Turkcell Iletisim Hizmetleri: Full Year 2024 Results

Successfully Expanding Subscriber Base and Growing ARPU in a Competitive Environment

ISTANBUL--(BUSINESS WIRE)--Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) (BIST:TCELL):

• Please note that all financial data is consolidated and comprises that of Turkcell Iletisim Hizmetleri A.S. (the “Company” or “Turkcell”) and its subsidiaries and associates (together referred to as the “Group”) unless otherwise stated.
• We have four reporting segments:
  • "Turkcell Türkiye," which comprises our telecom, digital services, and digital business services related businesses in Türkiye (as used in our previous releases in periods prior to Q115, this term covered only the mobile businesses). All non-financial data presented in this press release is unconsolidated and comprises Turkcell Türkiye only figures unless otherwise stated. The terms "we," "us," and "our" in this press release refer only to Turkcell Türkiye, except in discussions of financial data, where such terms refer to the Group, and except where context otherwise requires.
  • “Turkcell International,” which comprises all of our telecom and digital services-related businesses outside of Türkiye (BeST and KKTCELL).
    • As per Turkcell Group’s announcement on September 9, 2024, the transfer of shares, along with all rights and liabilities in Lifecell LLC, LLC Global Bilgi, and LLC Ukrtower, was completed. As of Q324, Turkcell Group no longer holds any shares in these companies. These operations have been classified as assets held for sale and as discontinued operations.
  • “Techfin” which comprises all of our financial services businesses.
  • “Other” which mainly comprises our non-group call center and energy businesses, retail channel operations, smart devices management, and consumer electronics sales through digital channels and intersegment eliminations.
• This press release provides a year-on-year comparison of our key indicators and figures in parentheses following the operational and financial results for December 31, 2024 refer to the same item as at December 31, 2023. For further details, please refer to our consolidated financial statements and notes as at and for December 31, 2024, which can be accessed via our website in the investor relations section (www.turkcell.com.tr).
• Selected financial information presented in this press release for the full year of 2023 and 2024 is based on IFRS figures in TRY terms unless otherwise stated.
• In the tables used in this press release, totals may not foot due to rounding differences. The same applies to the calculations in the text.
• Year-on-year percentage comparisons appearing in this press release reflect mathematical calculation.

NOTICE

This press release contains the Company’s financial information for the year ended December 31, 2024, prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This press release contains the Company’s financial information prepared in accordance with International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS29”). Therefore, the financial statement information included in this press release for the periods presented is expressed in terms of the purchasing power of the Turkish Lira as of December 31, 2024. The Company restated all non-monetary items in order to reflect the impact of the inflation restatement reporting in terms of the measuring unit current as of December 31, 2024. Comparative financial information has also been restated using the general price index of the current period.

This release includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, Section 21E of the U.S. Securities Exchange Act of 1934, and the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. This includes, in particular, and without limitation, our targets for consolidated revenue growth, data center and cloud revenue growth, EBITDA margin, and operational capex over sales ratio for the full year 2025. In establishing such guidance and outlooks, the Company has used a certain number of assumptions regarding factors beyond its control, in particular in relation to macroeconomic indicators, such as expected inflation levels, that may not be realized or achieved. More generally, all statements other than statements of historical facts included in this press release, including, without limitation, certain statements regarding our operations, financial position, and business strategy, may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, among others, “will,” “expect,” “intend,” “estimate,” “believe,” “continue,” and “guidance.”

Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. In addition, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements that may be expressed or implied by forward-looking statements. Should one or more of these risks or uncertainties materialize or underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned, or projected.

These forward-looking statements are based upon a number of assumptions and other important factors that could cause our actual results, performance, or achievements to differ materially from our future results, performance, or achievements expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements. For a discussion of certain factors that may affect the outcome of such forward- looking statements, see our Annual Report on Form 20-F for 2023 filed with the U.S. Securities and Exchange Commission, and in particular, the risk factor section therein. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release. All forward-looking statements in this press release are based on information currently available to the Company, and we undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

The Company makes no representation as to the accuracy or completeness of the information contained in this press release, which remains subject to verification, completion, and change. No responsibility or liability is or will be accepted by the Company or any of its subsidiaries, board members, officers, employees, or agents as to or in relation to the accuracy or completeness of the information contained in this press release or any other written or oral information made available to any interested party or its advisers.

FINANCIAL HIGHLIGHTS

FULL-YEAR HIGHLIGHTS

• As per our announcement on September 9, 2024, we have completed the transfer of shares, along with all rights and liabilities in Lifecell LLC, LLC Global Bilgi, and LLC Ukrtower, operating in Ukraine. Turkcell Group no longer holds any shares in these companies.
• In line with the General Assembly decision, a total gross dividend distribution of TRY6.3 billion was performed on December 5, 2024.
• Solid financial performance despite inflationary headwinds:
  • Group revenues up 7.8%, with Turkcell Turkey’s topline growing 8.3%, driven by strong ARPU growth, solid postpaid net additions, and successful upsell efforts. Our techfin segment revenues rose 30.9% on a yearly basis, more than offsetting the decline in other segment
  • EBITDA increased 10.2%, leading to an EBITDA margin of 41.9%, marking a yearly improvement of 0.9pp; EBIT up 22.5%, resulting in an EBIT margin of 13.3%
  • Net income up 29.8% to TRY23.5 billion, including the sale of subsidiaries in Ukraine
  • Strong free cash flow³ generation of TRY7.3 billion; net leverage⁴ level at 0.14x; net short FX position of US$124 million in line with our neutral FX definition, which is between plus and minus US$200 million
• Well-balanced operational performance despite intense competition
  • Turkcell Türkiye subscriber base⁵ up by 578 thousand net additions
  • 1.9 million mobile postpaid net additions - the highest level in the last 15 years
  • 168 thousand fiber net additions
  • 6.0 million total homepasses; 233 thousand new fiber homepasses
  • Mobile ARPU⁶ growth of 10.4%; residential fiber ARPU growth of 13.6%
• 2025 guidance⁷; revenue growth target of between 7%-9%, data center and cloud revenue growth target of between 32%-34%, EBITDA margin target of between 41%-42%, and operational capex over sales ratio⁸ target of around 24%

(1) EBITDA is a non-GAAP financial measure. See page 16 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income.
(2) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses.
(3) Free cash flow calculation includes EBITDA and the following items as per IFRS cash flow statement; acquisition of property, plant and equipment, acquisition of intangible assets, change in operating assets/liabilities, payment of lease liabilities and income tax paid.
(4) The net debt calculation includes "financial assets” reported under current and non-current assets. Required reserves held in CBRT balances are also considered in net debt calculation. We believe that these assets are highly liquid and can be easily converted to cash without significant change in value.
(5) Including mobile, fixed broadband, IPTV, and wholesale (MVNO&FVNO) subscribers
(6) Excluding M2M
(7) Our expectations for 2025 incorporate the effects of inflation accounting under IAS 29. These projections are based on assumptions regarding factors beyond our control, including key macroeconomic indicators such as inflation. Our 2025 expectations are based specifically on an assumed annual inflation rate of 30.5% (year-end). This paragraph contains forward-looking statements that reflect our current estimates and expectations regarding market conditions across all of our businesses. However, there can be no assurance that these forward-looking statements will occur as anticipated. For a discussion of the various factors that could impact the outcome of these forward-looking statements, please refer to our 2023 annual report on Form 20-F filed with the SEC, specifically the risk factors section.
(8) Excluding license fees
For further details, please refer to our consolidated financial statements and notes as at December 31, 2024, via our website in the Investor Relations section (www.turkcell.com.tr).

COMMENTS BY CEO, ALİ TAHA KOÇ, PhD

A year filled with achievements

As Turkcell, leading Türkiye's digital transformation, we successfully completed 2024 under the challenging conditions of global economic turbulence and high inflationary environment. Despite the Turkish economy being shaped by tight monetary policies and a focus on combating inflation throughout the year, we achieved strong performance through our robust business model and strategic initiatives. In this milestone year marking our 30^th anniversary, we have steadfastly progressed toward our goal of creating sustainable value for our stakeholders, driven by our strong foundations and innovative vision. On our focus on creating value from our assets, we reduced our geopolitical risks and further strengthened our cash position by completing the sale of our subsidiaries in Ukraine. In addition, in line with the decision taken at the ordinary general assembly meeting, we distributed a total gross dividend of TRY 6.3 billion on December 5, in line with our dividend policy. In the year ahead, we remain committed to creating value for our stakeholders.

In line with our guidance; Turkcell Group revenues increased by 7.8%, reaching TRY 166.7 billion; while the EBITDA¹ margin improved by 0.9 points on an annual basis, reaching 41.9%, despite the challenging inflationary pressures on the cost base in 2024. Our net income was at TRY 23.5 billion, supported by the contribution of the sale of Ukrainian subsidiaries.

Solid operational performance despite the challenging competitive environment

The MNP (mobile number portability) market has been increasingly active since May, peaking in December. While irrational offers by the competitors continue to impact the healthy development of the market, the MNP market volume rose to historic highs. At this point, we have occasionally responded to some of these competitive campaigns to retain our customer base. Thanks to our subscriber retention strategy, supported by analytical models and innovative services, our mobile churn rate remained steady at 2%.

As the leader of the mobile segment, we prioritize long-term and sustainable growth. While we emphasize maintaining a balanced market structure, we remain committed to creating lasting value rather than pursuing temporary gains through short-term strategies. With this strategy, we have managed the balance of ARPU increase and subscriber base growth in a healthy way. As a result, our mobile postpaid subscriber base grew by 1.9 million, surpassing 29.1 million, marking the highest annual increase in the past 15 years. The postpaid subscriber base increased by 5 points on an annual basis and reached 76%. Our prepaid subscriber base decreased to 9.2 million as a result of alternative data solutions as well as mass line closures that we carry out in the last quarter of each year. Mobile ARPU² increased by 10.4%, driven by our price adjustments, successful upsell efforts, and expansion in the postpaid subscriber base that generates more value.

In the fixed broadband segment, we remained committed to expand our end-to-end fiber service to more subscribers. Within this scope, our Turkcell fiber subscriber base³ increased by 168 thousand in 2024, reaching 2.5 million. Thanks to the 12-month contract share in residential fiber subscribers increasing to 85%, the share of our fiber subscribers with speeds of 100 megabits and above exceeding 41% in total fiber, and the price adjustment we have made, our fiber ARPU increased by 13.6% on an annual basis in 2024. We observe that our IPTV product TV+ also has a significant contribution to this increase. We had a very successful year in terms of converting our fiber investments into subscribers. Take up rate in the fiber segment increased by 1.7 points on an annual basis and reached 42.7%. Our “Resell” segment, which we provide services by considering financial profitability in regions where our fiber broadband service is not available, completed the year at 779 thousand. With the project that we launched as a pilot in the last quarter of 2024 and fully commissioned as of January 2025, we have now started to provide fiber service using the infrastructure of the incumbent operator.

Strong contribution to group from Techfin Segment

Our techfin segment, consisting of Paycell and Financell⁴ brands, experienced remarkable growth in 2024. Paycell, which has changed the habits of consumers with the innovative payment services, has grown in all verticals it serves and increased its revenues to TRY 3.9 billion, with a 25% annual growth. EBITDA margin improved by 0.5 points to 43.0%. In the Pay Later service, which accounts for more than half of Paycell's revenues, the non-group volume increased by 49% compared to last year. On the other hand, POS solutions, which have gained a strong growth momentum since its launch, has become the second largest vertical of Paycell revenues in 2024 with the strong performance in non-group customers. Total volume of POS solutions increased by 88%. Paycell Card volume grew by 77% on an annual basis as users strengthened their usage habits. On the other hand, Financell, which operates in the field of individual and commercial financing, increased its revenues by 32.8% in 2024 thanks to the contribution of the increase in the average interest rate and the larger loan portfolio. The ability to serve more comprehensive customer segments thanks to our personalized pricing strategy that we launched this year has a key role in the growth of the loan portfolio. Thus, we maintained our position as the leading financing company in the field of microloans in 2024. While Financell's net interest margin improved in the second half of the year, our cost of risk remained below industry averages.

We are shaping the future in Data Center & Cloud Business

The revenues of our Data Center & Cloud business, which we set out with the principle of “Keeping Türkiye’s data in Türkiye” and became the market leader in data center sector in a short time, grew by 46% in 2024 thanks to high demand and price adjustments. We aim to establish an additional capacity of 8.4 MW by adding new modules to our data centers, which have a total active IT capacity of 41.4 MW by the end of the year. As the first company in Türkiye to receive Tier III certifications in design, facility and operation by the Uptime Institute, we build our data centers to the highest standards to ensure redundancy, reliability and near-zero downtime. We aim to strengthen our leadership by continuing our investments in this field in the coming years.

Green steps for the future

As Turkcell, we value not only people but also all living beings and the environment we live in, taking action to leave a livable world for future generations. In this context, we have accelerated our investments in the field of sustainability in order to transform all our businesses into a more environmentally friendly, efficient and sustainable model by using the power of technology. As a company operating in an energy-intensive sector, we meet 100% of our electricity needs from renewable energy-certified sources. We took our efforts in this field even further. By the end of 2024, we completed the installation of our own solar power plants with a total capacity of 54 MW and activated 8.2 MW of it. We aim to increase the installed capacity of the solar power plants, which will be commissioned in 7 different provinces and 11 locations, to 300 MW by the end of 2026. Thus, while we will protect ourselves against possible energy price increases, we will also be one step closer to our goal of becoming a net zero carbon company in 2050.

We are working tirelessly to minimize our impact on the environment and to leave a much more livable world for our children. The ‘Recycle into Education’ project, which has been ongoing since 2019, is a meaningful reflection of this awareness. Within the scope of this project, we collected and recycled a total of approximately 48 tons of techno waste, 14 tons of which were in 2024, and supported more than 450 children to receive education for a year. At the same time, we increased environmental awareness and protected our natural resources by recycling technological waste.

Great interest and trust in Turkcell

We achieved a significant success for both our company and our country by issuing a billion USD Eurobond - the largest international bond in Turkcell's history. The 5-year bond with a nominal value of 500 million dollars and the inaugural sustainable bond with a 7-year maturity with a nominal value of 500 million dollars that we issued in January attracted great interest from investors despite the difficult market conditions. This success once again demonstrated Turkcell's financial strength and the trust international investors have in our company and our country. We will use this fund to further strengthen our digital infrastructure and implement our sustainable projects.

2025⁵ will be a year in which Turkcell accelerates its investments, focuses on sustainability areas, and closely follows the 5G tender and developments. While we aim to achieve 7%-9% real revenue growth and 41%-42% EBITDA Margin for this year, we expect the operational capex to sales ratio⁶ to be around 24%, taking into account our increasing solar energy, data center and cloud investments. We expect the revenue growth of our data center and cloud business to be in the 32%-34% range.

As Türkiye's Turkcell, we will continue to create value, be a pioneer with exemplary projects, and invest in the future of our country by continuing our investments focused on technology, innovation and sustainability. As Turkcell, we are determined to leave our mark on the future with the transformative power of technology. I extend my heartfelt thanks to all our employees for their contributions to our success and express my gratitude to our Board of Directors for their trust.

(1) EBITDA is a non-GAAP financial measure. See page 16 for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income
(2) Excluding M2M
(3) As of the fourth quarter of 2024, our fixed broadband subscriber reporting has been revised. Turkcell Fiber refers to customers served entirely through our own fiber infrastructure, while Turkcell Resell includes DSL, Cable, and Fiber sales provided through infrastructures of other ISPs. Accordingly, historical subscriber figures have been revised to ensure comparability
(4) Following the change in organizational structure, the revenues of Turkcell Sigorta Aracılık Hizmetleri A.Ş. (Insurance Agency), which was previously managed under Financell, are now classified as "Other" in the Techfin segment as of the first quarter of 2023.
(5) Our expectations for 2025 incorporate the effects of inflation accounting under IAS 29. These projections are based on assumptions regarding factors beyond our control, including key macroeconomic indicators such as inflation. Our 2025 expectations are based specifically on an assumed annual inflation rate of 30.5% (year-end). This paragraph contains forward-looking statements that reflect our current estimates and expectations regarding market conditions across all of our businesses. However, there can be no assurance that these forward-looking statements will occur as anticipated. For a discussion of the various factors that could impact the outcome of these forward-looking statements, please refer to our 2023 annual report on Form 20-F filed with the SEC, specifically the risk factors section.
(6) Excluding license fees

FINANCIAL AND OPERATIONAL REVIEW OF FULL YEAR

Financial Review of Turkcell Group

For further information, please contact Turkcell

Investor Relations
Tel: + 90 212 313 1888
investor.relations@turkcell.com.tr

Corporate Communications:
Tel: + 90 212 313 2321
Turkcell-Kurumsal-Iletisim@turkcell.com.tr