Release Date: September 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Turkcell Iletisim Hizmetleri AS (IST:TCELL, Financial) achieved a strong top line of TRY35 billion, reflecting a disciplined management approach and diversified business portfolio.
- The company delivered an EBITDA of TRY15 billion with a solid 42.6% EBITDA margin, driven by rational pricing strategies and upsell campaigns.
- Turkcell Iletisim Hizmetleri AS (IST:TCELL) saw a significant increase in postpaid subscribers, with 477,000 net additions in the second quarter and a 1.8 million net addition year-on-year.
- Residential fiber ARPU grew by 84% year-on-year, supported by a record low churn rate of 1.2%, the lowest in 18 years.
- The company maintained a strong cash position of TRY51 billion and a manageable net debt leverage ratio of 0.6 times, with sufficient cash reserves to cover upcoming debt obligations.
Negative Points
- Macroeconomic pressures, including high inflation, negatively impacted equipment revenues for both consumer and corporate segments.
- The company faced aggressive pricing actions from competitors, leading to increased mobile number portability market activity.
- There was a net loss of 232,000 prepaid subscribers due to the widespread use of alternative data providers.
- Revenue growth was suppressed by a decline in large projects, including hardware sales within the digital business services segment.
- Higher funding costs and wage increases put pressure on profitability, despite efforts to mitigate these through strategic financial risk management.
Q & A Highlights
Highlights of Turkcell Iletisim Hizmetleri AS (IST:TCELL) Q2 2024 Earnings Call
Q: What will drive a reacceleration of the top line growth in the second part of the year? Do you have an update on what you intend to do with the proceeds from the Ukrainian asset sale?
A: Our revenues remained flat at TRY34.9 billion in Q2 due to the absence of a positive base impact from last year's earthquake and suppressed equipment sales. The sale of Ukraine assets is expected to be completed within this year, with proceeds potentially used for significant investments like the 5G tender or other large-scale business initiatives.
Q: Can you elaborate on your revenue growth prospects for the rest of the year and the impact of price adjustments on ARPU growth?
A: Inflation trends are higher than expected, affecting revenue growth. Despite this, real ARPU growth is strong, and price adjustments in July and August will positively impact the remaining period of 2024. The absence of large projects from last year also affects growth rates.
Q: What drove the flat revenue growth despite regular price increases?
A: The flat revenue growth is due to fewer large budget projects and reduced equipment sales. Despite this, our recurrent income remains strong, and we are maintaining growth rates in line with inflation.
Q: What are your plans for the Eurobond issuance and 5G spending?
A: We have adequate cash reserves for bond redemption and are exploring alternatives like fresh bond offerings or bank loans. We expect a 5G tender in 2025 and rollout in 2026, with investments focused on infrastructure and local technologies.
Q: How will 5G be rolled out, and what is your current cash position?
A: The 5G rollout will likely be a hybrid model targeting both corporate and retail clients. Our current cash position is TRY1.5 billion, excluding proceeds from the Ukraine sale.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
