Earnings Report /

Turkcell: Better-than-expected operating performance

  • TCELL recorded TL1,429mn net income, better than cons. est. of TL1,278mn but in line with our est. of TL1,421mn

  • Revenues were 3.0% above our estimates and EBITDA of TL4,030mn was 2.4% above our estimates. 

  • 2021 guidance revised up

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
5 November 2021
Published by

Turkcell recorded TL1,429mn net income in 3Q21, better than consensus est. of TL1,278mn but in line with our estimate of TL1,421mn.

Revenues were 3.0% above our estimates and EBITDA of TL4,030mn was 2.4% above our estimates.  The company management revised up its topline growth guidance to c.20% from c.18% and EBITDA guidance to c.TL14.5bn from TL14.3bn.

Topline growth of 22.3% was 3.0ppt above our estimates.  Turkcell Turkey revenues, constituting 75.4% of Group revenues, increased by 17.2%, mainly supported by 17.5% growth in consumer and 26.8% growth in wholesale revenues. Turkcell international revenues, comprising 9.8% of Group revenues, increased by 39.2%, y/y, mainly driven by strong revenue growth in Ukrainian operations and the positive impact of TL depreciation. Total tech fin revenues, constituting 3.0% of Group revenues, increased by 37.3% y/y. Financell revenues and Paycell revenues increased by 28.1% and 52.7%, respectively, in 3Q21. Other subsidiaries’ revenues, at 11.8% of Group revenues, increased by 43.1% y/y, driven by growth in equipment and energy revenues. Including fixed broadband and IPTV, Turkcell Turkey net subscribers increased by 1,232K, which indicates a solid performance considering the target of 1mn net addition for the full-year. Turkcell Turkey recorded 464K post-paid and 643K pre-paid subscriber net additions in 3Q21. Mobile ARPU growth of 12.3% y/y was driven by rising post-paid subscriber base as well as upsell efforts, higher data and digital services usage.

Consolidated EBITDA was up 18.4% y/y to TL4.03bn, slightly higher than our estimate. Turkcell Turkey EBITDA increased by 16.0% y/y to TL3.32bn in 3Q21, implying 47.1% EBITDA margin whereas Turkcell International EBITDA was up by 51.7% y/y to TL451mn in 3Q21, implying 49.3% EBITDA margin. The EBITDA of tech fin segment was up by 20.8% y/y TL174mn in 3Q21 where other subsidiaries EBITDA was down by 5.0% y/y to TL88mn during the same period.

Net debt increased by TL0.85bn q/q to TL12.48bn in 3Q21, implying 0.9x Net Debt/EBITDA. Excluding Turkcell Consumer Finance Company’s (TCF) consumer loans, its net debt was up by 6.7% q/q to TL10.52bn in 3Q21, implying 0.8x Net Debt/EBITDA. Including advance payments, hedging and excluding FX swap transactions for TL borrowing, Turkcell’s net FX long position declined by US$24mn q/q to US$146mn as of 3Q21.