Turkcell’s Earnings Call Highlights Growth Amid Challenges

Turkcell Iletisim Hizmetleri As ((TKC)) has held its Q1 earnings call. Read on for the main highlights of the call.

Turkcell’s recent earnings call paints a picture of optimism, underscored by notable revenue growth and strategic expansions in techfin and cloud services. Despite these achievements, the company is navigating challenges such as intense market competition and currency volatility, which could impact its future trajectory.

Strong Financial Performance

Turkcell reported impressive financial results with a revenue of TRY48 billion, marking a 12.7% increase year-on-year. The company’s EBITDA rose by 19% to TRY21 billion, achieving a robust margin of 43.7%. This performance highlights Turkcell’s effective financial management and operational efficiency.

Customer Base Growth

The company saw a significant increase in its customer base, adding 153,000 postpaid and 30,000 fiber customers in the first quarter of 2025. This growth reflects the success of Turkcell’s value-focused strategy, which continues to attract and retain customers.

Techfin and Cloud Revenue Surge

Turkcell’s strategic focus on techfin and cloud services paid off, with techfin segment revenues increasing by 31% and data center and cloud revenues growing by 48%. This surge indicates strong momentum in these strategic areas, positioning Turkcell well for future growth.

Sustained ARPU Growth

The company achieved a double-digit ARPU growth of 15.9%, driven by rational pricing and effective upselling strategies. This growth underscores Turkcell’s ability to enhance customer value and drive revenue per user.

CapEx and Renewable Energy Progress

Turkcell’s CapEx to sales ratio was 20.2%, reflecting significant investments in data centers and renewable energy. The company has reached 28 megawatts of active solar capacity, demonstrating its commitment to sustainable growth.

Strong Balance Sheet

With a total cash position of TRY108 billion and a leverage ratio of 0.2 times, Turkcell maintains a strong balance sheet. This financial strength supports debt service for the next three years and positions the company for future investments, including 5G.

Competitive Market Pressure

Despite its successes, Turkcell faces intense market competition, impacting postpaid net additions and increasing the mobile churn rate to 1.7%. This competitive pressure remains a challenge for the company.

Challenges in Fixed Broadband

The fixed broadband segment experienced a slight increase in churn due to the transition to 12-month contracts and competition in the resale segment. These challenges highlight the competitive dynamics in the broadband market.

Deferred Tax Expenses

Turkcell reported higher deferred tax expenses, influenced by differences in inflation accounting principles. This financial factor adds complexity to the company’s fiscal management.

Net FX Position Concerns

Despite a strong balance sheet, Turkcell faces ongoing financial risks due to volatility in currency exchange rates. This concern underscores the challenges of operating in a fluctuating economic environment.

Forward-Looking Guidance

Looking ahead, Turkcell remains optimistic about its financial performance. The company achieved a top-line revenue of TRY48 billion in Q1 2025, with a 12.7% year-on-year growth. EBITDA increased by 19% to TRY21 billion, and net profit stood at TRY3.1 billion. Turkcell’s strategic investments in techfin, cloud services, and renewable energy are expected to drive future growth, supported by a strong cash position and readiness for 5G investments.

In summary, Turkcell’s earnings call reflects a positive outlook, driven by strong financial performance and strategic growth in techfin and cloud services. While challenges such as market competition and currency volatility persist, the company’s robust balance sheet and strategic focus position it well for future success.