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Turkcell delivered record-breaking results for the full year 2025, characterized by 11% revenue growth and a 43.1% EBITDA margin. The company reported its highest postpaid net additions in 26 years, totaling 2.4 million, while mobile ARPU saw real growth of 5.4%. A defining moment for the year was the strategic partnership with Google Cloud to establish a hyperscale cloud region in Turkey, positioning Turkcell as a leader in the nation's digital transformation and AI infrastructure. The company's data center capacity is set to double by 2032, with revenues in that segment expected to grow sixfold. Financially, Turkcell maintains a pristine balance sheet with 0.1x net leverage and continues to reward shareholders through dividends and buybacks. The Techfin arm, Paycell, and the renewable energy portfolio (164MW capacity) further diversified revenue and reduced costs. For 2026, management forecasts real revenue growth of 5-7% and an EBITDA margin of 40-42%, reflecting a heavy investment cycle into 5G rollout and cloud infrastructure. The company remains focused on profitable growth and maintaining its technology-led leadership in the Turkish market.

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Turkcell: Hyperinflationary Accounting and Geopolitical Chaos Obscure Declining Real Performance

Full Earnings Call Transcript — Q4 • 2026-03-05

Operator: 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.
Ozlem Yardim: 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.
Ali Koç: 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.
Kamil Kalyon: 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: [Operator Instructions] The first question is from the line of Bystrova Evgeniya with Barclays.
Bystrova Evgeniya: 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.
Ali Koç: 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.
Operator: The next question is from the line of Demirtas Cemal with Ata Invest.
Cemal Demirtas: 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.
Kamil Kalyon: 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.
Cemal Demirtas: 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.
Kamil Kalyon: 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.
Ali Koç: 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: [Operator Instructions] The next question is from the line of Karagoz Yusuf with Ak Yatirim.
Yusuf Karagoz: 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?
Kamil Kalyon: 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.
Operator: 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.
Ali Koç: Thank you very much for listening. Hope to see you next time. Thank you.
Kamil Kalyon: Thank you very much.
Ozlem Yardim: Thank you, bye.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.