TURKCELL ILETISIM HIZMETLERI A.S. - Q3 2024 Financial Summary
Business Context and Reporting Period
This Form 6-K filing, dated November 8, 2024, reports the consolidated financial results for Turkcell Iletisim Hizmetleri A.S. (Turkcell) for the third quarter and nine months ended September 30, 2024. The financial statements are prepared in accordance with IFRS and restated for hyperinflationary conditions in Türkiye under IAS 29. A material event during the period was the completed sale of Turkcell's Ukrainian operations (Lifecell, Global Bilgi, and Ukrtower) on September 9, 2024, which are now classified as discontinued operations.
Key Financial Metrics
| Metric (TRY Million) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Revenue | 40,171 | 37,590 | 114,592 | 108,295 |
| EBITDA | 17,757 | 16,091 | 49,031 | 44,485 |
| EBITDA Margin | 44.2% | 42.8% | 42.8% | 41.1% |
| EBIT | 6,552 | 5,795 | 15,810 | 14,188 |
| Net Income | 14,280 | (4,495) | 20,555 | (5,707) |
| Net Debt | 9,360 | 32,339 (Dec 2023) | - | - |
| Net Debt/EBITDA | 0.1x | - | - | - |
| Cash & Equivalents | 81,009 | 67,901 (Dec 2023) | - | - |
Material Changes vs. Prior Period
- Revenue Growth: Group revenue increased 6.9% year-over-year (YoY) in Q3 2024, driven by Turkcell Türkiye's strong ARPU performance and the Techfin segment's 30.9% revenue growth.
- Profitability Surge: Net income swung from a loss of TRY 4.5 billion in Q3 2023 to a profit of TRY 14.3 billion in Q3 2024. This improvement is primarily attributable to a TRY 11.2 billion gain from discontinued operations (sale of Ukrainian assets) and improved operational margins.
- Balance Sheet Strengthening: Net debt decreased significantly to TRY 9.4 billion (from TRY 32.3 billion at year-end 2023) due to proceeds from the Ukraine asset sale. Cash balances rose to TRY 81.0 billion.
- Segment Performance:
- Techfin: Paycell revenue grew 19.6% and Financell revenue grew 38.1% YoY.
- Turkcell Türkiye: Mobile ARPU (excluding M2M) grew 6.9% YoY. Postpaid subscribers increased by 515,000 in the quarter.
- International: BeST (Belarus) revenue grew 25.6% in local currency; Kuzey Kıbrıs Turkcell revenue grew 3.1%.
Guidance, Outlook, and Risks
- Revised Guidance: Due to higher-than-expected inflation in the second half of 2024, management revised the full-year 2024 revenue growth guidance to approximately 7% (previously higher). The EBITDA margin target remains around 42%, and the operational capex-to-sales ratio target is maintained at around 23%.
- Inflation Assumptions: The 2024 guidance is based on an assumed annual inflation rate of 43% (previously 37%).
- Operational Risks: Management noted aggressive pricing actions by competitors in Türkiye, leading to increased Mobile Number Portability (MNP) activity and a slight rise in mobile churn to 2.2% in Q3. Regulatory investigations regarding competition law and ICTA obligations remain ongoing, with provisions recognized for probable outflows.
- FX Exposure: The Group maintained a long FX position of US$228 million at quarter-end, which is within the defined FX neutral range.
Key Facts for Investor Verification
- Discontinued Operations Impact: Verify the sustainability of the Q3 net income, as TRY 11.2 billion of the profit stems from the one-time sale of Ukrainian assets.
- Inflation Accounting (IAS 29): Confirm that all financial figures are restated for hyperinflation and understand the impact of the revised 43% inflation assumption on future guidance.
- Techfin Growth Drivers: Assess the sustainability of the high growth rates in Paycell (19.6%) and Financell (38.1%) amidst rising interest rates and regulatory scrutiny on consumer lending.
- Competitive Landscape: Monitor the impact of aggressive competitor pricing on churn rates and ARPU growth in the core Türkiye market.
- Regulatory Provisions: Review the details of ongoing litigation and administrative fines (totaling TRY 249.5 million provision) related to competition law and ICTA investigations.