TKC

TURKCELL ILETISIM HIZMETLERI A.S. - Q1 2025 Financial Summary

Business Context and Reporting Period

This Form 6-K filing reports the consolidated financial results for TURKCELL ILETISIM HIZMETLERI A.S. (Turkcell) for the first quarter ended March 31, 2025. The financial statements are prepared in accordance with IFRS and restated for hyperinflation (IAS 29) in Turkish Lira (TRY). As of Q1 2025, the Group revised its reporting segments to three categories: Turkcell Türkiye (telecom, digital services, retail), Techfin (financial services), and Other (international, energy, eliminations). The filing includes a press release dated May 9, 2025, and audited condensed consolidated financial statements.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Driven by a 12.7% increase in consolidated revenue, primarily due to strong ARPU growth in mobile and fixed segments and a 31.5% surge in Techfin revenue. Data Center & Cloud revenue grew 47.5%.
• Profitability: EBITDA margin expanded to 43.7% due to cost efficiencies (cost of revenue decreased to 45.0% of revenue) and lower funding costs. EBIT grew significantly (68.8%) despite flat depreciation.
• Net Income Decline: Net income decreased 15.3% year-over-year. This was primarily due to a higher income tax expense (up 89.7%) and the absence of a one-time gain from the sale of Ukrainian assets (TRY 747 million) recorded in Q1 2024. Excluding the prior year's asset sale, net income increased 6.6%.
• Balance Sheet: Consolidated debt increased to TRY 150.7 billion (from TRY 114.8 billion in Q4 2024) following a USD 1 billion Eurobond issuance in January 2025. Cash balances rose to TRY 108.4 billion.
• Operational: Mobile postpaid subscribers grew by 153,000 (76% of total base). Fiber net additions were 30,000. Mobile ARPU (excl. M2M) grew 15.9%.

Guidance, Outlook, and Risks

• Dividend Proposal: The Board proposed a gross dividend of TRY 8.0 billion (TRY 3.64 per share), payable in two installments in June and December 2025, subject to shareholder approval.
• Strategic Investments: Turkcell Superonline won a tender to lease fiber infrastructure from BOTAŞ for 15 years at USD 25.5 million annually. The company also expanded solar energy capacity to 28.2 MW.
• Guidance: Management provided revenue growth guidance for the Data Center & Cloud business for the full year 2025, citing the 47.5% Q1 growth as a positive indicator.
• Risks & Contingencies:
  • Regulatory: Ongoing investigations by the ICTA regarding refund procedures, identity verification, and R&D obligations. Several administrative fines have been paid or are under legal appeal.
  • Competition: Intense market competition and potential regulatory interventions in tariffs.
  • Macroeconomic: Exposure to Turkish Lira inflation and exchange rate volatility, though the company maintains a net short FX position of USD 76 million (within neutral definition).

Key Facts for Investor Verification

• Segment Reclassification: Verify the impact of the new segment structure (Turkcell Türkiye, Techfin, Other) on historical comparability, specifically the reclassification of Turkcell Satış operations.
• Net Income Quality: Confirm the adjusted net income growth of 6.6% by excluding the one-time gain from the Ukrainian asset sale in Q1 2024.
• Debt Structure: Review the currency composition of the increased debt (60% USD, 26% EUR) and the terms of the new USD 1 billion Eurobond issuance.
• Techfin Performance: Validate the 31.5% revenue growth in the Techfin segment, driven by Paycell (47.8% growth) and Financell (8.2% growth).
• Regulatory Exposure: Monitor the status of ongoing ICTA investigations and potential additional fines related to refund procedures and R&D obligations.