Earnings Report /

Turk Telekomunikasyon AS: Broadly in line with expectations

  • Turk Telekom recorded TL561mn net income in 1Q22, broadly in line with consensus est. of TL539mn and our est. of TL538mn

  • Recall that 55% share transfer of Turk Telekom to Turkish Wealth Fund is completed by 31 March 2022

  • Keeping TTKOM in our top picks list

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
28 April 2022
Published byATA Invest

·   Turk Telekom recorded TL561mn net income in 1Q22, broadly in line with consensus est. of TL539mn and our est. of TL538mn.  Negative impact of higher than expected financial expenses was offset by higher than expected tax income.

·   Supported by stronger than expected topline growth, Turk Telekom’s EBITDA increased by 8.2% y/y to TL4.12bn in 1Q22, beating our estimate of TL4.02bn and consensus of TL4.05bn.  Including IFRIC 12, revenues increased by 24.8% y/y to TL9.47bn, beating our estimates by 1.2% 

·   Management maintained its 2022E guidance: 1) Topline growth guidance (exc-IFRIC12) of 23-25% versus our estimate of 27% (2) EBITDA guidance of TL17.5-18.3bn versus our estimate of TL18.7bn and (3) Capex guidance to c.TL12.5bn versus our estimate of TL12.2bn.

Excluding non-operational construction revenue adjustment, consolidated revenues increased by 25.6% y/y, driven by 22.3% growth in broadband and 23.4% growth in mobile and 59.3% growth in international revenues in 1Q22.  Fixed voice revenues inched up 2% y/y and the share of fixed voice in consolidated revenues declined to 7.3% in 1Q22 from 8.9% in 1Q21. Broadband subscribers and total mobile subscribers increased by 151K and 334K to 14.5mn and 24.4mn in 1Q22 whereas fixed voice subscribers (inc. nDSL) increased 100K q/q to 17.0mn during the same period.

Excluding non-operational construction cost adjustment (IFRIC 12), total opex increased by 44.6% y/y to TL5.0bn in 1Q22. Direct costs and others increased by 22.1% and 68.3% y/y to TL2.01bn and TL2.69mn, respectively, in 1Q22. During the same period, commercial costs were up 40.1% y/y to TL304mn. In 1Q22, consolidated EBITDA increased by 8.23% y/y to TL4.12bn, implying 43.4% EBITDA margin.  Excluding IFRIC 12 impact, the EBITDA margin was 44.9% in 1Q22.  Margin contraction was mainly due to higher personnel, energy and commercial costs.

Turk Telekom’s net FX long position increased to US$389mn in 1Q22 from US$242mn long position in 4Q21, including swaps and futures contracts. The sensitivity of 10% US$ and € appreciation against TL on net income is negative TL1,133mn as of 1Q22-end versus -TL1,238mn 4Q21. Net debt was up 14.2% q/q to TL20.9bn in 1Q22. Net debt (excluding the IFRS 16 impact) was up US$290mn q/q to US$1.33bn in 1Q22.  Net Debt/EBITDA ratio was slightly up to 1.24x in 1Q22 from 1.11x in 4Q21 due to significant TL depreciation.

Turk Telekom will be holding a conference call today, 28 April at 15.00 pm Istanbul time.