Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's Conference Call and Live Webcast to present and discuss the Turkcell's Third Quarter 2024 Financial Results. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. [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, Constantino. Hello, everyone, and welcome to Turkcell's Third Quarter 2024 Earnings Call. Today, our CEO, Ali Taha Koc; and CFO Kamil Kalyon will be delivering a brief presentation covering operational and financial results 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'm handing the meeting over to Mr. Ali Taha.

Thank you, Ozlem. Good afternoon, everyone and thank you for joining us today. This quarter marks my first full year at Turkcell. I honored to be a part of this journey, while hitting some major milestones along the way. In September, we completed the divestment of our Ukraine assets, creating value for our shareholders. We also opened our very first solar energy field, a big step forward in our sustainable efforts. Recently, I was elected to the Board of GSMA. This is not only a personal honor, but also an opportunity to represent Turkcell globally and help shape the future of our industry. I remain committed to growing our businesses and leading Türkiye digital transformation with critical innovations and industry firsts that will position us for long-term success. After a quarterly pause, we are back on growth path in the third quarter. Our top line increased by 7%, reaching TRY 40.2 billion. This growth was primarily driven by Turkcell Türkiye's strong ARPU group performance and solid subscriber additions with support from our Techfin segment. With a clear focus on profitability, our EBITDA rose 10% to TRY 17.8 billion, delivering a robust EBITDA margin of 44.2%. Our approach to acquiring high-value postpaid and fiber customers resulted in 322000 net additions. We reported a net income of TRY 14.3 billion which includes TRY three billion profit from operations, along with proceeds from the sale of our Ukraine assets. Next slide please. Let's take a look at our operational performance. On the mobile front, we have faced aggressive pricing in the market since May. We made a 25% price adjustments in July to support a more rational market environment. Despite this, extended competitive campaigns have driven up MNP activity across the market. With market volume rising 47% quarter-over-quarter. We have also responded to…

Thank you very much Ali Taha. Now, let's move on to our financial results. Third quarter was quite successful for us, with 7% top line growth, a healthy strong EBITDA margin of above 44% and net income TRY 14.3 billion we have clear proof that we are managing our business well. Our consolidated revenues exceeded TRY 40 billion, driven by 7% year-on-year growth in the Turkcell Türkiye segment, thanks to price adjustments a larger postpaid base and effective upselling. The Techfin segment contributed TRY 0.5 billion to the top line, backed by impressive performances of Financell and Paycell, which grew 38% and 20% respectively. The other segment impacted the top line negatively due to reduced demand in consumer electronics. Next slide please. Now let's look at our EBITDA performance. In the third quarter of 2024, EBITDA grew by 10.4% year-on-year to reach TRY 17.8 billion, driven by strong revenue growth and well-managed direct costs. Our EBITDA margin expanded by 1.4 percentage points year-on-year. To invest in our human capital, we made two wage adjustments this year with the second and the third quarter. This reduced the margin by 2.1 percentage points along with added pressure from rising funding costs. On the other hand, lower growth in the cost of goods sold due to decreasing demand for consumer electronics and the ongoing decline in MTR have positively contributed to the margin. Next slide please. Let's take a closer look at our CapEx management. For the third quarter of 2024, our CapEx to sales ratio is 18.1%. Operational CapEx amount remained fairly in line with the second quarter. However, with a boost in top line, we observed a typical seasonal slowdown. Half of our budget has been allocated to core communications covering both mobile and fixed services for this quarter. We expect…

Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] One moment for our next question, please. The first question comes from the line of [indiscernible] with Schroders. Please go ahead. Q – Unidentified Analyst: Hello. Congrats on the results. Thanks for taking my question. It is -- First of all, about the divestment proceeds you mentioned at the beginning of the call. Could you please share more color on them? And then also I think you briefly spoke about your 2025 CapEx outlook. If you could provide more details on that both in terms of the different projects, you're looking at the sum or the expected or the approximately expected CapEx to sales ratio. And then lastly, you finished this quarter at a very low net leverage level. I was wondering what you consider to be the ideal net leverage and what do you expect for 2025? Thank you very much.

First of all, I just want to start with the divestment process change. We have completed the sale of process on 9th of September. The final sales value will be determined based on closing adjustments to be made and as well as based on the level of net cash debt on financial statements to be prepared as of the closing date. Although, we do not have a Board decision regarding the proceeds we will obtain from the sale of our assets in Ukraine. Prospectively we might have important investments. Some of them depending on regulatory authorities decisions to come such as 5G tender and it's rollout plan or any other big scale business initiatives creating value for our shareholders in the upcoming periods. Although, we are diligently exploring a range of competitive and rational alternatives we have the redemption of our Eurobond in 2025. And for the second question CapEx. As part of our CapEx planning this year we will continue to focus more and more on our core businesses. Accordingly we will follow our demand-driven CapEx approach. Moreover we are expanding the white space capacity of our data centers by adding new modules to meet increasing demand in Türkiye and in the region. Additionally, we have renewable energy investment plans on the energy side to meet our own electricity demand. In 2023, we initiated investments in solar plant installations to achieve a capacity of 300 megawatts within three years. The installation of the first phase of 54 megawatts has been completed. And out of this 54 megawatts 6.4 megawatt of the first phase has been activated in Q3 2024. We aim to cover 65% of the Turkcell's total electricity consumption from our own green energy production by 2026. And also we are waiting for a 5G tender as well. And then 2025 is going to be getting ready for the 5G live network. So we are expecting an auction is going to be happening in 2025. So we need to prepare our infrastructure for the 5G when the 5G is ready in 2020 live in 2026. So it is going to be a CapEx intensive year. And all-in-all mobile and fixed CapEx will take more than half of the CapEx budget with the remaining share to be taken mainly by data centers and renewable energy investments.

And regarding your net leverage question still, as I mentioned in my presentation, with the help of proceeds from the sale of Ukraine assets, our net leverage ratio is very, very minimum nowadays. But our target is to keep our leverage below the industry average and our long-term internal target is around 1.56 -- 1.5 times. Q – Unidentified Analyst: Okay. Thank you. I come back into the queue. I’ll have more questions later, I guess.

The next question comes from the line of Bystrova Evgeniya with Barclays. Please go ahead.

Yes. Hello. Thank you very much for the presentation and congrats on the results. I have just one question regarding your potential bond issuance program. Given that you just received TRY500 million proceeds and now you're planning to issue TRY1 billion, so I was just trying to understand or maybe you could provide more color in terms of the timing of the issuance? And also, are you planning to issue the whole TRY1 billion? Or it will be split in part? And also, you mentioned that you're planning a sustainable or Green bond. So which one are you planning to issue?

Thank you very much for your question. First of all, I would like to mention that as Mr. Ali Taha said that we have some investments liabilities or investment figures in 2025 like 5G data center solars. And in order to recover our operations we will make -- we will continue to make our CapEx investments. Also we have a reduction of 2025, as you know, Eurobond. Therefore, our expectation or our intention is to issue $1 billion -- around $1 billion Eurobond, most probably it would be 50%, 50%, 50% would be conventional and 50% most probably would be sustainable loan. We are waiting the approval of CMB regarding this issuance after we take the issuance approval. Most probably it will be in the market in the first quarter of 2025.

Thank you. Thank you very much.

You’re welcome.

[Operator Instructions] The next question comes from the line of Demirtas Cemal with Ata Investment. Please go ahead.

Thank you for the presentation and congratulations for good results. My question is about the growth prospects. I know that you have been ambitious about the growth potential in the long-term. But I would like to understand the plans related to data centers and clouds. We see some significant increase in the third quarter. How should we assume for the following years regarding the growth what should be the portion of this business in overall your business side? That's my question for maybe the next several years. And the second question is after US elections. Trump won the elections as far as we see. Regarding the projects the China-US relations to all those technology issues, do you have any strategy in your mind regarding the projects for the future? Or does it have any impact on your plans related to the relations globally? Thank you.

Thank you very much. It's a great question. So you're right, we have ambitions in growth in long-term. In order to keep Türkiye's data in Türkiye, we maintain our leading position in the data center market and aim to increase our investment focus in our data centers as well as our cloud businesses. If you look around, currently the highest market share or market CapEx firms are totally investing on more on the data center business. And then with the AI, artificial intelligence we are expecting that the need for the data center is going to increase exponentially. So AI is coming and we are just seeing a small fragment of the AI, yet. So in the future, everybody is going to start using AI. So we are expecting that all this process, all the servers, all these AI chips are supposed to be located in data centers. So besides the current needs in Türkiye, we think that all these data centers that we are going to build, is going to be full of these AI chips and then AI processing. The data center market is currently very active. We anticipate that market growth will continue in the coming years, due to the increasing needs within both public and private sectors. So cloud everybody is going to go to cloud, because it is the best way to move your IT infrastructure, because instead of investing loss, the big amount of money in your IT infrastructure, renting and then moving your software into cloud, is the next big revolution in IT industry. So all the companies from the smaller SMEs to big companies, they have to move their IT infrastructure to cloud. And then the best thing is, if you are closer to the cloud or the data centers, you are going to get the best performance. And in this region, we already have four big data centers and we already spent €330 million and we are going to be our biggest cloud vendor, cloud supplier in this region. And with respect to the second question, regarding the President. We are just following the elections closely. And what we can do is currently, we are just -- we are also -- we are quoted in the New York Stock Exchange. And we are closely following the elections, and it's very new. So I'm too. We are just going to look into the relationship and then we will see. Currently, we don't see any impact in our businesses. But we are just going to follow it up. And to say the truth that, there multiple elections passed in the United States and then the Presidents change, and then our relationship is always stable. So we are expecting that our relation is going to keep stable in the near future as well.

And as a follow-up related to 5G. Is it still early to talk about the timing or I don't know, maybe I'm missing some point, but what might be the potential timing on that?

So, actually let me tell you that every couple of years, the technology always improves. So to say the truth that like the last time we did in 4.5G, currently the new release of the technology GSMA technology is called 5G Advanced. So to say the truth, we are not late or early. So we are going to get the best out of the -- best state-of-the-art technology in Türkiye and our Ministry of Transportation is the Ministry of our Transportation, already announced that 2025, there's going to be a frequency auction. So like we did in the 4.5G, there are some specific frequencies that needs to be auctioned and then we are going to pay frequency money for that auction. And then similarly, 5G also has a specific frequency that all the operator has to buy has to give some -- with the tender, needs to pay some money on that. And that's going to happen. The auction is going to be happening in 2025, and most of the time after the auction they always give six to eight months of time frame like they did the similar in the 4.5G. In 2015, the auction happened and 2016, the Live 4.5G started at April 1, 2016. So we are expecting the similar time frames, when we have the auction in 2025, six to eight months later we are going to have a Live most probably it is going to happen in the 2026.

And very last question regarding 2025, what's going to be your story compared to 2024? You had difficult times, when the inflation increase was very significant. And then, you adapted market conditions. But now, we are possibly into this inflationary environment. And maybe in a couple of sentence, how do you see 2025 on your side? Thank you.

Say true that 2025 is going to be -- we are just going to be focusing more and more on the R&D domain as well, and focus on R&D more. But say true that right now, we have a motto saying that everyone works with Turkcell, but also in the 2025, we are going to see that everything is going to start working with Turkcell as well, especially in terms of things, it's going to be a huge growth area for us. So currently, a number of subscribers and increased IoT domain increased drastically, we are expecting that it's going to happen. And also in 2025, we will sustain our postpaid focus on the mobile side. And as well as we are going to have a fiber focus on the fixed side. We will continue to take necessary pricing actions by accelerating macro and competitive conditions as well. Accordingly, we expect real revenue growth in 2025 as well. We are currently working on the figures, and we will be able to share more details of our expectation of the 2025 within our year-end result announcement most probably in a couple of months.

Thank you, Ali Taha.

Thank you.

The next question is a follow-up question from the line of Morris Still with Schroder. Please go ahead.

Thank you for taking this follow-up. There have been statements in the press that contribution of Turkcell and to telecom is currently not foreseen, but it was very interesting to see that Turkcell telecom was being asked this question at all because I didn't have it on the radar because I thought that the market structure as it is in Turkey, it doesn't require consolidation. Could you just address the elephant in the room, I'd be interested in knowing more about your thoughts about it.

I think it is just a rumor. We never ever heard about that kind of connotations. I appreciate it's just a rumor.

All right. Cheers.

The next question comes from the line of Madhvendra Singh with HSBC. Please go ahead.

Yes. Hi. Thanks a lot for taking my questions. My first question is on your operational performance and about the pricing outlook. So if you could disaggregate how much of the growth in the third quarter was because of price increase or pricing? And then do you have further plans to increase prices? And how comfortable are you with your ability to continue with the price hikes. So that's the first question. And second question is on your data center strategy as you mentioned. If it's possible, I may have missed it. But if you could remind you about your targets, how many megawatts capacity are you looking for? And by when would you consider any M&A to reach there? Or do you want to go there organically in its entirety? And then finally, you could also talk about your overall M&A strategy. Is there any gap in your offering that you would want to complete with any potential M&A? Thank you.

Thank you very much for the question. As you mentioned, we have a very successful quarter in Q3 and. In real terms, our revenues grew by 7% quarter -- in third quarter is the main driver about this growth and real growth is 7% in -- Turkiye recurring income. We have a very good successful period both coming from the expanding of our subscriber base, mainly postpaid front and real ARPU growth. The main drivers of the growth. We also achieved a growth in 11% year-on-year in Consumer segment. This is very important from our perspective, especially as mentioned in my presentation, take inside revenues increased by 31% year-on-year. Therefore, it's a very successful period for the fintech side. These are the main drivers of Q3 results. Regarding the price increases, as you know, as a leading operator in mobile sites, we are living in a high hyperinflationary environment. We have made quarterly price adjustments starting from 2021. And when you look at the history, except for Q1 2023 and Q2 2024. We made a lot of price increase -- in July, around 25%. We have -- we did our final price increases in July around 25%. Therefore, when you look at the year-on-year cumulative price increases has amounted around 90% on the mobile side. Therefore, we will take the necessary actions by evaluating macro and competitive conditions because when you look at our market our competitors has aggressive and very aggressive competitions day by day they can make. Therefore, we are looking at the actions, the behaviors and we are taking the necessary actions by evaluating both macro and competitive competition in this year and 2025 also.

For the second question, let me tell you that currently we have 33 megawatts of capacity in the data center. So previously, all data centers are measured with the white spaces, but with all the processing power it's all electricity consumption. So 33 megawatts it is to support four big data centers. But the difference between the Türkiye and Turkcell data center business, in Turkcell we just design data center with the highest standard. We construct the data center with the highest standards and also we operate data center with the highest standards. So that's the reason that we have a very fruitful market and then all the big companies in the Türkiye are just our customers in the data center business. And then we are the leader in this market. And to say true that this year we will increase this capacity by at least 30% more and every year we are planning to organically grow. And with this also with this high quality data center all the -- there is a huge appetite among the cloud vendors or cloud providers to collaborate. So we are closely talking with them as well. So you're going to -- we're going to have a very ambitious data center targets for the next year and the following.

And your overall M&A strategy, sorry?

Currently, we have just exited from Ukraine as well. So we don't have any M&A strategy in any adjacent countries. We are not looking into that business.

If you ask question for the data centers, we would not -- we are not contemplating any M&A action. It will be an organic growth.

And within Turkey also, you're not looking to do any other M&A right?

Regarding data center or you're talking about the other activities?

Other areas as well.

In the short term, we do not have any M&A but it's not -- it doesn't mean that we are closing our eyes to opportunities. If we find for example suitable opportunities which will help us assist us to make a growth -- revenue growth or EBITDA contribution. Why not? But currently in our short-term plan we do not have such kind of M&A but it doesn't mean that we are closing our eyes to opportunities.

Great. Thank you very much for taking my question.

Thank you very much for your question.

[Operator Instructions]. The next question comes from -- it's a follow-up question from Bystrova Evgeniya with Barclays. Please go ahead.

Yes. Thanks for the opportunity to ask a question again. I wanted to ask you about potential sale of the stake of Türkiye Wealth Fund in Turkcell. May be there any developments or some talks about it going on. I appreciate that it might be sensitive. So any color would be very, very helpful. Thank you.

This is just our -- the questions need to be answered by the Turkish Wealth Fund. So they are our shareholders and they have to decide and they have to answer your question. So it is out of scope of this call I think.

Thank you.

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 for the -- and also thank you very much for listening us. And hopefully, we are going to have another call in the end of the Q4 and we're going to soon talk to each other. Thank you very much for your time.

Thank you for joining us. Bye.

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