Q4 & FY 2024 | February 27, 2025 BUSINESS OVERVIEW Ali Taha Koç, PhD | Turkcell CEO Turkcell Group: 2024 Highlights We Delivered What We Promised VCC REVENUE EBITDA Margin NET INCOME 166.7 69.8 41.9% 23.5 TRY bn 2024 ▲29.8% YoY ▲7.8% ▲10.2% ▲0.9pp ₺ MOBIL ARPU** TRY 276.8 ▲10.4% 578 K TOTAL NET ADD* 1.9 Mn Highest yearly postpaid net add in the last 15 years *Including mobile, fixed broadband, IPTV and wholesale (MVNO&FVNO) subscribers **Mobile ARPU (Excluding M2M), ARPU is IAS 29 Adjusted All financial fig ...

Company Performance - Turkcell has effectively managed through a challenging macroeconomic environment with cumulative three-year inflation exceeding 340% [1] - The company has leveraged its strong mobile service quality to maintain performance [1] Industry Context - The macroeconomic situation in Turkey has been exceptionally challenging, with significant inflationary pressures [1] Analyst Perspective - The analyst holds a beneficial long position in Turkcell shares through stock ownership, options, or other derivatives [1] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships [1]

Financial Data and Key Metrics Changes - The company's top line increased by 7%, reaching TRY 40.2 billion, driven by strong ARPU growth and solid subscriber additions [5][21] - EBITDA rose by 10% to TRY 17.8 billion, resulting in a robust EBITDA margin of 44.2% [5][22] - Net income reported was TRY 14.3 billion, which includes TRY 3 billion profit from operations and proceeds from the sale of Ukraine assets [5][21] Business Line Data and Key Metrics Changes - Mobile segment faced aggressive pricing, leading to a 25% price adjustment in July, resulting in 515,000 new postpaid subscribers added in Q3 [6][7] - The prepaid customer base declined by 266,000 due to alternative data solutions impacting tourist demand [8] - Fixed broadband market saw 47,000 net additions in fiber subscribers, with residential fiber ARPU growing by 15% year-on-year [9][10] Market Data and Key Metrics Changes - The mobile number portability (MNP) activity increased by 47% quarter-over-quarter due to competitive campaigns [6] - The share of high-speed packages (100 megabits and above) in the residential fiber portfolio increased by 10 percentage points year-on-year [11] Company Strategy and Development Direction - The company is focused on digital services and solutions, with standalone paid users reaching five million and revenue from these services growing by 4% year-on-year [12][13] - Techfin segment revenues grew by 20%, driven by increased commissions and transaction volumes [15][17] - The company aims to cover 65% of its total electricity consumption from its own green energy production by 2026 [32] Management Comments on Operating Environment and Future Outlook - Management acknowledged the hyperinflationary environment and indicated that price adjustments have been made to adapt to market conditions [57] - The company expects real revenue growth in 2025, focusing on R&D and maintaining a strong postpaid and fiber customer base [48][49] Other Important Information - Following the divestment of Ukraine assets, the company's cash position increased to TRY 82 billion, with a net debt position of TRY 9 billion [25] - The company plans to issue a new Eurobond up to TRY 1 billion, with a portion expected to be sustainable [25][37] Q&A Session Summary Question: Details on divestment proceeds and 2025 CapEx outlook - Management stated that the final sales value from the Ukraine asset sale will be determined based on closing adjustments and may lead to significant investments [29][30] Question: Timing and structure of potential bond issuance - The company plans to issue around TRY 1 billion in Eurobonds, likely split between conventional and sustainable bonds, expected in Q1 2025 [36][37] Question: Growth prospects for data centers and cloud services - Management emphasized the increasing demand for data centers and cloud services, with plans for significant organic growth in capacity [41][59] Question: Impact of US elections on global strategy - Management indicated that they are monitoring the situation but do not foresee immediate impacts on their business [44] Question: Future M&A strategy - Currently, the company does not have any M&A plans but remains open to opportunities that could enhance growth [62]

Loan Agreement - Turkcell signed a long-term loan agreement with China Development Bank for the first tranche of a total RMB2.46 billion credit package, amounting to RMB1.23 billion (approximately EUR157 million) [3] - The repayment schedule includes 15 installments, with the first installment due 36 months after initial credit utilization at a repayment ratio of 1.25% [4] - The repayment ratios increase progressively, with the final installment due 120 months after initial credit utilization at a repayment ratio of 12.5% [4]

Financial Data and Key Metrics Changes - In Q2 2024, the company's top line reached TRY35 billion, with an EBITDA of TRY15 billion and a solid EBITDA margin of 42.6% [4][12] - The net income for the quarter was TRY2.9 billion, demonstrating financial resilience despite macroeconomic pressures [4] - The EBITDA grew by 0.3% year-over-year, reaching TRY14.9 million, while the EBITDA margin remained stable [13] Business Line Data and Key Metrics Changes - The Turkcell Turkiye segment's revenues rose by 1.5% year-on-year, driven by an expanding subscriber base and higher postpaid share [12] - The mobile segment saw a net addition of 477,000 postpaid subscribers, with the postpaid customer share reaching 73% [5] - In the fixed broadband market, 42,000 new fiber subscribers were added, with a churn rate of 1.2%, the lowest in 18 years [6] Market Data and Key Metrics Changes - Turkcell's international revenues, accounting for 3% of group revenues, rose by 2.7% to TRY890 million [10] - The company faced aggressive pricing actions from competitors, impacting its mobile segment [5] Company Strategy and Development Direction - The company is focused on digital services and solutions, aiming to connect with customers and meet their evolving needs [7] - Turkcell is committed to maintaining its leadership in the data center market, with revenue from these services growing by 57% to TRY540 million [8] - The company plans to accelerate tower fiberization and is preparing for 5G rollout, with expectations for a tender in 2025 [14][30] Management Comments on Operating Environment and Future Outlook - Management acknowledged the impact of inflation on financial performance and indicated that they are closely monitoring economic conditions [11][48] - The company expects the third and fourth quarters to show improved results, driven by strategic pricing adjustments and operational efficiencies [48] Other Important Information - The company has a cash position of TRY51 billion and gross debt of TRY99 billion, resulting in a net debt position of TRY32 billion [15] - The management is exploring funding options for potential reissuance of Eurobonds and is actively managing foreign currency risk [16][30] Q&A Session Summary Question: What will drive a reacceleration of the top line growth in the second part of the year? - Management noted that the absence of large budget projects in Q2 2024 impacted revenue growth, but they expect improvements in the latter half of the year [18] Question: Update on proceeds from the Ukrainian asset sale? - The final sales value will be determined based on closing adjustments, and proceeds may be used for significant investments, including 5G initiatives [18] Question: Revenue growth prospects for the rest of the year? - Management indicated that inflation trends and the absence of one-off projects from the previous year would affect revenue growth, but they remain optimistic about ARPU growth [21] Question: Subscriber base growth in July and August? - The company reported net additions in both months, with decreasing churn rates despite competitive pressures [22] Question: Clarification on revenue growth despite price increases? - Management explained that while ARPU grew, the decline in equipment sales and absence of one-off projects affected overall revenue growth [24] Question: Plans for Eurobond refinancing? - The company is considering options for refinancing the Eurobond due in 2025 and is monitoring market conditions [40] Question: 5G rollout strategy? - The company plans a hybrid rollout for both corporate and retail clients, depending on auction outcomes [45]

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]