Ladies and gentlemen, thank you for standing by. I'm Constantinos, your chorus call operator. Welcome, and thank you for joining the Turkcell conference call and live webcast to present and discuss the Turkcell second quarter 2022 financial results conference call. All participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Ali Serdar Yağcı, Investor Relations and Corporate Finance Director. Mr. Yağcı, you may now proceed.
Thank you, Constantinos. Hello, everyone. Welcome to Turkcell Second Quarter 2022 Results Call. Our CEO, Mr. Murat Erkan, and our CFO, Mr. Osman Yılmaz, are going to be delivering a brief presentation, and then we'll be taking your questions. Before we start, I would like to kindly remind you to read the last page of the presentation for our safe harbor statement. Now I hand over to Mr. Erkan.
Thank you, Serdar. Good morning and good afternoon, everyone. Welcome to Turkcell Second Quarter Result Call, and thank you for joining us. Despite prevailing global uncertainties and unprecedented macroeconomic challenges, we accelerated our performance with a strong business momentum in the second quarter. We generated revenue growth of 46%, enabled by timely price adjustment, a growing subscriber base in Turkey, and supportive performance of strategic focus areas, especially TechFin and digital business services. EBITDA reached TRY 5 billion on 45% growth, indicating an above 40% EBITDA margin. Owing to a dedicated pricing and cost management focus, net income was TRY 1.9 billion on 67% year-on-year growth. In a rationalized market, we continued to make strong total net add of 579,000 in Q2, of which 75% was mobile postpaid, further centering our market leader position.
Along with rising cost pressures, we continue to adjust our prices. As you may recall, we were proactive in making price adjustment last year starting from December and continued to take repricing action in March and June. In line with the plan to extend our fiber footprint and meet higher speed connection demand, we have reached 284,000 new homes, topping 5 million home passes in this quarter. Considering our improving financial performance and expectation for the rest of the year, we upgrade our 2022 full year guidance. I will talk about the revision in detail following pages. Let's move to the next slide and take a look at our operational performance in mobile. With the continued normalization in the post-pandemic period and support of increased tourism activities, we have seen increased mobility in the second quarter.
In line with our focus on valuable customer reach and on switching our customer to postpaid plans, we will gain 437,000 postpaid subscriber, bringing the postpaid share in the mobile base to 67%. On a year-on-year basis, the easing of pandemic measures boosted touristic inflow, whereby we gained 45,000 prepaid subscribers. Starting with this quarter, we began to reap the fruit of the timely and consecutive pricing actions supported by the continued upsell effort. Blended mobile ARPU ramped up 33% year on year, 13 percentage point above the previous quarter. Given the ongoing inflationary pressure, we once more adjusted our prices in June. With the sustained market rationalization, contraction in the mobile number portability market has continued.
In addition to this, in the normalized post-pandemic period, our customer-oriented focus has helped us to keep the churn rate at 1.8%, below the long-term healthy level of 2%. Lastly, as also evident in the net add performance, a well-invested network infrastructure and a positive customer experience ensure a sustained wide gap in NPS score between the second best. Next slide. Even though the tailwind of pandemic demand in the fixed broadband has eased in the normalization period, with our focus on high speed plans and customer experience, our fiber subscriber continued to grow with 55,000 net additions. In June, we focused on new plans with the higher speed of 1,000 Mb. This further supported our vision of high speed and quality offering with higher ARPU levels.
We are pleased to see strong demand for our IPTV services with 6,000 net addition. Overall, IPTV penetration in our fiber base has reached 67%, rising 5 points year on year. In the second quarter, ARPU continued to grow with the pricing action for the both new and existing subscribers. The focus on price adjustment and upsell to higher speed packages has supported ARPU growth of 23%. On the churn side, the fiber churn rate of 1.1% was not much affected despite the price increase, thanks to our superior fiber service quality and higher speed offers. Meanwhile, we managed to keep fixed churn rate at 1.4% level. In line with our plans, this quarter we added 284,000 home passes. Those in the first half will reach around 60% of the yearly plan of 800,000 additions.
Given the accelerated rise in our fiber footprint, our take-up rate slightly decreased to 42%, yet still remain well ahead of the competition. We expect the take-up rate to temporarily continue its slight decline over the next few quarters with the acceleration in new home passes. Next slide. Now in the next two slides, I will go through our action in the strategic focus areas. Let's start with our digital services and solution with, which represent 4% of Turkcell revenues. The standalone revenue of digital services and solution rose 23% year-on-year, where we reached 4.5 million standalone paid users. Digital OTT services revenue, which include core OTT services, rose 56% year-on-year. On the TV+ side, our healthy operational base continued to grow. OTT TV subscriber reached 879,000, up 24% year-on-year.
Lifebox, our cloud storage platform, reached 1.6 million subscribers on a solid rise of 51%. Number of three-month active user in BiP was above 23 million. We continue to strengthen our collaboration with credible partners. One such partner, Trendyol, a popular e-commerce platform in Turkey, has preferred to use BiP in order to communicate with its business partners. Furthermore, we launched İşte Suit platform, which allow user access to our cloud storage, email, and video conferencing solution in a single package. Our digital business services, which represent 9% of Turkcell revenue as of Q2, registered solid year-on-year growth of 85%, representing 12% of the DBS revenues. Data center, cloud, cybersecurity, and business application services were among the strong growth drivers and on average, their revenue almost doubled on the yearly basis.
Continuing its revenue growth pace, system integration project has a backlog of TRY 1.7 billion, which is set to contribute the top line in the upcoming quarters. Next slide. Third is our focus on TechFin, which saw a strong quarter of 71% yearly revenue growth. Paycell, the innovative payment service platform, registered another remarkable quarter, delivering 78% year-on-year growth. EBITDA rose 80%, marking 45% margin. Increasing traction in digital payment habits continues. Total transaction volume tripled year-on-year, while three-month active Paycell user rose 26%. The leading service, Paylater, saw its transaction volume more than double, thanks to increased user base and usage. The transaction volume of Paycell Card, being the second strongest performing vertical, rose six-fold. POS services transaction ramped up 39% quarterly, with increasing contribution of new account in virtual POS.
Additionally, our Android POS exposure in the market sustained its ambitious growth pace, reaching 12,000 devices. Moreover, Paycell is acting as a marketplace for the gold, silver, and platinum purchase of its customers, as well as for consumer loan offers. Financell customers' technological needs, Financell revenue rose 65% on the surging loan portfolio, higher average interest rate, and the contribution of insurance business revenues. The total loan portfolio rose to TRY 2.5 billion in Q2, up 41%, driven by high mobility and focus on the corporate segment. Lastly, to recall, we established an insurtech company in June to provide innovative insurance products. Furthermore, we applied to the banking regulator to incorporate a digital banking company, which will complement our existing activities in financial services and leverage our existing risk management capabilities. The next slide.
Now, let's take a look at our performance in the international markets. Turkcell International segment grew by 76% year-on-year, positively impacted by currency movements. Despite the ongoing war, Lifecell grew by 5% yearly in local terms, mainly with an increase in the international connection. Thanks to effective cost management, the EBITDA margin improved by around 2 percentage points to 58% as of Q2. We reported TRY 204 million impairment in our Ukrainian business in relation to the asset in the occupied regions. The contraction in BeST revenue continued due to reduced handset sales. Yet the contraction in handset sales positively impacted the EBITDA margin, which grew to 27%. To the next slide. I would like to touch upon our action on the ESG front in the first half of the year. We continue taking significant steps towards our sustainability targets.
To clearly define a pathway to reduce greenhouse gas emission and contribute to Paris Agreement goals, we have submitted our commitments in science-based target, which underlines our dedication to environmental sustainability. In the first half of the year, we collected 4 tons of e-waste through the Recycle into the Education project, made 56 GWh of saving with several energy efficiency projects. As a socially responsible company, we focus inclusively, regardless of their age or gender. Accordingly, in order to increase the number of women in the Turkcell group workforce, we aim to increase the women employee share and women manager share by 2030 to 40% and 28%. Respectively, we believe we are on a good path as of today. On the governance side, we introduced the board of director diversity policy.
Also, sustainability transformation kicked off in the supply chain, and our sustainability training was assigned to employees at Turkcell stores. Underlining our dedication of guiding the ecosystem, we released our second integrated annual report, which enables us to present environmental, social, and corporate sustainability information in a more holistic and transparent way. The next slide. I would like to end my presentation by sharing our new guidance for the full year of 2022. Taking into consideration our improving second quarter performance and better visibility of the second half, we have revised our guidance upwards. Accordingly, we raise our revenue growth to above 40% and EBITDA guidance to around TRY 20 billion. On the CapEx side, we maintain our previous guidance of 20%-21%.
Please note that these expectation do not account for the implication of a likely adoption of inflationary accounting in the future. I will now leave the floor to our CFO, Osman.
Thank you, Murat. Now let's take a closer look into the financial performance. This quarter, group revenues rose 46% year-on-year, corresponding to an incremental rise of TRY 3.9 billion. TRY 2.9 billion of this increase came from Turkcell Turkey, thanks to an expanding subscriber base with a higher post-pay share, accelerated ARPU growth driven by price adjustments to reflect inflation, and continued momentum in digital business solutions. Growing 96% yearly, wholesale revenues were another factor supporting the top line growth. International subsidiaries contributed TRY 640 million to the top line in the second quarter. Even though local currency growth of Lifecell was depressed by the ongoing war, its top line grew by 84% in TL terms due to the positive FX impact. TechFin segment performed relatively strong in this quarter, registering 71% growth.
Traction in mobile payment and POS solutions were instrumental in Paycell's 78% revenue growth. Scaling up loan portfolio and higher average interest rates were the main drivers of 65% yearly growth at Financell. The improvement of other segments contribution on a yearly basis was mainly thanks to an increase in equipment revenues. Next slide. Now, some highlights on EBITDA development. EBITDA rose by 45% year-on-year to TRY 5 billion. Given the macroeconomic challenge, I am glad to say that with our focus on OpEx management, we experienced just a slight contraction in EBITDA margin. Radio expenses adversely impact the EBITDA margin by 1.8 percentage points as a result of increasing energy prices. On the other hand, lower growth of cost of goods sold and employee expenses compared to top line growth had positively impacted the margin.
Decreasing interconnection costs also supported the margin mainly as a result of regulatory changes. Turkcell International also made a strong EBITDA contribution thanks to lower interconnection and S&M expenses. It's worth noting that this quarter we continue to register strong customer addition while keeping marketing expenses under control as percentage of revenues. Next slide. Now more detail on our free cash flow generation. Despite the strong EBITDA generation of TRY 5 billion, we had a negative free cash flow of TRY 235 million. In addition to capital expenditures, the main cash outflow impact came from the change in working capital. Expanding subscriber base and strong momentum in large digital business services projects which have longer collection periods, resulted in higher trade receivables. To remind, starting from the second half of last year, our finance company's portfolio has been expanding, inevitably driving up receivables from financial services.
Lastly, we also made advanced payments to our suppliers during this quarter. Our free cash flow performance is expected to improve in second half as collections from enterprise sales accelerate and CapEx advances will set off gradually. Next slide. Let's take a closer look at our CapEx management. We are following a tighter policy to remain more cautious considering current macroeconomic conditions. As we have emphasized in the past quarters, in recent years, we have made front-loaded investments in our mobile segments, which are more sensitive to FX movements. This has enabled us to have more comfortable and foreseeable investment plans for 2022. In line with our strategy, we keep focusing on fixed segment investments as fiber penetration lags behind OECD average and demand is strong in general. As previously mentioned, we added 284 ,000 home passes to our portfolio in this quarter.
In Q2, our operational CapEx to sales ratio was at 16.4%, which brings the last 12 months figure to 18.6%. On the fiber front, while CapEx intensity continues to increase, it will normalize as we ramp up monetizing the new home passes. All in all, we are progressing in line with our plans, despite all negative developments in currency. Next slide. Now a few words on our balance sheet. As of the second quarter, our gross debt position increased to TRY 48 billion, mostly as a result of currency movements, whereas our cash position reached TRY 22 billion with some positive FX impact as well. We continue to keep vast majority of our cash in hard currencies. Excluding FX swaps, 72% of our cash is in U.S. dollars and 18% is in euros.
This cash position covers our debt service until 2025. Despite the FX driven increase in the net debt, our net leverage remained at 1.2x, thanks to strong EBITDA growth. We still remain below our long term target of 1.5x. Next slide. Lastly, I'll go into the management of FX risk. At the end of Q2, we had around $2.1 billion equivalent of FX debt on our balance sheet and $1.1 billion cash and cash equivalent position. Additionally, we had $731 million derivatives portfolio. Overall, we are in a short net FX position of $150 million, which is in line with our neutral FX, net FX definition of ±$200 million. We monitor market conditions and manage our derivative portfolio dynamically.
It's not yet possible to claim that market conditions are reaching feasible levels conducive to execute long-term hedging instruments. Therefore, we continue to utilize short-term hedging instruments that provide us protection independent of currency fluctuations. This concludes our presentation. Now we can start Q&A session. Thank you.
Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Moewes Till with Schroders. Please go ahead.
Hello. Thanks for my question, and congratulations on the results. First question would be on your cash flow statement. You have significant spending here on the acquisition of intangible assets. Can you explain that a little bit and how you see it going forward? If you could also provide us with an outlook for free cash flow for the full year 2022, that would be great. The second question relates to Ukraine business. Do you have any thoughts there on capital controls, and do you see a shift towards everyone using the largest network, Kyivstar, given the situation there? Lastly, you have a really good take-up rate for your fiber.
42% seems strong by international standards, yet your pricing power seems to be less than what you achieve in mobile with fiber ARPU growing by 23%. Why is this? Can you explain a little bit here, what this process do with promotions or lower price entry offers? Yeah, that would be it. Many thanks and congratulations again.
Till, thank you very much. Let me start from the fourth question regarding fiber pricing. Obviously in Turkey, for the fixed line side, we are not the market leader. The market leader is incumbent, so they are driving the fixed line or broadband pricing as well. Even though we are challenger in the fiber pricing side, we have minimum 20% ARPU premium versus incumbent. This comes to our fiber superiority, customer experience, and so on. On the other hand, for the fiber side versus mobile, the fixed broadband side usually is 24 months contract. To be able to catch the inflation, you know, minimum 12 months to in your average.
It is not easy to catch by price increase as well. I think on the fixed broadband side, it's gonna be growing in terms of ARPU, but it's not going to happen as if it is mobile because of the nature of the contraction, which is 24 months. Regarding Ukrainian business, to be honest we don't see any capital control and/or regulatory control on our side. Luckily, we did invest on the strategic area of Ukraine. We haven't seen any shift to the other networks at all. As you probably recall, in Ukraine, there's a national roaming between three operators, and everybody is sharing their infrastructure between each other. I think we have fair share in this network environment. For the second and first question, I think Osman can take the questions as well.
Thank you very much, Murat Erkan. For the first question, significant acquisition of phone assets. Actually, we have a CapEx amount of TRY 1.5 billion in nominal terms in Q2. Despite it is high in nominal terms, you know, we have a CapEx intensity guidance of 20%-21% since the beginning of the year. Our first half CapEx intensity remains below 17%. It is 16.8%. So despite the nominal amount seems high, our CapEx intensity is below our target. Keep in mind that we had 34% lira depreciation in the first half, almost 30% depreciation in lira versus U.S. dollar in the first half. Seventy percent of our CapEx capital expenditures is in hard currency.
Despite that, we managed to keep our CapEx intensity even below our guidance. Inevitably, you know, there is a seasonality in telco business. CapEx usually accelerates in the second half, in summer months and going into the end of the year. We're gonna have a higher CapEx intensity, and we are comfortable with our CapEx intensity guidance of 20%-21% this year, if unless we see a sharp, another sharp depreciation in Turkish lira. For the free cash flow outlook question, actually, the first half of the year, besides the usual seasonality in our free cash flow generation, we had other one-off impacts, factors which impacted our free cash flow generation negatively in the first half.
You know, in telco business, in Turkey, seasonally, we do our CapEx intensively in the second half, and the payments with regards to this are made in the first and second quarters of the year, which is negative in terms of working capital change. In addition to that, our enterprise business grew more than our expectations in the first half, which increased our trade receivables by about TRY 1 billion. Going into the second half of the year, we will have collections from these operations, which will improve our free cash flow generations from working capital perspective.
In addition to that, we made advance payments to our vendors in the first half, and the main reason behind this was to fix exchange rate, so that we wouldn't be impacted from unfavorable movements in Turkish lira. These advance payments are set off gradually going into the second half. This will be another factor impacting our free cash flow positively in the second half. We wanted to put this diagram in our presentation to give you more details about free cash flow generation. I can comfortably say that we're gonna have a better picture of free cash flow generation into the second half of this year.
All right. Great. Thank you. Where do you think are you going to end net debt then at the end of the year, and under which currency assumption?
In terms of leverage, we will be around the existing level of 1.2x. Of course, we're gonna have a higher cash flow generation, but we made a dividend payment in July. Accelerated investments will balance our leverage for the remainder of the year. Another factor to keep in mind is lira performance. You know, every 10% depreciation in lira, keeping other factors constant, negatively impacts our leverage by 0.1x. The lira performance will also be a determining factor on our leverage.
Great. Thank you so much, and congrats again.
The next question is from the line of Jason Fairclough with Bank of America. Please go ahead.
Hi, good evening. Thank you so much for the presentation. I have a couple of questions on your revenue. Firstly, does your revised guidance assume another price adjustments in the second half of this year? Secondly, maybe if you can comment on revenue growth trends that you've seen in July. Thank you.
First of all, obviously, the inflation is still going on higher level. We are planning to add another price adjustment in the second half, probably next month or so, before the you know back-to-school period. For the revenue trend, growth trend, to be honest, it is. We feel quite okay on the revenue side, but the thing that we don't know is regarding the war in Ukraine. Because Ukraine is our one biggest operation for the international segment. We would like to see more detail on the war side in Ukraine. We hope to finish the war and then we get things clear because we see the positive momentum in Q2.
It gives us little bit comfort in during to Q3. This is our, you know, strong tourism season. It gives us also another good indication and rising demand for the data services as well. But only consideration is probably the war side. We hope that the Ukraine and Russian war will get ease.
Thank you.
Thank you.
As a reminder, if you would like to ask a question, please press star one on your telephone. The next question is from the line of Zaczkiewicz Daniel with Barclays Investment Bank. Please go ahead.
Hi. Thanks very much for the call. I just have a question on some of the restrictions the government's recently introduced on borrowing in liras. Do you see any impact on the way you run your business? Thanks very much.
Okay. Let me give the floor to Osman to respond to this question.
Actually this new legislation introduced by BRSA impacts some of our businesses, mainly Turkcell Turkey operations. Especially in Turkcell Turkey, our mother company, we hold a significant amount of hard currency cash. There are two reasons behind it, you know. First is to hedge against our foreign currency liabilities and to keep a liquidity buffer on our balance sheet. We are comfortable in our other subsidiaries, and we don't see any limitations in terms of access to borrowings. We are not much impacted by the recent legislations. Overall, funding costs in the market have increased sharply. This might put additional pressure on financial expenses into the second half of the year.
Okay. Thank you very much. Are you currently not able to borrow additional amounts in Turkish lira, or is it just the amount you can borrow is limited?
Actually, only one of our company, Turkcell Turkey, is not able to borrow fresh Turkish lira from domestic banks due to restrictions. There are other ways to generate Turkish lira funding. Actually, we are comfortable in terms of lira funding until the year-end. That's not a big concern to us.
Great. Thanks very much.
Once again, to register for a question, please press star one on your telephone. 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. Thank you all.
Thanks for joining. We hope to see you in the next quarter.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.