Turkcell Iletisim Hizmetleri AS (TKC) 2024 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. I am Gelli, your Chorus Call operator. Welcome and thank you for joining the Turkcell conference call live webcast to present and discuss the Turkcell fourth quarter and full-year 2024 financial results. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. (Operator Instructions)

At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed.

Thank you Gelli. Hello, everyone. Welcome to Turkcell's 2024 full-year earnings call. Today, our CEO, Ali Taha Koc; and CFO, Kamil Kalyon, will be delivering a brief presentation covering operational and financial results which will be followed by a Q&A session. Before we begin, I would like to kindly remind you to review our Safe Harbor statements available at the end of our presentation.

Now I'm handing the meeting over to Mr. Ali Taha.

Thank you, Ozlem. Good afternoon, everyone, and thank you for being with us today. This year in which we celebrated our 30th anniversary has been a testament to our dedication and achievements. We delivered on our promises honored our commitments and strengthened our foundation for the future. For the full year, our top line reached TRY16.7 billion reflecting a 7.8 percentage year-on-year rise, surpassing our guidance.

With a strong focus on profitability, we achieved TRY69.8 billion in EBITDA maintaining a solid margin just below 42%.

Throughout the year, we prioritized upselling and driving customers to postpaid plans. Leading to a record-breaking 1.9 million net postpaid additions, the highest of the past 15 years. In addition, we delivered double-digit ARPU growth supported by disciplined pricing strategy and an expanding postpaid base. In total, we added a net of 0.6 million subscribers in 2024. A key milestone of the year was the completion of our Ukraine asset sale in the third quarter.

Along with this, we delivered a 30% increase in net income, exceeding 23.5 billion.

Next slide, please. Let's take a look at our operational performance. On the mobile front, the aggressive pricing dynamics that began in May persisted into the second half of the year. There were no price adjustments across the market beyond July with intensified competitor campaigns, particularly in December, the market remained highly competitive. While we strategically responded to these news, we closed Q4 with 79,000 postpaid net adds.

Over the past year, our postpaid base has grown by $1.9 million, raising the postpaid share to 76%. And marking a 5-point increase year-on-year. We had $0.9 million quarterly net loss in the prepaid segment.

This is mainly due to broader adoption of alternative data solutions the quarterly disconnection of inactive subscribers in line with our churn policy and postpaid migrations. We achieved double-digit ARPU growth driven by our rational pricing strategy successful upselling to higher packages and expanding postpaid base and a slowdown in CPI. However, due to accelerated market aggressiveness and life cycle closures the churn rate rose to 2.8%. We retain our focus on profitability and leveraging our digital services to support ARPU growth. As a result, our standalone paid user base is at 4.8 million in Q4.

In Q4, the fixed broadband market remained relatively rational other than the late price adjustments among small ISPs. We maintain our focus on fiber subscribers Strong demand for our high-speed end-to-end fiber service role 32,000 net additions in this quarter, bringing the full year net debt to 168,000. Momentum in the demand for high-speed packages continued in this quarter. The share of packages of 100 megabits per second and above in our residential fiber portfolio rose by 12 percentage points year-on-year. Residential feedback fiber ARPU grew by 18.8% year-on-year.

This is mainly due to the rising 12-month contract share to 85%, higher usage of 100 megabit per second plus packages and price adjustments.

The slight rise in churn is mainly due to price increases and the transition to 12-month contracts. Meanwhile, our take-up rate rose by 1.7 points year-on-year and we focus on adding fiber subscribers over expanding home pass coverage lease. Digital business services generated TRY4.4 billion in revenue this quarter, with recurring service revenues rising 19% year-on-year. Hardware revenues also provided support, showing a partial recovery this quarter. Notably, our system integration project backlog has reached TRY4.8 billion.

In our high potential data center and cloud segment, revenues rose 39%, driven by high demand and strong pricing. Guided by our principle of keeping Turkey data in Turkey, we remain committed to expanding our data center investments, reinforcing our long-standing market leadership. We are Turkey's first company to receive per 3 certification from the Uptime Institute for design, facility and operations. Our data centers are built to the highest standards, ensuring redundancy, reliability and new low downtime. This makes us the #1 choice for top enterprises securing our long-term growth potential.

To meet growing demand, we expanded our data center capacity by 27% to 41.4 megawatts in 2024.

In 2025, we plan to build 2 more new modules, increasing our capacity by 8.4 megawatts by year-end. Our Techfin segment, Paycell and Financell comprises 5% of our group revenues, strengthening our top line growth. Paycell, our mobile payment platform, achieved 33% growth in the Q4. While all verticals contributed the biggest drivers were higher commissions and transaction volumes from Paylater and post solutions. Notably, Paylater transaction volumes surged by 87%.

The fueled by broader adoption in app stores and expanded QR payment eligibility.

Meanwhile, Paycell EBITDA grew by 51.8% and with a 4 percentage point increase in EBITDA margin, reinforcing our commitment to profitable growth. Financell revenue rose by 13.6%, supported by higher average interest rates and an expanded loan portfolio. Thanks to the personalized pricing strategy we adopted in 2024, we are now able to address a wider customer segments. This strategy has contributed to our portfolio growth, rising interest in our loan book is offsetting higher funding costs, driving the net interest margin up to 4.6%. Despite the challenging macroeconomic environment, Financial remains the market leader in loan volume within the financing sector, a proof of our strength and resilience.

Next, please. This year, I'm proud to say that we stay true to our commitment to sustainability, reaching key milestones along the way. We successfully issued a $1 billion euro bond with half of it marking our inaugural sustainable bond issue, a clear reflection of our ECG efforts. Our CFO will share the details shortly. On the renewable energy front, we added 8.2 megawatts of active solar capacity in 2024 on track to reach 54 megawatts by mid-2025.

Additionally, we integrated solar panels to 1,000 base stations, further strengthening our commitment to renewable energy in our telco operations.

Our social and digital inclusion projects have impacted 377,000 lives. We also conducted a sustainability assessment for our key suppliers to reinforce our ECG commitment in the supply chain. In governance, transparency and accountability remain our guiding principles. As part of our bond issuance we published our first sustainable finance framework and secured an independent third-party opinion to help investors assess our ECG commitments. These milestones underscore our dedication to sustainability, and we remain committed to building a more responsible and inclusive future.

I want to take a moment to lay out our strategy, our road map for driving Turkcell into the future.

At the heart of our plan lies a commitment to robust infrastructure and cutting-edge technology. We are making comprehensive investments to pave the way forward. Our leadership in mobile services will continue as we advance in 5G coupled with an expanding fiber network, not only to power mobile infrastructure, but also to enhance residential access. When it comes to 5G, we are committed to leading the way in connectivity. Just last week, we successfully tested 5G in a packed football stadium with around 50,000 supporters.

Delivering impressive download speeds of 1 gigabit per second and above.

As data and cloud services search, we are building next-generation data centers. While to meet growing energy demand, we remain committed to renewable energy investments. Our strategy is about more than infrastructure alone. It is about transforming lives. We are dedicated to delivering superior technologies.

We are embedding AI into our operations, ensuring operational excellence with continued investments in data centers, we are driving growth in the cloud business through strategic partnerships. And as a pioneering innovator, we are actively exploring disruptive technologies, such as 6G satellite systems and Quantum Technologies in collaboration with global industrial leaders. Our mission is clear to keep our service simple, functional and unique, ensuring we remain the first choice of our customers. No matter the sector, no matter the challenge, our people-centric approach remains our guiding principle.

Finally, sustainability and business continue to form the backbone of our strategic vision. With this strategy, we are unlocking the full potential of our world-class infrastructure and technology expertise, delivering lasting value to our stakeholders and shaping the future of connectivity. To conclude my presentation, I share our guidance for 2025. For 2025, we expect 7% to 9% top line revenue growth. 2% to 4% data center and cloud revenue growth.

We have an EBITDA margin guidance of 41% to 42%, and we expect a CapEx intensity of around to 24%.

I will now leave the floor to our CFO, Mr. Kamil Kalyon.

Thank you very much, Ali. Despite inflationary headwinds, we delivered solid financial results in 2024. Our group top line grew by 8% year-over-year, exceeding TRY166 billion. Turkey accounted for 92% of this growth, contributing an additional BRL11 billion. This performance was driven by a delicate balance between an expanding subscriber base double-digit ARPU growth and upsell efforts.

Taking segment more than offset the decline in the other segment, contributing TRY2 billion to top line growth. This was primarily driven by pay sales 2% and finance as 33% growth levels. On a quarterly basis, an incremental revenue of TRY5.3 billion was generated, reflecting strong 14% growth. In the quarter, a limited recovery in hardware sales positively impacted other segment revenue.

Next slide, please. In 2024, EBITDA surged by 10.2% to 70 billion, driven by a strong top line performance. Accordingly, the EBITDA margin expanded by 0.9 percentage points year-on-year. Higher personnel expenses due to semiannual wage increases and rising funding costs reduced EBITDA margin by 3.4 points. These impacts were offset by lower cost of goods sold, energy expenses and interconnection expenses.

Lower growth in the cost of goods sold due to the decrease in demand for consumer electrics and corporate projects and a decline in MTR have positively contributed to the margin. Additionally, energy expenses were lower than expected throughout the year, also supporting the margin.

Next slide, please. The operational CapEx to sales ratio for 2024 was 22.8%. Given the seasonality of telecommunication investments, and the completion of data centers and renewable energy investments at the year-end, we see higher CapEx intensity in the fourth quarter. 63% of our investments were allocated to mobile and fixed infrastructure with an equal focus on both. Around 5% of CapEx intensity came from investments in strategic initiatives namely the data centers and renewable energy projects.

As our CEO has underlined, we remain committed to 4 key investment areas to reinforce our strategy.

Advancing our state-of-art infrastructure, enhancing 4.5G capabilities and strengthening our position for 5G to enable a full-fledged 5G experience we aim to increase base station fiberization to 48% and growing data center capacity by adding 8.4 megawatts of active capacity with the construction of 2 new modules in Europe and (inaudible) centers; and finally, continuing to expect solar renewable energy investments. As a result, we anticipate around 24% CapEx intensity in 2025.

Next slide, please. Now let's turn our attention to the balance sheet. In 2024, our cash position stood at TRY7 billion. In the fourth quarter, we distributed TRY3 billion in dividends from 2023. Additionally, to make efficient use of our cash, we invested in financial assets.

Our gross debt was TRY104 billion, and we ended the quarter with a net debt position of TRY10 billion. Thanks to strong cash generation and proceeds from the sale of our Ukrainian assets, our net leverage declined to 0.4x. We have adequate cash to meet has priced a dual tranche offering. The strong outcome once again confirmed global investor confidence in Turkcell. The issuance attracted higher oversubscription levels than any other Turkish corporate issuer in the second half of 2024.

Moreover, in the past year, Turkcell had the lowest spread over the Turkish treasury Eurobond compared to other Turkish corporate issuers. Issuers also reinforced our commitment to ESG as one of the tranche is in inaugural sustainable bonds. It further helped us broaden our investor base by attracting funds focused on ESG investments. With these issues we aim to refinance our existing Eurobond maturing in October 2025 and support future growth initiatives, including 5G and data center investments as well as securing green and social projects.

Next slide, please. Lastly, let's look into the management of foreign currency risk for 2024. At the end of 2024, our balance sheet had around $2.4 billion equivalent in FX financial liabilities. In addition to $2 billion equivalent of FX-denominated financial assets, we have a $0.3 billion effective hedging portfolio. Overall, we ended up with a short FX position of $124 million, which is within our neutral FX potion definition of plus and minus $200 million.

This concludes our presentation, and we can now open the line for questions.

(Operator Instructions) Ece Mandaci, Unlu Securities.

Hello. Thank you very much for the presentation. I have a couple of questions about the prospective (inaudible). And you had also some comments in your interview before regarding the tender. So what's your view regarding the time line of the standard and potential license line.

The frequency -- sorry, the spectrum were over the announcement, but -- what's your view regarding the potential investment size of this -- or license fee of these standards, I mean, the scope of the standard.

And could there be regarding with the standard, could there be any change in the mechanism in the pricing mechanism of the contracts, mobile contracts there be a change in there because you had also mentioned the dynamic pricing model you will cause that in your interview. I just read about it. And could there be any possibility of more premium pricing with the deployment of 5G in Turkey, could that be possible? And could that contribute to your overall average ARPU performance going forward? And additionally, you set the target of 24% operational CapEx over sales.

And you stated that this does not include any license fee, but there will be still the cost regarding fiberization of these base stations, linking the base stations.

So these efforts are linked to, of course, the 5G deployment. So should we expect that is CapEx over sales remain around this cable in 2025 and '26 at around 24% operational CapEx over sales. So the final question is about infrastructure sharing models, could it be possible? Or is just an idea because there were some comments from the ministry from the ministry about that there could be another tender about the fiber infrastructure I just want to hear about your views overall about the things I have mentioned. Thank you very much.

Thanks. Let me tell you that there is no official time line for 5G announced by the regulatory yet. But we know that 2025, there's going to be a tender and 2026, there is going to be a live 5G network. But official time is not well announced yet. However, recent statements indicate that the tender definitely will begin a bit this year.

So as Turkcell, we are determined to establish our 5G infrastructure with local and national technologies as much as possible. And we will continue our ongoing efforts to support the development of these technologies. We are committed to lengthen just as I explained in my talk, last week, we managed to show the speed of 5G to all the sports, football fans in both the ultra stadium and the travel stadium. So with a full pack of 50,000 people, people are experiencing the 5G. And it's a good starting point for the Turkey so that everybody is going to get a better experience at 5G because before that, there is only one place that you can experience to 5G, which is the airport.

So this stadium approach is going to help us out that we are going to see how the people how good to (inaudible) Turkcell 5G is going to be. Simultaneously, we are on continue to pay our mobile and fixed support network for -- we are committing to building the best 5G advanced, latest version to 5G network to support next-generation applications and as well as the digitization process of both government as well as the industry. We will continue to invest in fixed wireless access solution, especially FWA, fixed wire access a key feature of 5G to increase the broadband connectivity in Turkey where you can provide fiber-like speeds where there is no fiberization. So fixed (inaudible) is good possible alternative for the fibers.

Alongside our network provision, we continue to intensify our efforts with our business partners for R&D perspective. And especially 5G is going to be for the things, focusing on the intent of things. And so we are looking for the additional revenues from these kind of deals, especially as well as nontrade networks and satellite networks. For the other question about the tender, with respect to 2026 tender about fiber infrastructure. the announcement of our minister, we are gladly welcome to Minister statements.

Actually, there is significant down for fiber infrastructure, both from corporate side and individual side in Turkiye. And there is still a considerable need for further investment to expand fiber infrastructure across all countries.

We are ready to take on this national responsible destruct. Those are in the same vertical services in fiber broadband that we provide up to now in mobile communication. We are ready for it. As I have always emphasis at the end of this process, Turkiye will be the winner benefiting from enhanced quality and cost efficiency. As Turkcell, we continue our investments, strengthening our fiber infrastructure and bringing innovative technologies to our nation.

Thank you very much for the question. I will try to respond to the second one. As you mentioned, we do not include our license fee to operational CapEx to sales ratio Therefore, our guidance would not include the license fee. For 2025, we will be focusing on our core business, mobile and the fixed side more for the preparation of the 5G side. Besides that, we will continue to make the investments for the data centers and the solar energy side.

Our expectation, we do expect to start in 24% CapEx intense ratio in 2025, most probably in 2026, we will not exceed such kind of CapEx intense rates.

Thank you very much. From your comments, I understand that there could be a possibility of premium pricing with 5G deployment with higher usage the additional services we have mentioned? And do you have any perspective regarding the potential size of the license fee because since 2016 have changed, maybe the 5G deployment will not be necessary all over to Turkey, maybe it will be regional. So could that be a possibility of lower license fees overall than the -- in 2016, as per number of 4 billion for the sector, including the VAT. So could that be a possibility of lower license fee for the sector?

So for the pricing perspective, we never -- we don't know the -- actually, your question or answer your Actually, your question also includes the answer because you don't know the actual licensing fees. So we cannot -- we couldn't manage or to decide on the pricing strategy. But sit through that in Turkiye, we're always following the inflation pricing. So we cannot -- we are not yet done yet about the pricing strategy because of the -- all the cost infrastructure needs because of the depending on the tender requirements and also the amount of the (inaudible) everything is going to change.

So up to now, our Turkcell strategy is following up the inflationary pricing in all the technology that it provides to the customers.

And regarding the license fee, unfortunately, we do not have any, how can I say, information provided by the government of bodies regarding the 5G tender Egypt. But I think it would not be same as in 4.5G tender because there was a significant important technology transformation while you are making a trust forming 3G to 4.5G is a little bit different, significantly different. Most probably, our expectation is not high as in 4.5G tender. But still, we do not have any idea regarding how the governmental bodies built design this standard, for example, they will we do not have any idea whether they will, for example, request how can I say, fixed fee or the fee, for example, as a revenue share model, there might be some possibilities. It's not clear yet.

We will wait and see.

Everything is on the table. And associated your question, EUR4 billion is for all three operators. Turkcell paid EUR1.6 billion for the (inaudible) tender. So in order to correct that. It is total amount that the government collects from the three operators is around EUR4 billion in 2015 and 2016.

Cemal Demirtas, Ata Invest.

First question is related to your growth prospects. As far as I remember, you were more just passionate about the growth side. Again, this year after 8% another 9%. Do you think we are going to see momentum in the growth prospects in the following years because I remember that you are very estimate about doubling this company going forward. What should we expect for the following years?

Or could you further elaborate your -- the assumptions behind your similar growth profit in 2025 compared to 2024. That's my first question. The other one is the financial side, at the bottom line. Do you see that your net debt level is coming down going forward, are we going to see improvement at the bottom line in the second quarter? Or does it depend on the interest rates?

Thank you very much. As you know that 8% -- our growth rate is around 8%. This is a real growth after the inflation accounting. Therefore, this is very significant growth rate from our test because we are the market leader and we are -- keep going on to make the growth rate. As you know, there is an inflationary accounting perspective, and it's really hard to estimate how the 2025 will realize regarding this inflationary accounting perspective because as you might add, the January inflation rate is declared over the expectations.

Therefore, such kind of measures are really significantly affecting our estimations for the growth side. 7% to 9% growth rate is a good target from our perspective. we will look at the developments in the competition in 2025. And the inflation development really affects our growth rate. But I can easily say that 7 to 9 real growth is still very good from our perspective.

I think the second one is related to net debt to EBITDA.

Related to your financial expenses side.

Regarding the financial expenses side, we had a very successful balance sheet management in 2024. Our liquidity position is very good. And when we look at the -- our credit portfolio, we have a basket approach, and we are diversifying the financial instruments very well Therefore, we are keeping this finance income and expense very well. The other perspective, the other important issues regarding the FX losses. You know that there is a stability in the FX side in 2024.

Therefore, we keep our short position very long time in 2024, and it really positively affects our income statement below the EBITDA level.

Therefore, we keep going on in 2025. We will be looking at the macroeconomic geopolitical and political developments in Turkey if we need to change our hedging strategy, we will be looking and chasing the development in the market level. most probably, we do not wait. Expect any problem about this issue because when you look at our balance sheet situation, we had a very -- we are very rich about the cash side or we do not have any liquidity position, and I think it will help us to manage our financial income and (inaudible).

And maybe in the business lines, you mentioned the growth in the cloud and the data center side. What about the other side? Do you expect a similar trend in the other side, lower growth prospect. And in the trust care side, do you see the pricing environment supportive. Or you are still seeing the increase in competition compared to maybe last quarter?

Yes. Normally, we are making our estimations for the growth side. Yes, Turkcell will be the most important, how can I say, strategical point for the growth side. But when you look at, for example, our financials in fintech side, we, for example, our growth rates are in real terms, around 20% or 30% of it. Therefore, I think this inside will also will be a denominator in 2025 side.

As you mentioned, we are making an investment in the data center side, and we are taking the free of these investments starting from three years period most probably after adding the new modules to our portfolio, our income or revenue coming from the (inaudible) That's why we are giving an importance to this data center and cloud issues. That's why we put -- this is a guidance item this year.

And when you look at our guidance, it's around 33%, for example, the real growth rate. This is very important later the inflation Therefore, these amounts or these rates are very significant, and these are the main motivators orator of the growth in 2025. But I would like to say something about the irrational and the illogical competition, unfortunately, has started from the second half of the 2024. It currently continues, as a market leader, we would like to stabilize or rationalize the market, but some of our competitors are making very aggressive companies. They are continuing to make this in January, February, we are looking, we are chasing the developments, and we are taking the necessary actions.

But don't worry that we will keep on being the market leader in the midterm and the long term in Turkiye.

And the last question related to the monetary position side. And when we look at into details, we see that your financials after inflation accounting when we look at your figures. And when we look at your pre-inflationary figures, just based on the food not related to net monetary gain. I see that if inflation accounting was not applied, your profits would have been around 12 billion lower, and I look at the details. Is that a fair statement?

Or in a simple way, if the inflation accounting didn't apply, your profit would be lower. Is it fair a fair statement?

No, it's not fair. Pre-inflation figures, I don't know what kind of a calculation did you make, but you should make -- you should take into consideration, especially regarding the depreciation side. Below EBITDA level, you are right, there are some positive or negative effects. But if you would like to, for example, how can I say would like to find the noninflationary figures. You should also eliminate the effects in the inflation side -- depreciation side.

Because depreciation is affected negatively from the inflationary accounting.

My number is I'm driving from your -- the financial statements. You had the distribution of your net monetary gain maybe it's like in the (inaudible) statements.

In that, how can I say -- accounts. We are not looking -- we are not following, for example, the effects of the depreciation in that account. The depreciation effect is mentioned in the depreciation accounts. Therefore, if you would like to, for example, find the noninflationary side, you should also eliminate the inflation accounting effects in the depreciation side. if you want, maybe we can provide a detailed information about.

Evgeniya Bystrova, Barclays.

I have just two quick questions. So my first question is, could you please elaborate on what is your inflation assumption for 2025 that you're using in your guidance? And my second question is, given that basically your net leverage ratio is very low with all the balance sheet management things that you've done in 2024? And given that you're expecting more CapEx and potentially some license fee payment, where are you seeing your net leverage at the end of this year?

Thank you very much for the question. Our year-end inflation assumption is around 31%. The average inflation rate would be around 33%. And regarding the net leverage, as you know, with the help of the proceeds from the sale of Ukraine assets, we completed the year with a leverage of 0.4 times levels. but our target is to keep leverage below the industry average.

Most probably it will be less than 1 times at the end of 2025. It depends on how and other issues will realize. But most probably, it would be less than 1 times at the end of 2025.

Campos Gustavo, Jefferies.

Congratulations on the results. Just a few questions from my side. Firstly, like you're expecting some top line growth while your margins will be sort of like very similar to 2024. However, there is concerns of like a decline in purchasing power for the Turkish consumer amidst this inflationary environment as well as some potential pressure from competition. How do you expect to maintain EBITDA margins on this environment?

And what will be your drivers for that? That is my first question.

Starting from the establishment state, Turkiye is doing these two issues very well. One of them is the growth side and the other one is we are not only focusing for the growth side, but we are also very good at in the cost management side. Therefore, while we are taking into consideration the growth rates, we are not giving any concession from our cost management side. Therefore, in 2024, we increased our EBITDA margin 1% when you compare 2023.

This is a really good success from our perspective the inflationary environment is not new for Turkey, as you might aware, we faced this crisis more than 20 years ago and this was very sticky and the hyperinflationary environment. Therefore, as I said, from the establishment that we are doing this inflationary pricing very well as but we are also very sensitive about the cost management side. I think the results of this year and previous years are the most important evidence of this discipline. And also, we have a very (inaudible) We have our taco business as well as we have a techfin segment as well as we have -- right now, our new guidance is the data center and cloud business.

So with our diversified revenue generation model and portfolio, I think we can achieve these targets.

Understood. Yes, that's crystal clear. I was also wondering about your CapEx breakdown. You mentioned you have like 48% target on fiber infrastructure. And I'm assuming that the other 50% of this CapEx will be directed to 5G tender to expanding renewable capacities, et cetera.

Is that a correct assessment of like your expectations for (inaudible) 2025.

Normally, I would like to correct if, for example, our breakdown, for example, we are targeting to spend 32% for the mobile side in 2025 and 33% of our CapEx investments will go to fixed side. And we look at the fixed side, the fiberization is included in the fixed side. Therefore, when you look at the total 65% of our CapEx investments will go to our main focus areas, mobile and fixed side.

Yes. Understood. And that also will include any potential like 5G tender and investments for this year, correct?

This is 32% mobile investments also including the 5G requirements or 5G investments that will be made in 2025, but license fee is not included into CapEx to sales ratio.

These are just the base stations, network equipment and all this CapEx for the related to 5G. Well, it doesn't include the tender fee. Licensing fee.

Okay. That's very helpful. And Lastly, from my side, I was wondering what are your plans or your expectations for the 2025 year bond maturing in October. Is your plan to refinance it or just pay it in cash. Yes.

That's my last question.

In January, we issued a Eurobond in the amount of $1 billion therefore Eurobond issuance is also for the preparation of the redemption of the Eurobond repayment that would be realized in October 2025. And the remaining portion of this $1 billion issue will be used for the 5G investment data center investments and the solar renewable energy investments.

(Operator Instructions) Madhvendra Singh, HSBC.

The first question is on your mobile segment. It seems like the churn rate actually has gone higher. So wondering what is driving that higher churn? Is it because of the continuous price hikes, if at all? So if you could talk about the drivers there.

Then the second question is about pricing outlook. Recently, the inflation expectations were raised, I think, in Turkey. So if you could remind us, can you still continue to pass on the inflation to the consumers? Is there any, let's say, issues from competition or regulation or anything which we need to know of. And then finally, I'm not sure whether I missed, but have you announced the dividends?

And if not, when will that be done? And just remind us what should we expect?

First question, it's starting from 2024, the price adjustments that we implemented are also followed by the competition, and the motivation to change operators do the pricing is limited at the beginning of the year, but currently, we have not seen a deterioration on the retention front due to price adjustments. However, we observed that aggressive campaign started the second half of the year, and these accretive campaign started at the May time frame and continue throughout the year and then it's still going to keep going on.

So due to (inaudible) market environment, we experienced a slight increase in the mobile churn rate into Q4 2024. Compared to the same quarter last year, particularly on the prepaid side, we have started to observe the impact on the absence of a minimum wage increase in the second half of 2024, coupled with the effects of intense competition such as customers switching to lower tariffs and more competitive offers. Despite this, we managed to keep our mobile churn rate at around 2%, which is a good value, which we define as a healthy level, thanks to our effective churn management actions supported by our analytical models.

And the second question is regarding the inflation.

Regarding the inflation expectations, yes, as you mentioned, in January, it's the rate is a little bit over the expectation. But as we mentioned previously in the previous questions, as Turkcell, we estimated the inflation rate around 33% average for 2025, which is higher than the expectation of the Central bank. Therefore, we not foresee any risk about this issue. We are taking the necessary actions regarding as (inaudible) mentioned that regarding the pricing side, we are continuously chasing the market developments and competition developments, and we are making a smart pricing model, we have a smart pricing model.

I think we do overcome this issue in 2025 also. Regarding the dividends, our dividend policy is same as the management of the company, we are proposing our policy sales that 50% of the net income can be distributable for the relevant year. But since we -- our AGM date is not clear yet. Therefore, we do not have any idea when the AGM meeting will be realized most probably it would be in May or something like that. Therefore, our policy is seen and the AGM will decide how much the dividend distribution will be done in 2025.

And if I can ask one more question on the salary hikes, if you could remind the -- because the inflation again, has been going up. What is the plan around the salary hikes, I mean, how many rounds of salary hike we should expect this year? And what magnitude?

Formally we made price increases in the January in the mobile side. In the fixed side, our -- we did not make any price adjustment because, unfortunately, incumbent has not made price increases right now. We are -- as I said, we are keeping following them. But in January, we made price increases in the mobile side, we will be looking at the coming periods regarding the price hikes.

Salary increase -- Salary increase always yearly normally in Turkcell.

Which month (inaudible). Sorry?

Sorry, you're talking about the salaries, right?

Yes. Yes. Yes.

Salary of the employees, right?

Yes. Yes.

It is just a normally yearly per year we have a salary increase.

In which month?

Last year, because of the inflation, we did twice. First in January and first -- and other in June. But this year, in 2025, we're expecting a yearly salary changes or increases yearly, on salary increase in 2025.

In June, should we expect that?

We are just following close with the inflation. And according to our plans, we didn't plan it. But we will definitely -- even last year, we didn't expect to do it, but we always follow up the competitive environment of the Premium resources. So we will find the best way to find the core balance with the increase and then -- but currently, for 2025, in our plans, we don't have any salary rising to June.

Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you.

Thank you very much. Hope to see you in the next meeting.

Thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.