ensure that Turkiye's data remains within the Turkiye borders, we continue to lead the data center market, and we are committed to increasing our investment in both data centers as well as the cloud services. The data center market is currently very dynamic, we anticipate that hyperscaler cloud providers will invest in Turkiye and which will significantly expand the market. Additionally, we expect even faster growth driven by the AI transformation which will provide an additional boost to already existing growth. In regards to global perspective, the current installed capacity 55 gigawatt is expected quadruple to 220 gigawatts by 2030. So there is a huge ambition plans all around the world about the data centers. There is no market study done by an independent research company for data center businesses in Turkiye. But according to latest International Data Corporation's forecast for 2024, the cloud businesses, Infrastructure as a Service, Platform-as-a-Software, Software as a Service in Turkiye a total market size of around $1.7 billion, which is expected to continue growing, large corporate companies in the finance, especially health care and as well as the banking sectors are significant potential customers for our DC business, as well as the cloud services due to the Turkish regulations that require that data to be stored within the country and within the boundaries of the country. On the other hand, Turkiye has a fast-growing startup ecosystem as you may know, that attracts investments, particularly showing significant development in the gaming and fintech sectors. Also, it's going to require huge data center business Therefore, our country is very attractive, especially for hyperscalers. And we are planning to make this the regional center for the data, and we are going to make Turkcell and Turkiye the regional data center hub all around this region.

And in first quarter, it seems the data center investment seems a little bit high. Yes, you're right, 24% of CapEx is seen a spot for the data center side. But for year-end estimation, it will be reduced to 13%, and we still spent significant amount of money for the, how can I say, renovation and modernization of fiber and the mobile infrastructure.

The next question comes from the line of Demirtas, Cemal with Ata Invest. Please go ahead.

Thank you for the presentation. My question is about the income statement, the effective tax side. You see an increase in deferred tax expense, is it specific to this quarter? Or are we going to see the trend for the rest of the year? Thank you.

Cemal, thank you very much for the question. Yes, after the -- you know there are different applications, especially coming from the inflationary accounting. The inflationary accounting in the local side is a little bit different, and the inflation accounting principles in the IFRS side is a little bit different. There are some differences. And these differences affecting our deferred tax liability or deferred tax revenue significantly. This quarter, we are seeing a high deferred tax expense in our financial income statement. We will be looking for the next quarters. I am not expecting such an important or significant tax effect in the coming period, but it depends on the difference. Unfortunately, we cannot also foresee the effect of these differences between two principles.

Okay. Thank you. And one other question is about the TOGG side, which is reported under equity method. We see a loss in this quarter and last year also there was both. In case of the capital increase, will you just be in that case, in case of any capital increase needed in TOGG project?

Thank you, Cemal. Let me answer this question. Well, the financing of this investment is planned to be made by equity, borrowings by the company, a very significant incentive package and cash flows of the company shareholders' commitment is restricted with EUR500 million capital, which corresponded to EUR115 million for Turkcell, as the main share of one of the shareholders. As of the end of 2024, we made all capital contributions of EUR114.5 million. If needed, we can evaluate a capital increase with our Board of Directors, taken into account the prevailing conditions. Every industry goes through business cycles and the automobile sector has been in a down cycle for some time, mainly due to the impact of macroeconomic conditions on consumer's consumption power. TOGG being a young company founded in 2018 may also require some time before it can deliver sustainable net profits. We see our investment in TOGG, not just as an investment in automotive, but as a broader move in e-mobility ecosystem. Cars are becoming smarter. A new mobile ecosystem is emerging around vehicles, all the connectivity is there, in-car infotainment is there have evolved significantly and connectivity has become one of the key topic in automotive industry with the smart cars and autonomous driving especially within the rise of autonomous and same autonomous vehicles. Therefore, this investment presents several opportunities for Turkcell, including the integration of smart living solutions into the e-mobility or mobility ecosystem and offering end-to-end mobile services. In this context, I can say that, we have integrated Paycell, for example, innovative payment solutions to TOGG. And our digital music platform, fizy, our TV+ app, so you can watch TV in any TOGG right now. Given the industry trends and the alignment with Turkcell capabilities, we believe that this EV initiative has the potential to create value for our group, for Turkiye, for all of us, both through performance of TOGG itself and synergies we can unlock together.

Thank you. And one last question about the latest, the volatility in the currencies by closing of the quarter. we see your net FX position. But could you tell us more about how you manage the volatilities, if any, going forward, how resilient you are? And in terms of profitability at the growth prospect for Turkcell where are we at this moment because we are growing a bit better than regular expectations, but I remember, [indiscernible] first came to Turkcell, you were just even thinking about doubling the company at some point. I just want to ask your opinion right now. I don't need like a concrete answer, but in terms of where we are heading about Turkcell where we are now. Thank you.

Thank you very much, Cemal. As you know, we have a very strong balance sheet, and we are doing our homework regarding balance sheet management very best and properly. We are trying to keep our discipline, especially not for example, we are not only focusing the revenue growth. But as you know, we are doing this cost optimization and cost management issue very well. And due to this fact, we have a very good EBITDA margins than compared with the competence. Therefore, we are not only focusing on the growth side. And below EBITDA level, we have a very strong balance sheet, as you know, and we are doing our whole work successfully. We have FX short position in TRY76 million, as you mentioned in Q1. This is very important from our perspective, and we are using the limited hedging portfolios or hedging instruments very properly right now. Therefore, they do not see high or significant FX losses, for example, due to our strong position, and we will be keeping it until the end of 2025. As you know, we have a very successful reissuance of Eurobond. And I can easily say that it's a very successful reissuance because if we do not do -- if we did not realize these reissuance in the January side. For example, our interest rates at around 7.45% and 7.65% for the 7-year maturity for the Eurobond side. For example, if we did not -- this issuance, for example, at that date, today, we will be talking very, very high interest rates. This signal of balance sheet, the success of the balance sheet management of the company. Therefore, we are ready for the volatility of the FX side because we have a very strong FX position right now. Yes, we have FX denominated debt in our balance sheet, but we are hedging some in our balance sheet, and we are keeping around 80% of our cash in FX denominator side. Therefore, these deviations would not affect us very significantly we will be -- for example, we are very successful in the EBITDA level, and we are also successful in the net income level, most probably in 2025, we will be keeping this performance until the end of the year. we will wait and see the 5G tender is very important from our perspective, but we have enough money, enough cash in our hand, and we will wait and see the developments both in the macro-economical environment and the Turkish-economical environment developments on our sector.

And besides – but we are just securing and just improving our infrastructure of both fiber and the mobile. Besides that, a strategic move, we are just investing heavily on the data center business. As you may know, the data center business globally is going to be coming like $1 trillion businesses in the near future and especially with the cloud businesses, we are expecting that this – we are currently laying the groundwork of this future of Turkcell. So we believe in the data center business, we believe in the cloud business. So we are expecting that which all this infrastructure we’re going to expect higher growth rates, and we’re going to have a bigger growth in the near future.

Thank you.

Thank you very 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. See you next quarter. Bye.

Thank you for joining us.

Have a very good weekend. Thank you very much.

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