Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) Q1 2024 Earnings Call Transcript

Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) Q1 2024 Earnings Call Transcript May 27, 2024

Operator: Ladies and gentlemen, thank you for standing by. I’m Vasilious, 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 First Quarter 2024 Financial Results. All participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by 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.

Ozlem Yardim: Thank you, Vasilious. Hello, everyone. Welcome to Turkcell’s first 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.

Ali Taha Koc: Thank you, Ozlem. Good afternoon, everyone and thank you for joining us today. At Turkcell, we are celebrating our 30th anniversary with great pride, having pioneered numerous milestones from our first call to becoming Turkey’s leading technology provider. In the first quarter of 2024, we are delighted to share our successful results. By taking timely actions, we have delivered double-digit Real Growth despite global central banks tightening policies and reaccelerating inflation in Turkey. Our top line grew 12% to TRY31 billion with a remarkable 23% increase in EBITDA. These results have been driven by a rational price increases since 2021, which enabled mobile ARPU growth to reach 17% and fiber residential ARPU growth to reach 14%.

Supported by lower energy and interconnection expenses, operating leverage expanded the EBITDA margin by 3.8 percentage points to 41.4%. Additionally, our commitment to focusing on value generating post-paid and fiber customer acquisition resulted in 333,000 net additions in the first quarter of the year. Overall, our strong operational performance resulted in a remarkable net profit of TRY2.6 billion. Our strong first quarter performance enabled us to revise our 2024 revenue growth upwards, which I will elaborate on later. Next slide, please. Let’s take a look at our operational performance in the first quarter. Unlike previous quarters, competition in the mobile market was relatively less aggressive in this quarter. On the mobile front, we sustained our focus on the postpaid segment, which contributes more value to our financials, resulting in a net increase of 472,000 subscribers.

Over the past 12-months, our postpaid base has grown with 1.7 million additions. Our postpaid customer base exceeded 27.6 million, reflecting 72% of the total on a three-point rise year-over-year. Disconnections from previous year’s tourist lines, rising new acquisition price levels, and demand to alternative data solutions were the main factors behind the prepaid net loss of 243,000 subscribers. Our customer-centric and innovative approach contributed to a low churn rate this quarter. The churn rate in the mobile segment was at 1.5%, marking the lowest rate in the past six years. Driven by sequential price adjustments, upsell efforts, and an increased share of post-paid subscribers in the portfolio, blended mobile ARPU rose by 95% year-on-year and continued to outpace CPI.

The base effect from the last year’s earthquake contributed to the widening ARPU inflation gap in this quarter. Taking into account inflation adjustments, mobile ARPU recorded 17% yearly growth. Next slide, please, Ozlem. In the fixed broadband market, this year started with price adjustment in December, and the market has become more rational compared to the previous year. In the first quarter, we had 48,000 fiber customer additions to our portfolio, following focused investments in expanding our fiber footprint over past years. We are pleased to have added 41,000 IPTV subscribers, reaching the homes of 1.5 million customers. TV plus is a premier solution for fiber subscriber retention, enabling us to implement effective price adjustments, thanks to its rich content.

With the contributions of TV plus, our pure fiber technology and a rational market, we achieved a fixed churn rate of 1.3%, marking the lowest level since 2007. Widening the gap with CPI, residential fiber ARPU growth continued to rise, achieving a 90% year-on-year growth on a historical basis. Our upsells are forced to higher speed packages and an increase in 12-month contract share within the customer portfolio were the main components of this outstanding performance. Similar to the mobile site, the base effect from last year’s [Indiscernible] contributed to the widening ARPU inflation gap in this quarter. Lastly, we will be prioritizing fiber subscriber net additions over increasing home passes this year. Therefore, it is reasonable to anticipate lower new compass figures, compared to last year.

Next slide. Let’s discuss our strategic focus areas, starting with digital services and solutions. Standalone revenue from our digital services and solutions grew an impressive 32% year-on-year, primarily driven by a 29% revenue increase in digital OTT services, which has a 5.5 million paid user base. Among these offerings our TV services and personal cloud service were particularly instrumental. TV plus’ success is remarkable. As it has been the only platform consistently growing its market share since 2014. According to the ICTA report, the TV plus market share increased to 17.6%, cementing its second position as of ‘23 year-end. In the first quarter, digital business services generated TRY2.8 billion in revenue and secured more than 1,200 contracts.

We remain committed to maintain our leading position in the data center market. Combined with our cloud services, revenues from those grew by 48% to TRY470 million. Next slide. Paycell, our innovative payment service platform, registered a remarkable quarter delivering 33% year-on-year growth. Rising interest rates and commission on post solutions as well as volume growth supported the top line. The 57% surge in Pay Later volume was positively affected by a 16% increase in the number of active users. Paycell EBITDA rose 47% year-on-year. The primary factor behind the rise in the margin is post-expense growth lagging behind its revenue increase. Financing customers’ technological needs, finance sales revenues rose 53% on a surging loan portfolio, higher average interest rate and the contribution of insurance business revenues.

The higher cost of funding stemming from tight monetary policies secures finance sales profitability similar to the banking sector. This was reflected in the next — in the net interest margin, which narrowed by 2.4% point this quarter. Since financial issues loans with relatively shorter maturities, we expect this pressure to decline in the second-half of the year. Meanwhile, our cost of risk is at 1.7%, which is lower than first quarter of 2023. Next slide. Lastly, our performance in the international markets. Turkcell’s international revenues, which account for 3% of group revenues, rose 2.2% to TRY815 million. Best revenues rose 24% on a yearly basis in local currency terms, primarily driven by higher data, SMS and service revenues. The 3.2% point improvement in EBITDA margin was sustained by dedicated cost management.

Next slide. I would like to end by sharing our revision for 2024 guidance. Given our first quarter performance, we revise our 2024 revenue growth guidance to low-double-digit growth. For EBITDA margin and CapEx intensity, we maintain our guidance. I will now leave the floor to our CFO, Mr. Kamil Kalyon.

Kamil Kalyon: Thank you very much, Ali Taha. Now let’s move on to our financial results. Our consolidated revenue increased by 11.8% on a yearly basis to TRY30.8 billion. The Turkcell Turkey segment was the biggest supporter of the Group topline growth with a 13% rise on a year-on-year basis. This was driven mainly by an expanding subscriber base, particularly on the postpaid side, and strong ARPU growth, thanks to sequential price adjustments with successful upselling efforts. The Techfin segment contributed TRY460 million to the top line with the strong performances of Paycell and Financell, which grew 33% and 54% respectively. Next slide, please. In the first quarter of 2024, EBITDA rose 23% on a yearly basis to TRY12.8 billion, thanks to strong revenue growth.

The EBITDA margin expanded 3.8 percentage points year-on-year. Despite the increase in personal expenses due to the [Indiscernible] annual wage rise and the increased funding cost of our financing operation, the Group EBITDA margin benefited from a decline in the cost of goods sold, energy expenses, and interconnection expenses as a percentage of revenue. After the electricity prices increase in 2023, which was relatively low compared to inflation and our corresponding price adjustments in line with the inflation, the proportion of energy expenses to our revenue decreased, thereby supporting the EBITDA margin. Additionally, the continued decline in MTR positively impacted our profitability. A trend expected to persist throughout 2024. Next slide, please.

Now let’s dive into the net income performance. Thanks to a robust operational performance, EBITDA has contributed TRY2.4 billion to net income. The net FX loss item has pressured net profit by TRY1.8 billion, due to higher foreign exchange rate change, which is partially offset by mark-to-market of financial derivatives. By the first quarter, the increased weight of non-monetary assets on the balance sheet, the dividend distribution, which decreased retained earnings, and higher inflation indexation resulted in a positive impact of TRY3.1 billion on net profit, marked under the monetary gain and loss item. Despite the positive impact of indexation between statutory reporting and IFRS, deferred tax decreased, compared to the previous period.

Lower corporate tax also supported the net profit. Next slide, please. Let’s take a closer look at our CapEx management. The CapEx to sales ratio for the first quarter of 2024 was 18.2% with accelerated revenue. As we plan to accelerate our data center and renewable energy investments in the upcoming quarters and given the seasonality of the second-half, we expect to reach 23% CapEx intensity for 2024. In this quarter, we primarily focused our investments on mobile and fixed assets. Fixed-site investments are primarily driven by tower fiberization. We remain committed to achieving our fiberization target of 41% within this year. The share of data center investments within the total investments for this quarter appears small. Yet, we expect this proportion to increase over the coming quarters in line with our target of installing an additional 9.1 megawatt capacity.

Thanks to the modular structure of our data centers, we simply add new modules as demand arises. Next slide, please. Now let’s turn our attention to the balance sheet. In Q1 2024, our cash position is at TRY49 billion. Note that a total of TRY5.2 billion wireless usage tax payments, the second installment of the earthquake donation, and employee bonuses had a negative effect on our cash position. Additionally, we have invested in euro bonds for effective cash management. Our gross debt was at TRY98 billion, and we ended this quarter with a net debt position of TRY33 billion. Due to the decreasing cash position, our net leverage slightly increased to 0.6 times. This year, our FX debt service is around $340 million, which we consider quite manageable given our strong cash position.

We possess an adequate cash reserve to fulfill the 10-year euro bond redemption in 2025 and are exploring a range of funding alternatives for the reissues. The majority of our cash remains denominated in hard currencies, excluding FX swaps, 49% of our cash is in U.S. dollars and 24% in euros. Next slide, please. Lastly, let’s look into the management of foreign currency risk. In the first quarter of this year, our balance sheet had around $2 billion equivalent in FX financial liabilities. In addition to the $1.6 billion equivalent FX denominated financial assets, we have a $700 million effective hedging portfolio, the vast majority of which consists of futures, forward and NDFs. Since we believe the Turkish lira has entered a period of real appreciation and with hedging costs in the market having risen significantly over the past couple of years, we plan to reduce our derivative portfolio in the coming periods.

As of this quarter, we have a net FX position of $158 million, due to our plans to reduce our derivatives portfolio, it’s fair to expect our net FX position to decrease in the coming periods, while remaining with our neutral FX range of minus and plus $200 million. This concludes our presentation and we can now open the line for questions. Thank you.

Q&A Session

Operator: Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Tiron Cesar with Bank of America. Please go ahead.

Tiron Cesar: Yes, hi. Good evening. Thanks for the call and for the opportunity to ask questions. I have three questions, but they’re all easy. The first one, if that’s okay. The first one is on the guidance increase on the revenue. What surprised you the most in the past, let’s say one, two months, so you had to hike this guidance? That would be the first question. The second question, I would like to understand what exchange rate are you assuming in your budget for the lira? And let’s say, if the lira depreciates less than per your budget, could it be that you spent a little bit less CapEx, so maybe the CapEx intensity will be less than your guidance? And then the third question, going back to the datacenters, can you please explain your ambition in the field and how large do you think the capacity would be in the medium term? Thank you so much.

Ali Taha Koc: Hi, Cesar. Thank you very much for the question. We had a quarter with solid financial and operational performance actually, which has beyond our initial plans. Accordingly, our revenue growth guidance for 2024 increased to low-double-digit growth, and there’s no change in our EBITDA margin and CapEx adjusted guidance. However, given the macroeconomic dynamics, projecting inflation will be challenging, and the actual figures may vary according to the realization — realized inflation and other factors such as the cyclicality of revenues. And also the minister of treasury and finance [Indiscernible] announced that the middle term plan OVP, is planned to be reviewed at the end of summer. Accordingly, we will be closed following the macroeconomic developments for possible further revision.

But to say true that the first quarter — first couple of months of this quarter is better than our expectations, so that’s the reason that we revised our guidance. For the datacenter business, we’re expecting — we already have four big high-tech datacenters, and we are planning to build more and actually we are looking for a collaboration with big companies to bring the data, whatever it is with data we have in the Turkey, we want to keep it and we want to be a data hub for this region. So that’s the reason that we have a huge ambition about the data center business. So currently we have four big data centers and we are adding more to them and then in the future you’re going to see more coming from Turkcell.

Kamil Kalyon: For the second question, normally our year-end U.S. dollars FX rate estimation is TRY37.5 and the average rate we are assuming TRY34. We believe that we will be in line with our guidance for the full-year for the CapEx side. However, in case of a spike in the FX rate, if it realizes within the years, we can postpone our discretionary CapEx in order to create a buffer. We are chasing the developments in the economical side, but most probably the FX rate will be realized within our estimations this year.

Tiron Cesar: Thank you so much. That was very clear. Thank you.

Kamil Kalyon: You’re welcome.

Operator: The next question comes from the line of [Indiscernible] with Barclays. Please go ahead.

Unidentified Analyst: Hello, good evening. Can you hear me?

Ali Taha Koc: Yes, loud and clear.

Unidentified Analyst: Good. Thank you very much for the presentation and congrats on the results. It’s also great news about the upgraded guidance. I have two quick questions, so my first one, you mentioned that your cash position decreased because of investments in Eurobond. Could you please elaborate on that a little bit? And my second question is related to Ukraine. Obviously, we’ve seen some headlines in the news about potentially positive developments. But, my question would be, what will you do with the process from this asset sale? Will you do you plan to pay additional dividends or do you plan to use that for CapEx or maybe for your Eurobond repayment? That’s it. Thank you.

Kamil Kalyon: Thank you very much. I will give the answer for the first one. The duration of the euro bond is five years. Turkish Sovereign and Bank, when we look at the, for example, yields in the Eurobonds, there’s a high yield when we compare it with the deposit rates. Therefore, we prefer to invest Eurobonds in order to benefit from the high yields. For the second question maybe you can give.

Ali Taha Koc: As you may know in April the seizure of our — on our Ukrainian assets lifted. It’s a positive news. We are now waiting the necessary permission from our anti-monopoly committee of Ukraine. So this is the last step for the conclusion — concluding of this deal. Although we do not have a board decision regarding the proceeds we will obtain from the sale of our assets in Ukraine, we have important investment projections in the coming period, such as data centers, solar energy and as well as the 5.5G auctions. So we will we are looking for huge investments projections in the coming period.

Unidentified Analyst: Got you. Thank you. So, do you still see the deal closing during this year?

Ali Taha Koc: Yes, definitely. Because there are two big roadblocks, one is just this seizure and another one is the anti-monopoly committee. Other than that, everything is clear. So hopefully, after this permission from the anti-monopoly committee of Ukraine finalized, hopefully near future and we are talking about in the period of months, we’re expecting that’s going to be done in this year.

Unidentified Analyst: Okay. Thank you very much.

Kamil Kalyon: You’re welcome. Operator [Operator Instructions] The next question comes from the line of Ignebekçili Murat with HSBC. Please go ahead.

Ignebekçili Murat: Hello. Thank you for the opportunity to ask questions. Can you clarify the calculation of net debt? I think you have changed something over there, because I see that the FX deposit accounts are no longer included in the net cash calculation. Am I missing something here?

Kamil Kalyon: Murat, we do not have any change in our net debt position calculation of net debt position. We are using the same method.

Ignebekçili Murat: Net cash still the total cash is at TRY48.8 billion, and when we get to the…

Kamil Kalyon: Some portion of cash is categorized in the financial assets. Maybe it might.

Ignebekçili Murat: Yes, yes, exactly. So why don’t you include those in the cash calculation?

Kamil Kalyon: We included. Normally we have TRY49.5 billion in our hand and TRY15.1 financial assets. And for example, when you look at our leverage 0.58, these two amounts are included into this calculation.

Ignebekçili Murat: Okay, when I look at the footnote, so I see 40 almost TRY49 billion as cash and also TRY10 billion as financial assets separately. That’s why I…

Kamil Kalyon: [Technical Difficulty] roughly.

Ignebekçili Murat: TRY15?

Kamil Kalyon: Fifteen, yes.

Ignebekçili Murat: Okay, we can follow-up on this later.

Kamil Kalyon: Okay.

Ignebekçili Murat: And were there any working capital issues in the first quarter? Because there’s around almost TRY12.5 billion EBITDA, around TRY7.5 billion CapEx in the quarter.

Kamil Kalyon: Yeah, Murat.

Ignebekçili Murat: So — and the change in net debt and the net debt increased TRY6 million or TRY7 million. So I think there should be some negative impact from working capital, right? Or is it tax payments or anything like that? Can you clarify that, please?

Kamil Kalyon: Normally, we hit around TRY9.9 billion cash outflow in this quarter related to working capital side. This was mainly driven by the as you know, we are — we paid the second installment of the earthquake donation, in January. Additionally, we paid personal bonus payments in February. And in February, again, we paid a huge amount of wireless fee tax payments as we have some payments to our suppliers and decreased trade payments in Q1 ‘24 compared to the first quarter of the last year. We are closely following our net working capital side and I think we will recover especially collection of the wireless fee tax payment from our clients, our net working capital structure will be better in the coming periods.

Ignebekçili Murat: Okay. Thank you very much. And finally, when you look at the financial expenses during the quarter of very limited FX activity or limited FX depreciation? We have financial expense as I see around more than TRY5 billion of FX losses. Could you elaborate on that, please?

Kamil Kalyon: Yes. Normally, as you said, I think around 6% or 7% depreciation in the FX rate realized in Q1. But as you know, along with the sequential rate hikes from the CBT side short-term rates and hedging costs increased very significantly. Therefore, this was the main driver behind the increase of our FX loss and the financial expenses. In addition to the credit rates are also increased very much before the election side, you remember. Therefore, these three effects affected our FX position or FX loss side negatively.

Ignebekçili Murat: So is it safe to assume that given that the interest rates in the market have already settled at some level, albeit very high, we should not see further significant FX losses in the coming months? The price is only the market-to-market?

Kamil Kalyon: Yes. As mentioned in my speech, our expectation in the FX side, we are not expecting a very high increases in the FX side. Therefore, most probably in order to decrease our hedging costs, we would like to make it short position might be in the coming periods in order to reduce our financial costs, because our estimation regarding the FX rates I think it will go for a short or mid-term side. We are not expecting any FX increases in this year. Therefore, most probably we will be opening a short position in our net FX position.

Ignebekçili Murat: Thank you. That’s very clear. And finally, about the operation. When you look at a typical postpaid client, it is to renew this contract? What is the, like, front book, like-for-like, growth in the invoice if one is to renew this contract, compared to last year. So a new contract renewal price is up how much on a year-on-year basis?

Kamil Kalyon: Normally, as we said, our revenues grew by around 13% in [Indiscernible] site, the first site. And we have a very how can I say, our ARPU rates are increasing very well when we compare it to the last period, it’s around 17% we have ARPU rate hike? And when we look at, for example, starting from the 2025, we had — we made a lot of price increases and more than a 100% increase in prices within the last 20 months. We can easily say that, because we successfully implement our inflation pricing policy.

Ali Taha Koc: Invoice to invoice, you can talk about 100%, more than 100% invoice to invoice.

Ignebekçili Murat: Yes. So a typical platinum tariff is up 100% in manual terms, compared to same week last year?

Kamil Kalyon: Might be.

Ali Taha Koc: Might be. We are talking about the blended ones, but we’re not talking about the markets or platinum. We’re just talking about the blended.

Ignebekçili Murat: So yes, and the inflation rate hopefully declines in the coming quarters. In the interim, this will translate into a much larger number. I see. Thank you.

Kamil Kalyon: You’re welcome.

Operator: The next question comes from the line of Demirtas Cemal with Ata Invest. Please go ahead.

Demirtas Cemal: Thank you for the presentation and congratulations for very good results. My first question is about your strategic focus area. I see a little bit more momentum in both the Techfin Business and Digital Services revenue side? Could we expect this track to continue going forward? Because in previous years there was a little bit slower growth, but I see higher momentum. Is it sustainable? This is my first question. The second question is how do you see the consumer sentiment in your front? Do you see any changes in the consumer behavior and could you give us some color on the roaming sites? What are your expectations on that side? Thank you. And the last question is again, it has been asked about the net debt. What was the amount of wireless pretax paid in the first quarter? Thank you.

Ali Taha Koc: Again, let me start with the strategy focus areas. I just want to say that our momentum is going to keep on going till the end of the year and then most probably into the next year as well. So Techfin and DSS side is going to grow. And for example, Paycell saw a quarter with double-digit real growth performance, Paycell. And then also the meanwhile, finance also supported the Techfin segment growth as well in the first quarter of 2024. And also, our Digital Business Services will grow and with the digitization of the older companies, as well as the public sector. They’re expecting that, that growth and the momentum is going to continue. So everybody wants to be digital and at the end of the day, Turkcell is a leading integrator and leading technology firm in Turkey.

So we will be happy to digitalize and just support them in their businesses. So we’re expecting especially the data center business as well as the co-op businesses is going to grow faster than we expect. So hopefully, we’re going to see this momentum keep ongoing.

Kamil Kalyon: Demirtas, we paid TRY1.7 billion while fixed payment in February. As you know, we are paying in advance to government side and we are collecting this from our customers within the year.

Demirtas Cemal: Thank you.

Kamil Kalyon: You’re welcome.

Demirtas Cemal: And the consumer trends at roaming site?

Ali Taha Koc: So we are closely following that part as well. But, for us, what we are doing is we are just doing some new campaigns about the smart contracts. So we are just letting all the users to see if their tariff is over or not, and then we just make that, that service free of charge. So we are trying to improve our Net Promoter Score as well. So we are seeing that it is kind of easy technologically easy, especially with the electronic and eSIM, but we are closely following the trends. And then we are in order to convince people to use our eSIM or just our subscriber domain. And, so we will close the following it up, but I to say the truth that I will tell you more when we have more data, especially during this tourist season, especially the summer.

We’re going to see the numbers, because this is going to be the first time that we’re going to see lots of tourists with electronic sin — eSIM. So that’s the reason that we’re going to see the impact, both positive and negative. We have more data. I will talk more better at the end of the summer.

Demirtas Cemal: Thank you.

Operator: [Operator Instructions] The next question comes from the line of Mandaci Ece with UNLU Securities. Please go ahead.

Mandaci Ece: Thank you very much for the presentation and congratulations on your strong guidance. So my question is about the corporate revenues. I see [Indiscernible] I see a 3% decline in your corporate revenues. Digital business solution revenue is flat, but apart from it, I’m noticing some decline. Is this just for the first quarter? Do you expect as I can understand, you’re expecting some drop over there going forward, but what was specifically the reason for this decline in the first quarter? Thank you.

Ali Taha Koc: So let me talk about the DBS and then the revenues growth for this quarter. Especially, our digital business services revenues remained flat in first quarter of 2024, mainly due to the fewer one-off large budget projects and hardware sales, compared to last year. And actually, additionally, revenues from public sector clients dropped from 41% Q1 of last year to 24% this quarter. And then also, it indicates reality and indicating a slowdown in public sector sales mainly due to the saving measures in the public. At this point, we’re compensating for the slowdown with our value-added and recurring services and like data center and cloud businesses. So hopefully, we’re just going to compensate this slowdown effect from the public sector.

Kamil Kalyon: Normally, we do not have any problem for the recurring service in the corporate side. As Ali Taha mentioned, we have three significant projects in the last quarter of 2023. Therefore, within the year’s most probably we do not — we will close or we will realize real growth in the corporate side also.

Mandaci Ece: So margin wise, was this the reason — one of the reasons why you had, I think a better margin maybe? Could there be a [Indiscernible] with the expected increase, could there be a margin dilution effect in the quarters ahead?

Kamil Kalyon: From — are you asking from the consumer side or the from the corporate side?

Mandaci Ece: Corporate side, I mean.

Kamil Kalyon: In the corporate side from the recurring side, it’s all the recurring — the income coming from the tariffs, we do not have any dilution regarding the margin side and we are a little bit sensitive from the project perspective, because this year would be a little bit hot for the corporations and state establishments for the budget purposes. Therefore, we do not want to enter risky projects in this year. Therefore, we are selecting the more profitable and no any double receivable risk projects within this year. Therefore, we do not wait or expect a margin dilution in the corporate side also. But as you know, the terminal side or that how can I say, hardware side is a little bit less profitable issues. But we are very good at for example balancing this issue and we do not want to dilute our EBITDA margin and we are very careful about the baskets, which we how can I say prepared for this project?

Mandaci Ece: Thank you.

Kamil Kalyon: You’re welcome.

Operator: 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.

Ali Taha Koc: Again, thank you very much for the time and I will be happy to present you our Q1 great results. So hopefully, we’re going to have the similar and then better results in the Q2. Hope to see you next time. Thank you.

Kamil Kalyon: Thank you very much. Hope to see you.

Ozlem Yardim: Thanks for joining. Thank you.

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