Turkcell Iletisim Hizmetleri A.S. Sponsored ADR Aktie

Ladies and gentlemen, thank you for standing by. I'm [ Paulina ], your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell first quarter 2026 financial results. The conference is being recorded. At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed.

Thank you, Paulina. Hello, everyone, and welcome to Turkcell's 2026 first quarter earnings call. On the call today we have our CEO, Ali Taha Koç and CFO Kamil Kalyon. They will provide an overview of our operational and financial results for the quarter, followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation. With that, I will now turn the call over to Mr. Ali Taha.

Thank you very much, Yardim. Good afternoon, everyone. We delivered a phenomenal quarter. We successfully launched 5G nationwide on March 31. This landmark launch reinforces our clear leadership in mobile. We executed with precision at every stage of the 5G deployment from spectrum acquisition to network rollout, from network rollout to marketing. In all aspects, Turkcell is the leader. Our spectrum acquisition was both strategic and efficient. We secured 25% more capacity than our closest competitor, creating a network of superior scale and positioning it for long-term demand. Our launch was supported by a powerful go-to-market strategy. To accelerate 5G adoption, we expanded data package allowances fivefold and introduced compelling smartphone campaigns. Our ads featuring global celebrity Shaquille O'Neal, resonate strongly with customers. We proved the real-world power of our network through high-impact use cases.

We successfully tested remote driving of a TOGG 10F over 150 kilometers distance. At the same time, we conducted live speed test across Türkiye. Türkiye has 81 different cities and live from all the cities, we have 5G and with 5G speeds exceeding 2,000 megabit per second means more than 2 gigabits. No one has that kind of capability. No one has that kind of speed other than Turkcell. We secured the best frequencies, delivered superior network quality and executed the strongest launch campaign. Our market is now more solid and resilient than ever.

Next page, please. We started the year with flawless execution across all our domains. We have been the leader in the mobile. We are the leader today, and we will continue to lead the future. By securing 40% of the 5G spectrum in the tender, we further reinforced our long-term capacity dominance. On the fixed side, we are driving value-led growth by promoting multi-gigabit per second fiber offerings. Currently, 20% of our customers are on 1 gigabit per second, means 1,000 megabit per second and above plan. Digital Business Service delivered robust growth through corporate digitization, supported by sustained momentum in data center and cloud services.

We further strengthened our balance sheet by securing $1 billion in Murabaha financing. This preserves our investment capacity while supporting a healthy leverage profile. Finally, we continue to expand our strategic partnership. We introduced up to 50% discounts on Samsung smartphones to support 5G penetration. We also secured a managed service collaboration with ASFAT in the defense industry and a strategic cooperation with HBO Max to strengthen our TV platform strategy.

Next page, please. In the first quarter of 2026, our revenues grew by 9% year-on-year, exceeding TRY 68 billion. This robust top line performance was driven by a combination of operational discipline and strategic execution. Key contributors included strong momentum in digital business services, the scaling of our Techfin segment and high-quality subscriber acquisition across both mobile and fixed segments. Group EBITDA increased to TRY 28 billion with a margin of 41.4%. Our bottom line performance strengthened further with net income increasing by 15% to TRY 4.6 billion with disciplined financial management. On the subscriber side, we have 661,000 postpaid net additions. We achieved a great quarter in the mobile number portability market, driven by targeted and segment-based offers.

We continue to prioritize subscriber quality and rich content packages to strengthen our leadership. Our data center and cloud business maintained its strong trajectory with revenues increased by 20.8% as we continue to scale our digital infrastructure. Overall, these results once again proved our ability to monetize the broader digital ecosystem.

Next page, please. Now let's look at the operational drivers behind our performance this quarter. Market competition remained relatively stable. We have 661,000 postpaid net additions in this quarter, our strongest total mobile net additions in the past 14 quarters. This performance reflects the success of our targeted offers and our focus on high-value subscriber growth. The share of postpaid subscribers rose by 4.6 points year-on-year to 81%. Mobile ARPU remained broadly flat year-on-year. This reflects the lagged impact of last year's competitive pricing, our contract-based structure as well as the rapid increase in inflation in the first quarter.

As we transition to 5G, we are taking a balanced approach. We are carefully managing pricing to protect our subscriber base while sustaining our clear leadership in the revenue market share. Our strategy is also reflected in lower churn rates, supported by an effective churn policy.

Next page, please. Moving on to our fixed broadband operations. We achieved a strong quarter in fixed broadband, supported by solid subscriber growth. We recorded 36,000 net fiber subscriber additions, including 21,000 from Turkcell fiber domain. Residential fiber ARPU increased by 9.7% year-on-year, supported by active upselling, pricing actions and the growing contributions of our IPTV offering. We expanded our Turkcell fiber home passed by 138,000 in the first quarter, reaching a total of 6.5 million home passes in 30 different cities. Our take-up rate reached 41.8%, reflecting effective monetization of our infrastructure investments and the strength of our fiber growth strategy.

Next page, please. Digital Business Services had a strong start to 2026, with revenues increased by 64% year-on-year. This performance was driven by higher hardware revenues from large-scale end-to-end corporate projects. We also delivered robust 21% growth in our data center and cloud business. Our system integration backlog remains strong, exceeding TRY 10 billion. Our cumulative data center investments have reached close to EUR 600 million. We are on track to finalize our fifth module in Ankara. Our Google Cloud hyperscale partnership is on track as we planned.

Next page, please. Paycell, the growth engine of this segment. In this quarter, Paycell revenues increased by 15%, fueled by strong momentum in our Post and Pay Later businesses. Active users of Pay Later increased by 16%, exceeding 3 million. On the financial side, revenues declined primarily due to ongoing installment limitations. Looking ahead, we see 5G penetration as a natural growth catalyst. A more supportive regulatory environment for installment limits would unlock the full expansion potential of this business. Despite revenue pressure, Financell's net interest margin expanded significantly by 3.6 percentage points to 8.3%, supported by lower funding costs. Balance sheet risk management remained disciplined with cost of risk is at 3.3%. I will now hand over to our CFO, Kamil Kalyon, to walk you through our financial highlights. Thank you.

Thank you very much, Ali Taha. Let me walk you through our financial results. We are very pleased with our solid first quarter performance with a 9% increase, our top line exceeded TRY 68 billion. This growth was primarily driven by Turkcell Türkiye, which rose 8.6% year-on-year. Our non-telco revenues were instrumental in this performance, particularly Digital Business Services. Accounting for 12% of our revenue this quarter, Digital Business Services delivered strong momentum through managed services. Our expanded postpaid base and fixed broadband services also provided a robust foundation for expansion.

Additionally, our other segments contributed TRY 0.5 billion to the top line, fueled by the robust performance of call centers and Belarus subsidiaries. The EBITDA margin was 41.4%. The increasing share of hardware sales from large-scale integration projects made a significant contribution to top line growth, but weighed on the overall margin mix. This impact was partially mitigated by disciplined cost management, favorable energy prices and reduced funding costs at Financell.

Next slide, please. Net income rose 15% to TRY 4.6 billion, primarily supported by strong operational performance and robust EBITDA generation. Another key driver was the monetary gain, which benefited from the capitalization of the 5G license and contributed TRY 4.2 billion year-on-year. This year, we are scheduled to make several major payments. We have proactively positioned ourselves to manage them effectively. The payment of the first installment of the 5G license in January amounting to USD 653 million, together with the recognition of future installments and higher swap transactions led to an increase in FX expenses.

In addition, the redemption of USD 500 million Eurobond last October and the license payment in the first quarter resulted in a slight increase in net interest expense. TOGG delivered a significantly stronger contribution compared to last year. This improvement was supported by effective cost management and pricing policies, while relatively stable Euro TRY parity also helped constrained FX funding costs and the cost of goods sold. Finally, the effective tax rate increased this quarter. This was driven by higher corporate tax expense and deferred tax impact stemming from the absence of inflation accounting in statutory financials.

Next slide, please. Now let's move on to CapEx management. In the first quarter of 2026, our CapEx to sales ratio stood at 21.5%. [ 85% ] of our operational CapEx was allocated to connectivity businesses, naturally reflecting our intensive preparations for the 5G rollout. On the fixed side, we continued our fiber expansion, adding 138,000 new home passes this quarter. Our base station fiberization has now reached 47%, significantly enhancing our overall network quality at 5G readiness. Data center investments accounted for approximately 5% of our CapEx with construction currently underway for the fifth module in Ankara data center. Seasonally, we experienced lower CapEx intensity in the first quarter. However, we expect higher figures in the upcoming quarters, driven by our ongoing investments in renewable energy and data center expansions for Google Cloud.

Next slide, please. Moving to our well-positioned balance sheet. The first quarter ended with a cash position of TRY 96 billion. In January, we completed the first installment payment for the 5G license and paid TRY 3.2 billion wireless usage fee. However, our cash position was significantly bolstered by the successful Murabaha syndication. Considering both cash and financial assets as part of our overall liquidity, we maintained a stable position quarter-on-quarter. Our current liquidity remains robust, providing full coverage for both the upcoming 5G payments and all debt maturities over the next 4 years.

Driven by the new line utilization and the impact of significant regulatory payments on our cash reserves, our net debt increased to TRY 49 billion. Consequently, and as expected, our net leverage ratio rose to 0.42x. We expect leverage to remain below the 1x threshold despite this being a high investment year.

Next slide, please. Lastly, foreign currency risk management. We proactively balance hedging costs supported by our strong natural hedge position. Currently, 77% of our cash is held in hard currencies, while 88% of our total FX-denominated debt is in hard currencies. To avoid excessive hedging costs during periods of relatively stable FX levels, we have strategically opted to maintain a higher short FX position, supported by USD 2.8 billion in FX assets and a USD 1.3 billion derivatives portfolio against USD 4.4 billion in FX debt, our net short FX position has now risen to USD 1.2 billion. This position reflects cash outflows related to 5G license, FX-denominated CapEx and our optimized use of hedging instruments.

Moving forward, we target an FX position of approximately USD 1.5 billion to support our ongoing investments and 5G obligations while maintaining the flexibility to adjust our strategy in line with market conditions. That concludes our presentation. We would now be happy to take your questions.

[Operator Instructions] The first question is from the line of Maddy Singh with HSBC.

My first question is on the consumer segment. I think your release rates consumer revenue growth was about 3%. So if you could talk about that, what is the context there? Because your overall revenue growth is high single digit in line with your guidance, but consumer growth is much slower. So if you could talk about the drivers? And then secondly, if you could talk about the pricing action within the mobile segment, how many -- have you revised the prices year-to-date? And how much was the price hikes, what periods or your future plans around the price hike as well? So that's the second question. And then finally, have you seen any impact on your operating costs from the higher fuel prices, energy costs and so on. So any potential impact there? If you could talk about that.

Let me start with the price adjustments. In 2026, segment-based dynamic pricing and offer strategy will be maintained. We're going to closely follow up the competition and act upon it. So we utilize actually AI-powered tools to provide dynamic and customer-specific offers. So we cannot have a mass change in the pricing. But from a segment by segment level, we are doing the change in price differentiation. On mobile side, this year, we applied a 26% price adjustment in January and 16% in April to restore pricing to the expected baseline. This year, did happen. And on the fixed side as well, we apply price adjustments broadly in line with the incumbent pricing actions. Accordingly, we implemented an approximate 12% price increase on the shared infrastructure and around 18% on our fiber products in February.

For the -- regarding the first question, this quarter, we have lots of great news with the Digital Business Services. And then our Digital Business Services and Paycell has a huge growth. And one of -- currently, we are the biggest digital integrator in Türkiye, and we are working very closely with the industry and other public sector. We gained lots of momentum on that perspective. So that's the reason that our growth is higher. Secondly, data center and cloud businesses grew around 21% year-over-year. So that's also helping us our growth. And Paycell also remains a strong contributor to say that it's our main growth engine. It grew 15%. So we have a balance sheet right now. So we have multiple options that we can grow. So consumer segment is still the biggest one, but we have other options that we can have a higher growth.

For the third question, we are closely monitoring the volatility in the global energy market, especially the fuel prices. While high fuel prices put upward pressure on costs, the actual impact will depend on the conflict situation and the intensity. Currently, it's a little bit early to say, how can I say, estimation for the future, but it depends on the duration of the conflict.

The next question is from the line of Cemal Demirtas with Ata Invest.

My first question is about the ARPU side. We see a real term contraction Q-over-Q and year-over-year. Could you further elaborate that how should this trend go in the following quarters? And the other question is about the cost side, your participation. We see that it turned to positive net income, around TRY 305 million contribution to your side. What do you expect for the following quarters, at least? And the last question is about the tax rate, effective taxes. How should we assume for the rest of the year?

Thank you, Cemal. Thank you very much for the question. I'm going to answer the first one and the TOGG part and the tax part, Kamil is going to answer that. So let me start with our primary objective is to actually maintain a healthy ARPU growth that aligns with macroeconomic indicators. The mobile market currently was characterized by intense competition throughout 2025, as you may know. Consequently, our strategic churn management and pricing actions taken last year have had a temporary restrictive impact on our current ARPU growth because we already did this strategic churn management systems last year, so we can see the impact this year.

For the full year 2026, our target is to achieve ARPU growth that closely tracks the inflation cycle. However, we must remain mindful that any unexpected shifts in inflation dynamics as we can see that nowadays, will create some influence on our real growth trajectory. Our dynamic pricing model will manage this and continue to migration to higher value segments remain our key strategy to ensure ARPU resilience. We implement a strategy that will enable us to maintain a healthy growth. So 2025 has also affected this year's growth as our ARPU growth is coming with a lag.

So we need to always know that there's a lag between the inflation and our ARPU growth because we are doing our contracts, 12-month contracts. So that's the reason that increasing trend in inflation is also putting a pressure on current year's growth. But if you look at the numbers, we have a healthy ARPU for the users. And then also, we don't do any strange operations with the machine-to-machine communication. So our ARPUs are always stable and growth is there.

From the TOGG side, TOGG's net loss initially eased starting from the third quarter of 2025, Cemal, mainly supported by change in the special consumption tax base, which led to higher vehicle prices in the company. The new model [ TOGG 10F ] also supported the sales momentum in Q4 '25 and Q1 '26. Within the light of these facts in Q1 TOGG registered a net income of TRY 306 million. There are various reasons of this profit in the TOGG side. This improvement was mainly driven by the increased benefit of current incentive mechanism with higher vehicle sales. This is the first one.

The other one, financial expenses also improved due to relative stability of Euro TRY parity in Q1. Additionally, TOGG continues to record monetary gains under the inflation accounting due to its significant fixed asset base. Therefore, when you combine these 3 effects, the company declared a good result in Q1. We also expect the momentum in the coming periods. For the last question, as you know, from the tax side, the termination -- as you might be aware, the termination of inflation accounting in accordance with the Turkish Tax Procedural Law led to tax impact of indexation effects of accounts under capital items is no longer taken into account. With another saying, the inflation accounting in the local side is canceled or postponed for 3 years period. Therefore, there are some negative effects of this issue in the deferred tax side.

Therefore, since the taxable nature of the monetary loss calculated on capital items has been eliminated, the effective tax rate has increased naturally. Therefore, higher fixed asset revaluation effects are included at the end of year. Termination of inflation accounting impact had been limited from this side. In addition to this, for the inflation accounting, the profit of the term is also increased in the first quarter. Therefore, this is the second reason which we have a tax expense in our financials in Q1.

And do you expect any upward revision to your revenue growth after around 9% growth in first quarter, you have like 5% to 7%.

It is really early to say something about the guidance revised because we should -- first of all, we should see the economical conditions in Türkiye. And the other one, the most important one is the conflict -- duration of the conflict. If the conflict, for example, duration will, for example, extended for many months, it will, how can I say, influence the inflation rate in Türkiye. Therefore, we will look at the position of the inflation in the coming future. Therefore, it's really early to say something about this one. I think we should see the Q2 results, maybe in the Q3 side, it would be more feasible or more rational to say a revise in the guidance side negatively or positively. It's really too early to say to talk about this one.

And one last thing about your promotion, it was very, I think, effective, at least from a consumer perspective, like me. Whenever I look at -- see it, it made me smile. So I think from my side, it was very effective. But from your side, do you think it reached to crowds in Turkey? Any reaction on that? Because really it's one of the best commercial I have experienced during the last several years. So I just want to appreciate it from the consumer perspective. But do you have any measure that it had any positive effect on your activities in all around Turkey?

First of all, thank you very much for the comment. It's very -- you are making us happy with these comments. And also our marketing team is also very happy about the impact. Overall, what happened is -- so we missed that kind of great ads in Türkiye. And Turkcell has in its DNA to publish great ads. So I think it is -- go back to the future or whatever you can say that a long time before, we didn't have that kind of big great ads. But still true that everybody knows the -- especially the story is very nice. So -- and we're explaining the 5G technology with a very funny and Turkish style way, I can say that. So that's the reason that there's a huge interest on that and everybody's -- 5G speed is just very well aligned with the Turkcell terminology. So it helps a lot.

But we are seeing that and we continue on the campaigns, especially on the consumer side, we have a huge campaign about the fivefold. And so we are waiting for that to be over. And this month and the next month, we are going to see the real impact. On top of it, we just brought a new market, which is called Fixed Wireless access. It means that we are going to give 5G Superbox and we have a new ad about it as well. So overall, we are expecting a positive impact, both the campaign and how we deploy our 5G technology in Türkiye.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you.

Thank you very much for joining. And hopefully, we're going to see each other in the second quarter results. Thank you.

Thank you for joining us.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.

Ladies and gentlemen, thank you for standing by. I'm Paulina, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell Fourth Quarter and Full Year 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed.

Thank you, Paulina. Hello, everyone, and welcome to Turkcell's 2025 year-end earnings call. On the call today, we have our CEO, Ali Taha Koc; and CFO, Kamil Kalyon. They will provide an overview of our operational and financial results for the quarter and the year, followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation.

With that, I will now turn the call over to Mr. Ali Taha Koc.

Thank you, Ozlem. Good afternoon, everyone, and thank you for joining us today. We closed 2025 with a strong finish, exceeding all of our expectations. Revenues increased by 11%, and we achieved an EBITDA margin of 43.1%. Net income from continuing operation reached TRY 17.8 billion, up 23% year-on-year. These outcomes reflect disciplined execution and strong momentum across the business. 2025 was pivotal for our long-term strategic positioning. We were awarded the largest spectrum in the 5G auction and secured our fiber footprint through the agreement with BOTAS. This will strengthen our network leadership and expand our capacity to capture 5G demand.

We maintain a robust balance sheet through prudent financial management. This preserves flexibility and liquidity. We delivered shareholder returns through a solid dividend payment and launched a 3-year share buyback program. Turkcell is a technology company. We are reinforcing that identity through focused investments. In 2025, we allocated 15% of CapEx to strategic areas, primarily in data center, cloud infrastructure and renewables. These investments deepen our digital infrastructure, enhance energy resilience and support long-term value creation.

A major milestone for Turkiye is our strategic partnership with Google Cloud. We are building a hyperscale cloud region in Turkiye. This cloud region will help enterprises accelerate cloud adoption to secure their data sovereignty as well as excess advanced capabilities in AI, cybersecurity and digital platforms. Turkcell is at the center of Turkey's digital transformation. With this partnership, Turkcell will have sustainable technology-led growth. Next page, please.

Over the past 3 years, we have executed with discipline to show that Turkcell's leadership in connectivity and digital infrastructure. This transformation shapes how we operate today and how we allocate capital to deliver long-term value creation. Our capital allocation framework is built on 3 pillars. First one, investing in our business to sustain leadership and capture future growth. We continue to advance mobile rollout and expand our fiber footprint with 5G. Our fixed wireless access solution Superbox will extend our coverage beyond fiber. In parallel, we are investing in data centers and cloud, which will bring future growth. As we scale this business, we may also evaluate selective inorganic opportunities. Our expected CapEx intensity of around 25% reflects this investment cycle.

The second one, delivering attractive shareholder returns. Last year, we distributed 72% of net income from continuing operations. This is our ninth consecutive year of dividend distribution, 9 consecutive years. We also launched a new share buyback program and repurchased $58 million of shares to date, reflecting our confidence in long-term value of our business.

Thirdly, maintaining a strong balance sheet. We continue to diversify our funding sources from sustainable bond issuance to Islamic financing structures. We remain committed to maintaining net leverage below 1x, preserving flexibility to invest in growth while continuing to support shareholder returns. Overall, we have a crystal clear capital allocation plan to invest in strategic infrastructure, capture structural global opportunities and deliver sustainable shareholder value. Next page, please.

We can now move to the quarterly performance. The fourth quarter marked another period of solid execution for Turkcell's leadership. Performance was driven by operational excellence and supported by our key growth engines. With outstanding performance across all core segments. In this quarter, revenues grew by 7% year-on-year to TRY 63 billion. Results were underpinned by ARPA expansion, continued subscriber momentum and scaling of our data center business. All of these reinforce the strength and resilience of our growth model. Group EBITDA increased 12% to TRY 26 billion, reaching a solid 41.2% margin. Margin expansion reflects continued cost discipline and as well as the operational efficiency.

Focused financial management also supported our bottom line with net income from continuing operations increasing 11% to TRY 3.6 billion. We achieved 905,000 net postpaid additions in the fourth quarter. This is the strongest quarterly result in the last 6 years. This was driven by targeted value propositions as well as customer-focused strategy. Another good news, this growth also came with real ARPU expansion, reflecting balanced growth.

On the other hand, our data center and cloud business continued to scale with revenues growing by 32%, renewable energy installed solar capacity reached 62.2 megawatts. Next, please.

Let us turn to the key operational highlights that shape our great quarter. Competition remained elevated for much of the year, but it is moderately in the middle of the fourth quarter. 2025 was marked by record high mobile number portability. In this environment, our customer-centric approach and pricing strategy helped us strengthen our market leadership and expand our customer base. We had 2.4 million postpaid net additions for the year 2025, the highest level in the past 26 years. Rising share of the postpaid subscribers was a key driver of revenue growth. It increased by 4.7 percentage points year-on-year to reach 81%, strengthening the resilience and the visibility of our revenue base. Revenue quality also improved. Through our micro segmented pricing actions and AI-supported offers we migrated a significant portion of our subscribers to higher-tier packages.

As a result, mobile ARPU real growth is 5.4%. Innovative offerings, including family plans and a new loyalty platform like Tumbara, increased engagement and supported retention. As a result, our churn improved year-on-year to 2.7%. Next, please.

Turning now to our fixed broadband operations. Another strong year for Superonline, our fixed business as well. We expanded our base with net addition of 119,000 Turkcell fiber subscribers. Total fiber subscriber base reached 2.6 million. High-speed campaigns were instrumental in driving this growth. We expanded our offer to speeds of up to 1,000 megabits per second. Today, out of all of our customers, 1 in 5 customers subscribes to speeds above 500 megabit per second. This signals a clear shift toward premium connectivity with Turkcell Superonline only.

Residential fiber ARPU increased by 10.3% year-on-year. We expanded our fiber home pass to 6.3 million home passes. While increasing the number of home passes, we achieved a phenomenal performance on take-up ratio of 42%. Next please.

Our digital infrastructure strategy is central to Turkcell's long-term growth. We believe that cloud and AI infrastructure is structural, a must for every business in Turkiye. The Turkish cloud market is growing at 19% annually in dollar terms, supported by increasing digitization and rapid adoption of AI-driven workloads. Our partnership with Google Cloud marks a defining milestone. Establishing a Google Cloud region in Turkiye strengthens our country's digital ecosystem and enhances our position in the infrastructure value chain. This partnership diversifies Turkcell's revenue streams and reinforces our long-term growth profile.

Today, we operate 50 megawatts of active data center capacity, and it will be doubled by 2032. Over the same period, we expect our data center and cloud revenues to grow at least sixfold in U.S. dollar terms. Beginning in 2026. We expect this segment to generate approximately $100 million in EBITDA. We are uniquely positioned to capture this technological breakthrough with our scale, network assets, market leadership and strategic partnership, we are ready to benefit from this structural growth. Next please.

Digital Business Services delivered solid growth, with revenues increasing by 30% to TRY 7 billion, supported by stronger hardware sales. Our system integration backlog reached TRY 6 billion. Our data center and cloud revenues increased by 32% year-on-year. This outstanding growth was driven by capacity expansion. As this new capacity established a higher base, we expect growth rates to gradually normalize. Even so underlying demand remains robust and continues to support for further expansion. We expect to complete the final module of Ankara data center in this year, reaching the full capacity -- full technical capacity of our existing facilities.

In the first half 2026 construction of our new data centers under Google Cloud partnership will start. This will be our next phase of capacity expansion strategy. Techfin is one of our core strategic growth engine. Our techfin business delivered solid performance in 2025 with revenues growing by 21% and once again outpacing group growth. Paycell was the main driver of this growth. In the fourth quarter, its revenues increased by 40% year-on-year, supported by POS solutions and Pay Later services. Paycell increased its non-group revenue share by 18 percentage points to 77%, reflecting its ability to scale beyond the Turkcell ecosystem.

On the financial side, revenues declined by 6%, mainly reflecting the lower interest rate environment. The loan portfolio continued to expand despite tight regulatory conditions. Net interest margin improved to 6.3%, primarily driven by lower funding costs as well as disciplined risk management and better collection practices. Overall, techfin continues to enhance the diversification and quality of our revenue growth. Next page, please.

Now a few words on our renewable energy footprint. We are so proud of it. In the fourth quarter, we commissioned our largest active facility to date. Active solar capacity increased from 8 megawatts at the end of the last year to 62 megawatts in 2025. In total, we reached 164 megawatts of installed capacity across 8 different cities. These investments are already delivering financial benefits. During the year, our solar energy portfolio generated TRY 156 million in OpEx savings. Stronger contribution is expected in 2026. We will continue to expand our portfolio to enhance cost efficiency, strengthening operational resilience and support our 2050 net 0 commitment. Next page, please.

We exceeded our expectations in 2025. This underscores the resilience of our operating model and the consistency of our execution. Looking ahead to 2026, our focus remains on real profitable growth. We expect real revenue growth in the range of 5% to 7% with the strength of our core business and increasing contributions from strategic areas. We aim to deliver an EBITDA margin between 40% to 42%, reflecting ongoing operational efficiency while continuing to invest in growth. Our operational CapEx intensity is expected to be around 25%, consistent with our investment cycle in 5G rollout, digital infrastructure expansion and renewable energy projects. In our data center and cloud business, we anticipate revenue growth in the range of 18% to 20%. This reflects a normalization following the significant capacity expansions completed in 2025, while underlying demand remains healthy.

Overall, we believe our guidance balances growth, continued investments and sustainable value creation. With that, I will now hand over to our CFO, Mr. Kamil Kalyon, to walk you through our financial highlights.

Thank you very much, Ali Taha bey. Let me briefly walk you through our financial results. We delivered a strong performance for both the year and the quarter. Top line grew by 11% year-on-year, surpassing TRY 241 billion, quarterly growth was 7%. This performance reflects resilient execution in our core telecom business and continued scaling of our techfin platform. Turkcell Turkiye revenue increased by TRY 21 billion year-on-year. Growth was driven primarily by real ARPU expansion and sustained postpaid subscriber additions. Continued upselling and premium positioning further enhanced the quality of our revenue base. Techfin accounted for 6% of consolidated revenues contributed TRY 2.4 billion for the year. Performance was underpinned despite strong momentum in Paycell, particularly in POS solutions and Pay Later. Both verticals continue to expand transaction volumes and monetization. Next slide, please.

Now EBITDA performance. Exceeding the top line growth, EBITDA increased by 14% year-on-year to TRY 104 billion, reflecting efficient cost management, EBITDA margin surpassed 43%. The main positive contributors were employee and energy expenses. While payment expenses scaled alongside strong POS expansion, Paycell's primary growth driver this year. Radio-related expenses reflect the acceleration of our 5G readiness and ongoing network modernization efforts. As a result, EBITDA margin expanded by 1.2 percentage points demonstrating disciplined execution while continuing to invest for future growth. We remain focused on balancing strategic growth investments with long-term profitability. Next slide, please.

Profit from continuing operations increased by 23% year-on-year to TRY 17.8 billion, primarily driven by strong EBITDA growth. We maintained market leadership through solid execution and a diversified revenue mix supporting sustainable EBITDA generation. We had a larger debt position during the year. However, our proactive balance sheet management further supported bottom line performance by TRY 3.5 billion. Net finance income benefited from lower interest expenses, loan redemptions and reduced hedging costs amid stable FX conditions. In addition, maintaining a solid TL position allowed us to benefit from attractive local currency yields. Monetary adjustments continue to reflect moderating inflation dynamics and the residual impact of the Ukraine divestment in 2024.

Looking ahead, the capitalization of 5G license is expected to support normalization in this line. TOGG contributed positively this year, supported by improved pricing dynamics and the launch of the new model. We see additional long-term value creation potential as 5G-driven technological transformation accelerates. Income tax expense increased mainly reflecting the deferral of inflation accounting application in statutory financials. Next slide, please.

Let's take a closer look at our CapEx management. With a prudent CapEx approach, we closed the year at 22.6%, in line with guidance. We continue to advance both mobile and fixed infrastructure. Fixed investments accelerated adding 405,000 new while base station fiberization reached 47%. Excluding strategic areas, CapEx intensity remains stable at around 18% to 19% over the past 3 years reflecting consistency in our investment framework. Our investment profile reflects a focus on our strategic growth areas beyond traditional telecom. Operational CapEx intensity of 25% is aligned with our strategic priorities across 5G, data centers and renewable energy. We allocate capital with a clear focus on long-term value creation, favoring projects with strong return visibility and scalable cash generation.

Next slide, please. Moving now to our balance sheet. Our balance sheet provides flexibility to execute our strategic objectives while preserving financial resilience. We closed 2025 with a cash position of TRY 92 billion after dividend payments, loan repayments and the Eurobond redemption in the fourth quarter. Our solid liquidity position fully covers upcoming 5G payments and debt service obligations over the next 2.5 years. Net debt was TRY 15 billion. Net leverage improved to 0.1x supported by strong EBITDA generation. We remain committed to maintaining leverage below 1x while comfortably funding 5G payments and broader strategic investments. The increase in lease obligations reflects the onetime accounting impact of a 15-year BOTAS infrastructure renewable agreement in the fixed side. We continue proactive debt management and actively evaluate diversified financing opportunities to support our long-term growth strategy. Next slide, please.

Lastly on foreign currency risk management. We proactively monitored market conditions and swapped a portion of our U.S. dollar holdings into Turkish lira. As a result, 56% of our cash was held in TL at year-end. This allows us to benefit from higher local currency yields and supported net financial income. At the year-end, we had USD 3.4 billion in FX debt, USD 1.9 billion in FX-denominated financial assets and a derivative portfolio of USD 600 million. Derivative portfolio reflects our short-term FX swap transactions with volumes increasing towards year-end and fewer NDF transactions. The increase in our short-term FX position mainly reflects higher FX-denominated CapEx in the fourth quarter and a deliberate reduction of hedging instruments to avoid higher costs. We target managing our FX position around USD 1.5 billion to support investments and 5G license obligations. We may adjust this level proactively in line with market volatility.

This concludes our presentation. We are now ready to take your questions. Thank you very much.

[Operator Instructions] The first question is from the line of Bystrova Evgeniya with Barclays.

Congrats on your results. I have just one question. 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? That would be very helpful.

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.

The next question is from the line of Demirtas Cemal with Ata Invest.

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.

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.

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.

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.

Okay. Let's come to the data center business. Yes, that's my favorite topic and favorite question. Let me tell you that. Let me give you a brief information about the Turkiye. Turkiye's total cloud consumption is around 150 to 200 megawatts. So if you look at the corporates, it's there out of 70 to 80 megawatts. So overall, what we need to do is most of the corporate domain in Turkey is still building their own data centers and they do internal consumption. So that's the reason that 50-megawatt number is not a huge number. The good thing about the 50-megawatt is. So previously, what we were doing is we were preparing the infrastructure for the colocation services. So our first 50 megawatts, most of the banks, most of the airline companies are bringing their own servers and they have their own hardware, and we colocate them in our data centers. But for the Google Cloud, it's going to be full-blown system.

So we are going to build a data center. We are going to prepare for Google Cloud that infrastructure with electricity with cooling. But on top of it, Google will bring thousands, 10 thousands servers to Turkiye. So that's the reason that the investment is high. So they're going to have a full-blown system such a way that -- and so another thing is the space, 50 megawatts is good enough because these servers are going to be used by not only one company, hundreds of companies that are going to -- together, they are going to use it. That's the meaning of cloud actually. So they can utilize their service more and more. So that's the reason that 50 megawatts is a huge investment, and I'm pretty sure that our biggest target is to bring all of these companies or the industry players to move their old systems to this cloud -- state-of-the-art cloud regions.

[Operator Instructions] The next question is from the line of Karagoz Yusuf with Ak Yatirim.

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?

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.

Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you.

Thank you very much for listening. Hope to see you next time. Thank you.

Thank you very much.

Thank you, bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell's Third Quarter 202 Financial Results. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Ozlem Yardim, Investor Relations and Corporate Finance Director. Ms. Yardim, you may now proceed.

Thank you, Constantino. Hello, everyone, and welcome to Turkcell's 2025 Third Quarter Earnings Call. On the call today, we have our CEO, Ali Taha Koc; and CFO, Kamil Kalyon. They will provide an overview of our financial and operational results for the quarter, followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation.

With that, I will now turn the call over to Mr. Ali Taha.

Thank you, Ozlem. Good afternoon, everyone, and thank you all for joining us today. This quarter once again demonstrated Turkcell's strong momentum powered by disciplined operations, sharp execution and the strength of our growth engines. We delivered 11% revenue growth, reaching TRY 60 billion, driven primarily by our core telecommunication business. Strong ARPU performance, a growing subscriber base and rising data center revenues all contributed to this outstanding performance. Group EBITDA increased 11% to TRY 26 billion, achieving a solid 43.9% margin, a clear reflection of our continued cost discipline.

In addition to our operational success, prudent financial management strengthened our bottom line. Lifting net income from continuing operations up by 31.8% to TRY 5.4 billion. Competition remained intense this quarter. Even so, we added 569,000 net postpaid subscribers. Through targeted pricing and upselling, mobile ARPU rose 12%, once again proving our ability to deliver double-digit growth in a highly competitive environment. Residential fiber ARPU also grew by 17.3% year-on-year in the third quarter. Our strategic growth areas also continued to perform strongly. Data center and cloud revenues grew 51%, and our renewable energy capacity from solar fields across 4 cities in Turkiye has reached 37.5 megawatt. Next page, please.

We are proud to reinforce our leadership with the successful outcome of the 5G spectrum tender, a defining milestone for Turkiye's digital future. The results were exactly in line with our expectations and reaffirm our leadership position. We secured 160 megahertz of spectrum, the maximum capacity available to a single operator in this tender. This allocation enabled us to deliver speeds exceeding 1,000 megabit per second while paving the lowest cost per megahertz per subscriber among all operators. 5G will be commercially launched in April 2026, marking the beginning of a new chapter in Turkiye's digital transformation. It will empower industries such as manufacturing, transport, health care and education with high-speed connectivity to regions that currently lack fiber access.

Once 5G officially launches, these customers will be among the first to experience 5G speeds. And just as we have done over the past 30 years, we will continue to lead in this new era of connectivity. We are fully ready to shape Turkiye's 5G future and drive the next wave of digital transformation. Next page, please.

Let's take a closer look at the key operational highlights from the third quarter. Competition in the mobile market was strong as we expected, maintaining our dynamic and customer-centric approach, we continue to expand our customer base. We recorded 569,000 net postpaid additions, bringing our total net gains to 2 million over the past 12 months. As a result, our mobile subscriber base exceeded 39 million. Leveraging our AI-driven dynamic micro segmentation approach, we executed our upsell strategies with precision. We offered customers precisely targeted offers, moving the vast majority of our base to higher tier plan.

In addition, the share of postpaid subscribers, a key driver of revenue growth, rose by 4.6 percentage points year-on-year to 79%. These efforts, together with higher seasonality, delivered double-digit mobile ARPU growth of 12%, reflecting our continued focus on value-driven growth. Our mobile churn rate was 2.6%, primarily reflecting the ongoing competition and high activity in the number portability market. Next page, please.

Now let's move on to our fixed broadband operations. With a focus on fiber customers, we had a net add of 33,000 this quarter, bringing our Turkcell fiber base to over 2.5 million. Including sales over other operators' infrastructure, we introduced 55,000 new customers to high-quality fiber services. Our fiber strategy is best described by a simple principle, high quality and high speed. With this approach, since last year, we remain committed to offering 1,000 megabit per second speeds and delivering greater value to our customers. Year-on-year, the number of subscribers on these plans more than tripled. With effective pricing adjustments, a higher proportion of customers on 100 megabit per second plus plans and 88% commitment rate to 12-month contracts, our residential fiber ARPU grew 17.3% year-on-year in the third quarter.

As we continue to strengthen our fiber network, we expanded our footprint with 107,000 new home passes, reaching 6.2 million households. Our 42.6% take-up rate is a clear indication that our fiber investments are effectively planned. Next page, please.

Let me now turn on to our strategic areas, beginning with Digital Business Services. Digital Business Services delivered robust 97% revenue growth, reaching TRY 4.9 billion, supported by recurring service income and stronger hardware sales. The backlog from system integration projects reached a remarkable TRY 5 billion. Data center and cloud revenues continued their strong momentum, increasing 51% year-on-year in real terms. We had targeted an 8.4 megawatt capacity expansion at the beginning of 2025, guided by our vision of keeping Turkiye's data within Turkiye, and we successfully activated that capacity in this quarter.

Thanks to our early-stage investment, we have established a strong market position, becoming the leading player in the enterprise colocation market. We are preparing for our next strategic move in data centers and cloud businesses, which will further strengthen our leadership. Next page, please.

Now moving on to another of our strategic pillars, techfin. Our techfin ecosystem, representing 6% of consolidated revenues achieved 20% year-on-year growth in the third quarter, outpacing the group's overall performance. This growth was mainly driven by our digital payment company, Paycell, which achieved a 42% increase in revenues. Within Paycell, POS and Pay Later services were the key contributors supported by favorable regulatory revisions in mobile payment limits and broader adoption of POS solutions.

Our Financell brand, providing customers with fast and flexible financing solutions continued to expand its loan portfolio, reaching TRY 7.5 billion despite the high interest rate environment. The net interest margin improved to 5%, driven by more favorable funding costs. Financell continued to support the sales of Samsung A26, locally manufactured 5G smartphone exclusive for Turkcell with a total of 54,000 contracted sales since its launch in April. Next page, please.

Despite global geopolitical and macroeconomic headwinds, we delivered performance that exceed our expectations over the first 9 months of the year. In line with these strong results and the revised CPI outlook, we are upgrading our 2025 guidance. Reflecting our solid momentum and confidence in the sustainability of our results, we are revising our revenue growth expectations upwards to around 10% and raising our EBITDA margin target to 42% to 43% range. Even as we continue our intensive investment cycle, we are revising our operational CapEx to sales target to around 23%, mainly driven by the acceleration in revenue recognition. As for our data center and cloud revenues, we are also revising our growth guidance upwards to around 43%.

With that, I will now hand over to our CFO, Mr. Kamil Kalyon, to walk us through the financial highlights.

Thank you very much, Ali Taha. We had a solid quarter driven by continued momentum in our core business and techfin expansion. We achieved 11.2% year-on-year revenue growth, fueled by strong execution across our key business lines. Turkcell Turkiye remained the main top line driver, contributing TRY 5.5 billion of additional revenue. This was supported by double-digit real ARPU growth, a larger postpaid base and solid performance from digital business services. Techfin added TRY 569 million in revenue, driven by solid growth at Paycell, particularly across POS and mobile payment verticals.

On profitability, margins reflected our ongoing investments to enable 5G rollout and to capture the strong growth momentum in Paycell transaction volumes. At the same time, personnel and energy costs contributed positively to our overall performance. Overall, we maintained a solid profitability level, demonstrating the strength of our operating leverage and disciplined cost management. Next slide, please.

Profit from continuing operations increased 31.8% year-on-year to TRY 5.4 billion, reflecting focused execution and effective cash management. EBITDA contribution totaled TRY 2.5 billion for the quarter, remaining the key driver of profit growth. Despite persistent competition, Turkcell sustained its leadership through a clear strategic focus and efficient execution. We prudently managed our net finance income and expenses this quarter, resulting in a year-on-year contribution of TRY 1.5 billion. With FX depreciation decreased to nearly half of last year's level, we recorded a positive FX impact of TRY 912 million.

Despite a higher nominal debt level versus Q3 2024, our strong financial discipline and proactive funding strategy led to a decline in interest expenses to TRY 677 million. Meanwhile, although interest income remained limited, returns were supported by a well-diversified and efficiently managed investment portfolio. Our strong cash position, together with the slower inflation growth year-on-year resulted in a monetary loss this quarter. Next slide, please.

Turning to our investment strategy with a clear focus on 5G readiness. CapEx intensity was 17.4% this quarter, reflecting our continued commitment to strengthening network infrastructure and preparing for next-generation technologies. With the largest spectrum allocation secured from the 5G tender, we are maintaining our investment momentum at full speed. This quarter, approximately 80% of CapEx was directed towards our core businesses, mobile and fixed broadband. Our base station fiberization rate surpassed 45% this quarter, laying the groundwork for a seamless and efficient 5G transition. In our data centers, we activated an additional 8.4 megawatts of IT capacity, bringing the total to 50 megawatts. On the renewables side, solar capacity reached 37.5 megawatts with further expansion expected in Q4. We have started to see savings from renewable energy investments this year with a more visible impact expected in 2026.

Given the expected ramp-up in 5G investments and seasonal factors in Q4, we continue to manage our CapEx with a disciplined and value-focused approach. Our revised guidance reflects both the progress of our investment programs and our commitment to efficient capital allocation. Next slide, please.

Moving now to our balance sheet. Our cash position reached TRY 122 billion in Q3. The second dividend installment will be paid in Q4, while under the 5G tender, the first 2 installments are scheduled for 2026. We consider our current liquidity as strong, sufficient to cover upcoming 5G payments and debt service over the next 2.5 years. We are well prepared, having issued a Eurobond earlier this year and secured Murabaha fundings on favorable terms in the first half. Our net leverage ratio increased slightly to 0.2x, but remains comfortably within healthy levels, reflecting our continued financial discipline. Given the 5G payment schedule, we expect leverage to remain below 1x in the upcoming periods. Debt repayments of around USD 1 billion are expected to be completed by year-end, of which USD 800 million is denominated in foreign currency. Next slide, please.

Finally, a brief update on our FX risk management, 81%. As of Q3, we held USD 3.9 billion FX debt and USD 3 billion FX-denominated financial assets and USD 800 million derivatives portfolio. We maintain a dynamic FX risk management strategy. We actively manage a short-term derivatives portfolio to mitigate potential FX volatility while accounting for higher hedging costs. We closed the quarter in a neutral FX position. Following the acquisition of the 5G license, our net foreign exchange position is expected to increase. We will closely monitor market conditions and proactively manage this position over the next 1.5 years until the full 5G license payments are completed. Therefore, during this period, we will not apply our neutral position definition.

That concludes our presentation. We look forward to addressing your questions. Thank you very much.

[Operator Instructions] The first question comes from the line of Singh Maddy with HSBC.

My first question is on your CapEx and dividend outlook, especially given the recent 5G auction win. I wonder -- for this year, you have given the guidance for CapEx, so that's fine. But I was wondering whether next year, we should expect a significant jump in the CapEx to sales intensity and whether this spectrum payment is going to affect the dividend payments at all? So that's the first question. And then the second question is on your pricing action during the quarter? Did you increase any prices? And how was the competitive response to that? Are you comfortable around the pricing environment? So that's the second one.

And then the final one, actually on your final comment about the net short FX position, you said the definition will not be applicable going forward. So can you please explain what do you mean by that? And how should we think about the FX losses going forward, yes?

Thank you very much, Maddy, for the questions. First question and third question will be responded by me. First of all, -- for the next year, CapEx intensity, we are not expecting higher jumps. As you know, starting of this year, we declared 24% CapEx sales ratio for this year. Now we revised it to 23%. For the next year period, we do not -- we will not be in a position exceeding the 24% around the CapEx intensity levels will be around this 24%. We will see the budget figures that will come from the business lines.

The other one, as you know, our dividend policy is distributing our 50% net income of the year. We are proposing to the general assembly and general assembly decided. As you know, we have -- as [indiscernible] said, we are a very dividend-friendly company. And if you chase our company, we will be -- we have been distributing dividends for many years period. Therefore, for the 2026, our AGM has not been decided about this issue, but our dividend policy is still distributing the 50% of the net income.

For the third question, as you know, we are declaring our FX position as minus -- plus USD 200 million. And when we look at the 5G tender, the results and officially, the tender results will be ratified by the governmental bodies approximately in January 2026. Therefore, the FX position -- net FX position or this liability will be in our balance sheet starting from 2026. Therefore, we will look at the position at that time. But as Ali mentioned, the 5G tender price will be paid within 3 installments. In the first installment will be in January 2026. Therefore, it means that 1/3 of the tender price plus 20% VAT amount, which corresponds 44% or 45% of the total amount will be paid in January 2026.

Therefore, we will look at the -- our FX position in January 2026, and we will decide how we will manage this FX position starting from 2026. As you know, the decision will be taken under the scope of the macroeconomical conditions, hedging costs and Turkish internal macroeconomic conditions. Therefore, we will see it in January 2026.

I will hand over the mic for the second question to Mr. Ali.

Regarding the price adjust, I will divide this question into two different parts, mobile side and the fixed side. For the -- as the leading mobile operator and the leader and the biggest operator, mobile operator in Turkiye, we have adjusted our prices in almost every quarter between 2021 and 2024 to reflect the inflationary environment. Considering the slowing pace of inflation and competition conditions in the market, we updated our prices in January and July into 2024. Following 14% price increases implemented in January 2025, we carried out further price adjustments on our micro segmented packages such as youth and regional offers in June and August.

On top of price adjustments, thanks to our successful upsell performance, we registered above inflation mobile ARPU growth of 12%. With respect to fixed broadband market, following the competition, we increased prices in December 2023, August 2024, March and October 2025. We are driving ARPU growth by increasing the share of customers within a 12-month commitment, boosting transition to high-speed packages and also widening the price gap between our TV+ bundled offers and data-only packages. This successful efforts and initiatives enables us to outperform inflation and achieve at the fixed market -- fixed broadband market, 17% real growth performance in our residential fiber ARPU.

As Turkcell, we continue to focus on value as the main differentiation point from the competition. Hence, rather than competing on price, we focus on creating additional value for our customers. And we will continue to closely monitor market conditions and the competition in the upcoming quarters as well.

If I may ask a follow-up on the spectrum part. So the payment is in hard currency. I was wondering whether the asset itself will be recognized in hard currency as well.

Normally, as you mentioned, the payments will be done in U.S. dollar terms. Therefore, we will -- our liquidity position is fair enough to make all the payments in both in TL side and the U.S. dollar side. Therefore, starting from the January 2026, we will look at the macroeconomical conditions, FX rates, TL rates and the most important one, the hedging rates, for example, hedging costs are very important in order to decide. But as I said, we have enough TL and the U.S. dollar money in our hands. Therefore, we will decide it in January 2026 by taking into consideration the macroeconomical conditions on that date. It's a little bit early to give a guarantee or to give a color how we will make the payments. We can prefer to make dollar payments or maybe we can prefer to make TL payments. But at TL, we will be keeping our U.S. dollar money in our hands, and it will not create additional problem from our perspective.

My question was more on the balance sheet entry on the asset side. So you will recognize the spectrum as an asset, right? But the value, I'm not sure whether that will be put in a lira number or a dollar number.

Normally, it will be included into our balance sheet in 2026, and we will make this capitalization in the TL terms. And as you mentioned -- as you imagine, that starting from 2026, this asset will generate an inflation profit starting from the depreciation in the income side starting from 2026.

The next question comes from the line of [indiscernible] with Barclays.

Congrats on the results. I have just a couple of questions. So my first one is on your 2026 outlook. Do you think that the revenue growth that you've delivered in 2025 or planning to deliver is sustainable going forward given the 5G regime coming? And also -- and also on your profitability, do you think like current margin -- EBITDA margin levels are sustainable for next years? And second question is also on your -- do you have any long-term target for your net leverage? Or maybe where do you see the net leverage ratio next year and going forward after the 5G payments are done?

I can start with the first one. Let me talk a little bit about the current year, the great year and a great quarter. So we had another solid operational and financial results this quarter and which was actually beyond our initial plans. We continue to expand our subscriber base in both mobile and fixed segments, while delivering a real ARPU growth in each quarter of 2025 through our dynamic tariff and pricing management, higher postpaid share, also successful upselling actions and rising demand for high-speed connection also supported our ARPU performance.

So consequently, in the first 9 months, our consolidated revenue grew by 12% year-over-year. And also techfin, if you talk about the techfin in the first 9 months, delivered a 25% year-over-year growth, making a very meaningful contribution to our top line. Also, our strategic investments, data center and cloud services also achieved robust revenue growth of 51% compared to the same period last year and significantly exceeding our previous full year 2025 guidance. EBITDA grew by 15%, leading to a 43.7% EBITDA margins. Building on our strong 9-month performance, we have revised our full year both revenue growth and as well as the EBITDA margin expectation and guidance.

So to remain prudent while revising our guidance, we also considered the reduced magnitude of price adjustments compared to last year. And we are expecting a very competitive environment in the following years on 2026 expectation as we are in the planning process. It is too early to comment. However, our goal is to maintain our micro segment management strategy, along with our AI-driven technologies, along with our revenue growth initiatives and continue growing above the inflation rate.

For the second question, as I mentioned in my presentation, at the end of this year, we will be paying the second installment of our dividend payment, and we have some additional repayment of debt for 2025. And in January, as I mentioned, we will be paying the 44% of the total tender price for the 5G side. Therefore, our expectation is this leverage ratio would be around 0.7 or 8x. And as I mentioned in my presentation, again, our aim is to keep this level lower than the 1x.

[Operator Instructions] The next question comes from the line of [indiscernible] with [indiscernible].

Good results. Actually, all of my questions have been answered.

The next question comes from the line of Demirtas Cemal with Ata Invest.

Congratulations for the good results. My question is rather some technical issues in the income statement. We see monetary loss in third quarter versus like the monetary gain in the previous quarters. Could you just tell us more about the changes that lead to monetary losses in this quarter because it offsets a portion of the higher-than-expected operating profit when we go to the bottom line? And the other question is again about the TOGG participation side, we see lower losses unlike the previous 2 quarters. Do you think it's going to be the permanent? Should we expect lower the losses contribution from the TOGG, your subsidiary side? That's my second question.

And again, could you just give any direction about 2026 from your side? And again, I would like to ask what kind of value-added -- the things that could come into surface in 2026 as now the 5G is done, please, in terms of licensing. What are the opportunities rather than the organic growth of the company? What could be changing in 2026 from your perspective?

Cemal, thank you very much for your technical questions. First question regarding the first question, yes, you're right. Our monetary gain declined by TRY 2.4 billion compared to Q3 of 2024. There are certain reasons. One of them is the slowdown in inflation rates. As you know, last year, inflation was in the same period around 8.9%. Now currently, it's declined to 7.5%. Therefore, this is the first reason for the lower monetary gain. The second one and the most important one, as you know, we sold our Ukraine business in 2024. It means that you are taking a significant portion from your balance sheet, especially generating inflationary income in your balance sheet.

Therefore, due to this effect, Ukraine subsidiary sale led to a negative composition against nonmonetary assets. And furthermore, the capital reduction executed in our Netherlands company subsidiary in Q4 in 2024 indirectly led to a monetary loss due to indexation in Q3 2025. Therefore, this is the reasons of this one starting...

Sorry for interrupting, but before passing to the next question, when I look at the -- my question is rather compared to second quarter, what -- I know that there might be changes from quarter-to-quarter, but even what changed from second quarter to third quarter? The inflation is higher, the quarter-over-quarter change. I don't know if you have any justification for the Q-over-Q comparison, the year-over comparison fair. Just if you have any comments before answering the next question.

Normally, from Q3 -- Q2 to Q3, you're asking in 2025. Am I right?

Yes, yes, yes.

As far as I remember, we do not have a significant change regarding the year-over-year side. Yes, the Ukraine business is very important for this one. But Q2, Q3, we do not have a significant change in the inflationary side. But as you know, this -- some of the -- how can I say, in the CapEx side, there are some CapEx amounts are eliminated, as you know, for the 5G side and the 4G side. Therefore, this might affect the inflationary accounting side. But in Q2 and Q3, I do not remember the significant result. But starting from Q2 or Q3, we have started to generate inflationary loss for this year. But for -- starting from 2026, our 5G license amounts and the additional CapEx amounts will be included in our balance sheet, and we will be starting to see significant amount of monetary gain in our balance sheet starting from 2026. But for this year, as I mentioned, the main loss item is coming from the Ukraine sale asset and the inflation rates.

The second question is regarding the TOGG. As we mentioned in our previous calls, there are some problems, especially in the market -- electric vehicle market in 2025. And starting from the Q2, TOGG started to take the necessary actions for the cost optimization. And as you might remember, there are certain changes in the special consumption tax base in third quarter. And this change led to an increase in vehicle prices, which was also supported by the launch of the new model. Therefore, TOGG recorded a moderate improvement in its performance during this quarter. Most probably this improvement will continue in Q4.

Therefore, starting from -- we hope that Q3 2025 would be a significant milestone for the TOGG side. In the coming periods, we are expecting more performance from the TOGG side. But as you know, this is a production investment and there are heavy EBITDA -- amortization expenses of the company. But we are -- we can observe the positive impacts of the precautions that are taken by the TOGG company for this quarter. We hope that this performance will continue in Q4 because you know the new model is also in the markets right now. And there are some extra models are presented to the market, especially 4x for electric vehicles. There are important demand for these cars. Therefore, we will see the positive impact of these actions in the Q4 also.

Regarding the 5G, Cemal, thank you very much for the great question. Yes, 5G era is starting. So starting from April 1, 2026, we are going to launch 5G all over the Turkiye, and it's going to create new value-added services and opportunities. Especially with 5G, a new era of flexible and personalized tariff is the beginning. The age of one-size-fits-all plans is coming to an end. And today, for example, Turkcell serves more than 39 million mobile subscribers, which means 39 million unique tariff possibilities. In this environment, our goal is to maintain the highest level of customer satisfaction by offering plans tailored to each individual's need.

We also aim to accelerate 5G adoption because 5G is going to bring high speeds, lower latency, but we need to -- our customers to have 5G phones. So we also aim to accelerate 5G adoption by supporting device financing and establishing new partnerships with smartphone manufacturers. Following our recent collaboration with Samsung, for example, we have already bought 100,000 5G-enabled devices. We plan to -- which are built in Turkiye, domestically produced A26 phones, Samsung phones. We plan to form similar partnership to further increase the number of 5G-ready phones in the market. Through these initiatives, we will make the next-generation devices more accessible as well as drive broader 5G usage across our customer base.

So in order to give you a brief information about what is the difference between 4G and 5G, 4G technology was designed primarily for people, but 5G opens the door to a world where machines communicate with each other, enabling smart cities, connected factories, smart factories, industrial automation. And as a new value-added services over the next 5 years, we anticipated that the autonomous driving and connected car sectors will gain momentum in Turkiye. During this period, data consumptions and speed requirements are expected to rise significantly. And additionally, similar increases in data demand, speed requirements will emerge across government services as well as logistics, supply chain, smart manufacturing, the energy sector and smart city ecosystem, driven by the adoption of hybrid and private 5G networks.

So stay true that 5G will unlock new revenue opportunities across not only the automotive industry, but also the government services and logistics and energy and smart cities. So as new technologies mature, Turkcell is positioned to be a leading operator, enabling Turkiye digital transformation through 5G and delivering the best and the greatest 5G technology to our customers.

So how we are going to do it is the tender is a solid proof for it. So by securing large-scale 5G frequency resources, we gain a significant competitive advantage in both capacity and the quality because we got the highest frequency spectrum. The wider the spectrum will allow us to deliver superior customer experience in densely populated areas, ensuring high speed, low latency connectivity even under heavy network loads. It also enables us to serve a much larger number of people. So we are going to bring this fixed wireless access customers. We call it Superbox 5G, fiber-like performance. Even if you don't have a fiber, we are going to provide you 1,000 megabit per second speeds with our Superbox 5G-enabled boxes. So even if you don't have your fiber in your house in anywhere you go, we are going to provide the best speeds within a wireless domain, and it's going to give you a huge flexibility and then it's going to come up with a huge efficiency.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you.

Thank you very much for joining us, and I hope to see you in the next quarterly meetings. Thank you very much for attending.

Thank you for joining us. Hope to see you for the year-end results. Thank you.

Thank you.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.

Ladies and gentlemen, thank you for standing by. I am Jota, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's conference call and live webcast to present and discuss the Turkcell Second Quarter 2025 Financial Results. [Operator Instructions]

At this time, I would like to turn the conference over to Mrs. Ozlem Yardim, Investor Relations and Corporate Finance Director. Mrs. Yardim, you may now proceed.

Thank you, Jota. Hello, everyone, and welcome to Turkcell's 2025 Second Quarter Earnings Call. On the call today, we have our CEO, Ali Taha Koc; and CFO, Kamil Kalyon. They will provide an overview of our operational and financial results for the quarter followed by a Q&A session. Before we begin, I would like to kindly remind you to review our safe harbor statement, which is available at the end of our presentation.

With that, I will now turn the call over to Mr. Ali Taha.

Thank you, Ozlem. Good afternoon, everyone, and thank you for joining us today. I am pleased to report that we have once again delivered a strong set of results this quarter. Let me briefly review our overall results and outstanding performances of some key metrics. Our top line reached TRY 53 billion reflecting another remarkable double-digit year-on-year growth of 12%. This was primarily driven by strong ARPU performance and significant expansion of the mobile subscriber base particularly in postpaid domain.

Group EBITDA rose by 15% year-on-year to TRY 23 billion with a solid margin of 43.5%, mainly supported by strong operational leverage. Our impressive operational profitability, coupled with effective financial risk management resulted in net income from continuing operations of TRY 4.4 billion, an increase of 37% year-on-year. The market remained highly competitive throughout the quarter. In response, we took targeted actions where necessary, while staying aligned with our long-term strategic priorities.

As a result of these efforts, we achieved 816,000 postpaid net additions during this quarter, marking our highest net addition in over 5 years, while recording high single ARPU growth. In our strategic areas, we continue to deliver robust performance. Our Data Center & Cloud services continue to scale, posting strong growth of 53%, while our Techfin business also maintained its momentum.

Next page, please. Now I will continue with the operational overview. Competitive dynamics in the mobile market remained in line with our expectations and continued at a similar pace as the past year. As a market leader, we took selective actions in response to competitive pressures, maintaining a dynamic and consumer-centric approach. As a result of this strategy, we added 816,000 postpaid subscribers this quarter, bringing our yearly net additions to 2 million.

Our postpaid share in total mobile subscribers reached 78%, underlying our continued focus on value-added subscribers. Mobile ARPU increased by 9.8% year-over-year, reflecting the impact of expansion of our postpaid base, price adjustments and successful upselling initiatives. Our mobile churn rate was 2.2% this quarter, primarily due to highest volume in the mobile number portability market resulting from intensified competition.

Next page, please. As the premium provider in the mobile market, we remain committed to leading the industry. Our approach extends beyond price competition. We differentiate ourselves through superior network quality, high-speed connectivity and a strong focus on customer experience. Looking ahead, we are firmly committed to 5G to maintain our leadership position. We are closely monitoring the upcoming spectrum tender, while continuing to invest in our best-in-class infrastructure. Our vision extends beyond individual connectivity. We enable digital transformation across devices, cities and industries placing us at the heart of the Turkey's digital future.

Customer focus remains a key pillar of our mobile strategy. We implemented dynamic pricing practices that support both our premium positioning and the rationalization of the overall market. While doing this, we maintain our customer focus, which led to our all-time highest net port during this quarter. Leveraging AI-powered tariff management and segment-specific strategies, we are better positioned to meet evolving customer expectations. We actively address customer pain points and continually enhance our packages to drive higher retention.

Our Smart Control Service now covers nearly half of our postpaid base. Recently, we launched Tumbara, a digital loyalty program that allows customers to redeem their unused packages. The program has already engaged 4 million customers, further strengthening retention and customer engagement. Our strong customer orientation is clearly reflected in our Net Promoter Score, where we led our closest competitor by 17%. Overall, we once again delivered real ARPU growth in the second quarter.

Next page, please. Now let us examine the fixed broadband segment. Our fixed subscriber base remained broadly stable at 3.3 million, impacted by competitive offers from smaller ISPs and higher volume of expiring 12-month contracts. We remain focused on achieving consistent ARPU expansion. In the second quarter, we recorded a 17.5% year-on-year increase in the residential fiber ARPU supported by rising penetration of high-speed plans and increase in 12-month contract share and effective pricing actions.

Notably, the share of high-speed packages increased by 16 percent points year-on-year. As we continue to strengthen our fiber infrastructure, we expanded our footprint with 67,000 new homepasses bringing the total to 6.1 million pure fiber connection. Lastly, an impressive take-up rate of 42.7% highlights our continued focus on fiber subscriber growth.

Next page, please. Next, I would like to briefly discuss on strategic areas, starting with Digital Business Services. Digital Business Services delivered solid growth of 39%, which with revenues exceeding TRY 4.9 billion. This performance was driven by the continued strength in recurring service revenues further supported by a recovery in hardware sales within corporate projects. Our ambition is to build a seamlessly connected digital ecosystem that enhances connectivity. Data Center & Cloud services play a critical role in this strategy. Revenues in our high potential Data Center & Cloud services surged by 53% this quarter.

This exceptional performance reflects the successful monetization of last year's capacity investments and expanding customer base and sustained market demand. As the market leader, we continue to respond to growing demand through our investments. With 2 additional models to be commissioned, we plan to expand our capacity by 8.4 megawatts reaching a total of 50 megawatts by year-end.

Next page, please. Another strategic area is Techfin. In mobile payments, our Paycell business continues to scale with healthy growth in both revenue and transaction volume. Driven by the strong performance of the POS and Pay Later verticals, Paycell recorded an impressive 36% year-on-year revenue growth. In particular, we continue to see rising demand for POS transaction and transactions in digital stores such as Google Play and the Apple Store.

The consumer financing company, Financell, generated TRY 1.3 billion in revenues, supported by loan portfolio expansion through dedicated campaigns targeting small businesses. The net interest margin improved to 4.9%, driven by more favorable funding costs. Lastly, I would like to reemphasize that we have delivered strong results across the board. We expect a moderation in performance in the second half of the year, in line with our initial projections. We forecast year-on-year inflation to be 30.5%. Considering these factors, we reiterate our full year guidance. Meanwhile, we continue to closely monitor macroeconomic dynamics and market conditions.

Thank you. And now I will hand over to our CFO, Mr. Kamil Kalyon, for our financial highlights.

Thank you very much, Ali Taha. This was certainly an exceptional quarter for us. Let's take a closer look at the financial results. We achieved a strong top line performance recording 12.5% year-on-year growth, supported by the strength of our core business and Techfin services. Turkcell Turkiye served as the primary growth engine contributing TRY 5 billion to the top line. This was driven by real ARPU growth and expanding postpaid subscriber base and the continued strong momentum of Digital Business Services.

Our Techfin segment also maintained its growth momentum, generating TRY 547 million, supported by robust performance across all Paycell verticals. On the profitability front, we improved our EBITDA margin by around 1 percentage point, reaching 43.5%. A decline in employee expenses as a percentage of revenue was partially offset by higher cost of goods sold, largely due to increased hardware sales in corporate projects. Other cost items, including interconnection costs and energy expenses and funding costs contributed positively to the margin, enabling us to maintain a more favorable cost structure during the quarter. That said, we expect a higher cost base in the second half of the year, which is already factored into our full year guidance.

Next slide, please. Moving on to profit from continuing operations, which underscores our effective and consistent management execution. Profit from continuing operations rose by 36.8% year-on-year, reaching TRY 4.4 billion. The primary driver of this growth was strong EBITDA generation, totaling TRY 3 billion in the quarter. Despite a highly competitive market, Turkcell has maintained its market leadership as it has consistently done over the past 30 years. Our premium positioning innovative offerings and disciplined expense management once again delivered clear and measurable results. Additionally, prudent balance sheet management and a decrease in FX losses compared to the same period last year contributed to net financial income of TRY 670 million. On the tax side, strong profitability and our taxpaying position resulted in higher corporate tax expenses during the quarter.

Next slide, please. Turning to CapEx management. CapEx intensity for the quarter stood at 16.9%. We remain focused on strategic infrastructure investments in preparation for upcoming technology transitions. Over 80% of this quarter's CapEx was allocated to mobile and fixed networks further strengthening quality and capacity of our core communication services. The base station fiberization rate increased to 43% enhancing our readiness for a smooth and efficient 5G transition in the upcoming period. Additionally, we expanded our high-quality fixed infrastructure by adding new homepasses bringing our service to more customers.

As a reminder, a higher share of CapEx was allocated to data center investments in the first quarter. This quarter, we entered the hardware integration phase for an additional 8.4 megawatts of capacity. In renewable energy, our total installed capacity reached 109 megawatts with around 8 megawatts expected to become operational after securing the necessary permits. CapEx allocation for these assets will be recognized in the second half. Given the seasonal nature of investments, we remain on track to meet our year-end CapEx targets.

Next slide, please. Turning to our strong balance sheet. Our cash position reached TRY 117 billion in second quarter. In June, we paid the first installment of our dividend. Our gross debt stood at TRY 173 billion, resulting in a net debt position of TRY 25 billion at the end of the quarter. As a result, our net leverage ratio rose slightly to 0.3x. We remain focused on keeping it below our long-term target of 1x. By year-end, we are scheduled to repay approximately USD 1 billion in debt, of which USD 854 million is foreign currency denominated. Following the successful Lifecell sales and Eurobond issuance, our liquidity position has strengthened to around USD 3.5 billion, more than sufficient to cover our debt obligations for the next 4.5 years.

Next slide, please. Finally, let's look at how we manage foreign currency risk. The majority of our cash remains in foreign currencies with 87% of our cash holdings in hard currency, providing a natural hedge for 83% of our hard currency debt. At the end of Q2, our FX debt stood at USD 3.9 billion, while FX-denominated financial assets totaled USD 3.2 billion. We also held a derivative portfolio equivalent to USD 574 million. In the medium term, we will maintain our current foreign exchange risk management strategy. Due to high cost, we avoid using cross-currency swaps against the Turkish lira instead focusing on short-term proxy hedging strategies. We proactively manage our FX position, which stood at minus USD 102 million, keeping it our neutral range of plus or minus USD 200 million. Our disciplined risk management approach has reduced the impact of currency fluctuations on our balance sheet and strengthened our overall financial position.

This concludes our presentation. We would be happy to take any questions you have. Thank you.

[Operator Instructions] The first question comes from the line of Singh Maddy with HSBC.

I have 2 questions. The first question is on the fixed concession and the 5G update, if you could share what you have in terms of the latest updates on these and any update on the timing as well.

And then second is on your CapEx target. Just wondering, you said that you are happy for the full year guidance on CapEx as well, given the run rate has been much lower in the first half. So in which areas do you see the acceleration happening for CapEx in the second half, especially?

Thank you very much. Let's start with the fixed concession. The Ministry of Transport and Infrastructure recently indicated an indication to renew the Türk Telekom's concession for 25 years. We believe that a policy framework designed to support infrastructure investments should be inclusive and applied under equal terms. In this context, we see value in broadening such opportunities to also support mobile operators' 5G deployments. As Turkcell, we continue to invest heavily in both mobile and fixed infrastructure and remain committed to contributing to Turkey's digital transformation, ensuring competitive equality and policy decisions will help foster a healthy and dynamic telecom sector for the benefit of all stakeholders.

For the 5G front, we are still waiting for the official time line and details of the 5G tender. However, the Ministry of Transport and infrastructure is going to say that the goal is to make 5G services available by 2026 next year. He also mentioned that the different frequency will be allocated as part of the tender process. We expect actually the regulatory authorities to adopt a balanced approach that promotes technological advancement, while ensuring the industry's long-term investment sustainability. We're always talking with the regulatory body, a well-structured tender process is critical to enabling operators to invest efficiently and effectively and support Turkey's digital transformation.

For the full year, the second question, we plan to increase our investments in telecom infrastructure to enhance our 4.5G capabilities and also reinforce our readiness for 5G because we're expecting that 5G is going to be live in 2026. While continuing our fiberization efforts, we're going to keep on building more homepasses. Accordingly, approximately 65% of our CapEx budget will be allocated to fixed and mobile businesses. Additionally, 13% of the 2025 CapEx is allocated to data center investments. We have also renewable energy investment plans to meet our own electricity demand. To this end, 7% of the 2025 CapEx is allocated to the renewable energy projects.

The next question is from the line of Demirtas Cemal with Ata Invest.

Thank you for the presentation and congratulations for the results. My first question is about the guidance. How do you evaluate the second quarter when we think that -- when we see that the growth is already high in second quarter as well as in first quarter? So still you maintain the same guidance, what is the reason behind that? Could you further elaborate that? Because for reaching 7% to 9% real growth, you need to go down maybe like 5%, 6% in the second half. Could you further elaborate that with some further clarification, it will be helpful?

And the second one is already Turkcell has been a profitable company and has been -- when it's growing. But recently, TOGG project, which is a very important project for the country. But when I look at the details in second quarter, regarding your share of 23% in TOGG, you recorded TRY 1.2 billion loss and when you look at for the first half of the year, TOGG recorded around $226 million loss and when we look at your profit, you have TRY 4.2 billion net income. But if TOGG was not in it, you could have TRY 1.2 billion higher net income.

I know it's a long-term project and it's related to the development and it's like Turkish car, very important. But what -- if I come to my question, how do you see the future of this side? Do you expect this profit -- loss-making to change in the following quarters? Or could -- when we make a calculation for the following years, should we assume similar loss from the TOGG side? I just want to understand more details because currently, it is having a higher impact on your financials. That's why maybe I'm asking a sensitive question.

Thank you very much, Cemal, for the questions. Actually, I'm just going to answer the first question about the guidance. Our strong first half performance gives us some headroom for the year-end guidance. However, given our 12-month contract structure, the positive impact of the price adjustments we implemented in July last year will begin to taper off in the third quarter. And additionally, the magnitude of price adjustment is reduced compared to last year, in line with the inflation. We should also take into account that the high base effect, means that in the Q3 and Q4 last year, we had a strong growth. So from the second half of this last year. Therefore, as we approach year-end, we expect our results to converge closer to our current guidance range.

At this point, we prefer to remain prudent and believe it, it is more appropriate to wait for the third quarter results before making any adjustment to our outlook. Moreover, how inflation will conclude and what path it will follow will also be another variable. Our current guidance based on a year-end inflation assumption of 30.5% which still looks reasonable. By then, we will also have a clear view, and at the end of the third quarter, we will be having a clearer view of the inflation dynamics and market condition. So that's the reason that we prefer to remain prudent and to keep it our guidance.

For the second question, Cemal, thank you very much for the question. As you might observe the automotive industry, not only for TOGG but in Turkish, automotive industry is cyclical and has been under pressure globally due to macroeconomic factors -- due to both of macroeconomic factors and Turkish economical -- some -- regarding these problems impacting the consumer demand. TOGG being a young company will naturally need some time to -- before reaching sustainable profitability. As we are always underlining for Turkcell, this is not an only automobile investment. We see it as a broader step into the e-mobility ecosystem.

As you know, we have already integrated our Paycell payment solutions, our solutions fizy, TV+ into the TOGG ecosystem. As you might be aware, in the near past, the Ministry of Finance had made some taxation regulation change, which will affect positively the automotive industry, especially TOGG in near future. And TOGG management also have taken some measures to manage their costs effectively. I think we will see the results of the positive effects in the half 2. For this year, we are not expecting to generate profit in the short-term side. But in a midterm or long-term side, I think we are very confident that TOGG investment will create a long-term value for Turkcell and for Turkey.

And as a follow-up related to your financing costs, financial cost and financial income, I see some increase from first quarter to second quarter. Could you also further elaborate that we don't see major increase in the currencies or others, but I would like to understand the reason behind some increase on that front? And how should we think for the rest of the year in terms of financing costs plus finance income. Could you just give us some at least indication about that?

Yes. Normally, we have a very strong balance sheet management in Turkcell side, and we are managing our balance sheet and liquidity position very effectively. When you look at our positions, for example, our net FX position is around minus USD 102 million, which you compare with the competitors and our [ market also, ] is very, how can I say, low rate from our perspective. As you mentioned, starting from the year-end, the euro -- especially euro/Turkish lira are very -- devaluated very highly. But then we are looking -- we are using short-term hedge instruments to hedge our FX position, and we are trying to put our FX position -- net FX position in the normal position in order not to affect it from the FX devaluations and higher interest rates.

But as you know, the interest rates are a little bit high with this quarter -- first quarter and the second quarter, but I believe that due to our effective management -- balance sheet management situation, we, for example, recorded a TRY 670 million net income -- positive income to the FX management side. Therefore, we believe that we are managing this side very well properly.

[Operator Instructions] The next question comes from the line of Bystrova Evgeniya with Barclays.

Congrats on results. I have just one question. There were news about Türksat entering mobile market and basically becoming the fourth mobile operator. So I would like to hear maybe your thoughts on that. How do you think this will affect Turkcell competitive position, margins, subscriber base? Basically, if you could please provide any color on that would be very helpful.

Thank you very much for the question. Also -- we have also seen this news in the press. However, we have not seen any statement from the regulatory body or any government entities. While there is currently no clear information regarding this matter, we closely follow all initiatives that may affect the competitive landscape in the Turkish telecommunication market and not in just mobile side as well as in the fixed side. Turkcell has begun its operation in 1994 and has a proven ability to compete effectively in any condition, leveraging on its strong network infrastructure, a customer-oriented service approach, and continuous focus on the innovation and new technology.

Türksat currently doesn't possess actually a mobile network infrastructure. They're always a satellite company and then a fixed cable company. It is clear that building and operating a large scale mobile network requires significant capital and advanced technological capabilities. And I think this is not a process that can be accomplished easily in the short term. So as the market leader in mobile services, we believe that our solid financial structure and as well as our loyal customer base position us well to remain competitive and lead the mobile market in the near future and the far ahead.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turkcell management for any closing comments. Thank you.

Thank you very much for listening and see you next time in the third quarter results. Thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.