Turkcell Iletisim Hizmetleri A.S. Q2 FY2026 earnings call

• Overall Group Performance • Delivered 8 consecutive quarters of real revenue growth despite persistent inflation above 30%, with Q2 2026 group revenue of 71.8 billion Turkish liras, up 2.5% year-over-year (real growth after adjusting for 32% inflation) • Reported EBITDA of 30 billion Turkish liras with an EBITDA margin of 41.8%, and net income of 5.2 billion Turkish liras • Maintains a disciplined, value-focused growth strategy to build a diversified, resilient business model centered on core connectivity and high-growth strategic digital segments

• Network and Infrastructure Investment • Allocated 81% of Q2 operational CapEx to core business, prioritizing 5G network rollout and fiber infrastructure expansion; operational CapEx-to-sales ratio was 25% for Q2, 23.2% for H1 2026 • Fiberization of Turkcell's base stations reached 47.5%, strengthening network quality and resilience; added 194 thousand new fiber home passes in Q2 • Expanded renewable energy generation capacity to 74.4 megawatts via acquisition of a 12.1 megawatt solar power plant in Q2, with additional capacity coming online in subsequent quarters • Activated the final module of the Ankara data center and broke ground on the hyperscale data center facility supporting Google Cloud's Turkey region, as part of a €612 million total data center investment program

• 5G Commercial Progress • Stepped up marketing investments in Q2 to drive 5G adoption; depreciation of 5G assets commenced this quarter following commercial launch, with 5G currently reaching 30-35% of Turkcell's mobile user base • 5G-enabled devices have higher ARPU than 4G devices, and 5G will act as a catalyst for FWA growth by boosting service speeds and market demand for home broadband

1. Mobile: Crossed 40 million total mobile subscribers for the first time, with a postpaid base of 32.5 million subscribers (284 thousand net postpaid additions in Q2). Postpaid now accounts for 81% of the mobile subscriber base. Mobile ARPU (excluding M2M) grew 27% year-over-year to 448 Turkish liras. Monthly average churn improved to 1.6% year-over-year. Mobile is the core revenue contributor representing the majority of group revenue.
2. Fixed Wireless Access (Superbox): Added 64 thousand net subscribers in Q2, reaching a total base of 818 thousand subscribers. Holds a 74% share of Turkey's FWA market. This segment is a key growth driver for home broadband.
3. Fixed Broadband (Fiber): Reached 2.6 million total subscribers, with 31 thousand net additions in Q2. 80% of subscribers are served on Turkcell's own fiber infrastructure (up 3 percentage points year-over-year). 88% of residential fiber subscribers are on 12-month contracts, with monthly churn improved to 1.1%. Residential fiber ARPU grew 37% year-over-year to 570 Turkish liras. Total fiber home passes reached 6.7 million, with a 41% take-up rate.
4. TV+: Reached 2.7 million total subscribers, with 123 thousand net additions in Q2. Average viewing time increased 14% quarter-over-quarter and 64% year-over-year, driven by the HBO Max partnership. This segment strengthens customer engagement across the Turkcell ecosystem.
5. Digital Business Services (DBS): Total revenue grew 33% year-over-year to 8.7 billion Turkish liras, contributing ~12% of group revenue. Data center and cloud sub-segment revenue grew 10% year-over-year to 1.6 billion Turkish liras, representing 2.3% of total group revenue. Active data center IT capacity reached 54 megawatts following new module activation. System integration held a contracted backlog of 16 billion Turkish liras with over 1,500 new contracts entering H2 2026.
6. Techfin: Total revenue grew 7% year-over-year to 4.1 billion Turkish liras, contributing 6% of group revenue. Paycell (payment services) revenue grew 22% year-over-year to 2.4 billion Turkish liras, with pay later transaction volume up 84% and POS transaction volume up 67% year-over-year; total payment value reached 39 billion Turkish liras, with 6.8 million active users. Financell (customer financing) revenue was 12% lower year-over-year due to disciplined portfolio management, but net interest margin improved from 4.5% to 7.8% with cost of risk held at 3.4%, and it holds 43% market share by number of loans with 16.1 million preapproved credit customers.

• Full-year financial guidance (including EBITDA margin expectations) remains unchanged despite an upward revision to the full-year 2026 inflation assumption, from 23% to 28%
• CapEx guidance is maintained; management expects no meaningful deviation from current guidance, and will continue disciplined capital spending despite inflation and FX volatility
• The full impact of first-half 2026 pricing actions will become visible starting in Q4 2026 due to 12-month contract renewal lag effects, with the full ARPU improvement realized in 2027, though positive signals will emerge in H2 2026
• The Google Cloud hyperscale data center is expected to begin serving customers within 2 years, with data center and cloud projected to contribute 10-15% of total group revenue by 2030-2031
• System integration backlog will drive steady revenue growth through 2026 and into 2027, with continued new project flow from existing large enterprise and government clients

• Persistently high inflation in Turkey (revised to 28% full-year 2026) creates pressure on pricing and costs, though disciplined pricing actions have so far sustained real revenue growth
• Foreign exchange (FX) volatility creates revaluation impacts on outstanding 5G license installments and FX-denominated debt; the cost of full hedging of FX exposure remains currently elevated, so management uses a combination of natural hedging (FX-denominated cash assets) and selective hedging to balance risk and cost
• Global supply chain constraints and component price increases (for servers, RAM, and mobile handsets) are pushing up device prices, which could slow 5G handset adoption and constrain Financell lending growth under current regulatory installment credit limits
• Data center and cloud growth faces near-term headwinds from elevated server prices that reduce demand for collocation services, though long-term demand from AI and cloud services is expected to drive growth

Q: What will drive reacceleration of revenue growth in H2 2026, why are Techfin segment margins volatile, and is CapEx guidance still on track? / A: H2 growth will be supported by stabilizing market competition, the lagged impact of H1 2026 pricing actions, and continued strong growth from digital business services and fintech. Paycell margin compression comes from its high-growth investment in lower-margin POS transaction solutions, while Financell's margin expansion reflects reduced lending volume and lower financing costs under current tight economic conditions. Management reaffirmed that existing CapEx guidance remains unchanged, with disciplined spending preventing meaningful deviation from targets.

Q: When will 5G license installments be paid, and what are the remaining amounts? / A: The 5G tender has three total installments. The first installment of $650 million (including VAT) was paid in January 2026. The second installment of ~$400 million is due in December 2026, and the final $400 million installment is due in May 2027.

Q: What is the long-term revenue contribution target for new growth segments like data centers, and when will ARPU improvements materialize? / A: Turkcell targets 10-15% of total group revenue to come from data center and cloud services by 2030-2031, up from 2.3% today. The Google Cloud partnership will add higher-margin cloud services on top of existing collocation, and AI demand will further increase long-term value. Initial positive signals for ARPU growth will appear in H2 2026, with full materialization of the improvement expected in 2027.

Q: Are current FWA Superbox customers 4G or 5G capable, how is Superbox priced vs fiber, and what is competitive dynamics? / A: Most existing Superbox customers currently use 4G devices, and require a 5G device upgrade to access 5G FWA speeds. Turkcell is already swapping 4G devices for 5G capable units across its customer base. Superbox pricing is broadly comparable to fiber, with minor variations based on data allowances. Turkcell holds 74% of the Turkish FWA market, with no meaningful competitive response to its market leading position to date.