Turkcell Iletisim Hizmetleri AS Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 27, 2024

Key Takeaways

  • In Q1 2024 Turkcell delivered robust results, with revenue up 11.8% to TRY 31 bn, EBITDA +23% to TRY 12.8 bn and net profit of TRY 2.6 bn, leading to an upgraded guidance of low double‐digit revenue growth for 2024.
  • ARPU growth remained strong, driven by rational price adjustments: mobile ARPU +17% year-on-year and fiber residential ARPU +14%, supported by postpaid additions of 472 K and fiber net adds of 48 K in Q1.
  • Operational metrics improved further, with mobile churn at a six-year low of 1.5% and fixed broadband churn at a record 1.3%, while postpaid subscribers rose to 27.6 m (72% of total mobile base).
  • Digital Services & Solutions accelerated, with standalone revenues +32% led by OTT offerings, Paycell top-line +33%, and data center & cloud revenues +48% to TRY 470 m on growing contracted volumes.
  • CapEx intensity was 18.2% of sales in Q1 and is expected to rise to ~23% in 2024 to fund fiberization (target 41%) and data center expansion, while net debt of TRY 33 bn (0.6x leverage) remains well-covered by a TRY 49 bn cash buffer and planned FX hedge reduction.
AI Generated. May Contain Errors.
Earnings Conference Call
Turkcell Iletisim Hizmetleri AS Q1 2024
00:00 / 00:00

There are 7 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. I am Vasilios, your conference call operator. 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 At this time, I would like to turn the conference over to Ms.

Operator

Ozlem Jardem, Investor Relations and Corporate Finance Director. Ms. Jardem, you may now proceed.

Speaker 1

Thank you, Rosilios. Hello, everyone. Welcome to Turkcell's Q1 2024 Earnings Call. Today, our CEO, Alisa Hakoch and CFO, Kami Khayon, will be delivering a brief presentation covering operational and financial results, which will be

Speaker 2

followed by

Speaker 1

a Q and 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. Al Zahra.

Speaker 3

Thank you, Aslam. 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 Q1 of 2024, we are delighted to share our successful results. By taking timely actions, we have delivered robust digital double digit real growth despite global central banks tightening policies and reaccelerating inflation in Turkey.

Speaker 3

Our top line grew 12% to TRY 31,000,000,000 with a remarkable 23% increase in EBITDA. These results have been driven by 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 postpaid and fiber customer acquisition resulted in 333,000 net additions in the Q1 of the year. Overall, our strong operational performance resulted in a remarkable net profit of TRY 2,600,000,000.

Speaker 3

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 Q1. 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.

Speaker 3

Over the past 12 months, our postpaid base has grown with 1,700,000 additions. Our postpaid customer base exceeded 27,600,000, reflecting 72% of the total on a 3 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 6 years, Driven by sequential price adjustments, upsell efforts and an increased share of postpaid subscribers in the portfolio, blended mobile ARPU rose by 95% year on year and continued to outpace CPI.

Speaker 3

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, Usen. 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 Q1, we had 48,000 fiber customer additions to our portfolio, following focused investments in expanding our fiber footprint over past years.

Speaker 3

We are pleased to have added 41,000 IPTV subscribers, reaching the homes of 1,500,000 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 DBplus, our pure fiber technology and a rational market, we achieved a fixed churn rate of 1.3%, marking the lowest level since 2007. Widering the gap at CPI, residential fiber ARPU growth continued to rise, achieving a 90% year on year growth on a historical basis. Our up sell efforts to higher speed packages and an increase in 12 month contract share within the customer portfolio were the main components of this outstanding performance.

Speaker 3

Similar to the mobile side, the base effect from last year's earthquake 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 home pass figures compared to last year. Next slide. Let's discuss our strategic focus areas, starting with Digital Services and Solutions.

Speaker 3

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 5,500,000 paid user base. Among these offerings, our TV services and personal cloud services 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 2nd position as of 2023 year end. In this in the Q1, Digital Business Services generated TRY 2,800,000,000 in revenue and secured more than 1200 contracts.

Speaker 3

We remain committed to maintaining our leading position in the data center market. Combined with our cloud services, revenues from those grew by 48% to TRY 470,000,000. 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.

Speaker 3

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 EBITDA 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.

Speaker 3

The higher cost of funding stemming from tight monetary policies secures financials 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 Finance had 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 Q1 of 2023. Next slide.

Speaker 3

Lastly, our performance in the international markets. TruCell's international revenues, which account for 3% of group revenues, rose 2.2% to TRY 815,000,000. 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.

Speaker 3

I would like to end by sharing our revision for 2024 guidance. Given our Q1 performance, we revised 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 Kalyan.

Speaker 2

Thank you very much, Alitravesh. Now let's move on to our financial results. Our consolidated revenue increased by 11.8% on a yearly basis to TRY 30 800,000,000. The Turkcell QTS segment was the biggest supporter of the group top line 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 ARP growth, thanks to sequential price adjustments with successful upselling efforts.

Speaker 2

The Technin segment contributed TRY 460,000,000 to the top line with the strong performances of Paycell and Financial, which grew 33% 54%, respectively. Next slide please. In the Q1 of 2024, EBITDA rose 23% on a yearly basis to TRY12.8 billion, thanks to strong revenue growth. EBITDA margin expanded 3.8 percentage points year on year. Despite the increase in personnel expenses due to the BNU 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.

Speaker 2

After the electricity prices increased 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 TRY 2,400,000,000 to net income.

Speaker 2

The net FX loss item has pressured net profit by TRY 1,800,000,000 due to higher foreign exchange rate change, which is partially offset by mark to market of financial derivatives. By the Q1, 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 TRY 3,100,000,000 on net profit marked under the monetary gain and loss item. Despite the positive 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.

Speaker 2

The CapEx to sales ratio for the Q1 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.

Speaker 2

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 TRY 49,000,000,000.

Speaker 2

Note that a total of TRY 5,200,000,000 virus usage tax payments, the 2nd installment of the earthquake donation and employee bonuses had a negative effect on our cash position. Additionally, we have invested in Eurobonds 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 decrease in cash position, our net leverage slightly increased to 0.6 times. This year, our FX debt service is around US340 $1,000,000 which we consider quite manageable given our strong cash position.

Speaker 2

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.

Speaker 2

Next slide please. Lastly, let's look into the management of foreign currency risk. In the Q1 of this year, our balance sheet had around US2 $1,000,000,000 equivalent in FX Financial Liabilities. In addition to the $1,600,000,000 equivalent FX denominated financial assets, we have a $700,000,000 effective hedging portfolio, the vast majority of which consists of future, 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.

Speaker 2

As of this quarter, we have a net FX position of US158 million dollars 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 US200 $1,000,000 This concludes our presentation and we can now open the line for questions. Thank you.

Speaker 4

You.

Operator

The first question comes from the line of Tiram Cesar with Bank of America. Please go ahead.

Speaker 5

Yes. Hi. Good evening. Thanks for the call and for the opportunity to ask questions. I have 3 questions, but they're all easy.

Speaker 5

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, 1, 2 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?

Speaker 5

And let's say, if the lira depreciates less than per your budget, could it be that you spent a little bit less CapEx or maybe the CapEx intensity would be less than your guidance? And then the third question, going back to the data centers, can you please explain your ambition in the field and how large do you think the capacity will be in the medium term? Thank you so much.

Speaker 4

Thanks, Sebastien.

Speaker 3

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 is no change in our EBITDA margin and CapEx guidance. However, given the macroeconomic dynamics, projecting inflation will be challenging and the actual figures may vary according to the realization in realized inflation and other factors such as the cyclicality of revenues.

Speaker 3

And also the Ministry of Treasury and Finance, Mehmet Shimsek 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 through that the Q1, 1st couple of months of this quarter is that is our expectation. So that's the reason that we revised our guidance. For the data center business, we're expecting we already have 4 big high-tech data centers.

Speaker 3

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 4 big data centers and we are adding more to them. And then in the future, you're going to see more coming from Turkcell.

Speaker 2

For the second question, normally our year end U. S. Dollars FX rate estimation is 37.5 and the average rate we are assuming TRY 34. 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.

Speaker 2

We are chasing the developments in the economical side, but most probably the FX rate will be realized within our estimations this year.

Speaker 5

Thank you so much. That was very clear. Thank you.

Speaker 3

You're welcome.

Operator

The next question comes from the line of Bistro Vazenia with Barclays. Please go ahead.

Speaker 6

Hello, good evening. Can you hear me?

Speaker 3

Yes. Loud and clear.

Speaker 6

Good. Thank you very much for the presentation and congrats on the results. It's also great news about the upgraded guidance. I have 2 quick questions. So my first one, you mentioned that your cash position decreased because of investments in Eurobond.

Speaker 6

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?

Speaker 6

Or do you plan to use that for CapEx or maybe for your eurobonds repayment? That's it. Thank you.

Speaker 2

Thank you very much. I will give the answer for the first one. The duration of the Eurobond is 5 years, Turkish Sovereign and Bank. When we look at, for example, yields in the Eurobond, there is a high yield when we compare it with the deposit rates. Therefore, we prefer to invest eurobond in order to benefit from the high yields.

Speaker 2

For the second question, maybe you can give

Speaker 3

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 anti monopoly committee of Ukraine. So this is the last step for the conclusion concluding of this deal. Although we don't we do not have a board decision regarding the proceeds, we will obtain from the sale of our assets in Ukraine.

Speaker 3

We have important investment projections in the coming period, such as data centers, solar energy and as well as the 5.5 gs auctions. So we will we are looking for huge investments projections and in the coming period.

Speaker 6

Got you. Thank you. So do you still see the deal closing during this year?

Speaker 3

Yes, definitely, because there were 2 big roadblocks. 1 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 grain finalized, hopefully in near future, and we are talking about in the period of months, we're expecting that's going to be done in this year.

Speaker 6

Okay. Thank you very

Speaker 2

much. You're welcome.

Operator

The next question comes from the line of Ignibikli Murat with HSBC. Please go ahead.

Speaker 4

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?

Speaker 2

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

Speaker 4

Net cash, the total cash is at JPY48.8 billion And when we look at

Speaker 2

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

Speaker 4

Yes, yes, exactly. So why don't you include those in the cash calculation?

Speaker 2

We include it. Normally, we have in our hand and 15.1000000 financial assets. And for example, when you look at our leverage, EUR0.58, these two amounts are included into this calculation.

Speaker 4

Okay. When I look at the footnote, I see almost €49,000,000 as cash and also €10,000,000 as financial assets separately. That's what

Speaker 2

I 15,000,000, roughly. 15,000,000, yes.

Speaker 4

Okay. We can follow-up on this, Nikos.

Speaker 2

Okay.

Speaker 4

Were there any working capital issues in the Q1? Because there's around almost EUR 12,500,000,000 EBITDA. I'm still EUR 0.5000000000 CapEx in the quarter. And the change in net debt increased, euros 6,000,000 or euros 7,000,000,000. So I think there should be some negative impact from working capital, right?

Speaker 4

Or is it tax payments or anything like that? Can you clarify that, please?

Speaker 2

Normally, we hit around TRY 9,900,000,000 cash outflow in this quarter related to working side. This was mainly driven by the as you know, we are we paid the 2nd 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. And we have some payments to our suppliers and decreased trade payments in Q1 2020 4 compared to the Q1 of last year.

Speaker 2

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.

Speaker 4

Okay. Thank you. And finally, when you look at the financial expenses during the quarter of very limited FX activity or limited FX depreciation, the financial expense rise, I see around more than EUR 5,000,000,000 of FX losses. Could you elaborate on that, please?

Speaker 2

Yes. Lomenib, 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.

Speaker 2

Therefore, these three effects affected our FX position or FX loss side negatively.

Speaker 4

So is it safe to assume that given that the interest rates in the market has already settled at some level of rate very high, we should not see further significant FX losses in the coming months. The price is only the market to market.

Speaker 2

Yes. As mentioned in my speech, our expectation in the FX side, we are not expecting a very high increase in the FX side. Therefore, most probably in order to decrease our hedging costs, we would like to make a short position might be in the coming periods in order to reduce our financial costs because our estimation regarding the FX base, 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 FX position.

Speaker 4

Thank you. That's very clear. And finally, about the operations. When you look at a typical postpaid client, it is to release contract. What is the like front book like for like growth in invoice if one is to renew its contract compared to last year.

Speaker 4

So a new contract renewal price is up how much on a year on year basis?

Speaker 2

Normally, as we said, our revenues grew by around 13% in Turkcell to Kia site, first go ahead. And we have a very how can I say, our 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 2021, we had we made a lot of price increases and more than 100 percent increase in prices within the last 20 months, we can easily say that, because we successfully implement our inflation pricing policy. Invoice to invoice, you can

Speaker 3

talk about 100%, more than 100% invoice to invoice. Yes.

Speaker 4

So the typical trade union tariff is up 100% in the new terms compared to same period last year.

Speaker 2

Might be.

Speaker 3

Might be. We are talking about the blended ones, but we are not talking about the markets or platinum. We are just talking about the blended.

Speaker 4

So yes, the inflation rate hopefully declines in coming quarters. In the near term, this will translate into a much larger number. I see. Thank you.

Speaker 3

You're welcome.

Operator

The next question comes from the line of Demirtas Jamal with Tata Invest. Please go ahead.

Speaker 4

Thank you for the presentation and congratulations for very good results. My first question is about your strategic focus areas. I see a little bit more momentum in both the 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.

Speaker 4

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?

Speaker 4

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 prepack paid in the Q1? Thank you.

Speaker 3

Ian, 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 Techwin and DSS side is going to grow. And for example, Paycell saw a quarter with double digit real growth performance, Paycellar. And then also the meanwhile, Financial also supported the Techne segment growth as well in the Q1 of 2024.

Speaker 3

And also, are the digital business services will grow and with the digitization of all the 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 the leading integrator and leading technology firm in Turkey. So we will be happy to digitalize and just support them in their businesses.

Speaker 3

So we are 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.

Speaker 2

Jember, we paid TRY 1,700,000,000 while this tax payment in February. As you know, we are paying in advance to government side and we are the

Speaker 4

And the consumer trends

Speaker 3

are roaming site? 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 service free of charge. So we are trying to improve our Net Promoter Score as well.

Speaker 3

So we are seeing that it is kind of easy, technologically easy, especially with the electronics 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 closely following it up. But I have 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 tourism with electronic sim in SIM. So that's the reason that we're going to see the impact, both positive or negative. We have more data, I will talk more better at the end of the summer.

Speaker 4

Thank you.

Operator

The next question comes from the line of Mandati Eze with Unlu Securities. Please go ahead.

Speaker 1

Thank you very much for the presentation and congratulations on your strong guidance. So my question is about the corporate revenues. I see Manali Capital, I see a 3% decline in your corporate revenues. Digital Business Solutions revenues is flat, but apart from it, I'm not seeing some decline. Is this just for the Q1, do you expect as I can understand that you're expecting some growth over there going forward, but what was specifically the reason for this decline in the Q1 just?

Speaker 1

Thank you.

Speaker 3

So let me talk about the DBS and then the revenues growth for this quarter. Especially our digital business services revenues remained flat in Q1 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 20 4% 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 are compensating for the slowdown with our value added and recurring services and like data center and cloud businesses.

Speaker 3

So hopefully, we are just going to compensate this slowdown effect from the public sector.

Speaker 2

Normally, we do not have any problem for the recurring service in the corporate side. As Al Fabin mentioned, we have 3 significant projects in the last quarter of 2023. Therefore, within the years, most probably, we do not we will close or we will realize

Speaker 4

real growth in the corporate side also.

Speaker 1

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

Speaker 2

From are you asking from the consumer side or from the corporate side?

Speaker 1

Corporate side, I

Speaker 2

mean. 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 hard for the corporations and state establishments for the budget purposes. Therefore, we do not want to enter risky projects in this year.

Speaker 2

Therefore, we are selecting a 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 buckets which we how can I say prepare for these projects?

Speaker 1

Thank you.

Speaker 2

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.

Speaker 3

Ian, 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. Thank you very much.

Speaker 3

Hope to see you.

Speaker 1

Thank you for joining.

Speaker 6

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.

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