Turkcell Iletisim Hizmetleri AS (TKC) 2017 Q3 法說會逐字稿

Good day, and welcome to the third quarter 2017 results conference call. For your information, today's conference is being recorded. At this time, I'd like to turn the call over to Korhan Bilek, Director of Investor Relations and Mergers and Acquisitions. Please go, ahead.

Thank you, Zudd. Hello, everyone. Welcome to Turkcell's Third Quarter 2017 Results Call. Today's speakers are our CEO, Mr. Kaan Terzioglu; and our CFO, Mr. Bulent Aksu. We have a brief presentation and afterwards, we will be taking your questions. Before we start, I would like to remind you to review the disclaimer of our presentation. Now I hand over to Mr. Terzioglu.

Thank you, Korhan. Good afternoon, and good evening, and welcome to our third quarter results call. We are pleased to announce another remarkable quarter of operational and financial performance. Our group revenues grew 25.7% to TRY 4.6 billion and EBITDA rose 34.1% to TRY 1.6 billion. Our EBITDA margin is now at 35.5 points -- percentage points -- marks the highest quarterly print since 2009.

Our data and digital services revenues grew 37% year-on-year, with continued expansion of the 4.5G customer base, growing smartphone penetration of 71% and 40% higher data usage of 4.5G customers, reaching 6 gigabytes per user as the average of the quarter. On 7% growth, total subscribers in Turkey reached 37.2 million. Over 50% of our customers in the mobile segment have preferred Multiplay and actively used our voice, data and at least one digital service. Our consumer finance company, Financell, completed its second asset-backed security issuance of TRY 100 million, contributing further to the group focus on balance sheet efficiency and boosting cash flow generation ability.

This quarter, we marked another milestone in our digital transformation by launching the Lifecell brand and accompanying plans in Turkey. With Lifecell plans, all communications, including calls will be conveyed over mobile data and through our digital services. I will elaborate more on Lifecell (technical difficulty)

Move to the next slide. I will now elaborate more on the financial results of this quarter and our 9 months performance. In the third quarter, Turkcell group recorded 25.7% revenue growth with an EBITDA of 35.5%. Group net income virtually quadrupled year-on-year to TRY 601 million.

With our third quarter top line performance, we are now Turkey's largest revenue generator in telecoms business. We have achieved this target 1 year ahead of our plan. At the group level, we registered TRY 13 billion revenue and TRY 4.5 billion EBITDA in the first 9 months, corresponding to 26.6% and 38.2% growth respectively.

This represents all-time high 9 months revenue and EBITDA in nominal terms at the group level. Our quarterly capital expenditures remained under control at 16.9% of revenues. This resulted in a 15.7% CapEx-to-sales ratio in the first 9 months.

As these results are in line with our plans, we reiterate our 2017 full year guidance of 21% to 23% revenue growth, 33% to 35% EBITDA margin and an operational CapEx-to-sales ratio of 19% to 20%.

Next page. Now I will go further into the details of Turkcell Turkey, which represents 88% of our group revenues. In the quarter, our revenues grew by 23.5% to TRY 4 billion. We recorded 33.4% growth in EBITDA, which reached TRY 1.5 billion. Quarterly revenue growth, including financial services, was at 26.1% with an EBITDA margin of 36.2%. In the first 9 months, revenues, including financial services grew by 27% with an EBITDA margin of 35.3%.

In order to normalize the impact of 4.5G, we consider our 2-year growth rate cumulatively. In the last 3 quarters, our 2-year growth rate was 34%, 36% and 33% respectively. Therefore, a sustainable 2-year growth rate above 30% can be foreseen.

Moving to the next page. Let's elaborate on Turkcell Turkey's operational performance. This quarter, we recorded over 0.5 million net subscriber additions, reaching 37.2% -- 37.2 million total subscribers in Turkey. In mobile, we registered 473,000 net mobile subscriber additions, 201,000 of which were postpaid. Meanwhile, our prepaid components saw robust growth, with 271,000 net additions confirming seasonal expectations. Our fixed business continued to grow with 49,000 net additions, 39,000 of which were fiber. The number of customers who prefer to experience TV+ as an IP TV service, increased by 31,000. Including OTT TV subscribers, our total subscribers (technical difficulty) 8.5 million. Successful implementation of our digital services-focused strategy, upsell efforts, price adjustments and a favorable change in customer mix, have all supported the rising trend of ARPU. Mobile-blended ARPU grew by 11.2% to TRY 32.8 million. Fixed residential ARPU rose 3.7% year-on-year on the back of the rise on Multiplay customers with TV and price adjustments.

Considering our third quarter performance of the past 4 years, we observe an improving mobile churn well ahead of the competition. Our service quality, retention campaigns and attractiveness of our unique digital services portfolio have increased customer retention.

Next page. In the third quarter, we have reached further milestones in our digital journey. Following a successful initial implementation in Turkish Republic of Northern Cyprus, we launched our digital brand Lifecell and its new plans in Turkey. As one of the global pioneers of digitization of telecom services, we now define Turkcell as the digital operator. Lifecell marks another first in this strategy with its offers that meet all communication and digital needs entirely through mobile data and digital services. Lifecell subscribers can conduct voice and video calls and send instant messages through BiP, listen to music on fizy, watch movies on TV+ and keep their memories safe in Lifebox. And they can also get 7-24 customer service via BiP. Our recently launched native service engine, Yaani, also comes with unlimited data offering within Lifecell.

There is more data in the plan that subscribers can use at their own discretion.

Of the 37,000 of travelers, already onboard in a month, 59% are new to Turkcell. We are confident

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to fast-growing and influential digital customer and reach a completely new set of customers. As evidenced so far by users in Cyprus, the Lifecell customers ARPU significantly exceeds that of a postpaid Turkcell user, while their retention is higher. We anticipate a similar performance in the Turkish market.

Going forward, we will also replicate this model in our international subsidiaries, cementing our position as the regional leader in digital services-focused experience.

Next slide. We have continued to promote our services through a focused marketing strategy. Reflecting our focus on digital services, we have held a number of marketing campaigns through the quarter. BiP users are rewarded with complementary data packages encouraging a wider use. Fizy users are able to watch famous stars live onstage through the digital platform. Our Shake & Win campaign now in its 41st week sees 4.7 million participants each week and each of these participants are awarded with a wide range of digital services and products helping them explore Turkcell's digital world. Our customer-centric approach, overall service quality, and a variety of our offers make us the operator of choice in both consumer and corporate mobile segments.

This is visible in our net promoter score, where the gap between Turkcell and the second and the third players continues to widen.

Moving to the next slide. A key growth driver in healthy customer appetite for mobile data boosted by 4.5G. An average 4.5G customer has significantly higher data consumption. In fact, their consumption has reached 6 gigabytes, listing the overall average to 4.2 gigabytes on 62% year-on-year growth.

4.5G is still a very significant growth opportunity for us, not only in terms of average gigabytes per user but also in terms of the growth potential of the base.

Out of 29 million customers requesting our 4.5G services, only 14 million have 4.5G compatible smartphones. This points to the potential of more than doubling the 4.5G customers on our network. We continue efforts to tap this potential to switch our subscribers to 4.5G by switching SIM cards, offering more mobile data and through smartphone campaigns. Our consumer finance business is also a critical contributor to these efforts. Thanks to the loans granted to date, smartphone penetration in our network has already reached 71%, rising 9 percentage points within a year. We are confident that this trend will help us reach more customers, with more value-creating digital services as we go forward.

Next slide. Now let's analyze our performance in monetizing our data and digital services. The largest component, mobile data continued its solid growth rising 13%, reflecting an ever-increasing demand and a higher number of 4.5G users coupled with more smartphones on our network. The second largest contributor, digital services have almost tripled in a year, reaching TRY 750 million. Our core digital services are TV+, Dergilik, our digital media platform, fizy, our music platform and Lifebox, our consumer cloud services. These have been instrumental in driving this growth.

Last but not least, fixed data revenues were up 27% with the expansion of our fiber subscriber base, coupled with price adjustments. In total, data and digital services grew by 37% year-on-year to TRY 2.7 billion. This corresponds to 67% of Turkcell revenues in Turkey.

Next page. Our investments in developing new services and enhancing the user experience in existing ones has supported higher takeup rates of our digital services. As of the third quarter, 1 in every 2 of our subscribers is using at least one of our digital services besides voice and data, marking a 22 percentage points yearly rise. While they account for 50% of the customer base, their revenue impact goes beyond this number to 69%.

The mobile revenues coming from triple-play customers, they generate more than twice the ARPU of other customers, while tripling the Single Play customers ARPU. On the fixed side, 42 out of every 100 fiber residential customers have subscribed to our IP TV services. We aim to keep these trends on both fronts.

Next page. We aim to increase customer engagement from basic communication to potentially all digital activities. We have always acted with the insight that telecommunications companies are best positioned to meet all communication needs of their customers in digital services and traditional GSM services. Today, we are observing that our customer choices group prove us right. A day is 1,440 minutes. In a traditional world of telco, we would have taken only limited minutes with GSM calls, but today our customers spend 8 hours on our IP TV, 51 minutes on the TV app on their smartphones, 31 minutes reading Dergilik magazines, 24 minutes listening to music on fizy and 13 minutes in interacting over BiP.

Our team of over 1,000 engineers tirelessly works to introduce new features, enrich the content of our existing applications and launch new ones to meet the demands of a rapidly digitalizing world.

We are confident that achieving a greater timeshare in these 1,440 minutes with our current and upcoming digital services.

Next slide. We continue to see rising demand across all services, steadily rising KPIs. With 16 million downloads, BiP, the first and the leading global product of our global services portfolio is a platform for 32 million messages per day with 4.2 million active users. This quarter, we introduced a group video call feature. And according to an independent study, the awareness of BiP was 59% in the third quarter.

UpCall, which offers an enhanced call experience, reached 1.5 million downloads. 595,000 customers actively use UpCall receiving 750 -- 570,000 calls a day. Our digital publishing application, Dergilik, reached 2.6 million downloads, a monthly average of 4.7 million customers used Dergilik application and its benefits. This boosted by the inclusion of 16 daily digital newspapers in July on top of the 335 magazines. Over 8 million songs are streamed daily on fizy, our popular digital music platform, which has 1.7 million active users. 1.3 million monthly active users on TV+ had 1.5 million session logins per day. We aim to increase our penetration in various smart TV application stores as well.

Lifebox, a valuable contributor to customer retention has 1 million active users uploading 40 documents per day on average. We also have an upcoming search engine service called Yaani, which I will elaborate on the next slide.

Our value proposition in the digital service space is not limited to creating our own (technical difficulty) other digital content and service providers as we seek to create the platform with seamless end-to-end customer experience. We have developed a model in the fast developing e-commerce market for both of our own digital services and those of our corporate customers. The first step is the secure login of the end users via Mobile Connect or fast entry as we call it in Turkcell, which is a universal digital authentication platform supported by GSMA.

This technology serves both our customers

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consumers enjoy secure and easy login with GSM number-based authentication. Businesses benefit from reliable identification provided by Turkcell. Today, 11% of world's Mobile Connect verification is realized through Turkcell.

As customers make transactions for digital content, they can benefit from secure payment opportunities provided by Turkcell's Paycell and even use credit from Turkcell consumer finance company where available.

We are integrating this model of our services, including Turkcell economy and travel platform, Fulltrip and third-party services like BluTV and Piri travel companions. Turkcell further complements its digital model by providing related customer services via BiP. With this platform, we seek to expand the e-commerce market in Turkey as the interaction between Turkish digital content and service providers and consumers become secure and seamless. In fact, today we took another step in this direction by launching Yaani, Turkey's native search engine, building on a rich control of local data and responding better to the Turkish language than its counterparts.

Yaani enables a smoother interaction between the end users and the companies, which would like to get their messages across more accurately and efficiently. Yaani is the first step towards the exponentially growing digital advertising market.

Data accumulated at Yaani will be stored in Turkey. We believe this is important as data sovereignty becomes increasingly critical worldwide. Certain European companies have the toughest law and regulations already in place. Further, as opposed to other search engines, Yaani will be subject to the Turkish corporate tax law, which reflects our service neutrality approach, which we define as same service, same rules. Next slide.

Now let's look at our consumer finance company, active in Techfin. Financell continued its steady growth in Q3. The consumer loans portfolio reached TRY 3.80 billion. Our 26 million credit scored customers offer considerable potential going forward. In August, we successfully securitized the second tranche of TRY 100 million Financell receivables, which contributed to our balance sheet management focus and improved our cash flow generation capability. Fitch maintained its AA local rating for Financell. Paycell giving our customers differentiated payment options is seeing increased traction from our customers. We have observed a transaction volume of TRY 241 million in the first 9 months of the year. We have 1 million registered cards on Paycell again, spelling a considerable potential.

Next page. Turkcell International comprises 6% of group revenues. Our operations grew 22.7% year-on-year to TRY 273 million for the quarter with an EBITDA margin of 26.9%. Lifecell in Ukraine contributed 62% of our International business revenues. Lifecell this quarter maintained its leadership of 3G geographical coverage. With the rise in mobile data revenues, Lifecell's revenues climbed to 16.1% in TRY terms. The EBITDA margin came in at 29.7% on a 2.8 percentage point improvement year-on-year, underlining effective cost management. Lifecell also launched Lifebox, which continued to strengthen its digital services focus.

Moving to Belarus. In the third quarter, BeST revenues grew by 41.8%, with an EBITDA margin of 6.5%. BeST (technical difficulty) footprint now serving all 6 regions and matching the geographical coverage of the leading operator in the country. 14% of our customers have experienced 4G services, which have increased data consumption and revenues. Our Turkish Republic of Northern Cyprus operation, Kuzey Kibris Turkcell recorded 19% year-on-year growth with 34.8% EBITDA margin. Growth is sustained by healthy data demand. Approaching its first anniversary, we are pleased to say that digital brand Lifecell in Cyprus, the customers of Lifecell generate 46% more ARPU than postpaid users and furthermore, their churn rate is 1/3 of the churn rate of the entire customer base.

I will now leave the floor to our CFO, Bulent. Bulent?

Thank you, Kaan. Good afternoon and -- good afternoon and good evening to all participants. Let's take a closer look into financials.

In the third quarter, group revenues rose by 25.7% year-over-year, corresponding to the TRY 939 million in nominal terms. This came mainly from subscriber base growth as well as the strong ARPU platforms driven by the data and digital services growth of Turkcell Turkey and the additional TRY 103 million generated by Turkcell consumer finance company. Turkcell International added an incremental TRY 50 million to our revenues. EBITDA rose by 34.1% year-on-year to TRY 1.6 billion. This was mainly due to a solid rise in revenues and effective cost transformation program. The EBITDA margin improved by 2.2 percentage points to 35.5%.

Next page. In the quarter, net income rose to TRY 601 million, 3.7x that of last year. The TRY 415 million higher EBITDA was the main driver of this growth.

Other positive factors are the TRY 101 million improvement of FX gain/loss after hedging tasking including the positive impact of the change in the fair value of cross-currency swap transactions. The TRY 150 million change in other income expense, which was mainly due to the TRY 138 million negative impact of the tax analysis last year.

This quarter, we again saw a limited TRY 74 million rise in depreciation and amortization with a base comparable to that of last year. Fintur contributed a TRY 5 million to net gross in Q3 '16. Yet as expected it had no P&L impact in Q3 '17 as in the previous quarter.

Regarding Fintur sale process, we see continuous progress and high activity and it is still our ambition to divest these assets before year-end.

Moving onto the next page. Now I would like to talk about our balance sheet and leverage details. At the end of the third quarter, our net debt position was TRY 7 billion, with a net debt-to-EBITDA ratio of 1.2x. Excluding the impact of the consumer finance companies loans, our telco in the net debt is TRY 3.2 billion and the leverage is 0.6x. This level is well below our 1.5x threshold. In this quarter, our telco net debt increased due to the second installment of our dividend payment. Net of this, our telco in the cash flow is a positive TRY 590 million in this quarter.

We paid the second installment of dividend on September 15. Following the sale of Telia on May 14 and September 19, we now have a 49% effective free float, which allows for healthy liquidity. As of last Friday, our stock price is up 33% and 15%. It is the first and second spec sales of Telia, respectively.

Moving onto the next page. Let me give you the overall summary of our consolidated cash position. The major cash flow items of the quarter include an EBITDA of TRY 1.6 billion. Capital expenditure of TRY 938 million of which TRY 873 million was related (technical difficulty) net interest expense of TRY 4 million, net change in the debt of TRY 410 million and the second installment of the dividend payment amounting to the TRY 1 billion.

Next page. Now I will go into the management of the foreign currency risk. As hedging mechanism, we continue to hold 76% of our cash in hard currency. In addition, we use gross currency swaps to convert some part of our long-term foreign currency debt to fixed rate local currency liability. After the hedging with swaps, the share of foreign currency debt exposure falls to 41% from 77%. Having taken these actions, Turkcell group's short -- fixed position is at USD 330 million as of the end of the third quarter, still below our comfort zone of USD 500 million. This is the end of our presentation today, and we can now begin the Q&A session.

Thank you, Bulent.

(Operator Instructions) And we will take our first question from Slava Degtyarev with Goldman Sachs.

Can you please elaborate a bit on your plans with regards to search? And is there any international role model for you here? And -- so why do you think that your search opportunity might be successful in Turkey? So you obviously have reached more than 40% of the mobile users in the country, but what makes you confident that significant part of them will move from -- towards your search engine versus the Google? And also, if you can elaborate how many people are involved into that project? And also on top of that, what is the digital advertising market in Turkey, in order to (inaudible) that sales opportunity here?

Slava, thank you very much for the question. The search engine and the digital advertising market is a market which is growing very healthy in Turkey. However, on the other side, Turkey is one of the unique countries, where Google has a 97% market share. If you look around the world, countries like Russia, China, Korea, Japan, have all come up with strong local search engines, which adhere to local market needs. Turkey is one of those countries, where language is an important issue and location-based services, which can only be effectively delivered through abilities of a local telecommunications player is key. Therefore, we believe there is a healthy segment of the TRY 2 billion advertising market that can be captured through our entry to the market. Yaani, our search engine, is going to focus on local language, local localizations of the search results and combine these with secure commercial platforms. Therefore, we see this as a very important investment on our side, and we deploy almost 100 of our engineering resources developing the capabilities of local search. Today, we made our first announcement, and we are coupling our local search tool, Yaani, with search capabilities, which does not consume from the quotas of the users. We will also provide one gigabytes of free browsing with the search engine users. I expect a strong demand to show up in our customer base, but the demand will not be limited to Turkcell customers because the engine will be open for all operators, all devices and all operating systems. And we will be providing further details in next quarterly calls on the progress of this product.

And we'll move to our next question from Madhi Singh with Morgan Stanley.

Just continuing on the digital opportunity. Out of the main categories you mentioned, which one do you think has the biggest opportunity for revenues and profits? And also, what do you think of the, like, overall market potential for digital services as a whole? And how do you see the overall growth trends over next 2, 3 years in the segment? And on the financials, just wondering how much was the FX loss in the third quarter exactly.

Thank you very much. The digital opportunity can be best expressed in terms of the time that our customers spend on our services. If you take a day as 1,440 minutes, we actually value the most where the customer spends the most time. From that perspective, our OTT TV offer TV+ has the maximum time spent by our customers with 53 minutes. This is followed by our digital media platform, Dergilik, which actually is the digital publishing of magazines and newspapers in Turkey, which actually is consumed by 31 minutes by our customers. This is also followed by 24 minutes of music listening, almost equivalent to 8 million stream songs a day. Now, naturally, another important segment is safeguarding the digital assets of our customers, which is our cloud service. And I consider all these portfolio coupled with BiP and also in the future, with the searches that the Yaani will provide as our core 7 cornered digital services strategy. But our digital services strategy is not only limited to our own digital services. While we consider sharing, listening, watching as core parts of the digital services that we will provide, we also expand this as a platform for third parties. Through our first entry, Mobile Connect platform and Paycell, we provide a secured commerce platform for any e-commerce player in the country, and we would also consider these in the future as our combination of our own services and third-party services to go. I expect most of our services and relevancies to the customer will come from these digital services. As of end of Q3, 1 out of 2 customers we have on mobile segment enjoys a minimum of one digital service from Turkcell. With regard to the foreign currency loss in Q3 exactly, this quarter, our FX loss has been TRY 135 million. This is a combination of our cross-currency swap position changes.

Yes. Okay. So on the digital revenue, if you see quarter-on-quarter, third quarter saw probably around TRY 60 million additional revenues. So is that the number what we should expect in terms of the revenue opportunity? Or you would see further acceleration in the revenue generation trends in digital services space?

The digital services revenue growth drivers are a couple of different issues. One is the smartphone penetration, which heavily affects the consumers' appetite to consume more digital services. The second point is 4.5G customer base, which we believe we have a significant upside since still about 40% of the phones of our 4.5G customers are not yet supporting 4G technologies. And of course, the third extent of our service offerings. So all these 3 things play a role, and we do expect a healthy growth in penetration rates of our services.

So acceleration is possible?

Acceleration of digital services is sustainable and possible.

All right. And any plans on monetization of BiP, the messaging platform?

BiP is already monetized through our Lifecell, our new digital brand. We actually bundled after network, which is a unique feature of BiP, calls as part of our Lifecell packages. BiP, unlike other OTT instant messaging platforms is not a closed-loop application. We integrated our IMS capabilities and call management capabilities into BiP, which allow BiP users to place calls to other operators as well as landlines. So this is a direct start of our monetization of BiP and, of course, the real monetization of BiP comes from lower churn rates, who experience this superior service.

And just to get it clear here. The revenues which would be booked via a BiP to normal phone call, would that be booked as a digital revenue or as a voice revenue?

It will be booked as a digital service revenue.

And we'll move to our next question from Anna Kazaryan with VTB Capital.

The first question about your churn rate, so we see the sustainable year-on-year decline of the mobile churn rate. But if we look on the quarter-on-quarter trends, we see that, there was some increase in the third quarter versus the second quarter. So could you explain this trend? And the second question about your search service. So as the search service is quite complex from the technological point of view, we think could you elaborate what's this search service. It's totally your own property or you developed this service in collaboration with some other IT companies? Could you clarify it?

Anna, thanks a lot. The rise observed this quarter stems from the correction of the seasonality of the churn rates that's changing from 9 months to 12 months. As you would remember, the seasonality, especially during summer times in Turkey, due to influx of foreign visitors have forced us to change our churn policy from 9 months to 12 months and basically we see the impact of this. This is a healthy change, and we actually foresee that the year-on-year churn rate is on a declining trend on an annual basis and this is significantly lower rate than compared to our competitors. With regard to the search engine, naturally we partner with best-of-class technology companies in developing our solutions. Search engine is no different. We have technologically advanced partners, which are working together with our local Turkish engineers and developing this solution.

(Operator Instructions) And we'll take our next question from Walid Bellaha with Barclays.

I have just one question on the Fintur planned disposal. So you mentioned that you're still expecting to complete a sale by the end of the year. Is it possible to give us just a sense of what you would do with the proceeds of such a sale?

Thanks, Walid. I mean, as also Telia Corporation expressed their opinions in their quarterly call, we reiterate those. We are working hand in hand with them in terms of the sales process, and we still expect to close the sale in this year. Now with regard to the proceeds, naturally, it will be a cash inflow, which will be impacting our leverage point, and we will consider reducing the leverage or, ultimately for benefiting our shareholders.

(Operator Instructions) And we'll move to Cemal Demirtas with Ata Invest.

I have 2 questions. The first one is about the possible tax increases or tax changes related to telecommunication. What could be the impact for this, for next year? And maybe if you can give an example based on 2016 numbers, assuming that everything would be similar and only the 10 changes would apply. So maybe you could give an example on the previous year, because for the future, the -- everything could change, you can increase the prices or change the prices. So it could give some indication about predicting the future? And the other question is related to OpEx. I see a significant improvement in your OpEx management. It's very impressive. And I would like to understand, how is it going to go going forward? Are there any room for improvement in that side? And the third one -- my third question is related to any indication related to 2018 on top of a very successful year?

Thank you, Cemal. First of all, I would like to mention that the tax legislation is still a draft and it is in the process of being discussed. So lots of things cannot be -- may not be final in those. Having said that, over the last years, different application of special communication tax has led into lot of complexities as speculations in the market. So overall, we see simplification -- the suggested simplification by the government as a positive thing. With regard to total impact on the industry, we do not see anything that would necessitate a change in our guidance. Having said that, I believe this simplified method of taxation will be good for our industry and any potential increases in taxation will naturally be also passed to the customers in terms of increased prices. With regard to our OpEx management, we will continue to be very disciplined and continue with our cost takeout initiatives that has proven to be successful. I think, again, our guidance reflects the impacts of these type of initiatives as we have provided.

And the last question was related to 2018. How do you see the transfer the following year in general?

I would recommend to look into -- since there is the 4.5G step impact in 2017, in order to see a sustainable development and progress, one needs to look carefully into the 2 year-on-year cumulative growth figures. And I would see that in our next conference call, we will be in a better position to provide you the 2018 guidance. And in our Capital Markets Day to come in the first quarter in London, we will provide again a revised 3-year outlook as well.

And we will move to our next question with Ondrej Cabejšek with Berenberg.

Two questions for me, please. On Yaani, I would like to ask, if you plan potentially on developing this into a web portal, more than just a search engine and hope this -- somehow with, for example, the publishing services that you have, which I guess would to get a

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it's a price-based effect, but still losing that your growth could be some sort of low-teens level or you'll view your guidance as conservative? And secondly, also, how do you view the adoption of the 5G technology in Turkey? So when do you think that the standard might be put into the commercial operations in Turkey? And do you think that it might require substantial increase in CapEx or you will be looking for some sort of infrastructure sharing with other industry participants?

Thanks, Slava. First of all, as I tried to explain in the first explanations if you look to last 3 quarters from a 2-year cumulative year-on-year growth perspective, our growth in the last quarters have been in between 30% to 35% range. And this is the sustainable continuation for Q4 as well. So if you take this into consideration actually the trend is stable and will continue, and we reiterate our guidance that we have provided before, which is in line with our plans and yearly targets of 21 to 23 percentage points of year-on-year growth. With regard to 5G, as you know, during the 4G spectrum tender, Turkey has adopted a technology-agnostic spectrum utilization policy. And we have deployed an advanced version of LTE technology, which is 4.5G or in the world known as LTE-Advanced. This gives us the capabilities for carrier aggregation, which could easily be done also for 5G deployment. Our network, we have deployed now in Turkey, which covers 82% of population, actually is ready to be upgraded whenever needed through application of massive MIMO antenna technologies to 5G. But we do expect deployment of 5G, unlike for 4.5G, into industrial zones, especially ports, airports, railroads and highways for industrial usage. So this will be a planned, controlled and economically feasible deployment model. With regard to consumer applications of 5G, we see a big potential in the home gaming market, where we're going to see very high-speed connections, allowing virtual reality and augmented reality-based gaming applications. And this is again a deployment that is possible through carrier aggregation through license and unlicensed spectrum. So we do not see potentially 5G as a major investment. However, having said that, we are always open for infrastructure sharing, both passive and active, whenever possible and wherever applicable.

(Operator Instructions)

We have question from the web from [Zelman Capital] (inaudible) Sania. It was about the revenue guidance and also EBITDA guidance for 2017. I think revenue guidance is covered. Maybe EBITDA guidance.

Yes. Actually, maybe it came at the same time with Slava's question. So the revenue guidance 21% to 23% year-on-year growth for the entire year and EBITDA guidance of 33% to 35% are unchanged and these are stable and in line with 2 year-on-year cumulative growth experiences that we have in throughout the quarters this year.

And there are no further phone questions in the queue at this time. I'd like to turn the call back to Korhan Bilek. Please go ahead, sir.

Okay. This is the end of our call. Thank you very much all for your participation and interest in our company. And we hope to see you in the next quarter.

Thank you very much. Take care. Bye-bye.

Again, this concludes today's conference. Thank you for your participation. You may now disconnect.