TURKCELL ILETISIM HIZMETLERI A.S. ADS 2026 Q2 Earnings Call

Thank you, Geli. Good evening, everyone, and welcome to Turkcell's 2026 second quarter earnings call. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation. Our earnings release and today's presentation are available on our investor relations website. Our CEO, Mr. Ali Taha Koç, will begin with an overview of our business performance, followed by our CFO, Mr. Kamil Kalyon, who will take you through our financial results. After the presentations, we will open the line for your questions. It's now my pleasure to hand over to our CEO, Mr. Ali Taha Koç.

Thank you very much, Özlem. Good evening, everyone. Welcome to Turkcell's second quarter 2026 results call. Today, I will take you through our operational and strategic performance for the quarter. After my remarks, Kamil will cover the financial results in more detail, and then we will be happy to take your questions. The key message this quarter is clear. We continue to deliver real growth in a challenging environment. Macro conditions remain demanding, with inflation still above 30%. We keep on delivering real revenue growth for the eighth consecutive quarter, supported by disciplined pricing, continued postpaid additions, and improved churn. Our strategic growth areas, Digital Business Services, Fixed Wireless Access, FWA, data centers, TV+, and Techfin took another step forward. Throughout all these slides, you will see one consistent story: disciplined, value-focused execution. Let's begin with the numbers.

Group revenue reached TRY 71.8 billion, up 2.5% year-on-year. I want to underline this. With inflation at 32%, this is genuine real growth, driven by consistent pricing actions and healthy commercial momentum across our businesses. EBITDA was TRY 30 billion with a margin of 41.8%, and net income was TRY 5.2 billion. Our profitability continues to reflect the strength of our disciplined operations and balanced capital allocation approach. On the operational side, momentum was strong across the board. We added 284,000 postpaid subscribers in a single quarter. Turkcell fiber business added 31,000 net subscribers. Mobile ARPU was realized at TRY 448, while residential fiber ARPU reached TRY 570. Techfin revenue was up 7% to TRY 4.1 billion. Digital Business Services revenue grew 33% to TRY 8.7 billion.

Data center and cloud revenue increased 10% to TRY 1.6 billion, and Superbox, our fixed FWA technology, added 64,000 subscribers. These businesses are becoming core engines of Turkcell's growth and reinforce our strategy of building a more diversified and resilient business model. Let me go deeper into each business, starting with mobile business. Our mobile business delivered an outstanding quarter. We crossed the 40 million mobile subscriber milestone for the first time in Turkcell's history. This is a testament to the strength of our network, our brand, and our commercial execution. Our postpaid base reached 32.5 million subscribers, driven by 284,000 net additions in the quarter, and 2.4 million over the last 12 months. Prepaid performance remained broadly stable this quarter, as we successfully continued the transition of our mix toward postpaid, which now accounts for 81% of our mobile base.

This mix shift is significant, as postpaid customers deliver higher lifetime value through lower churn and multi-service adoption. Churn tells the same compelling story. Monthly average churn improved to 1.6%, down significantly from a year ago. Strong net additions combined with declining churn prove one thing: customers are choosing Turkcell with long-term loyalty. On pricing, mobile ARPU excluding M2M grew 27% year-on-year. Given the predominantly contractual nature of our postpaid base, pricing actions are gradually reflected in ARPU as contracts renew. Our strategy remains consistent. We take disciplined pricing actions to sustain real revenue growth, supported by our strong brand and superior service quality. One of the most dynamic drivers of our connectivity business today is fixed wireless access. Let me now turn to our FWA performance. Superbox is our fixed wireless access, FWA offering, which we view as the next way of growth in home internet.

We are the undisputed market leader with a 74% share of FWA, fixed wireless access market. After a soft start to 2025, growth has escalated for four consecutive quarters. We added 64,000 subscribers this quarter alone, expanding our total Superbox base to 818,000. The strong momentum we are building here is particularly encouraging. Looking ahead, 5G will act as a catalyst. Superbox, our FWA offering, delivers fast, reliable plug-and-play home internet today, and 5G will elevate that experience to an entirely new level, further accelerating market demand. Superbox enable us to capture broadband demand quickly and efficiently while working hand-in-hand with our fiber strategy. Fiber remains the backbone of that strategy. Let's move to fixed broadband. Our fixed broadband strategy is straightforward. Grow on our own fiber, price with discipline, and deliver a premium service and experience.

Turkcell fiber reached 2.6 million subscribers with 31,000 net additions in the quarter and 138,000 over the last 12 months. We continue to increase the share of customers served through our own fiber infrastructure, reaching 80%, up three percentage points year-on-year. The increase reflects our sharp focus on expanding the highest value part of our fiber business. The strength of our fiber business goes beyond scale, reflecting the quality of our subscriber base. 88% of our residential fiber subscribers are on 12 months contracts, while monthly churn improved to 1.1%. Together, these metrics provide exceptional revenue visibility and reinforce the resilience of our fiber business. On pricing, residential fiber ARPU grew 37% year-on-year, outpacing the inflation rate. Combined with continuous improvements in churn, these results demonstrate the strength of our fiber proposition and the value customers place on our service.

At the same time, we continue to expand in Türkiye with strong discipline. We passed 194,000 new homes in this quarter, bringing total home passes to 6.7 million across 31 different cities with a take-up rate of 41%. Take-up rate is one of the metrics we track closely, as it demonstrates that we are expanding where demand is strongest. Connectivity also opens the door to our digital customer services, starting with TV+. TV+ now serves 2.7 million subscribers. Subscriber momentum continues to gather pace throughout the year. Net additions increased from 62,000 in the fourth quarter of last year to 106,000 in the first quarter of this year and accelerated further to 123,000 this quarter. Content is the key driver of the TV business. Our strategic partnership with HBO Max, launched in November, has significantly enriched our content offering and resonated well with customers.

As a result, viewing time increased by 14% quarter-on-quarter and 64% year-on-year. TV+ is about more than just the numbers of subscribers. It strengthens engagement across our ecosystem. Users that actively use TV+ interact with Turkcell more frequently, adopt more of our services, and build deeper, longer-lasting relationships with us. Now let's move to fastest-growing part of the group, Digital Business Services. Digital Business Services delivered an outstanding quarter, with revenue up 33% year-on-year to 8.7 billion TRY. This strong performance reflects the depth, scalability, and market strength of the digital infrastructure platform we have built over the years. Today, our data center footprint spans four different locations: Kocaeli, Ankara, Tekirdağ, and Izmir. Following the activation of a new module during the quarter, our active IT capacity reached 54 megawatts. We are now taking this platform to the next level.

Construction of hyperscale data center facilities dedicated to Google Cloud's Türkiye region in Ankara is underway. A partnership of this caliber is a strong endorsement of the quality of our infrastructure and further strengthens Turkcell's position at the center of Türkiye's digital transformation. Including our hyperscale data center investments, our total investment amount reached €612 million. As of Q2, data center and cloud represent 2.3% of our group revenues. While still a developing revenue stream today, we see this business as one of Turkcell's most promising long-term growth platforms. Growth in system integration was supported by both hardware and services. More importantly, we entered the second half of the year with more than 1,500 new contracts and a system integration backlog of 16 billion TRY. This contracted backlog provides exceptional revenue visibility and reinforces our confidence in the sustainability of future growth.

Finally, let me turn to our Techfin businesses, another critical pillar of the Turkcell ecosystem. Our Techfin businesses contribute 6% of the group revenue this quarter and continue to strengthen the diversity of our earnings base. Paycell delivered another strong quarter, with revenue increasing 22% year-on-year to 2.4 billion TRY. Paycell transaction volumes surged 84%, while POS transaction volume grew 67%. Consequently, total payment volume across the Paycell ecosystem reached 39 billion TRY during this quarter. Paycell now serves 6.8 million active users across a broad range of everyday payment services, while the ongoing expansion of our POS solution is further strengthening our merchant ecosystem. Together, these customer and merchant capabilities continue to reinforce the scale and the resilience of our payment platform. At Financell, our focus remained firmly on profitability and portfolio quality.

This approach resulted in a significant improvement in net interest margin, which increased from 4.5% to 7.8%. The cost of risks remained well under control at 3.4%. Revenue was 12% lower year-on-year, reflecting our disciplined approach to portfolio management. Financell continues to lead the customer finance market with a 43% market share by number of loans. Our 16.1 million pre-approved credit customers provide significant potential for future growth. As we close the quarter, one key message stands out. Our core connectivity business continues to perform with resilience. The businesses we have been investing in are becoming increasingly important drivers of our growth and profitability. We remain committed to executing our strategy with discipline, investing in high return, long-term growth while continuously enhancing operating margins. Before I conclude, let me briefly touch on our outlook.

Since the beginning of the year, the macroeconomic environment has evolved, and we now anticipate year-end inflation to settle around 28%, compared with our previous assumptions of 23%. Even with this revised inflation assumption, our financial guidance remains unchanged. Finally, I want to express my sincere gratitude to the entire Turkcell team. Their dedication and commitment are behind every achievement we have shared today. With that, I will hand it over to Kamil for a more detailed review of our financial results.