Turkcell Iletisim Hizmetleri AS Q1 Earnings Call Highlights

Key Points

• Turkcell’s Q1 2026 results improved across the board, with revenue up 9% year over year to more than TRY 68 billion, EBITDA rising to TRY 28 billion, and net income climbing 15% to TRY 4.6 billion. Management said growth was driven by Turkcell Turkey, Digital Business Services, and a stronger postpaid and broadband base.
• The company completed a nationwide 5G launch on March 31 and said it won 40% of the spectrum in the tender, giving it 25% more capacity than its closest rival. Turkcell is leaning on expanded data packages, device campaigns and network upgrades to support the transition.
• Subscriber and digital service momentum remained strong, including 661,000 postpaid mobile additions, 36,000 fiber net adds, and 64% growth in Digital Business Services revenue. Paycell also grew 15%, while capital spending was focused heavily on 5G, fiberization and data center expansion.

Turkcell Iletisim Hizmetleri AS NYSE: TKC reported first-quarter 2026 revenue growth of 9% year over year, with management highlighting the company’s nationwide 5G launch, postpaid subscriber gains, and strong demand for digital business services as key drivers of the period.

Chief Executive Officer Ali Taha Koç said Turkcell launched 5G nationwide on March 31, calling it a milestone that reinforced the company’s mobile leadership. He said the company secured 40% of the 5G spectrum in the tender and “25% more capacity” than its closest competitor, positioning the network for long-term demand.

Koç said the 5G rollout was supported by expanded data packages, smartphone campaigns and advertising featuring Shaquille O’Neal. He also cited use cases including remote driving of a Türkiye’nin Otomobili Girişim Grubu T10F over a distance of 150 kilometers and live 5G speed tests across Turkey’s 81 cities, with speeds exceeding 2,000 Mbps.

Revenue, EBITDA and net income rise

For the first quarter, Turkcell’s revenue exceeded TRY 68 billion, up 9% from a year earlier. Group EBITDA rose to TRY 28 billion, with an EBITDA margin of 41.4%. Net income increased 15% year over year to TRY 4.6 billion.

CFO Kamil Kalyon said the top-line increase was primarily driven by Turkcell Turkey, which grew 8.6% year over year, and by non-telco businesses, particularly Digital Business Services. He said Digital Business Services accounted for 12% of revenue in the quarter and benefited from managed services, while the expanded postpaid base and fixed broadband services provided a foundation for growth.

Kalyon said the higher share of hardware sales from large-scale integration projects supported revenue growth but weighed on the overall margin mix. He added that disciplined cost management, favorable energy prices and reduced funding costs at Financell partially mitigated that impact.

Net income benefited from stronger operating performance and EBITDA generation, as well as a monetary gain tied to capitalization of the 5G license, which contributed TRY 4.2 billion year over year, according to Kalyon. He also noted higher foreign exchange expenses related to the first 5G license installment payment of $653 million in January, the recognition of future installments and increased swap transactions.

Postpaid and fiber additions support consumer base

Turkcell added 661,000 postpaid subscribers in the quarter, which Koç described as the company’s strongest total mobile net additions in 14 quarters. The postpaid subscriber share rose 4.6 percentage points year over year to 81%.

Koç said mobile average revenue per user was broadly flat year over year, reflecting the delayed effect of competitive pricing in 2025, Turkcell’s contract-based structure and higher inflation in the first quarter. He said the company is taking a “balanced approach” to pricing as it transitions to 5G, aiming to protect its subscriber base while maintaining revenue market share leadership.

In fixed broadband, Turkcell recorded 36,000 net fiber subscriber additions, including 21,000 within its own fiber footprint. Residential fiber ARPU increased 9.7% year over year, supported by upselling, pricing actions and IPTV contributions. The company added 138,000 fiber home passes in the quarter, reaching 6.5 million home passes in 30 cities, with a take-up rate of 41.8%.

Digital services and Paycell remain growth areas

Digital Business Services revenue increased 64% year over year, driven by higher hardware revenue from large end-to-end corporate projects. Turkcell’s Data Center and Cloud business grew about 21%, and the company said its system integration backlog exceeded TRY 10 billion.

Koç said cumulative data center investments have reached nearly EUR 600 million and that Turkcell remains on track to complete its fifth data center module in Ankara. He also said the company’s Google Cloud hyperscale partnership is progressing as planned.

In Techfin, Paycell revenue increased 15%, supported by momentum in point-of-sale and Pay Later services. Active Pay Later users rose 16% to more than 3 million. Koç said financial services revenue declined primarily because of ongoing installment limitations, but added that 5G penetration could serve as a growth catalyst if the regulatory environment becomes more supportive. Paycell’s net interest margin expanded 3.6 percentage points to 8.3%, supported by lower funding costs, while cost of risk was 3.3%.

Capital spending focused on 5G and infrastructure

Turkcell’s capital expenditures-to-sales ratio was 21.5% in the first quarter. Kalyon said 85% of operational capital spending was allocated to connectivity businesses, reflecting preparations for the 5G rollout. The company’s base station fiberization reached 47%, which management said improved network quality and 5G readiness.

Data center investments accounted for approximately 5% of capital expenditures, with construction underway for the fifth module in Ankara. Kalyon said capital intensity is typically lower in the first quarter, but the company expects higher figures in upcoming quarters due to renewable energy investments and data center expansion related to Google Cloud.

Turkcell ended the quarter with TRY 96 billion in cash. Kalyon said liquidity was supported by a $1 billion Murabaha syndication and remains sufficient to cover upcoming 5G payments and all debt maturities over the next four years. Net debt increased to TRY 49 billion, and net leverage rose to 0.42 times. Management said it expects leverage to remain below 1x despite 2026 being a high-investment year.

Management addresses pricing, ARPU and guidance

During the question-and-answer session, management said Turkcell applied mobile price adjustments of 26% in January and 16% in April, using segment-based and customer-specific offers supported by AI tools rather than broad mass pricing changes. On fixed services, Turkcell implemented price increases of about 12% on shared infrastructure and about 18% on fiber products in February.

Asked about ARPU trends, Koç said Turkcell’s goal is to maintain healthy ARPU growth aligned with macroeconomic indicators, while noting that inflation affects reported ARPU with a lag because of 12-month contracts. He said dynamic pricing and migration to higher-value segments remain central to the company’s strategy.

Kalyon said it was too early to discuss any revision to full-year guidance, citing uncertainty around economic conditions, inflation and the duration of current geopolitical conflict. He said management would need to review subsequent quarterly results before assessing whether guidance should change.

About Turkcell Iletisim Hizmetleri AS NYSE: TKC

Turkcell Iletisim Hizmetleri AS, traded on the NYSE under the symbol TKC, is a leading integrated telecommunications and technology company headquartered in Istanbul, Turkey. Since its founding in 1994 as the country's first GSM operator, Turkcell has expanded its footprint to offer a comprehensive suite of mobile voice, messaging and data services to millions of subscribers. The company has made significant investments in nationwide 4.5G and 5G network infrastructure to deliver high-speed connectivity across both urban centers and rural regions.

In addition to its core mobile offerings, Turkcell provides fixed broadband and fiber-optic services tailored to consumer and enterprise customers.

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