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Consolidated Revenue: TRY33 billion, 4% annual growth.
Revenue Excluding IFRIC 12 Impact: TRY31 billion, 7% annual growth.
Consolidated EBITDA: TRY13 billion, 22% annual growth.
EBITDA Margin: Expanded by 550 basis points to nearly 39%.
Net Income: TRY1.4 billion for the quarter.
CapEx Spending: TRY7 billion, up 7% year-over-year.
Unlevered Free Cash Flow: TRY3.2 billion for the quarter.
Net Subscriber Additions: Total subscribers at 52.6 million, down 110,000 from prior quarter.
Fixed Broadband Base: 15.2 million, with near 20,000 net additions in Q2.
Mobile Segment Subscribers: Added 125,000 subscribers, totaling 26.3 million customers.
Mobile Revenue Growth: 20% year-over-year.
Fixed Internet Revenue Growth: 8% year-over-year.
Mobile ARPU Growth: 15% year-over-year.
Fixed Internet ARPU Growth: 6% year-over-year.
Net Debt-to-EBITDA: Continued downward trend towards one multiple.
Cash and Cash Equivalents: TRY7 billion, with 44% FX-based.
Release Date: September 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Consolidated revenue increased to TRY33 billion with 4% annual growth.
EBITDA margin expanded by an impressive 550 basis points year-on-year to nearly 39%.
Mobile segment added 125,000 subscribers on a net basis, closing the quarter with 26.3 million customers in total.
Postpaid base secured 438,000 net additions, meeting prior quarter's strong performance.
Unlevered free cash flow rose to TRY3.2 billion, driven largely by progressive operational performance.
Negative Points
Subscriber base declined by 110,000 from the prior quarter end, mainly due to a 213,000 loss in the Fixed voice segment.
Fixed broadband base remained flat with only near 20,000 net additions in Q2.
Prepaid base lost 313,000 subscribers on a net basis, indicating a declining trend.
Contraction in Fixed internet usage by 7% due to seasonal factors and long national holidays.
Corporate data revenue contracted by 3% year-over-year, indicating challenges in this segment.
Q & A Highlights
Q: Given your strong margin performance in Q2, close to 40%, will you resume dividends if you cross this threshold? Also, will you prioritize further deleveraging? A: We had a very good margin improvement, and while we expect to stay within our guided range of 36% to 38%, it's too early to make an assessment on dividend payouts. We need to consider year-end financial results and next year's investment requirements, including potential large-scale investments like the fixed-line concession extension and 5G tender. (Kaan Aktan, CFO)
Q: Are there any plans to monetize your infrastructure assets, such as fiber and towers? A: Monetizing infrastructure assets is not part of our short to mid-term projects. We are focused on the license extension agreement and regulatory considerations. However, we are open to infrastructure sharing, especially on the mobile side, if other operators are willing. (Kaan Aktan, CFO)
Q: Can you comment on the current state of competition and your ability to pass on price hikes to consumers? A: The mobile market has been highly competitive, focusing on subscriber acquisition. This has reduced ARPU growth potential. We prefer rational competition and have revised our retail prices on the fixed side. We aim to maintain rational pricing in the mobile market as well. (Umit Onal, CEO)
Q: What will drive your expected double-digit revenue growth in the second half of 2024? A: The main drivers will be inflation adjustments and operational performance. We expect strong revenue growth in both Fixed broadband and Mobile segments. The gap between their growth rates will narrow, supporting overall revenue growth. (Kaan Aktan, CFO)
Q: Do you see any affordability issues among customers due to price increases? A: So far, we haven't seen any affordability issues or resistance from consumers. We continue with our inflationary pricing actions and monitor consumer behavior closely. (Umit Onal, CEO)
Q: What are your plans for financing the potential concession renewal and 5G tender? A: We have close to $500 million in cash and $400 million in committed but non-utilized ECA agreements. We are comfortable with our existing debt portfolio and will consider various financing options, including Eurobonds and ECA loans, depending on the terms of the concession and 5G tender. (Kaan Aktan, CFO)
Q: Can you provide any details on the potential terms of the concession renewal? A: The main model will focus on maintaining a healthy balance sheet and ensuring investment continuity. We believe our stakeholders will consider these factors in the concession renewal terms. (Umit Onal, CEO)
Q: What is your outlook on CapEx as a percentage of sales for 2025 relative to 2024? A: Excluding new large-scale investments, we expect CapEx intensity to gradually decrease from around 30% this year to low 20s in the coming years, supported by revenue growth and lower cost inflation on investments. (Kaan Aktan, CFO)
Q: Will you obtain new PCCS contracts for the new bond? A: Not for the new bonds, but we are hedging the total exposure with short-term contracts. We may consider hedging the new $500 million bond in the future, depending on market conditions. (Kaan Aktan, CFO)
Q: What is the expected use of proceeds from the new Bank of China and Citibank facilities? A: These facilities will be used to finance CapEx related to procurement from major suppliers like Nokia, ZTE, and Huawei. (Kaan Aktan, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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