Turkcell Iletisim Hizmetleri AS (TKC) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Turkcell Second Quarter 2011 Results Announcement on the 28th of July, 2011. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions). I will now hand the conference over to Mr. Koray Ozturkler. Please go ahead, sir.

Yes. Thank you very much. And now, on behalf of the Turkcell team here, I would like to also welcome you to our conference call. Today, we have here Sureyya Ciliv, who will present you the results and then followed by CFO, Serkan Okandan's, presentation.

Also, myself and Burak Sevilengul is going to be available on the Q&A session. Burak is also in charge of the individual segment, business, at Turkcell, as well as corporate chief officer for corporate business is also here, Selen Kocabas. Now, I'd like to just start with the warning, briefly.

Please be reminded that this presentation may contain statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially, due to factors discussed in this presentation. Please also note that all financial data consolidated, whereas non-financial data are unconsolidated, unless otherwise specified. At this point, we'll start with Sureyya Ciliv's presentation. Please go ahead, sir.

Good morning, good afternoon, and welcome to Turkcell's Second Quarter of 2011 Results Call. In the second quarter of 2011, Turkcell Group revenues increased by 1.7% year-on-year and 7.6% quarter-on-quarter to TRY2.3 billion. Group EBITDA was broadly flat year-over-year and grew by 15.2% quarter-on-quarter to TRY721 million, while due to our investment in efficiency focus, we managed to increase our EBITDA margin to 31.6% from 29.5% a quarter ago.

Due to growing subscriber base in mobile Internet revenues, Turkcell Turkey's revenues grew by 7% quarterly. Revenues remained almost flat year-on-year in Q2 2011, recovering from a year-over-year decline of 8.8% in Q1 2011. Turkcell Group registered a net loss of TRY21 million, mainly due to one-off items below the EBITDA line, mostly stemming from the devaluation in Belarus, as well as the provision with the competition board fine. Excluding these one-off items, group net income would have been TRY472 million.

I will now elaborate on our operational efficiency. As some of you may be aware, in Turkey, operators pay the Turkish treasury a monthly treasury share of 15% of revenue. The treasury share is here to stay for now and has been a major burden to margin development over the years. On this slide, you can see comparable margin performances for Turkcell Turkey, excluding Turkcell in Europe and the emerging markets.

As you see, excluding Turkcell EBITDA, the average EBITDA margin of the Turkish market is quite low at 10%, which is significantly less than our reported 34%. You may recall that the market's average margin, excluding Turkcell's EBITDA, was above 20% almost two years ago, before the competition's irrational offers have been initiated.

Meanwhile, it is interesting to see that excluding the 15% payment requirement, we could comfortably have reported north of 45% margin, which is near to or above our peers, despite the currently existing nature of our market. Nevertheless, despite current efficiency levels that are comparable to those of our peers, the perceived further room for margin improvement, both in our market and in Turkcell itself, [quantro] players begin to focus on profitably -- profitability.

I will now focus on the competitive dynamics in Turkey in the second quarter of 2011. During the quarter, competition in Turkey remained aggressive, with heavy emphasis on the communication of low price offers. In terms of quarterly dynamics, we observed some positive price adjustments early in the quarter.

However, towards the end of the quarter we saw aggressive offers, again, initiated mainly by third operator and followed by the second. In this market environment, we have sustained our market leadership in all areas and have seen no change in market shares. In this, we recorded net subscriber additions during the quarter.

In fact, over the last two years, average tariffs has declined significantly in our markets. We have been adapting those -- to these changes and our overall value propositions have now become even more attractive for our customers, increasing our ability to retain customers. As I have said, we see improved increase to sustain our winning edge against competition in Turkey.

Moving onto the next slide, slide seven. On a quarterly basis, we registered 1 million net additions, 840,000 of which came from the change in the definition of active prepaid subscribers. The remaining 165,000 net new additions are the positive result of investment in our brand in channel. This marks the first quarter of net additions following eight quarters of net loss.

We have also recorded a notable turnaround in our revenues, reversing four consecutive quarters of decline and improving Turkcell Turkey's EBITDA margin to 32.1%. Additionally, we have already started to see positive results of our customer loyalty program, 2.0, that we have deployed a year ago, focusing on enhanced customer experience. As a result, we also recorded the lowest customer churn numbers during the quarter, since the beginning of 2009, validating our efforts.

We believe that our 2G and 3G network infrastructures have also been creating an excellent opportunity for us to gain momentum and win versus competition. We will continue to capitalize our capabilities and lead the developments in the mobile Internet arena. I will now further elaborate on our operational performance in Turkey.

As already mentioned in the second quarter, we maintained our subscriber market share, adding 165,000 net new subscribers. During the quarter, we further improved our postpaid subscriber base, adding 353,000 new postpaid subscribers and increasing our total postpaid number to 10.7 million.

On the prepaid front, our retention focus resulted in a decline in churn. However, growth in the prepaid subscriber base was mainly due to the positive impact of the increase in the prepaid churn period from 210 days to 270 days. Our blended ARPU rose by approximately 1% to TRY19.6 as our blended MOU rose to 220 [minutes] in the second quarter.

Our blended ARPU was mainly -- has been negatively impacted by decreases in pricing and increasing penetration of our voice package plans, as well as increasing data SIM cards. On the other hand, selling suitable package plans, the contract remains critical for us for the long term, as it increases customer satisfaction, retention and sustainable revenue generation.

Moving onto the next slide, slide nine. To capitalize on our investments in the new era, we have set and been executing a very clear mobile Internet strategy with three major components. Creating one of the best 3G networks, increasing the penetration of smartphones with high usability and increasing data usage and mobility through innovation applications and platforms.

For this purpose, we have established, by far, the widest data highway in Turkey and one of the world's best performing 3G networks. We all -- we offer HSDPA+, dual carrier technology enabling up to 43.2 megabits per second mobile Internet speed. Meanwhile, we also introduced a one gigabit per second fibre Internet service through Turkcell Superonline.

In line with our strategy, as you know, we introduced the first Turkcell branded smartphone, T10, in late 2010 and it has since become the best-selling Android-type smartphone in Turkey. Recently, we introduced updated and NFC-enabled version, the T20, which is reasonably priced, is set to increase mobile data usage through its enhanced user experience and preloaded applications.

As a result of our ongoing efforts, the number of smartphones on our network has increased by more than 100% year-on-year to 2.8 million, exceeding our initial expectations, while our mobile Internet revenues increasingly risen 55% to TRY166 million for the quarter. Overall, for the period, our mobile Internet and data-related service revenue has increased by 19% to TRY462 million, while its share in Turkcell Turkey's revenues grew by 3.8 percentage points to 23.4%.

Moving on to the next slide, I would like to elaborate on our subsidiaries. In the second quarter of 2011, the performance of our Group companies continued to improve with a contribution of more than 13% to the top line and 12% to EBITDA. Turkcell Superonline's revenues grew by 29% to TRY105 million, mainly due to the residential segment, which almost doubled its revenues and enhanced synergy with Turkcell's corporate segment.

During the quarter, the EBITDA margin was realized at 13.3%. Despite the year-on-year increase in this item, promotional expense in support of convergence offers and the launch of the new brand have resulted in a quarterly EBITDA margin decline. As for Astelit, we also observed strong execution by the new management, which delivers financial result in line with our plans.

In the second quarter, Astelit registered $88.3 million in revenues and despite flat year-on-year revenues, we achieved a 13% quarter-on-quarter increase in US dollar terms. Consequently, with revenues in an increasing trend and costs under control in Astelit, the EBITDA margin has settled at above 20% levels for the fifth consecutive quarter at 26.8%. We expect both Turkcell Superonline and Astelit's contributions to continue growing.

Moving onto slide 11, overall, we retain our focus on 2011 priorities and expect to register a better growth rate in the second half of the year. We expect to maintain our strength in the voice business, the highest contributor to revenues, while ensuring better growth rates in mobile Internet and service as well as the contribution of our subsidiaries.

We realize that there are continuing challenges in the Turkish market. We will continue to address these and try to move the industry towards -- to a more rational footing. At this point, we expect to be at the lower end of our revenue and EBITDA guidance range this year. I will now hand over to Serkan to talk you through our financials.

Thank you, Sureyya. Good morning and good afternoon to everyone. I will now go into more detail about our financial results. In the second quarter, Group revenues rose by 1.7% year-on-year to TRY2.3 billion, mainly due to increasing mobile Internet and service revenues in Turkey and growing contribution of our consolidated subsidiaries.

Year-over-year Turkcell Turkey's revenues were broadly flat at approximately TRY2 billion. This essentially resulted from an 18.9% rise in mobile Internet and service revenues, which were offset by the decline in voice another revenues. 0.8% growth in contribution from subsidiary mainly -- was mainly driven by higher revenues on Superonline. Specifically, Superonline's revenues rose by 29.4% to TRY105 million.

Compared to the previous quarter, higher revenues from voice and roaming in Turkey, due to seasonally higher usage, continued to increase in mobile Internet and service revenues and higher revenues from our subsidiaries, which resulted in 7.6% increase in consolidated revenues.

Moving on to the EBITDA slide, slide 14, consolidated EBITDA was flat, in nominal terms, at TRY791 million compared to the same period last year. This EBITDA margin is slightly down to 31.6%. This was mainly due to lower general and administrative expenses and selling and marketing expenses, which were partially offset by the increasing direct cost of revenues.

As a percentage of consolidated revenues, direct cost of revenues, excluding depreciation and amortization, increased by 4.2 percentage points year-on-year, mainly as a result of 2.9 percentage points higher interconnection costs, due to increasing offset minutes in Turkey. General and administrative expenses as a percentage of revenues declined year-on-year by 1.6 percentage points, to 4.5% in the second quarter, mainly due to the decline in bad debt expenses.

In addition to improved collection improvements, the absence of a one-time negative impact regarding the change in bad debt calculation methodology in the second quarter of last year, were the main reasons for this decline. Selling and marketing expenses as a percentage of revenues decreased year-on-year by 1.9 percentage points to 17.6%. This mainly arose from a decline in frequency usage fee expenses, as a result of our decision to charge frequency usage fees to prepaid subscribers starting from June 11th and the TRY22.5 million returning from the telecom services, regarding overpayments made in previous periods. This impact was coupled with lower [selling] expenses and higher marketing expenses in the quarter.

However, compared to the previous quarter, EBITDA in nominal terms increased by 15% and EBITDA margin rose by 2.1 percentage points, mainly due to lower general and administrative expense, also selling and marketing expenses, which were partially offset by a slightly higher direct cost of revenues.

Moving on to the next income slide, slide 15, in the second quarter, we saw a net loss of TRY21 million due to one-off items negatively impacting below the EBITDA line. Excluding all one-off items below the EBITDA line, consolidated net income would have been TRY472 million, which means a 12% year-on-year growth, major impact was related to the devaluation in Belarus.

As a result of approximately 73% devaluation, we recorded TRY255 million translation loss, stemming from our foreign currency denominated net liabilities and also TRY188 million goodwill impairment for Belarus investments. During the quarter, we also set aside TRY68 million provision for the competition board's fine. Quarter-on-quarter improvements in EBITDA and net finance income were offset by the one-off items that I just mentioned. Therefore, net income decreased from TRY330 million to net loss of TRY21 million.

I will talk about our balance sheet and also cash flow on the next slide. Our financial position remains strong, with approximately TRY5.4 billion of cash on our balance sheet at the end of Q2. Our consolidated debt increased by TRY255 million quarter-on-quarter, to TRY3 billion and TRY880 million of this amount was related to Ukraine operations. Of this total debt figure, TRY2.1 billion is at closing rates and TRY1.1 billion will mature in less than a year.

With reference to this figures, we continue to maintain a strong balance sheet, with a solid cash position until the year-end. For the quarter, major cash outflow item was the capital expenditures of TRY336 million. Of the total CapEx figure, TRY200 million was related Turkcell Turkey, TRY91 million to Superonline, TRY20 million for Ukraine operations and TRY6 million for Belarus operations.

For the full year, group CapEx is expected to be around TRY1.5 billion. As a final note, I would like to highlight that Turkcell Group continued to improve its free cash flow margins. Annualized free cash flow margins increased year-on-year by 3.3 percentage points to 15.7%. This concludes our presentation today. Thank you.

Thank you, Serkan. At this point, we are ready to go to the Q&A session. I'd just like to remind you to please limit your questions to two. And perhaps once everyone asks questions, the -- you may come back and ask another round of questions, if you like. Anna, would you please open the session to questions?

Thank you, sir. (Operator Instructions). One moment, please, for the first question. One moment, please. Thank you. The first question comes from Herve Drouet from HSBC. Please go ahead with your question.

Yes. Good afternoon. My question is related to Superonline. I was just wondering, since Turk Telekom now is upgrading its broadband network with VDSL and fibre-to-the-cabinet, I was wondering how do you expect that to impact Superoline? So far you had good revenue growth. Do you expect that to slow down, looking forward? Or not? Or do you think it's -- would continue to be the same?

And also, I notice on the margin on Superonline, in Q2, the margin was the weaker, 3% weaker, compared with the previous quarter. I was wondering, if you can give us a bit more light on the reason for this margin decline and if it's due to more intense marketing expenses, for instance? Thank you.

Yes. First of all, I would like to report that Turkcell Superonline is a very strategic member of our Group and their number -- its number one customer is Turkcell Turkey, its mobile operations, representing about 40% of its revenues and the -- having that fibre optic network connecting our base stations through most of Turkey gives us [revival] key performance and also cost effectiveness versus the scenario of having Turk Telekom as the only provider of that service, transmission service in the market.

And its business is growing. It has corporate business. It has residential business. Corporate business, Turkcell has one of the strongest corporate sales forces in Turkey. Selen is leading that group. And they represent the sales force, not only for Turkcell Turkey's mobile operations, but also they are selling our Turkcell Superonline fibre optic fixed line services.

On the residential side, we have not emphasized or we have not participated on being a Turkish Telekom reseller because most of those companies have significant profitability problems and we have focused on FTTH, taking fibre-to-the-home and we have about 750,000 home passes and we have about 185,000 FTTH customers.

Considering that we have about 17 million, 18 million homes in Turkey, this is a little bit more than 1% of the homes. And fibre optic investment is a -- obviously not an easy investment. And so far we compete very well versus VDSL or other offerings from Turkish Telekom, but our home pass coverage is obviously small. And it is not going to increase very fast.

So we think that we are not really competing directly with Turkish Telekom. I think we are in a niche market of fibre-to-the-home, and we are patient about growing this niche market.

But I also know that Minister of -- Ministry of Communications and authorities in Turkey are keen on having fibre-to-the-home in Turkey grow rapidly. Just 10 minutes before this conference call, I saw an email from another member of the parliament that Turkey should move faster in rolling out the fibre optic network.

So we plan to be in communication with Minister of Communication and also the regulator on how Turkey can roll out fibre and how Turkcell and Turkish Telekom can participate in this build-out, which is expensive and timely, in a profitable manner.

On the second part, related to margin, I know that the first quarters of Superonline margin was at 16% and the second quarter, it fell down to 13.3%. Because we had a launch of our new brand, we changed the name of the company from Superonline to Turkcell Superonline, because as I mentioned, we are uniting the sales force and having our -- having our sales force sell both products, both groups of products.

So the new brand is Turkcell Superonline expands the marketing dollars on Turkcell Superonline. But we also launched a service, which offers one gigabit per second to the homes in Turkey, and now we are offering the service in 10 cities. So during Q2, when we had this fibre optic launch and the new brand, we did spend TRY5 million, TRY6 million and it impacted its profitability here. I think for the second half, my expectation is this profitability to be around 18%. So that's where we are.

Thanks. Thank you very much. Very clear.

Thank you. The next question comes from Cesar Tiron of Morgan Stanley. Please go ahead with your question.

Yes, hi. I have two questions. The first question, I -- looking at your pricing on voice compared to that of Vodafone, I think it's still 25% to 30% higher. Do you think this is sustainable going forward?

And my second question to you, it seems that your revenue market share is declining quite fast, towards 50%. And I think your strategy is to maintain market leadership. How would you define market leadership? Is market leadership being the number one mobile operator in Turkey? Or is mobile leadership being the operator that has more than 50% revenue market share in Turkey? Thank you very much.

Okay. First, I will talk about the second part of the question and then Burak can give about the delta. I believe the whole -- Burak can elaborate on this, but I think the delta, the gap, between our average price per minute versus competition has declined over the last two years and we are a lot -- I know some time ago, this was at a much higher percentage and now it has come down to about 20% range. At the end of the second quarter is the calculation I had made.

But we look at -- in running the business, a lot of KPIs. We look at revenue share, which is important. But we also look at profitability, EBITDA performance and we are in telecommunications business, it's a very heavy investment. So depreciation is a very important cost of doing business here. As a result, EBIT is a very, very important KPI as well.

We look at -- so our goal is to -- our strategy is to sharpen our customer focus, to deliver more complete solutions that meets our customers' needs completely, to delight our customers, to improve customer satisfaction and turn that into customer loyalty. To be -- to win the hearts and minds of the customers. And to be -- deliver higher value propositions to our customer segments.

So we have taken a lot of actions in segmentation and fine-tuning our strategies for customer segments. But obviously we recognize that in the business world, making money is very important and creating a positive cash flow is very important for our shareholders. And to achieve those, however, the companies need revenues and the revenues come from customers.

So as a result, we also look at the subscriber market share. But all of these indicators, all by itself, [comtang], if you just look at one of them, they could be misleading. In subscribers, sometimes we see in certain markets not active -- activations are counted as subscribers or very little ARPUs. So all by itself, it doesn't show the whole picture.

Sometimes certain companies include terminals in revenue. Certain companies include fixed income -- fixed business revenues in their revenue. And sometimes certain companies have very little profitable or no profitable business, which brings them big revenues. So I think when we look at subscriber share, revenue share, EBITDA share, EBIT share, and all of these factors in determining the market leadership. So that was a long answer, but I hope I was able to answer the question. Burak, would you like to add anything else?

Yes, just a quick addition. As Mr. Ciliv has mentioned, we are one side starting to provide more value for our customers to make sure that we deserve this premium that you mentioned. And on the other side, we are trying to make sure that we are competitive on all customer segments, so that we protect our valuable customer base.

I think in Q2, this balance was the right balance because we still have this price premium. And on the other hand, we were able to record net subscriber additions. So we believe we are in a good competitive position with respect to the competition, taking all the value and the costs that we provide for the customers.

If our revenue share fell below 50%, that doesn't mean that we are not the market leader. We could still be. I think the highest revenue -- the highest revenue share owner will be, probably, considered the market leader. But also it is important, obviously, the positioning of the company, the profitability of the Company and looking at all of those features.

I think that probably it is not measurable easily, but winning the hearts and minds of the customers and for the customers to come and tell you that you are their best business partner, that they would not want to lose ever, that the relationship with the customer is very, very critical.

And Turkcell has achieved this premium position because of the customer relationship and in the last two or three years, it has been a very strong, aggressive, price-focused competition. But at the same time, the prices have come down to really very low levels. And I think certain customers are now coming to us and they are saying they are really looking for value versus the lowest price. And it is encouraging to see.

Thank you very much for your answers.

Thank you. The next question comes from San Dhillon of Barclays Capital. Please go ahead with your question.

Hi, guys. I have a couple of questions. The first, following your decision not to absorb the frequency usage fee on your prepaid base, could you provide some color on how your prepaid base has been affected in July and how they're behaving? The second question, price per minute took a sharp step down in the quarter. Could you please provide some color and some views on your -- on the market elasticity? And do you think usage can offset price declines going forward? Thanks.

I think the first question, Serkan, do you want to take the first question? Or --?

Okay.

Maybe you can say a few things about the prepaid subscriber base and I can take the rest.

Yes. Hi, this is Burak. We have started, as you mentioned, imposing the frequency usage fee for our consumer subscribers, up to now, we do not see a major impact on our prepaid customer base, in terms of churn or report to those numbers. So up to now, we are happy with our decision, going forward, with the prepaid frequency usage.

And also, Vodafone has just announced that they will start the same policy, starting from first of August. So that also puts us in a better position, I think, in terms of the risks. Potential risks for the subscriber base.

And also, maybe, I can say a few words about the financial impact of our decision regarding frequency usage fee. As you know, we have started to charge monthly frequency usage fees to our prepaid subscribers, starting from June 11th. And the charged amount in June was TRY13 million. And our expectation for the second half of the year, the positive impact of this decision, to our EBITDA, will be around TRY60 million to TRY70 million.

And as a separate note, I would like also -- I would also like to mention that until our decision in June, all operators in the market were subsidizing frequency usage fees for their prepaid subscribers and they were -- and they are all making the related payments to the telecom authority from our selling budget.

And we first considered, at the beginning of the year, to charge a monthly subscription fee to our prepaid subscribers and also, based on our calculations, we have included around TRY100 million additional revenue in our 2011 revenue guidance, which we gave in April 11th. However, after that, we decided to charge that amount, clearly, for the frequency usage fee from the subscribers, which we are now crediting that amount from our selling expenses. But in any case, the EBITDA impact of this decision is the same.

Next question, regarding your question about market elasticity, I think we have seen quite significant decrease in RPM and MOU increases associated with that decrease. Up to now. Moving forward, we do not expect a very major decrease in RPM at -- because it's already at a quite competitive levels.

On our side, what we are trying to do and what we will try to do is try to make sure that we offer the right incentives that will also generate revenue at the right elasticity point, so that any usage increase that we see, that will bring us some additional revenues too. So that will our strategy on how we manage the elasticity and drive revenues out of usage.

Fantastic, guys. Thanks.

(Operator Instructions). One moment, please. One moment, please, ladies and gentlemen, for the next question. Thank you. The next question comes from Atinc Ozkan of Credit Suisse. Please go ahead with your question.

Yes. Thank you. This is Atinc from Credit Suisse. Just one quick question. On the breaking news regarding Vodafone [Coach Net] acquisition this morning, is it the second alternative operator acquisition by Vodafone, which looks like part of their penetration strategy in the corporate segment. What are your views on this? Do you think this is a game changer? And what was the impact of their earlier acquisition, I think, last year? For [San Telecom] on your corporate business? Thank you.

We don't think it's a game changer. So we think the corporate business of Coach Net is not a very significant part of the Turkish market. So we knew or we felt that this was coming, so it is not surprising news to us.

As a follow-up, if I may, Vodafone has reported 36% year-on-year growth in their corporate segment revenues during the second quarter. Could you provide some color on your end of this business, in terms of market trends? And what kind of revenue growth or decline you have seen? Thank you.

According to the market survey, we actually have done a pretty amazing job in the corporate space. The latest market research numbers shows to us that on the corporate side, we have about, close to 68% of the wallet share and about 61% of the subscriber share. Vodafone has been aggressive in the market, but what we have seen is Vodafone increased in its share and Avaya decreased their share.

That's very helpful. Thank you very much.

Thank you. The next question comes from Vera Sutedja from Erste Bank. Please go ahead with your question.

Yes. Good afternoon. I just have two questions, please. First, about the shareholder dispute, can you tell us what's the latest status or what is going to be done, so that we can resolve the dividend issue?

The second, if you could tell us, please, about how -- what is now the goodwill of BeST? Is it now basically written down to zero? And the last question would be back to these frequency usage fees, am I right to understand it's TRY150 million per year revenues additional expected from this? And then the EBITDA impact will be TRY60 million to TRY70 million for the full year?

Okay. Vera, let's start -- so the first question was about the shareholder dispute, dividend issue. As management, we are very concerned about the fact that the -- we recommended a dividend and it was actually a higher percentage of our net income and then the Board has approved dividend distribution, but unfortunately, in the general assembly meeting, the shareholders -- we couldn't get the shareholder approval of this.

So as a result, with the support of the courts in Turkey, we have this general assembly meeting rescheduled for August 11th and I hope it gets approved in these general assembly meetings by our shareholders. Because it is required to get the approval of the general assembly meeting for the dividend distribution.

I don't have any other piece of information. I know that [Telia Sunera] has applied to court for changing the Board composition in this general assembly meeting as well. And this court decision -- this court review will be done on August 8th and obviously there's the court's decision may also impact the general assembly meeting.

But right now, we are preparing for the general assembly meeting and I hope that the shareholders approve the dividends, so that all of our shareholders receive the dividend that was approved by the Board. Goodwill of BeST, I think Serkan will articulate on that.

Regarding Belarus, there is no goodwill left on our balance sheet as of Q2. The only asset that we are now reporting regarding Belarus is around TRY150 million network fixed assets in Belarus. So nothing else left regarding Belarus on the balance sheet.

Relating to the third question, the financial impact of the frequency usage we collected from the subscribers, as I mentioned, we have started to charge this amount on our prepaid subscribers, starting from June. In our Q2 results, only TRY13 million was charged to the prepaid subscribers, again, impacting the EBITDA positively. And for the second half of the year, we are expecting that additional TRY60 million to TRY70 million will be positively impacting our EBITDA.

However, this amount was already included in our EBITDA guidance and currently there is no impact on the revenue side. But as I mentioned, again, against two questions before, before this one, we were considering to charge this amount as monthly subscription fee to the subscribers. And based on that assumption, we have included around TRY100 million revenue coming from this decision in the guidance.

However, according to the current practice, charging to these prepaid subscribers has clearly the collection of the frequency fee, we cannot report this collection as revenue, but the EBITDA impact will be the same. Nothing will change from that side.

Okay. Thank you.

(Operator Instructions). Thank you. We have a follow-up question from San Dhillon of Barclays Capital. Please go ahead.

Hi, guys. Thanks for letting me ask a couple more questions. On Belarus, how much cash do you have in the business? And are you finding any difficulty in repatriating that cash? And secondly, could you remind me again what percentage of voters are required at the general assembly for the dividend to be approved? Thanks, guys.

Regarding the first question, we are not keeping a significant amount of cash in Belarus. I can say that less than $10 million at any moment. And as you may estimate, we didn't -- we can't try to repatriate cash from Belarus yet.

So Belarus was a -- has been a negative cash flow operation so far as we report the unit in the position, but we recognize there are some challenges in getting cash out of Belarus.

However, I will not elaborate more on this, but I want to say that we are focused on improving the efficiency of our Belarus operation as much as possible, so we are working on that, under these changes. About the second, part what percentage is required for the AGM approval, it is the simple majority, which means 51% of the votes. But that means for Turkcell, 51% is held by Turkcell Holding. Turkcell Holding needs to approve this.

Fantastic, guys. Thank you.

Thank you. There are no further questions at this time. Please continue with any other points you wish to raise.

Thank you, Anna. At this point, we would like to conclude the session. Thank you for your participation. Please note that the audio recording will be available to you the next two weeks. And also, please, contact with me and the IR team for follow-up questions, if you may have. Thank you and bye-bye.

Thank you. Ladies and gentlemen, this concludes the Turkcell Second Quarter 2011 Results Announcement. Thank you for participating. You may now disconnect.