Turkcell Iletisim Hizmetleri AS Q4 Earnings Call Highlights

Key Points

• Turkcell closed 2025 with 11% revenue growth, net income from continuing operations up 23% to TRY 17.8 billion and a full‑year 43.1% EBITDA margin, and guided 2026 for real revenue growth of 5–7%, an EBITDA margin of 40–42%, and ~25% CapEx intensity.
• Management is prioritizing network and digital investments after winning the largest 5G spectrum and securing fiber via the BOTAŞ deal, while executing a capital allocation plan that includes reinvestment, a 72% dividend payout plus a share buyback program and a commitment to keep net leverage below 1x (ended 2025 at 0.1x).
• Turkcell is scaling its digital infrastructure through a strategic Google Cloud partnership to build a hyperscale region, expects to double active data‑center capacity from 50 MW by 2032, target a six‑fold increase in data‑center/cloud revenues (to ~8–10% of group revenues) and for the segment to generate about $100 million EBITDA from 2026.

Turkcell Iletisim Hizmetleri AS NYSE: TKC executives said the company ended 2025 “with a strong finish,” reporting revenue growth of 11% for the year and an EBITDA margin of 43.1%, while emphasizing continued investment in 5G readiness, fiber expansion, and digital infrastructure such as data centers, cloud, and renewable energy.

2025 results and fourth-quarter performance

CEO Ali Taha Koç told investors that Turkcell’s 2025 revenues increased 11%, and net income from continuing operations rose 23% year-over-year to TRY 17.8 billion. The company also highlighted an EBITDA margin of 43.1% for the full year.

In the fourth quarter, Turkcell reported revenue growth of 7% year-over-year to TRY 63 billion. Group EBITDA increased 12% to TRY 26 billion, producing a 41.2% margin for the quarter. Net income from continuing operations in the fourth quarter rose 11% to TRY 3.6 billion, which management attributed to operational execution, cost discipline, and financial management.

Strategic positioning: 5G, fiber, and capital allocation

Management described 2025 as a pivotal year for long-term positioning. Koç said Turkcell was awarded the largest spectrum in the 5G auction and “secured our fiber footprint through the agreement with BOTAŞ,” moves the company views as strengthening network leadership and capacity for future 5G demand.

Koç outlined a capital allocation framework with three pillars:

• Investing in the business to sustain leadership and capture growth, including mobile rollout, fiber expansion, and investments in data centers and cloud. The company expects CapEx intensity of around 25% during this investment cycle and said it may evaluate selective inorganic opportunities as it scales.
• Shareholder returns, including a dividend distribution equal to 72% of net income from continuing operations in 2025, marking the company’s ninth consecutive year of dividends. Turkcell also launched a three-year share buyback program and repurchased $58 million of shares to date.
• Maintaining a strong balance sheet, with a stated commitment to keeping net leverage below 1x while diversifying funding sources, including sustainable bonds and Islamic financing structures.

Subscriber momentum and fixed broadband growth

Turkcell cited strong subscriber performance in an environment it said was marked by elevated competition and record-high mobile number portability in 2025. Koç said the company delivered 905,000 net postpaid additions in the fourth quarter—its strongest quarterly result in the last six years—and 2.4 million postpaid net additions for the full year, which he characterized as the highest level in 26 years.

Management said postpaid subscribers represented 81% of the base at year-end, up 4.7 percentage points year-over-year, supporting revenue visibility and resilience. The company also pointed to “micro-segmenting pricing actions” and “AI-supported offers” that it said helped migrate customers to higher-tier packages, contributing to mobile ARPU real growth of 5.4%. Turkcell added that churn improved year-over-year to 2.7%, supported by offerings such as family plans and a loyalty platform called Tumbara.

In fixed broadband, Turkcell reported 119,000 net additions in fiber subscribers during 2025, bringing the total fiber subscriber base to 2.6 million. The company expanded offers to speeds up to 1,000 Mbps and said one in five customers now subscribes to speeds above 500 Mbps. Residential fiber ARPU increased 10.3% year-over-year. Turkcell expanded fiber home passings to 6.3 million, and management highlighted a 42% take-up ratio.

Data centers, cloud partnership with Google, and other growth engines

Turkcell repeatedly highlighted digital infrastructure—particularly data centers and cloud—as central to its long-term growth strategy. Koç said the company has formed a strategic partnership with Google Cloud to build a hyperscale cloud region in Türkiye, which he said would support data sovereignty and provide access to AI, cybersecurity, and digital platform capabilities.

Management said Turkcell operates 50 megawatts of active data center capacity and expects it to double by 2032. Over the same period, the company expects data center and cloud revenues to grow at least six-fold in U.S. dollar terms. Koç also said that beginning in 2026, Turkcell expects the segment to generate approximately $100 million in EBITDA.

During the Q&A, management addressed investor questions about the data center business. In response to a question on EBITDA margins, Turkcell said it does not expect a dilutive impact on the company’s EBITDA margin as the business scales and reiterated expectations for more than a doubling of active data center capacity and a six-fold increase in data center and cloud revenues by 2032. Management also said the share of data center/cloud revenue in total revenues is expected to rise to around 8%–10% from about 2% currently.

Asked about the scale of planned investment and whether the megawatt targets appear small for a hyperscale deployment, Koç provided context on Türkiye’s current cloud consumption and said much of the corporate market still relies on self-built data centers. He described Turkcell’s existing capacity as largely supporting colocation customers, while the Google Cloud region would involve Turkcell building the facility infrastructure (including power and cooling) and Google bringing large volumes of servers. Koç said 50 megawatts represents a significant investment in that context and argued the model enables hundreds of companies to share and more fully utilize cloud capacity.

Beyond cloud, Turkcell said its digital business services revenues rose 30% to TRY 7 billion, supported by stronger hardware sales, and its system integration backlog reached TRY 6 billion. Data center and cloud revenues grew 32% year-over-year, which management attributed to capacity expansions, while noting growth rates are expected to “gradually normalize” off a higher base. The company said it expects to complete the final module of its Ankara Data Center in 2026 and begin construction of new data centers under the Google partnership in the first half of 2026.

In TechFin, Turkcell reported 21% revenue growth for 2025, with Paycell as the main driver. Paycell’s fourth-quarter revenues increased 40% year-over-year, supported by postpaid solutions and “Pay Later” services. Management said Paycell increased its non-group revenue share by 18 percentage points to 77%. Turkcell also said financial-side revenues declined 6% due to a lower interest rate environment, while the loan portfolio continued to expand and net interest margin improved to 6.3% on lower funding costs and improved risk management and collections.

Costs, balance sheet, FX positioning, and 2026 outlook

CFO Kamil Kalyon said full-year EBITDA increased 14% to TRY 104 billion, with margin expansion supported by employee and energy expenses, while mobile payment expenses rose alongside Paycell’s POS expansion. He added that radio-related expenses reflected accelerated 5G readiness and network modernization.

Turkcell closed 2025 with TRY 92 billion in cash after dividend payments, loan repayments, and a eurobond redemption in the fourth quarter. Net debt was TRY 15 billion, and net leverage improved to 0.1x, supported by EBITDA growth. The company said its liquidity position covers upcoming 5G payments and debt service obligations over the next two and a half years. Kalyon also referenced a one-time accounting impact tied to the 15-year BOTAŞ infrastructure renewable agreement on the fixed side.

On foreign exchange risk management, Kalyon said Turkcell swapped part of its U.S. dollar holdings into Turkish lira, resulting in 56% of cash held in TL at year-end, which management said supported net financial income via higher local currency yields. Turkcell disclosed year-end positions of $3.4 billion in FX debt, $1.9 billion in FX-denominated financial assets, and a $600 million derivatives portfolio. In response to investor questions, management discussed a short FX position of about $957 million, attributing the change to fourth-quarter CapEx seasonality and the decision to reduce hedging given what it described as expensive hedging costs in 2025, while stating a policy target of managing the FX position around $1.5 billion.

For 2026, Turkcell guided for real revenue growth of 5%–7%, an EBITDA margin of 40%–42%, and operational CapEx intensity around 25%. The company also forecast data center and cloud revenue growth of 18%–20%, which management said reflects normalization after capacity expansions in 2025. When asked about the margin outlook versus the 2025 result, management cited expectations for higher salary increases in 2026, planned marketing and sales activity tied to 5G starting April 1, and uncertainty around energy prices, prompting a more conservative stance.

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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