Turkcell Iletisim Hizmetleri AS Q4 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Cesar Tiron - Bank of America Securities - Analyst : I have three questions, if that's okay. If I look at the new accounting standard, including inflationary accounting, and if I look at your guidance, there's a slowdown from what I think you delivered in 2023, which I think was 14% or 15%, and your guidance of high single digit. Can you please explain why, excluding inflation, you think the revenue growth will slow down? That's the first one. The second question, I see an increase, again, in the guidance of CapEx intensity to sell. Can you please explain it? Is that mainly driven by the weakening of the currency? And then the third question, if you can please update us on Ukraine and the sell process and this litigation, which you've disclosed, I think one or two weeks ago? Thank you so much.

Question: Cesar Tiron - Bank of America Securities - Analyst : (inaudible) that was very clear.

Question: Ece Mandaci - Unlu & Co - Analyst : Congratulations on the strong results. I have a couple of questions. One is about your EBITDA guidance for 2024. It looks like you're expecting a double -- maybe some double-digit growth in your EBITDA in real terms. What's the main reason for that? I understand that you're going to make price adjustments and there will be real revenue growth, but could there be any possibilities in cost savings maybe? Can you provide more details about that? And secondly, I'm seeing that you have recorded deferred tax income, you also had last year. Is this due to the revaluation of some assets, and will this be continuing in 2024 as well? And thirdly, I see that you expensed some donation expense in the fourth quarter, but cash flow-wise, this payment will be done in the first quarter. Is that right? Thank you.

Question: Ece Mandaci - Unlu & Co - Analyst : Deferred tax income, is that continuing in 2024 as well? And the reason for that, if you can explain?

Question: Ece Mandaci - Unlu & Co - Analyst : Just to follow up on your EBITDA margin guidance, do you consider any more increase in minimum wage in the second half or increase in personnel expenses in the second half of the year?

Question: Ece Mandaci - Unlu & Co - Analyst : Thank you very much.

Question: Cemal Demirtas - ATA Invest - Analyst : Congratulations for good results. My first question is about discontinued operations. You shared some historical figures, including Ukraine. Could you tell us the bottom-line net income number for full year 2023, including Ukraine in 2023? That's my question. I can see the -- I can calculate the revenue and EBITDA, but I cannot calculate the historical number for discontinued sites at the net income level. That's my first question. And maybe if you give more digits about the revenue growth. In historical figure, saw that we can compare, I think it will be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2024 / 5:00PM, TCELL.IS - Q4 2023 Turkcell Iletisim Hizmetleri AS Earnings Call And the other question is about your guidance. I understand that for the -- when you make the calculation based on the IFRS-29 figures, you're saying that you will have, let's say 8%, 9% real growth. plus inflation, 37% year over year. I think that's the assumption we are making, if I didn't understand it wrong. So that's my second question. And the third question, how do you see the Ukraine operations to end up. You put it in discontinued, but it was a profitable one, maybe going forward, it will change. But can you give us some timeline? And the last is not a question, but just criticism I'm making to all blue-chip companies in Tnrkiye. To be honest, I would expect higher disclosure transparency related to the inflation accounting, because it's really hard to understand, and most of the companies put several numbers as you did. But I know some good examples like [ERISA], they made whole -- the comparison, which was very much helpful. Just a quick -- it's a criticism because I -- Turkcell is one of our topic and it has always shown it has a very good standard, but in my humble opinion, that's the basic thing that I didn't like with any company in Tnrkiye, most of the blue chip companies, they give limited figures. But for the transparency, I would expect much, much higher.

Question: Cemal Demirtas - ATA Invest - Analyst : Thank you. But regarding my first question, I understand that the historical figures, including Ukraine, you mentioned around TRY1.9 billion, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2024 / 5:00PM, TCELL.IS - Q4 2023 Turkcell Iletisim Hizmetleri AS Earnings Call

Question: Cemal Demirtas - ATA Invest - Analyst : But -- and I look at your financial statements and it's the number we see for the inflation accounting standards. But I see TRY1.97 billion, the net income related to the Ukraine. But I am asking the historical figures, which might be lower than this number, because these numbers are all carried to the year-end. So in order to -- and my reasoning is, to compare with our full-year numbers, nothing more than that. So, it should be lower than TRY1.9 billion. So I just wanted to reiterate my question. Thank you.

Question: Cemal Demirtas - ATA Invest - Analyst : Okay. Thank you. Thank you very much. It was very helpful. And congratulations for the --

Question: Cemal Demirtas - ATA Invest - Analyst : Okay, thank you. Thank you very much.

Question: Gustavo Campos - Jefferies - Analyst : Congratulations on the results. Just wanted to -- if you could provide some color on the -- your working capital flows as of this fourth quarter of 2023 unadjusted to from like the inflation, that would be very helpful. Thank you.

Question: Gustavo Campos - Jefferies - Analyst : Okay, sounds good. Thank you.

Question: Maddy Singh - HSBC - Analyst : This is Maddy Singh from HSBC. I just have a couple of questions. Firstly, on the results itself. Just wondering if you could share the revenue and EBITDA, net income numbers, as well as the growth year-on-year for the fourth quarter, because I think the results here are for full year. And given that the previous quarter results and all are not reliable, so it will be helpful to see how was -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2024 / 5:00PM, TCELL.IS - Q4 2023 Turkcell Iletisim Hizmetleri AS Earnings Call

Question: Maddy Singh - HSBC - Analyst : Sorry?

Question: Maddy Singh - HSBC - Analyst : The numbers in the table are all for full year. It will be good to have at least some idea about the Q4 as well, so growth and margin as well.

Question: Maddy Singh - HSBC - Analyst : Okay. All right. So any idea by when we can get those numbers? Because I'm just trying to understand the recent trends, because when you do the inflation adjustment on historical basis, the trends kind of do not make any sense after that. So it will be good to have some sense about the recent trends. And then the second question is, is there any plan to distribute dividend for the year? And if so, by when we can know about that?

Question: Maddy Singh - HSBC - Analyst : Great. And then finally, on the guidance for next year, the high single-digit revenue growth target as well as the 42% margin you have talked about. Given that you are assuming 37% margin there -- sorry, inflation rate there, if the inflation rate is much higher than this, do you think these guidance will still hold or you would have to tweak them? Because what I'm not sure about is the underlying adjustments you have to make, given the hyperinflationary accounting, what multipliers and index you use, basically. So, any idea there? Any sensitivities there would be helpful? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2024 / 5:00PM, TCELL.IS - Q4 2023 Turkcell Iletisim Hizmetleri AS Earnings Call

Question: Maddy Singh - HSBC - Analyst : Okay. So, it is fair to assume that if inflation goes up, your real revenue growth will probably also improve somewhat.

Question: Maddy Singh - HSBC - Analyst : Yes. Okay, got it.

Question: Maddy Singh - HSBC - Analyst : Okay. Thank you.

Question: Nagy Nora - Erste Group Bank AG - Analyst : Just a follow -up question from my side, please. If inflation will be higher than you assume for 2024, isn't it the case that then the real growth will be lower than what you are now guiding for, for 2024?

Question: Nagy Nora - Erste Group Bank AG - Analyst : No, but I would assume that, that takes time for the ARPU to catch up to inflation, so that the real growth would be negatively impacted if inflation will be higher than you assumed?

Question: Nagy Nora - Erste Group Bank AG - Analyst : Thank you.