Turkcell Iletisim Hizmetleri AS (NYSE:TKC) Q3 2018 Earnings Conference Call Transcript

Oct 24, 2018 • 02:00 pm ET

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Turkcell Iletisim Hizmetleri AS (NYSE:TKC) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Third Quarter 2018 Results Conference Call. For your information, today's conference is being recorded.

At this time, I'd like to turn the call over to Korhan Bilek, Director of IR and Mergers and Acquisitions. Please go ahead, sir.

Executive
Zeynel Korhan Bilek

Thank you, Wali. Hello, everyone. Welcome to Turkcell's third quarter 2018 results call. Today's speakers are our CEO, Mr. Kaan Terzioglu and our CFO, Mr. Osman Yilmaz. We'll have a brief presentation and afterwards we will be taking your questions. Before we start, I would like to remind you to review the disclaimer of our presentation.

Now, I hand over to Mr. Terzioglu.

Executive
Muhterem Kaan Terzioglu

Korhan, thank you very much. Good afternoon, and good evening, and welcome to our third quarter 2018 results call. We are pleased to announce another set of strong results, especially in a challenging macroeconomic environment. We continued our growth momentum at the top line with 26.1% year-on-year increase to TRY5.8 billion. This brings the two year cumulative growth rate to 59%. Even with an accelerated inflation level, this represents a real growth after inflation rate of 14.5%. The key driver of this outstanding performance was the record high mobile ARPU growth of 18% due to successful execution of our digital services focus strategy and upsell performance.

EBITDA rose to TRY2.4 billion with a 41.3% EBITDA margin. As the download of our digital services reached 130 million, the share of Multiplay customers also followed, resulting in 64% of our mobile customer base on triple play and 47% of fiber residential subscribers using our TV services. With 18.2 million 4.5G compatible smartphones on our network, the average data usage has continued to rise, reaching 7 gigabytes quarterly average.

Given these better than anticipated nine months' results, we once again raise our revenue growth guidance from the 16% to 18% range to 20% to 22% range, along with a higher EBITDA margin guidance of 39 to 41 percentage points for 2018. Our capital expenditure, monitored for efficiency at all times, remains on check at 18% to 19% operational CapEx over sales ratio guidance, despite sharp lira weakness.

Next slide. Our robust business model has successfully weathered the top macroeconomic environment of the third quarter. Our ability to create revenues with adjacent products and our focus on the value offered to our subscribers contributed to the year-on-year mobile ARPU growth of 18% for the quarter. Resilient operational performance is proven again by continued growth momentum and an EBITDA margin of 41.3% with a 5.8 percentage points rise year-on-year.

Customer loyalty is intact as seen in the sector low monthly churn as well as our leadership in the Net Promoter Score. This resulted from our value offerings enhanced by digital services, superior network quality, retention campaigns and user experience. Our prudent and disciplined financial risk management strategy has protected us in volatile times. Additionally, effective credit scoring and collection mechanisms have allowed us to maintain robust asset quality, including our consumer finance business.

Next slide. Now more details on