Turkcell(TKC) - 2025 Q1 - Quarterly Report

Highlights Segment Information As of Q1 2025, Turkcell revised its reporting segments to Turkcell Türkiye and Techfin, reclassifying former international and other operations - The company re-evaluated its operating segments, consolidating them into two main groups: Turkcell Türkiye and Techfin, effective from Q1 2025[11] - Following the sale of its Ukrainian assets, the companies previously in the Turkcell International segment have been reclassified under the "Other" segment[11] - Turkcell Satış, which handles consumer electronics and retail channel operations, has been moved from the "Other" segment to the "Turkcell Türkiye" segment for integrated management review[12] - The reclassification of segments has no impact on the Group's operating profit, net profit, or cash flow statement[14] Quarter Highlights Turkcell Group's Q1 2025 revenue grew 12.7% to TRY 48.0 billion and EBITDA increased 19.0%, though net income declined 15.3% Q1 2025 Financial Highlights (vs. Q1 2024) | TRY million | Q124 | Q125 | y/y% | | :--- | :--- | :--- | :--- | | Revenue | 42,567 | 47,963 | 12.7% | | EBITDA | 17,614 | 20,959 | 19.0% | | EBITDA Margin (%) | 41.4% | 43.7% | 2.3pp | | EBIT | 4,865 | 8,214 | 68.8% | | Net Income | 3,638 | 3,082 | (15.3)% | - The Board of Directors has proposed a gross dividend of TRY 8.0 billion, which corresponds to a gross dividend of TRY 3.636 per share, to be paid in two equal installments in June and December 2025[22] - The company renewed its fiber infrastructure agreement with BOTAŞ for an additional 15 years through a tender valued at $25.5 million annually[22] - Key operational achievements include 153,000 quarterly mobile postpaid net additions, 30,000 fiber net additions, and surpassing 6.0 million total fiber homepasses[22] Comments by CEO, Ali Taha Koç, PhD The CEO highlighted a strong start to 2025, driven by robust ARPU growth, postpaid additions, and expansion in Techfin and Data Center businesses - Consolidated revenues for Q1 2025 reached TRY 48.0 billion (+12.7% YoY), EBITDA increased to TRY 21.0 billion (+19.0% YoY), and net profit was TRY 3.1 billion[24] - The mobile segment saw 153,000 net postpaid additions, increasing the postpaid subscriber share to 76%, while mobile ARPU grew by 15.9% YoY[25] - The fixed segment added 30,000 new fiber customers, with total homepasses exceeding 6.0 million and fiber ARPU growing by 17.7% YoY[26] - Strategic focus areas showed strong growth, with Techfin revenues up 31.5% and Data Center & Cloud business revenue up 47.5%[24][30] Financial and Operational Review Financial Review of Turkcell Group Group revenue rose 12.7% to TRY 48.0 billion and EBITDA grew 19.0%, but net income fell 15.3% due to a high base effect from an asset sale in 2024 Q1 2025 Profit & Loss Statement Summary | Profit & Loss Statement (million TRY) | Q124 | Q125 | y/y% | | :--- | :--- | :--- | :--- | | Revenue | 42,566.8 | 47,962.6 | 12.7% | | EBITDA | 17,614.2 | 20,959.1 | 19.0% | | EBITDA Margin | 41.4% | 43.7% | 2.3pp | | EBIT | 4,864.6 | 8,213.5 | 68.8% | | Net Income | 3,638.4 | 3,082.1 | (15.3)% | - Net income decreased by 15.3% YoY; however, excluding the TRY 747 million positive impact from the sale of Ukrainian assets in Q1 2024, net income increased by 6.6%[46] Cash and Debt Position (as of March 31, 2025) | Metric | Value (million TRY) | | :--- | :--- | | Total Cash | 108,421 | | Total Debt | 150,712 | | Net Debt | 16,637 | | Net Debt to EBITDA Ratio | 0.21x | - Operational capital expenditures (excluding license fees) were 20.2% of total revenues in Q1 2025[53] Operational Review of Turkcell Türkiye Turkcell Türkiye expanded its mobile postpaid and fiber subscriber bases while achieving double-digit ARPU growth in both segments Turkcell Türkiye Operational Data (Q1 2025) | Metric | Q125 | y/y % | | :--- | :--- | :--- | | Mobile Postpaid Subscribers (million) | 29.3 | 6.2% | | Turkcell Fiber Subscribers (thousand) | 2,484.4 | 6.4% | | Mobile Churn (%) | 1.7% | 0.2pp | | Fixed Churn (%) | 1.4% | 0.1pp | Turkcell Türkiye ARPU (Q1 2025) | ARPU (TRY) | Q125 | y/y % | | :--- | :--- | :--- | | Mobile ARPU, blended (excl. M2M) | 325.1 | 15.9% | | Residential Fiber ARPU | 377.0 | 17.7% | - The company added 153,000 postpaid subscribers in the quarter, bringing the postpaid share of the total mobile base to 76%[57] - The fiber network was expanded to an additional 43,000 homepasses, bringing the total to over 6.0 million[60] Techfin The Techfin segment, comprising Paycell and Financell, demonstrated strong growth, significantly contributing to consolidated results Paycell Paycell's revenue grew 47.8% YoY to TRY 1.4 billion, driven by mobile payment and POS services, though its EBITDA margin contracted Paycell Financial Data (Q1 2025 vs Q1 2024) | Paycell Financial Data (million TRY) | Q124 | Q125 | y/y% | | :--- | :--- | :--- | :--- | | Revenue | 940.4 | 1,390.0 | 47.8% | | EBITDA | 439.4 | 545.6 | 24.2% | | EBITDA Margin (%) | 46.7% | 39.2% | (7.5)pp | | Net Income | 102.3 | 186.0 | 81.8% | - Total transaction volume reached TRY 38 billion in Q1 2025, an 88% year-on-year increase, supported by POS solutions, QR Code, and direct carrier billing[63] - Over 70% of Paycell's revenues originated from non-group business, highlighting its market expansion[62] Financell Financell's revenue grew 8.2% and its EBITDA margin improved significantly due to lower funding costs, despite weak consumer demand Financell Financial Data (Q1 2025 vs Q1 2024) | Financell Financial Data (million TRY) | Q124 | Q125 | y/y% | | :--- | :--- | :--- | :--- | | Revenue | 1,162.4 | 1,257.3 | 8.2% | | EBITDA | 129.5 | 199.4 | 54.0% | | EBITDA Margin (%) | 11.1% | 15.9% | 4.8pp | | Net loss | (130.2) | (10.1) | (92.2)% | - The loan portfolio reached TRY 6.8 billion in Q1 2025, with 0.8 million active customers[65] - EBITDA margin improved by 4.8 percentage points to 15.9%, driven by lower funding costs on a yearly basis[64] Turkcell Group Subscribers As of March 31, 2025, the Turkcell Group's total subscriber base grew 0.7% year-over-year to 45.2 million across all regions Turkcell Group Subscribers (as of March 31, 2025) | Region | Subscribers (million) | y/y% | | :--- | :--- | :--- | | Turkcell Türkiye | 43.1 | 0.7% | | BeST (Belarus) | 1.5 | - | | Kuzey Kıbrıs Turkcell | 0.6 | - | | Total Group | 45.2 | 0.7% | - The total subscriber figure is calculated by summing the mobile, fiber, ADSL, cable, and IPTV subscribers of Turkcell Türkiye, and the mobile subscribers of BeST and Kuzey Kıbrıs Turkcell[66] Overview of the Macroeconomic Environment Key macroeconomic indicators for Q1 2025 show a YoY CPI of 38.1% in Türkiye and a 17.0% increase in both USD/TRY and EUR/TRY exchange rates Key Macroeconomic Indicators (Q1 2025) | Indicator | Q125 | y/y% Change | | :--- | :--- | :--- | | Consumer Price Index (Türkiye, YoY) | 38.1% | (30.4)pp | | US$ / TRY Closing Rate | 37.7656 | 17.0% | | EUR / TRY Closing Rate | 40.7019 | 17.0% | Reconciliation of Non-GAAP Financial Measurements This section reconciles the Q1 2025 consolidated profit of TRY 3.1 billion to an Adjusted EBITDA of TRY 21.0 billion - The company uses Adjusted EBITDA as a key metric to facilitate performance comparisons by excluding the effects of capital structure, tax positions, and depreciation/amortization[70] Reconciliation of Adjusted EBITDA to Profit (Q1 2025, million TRY) | Item | Q125 | | :--- | :--- | | Consolidated profit before minority interest | 3,082.1 | | Income tax expense | (3,459.7) | | Consolidated profit before income tax & minority interest | 6,541.8 | | Adjustments (Finance, Monetary, Other) | 1,671.7 | | EBIT | 8,213.5 | | Depreciation and amortization | (12,745.6) | | Adjusted EBITDA | 20,959.1 | Appendix Appendix A – Tables Appendix A details a net FX loss of TRY 1.4 billion and a total income tax expense of TRY 3.5 billion for Q1 2025 Net Foreign Exchange Gain and Loss Details (million TRY) | Item | Q124 | Q125 | | :--- | :--- | :--- | | Net FX loss before hedging | (3,708.3) | (1,783.3) | | Swap interest income/(expense) | 254.9 | 115.1 | | Fair value gain on derivative financial instruments | 267.8 | 286.8 | | Net FX gain / (loss) after hedging | (3,185.6) | (1,381.3) | Income Tax Expense Details (million TRY) | Item | Q124 | Q125 | | :--- | :--- | :--- | | Current tax expense | (61.7) | (622.8) | | Deferred tax income / (expense) | (1,761.8) | (2,836.9) | | Income Tax expense | (1,823.6) | (3,459.7) | Appendix B – New Segment Breakdown Appendix B presents historical financial data under the new reporting segments, showing Turkcell Türkiye and Techfin as the primary revenue drivers Revenue Breakdown by New Segment (Q1 2025, million TRY) | Segment | Revenue | | :--- | :--- | | Turkcell Türkiye | 43,523.4 | | Techfin Business | 2,746.6 | | Other Segment | 1,692.7 | | Consolidated Revenues | 47,962.6 | EBITDA Breakdown by New Segment (Q1 2025, million TRY) | Segment | EBITDA | | :--- | :--- | | Turkcell Türkiye | 19,835.0 | | Techfin | 716.9 | | Other | 407.2 | | Consolidated EBITDA | 20,959.1 | Condensed Consolidated Financial Statements Condensed Consolidated Interim Statement of Financial Position As of March 31, 2025, total assets grew to TRY 418.1 billion, driven by increased cash, while total liabilities rose to TRY 208.3 billion Statement of Financial Position Summary (million TRY) | Item | 31 March 2025 | 31 December 2024 | | :--- | :--- | :--- | | Total Assets | 418,120 | 378,919 | | Total Non-Current Assets | 259,270 | 253,786 | | Total Current Assets | 158,850 | 125,133 | | Total Equity and Liabilities | 418,120 | 378,919 | | Total Equity | 209,835 | 205,781 | | Total Liabilities | 208,285 | 173,139 | Condensed Consolidated Statement of Profit or Loss For Q1 2025, revenue increased to TRY 48.0 billion, but profit for the period decreased to TRY 3.1 billion due to higher taxes and no discontinued operations gain Statement of Profit or Loss Summary (million TRY) | Item | 31 March 2025 | 31 March 2024 | | :--- | :--- | :--- | | Total revenue | 47,962.6 | 42,566.8 | | Total gross profit | 13,622.8 | 9,173.3 | | Operating profit | 7,763.9 | 4,563.0 | | Profit before income tax | 6,541.8 | 4,707.8 | | Profit from continuing operations | 3,082.1 | 2,884.3 | | Profit from discontinued operations | - | 746.6 | | Profit for the year | 3,082.1 | 3,630.9 | Condensed Consolidated Financial Statement of Cash Flows In Q1 2025, a significant net cash inflow from financing activities of TRY 33.7 billion led to a net increase in cash of TRY 39.1 billion Statement of Cash Flows Summary (million TRY) | Item | 31 March 2025 | 31 March 2024 | | :--- | :--- | :--- | | Net cash inflow from operating activities | 12,729.9 | 7,716.3 | | Net cash outflow from investing activities | (7,341.0) | (16,235.3) | | Net cash inflow from financing activities | 33,711.0 | 6,904.6 | | Net increase in cash and cash equivalents | 39,099.9 | (1,614.4) | Note 13. Loans and borrowings Total borrowings stood at TRY 150.7 billion as of March 31, 2025, following a USD 1 billion Eurobond issuance and new domestic financing in Q1 - In January 2025, the company completed a dual-tranche bond issuance to qualified investors abroad: a USD 500 million conventional bond due 2030 and a USD 500 million sustainable bond due 2032[159][160] - The company issued domestic bonds totaling TRY 2.23 billion in Q1 2025 and utilized new loan facilities from the Development Investment Bank of Türkiye (EUR 18.5 million) and China Development Bank (CNY 103 million)[161][162][163] Breakdown of Borrowings (as of March 31, 2025, million TRY) | Type | Long-term | Short-term | | :--- | :--- | :--- | | Unsecured bank loans | 28,666 | 26,367 | | Secured bank loans | 8,574 | 1,307 | | Lease liabilities | 4,155 | 2,257 | | Debt securities issued | 53,370 | 26,016 | | Total | 94,765 | 55,947 | Note 17. Commitments and Contingencies The company faces ongoing legal disputes, regulatory investigations, and has outstanding purchase commitments of TL 4.7 billion - The Competition Authority imposed an administrative fine of TL 57,301 on the Company, which was recognized as a liability in the Q1 2025 financial statements[193] - A lawsuit related to a prior Competition Board decision was settled via mediation, with the company paying TL 130,000 in May 2024[190] - The company is subject to multiple ongoing investigations by the Information and Communication Technologies Authority (ICTA) regarding R&D obligations, subscriber refunds, subscription agreements, and service quality[194][195][197][203] - As of March 31, 2025, the Group has outstanding purchase commitments of TL 4,743 million and is contingently liable for guarantees amounting to TL 21,492 million[181][182] Note 21. Discontinued operations The sale of Ukrainian subsidiaries in Q1 2024 generated a one-time profit of TRY 746.6 million, which is absent from Q1 2025 results - The sale of Ukrainian subsidiaries was agreed upon in December 2023 and completed in 2024[222][223] Profit from Discontinued Operations (for Q1 2024, million TRY) | Item | 31 March 2024 | | :--- | :--- | | Revenue | 3,514.1 | | Gross profit | 1,245.1 | | Operating profit | 937.8 | | Profit for the year from discontinued operations | 746.6 |