Core Viewpoint - Turkcell's stock has appreciated by 20% since the last analysis, outperforming the S&P 500, primarily due to improved inflation news, but concerns about overvaluation have led to a downgrade from hold to sell [3][5][18] Company Performance - Turkcell is expected to report Q2 2024 revenue of $1.13 billion, reflecting an 18% sequential increase and double-digit year-over-year growth, aligning with company guidance despite a Q1 miss [6] - The company has a mixed history of meeting EPS consensus but a more favorable record in revenue delivery, complicating earnings expectations [6][7] Market Conditions - Inflation in Turkey, while easing, remains historically high near 60%, continuing to pressure the company's cost base and margins [4][13] - The Turkish telecom market is mature, with a projected CAGR of 3.52% through 2029, limiting growth potential for Turkcell despite being the largest player with a 41% market share [12][11] Valuation Analysis - A DCF analysis yields a price target of $7.00, indicating a 10% downside from current prices, based on assumptions of revenue growth and inflation trends [8][18] - Revenue projections for Turkcell show growth from $3.626 billion in 2023 to $3.880 billion in 2024, with net income expected to rise from $425 million to $469 million in the same period [9] Future Outlook - Upside potential for Turkcell hinges on rapid inflation decline, continued pricing power, and acceleration in digital business growth, with current trends suggesting limited upside [15][17][18] - The company is well-managed, but macroeconomic factors and recent stock price increases pose significant risks to future growth prospects [18]

Financial Data and Key Metrics Changes - The company reported a 12% increase in top line revenue, reaching TRY31 billion, with a 23% increase in EBITDA, expanding the EBITDA margin by 3.8 percentage points to 41.4% [30][38] - The consolidated revenue increased by 11.8% year-on-year to TRY30.8 billion, with the Turkcell Turkey segment contributing a 13% rise [37] - Net profit reached TRY2.6 billion, supported by strong operational performance despite a net FX loss of TRY1.8 billion [40][51] Business Line Data and Key Metrics Changes - Digital business services generated TRY2.8 billion in revenue, with a 32% year-on-year growth, driven by a 29% increase in digital OTT services [34][26] - Paycell, the payment service platform, saw a 33% year-on-year growth, with EBITDA rising 47% due to post-expense growth lagging behind revenue increase [27] - The corporate revenues experienced a 3% decline, primarily due to fewer one-off large budget projects and a drop in public sector client revenues from 41% to 24% [5][6] Market Data and Key Metrics Changes - The mobile segment saw a net increase of 472,000 postpaid subscribers, with a total postpaid customer base exceeding 27.6 million, reflecting a 72% share [24] - Fixed broadband market added 48,000 fiber customers and 41,000 IPTV subscribers, reaching a total of 1.5 million IPTV customers [25] - International revenues rose 2.2% to TRY815 million, with Best revenues increasing by 24% in local currency terms [112] Company Strategy and Development Direction - The company aims to prioritize fiber subscriber net additions and maintain its leading position in the data center market, with a focus on digital services and solutions [34][26] - The company plans to build more data centers and collaborate with major companies to establish Turkey as a data hub for the region [62] - The 2024 revenue growth guidance has been revised to low-double-digit growth, while maintaining EBITDA margin and CapEx intensity guidance [35] Management Comments on Operating Environment and Future Outlook - Management noted that competition in the mobile market was less aggressive, allowing for a focus on the postpaid segment [24] - The company expressed optimism about the growth of digital services and solutions, expecting continued momentum into the next year [107] - Management highlighted the challenges of projecting inflation due to macroeconomic dynamics but remains committed to maintaining strong operational performance [49] Other Important Information - The company is exploring funding alternatives for euro bond reissues and has a manageable FX debt service of around $340 million [44] - The cash position at the end of Q1 2024 was TRY49 billion, impacted by various payments including a wireless usage tax [43] - The company plans to reduce its derivative portfolio to manage foreign currency risk more effectively [45] Q&A Session Summary Question: What surprised you the most in the past couple of months to increase guidance? - Management indicated that the first couple of months of the quarter exceeded expectations, prompting the guidance revision [60][51] Question: Can you elaborate on the cash position decrease due to Eurobond investments? - The company explained that investing in Eurobonds was a strategy to benefit from high yields compared to deposit rates [68][69] Question: What will be done with the proceeds from the asset sale in Ukraine? - Management stated that while no board decision has been made, significant investments are planned in data centers, solar energy, and 5.5G auctions [71][72] Question: Were there any working capital issues in the first quarter? - Management confirmed a cash outflow related to working capital, primarily due to tax payments and bonuses, but expects recovery in the coming periods [86][87] Question: Can you clarify the calculation of net debt? - Management clarified that the net debt position calculation remains unchanged, including cash and financial assets [75][78]

Q1 2024 | May 27, 2024 Ali Taha Koç, PhD | Turkcell CEO BUSINESS OVERVIEW VCC ₺ OPERATIONAL PERFORMANCE 30.8 Bn TL ▲11.8%YoY NET INCOME +333 K Total* FIBER RESIDENTIAL ARPU GROWTH** 2.6 Bn TL ₺ Solid revenue & profitability growth Double digit real ARPU growths Guidance revised upwards Operational Highlights Mobile Operational Highlights Fixed Broadband TURKCELL GROUP Turkcell Group: Q1 2024 Highlights Double-Digit Real Growth FINANCIAL PERFORMANCE 12.8 Bn TL ▲23.2%YoY NET ADD+41 K IPTV +48 K Fiber +472 K P ...

Financial Performance - Net cash inflow from operating activities decreased to TRY 41,721.5 million in 2023, down from TRY 42,281.1 million in 2022, indicating a stable performance year-over-year [968]. - Net cash outflow from investing activities decreased to TRY 20,905.8 million in 2023, from TRY 31,712.1 million in 2022, primarily due to increased cash outflows for property, plant, and equipment [969]. - Net cash inflow from financing activities increased to TRY 6,769.3 million in 2023, up from TRY 3,388.4 million in 2022, driven by higher inflows from derivative instruments and bond issues [970]. - Cash inflow from interest received increased to TRY 5,825.4 million in 2023, up from TRY 3,986.6 million in 2022, contributing positively to cash flow [969]. - The company expects total operational capital expenditures to be around 23% of revenues in 2024 [994]. - The company anticipates continued moderate cash outflows related to capital expenditures and potential 5G license investments [996]. Debt and Liquidity - Total debt as of December 31, 2023, was TRY 84,084.2 million, including TRY 2,427.6 million of lease obligations, reflecting the company's financing strategy [972]. - The debt-to-equity ratio improved to 68.8% as of December 31, 2023, compared to 81.1% in 2022, indicating better leverage management [977]. - The company has a strong liquidity position with cash equivalents of approximately USD 1.4 billion, covering debt service obligations due in the next two years [973]. - As of December 31, 2023, Turkcell's total contractual cash obligations amount to TRY 115.39 billion, with TRY 93.34 billion in loans and borrowings [1004]. - Turkcell Superonline has TRY 4.2 billion in short-term loans and TRY 4.7 billion in short-term intra-group loans [987]. Investments and Capital Expenditures - Turkcell's capital expenditures in 2023 focused on network infrastructure, renewable energy investments, and subscriber acquisition costs [994]. - The company has engaged in various financing agreements, including a EUR 30 million Green Loan for solar energy investments, demonstrating commitment to sustainability [985]. Subscriber and Market Trends - The proportion of postpaid subscribers in Turkey increased to 71.5% in 2023, up from 68.1% in 2022 and 66.4% in 2021, reflecting a focus on value [1014]. - The company expects an increase in revenue from mobile and fixed data due to rising smartphone penetration and a larger postpaid subscriber base [1016]. - The market for roaming revenues returned to pre-COVID levels in 2023 after significant restrictions in previous years [1017]. - The company anticipates a continued demand for higher data quotas in mobile services and higher-speed broadband packages in fixed broadband services [1018]. Research and Development - The company has invested significantly in R&D, employing around a thousand researchers at its wholly-owned subsidiary Turkcell Teknoloji [1012]. - The company is focusing on emerging technologies such as cybersecurity, artificial intelligence, and quantum technologies to enhance its technological competence [1010]. Regulatory and Economic Factors - The Turkish Lira depreciated by 36.5% against the USD in 2023, compared to a 28.2% depreciation in 2022, impacting the company's operations [1036]. - The ICTA has set maximum tariffs for national voice at TRY 3.12 per minute and national SMS at TRY 2.23 as of April 1, 2024 [1021]. - The company has faced restrictions in Ukraine regarding foreign exchange controls, which may impact future dividend distributions from subsidiaries [974]. Dividends and Shareholder Returns - The company approved a dividend payment of TRY 2.26 billion on September 13, 2023, to be distributed on December 20, 2023 [1008]. - The company approved a dividend payment of TRY 6,277.0 million, translating to a gross cash dividend of TRY 2.8532 per share, equivalent to USD 0.088542 [1009]. Financing Activities - Turkcell Superonline issued a total of TRY 1.45 billion in lease certificates in 2023, with interest rates ranging from 19.25% to 39% [986]. - Turkcell Odeme issued lease certificates totaling TRY 1.1 billion in 2023, with interest rates between 23% and 44.5% [990]. - Financell's total loan portfolio reached approximately TRY 5.8 billion as of December 31, 2023, with 6% (TRY 325 million) in foreign currency loans [989].

Financial Data and Key Metrics Changes - Group revenues increased by 76% in historical figures, while under inflationary accounting, the rise was 15% [12] - EBITDA surged by 83% on historical figures, with a 20% growth according to inflationary accounting [12] - Net income grew by 65% in historical figures and 82% in inflation-adjusted terms, driven by strong EBITDA performance [12] Business Line Data and Key Metrics Changes - Mobile segment saw a 3-point increase in post-paid share, exceeding 71%, with blended mobile ARPU growing by 85% year-on-year [3] - Fixed broadband segment registered 169,000 net additions for the full year, with ARPU widening by 76% year-on-year [4] - Digital services and solutions revenue grew by 19% year-on-year, with cloud service revenues increasing by 50% [5] Market Data and Key Metrics Changes - Turkcell's international revenues decreased by 1.8% to TRY2.6 billion, while base revenues rose 20% in local currency terms [7] - The Turkish Republic of Northern Cyprus subsidiary's revenues increased by 20% year-on-year, driven by strong real ARPU growth [7] Company Strategy and Development Direction - The company aims to focus on digital services, data centers, and cloud solutions to meet high demand [5][9] - Investments in renewable energy and data center capacity are prioritized to enhance operational efficiency and sustainability [15] - The company plans to maintain its leadership in 5G and beyond technologies [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation and economic pressures but remains committed to digital transformation [41] - For 2024, the company expects high single-digit real revenue growth and an EBITDA margin of around 42% [10][12] - The guidance reflects macroeconomic dynamics, particularly inflation, which is projected at around 37% year-on-year [10][44] Other Important Information - The company has classified its Ukrainian subsidiaries as discontinued operations due to an ongoing sales process [7] - A significant rise in interest rates impacted Financell's margins, despite revenue growth [6] Q&A Session Summary Question: What is the bottom line net income number for full year 2023, including Ukraine? - The net income from discontinued operations is TRY1.9 billion [43] Question: Why is there a slowdown in revenue growth guidance for 2024? - The guidance reflects expected impacts of inflationary accounting and operational expectations, aiming for high single-digit growth [29] Question: Update on Ukraine operations and sale process? - A transfer agreement for Ukrainian subsidiaries was signed, but completion depends on certain conditions and legal proceedings [31] Question: What is the reason for the expected EBITDA growth in 2024? - The company anticipates strong real top line growth supported by sequential price adjustments, despite inflationary pressures [38] Question: Will there be a second increase in minimum wage affecting expenses? - Current assumptions do not include a second minimum wage increase, but the situation will be monitored post-elections [38]

IAS29 Adjustment Historical Figures ▲65.1% 11,053 18,245 2022 2023 36,608 43,877 13,629 (4,034) (850) (1,090) (386) EBITDA Δ in Δ in Direct Δ in G&A Δ in S&M Δ Doubtful EBITDA ▲19.9% 2022 Revenues Cost of Revenues* Expenses Expenses Trade Receivables** 2023 • The EBITDA margin improved by 1.8% YoY thanks to lower energy expenses, interconnection expenses, and cost of goods sold as a percentage of revenues Net Income 2022 Δ Tax Δ Profit & Loss from Disc. Op. FY 2023 Results | 15 OPERATIONAL CAPEX/SALES Histo ...

Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) Q3 2023 Results Conference Call November 7, 2023 12:00 PM ET Kayahan Demirak - AK Investment Nagy Nora - Erste Group Bank AG Murat Ignebekçili - HSBC Thank you, [Gaeli]. Hello, everyone. Welcome to Turkcell's third quarter 2023 earnings call. I am Ozlem Yardim, and recently appointed as the Head of IR and M&A success. I'm here with the company more than a decade and excited to meet each of you in person in the near future. I'm always here to address your question ...

Financial Data and Key Metrics - Group revenues increased by TRY 9.2 billion, a 74% YoY growth, driven by Turkcell Turkey's expanding subscriber base and strong ARPU growth [19] - EBITDA reached TRY 9.5 billion, almost doubling YoY, with a 44% EBITDA margin, supported by strong top-line growth and reduced energy prices [37] - Net profit rose 70% YoY to TRY 3.2 billion, reflecting solid operational performance and prudent risk management [37] - Mobile ARPU accelerated by 84%, driven by price adjustments and upsell efforts, with a churn rate of 1.9% [28] - Residential fiber ARPU grew by 49%, surpassing quarterly average annual inflation, with 53% of fiber customers opting for 12-month or contract-free tariffs by June [16] Business Line Performance - Mobile operations: Postpaid subscribers increased by 404,000 in Q2, representing 70% of the mobile base, despite competitive pressures and rising acquisition costs [11] - Fixed broadband: Gained 40,000 fiber subscribers and 35,000 IPTV net additions in Q2, exceeding the annual homepass target with 165,000 additions in H1 [12][33] - Digital business services: Revenue grew 82% YoY, contributing 10% of total revenue, driven by system integration projects, data center, and cloud businesses [13] - Techfin: Paycell revenue rose 95% YoY, supported by Pay Later, mobile app store payments, and increased card usage [35] - International operations: Turkcell International revenue grew 48% YoY, with lifecell Ukraine revenue up 36% in local currency, exceeding inflation [23] Market Performance - Turkcell Turkey: Main driver of group revenue growth, supported by subscriber expansion and ARPU growth [19] - Ukraine: lifecell revenue grew 36% YoY in local currency, with EBITDA margin improving by 1.2 percentage points due to lower interconnection and energy costs [23] - Pakistan: OTT TV services surpassed 1 million active users through a partnership with Jazz [17] Strategic Focus and Industry Competition - Focus on inflationary pricing strategy, with price adjustments in August for both mobile and fixed services [30] - Continued investment in fiber expansion, with a take-up ratio expected to rebound as the company monetizes its investments [33] - Strategic partnerships in digital services, such as the nationwide QR payment project and collaborations with global studios for TV+ [14][38] - Regulatory environment: Expectation of 5G licensing and spectrum tender in 2024, with no immediate changes anticipated [62] Management Commentary on Operating Environment and Outlook - Management remains cautious on EBITDA margin for H2 due to expected energy price increases and a 37% wage hike in July [44][56] - Guidance for 2023 revised to 71% revenue growth, TRY 37 billion EBITDA, and 22% CapEx intensity [39] - FX risk management: Majority of cash held in hard currencies, with a net long FX position of US$84 million, within the neutral range [24][45] Other Key Information - CapEx intensity for the last 12 months was 20.7%, with mobile and fixed investments accounting for over 70% of total CapEx [20] - Cash position increased by TRY 7.8 billion in Q2, with FX movements contributing TRY 6.2 billion [41] - Net debt position stood at TRY 28.2 billion, with net leverage at 1x (0.8x excluding Financell) [41] Q&A Session Summary Question: Subscriber growth and ARPU outlook - Mobile subscriber growth slowed in Q2, with 165,000 net additions, driven by seasonality and prepaid segment challenges [54] - Price adjustments in August for mobile and fixed services, with further adjustments expected in Q4 to align with inflation [30][64] Question: CapEx intensity and FX impact - CapEx intensity expected to decrease slightly in 2024, but uncertainty remains due to FX dependency and macroeconomic conditions [65] - FX hedging strategies helped limit losses, with a positive M2M valuation on the derivative portfolio [31][57] Question: Ukraine operations and 5G licensing - Ukraine operations performing well despite the war, but future performance remains uncertain due to the ongoing conflict [67] - 5G licensing expected in 2024, with no immediate regulatory changes anticipated [62] Question: Financial expenses and hedging impact - Financial expenses increased due to FX movements, but hedging strategies mitigated losses, with a net long FX position of US$84 million [52][57]

Company Participants Conference Call Participants Operator At this time, I would like to turn the conference over to Mr. Ali Serdar YaÄcı, Investor Relations and Corporate Finance Director. Mr. YaÄcı you may now proceed. Thank you Gaily. Hello everyone. Welcome to Turkcell's first quarter 2023 results call. Today our CEO, Mr. Murat Erkan; and Acting CFO, Mr. Kamil Kalyon will be delivering a brief presentation on operational and financial results. And afterwards we will be doing Q&A. Now I'm handing over to ...

Turkcell Group Q1 2023 Highlights: A Promising Start to the Year 17.3 Bn TL MOBILE ARPU 67GROWTH* .9%YoY ₺ Accelerating topline growth despite earthquake effect | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |--------------------|-------------------------|-------|-------|------------------------------------------------|-----------------------------------------|------------------------------|---------------|--------------|-----------------------------------------------------| ...