Ladies and gentlemen, thank you for standing by. I am [Gaeli], your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell Third Quarter 2023 Financial Results Conference Call [Operator Instructions]. At this time, I would like to turn the conference over to Ms. Ozlem Yardim, Investor Relations and Corporate Finance Director. Ms. Yardim, you may now proceed.

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 questions and feedbacks. Today, our CEO, Ali Taha Koc; and CFO, Kamil Kalyon, will be delivering a brief presentation covering operational and financial results of third quarter, which will be followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statements available at the end of our presentation. Now I am handing the meeting over to Mr. Ali Taha.

Thank you, Ozlem. Hello, everyone. Thank you for joining us today. I'm honored to have been appointed as the CEO of Turkcell, which pioneered mobile telecommunication technology in Turkiye and remains a flag carrier in the global capital markets. With a strong background in telecommunications, technology and innovation, I have contributed to numerous patents and international projects during my tenure at Intel Corporation. I have also held key positions overseeing the digital transformation of Turkiye. With a wealth of experience in my new role, I am committed to advancing Turkcell's leading position in our nation's digital sovereignty. We will harness our advanced technological capabilities to foster innovation and they create brighter digital vision for all while taking Turkcell to the next level. As we are [celebrating] the centennial of the Republic, I am confident in Turkcell's leadership in technology and innovation will further carry our country to the second century. Turkcell's performance in the third quarter improved the success of this company, which is levered by a robust business model, state-of-art capabilities that enhance customer satisfaction and a team of highly skilled individuals. My initial evaluation of the company has reaffirmed my perception of Turkcell. My primary mission is to bolster Turkcell's position in the telecommunication and technology market. To achieve this, I plan to place a greater emphasis on technological advancements and innovation. To unlock the full potential that lies within the Turkcell capabilities, I aim to achieve sustainable growth and create value for Turkcell shareholders. Let me dive into financials. We delivered a solid set of results in the third quarter. Continuing to outpace inflation, our revenue growth accelerated to 7%, driven by record ARPU growth and a significantly expanding subscriber base. Our EBITDA exceeded TRY11 billion, marking an impressive 89% annual increase. This growth is driven mostly…

Thank you very much, Ali Taha. Now let's move on to our financial results. Our group's revenue delivered an incremental revenue of TRY11.3 billion, marking 77% year-on-year growth. The Turkcell Turkiye segment was the main driver of this performance, driven by an expanding subscriber base, strong ARPU growth, thanks to sequential price adjustments and successful upselling efforts. The contribution of the International segment was TRY1.2 billion. The main drivers of this rise were the positive impact of currency movements and our Ukrainian operations performance. Our techfin segment contributed TRY537 million to the top line with the strong performance of Paycell and Financell, which grew 112% and 104% respectively. Next slide, please. Now let's look at our EBITDA performance. In the third quarter, group EBITDA grew 88.9% to TRY11.3 billion due to solid top line performance. The EBITDA margin expanded by 2.6% on a yearly basis in this quarter. The increase in personnel expenses due to the wage price that became effective at the start of the quarter was more than compensated by the decline in the cost of goods. Energy expenses sustained the positive impact on the margin this quarter as well. Please note that the energy market regulatory authority has announced a 20% price increase effective from October 1st, which will have an adverse impact on our Q4 results. Declining NPL rates through 2024 year end will continue to impact profitability in the upcoming periods positively. Next slide, please. Now the net income performance. Group net income surged by TRY3.1 billion, reaching a remarkable TRY5.5 billion on 129% year-on-year growth. Our robust operational performance boosted EBITDA contribution to TRY5.3 billion, resulted in the solid net income. The limited depreciation of the Turkish lira resulted in lower foreign exchange losses in Q3, particularly compared to the previous quarter. The MTM…

[Operator Instructions] The first question is from the line of [Indiscernible].

Can you please share some thoughts about what you're planning to do with your upcoming debt maturities? There's quite well ahead like $2 billion between now and 2025, so it would be great to get some color on that.

We have around $1.4 billion as FX cash in hand as of the third quarter. In addition, we have around $185 million committed long term facilities, as I mentioned in my presentation. And as of Q3, our cash [indiscernible] service our debt until the end of 2024, our FX debt sales for this year is around $150 million, which we deem as manageable. As you mentioned, regarding our 2025 euro bond to sell processes and to create cash reserves to fulfill the bond redemption as evident from our financial statements. Nevertheless, we are diligently exploring a range of competitive evaluation of alternatives for the reissuance of the 2025 euro bond. These alternatives encompass potential solutions, such as launching a fresh bond sukuk offering or securing a bank loan.

Next question is from the line of [indiscernible] from Ata Invest.

My first question is about the fiber investments in Turkey. What's the current share of your company in this area, what are your targets for the future? I would like you to elaborate that. And the second question is about the inflation accounting set. What might be the impact of inflation accounting application on your financials starting by the following? If you know that you also announced the inflation adjusted figures, because as you are listed in US. But I would like to understand how it will affect your tax payments or other factors, or any impact on your financials?

Let me answer the first one, and then I'm going to hand over to my CFO. As part of our CapEx planning this year, we focus more on our core businesses. Compared to the last year, mobile investments will take a bit more share given the disaster related damages. On the fiber front, each year, we maintain a balanced CapEx strategy with a demand driven approach. We have decided to decrease homepass investment to 380,000 due to uncertainties that arise from the current macroeconomic situation and our new monetization strategy on the fiber side. In line with the increased demand, we accelerated our investment and added a total of 1.5 million new homepasses in 2021 and 2022. Accordingly, we now slowed down our investment on that side and have progressed on the monetization phase. However, if a need arises, we can also consider increasing our homepass investments in line with our smart CapEx strategy. Additionally, we have remarkable energy investment plans on the energy side to meet our own electricity demand as well.

In inflation accounting system, we have revised our 2022 financials as per the IFRS rules and we will be starting the 2023 financials this year regarding the IFRS side. Since we are -- as the CapEx or how can I say, the FX side are a little bit higher, the inflation accounting would affect us a little bit positively in the income side, most probably simultaneously, the tax side might be affected over this issue, but we have some tools regarding the tax side, especially for the deferred tax side and we would not have affected very negatively about this issue from the tax perspective.

[Operator Instructions] The next question is from the line of Demirak Kayahan with AK Investment.

I mean I have a question about maybe for the next year. Would it be possible to give any indication about to expect CapEx intensity for the next year, given your expansion plans in the fiber? And also, could we assume that the company will be committed to do inflationary pricing, delivering real growth like this year?

As we mentioned in our presentation, we had elective investments in the fiber side last three months period and we are at the stage of monetization of these fiber investments in this year. Most probably, this strategy would continue for the next year, especially for 2024. We will make some investments where we need. Regarding the comment to inflation pricing delivering growth, yes, this year, we have a lot of inflationary effects in our sector and in our economy. Therefore, this is a tradition for Turkcell's team. We are doing this inflation pricing very well, more than decades. Therefore, we will continue this inflationary pricing in 2024 also.

The next question is from the line of Nagy Nora with Erste Group Bank AG.

Can you please update us on 5G spectrum allocation in Turkey, what's the update and what's your expectations?

Well, there is no official timeline for 5G announced by the regulator yet, but the minister of the transportation has announced that 2024 will be a planning for year for the 5G technology. Accordingly, we will be continuing our preparations during 2024. 5G is a vital technology that will facilitate digitization of industries and contribute to the economic development of our country. However, we believe that there are some issues that need to be addressed first for a healthy launch such as the fiber connection of our base stations, 5G capable smartphone penetration and development of locally manufactured equipment. As of 26 July, 2022, we've officially launched commercial 5G in Istanbul Airport with a special regulatory permission that is issued to all operators. Turkcell customers and international roamers with 5G supported phones and 5G subscription can use 5G in Istanbul Airport. We will position Istanbul Airport as a commercial 5G pilot cluster and use it as a base for us to use care creation and R&D on top of our test 5G sites. As to the license cost and rollout of CapEx, it is difficult to give you an estimate as there is no official tender announcement. Analyzing the 5G development in different countries, we see that the high license cost lead to a slower 5G rollout and lower network quality. Additionally, the use cases, especially of 5G, particularly for the consumer segment are not yet clear. 5G will offer value for the digitization of the industry initially. We believe that this will limit operators the ability to generate incremental revenues at first. Therefore, it is of utmost importance that licenses are granted to operators with reasonable fees and conditions. We also believe that deployment should be gradual based on customer demand to prevent excessive cash outflows without any return potential.

Next question is from the line of Ignebekçili Murat with HSBC. Murat Ignebekçili: I would like to wish the top management success for their new post. I hope this for you. I would like to ask you a more general question maybe about the strategy. Now what are the key path of this system that you think needs improvement at first glance? And when we look at 2024 and '25, what are the key points where there is potential for improvement in performance that will also reflect in the financial performance over the next couple of years? This is a more broader question maybe but I just want to hear about your thoughts on this.

I'm committed to advancing Turkcell's leading position in our nation's digital sovereignty, while sustaining and bolstering the company's position in the telecommunication market. I am planning to emphasize innovation and technological development to unlock the full potential that lies within the Turkcell while creating, of course, value for our shareholders. There are several trends in the telecommunication industry that we care of that have the potential to significantly affect the future of our sector, such as especially artificial intelligence, cybersecurity and digitalization. At Turkcell, we will direct our efforts towards these phones by utilizing our company's state-of-the-art infrastructure and know how and human capital.

[Operator Instructions] The next question is from the line of [Indiscernible] with Ata Invest.

My question is, again, about strategic focus area. As we see in your financials, around 15% of your revenue is coming from cost focused strategy area along digital, digital business and techfin business. Do you have any targets on that side, because over the last several years, we see that around 50% of the consolidated revenues. Should we expect some jump in the future, maybe over the next three, four years? Do you have any just numerical targets on that?

As you know, our strategy or our focus areas are growing. We are the leader in the telecommunication sector but we have determined some growth areas for our group, especially this DSS side and the finance side -- techfin side, fintech side is significant instruments of this growth area. Therefore, especially in the Paycell side, we continue our growth more than 100% growth rate, as you can see in our financials regarding the techfin side. Most probably, we will be continuing this performance until next year. We also have targeted our digital services, especially we are trying to increase our direct sales from the DSS side to the more efficient and the more, how can I say, extended subscriber base and we will continue to perform this performance in 2024.

[Operator Instructions] The next question is from the line of Demirak Kayahan with AK Investment.

I mean, as a follow-up on the strategic priorities since the new management in place. Our tech monetization was -- I mean, you can put a topic for the Turkcell over the next -- past few years, but there has been little progress on that front. The things I used to remember, the company was looking for a strategic partnership in the fintech business on potential IP in this power business and the fixed broadband business. And the IPO process has been started, I think, like previous years, but there hasn't been any progress on that front very well. So what do you think about the asset monetization for last year? And also maybe I might add disposal of the selling the international businesses, also was a part of the agenda, I mean what's your reason or issues?

We are continuously evaluating our portfolio and we are open to strategic actions that has the potential to create value for our shareholders. Frankly speaking, our international operations can be the closest candidates for a potential divestment. While these operations contribute to our top line, they are not among our strategic priorities. If we see interest with good valuation, we might evaluate our options always. As you know, [indiscernible] is a multibillion dollar world asset. We currently do not think that the current market conditions are supportive for such a sizable IPO. Last December, our Board decided to start preparation to take global power to public as there was a Board resolution. It had to be announced. The Board resolution said the company will be listed when relevant conditions are favorable. As IPO preparation take time between six to nine months, we decided to have the Board approve it in advance and we're ready for a potential IPO in the following quarters.

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.

Thank you very much for joining this call. We hope to see you in next quarter. Thank you very much for sparing your valuable time.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.