Turkcell Iletisim Hizmetleri AS (IST:TCELL) Q2 2025 Earnings Call Highlights: Strong Revenue ...

Revenue: TRY 53 billion, reflecting a 12% year-on-year growth. Group EBITDA: TRY 23 billion, a 15% increase year-on-year with a margin of 43.5%. Net Income: TRY 4.4 billion, a 37% increase year-on-year. Postpaid Net Additions: 816,000, marking the highest net addition in over five years. Mobile ARPU Growth: 9.8% year-on-year increase. Mobile Churn Rate: 2.2% for the quarter. Residential Fibre ARPU: 17.5% year-on-year increase. Digital Business Services Revenue: Exceeded TRY 4.9 billion, a 39% growth. Data Centre and Cloud Services Revenue Growth: 53% increase. Paycell Revenue Growth: 36% year-on-year increase. Consumer Financing Revenue: TRY 1.3 billion. CapEx Intensity: 16.9% for the quarter. Cash Position: TRY 117 billion at the end of the second quarter. Net Debt Position: TRY 25 billion with a net leverage ratio of 0.3 times. FX Debt: USD 3.9 billion with FX denominated financial assets totaling USD 3.2 billion.

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Release Date: August 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Turkcell Iletisim Hizmetleri AS (IST:TCELL) reported a strong top line growth of 12% year on year, reaching TRY 53 billion, driven by strong ARPU performance and expansion of the mobile subscriber base. Group EBITDA increased by 15% year on year to TRY 23 billion, with a solid margin of 43.5%, supported by strong operational leverage. The company achieved 816,000 postpaid net additions, marking the highest net addition in over five years. Data centre and cloud services posted strong growth of 53%, reflecting successful monetization of capacity investments. Techfin business maintained momentum with Paycell recording a 36% year on year revenue growth, driven by strong performance in mobile payments.

Negative Points

The mobile churn rate increased to 2.2% due to higher volume in the mobile number portability market resulting from intensified competition. Fixed broadband subscriber base remained stable at TRY 3.3 million, impacted by competitive offers from smaller ASPs and expiring 12-month contracts. Turkcell's share in the TArkiye project resulted in a TRY 1.2 billion loss, impacting the company's net income. The company expects a higher cost base in the second half of the year, which is already factored into their full year guidance. Turkcell's net leverage ratio rose slightly to 0.3 times, with a scheduled repayment of approximately USD 1 billion in debt by year end.

Q & A Highlights

Q: Can you provide updates on the fixed concession and 5G, and explain the CapEx target for the second half of the year? A: The Ministry of Transport and Infrastructure plans to renew telecom concessions for 25 years, supporting infrastructure investments. For 5G, the goal is to make services available by 2026, with a balanced approach expected in the tender process. CapEx will focus on enhancing 4.5G capabilities, fiberization, and data center investments, with 65% allocated to fixed and mobile businesses.

Story Continues

Q: Why maintain the same guidance despite strong growth in the first half, and what about the losses from the Togg project? A: The positive impact of price adjustments will taper off in the third quarter, and high base effects from last year will affect growth. We remain prudent and will reassess after the third quarter. Regarding Togg, it's a long-term investment in the e-mobility ecosystem, and while not profitable short-term, it is expected to create long-term value.

Q: Can you explain the increase in financial costs and income from the first to the second quarter? A: Despite higher interest rates, effective balance sheet management resulted in TRY 670 million positive income from FX management. Our net FX position is well-managed, and we use short-term hedging to mitigate currency risks.

Q: What are your thoughts on Turkcell entering the mobile market and its impact on competition? A: We have not seen official statements regarding this. Turkcell has a strong network and customer base, and building a large-scale mobile network requires significant capital and technology. We are confident in maintaining our competitive position.

Q: How do you see the future of the Togg project and its impact on financials? A: Togg is a strategic investment in the e-mobility ecosystem. While it currently impacts financials, we expect positive effects from recent regulatory changes and cost management. Long-term, it will add value to Turkcell and Turkey.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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