Turkcell Iletisim Hizmetleri A.S. Q4 FY2025 earnings call

• 2025 was pivotal for strategic positioning: awarded largest 5G spectrum, secured fiber footprint via BOTAS agreement, partnership with Google Cloud to build hyperscale cloud region in Turkiye. • Capital allocation framework on 3 pillars: investing in business to sustain leadership and capture future growth (expected CapEx intensity ~25%), delivering attractive shareholder returns (9 consecutive years of dividend distribution, launched 3-year share buyback program), maintaining strong balance sheet (committed to net leverage below 1x). • Fourth quarter solid execution: revenues grew 7% y-o-y, 905,000 net postpaid additions (strongest in 6 years), data center and cloud revenues grew 32%, renewable energy installed solar capacity 62.2 megawatts. • Key operational highlights: record high mobile number portability, 2.4 million postpaid net additions in 2025 (highest in 26 years), postpaid subscribers share 81%, mobile ARPU real growth 5.4%, churn 2.7%, fixed broadband net addition of 119,000 fiber subscribers, fiber home pass 6.3 million with 42% take-up ratio, digital infrastructure strategy with partnership with Google Cloud, digital business services revenues up 30%, techfin revenues up 21% with Paycell driving growth, renewable energy OpEx savings TRY 156 million in 2025.

In 2025, revenues increased by 11%, EBITDA margin was 43.1%, net income from continuing operation reached TRY 17.8 billion up 23% y-o-y. Fourth quarter revenues grew 7% y-o-y to TRY 63 billion, Group EBITDA increased 12% to TRY 26 billion with 41.2% margin, net income from continuing operations increased 11% to TRY 3.6 billion. Mobile: 905,000 net postpaid additions in Q4, 2.4 million net postpaid additions for 2025, mobile ARPU real growth 5.4%, churn improved to 2.7%. Fixed broadband: Superonline had net addition of 119,000 Turkcell fiber subscribers, total fiber subscriber base 2.6 million, residential fiber ARPU increased 10.3%, fiber home pass 6.3 million with 42% take-up ratio. Data center and cloud: Revenues grew 32% y-o-y, expected data center and cloud revenues to grow at least sixfold in USD terms by 2032, expected to generate ~$100 million in EBITDA in 2026. Digital Business Services: Revenues increased 30% to TRY 7 billion, system integration backlog TRY 6 billion. Techfin: Revenues grew 21%, Paycell was main driver with 40% Q4 y-o-y revenue growth, non-group revenue share 77%, financial side revenues declined 6% but net interest margin improved to 6.3%. Renewable energy: Active solar capacity increased to 62.2 megawatts in 2025, total installed capacity 164 megawatts, solar energy portfolio generated TRY 156 million in OpEx savings in 2025.

• Expect real revenue growth in range of 5% to 7% in 2026 with strength of core business and increasing contributions from strategic areas. • Aim to deliver EBITDA margin between 40% to 42% in 2026, reflecting ongoing operational efficiency while continuing to invest in growth. • Operational CapEx intensity expected to be around 25%, consistent with investment cycle in 5G rollout, digital infrastructure expansion and renewable energy projects. • Anticipate data center and cloud business revenue growth in range of 18% to 20% in 2026, reflecting normalization following significant capacity expansions in 2025 while underlying demand remains healthy.

Q: Congrats on your results. I was kind of curious to know more about the data centers business. If you could please provide more color maybe on what are the EBITDA margins of this business?

A: So thank you very much for the question. It's our growth area, and we are expanding our data centers. AI and our cloud are expected to drive 14% CAGR in data centers from 2025 to 2030, lifting global capacity from 108 gigawatts to 200 gigawatts. So overall, what we can see is our results are getting better and better. AI is reshaping workloads all around the world. So there's a huge demand on the data center business. So currently, our expectation is that more than 2x increase in active data center capacity and 6x increase in the data center cloud revenues in dollar terms as of 2032. Share of the DC cloud revenue and total revenue is expected to increase around 8% to 10%. It is -- currently, it is around 2% and we are expecting that no dilutive impact is expected on our EBITDA margin.

Q: Thank you for the presentation and congratulations for good results. My question is about your FX position. Maybe if could you further elaborate that. If I didn't understand wrong, you mentioned that you have short position now around $900 million. I couldn't understand the justification behind that any -- short position in U.S. dollar, maybe that will be more helpful because there's jump and you justify with some other things, I guess, investments that further evaluation could be helpful. And the other question is, again, the data center sites. We visited one of your -- the data center, and it was really helpful for us. Thank you once again, and you spent time with us, and it was very helpful to know where Turkcell is going ahead. But Ali Taha bey, I'm receiving questions about the size of the investments. Currently, is a simple calculation, maybe you can just give us a better color with the size, you have already have 50 megawatts. And you will add additional 50 megawatts. And -- but during that period, $1 billion will be invested you and $2 billion will be invested by Google. For some -- just we see that question from also investors, isn't the small number, small megawatts as a hyperscale scalers shouldn't be expected a bigger megawatt numbers also in the investment side, please just help us to understand better? Or should we assume that this is the starting point. Going forward, this megawatt number could be much higher. That would be very helpful again.

A: Yes. Cemal, I will start from your first question. Our FX position is around USD 957 million sizes. As you know, fourth quarter is seasonality from the CapEx investments are very high in our site. Therefore, the one reason is coming from the high CapEx investments. The other side, as we mentioned in the presentation slide, we are monitoring the market conditions very closely and we swapped some portion of U.S. dollar holdings into Turkish lira. Therefore, we would -- currently our cash is -- 56% of the cash is Turkish lira position. This transaction in order to benefit from the higher local currency yields coming from the money funds, for example, in Turkiye, the money market funds. Therefore, we would like to benefit from this advantage, therefore, we swapped some portion of our U.S. dollar into Turkish lira. For the first question, I can say this at for the second and third question, I will hand over to Mr. Ali Taha.

Q: Kamil bey, related to this question. Doesn't it mean you are taking a position, if I understand correctly, it looks like if there is the pressure on Turkish Lira, do you have any hedge for that already as a structure -- is it hedged? I just try to understand that. Maybe it's a good strategy part of this, but doesn't need just for the benefit because Turkish lira -- things might change. There's a risk and it's not the main business of the company. So maybe further justification could be helpful.

A: You're absolutely right. But as you know, in 2025, the FX policy of the Central Bank worked very well. Therefore, the hedging costs were very, very expensive in 2025. Therefore, we prefer to move a short position in the U.S. FX side in 2025. Yes, this policy worked very well in 2025. For example, if you do not have any war in the Iran or something like that, we believe that in 2026 this policy also will work. But currently, we are monitoring the conditions. Current conditions are a little bit different when you compare it with 2025. We are closely monitoring the markets and the environment right now. Therefore, we will decide how will we use this FX position. But as we mentioned in our presentation, our aim is, our policy is we would like to keep the short position in USD 1.5 billion levels. We still trust the policy of the Turkish Central Bank for 2026.

Q: You ended the year with a 43% EBITDA margin for the next year, your guidance is around 40% to 42%. Do you expect any contraction in margins?

A: Yusuf, normally, as you said, that the 2025 performance was very, very good regarding the EBITDA side, especially for the energy cost and the salary expense, salary wage expenses are -- does not increase over the inflation rate. It was very useful for 2025. In 2026, there are some -- we make a salary increase, average in 30 percentage levels is a little bit above the inflation side. And as you know, this is the 5G year. We will be starting from the April 1, the 5G issue. Therefore, we will be spending some money through the marketing expense, marketing activities and the sales activities for the 5G side. And we will closely monitor the energy prices because the war, current war might affect -- might have some effects, inflationary effects in the energy side and the other cost. Therefore, we would like to be a little bit conservative starting for the year for the EBITDA margin. We will look forward within the year. But this year is a little bit less when you compare it with the 2025.