Turkcell Iletisim Hizmetleri A S Q3 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your Chorus Call operator. Welcome, and thank you for joining Turkcell's conference call and live webcast to present and discuss Turkcell's Third Quarter 2021 Financial Results Conference Call. At this time, I would like to turn the conference over to Mr. Ali Serdar Yagci, Investor Relations and Corporate Finance Director. Mr. Yagci, you may now proceed.

Thank you, Konstantinos. Hello, everyone. Welcome to Turkcell's third quarter financial and operational results call. Today's speakers are our CEO, Mr. Murat Erkan; and our CFO, Mr. Osman Yilmaz. They will be delivering a brief presentation, and afterwards, will be taking your questions. Before we start, I'd like to kindly remind you to review the last page of this presentation for our safe harbor statement. Now I hand over to Mr. Erkan.

Thank you, Serdar. Good morning, and good afternoon to all. Welcome to our presentation, and thank you for joining us. In the third quarter, we recorded 22.3% revenue growth, and our EBITDA reached TRY4 billion for the first time, implying an EBITDA margin of 43.1%. Growing 18% year-on-year, we recorded a net income of TRY1.4 billion, an all-time high quarterly figure. Net income settled above TRY1 billion run rate per quarter. Our customer-centric strategy, diversified business model, and focus on mobile and fixed network quality are the key factors of the sustainable performance, which was further supported by increased mobility in this quarter. This strategy has enabled us to continue outstanding growth in total subscribers by 1.2 million, marking the record of the past 14 years. In the first nine months of the year, we gained a total of 2.5 million subscribers, further strengthening the subscriber base for the upcoming terms. The ARPU trend remained robust at 12% for mobile and 10% for residential fiber. Lastly, this quarter, the revenue share of digital channels in consumer sales rose to 17%, increasing five percentage points year-on-year. We have also distributed the last installment of the 2021 dividend on October 27. In consideration of these solid results, we further increased our full-year guidance, which I will celebrate on my last slide. Next slide. Here, we see the operational performance of the third quarter. In all three fronts, mobile, fixed broadband, and IPTV, we delivered a strong net add performance. On the mobile front, we gained a net 464,000 postpaid and 643,000 prepaid subscribers. This outstanding performance was achieved through our customer-focused offer and innovative service portfolio, and also supported by increased mobility, thanks to vaccination. High net add performance in prepaid subscribers is due to the visit of Turks living abroad after the lifting of restrictions in international travel. The average monthly mobile churn was at 1.9%, well below that of last year, and we believe around 2% market churn is a healthy level in this market. Blended mobile ARPU rose to TRY58, a 12% increase, thanks to a higher postpaid subscriber base, upsell to higher tariffs, price adjustments, and increased data and digital users. Also, with our AI-based analytical capabilities, we observed strong upsell levels, with the incremental upsell of postpaid customers pacing 2x of the same quarter last year. In the fixed broadband segment, the prevailing demand for high-speed connections during the back-to-school period led to a net gain of 60,000 fiber subscribers with our high-speed fiber Internet offers. Our rollout plans are on track as we exceeded 400,000 new home passes in the first nine months. This quarter, we also welcomed our 205th city in our fiber network. We are pleased to register a further 51,000 net additions to our IPTV subscribers, exceeding 1 million customers this quarter. IPTV penetration within the residential fiber subscriber base reached 63% accordingly. Residential fiber ARPU rose to TRY79, an increase of 10%. We also recorded a 13% annual fiber subscriber growth, which should be taken into consideration as we aim to manage a delicate balance between ARPU growth and net addition. Next, let's update on data usage and 4.5G subscription trends. Average mobile data usage rose 12% year-on-year to 13.7 gigabytes per user. This rise in data consumption was primarily due to higher content consumption, boosted by seasonality and lifted restrictions. Out of the 34 million subscribers signed up for 4.5G services, around 70% have 4.5G compatible smartphones, indicating growth potential for upcoming quarters and implying further room for growth in data consumption. Overall, smartphone penetration is at 84%, with 92% of these units being 4.5G compatible. Moving on to Page 6, we are reaping the benefits of our careful plan to provide best-in-class services, which is evidenced by the outstanding net add figures this quarter. Our well-invested high-quality network and strong infrastructure has been once again confirmed in the GSA report. With its risk spectrum assets and carefully planned modern infrastructure, Turkcell is able to provide speed of up to 1.6 gigabits per second, which even exceeds the 5G speed provided by certain operators. Turkcell ranks among the world's top three operators and has the fastest 4.5G network infrastructure in Europe. Our long-time invested customer-centric approach enables Turkcell to provide services that address customers' exact needs, making us a winner at the European Customer Centricity Awards. At Turkcell, we have realized over 100 projects that have touched the hearts of our customers. Additionally, our key strengths, including data-driven personalized offers and extensive distribution channels, both physical and digital, stand as core factors influencing customer decision-making. With all of the above, customers have continued to recommend Turkcell over the competition this quarter, even extending the gap with the second-best. Next, let's zoom into digital services and solutions. The stand-alone revenue from digital services and solutions continued its strong growth at 31% year-on-year, reaching TRY435 million. The paid user base reached 3.6 million, up 0.9 million from last year. We are delighted to have reached another remarkable milestone for our digital services as the IPTV user base exceeded 1 million in September. TV+ has continued to increase its share in the TV market, reaching just above 13% in Q2, and it is the only TV platform that has steadily increased its share for the past 12 quarters. Content and product quality have enabled us to increase prices, thereby ensuring the product enjoys rising retention levels. With its robust infrastructure, BiP, our instant messaging platform, provides seamless communication and has reached 27 million three-month active users this quarter, tripling from the same quarter last year. A quarter of the active user base is abroad, with leading countries being highly populated regions like Nigeria, Indonesia, and Bangladesh. Our continuous effort in our digital services is aimed at improving the user experience of the application, and we achieve this by responding to our customer needs. For instance, features in BiP this quarter include status posting and video group calls with up to 15 people. On fizy, our digital music services, we have added over 120 podcast series. Next slide. Next is the digital business services. We continue to lead and navigate the digital journey of corporates in Turkey. This has resulted in a revenue of TRY499 million from digital business services this quarter. Of the total revenues, 75% are service revenue, which rose by 28% year-on-year. From the service revenues, we have seen continued strong demand, particularly in data center and cloud business, fiber security services, and IoT. We signed 575 new contracts with a total contract value of TRY221 million. Overall, the backlog from the system integration projects signed to date is at TRY832 million, which will contribute to the top line in the upcoming quarters. This quarter, we continued our product launch in cybersecurity and cloud services. Watch Card is an economic and flexible fiber solution that operates in both physical and virtual systems, being the first in the country. Object Storage is a cloud-based solution aimed at further supporting companies' vision of keeping corporate data in Turkey. Next slide. Lastly, in our taxing focus. Tax Services revenue rose to TRY281 million, reflecting a 27% year-on-year growth. Paycell has seen another remarkable quarter, reaching 6 million active users and registering a 30% rise year-on-year. The revenue grew by 53% year-on-year, mainly driven by traction in the Pay Later product. We are starting to monetize post solutions, which include both virtual and physical Android post services. We have installed 1,700 devices for local SMEs and launched our version of a post solution with 900 e-commerce merchants, including Turkcell channels. This quarter, finance sales revenue rose 28% year-on-year, supported by higher interest rates and growth from our emerging insurance business. Finance sales continue to support the technological needs of a broad range of customers, including individuals, SMEs, and corporates. To date, we have reached 11 million customers and hold a 24% market share in consumer loans below TRY5,000. A key strength of our finance service is the ability to provide the right limit to the right customer based on Turkcell's data. Recently, we launched a new credit model based on machine learning. Initial results indicate higher approval rates and limits without negatively impacting the historically low cost of risk levels. Next slide. Let's examine our performance in the international segment, which now generates 10% of group revenues. In this quarter, international revenue grew by 39% year-on-year, thanks to the expanding subscriber base in all three regions, higher mobile data consumption, and the positive impact of currency movement. Organic growth, excluding currency impact, was at 18%. Our Ukraine business has continued its strong operational performance this quarter, reaching 8.9 million mobile subscribers with a 14% rise year-on-year. Revenue growth in local currency terms was 24% yearly, exceeding the 12% growth of the last four quarters. This business has seen a 4.6 percentage point EBITDA margin improvement year-on-year due to limited interconnection costs and well-controlled operational expenses. In local currency terms, Belarus revenue declined 2%, mainly due to lower handset sales, which positively affected the EBITDA margin. In Belarus, we are focusing on digital subscriptions. In the third quarter, one out of five new customers opted for life via digital service channels. Our subsidiary in the Turkish Republic of Northern Cyprus recorded strong 24% growth with rising voice revenues and data usage due to increased mobility after the recovery of education services and tourism in the region. I would like to conclude my presentation by sharing our new guidance for the full year. Taking into account our outstanding nine-month performance and expectations for the remainder of the year, we have revised our guidance outlook once again. Accordingly, we have raised our revenue growth guidance to around 20%. Our nominal EBITDA expectation is around TRY14.5 billion, and we expect to register an operational CapEx over sales ratio of around 21%. Lastly, as you remember, we held our last Capital Market Day back in November 2019. Since then, the COVID-19 pandemic has significantly impacted our industry and the way we do business. This necessity has prompted us to revisit our plans and targets in relation to the core business and strategic focus areas. We plan to organize a Capital Market Day after the announcement of the full-year 2021 results, where we aim to reveal our revised three-year business plan and targets. We will make the necessary announcements regarding the details of the event in due time. I will now leave the floor to our CFO, Osman, for the financial discussion.

Thank you, Murat. Now let's take a closer look at our Q3 financials. In Q3, we recorded a TRY9.4 billion top line and 22% year-on-year growth, thanks to subscriber base expansion, higher data and digital service revenues, coupled with contributions from international operations and equipment sales. The first nine-month growth exceeded 21%. Our EBITDA reached TRY4 billion, reflecting a 19% increase. Net income was solid at TRY1.4 billion, marking 18% yearly growth, mainly driven by solid top line growth. The bottom line has consistently settled above TRY1 billion with the contribution of disciplined financial risk management. We are pleased with our solid performance, which exceeded our expectations. Next slide. Now some details on revenue and EBITDA development. This quarter, with contributions from all segments, we generated TRY1.7 billion incremental revenue, with TRY1 billion derived from Turkcell Turkey. This was possible with a larger subscriber base, ARPU growth, and upsell efforts with price adjustments. TRY258 million from international subsidiaries supported the top line primarily due to robust subscriber and ARPU performance of Ukrainian operations along with the positive impact of currency movements. Our Tech segment had a TRY76 million positive impact. Paycell and Financell have supported this with annual growth of 53% and 28%, respectively. The other segment contribution of TRY334 million was primarily driven by increased equipment sales. This quarter, our EBITDA margin was at 43%. The main factors behind the 1.3 percentage points margin contraction year-on-year were as follows: First, a decrease of 0.6 percentage points from gross margin impacted by our energy business's increased cost of goods sold and rising radio costs due to higher energy prices, and secondly, a decrease of 0.7 percentage points from S&M expenses, mainly due to increased selling expenses resulting from record-high net adds during the quarter. Next slide. Now, a few words on our balance sheet and leverage. Our total debt increased by TRY700 million this quarter, mainly due to currency movements. A cash position of around $1.4 billion equivalent, which is primarily in FX, covers our debt service until 2025. We maintained our leverage below 1x in this quarter despite the second installment of the last year's dividend amounting to TRY862 million. Excluding the financing business, this was at 0.8x, the same level as the previous quarter. We generated just over TRY1 billion of free cash flow, thanks to strong operational performance, as well as relatively lower CapEx in this quarter. Next slide. Now I will go into the management of foreign currency risk. We continue to hold the majority of our cash in hard currencies as a natural hedging tool. With hedging instruments in place, the share of FX debt declined from 83% to 51% as of the end of this quarter. Our hedge contracts are cash flow hedges and cover the full maturity of related FX liabilities. We were in a long net FX position of $122 million at the end of Q3, and we continue to target a neutral to long FX position going forward. Next slide. Now let's take a closer look at our FinTech companies' performance, starting with our financing business, Financell. As we communicated earlier, in line with our expectations, the negative trend in financing's portfolio ended in Q2, and growth has gradually resumed. Revenues rose by 28% year-on-year due to higher average interest rates on the portfolio versus last year and growing insurance revenue. We expect to maintain the loan portfolio at around TRY2 billion by year-end. EBITDA rose by 24% to around TRY120 million with a margin of 73%. The 2.3 percentage points margin contraction is due to base effects from debt receivables in Q3 2020. As a result of strong collection performance and improvements in the customer portfolio, the cost of risk has been declining since the start of this year. The cost of risk has remained nearly unchanged at 0.3% for this quarter. Next slide. Lastly, for our payments business, Paycell. In line with global trends, Paycell users continue their payment habits in the post-pandemic period, which is reflected in Paycell's solid operational and financial performance. Paycell continued to see increased recognition due to rising active customer counts and merchant numbers in Q3. In fact, Paycell's three-month active users reached 6 million, and the number of merchants hit 14,000. The most popular product on our platform, Pay Later, delivered another strong performance in Q3. Pay Later volume rose by 84% to TRY455 million year-on-year. The transaction volume of the Paycell card has increased sixfold compared to the same period last year, reaching TRY657 million. As you may remember, at the beginning of the year, we launched Android phones for our corporate customers. By focusing on virtual POS, we have shifted Turkcell payment channels to Paycell's virtual cost, providing a revenue channel for Paycell and cost savings for Turkcell. Thanks to our increased focus on this business, POS transaction volume reached TRY475 million this quarter. Overall, in Q3, Paycell revenues increased by 53% to TRY190 million, with 55% being non-group revenues. The EBITDA margin was at 46%, affected by increased human capital investments and selling and marketing expenditures. With its unique product range and disruptive nature, Paycell has already established itself among regional FinTech leaders. As disclosed earlier, we are seeking growth capital to scale this business further in Turkey and then globally. This concludes our presentation. We are now ready to take your questions. Thank you very much.

The first question is from the line of Jonathan Kennedy-Good with JPMorgan. Please go ahead.

Good evening, and thanks for the opportunity to ask questions. My first question is on Paycell. Could you give us a sense of what the total payment value across the platform is at the moment and the growth rates there? And then just wanted to understand why bill payments have declined during the quarter. That's the first question. Second question, I wanted to understand how your pricing strategy is evolving at the moment given inflation rates and whether you can push mobile ARPU growth at higher rates than what you've seen at the moment or whether that's hoping for too much in the new year.

Okay, Jonathan, thank you very much. For the first question regarding the total payment, it is around TRY500 million. It fluctuates around TRY500 million. And the decline in bill payments is because it has shifted from physical channels to digital channels. So that's why you might see fluctuations; we see growth, but when it moves to the digital channel, we can capture it. For the pricing strategy, obviously, to grow the business, there are two options at your disposal. One of them is growing the subscriber base, and the other is increasing ARPU. So we intend to push both of them. This has been our strategy for the last 2 to 2.5 years. While inflation is increasing faster than expected, our initial plan was for it not to grow that much. We are adapting based on pricing. However, as you know, we have contracts with customers for 12 months. It will take some time to align prices with real inflation, but we aim to match inflationary pricing as soon as possible. I would like to emphasize our focus on customer growth because if we had to choose one, I would prefer growth in customers. If we secure customer acquisition, particularly with our other businesses like Paycell and Financell, we can easily increase their ARPU levels in the near term. So that's why we would like to continue. Regarding the growth rate, it is around 85% for payments in Paycell, which is in the range of 84%.

The next question is from the line of Ivan Kim, Xtellus Capital. Please go ahead.

Three questions from my side, actually, if I may. Firstly, on the 5G auction, when do you expect the auction to take place? What spectrum do you expect to be sold? Is it C-band and 700 megahertz? Second, regarding capital intensity in 2022, how should we think about it compared to 2021? Do you think capital intensity will increase in 2022 relative to 2021? And lastly, regarding Paycell's take rate, it's been pretty high, around 3% in 2020 and now 3.5%. If we look at the third quarter, where do we expect the take rate to evolve as the business scales?

Thank you very much, Ian. First of all, regarding the 5G roadmap auction, there is no official timeline yet from the regulator. There have been several announcements from the ministry, but we have to wait for an official announcement. 5G is a vital technology, and we are keen to facilitate its digitalization of the industry, contributing to the economic development of our country. However, we believe there are some issues that need to be addressed for a healthy launch. First is the fiber connection of base stations. Currently, the fiber connectivity to base stations is less than 40% for all operators, and even the incumbent operator has less than 50%. Therefore, without fiber reaching these base stations, it is difficult to provide proper 5G services. Secondly, we have not reached the desired localization rate in the buildup and development of 5G network equipment. We think the localization rate can only reach around 20% by 2023, which could be even lower for the core network and base station levels. Therefore, we believe there are risks associated with a full-fledged local 5G network transition. Regarding license costs or CapEx side, the auction structure is not clear yet, which limits our ability to estimate possible CapEx payments. The difference between 4.5G and 5G is that 4.5G represents a significant leap in speed over 3G for individual users. Thus, we need time to assess how this will evolve by the end of this year. For our total CapEx plan in 2022 and allocation, we have not finalized our budget planning for next year, and we will provide guidance when we announce our full-year results. However, I don't expect a significant increase in CapEx, possibly even a slight decrease, as we have spent more CapEx earlier than anticipated this year, yielding positive results due to FX fluctuations. So, next year, we will likely invest a little more in fixed line on the fiber side, while spending a little less on mobile. Overall, we aim to maintain similar levels of CapEx. Sorry for the third question; could you repeat it? It was regarding Paycell, but I couldn't catch it.

Yes, of course. On Paycell, just a quick question on its take rate. If we take Paycell’s revenue and divide it by the total payment volume, it's relatively high compared to international standards at around 3% in 2020. If you look at the third quarter of 2021, it's 3.5%. Where do you expect that to settle as the business scales?

Actually, Paycell started its business as a unit within the group and has now become a standalone company. We are expanding Paycell revenues outside the group, and more than half of the revenues now come from external sources. The revenue intensity over total turnover is influenced by two key factors: the first is group revenues, and the second, which is more important, is our lending business, the Pay Later option. Many prepayment companies do not have this Pay Later business, which is a relatively more profitable segment of the FinTech business. There are international examples of FinTech companies that focus solely on payment processing and remittances. Paycell combines both aspects: high volume turnover as well as greater profitability supported by our strong penetration in the Paycell network. Looking ahead, our primary aim is to penetrate the overall Turkish market. We intend to double our customer base within a couple of years, then expand regionally and globally. This is why we are seeking growth capital for this business, but we will not jeopardize our healthy balance sheet while pursuing this growth.

The next question is from the line of Ondrej Cabejsek, UBS. Please go ahead.

Hello and thank you for the presentation. I have one follow-up and three questions, if I may. The follow-up pertains to the fiber connectivity on towers that you mentioned as a prerequisite for running the 5G auction properly. Can you elaborate on that? Does that imply that you would be advocating for some kind of large-scale regulated fiber access needed across the market to connect base stations across operators for 5G to really be successful? Is this what you meant? Secondly, you mentioned 400,000 homes passed in terms of fiber year-to-date. Can you provide insight into the take-up rate in that footprint so far? Is it comprised of greenfield customers, or are you taking market share from competitors? My third question pertains to your CapEx guidance; you have indicated a lower guidance, which I understand isn't a huge difference, but considering the lira has depreciated again in the fourth quarter, what has changed in your plans? Lastly, on Ukrainian operations, I understand that one of your peers is looking to do something with their towers in Ukraine. Are you also exploring that avenue? Thank you.

Thank you very much, Ondrej. Regarding fiber connectivity, in Turkey, for all operators, the fiber connectivity to base stations is currently around less than 40%. Even the incumbent operator has less than 50%. In this case, without fiber reaching the base stations, it is difficult to provide adequate 5G services. On the other hand, the number of existing base stations across all operators is around 100,000, and when we transition to 5G, this figure may need to increase tenfold. Therefore, fiber connectivity is mandatory. About the 400,000 homes that we passed this year, we are witnessing increased demand for fiber, and our take-up rate for this segment is over 20% in the first year, aiming for 45%. We are ahead of our business case. This includes both existing greenfield customers and customers from the competition, accounting for over 50% market share in the areas we reach. Regarding the lower CapEx guidance, there are two important actions in this area. First, we made advance payments to suppliers, reducing the cost of equipment, which helped us manage CapEx effectively. Secondly, we decided to invest earlier than expected, which means that our investments were front-loaded. As a result, we are able to maintain our CapEx guidance level despite the dramatic increase in FX costs. As for Ukraine, I do not have specifics on what others are doing within the tower space and do not wish to comment without clear knowledge.

Thank you very much. If I may, just a quick follow-up regarding connectivity. You mentioned that less than 50% of towers have fiber connections, which is a prerequisite for the 5G auctions to succeed. What would you propose as a solution? What needs to be resolved for 5G auctions to make sense at this point?

We have publicly announced our proposal for a common infrastructure company focused on fiber. If each operator invests heavily in fiber, it won't benefit the country's economy or services. Instead, we should be competing in the services space, not infrastructure. Investment directed towards shared fiber infrastructure would allow us to enhance our digital services capabilities.

Understood. What do you think needs to transpire for a common infrastructure company to become a reality in Turkey? What are your expectations?

I believe there is a vision to implement a common infrastructure company in Turkey, supported by the ministry. The intention for this development is visible. However, uncertainties in telecom concessions can sometimes hinder advancements. It is evident that reasonable stakeholders understand the necessity for a common fiber infrastructure.

The next question is from the line of Nora Nagy with Erste Group. Please go ahead.

Good evening, thank you for the presentation. I have one question. Do you plan to undertake fixed asset revaluation under new legislation to use that as a deferred tax income release, similar to what we have seen in the case of Turk Telekom?

Let's have Osman address this question.

Actually, we disclosed the same implication in our Q2 financial statement. There are further opportunities on our balance sheet that we are evaluating further, and we will make a decision regarding this in our year-end financials.

The next question is a follow-up from Ondrej Cabejsek with UBS. Please go ahead.

Thank you. Just one follow-up, if I may, in relation to the headlines we saw today regarding your search for monetizing the FinTech business. Is it still the case that you prefer a strategic partner who can help you grow this business from a minority perspective? Or have your preferences changed in comparison to the previous couple of quarters when you suggested that this would be the favored option?

Thank you. First of all, discussions about monetization or strategic partnerships have pertained to various segments, including Superonline, our tower business, as well as Paycell and FinTech. We see this as a good opportunity, and we plan to offer a minority stake in the partner we are seeking, ideally someone who contributes to Paycell's growth trajectory—not just providing growth capital, but also sharing expertise, expansion plans, and ensuring that the business evolves to be potential IPO-ready in the next couple of years.

The next question is from Kayahan Demirak with AK Investment. Please go ahead.

Hi, thank you very much for the presentation. On the Paycell side, do you have any valuation range for the stake sale? My second question relates to your first comments about inflationary pricing and the current inflationary environment. Do you expect ARPU growth to converge to inflation levels in the near future? Lastly, regarding Ukrainian operations, they have performed well in recent quarters. Can you provide clarity on that? Have you seen strong subscriber additions due to market share gains or overall market growth?

Thank you. First of all, Paycell stands as one of our most significant assets. Not only Paycell but we also possess other valuable assets. We have disclosed the financial and operational metrics of the company each quarter in our presentations. We have been transparent with the market. As we know, FinTech and payment companies globally enjoy high valuation multiples, due to their disruptive nature and exceptional growth profiles. While many of these companies often exhibit negative EBITDA, which results in valuations being primarily based on revenue, Paycell has a positive EBITDA margin with a strong growth profile. Its diversified business model includes group and non-group revenue, as well as individual users and merchants. In terms of revenue growth and EBITDA margin, Paycell represents a unique business. The market can make logical estimations of Paycell’s valuation based on global revenue and EBITDA multiples. Regarding inflation in pricing and ARPU growth: As I mentioned, we aim to keep ARPU aligned with inflation increases. Our initial plan did not foresee such a rapid increase in inflation. To adapt our pricing in response to inflation, we need to provide time to evolve our contracts, which usually last for 12 months. Our expectation is that we will eventually reach an acceptable ARPU level as we continue while acquiring customers—2.5 million customers since the start of the year. When we acquire these customers, we imbue them into our system, emphasizing upsell opportunities across products like Paycell, digital services, and TV, leading to ARPU improvement in due time. Regarding operations in Ukraine, our focus there has been a commitment for the past few years. We invested in areas where we previously held weaker networks, enabling us to capture more customers. Reflecting on our subscriber growth in Ukraine, our year-over-year increase is 14%, and our ARPU growth is 9%. This performance outstrips that of our competition, so we intend to maintain gaining market share in terms of both revenue and customers in the future.

Thank you. Additionally, could you project realistic subscriber additions in Ukraine for next year?

To be realistic, in the telecom technology and service arenas, customer acquisition remains essential. Our strategy to gain subscribers will persist. We aim to see another increase of 1 million next year. This year has been exceptional in terms of subscriber growth, which is crucial for future revenues since subscriber acquisition costs are incurred presently, while real revenue is realized in subsequent years. Our strategy remains consistent, and we are executing well operationally, so we hope to maintain this level in the future. Thank you very much. I appreciate it.

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.

First of all, I would like to thank everyone for joining our conference call. I hope to see you in our Capital Market Days at the start of next year. Thank you very much. Have a good day.

This concludes our call. Thank you for joining. Have a nice day or evening. Thank you.