Turkcell Iletisim Hizmetleri AS (TKC) 2013 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter 2013 results announcement conference call on the 18th of April, 2013. 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 Koray Ozturkler. Please go ahead, sir.

Thank you, Kiev. I would like to also say welcome on behalf of the management team here to our results announcement. Quickly, let me go over the notice, and then I will hand it over to Sureyya Ciliv for his part of the presentation, followed by Murat's presentation on financials.

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 are consolidated, whereas non-financial data are unconsolidated, unless otherwise specified. Please go ahead, sir, Sureyya.

Good morning, good afternoon, and welcome to Turkcell's first quarter of 2013 results call. We are happy to report another strong quarter, a good start to the year, with double digit revenue and EBITDA growth.

Turkcell Group revenues rose by 13% year on year, to TRY2.7 billion. While improving our top line, we maintained our profitable business model. Consolidated EBITDA rose by 15% year on year, to TRY808 million, while the EBITDA margin reached 30%.

In this quarter, our net income rose by 10%, to TRY566 million. Despite the lower net finance income, solid operational performance was the driving force of the growth in our net income.

Moving to page 5, now I'll talk about the drivers of our top line growth. Turkcell Turkey was the main driver, the revenues of which rose by 11%, or TRY217 million in nominal terms. Despite the declining trend in the global telecom sector, we accelerated the growth of our Voice business 9% year on year.

Mobile Broadband and Services revenues remained a major growth driver, rising 16% to TRY616 million in the first quarter. Meanwhile, the total revenues of our domestic and international subsidiaries grew by 23%. The growth in our Voice revenues, and even stronger rising subsidiary contribution in Mobile Broadband and Services, have led to a change in our revenue mix. Overall, the share of subsidiaries rose to 18%, and Mobile Broadband and Services rose to 23%. We think this is progress in the right direction.

Moving to page 6, now I'll talk about the competitive landscape and recent developments on pricing in Turkey. In the first quarter, pricing environment worsened in the market, where prices were already low. As shown on this slide, Turkcell continues its efforts to recover its average pricing through its value focus. However, we have observed that our competitors, specifically Avea, has decreased the prices to all-time low levels, and through sub-brands, has started competing with itself. Similar price discounts were partially followed by Vodafone as well.

As Turkcell Turkey, on the strength of our technology, we will continue to grow our business through our focus on innovation and operational excellence, together with a superior customer experience. Moreover, as the market leader, we will continue our efforts for a better pricing environment.

Of note, the regulatory authority increased the lower limit for Turkcell on net Voice, and set a lower limit for on net SMS tariffs, and also cut SMS termination rates by 75%. Certain aspects of implementation of these decisions remain unclear. We understand that the new price levels are very likely to adversely impact our business. After obtaining further clarification regarding these points, we will evaluate and communicate any resulting material impact.

Our leading role and business approach is to create value by providing excellent service and developing cutting edge technologies through substantial investments. This has also triggered other investments that developed local businesses, while bringing value to our people and our economy.

Consequently, Turkey now leads the world in mobile coverage, and provides one of the fastest mobile and fiber broadband services. Therefore, we believe that in the long run, the authority will introduce the necessary regulation to support equal access to product and services, as well as investments in the fair competitive environment.

Now, moving on to page 7. At the end of the first quarter of 2013, our subscriber base stood at 34.9 million. We lost 268,000 customers in the quarter. Our postpaid base increased to 13.5 million, with 285,000 new subscribers. As a result, the share of postpaid customers reached 66% of Turkcell Turkey revenues. Meanwhile, a better subscriber mix, 14% rising prepaid ARPU, and higher mobile broadband usage raised blended ARPU 9% year on year.

Moving to page 8. Internet, mobile or fiber, is strategic to Turkey's future. This is why we have made significant investments to build one of the best Internet platforms in the world. Mobile Broadband, which currently accounts for 52% of non-Voice revenues, was the main driver, growing 39%.

Meanwhile, Messaging and Mobile Services revenues were down 1%, mainly due to the regulatory decisions of the past one year, (inaudible) protecting customers' interests, which negatively impacted Mobile Service revenues. I am happy to say that the regulatory body clearly understands the value in growth of mobile services for the consumer and for the country, and yesterday announced a decision to lift one of the hurdles.

The smartphone and tablet market is key to growth of our Mobile Broadband business. Therefore, we focused on widening access to Mobile Broadband through our own branded smartphones and tablets. Consequently, we have 700,000 users (inaudible). Smartphone penetration in our network rose by 3 percentage points, to 22%.

Moving to page 9, Turkcell Superonline sustained its momentum on continued investments during the first quarter, recording year on year revenue growth of 40%. Moreover, I am pleased to say that due to its profitable business model, Turkcell Superonline has continued to increase its EBITDA margin, from 20% to 27% year on year.

During the quarter, the residential segment grew by 69% as the major force boosting the top line, while our corporate segment rose 26%, and the wholesale clients, 30%. Turkcell Superonline increased its minimum fiber broadband speed from 20 megabits per second to 25 megabits per second. Meanwhile, our home-passes rose to 1.4 million, with 464,000 FTTX subscribers.

In 2013, we will continue to focus on increasing our in-city coverage and improving our take-up rate.

Now, moving to page 10. In the first quarter of 2013, Astelit's strong execution led to sustained growth and profitability. Revenues of $99 million was up 9% year on year, mainly on higher subscriber base, and the rising mobile data and other value added service revenues. Meanwhile, the EBITDA margin reached 28%, from 27% a year ago.

Astelit recorded net subscriber additions of approximately 1.1 million, and increased its 3-month active subscriber base to 8.2 million through successfully deployed regional strategy. Overall, we appreciate the success of Astelit's operations, and expect this performance to continue with an increasing contribution to the Group going forward.

I thank you all, and now I will hand over to Murat for the financial review.

As highlighted on page 12, in the first quarter of 2013, Group revenues rose by 13% year on year, to TRY2.7 billion, with the sustained growth momentum of Turkcell Turkey's Voice and Mobile Broadband businesses as of its high contribution of Turkcell Superonline and Astelit.

Consolidated EBITDA, in nominal terms, climbed 15%, rising its margin by 0.5 percentage point, to 30%, compared to the same period of last year. As a percentage of consolidated revenues, the direct cost of revenues, excluding depreciation and amortization, increased by 0.8 percentage points year on year.

The 1.3 percentage point rise in interconnection costs was partially offset by lower net regulated cost as a percentage of revenue. Furthermore, in September 2012, an ICTA decision enabled users of mobile lines without subscription to register them under their names at no charge until October of this year. Moreover, cost of this registration is met by mobile operators. Therefore, direct cost of revenues included a registration-related tax expense of TRY16 million in the first quarter of this year. We expect a similar impact in the following quarters until October.

General and administrative expenses, as a percentage of revenues, fell 0.2 percentage points year on year. Selling and marketing expenses, as a percentage of revenues, decreased by 1.1 percentage points year on year, to 15.8%. Both selling and marketing expenses were broadly flat, in nominal terms, despite the growth in our revenues.

Now, moving on to page 13. In the first quarter of 2013, Group net income grew by 10% to TRY566 million, while the EBITDA rise was a key driver. Net, this improvement in EBITDA was partially offset by TRY27 million higher depreciation and amortization expenses.

The improvement in EBIT was partially offset by a translation of TRY1 million, in contrast to the translation gain of TRY37 million in the first quarter of 2012, and TRY32 million higher tax expenses in the first quarter of 2013.

In this quarter, we recorded lower interest income and interest expense, resulting from declining interest rates, and hence, the net impact of interest income and expenses was small.

As in the same period of last year, our Company did not record any significant one-off items in this quarter.

I will now talk about our balance sheet on the next slide. Our financial position remains strong, with a net cash position of TRY3.6 billion as of end of first quarter 2013. Our consolidated debt is almost flat, at TRY3 billion. The debt balance of our Ukrainian operation was TRY1.256 billion, and that of our (inaudible) operations was TRY911 million.

As of March 31, 2013, our debt to EBITDA ratio, in Turkish lira terms, decreased to 90% from 94% a quarter ago.

During the quarter, the major cash outflow items included capital expenditures amounting to TRY199.5 million, and annual frequency usage prepayment in the amount of TRY344 million. Of the total CapEx figure, TRY117 million was related to Turkcell Turkey, TRY59 million to Turkcell Superonline, and TRY23 million to other subsidiaries.

This brings our introductory presentation to an end, and thank you very much.

Kiev, at this time, we can start the Q&A session, please.

Thank you, sir. (Operator instructions) The first question comes from Cesar Tiron. Please go ahead.

Yes. I have a question on the regulatory impact -- on the impact of this regulatory measure of the increasing of the price cap. Actually, my question is to understand whether this also will be applied to promotions or not, and also to understand how are you planning to manage the fact that your on net pricing is going to be higher by almost 50% to some of the existing Avea and Vodafone offers, which offer all direction calls for TRY0.03 per minute. Thank you very much.

Yes, thank you for the question. It has two parts. First, does the latest ruling apply to promotions as well? No, it does not apply to promotions.

On the second part, I think, Cesar, you made a lot of good points while you were asking the question. And this is really how I would like to answer it. ICTA decision on minimum pricing is really a very complex decision, and also, a very important one. And as of today, there are still certain points regarding the implementation of this decision which remain unclear.

But analysis, according to our analysis, in the worst case, this decision will negatively impact Turkcell and mobile market in Turkey. However, we believe that ICTA, the regulator, once it has all of the facts and correct analysis, will understand the real cause of the problem, and will introduce the right solutions that will encourage market to focus on customer value through innovation, quality and investments.

And we understand that the regulated authority's concern for intense price competition and resulting low profitability levels in the market and sustainability for the investments. We understand that. However, I think it's important to recognize that the root cause of this problem is the intense price competition between Avea and Vodafone offers, not Turkcell prices.

An example, Cesar, on 18th of March, in your report, you reported that Avea and Vodafone has offers 40% below the MTR rates. We know that today, the rate is under 2 kurus. And you also report in your report that Turkcell has significant pricing improvement in 2012.

So we think that there are still unclear issues, yes. In the worst case, the decision will negatively impact Turkcell and the mobile market, but in conclusion, we believe that ICTA -- we have full confidence in them, that they will -- once they have all of the facts and analysis, they will introduce the right solutions so that market is driven by innovation, quality, and investments.

So, after obtaining further clarification regarding these points, then we will evaluate and communicate the resulting material impact, if any, on our 2013 outlook.

Was this helpful?

Yes. Just a very quick follow up on pricing. Is there any hope that pricing levels in 2013 have the same patterns as in 2012, where we saw significant pricing pressure in first quarter, and then in the following quarters, prices improved?

You know, I think -- and this would be the logical outcome, but you sometimes see irrational plays. And as you know, you know, this started with Avea introducing some time ago, last year, [Bincell], and they had introduced the lowest prices at that time in the market. And then, Avea itself introduced lower prices than that, and then Vodafone has introduced lower prices than that.

So, it has kind of gone down. You know, we know what is the right thing to do, and we think the regulatory decision is not, in our opinion, is not dealing with the real cause of the problem. The real cause of the problem is the intense irrational price competition by the other two operators.

You know, if you notice, we have increased our prices. I mean, for the last year, we have been reducing the discounts, and in the last quarter, we have actually increased our average revenue per minute.

So, I hope the other operators start focusing on value, because, you know, prices are approaching a very low point, and I think it is more important to focus on the customers, indelible value through technology innovation. And there is no question that mobile Internet is very important. Mobile Internet is the main driver for Internet access for the country, and there will be investments needed.

So we -- I think the market has to learn from other examples in other countries, where very low prices in the market has resulted very poor service to the consumer, and in the long run, net profitability level is important.

But we have been value-based from the beginning, and we are recognized by our customers, by our quality, by our service, by the speed of our mobile Internet, by the speed of our fiber Internet, and our contributions to the country through innovation in every way.

So, we hope that the market, like last year, turns more rational.

Thank you --

But I cannot guarantee that. We have no -- we cannot comment on it.

Thank you.

Thank you. The next question comes from Alex Wright from UBS. Please go ahead.

Yes, thank you, and good afternoon. I just wanted to follow up, first of all, on the question from Cesar, please, regarding the ICTA decisions. Just to understand your answer fully, Sureyya. It sounds that as though you were suggesting that there may be some possibility that the decision on minimum on net prices may be revised or adjusted in some way, perhaps before it is implemented. Do you think that that is a realistic expectation, or if not, then what do you think precisely the ICTA may change going forward about this?

And then my second question is on the AGM, and the expectations for dividends, in particular. As far as I remember, the 2010 dividend was approved by the Boards previously a couple of years ago. Does that need to be re-approved by the new Board, or can the shareholders vote on that 2010 dividend as part of the AGM?

And regarding the 2011 and 2012 dividends, is the date set for the Board to discuss the dividends for those years, please? Thank you.

You know, BTK, ICTA, you know, they meet regularly, and they announce decisions regularly. So they have made some announcements since they first made this announcement, and we saw, as example, the SMS mobile termination rates were reduced. I think, first of all, I also want to comment on that, that still we are expected to have a minimum price of 70% below this new MTR rate. I still don't understand the logic why we should be 70% higher versus competition. Our market share in the SMS market is only 40.6%.

And I think on the Voice side, on the first part, Voice arm side, there are a lot of unclear issues about implementations. As you know, it is very, very complex. There are a lot of aspects, including contracts with different terms, commitments to the customers, and all aspects.

So really, I think you can even look at -- you can look at the decision, and you can interpret the decision many different ways.

So, but you know, I think the market should be driven by innovation, by quality of service, and so we think that ICTA should consider these, and we'll do everything we can to communicate what is right for the market in the long term. And there is no guarantee we can -- they will make any change. But the implementation of this starts on July 1st. So, this is the situation.

On the dividend side, the last Board meeting was fruitful. Articles of Association for Turkcell was changed by the Turkcell Board, and now it has been sent to CMB, Capital Markets Board for approval. And a date for AGM has been set, May 22nd, 10 AM. And an agenda for AGM has also been released.

You know, I cannot make any further comments. This is all I can say about it, and the dividend decision will be ultimately made by the Annual General Assembly, General Meeting, shareholders' meeting. And there will be a Board recommendation for that meeting. But the General Assembly can follow the Board direction, or can even execute on some other proposals.

So, this is nothing I can comment on, at this time.

Okay, but you do expect a Board decision, or a Board proposal on the dividend to be put forward and announced before the AGM, then?

Yes.

Okay, thank you very much.

Thank you. The next question comes from San Dhillon from Barclays. Please go ahead.

Hi, guys. The first question, you previously alluded to 50% subscriber market share, and being a level you are not prepared to fall below. Is that still the case? And regarding outlook, if the clarifications you seek end up being, as you describe, your worst case, what would that actually mean, in terms of your outlook? Thank you very much.

Okay, I don't -- we don't have a comment on specific market share. There is no magic number. And -- but what we have said is, it is the soul of any company to target, to focus on its customers, and do all it can through innovation and investments and customer service to keep those customers.

So we want freedom to deliver the best customer experience, so that customers benefit from it. And we are recognized by the world, and this is true. Two weeks ago, we were recognized by the United Nations as a role model, as a best practice, we were shown to the rest of the world.

So basically, we are not focused on any specific market share. We are focused on our customers, gaining customers, and delivering the highest value we can through innovation and investments to our customers.

And our customers like what they get from Turkcell. And you know, I have been traveling in Turkey, and everywhere I go, people recognize Turkcell as by far the best quality, best service.

So just like it is recognized outside Turkey by the United Nations as a best practice, it is also recognized in Turkey by people in Turkey as a best service.

So, we are focused on keeping our customers. We are not focused on any particular market share number.

Thanks. And the second question, regarding the outlook, and if the clarifications you seek end up being your worst case?

Hi, this is Koray. We are actually -- pointed out that we are in the process of assessing the risks and uncertainties related to the decision. I think once we are clear on these points, we will complete our evaluation, and if there's a material impact which suggests that we will be lower than the bottom range of our guidance, then we will update you. Otherwise, we will keep the current guidance. That's the situation right now. That's where we stand.

Okay. Cheers, guys. Thank you.

Thank you. The next question comes from Haim Israel from Bank of America. Please go ahead.

Hi, good afternoon, guys. We spoke a lot about Turkey and the regulation and competition. Touching on another part of your business, in Ukraine, and you did quite well, and definitely feel about your performance this quarter. I wanted your views about the competitive environment over there. We understand that recently, Vimpelcom have upped its aggressiveness in the market, and MTS is following. Can you just comment on that, how you see Ukraine going forward for you? And also, if we touch on Ukraine, about the -- your local currency exposure, where we stand right now in terms of debt, cash, and everything else?

Yes, I will first reflect on the market. You know, four or five years ago, we had below zero EBITDA margin in Ukraine. We were very new to the market. And you know, our team at that time was involved in a very intense price competition, including in a free or net kind of pricing.

And in four years, we changed our strategy and we changed our execution, and we focused on a strategy called regional strategy. Basically, how do we focus on our customers, and then align all of the Company resources from network to IT to sales and customer service, and everything, advertising, messaging. How do we align all of the Company resources to deliver a great customer experience to those people?

And this strategy has been reasonably successful. And we went from a negative EBITDA to 28% EBITDA in about three to four years' timeframe.

So we plan to continue this. Three or four years ago, we were number three in customer service and quality. In many of the regions now, we are number one or number two in the market. So we are -- we have now evolved into an innovation and value company. So now the other operators are sometimes getting involved in price wars. And I am -- as you can see, we were able to improve our customer base by 1.1 million customers, to 8.2 million.

But it is true that net market still remains very competitive. EBITDA margin for 2013 will be very similar to 2012 level. And our revenue growth expectation, in dollar terms, is high single digits. That's the situation. Murat, can you comment on the exposures?

Yes, sure. On the balance sheet, 90% of our liabilities are in other currency, which $694 million is the debt that the Company is owing, including principal and interest together. And of the assets, 96% are in local currency, and the Company has a (inaudible) cash balance, and that is a level of $14 million equal in local currency majority.

Okay. Okay, thank you very much, guys.

Thank you. The next question comes from Alex Kazbegi from Renaissance Capital. Please go ahead.

Yes, good afternoon. Two quick questions, please. We saw today that Turk Telekom has put a bid for the Bulgarian (inaudible). You are interested, of course, in this asset before as well. Could you comment whether you plan to take any action on this, or you don't plan to put any counterbids whatsoever?

And the second question is, just on the (inaudible), on your Superonline, your margin has improved quite significantly. You mentioned that it's because more data revenue is coming through. But again, can you be -- give us maybe some idea whether this improvement is sustainable, generally? What do you expect going forward on that front as well? Thank you.

On the first question, about Global in Bulgaria, we did not submit a bid, and we are not trying to submit a bid at this time.

On Superonline, basically, last quarter, Superonline had some one-time special marketing expenses, marketing investments. They were not recurring in the first quarter of 2013. That has an impact quarter over quarter, and also, the revenue growth. You know, we expect Superonline margin to be around 25% EBITDA margin for the year.

Okay, very clear. Thank you.

Thank you. The next question comes from Ivan King from VCB Capital. Please go ahead.

Hi, good afternoon. Sorry to get back on this regulatory issue, but I have a question in two parts. You are assuming that this floor voice on net rate stays. Would you rather sacrifice some of your margin by increased sales and marketing expense, or you could let some more subscribers to churn?

And secondly, do you think Avea and Vodafone would be aggressive, or they would rather use this as an opportunity to increase their own margins? Thank you.

You know, we have seen that BTK decision, but as I mentioned, there is still a lot of parts that is unclear about implementation. And I think BTK will act responsibly to clarify these uncertain parts. And we will -- I think basically, we will continue to focus on our customers, and drive innovation and higher value.

I am very excited about mobile services, our customer focus. There is a lot of new products and services we can bring to the market, and -- Ivan, but at the same time, I think I am expecting the regulatory body to do the right thing. So I can't really comment any more on that.

Okay --

And I also cannot comment on Vodafone and Avea. Basically, as I mentioned, in certain markets, like Ukraine, we have 8 million customers, and in a very tough market environment, with much lower ARPUs, we are delivering EBITDA 28%. We are growing, our customers are happy. I think that is a more logical way of running the business.

I think customers -- in Turkey, the prices have come down significantly, so in my opinion, bringing prices further down is not creating value for our customers. The value for our customers will come through innovation and higher value. And we will continue to focus on that. And you know, I cannot comment on how our competitors will react.

Okay, thank you.

Thank you. (Operator instructions) The next question comes from Dalibor Vavruska from Citigroup. Please go ahead.

Oh, hi. Good afternoon. Just wanted to ask a little bit about the fixed line business as well, and Superonline. I mean, first of all, just a technical question. Can you say where the subscriber growth is coming from, in particular, the newly-built houses? I'm just wondering which sort of areas you are focusing on in terms of your expansion. And then, perhaps, if you can mention what is your market share on the newly-built developments? Because I understand that there is about 0.5 million newly-builts in Turkey, which I assume can be significant opportunity. And maybe you can be in a better position than relatively to the city centers and areas which are already covered?

Secondly, Sureyya, I think you mentioned something about equal access in your presentation. I am not exactly sure what you were referring to. I mean, are you talking about your desire to get regulation about equal access to fixed line infrastructure, perhaps the (inaudible) fixed line infrastructure? Is it something which is on the agenda, and something that you're looking to change, or to, perhaps, improve the opportunities for Superonline?

And my last question, if I may, is on the regulatory situation. Let me ask a little bit differently. You said that the regulator is now interested in stabilizing, or perhaps even bringing the prices up, and -- so that the operators can increase their investment in innovation.

Now, I notice your CapEx is relatively low in Q1, and generally, the CapEx went down so far for this year. Can we talk a little bit, what the regulator is doing to -- or, what do you think they should be doing to improve the climate for investment? Thank you.

First of all, on Superonline, yes, in Turkey, there is a lot of new construction happening, and you are 100% right. It is a lot easier for us to go and offer fiber Internet services to new buildings, and most of them are in high rises. It is a lot easier to do, versus digging through old roads, where it is very difficult to get permits.

And you know, if you look at the chart 9, our FTTH business, our residential business, has been the fastest-growing business, 69%. But our corporate business, we are also pleased with the progress over there, and I think our teams have created good synergy, working between Turkcell Turkey and Superonline.

About equal access, yes, we would be very happy if we were allowed to use the ducts that Turkish Telekom has at reasonable price, and this is important, I think, for the regulation, to make sure that those access rights to use those duct space is reasonable, and is not eliminating competition.

And as for the last part, let me think. Oh, about --

It's about what the regulator is doing to encourage investments.

Yes. I think that's a good question. (laughter) But we are -- 2013, annual budget, as you know, has about 15.5% of our revenue is CapEx investment. I mean, the first quarter has been slow, because it's seasonally slow, because it's the winter. And it is difficult to make CapEx investments in the winters. I'm sure it will accelerate according to plan, if we execute the plan during the rest of the year.

And I -- you know, you asked me, what is the regulator doing to encourage investment? I think basically, they are sharing information that data traffic is increasing rapidly, which we also see. It is true that in 2007 first quarter, data was about 1% of our traffic. Now it is approaching -- or more than 70% of our traffic is through data. And this traffic is increasing.

So it is very important, we believe, that we price data accordingly, and this is why I am also concerned about this latest BTK decision. Because some of our competition is kind of giving data away. And that is very concerning about the future investments.

But we plan to remain disciplined about this, because I think it is very important to the future that we build a business model where we are pricing data accurately.

And I'm sorry, maybe I -- if you could answer it, what is roughly your market share on this newly-built building, in terms of fixed line? Just to get a sense, how much more successful you are in getting those subscribers, rather than penetrating the areas which are already covered, if you have a ballpark number.

You know, at this time, I cannot give you a precise number, but that has been the major area of our investments and our direction so far.

Understand.

But I also want you to be aware of the fact that Turkish Telekom has also started, or accelerated its fiber buildup. But there are close to 18 million residences in Turkey, homes in Turkey, and Superonline is only at 1.4 million of this today.

I understand. Thank you. Thank you very much.

And, you know, I also want to say that throughout Turkey, the construction boom is continuing. And I think there is a lot of construction to be done in Istanbul as well.

Thank you.

Thank you. The last question comes from Vera Sutedja from Erste Bank. Please go ahead.

Yes, good afternoon. I just have two simple questions. Regarding -- sorry to get back to the regulatory measures again. If your current average voice tariff is actually above this minimum level, or actually, you have to increase the price on average, as well as for the SMS, because as far as I am aware, your voice average tariff is between 6 to 7 kurus. So that is actually above the minimum voice tariff that was required by the regulator.

Second question would be, please help me to understand a certain tariff that you have, related to these regulatory measures. So, for TRY19, you offer 400 minutes and 2,000 SMS. If we are following these new measures from the regulator, that means that you have to raise the price to TRY36. Is that correct? Or you have to cancel the tariff altogether?

Hi, this is Murat. The decision made by ICTA is quite complex, in terms of how we calculate the average prices, etc. But the average price rule applies on each tariff basis. So it's not possible to say that our average tariff is above or below the rule. So it's applied at every tariff level. So we'll look into it at a tariff level, and see what we'll have to do.

Again, I think I -- regarding the question about TRY19 campaign, it's, again, a more complex calculation that we do on this. It also depends on a lot of allocation rules, defined earlier. So at this moment, I cannot -- and it's also a matter of the usage in the recent months. So it's not easy to say we will close it down or not at this time, regarding this campaign.

So you cannot say that what are the current, on average, your tariff is above or below this minimum price?

As I said, it's not a matter of the average. I mean, the rule doesn't apply on average. It applies on each and every tariff. So it's not an issue whether on average we are above the rule or not.

Okay, thank you --

So there might be tariffs where we are above, and tariffs that we are not above.

Yes, that's why I'm asking, for this TRY19 tariff, what you are going to do with it, so that we can get a bit of understanding, or a bit of, how do you say, indication what you can do or what you would do. That's why I'm asking, what's happened with this TRY19, because TRY19 to TRY36 is a big gap.

Right. As I said, we are looking into each and every tariff, at the moment, and try to also interpret the details of the decision. And that will be only (inaudible) whether we should change it or not after these studies.

Okay, thank you.

Thank you. There appear to be no further questions. Please continue.

Thank you very much, Kiev. On behalf of the management team here, I'd like to thank you for participation to all. And if you do have follow up questions, please, do call the IR team. And also, audio recording is available of the call for the next two weeks.

Thank you. Bye bye.

Thank you. This concludes the first quarter 2013 results announcement conference call. Thank you for participating. You may now disconnect.