Turkcell Iletisim Hizmetleri AS (TKC) Q1 2026 Earnings Call Highlights: Strong Revenue Growth ...

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Revenue: Increased by 9% year-on-year, exceeding TRY68 billion. Group EBITDA: Reached TRY28 billion with a margin of 41.4%. Net Income: Increased by 15% to TRY4.6 billion. Postpaid Net Additions: 661,000 additions, the strongest in the past 14 quarters. Residential Fiber ARPU: Increased by 9.7% year-on-year. Digital Business Services Revenue: Increased by 64% year-on-year. Paycell Revenue: Increased by 15%. CapEx to Sales Ratio: Stood at 21.5%. Cash Position: Ended the quarter at TRY96 billion. Net Debt: Increased to TRY49 billion. Net Leverage Ratio: Rose to 0.42x.

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Release Date: May 11, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Turkcell Iletisim Hizmetleri AS (NYSE:TKC) successfully launched 5G nationwide, reinforcing its leadership in mobile technology. The company secured 25% more 5G spectrum capacity than its closest competitor, positioning it for long-term demand. Revenues grew by 9% year-on-year, exceeding TRY68 billion, driven by strong momentum in digital business services and subscriber acquisition. Group EBITDA increased to TRY28 billion with a margin of 41.4%, and net income rose by 15% to TRY4.6 billion. Turkcell's digital business services and Paycell segments showed robust growth, with digital business services revenue increasing by 64% year-on-year.

Negative Points

Consumer revenue growth was slower at 3%, compared to the overall high single-digit revenue growth. Mobile ARPU remained broadly flat year-on-year due to competitive pricing and inflation impacts. The company faced increased FX expenses due to the first installment payment for the 5G license and higher swap transactions. Net debt increased to TRY49 billion, and the net leverage ratio rose to 0.42x due to high investment activities. The effective tax rate increased due to the absence of inflation accounting in statutory financials, impacting deferred tax.

Q & A Highlights

Q: Can you explain the slower consumer revenue growth compared to overall revenue growth, and discuss any pricing actions in the mobile segment? Also, how have higher fuel prices impacted your operating costs? A: We are maintaining a segment-based dynamic pricing strategy using AI-powered tools, with a 26% price adjustment in January and 16% in April for mobile. On the fixed side, we implemented a 12% price increase on shared infrastructure and 18% on fiber products. The slower consumer growth is offset by strong performance in Digital Business Services and Paycell. Regarding fuel prices, we are monitoring the situation closely, but it's too early to estimate the future impact.

Story Continues

Q: Could you elaborate on the ARPU contraction and expectations for the coming quarters? Also, what are your expectations for TOGG's contribution and the effective tax rate? A: Our ARPU growth aligns with macroeconomic indicators, but strategic churn management and pricing actions have temporarily restricted growth. We aim for ARPU growth that tracks inflation, though unexpected inflation shifts could impact this. TOGG's net income improved due to higher vehicle prices and stable Euro TRY parity, and we expect continued momentum. The effective tax rate increased due to the termination of inflation accounting, impacting deferred tax.

Q: Do you anticipate any upward revision to your revenue growth guidance after the 9% growth in Q1? A: It's too early to revise guidance. We need to assess economic conditions and the duration of the conflict, which could influence inflation. We may consider revising guidance after Q2 or Q3 results.

Q: How effective was your recent promotional campaign, and did it have a positive impact on your activities across Turkey? A: The campaign was well-received, resonating with consumers and effectively explaining 5G technology. We expect positive impacts from ongoing campaigns and the introduction of new products like the 5G Superbox.

Q: What are your plans for CapEx management and investments in the coming quarters? A: Our CapEx to sales ratio was 21.5% in Q1, with significant investments in 5G rollout and fiber expansion. We expect higher CapEx in upcoming quarters, driven by renewable energy and data center expansions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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