Earnings Call: Q2 2021

Aug 12, 2021

Ladies and gentlemen, thank you for standing by. I am Gail, 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 2021 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. At this time, I would like to turn the conference over to Mr. Ali Serdar Yage, Investor Relations and Corporate Finance Director. Mr. Yagze, you may now proceed. Thank you, Gerdia. Good morning and good afternoon, everyone. Welcome to Turkcell's Q2 2021 results call. Today's speakers are our CEO, Mr. Murat Ercan and our CFO, Mr. Osman Yumaz. We have a brief presentation and Afterwards, we'll be doing Q and A. Before we start, I would like to kindly remind you to review the last page of our presentation for our safe harbor statement. Now I hand over to Mr. Ekan. Thank you, Alisarba. Good morning and good afternoon. Thank you for joining us today. Before we dive into the results, I would like to extend my condolences to every country, including our own behalf, Turkey, that is fighting wildfire disaster and flood recently. The world is dealing with 1 of the most severe of HeatWave, which underlines the importance of addressing climate change under a focused sustainability strategy. In the Q2 of the year, we accelerate our outstanding performance, delivering robust operational and financial results. We recorded 3.5 percent revenue growth and EBITDA reached TRY 3,500,000,000. Net income was TRY 1,100,000,000 on 31% year on year growth. Despite prevailing pandemic condition, this performance was enabled by customer centric strategy, a diversified business model and digital ecosystem with high value offers. All this was possible due to remarkable subscriber base growth of 617,000 and double digit ARPU growth in mobile and fiber residential segments. Additionally, our strategy of privatizing our digital channel has helped us during the Q2, whereby their share in our sales reached 18%. To note, we distributed the 1st and second installment of the 2020 dividend on April July 13, and the last installment plan to be distributed in October. Our outstanding results and our expectation for the second half have led us to upgrade the full year guidance. Next slide. Let's take a look at our operational performance in the Q2. In the mobile business, With our continued focus on postpaid segment, the base grew by 501,000 and the postpaid share reached 66% of the total on a 3 point rise year over year. Going forward, we aim to keep our postpaid focus and further increase the postpaid share. Despite the lockdowns in May affecting acquisition and churn numbers, After the ease of pandemic measures in June, we gained strong momentum in net addition through increased mobility. Additionally, our customer centric approach and AI based analytical capabilities were instrumental in the retention. As such, our mobile churn rate was 1.7%, the lowest level of the past 3 years. Blended mobile ARPU rose to 52 TL on a 14% increase, thanks to a larger postpaid subscriber share. Price adjustment, upsell to higher tariffs and higher data usage. Our mobile ARPU level is 12% and 22% higher than the competition, Enabling a rational pricing environment in the market, we expect double digit ARPU growth for the remaining parts of the year. In the fixed broadband segment, strong demand has continued under prevailing mobility limitation. We made 40,000 fiber subscriber addition with our high speed fiber Internet offers. Our focus on fiber customer will continue. We are pleased to register a further 40,000 net addition to our IPTV subscriber. Having reached the homes of 961,000 customers, We now offer this service to 62 out of every 100 households amongst our residential fiber customers. Fiber residential ARPU rose to TRY 77, 11% growth, mainly on our upside efforts, of demand for higher speeds and price adjustments. As a challenger operator in the fixed broadband market, our ARPU level is 21% above the income. Next slide. Next, an update on the data usage and for our healthy subscription trends. Average mobile data usage rose 15% year on year to 13.4 gigabyte per user. Recall that last year for this quarter, mobile data growth was the record high of the previous 8 years. The lockdown period in the quarter also affect growth. This quarter's data growth is reflected on mobile ARPU growth, which indicates that we are monetizing the usage trend. Out of 33,000,000 customers signed up for 4 and half gs services and around 70% have for our 4 gs compatible smartphones, still indicating significant growth potential. Overall smartphone penetration is at 84% with 92% of these being 4.5 gs compatible. Next slide. We recently launched Turkcell Digital Ecosystem, which reunites all digital enterprise services under a digital ecosystem roof. An individual who uses any of our digital services We'll be served as a Turkcell customer regardless of the operator they use. We aim to serve all customer within our digital ecosystem with the TD Turkcell customer experience and technology. The satisfaction point accepted by all of our customers is our well invested, high quality network and strong infrastructure. This quarter, our AI based retention strategy led us to reach the right customer at the right time with the right target. An extensive distribution channel of almost 6,000 points nationwide and our digital channels that are tailored to customer needs are instrumental in customer decision making. As we invest further in the relationship with our customer, We are happy to see their appreciation. Customers have continued to recommend Turkcell to a significantly higher degree than the competition as confirmed by our Net Promoter Score. Next slide. Now our strategic focus areas. Let's start with our digital services. The stand alone revenue from digital services and solution Continued its strong growth at 32% year on year, reaching TRY 404,000,000. The paid user base reached 3,400,000, up 800,000 on last year. Our messaging platform reached 82,000,000 downloads and has 26,000,000 active users. More than a quarter of active users are being abroad. Since we have added the ability to move chat and the groups from other platform, 2,000,000 chats have been imported to date. It has also been a good quarter for our TV business. The churn level for mobile TV product is half that of last year. STV Plus has the best user experience, of price and content equation. In the big segment strategy, we are now in almost every smart TV produced over the past 4 years. And for those that we have not integrated, we offer TV plus rated devices. We are delighted to have reached a remarkable milestone for our personal cloud application lifecycle As the standalone paid user base has exceeded 1,000,000. Consistent improvement on user experience, New features and collaboration have increased the app's user base. As communicated last quarter, We have launched the B2B business model of our digital services with the evident demand from the market. As the demand for remote working and education continues, we are ready to serve cooperation with our local services and aim to be a part of this digitalization process. Next slide. Next are our Digital Business Services. Revenues from Digital Business Services rose 22% year on year to TRY 618,000,000. We signed 678 new contracts with a total contract value of nearly of TRY 117,000,000. TRY 917,000,000 TRY 917,000,000 system integration project Backlog is promising for the periods ahead. By rendering our latest data center operational This quarter in Cholu, we further sustained our leadership of data center and cloud business. Recently, we have launched a new interface for our cloud services, which enables our customer to make their own configuration. We have introduced our customer to a variety of new services. On cybersecurity vertical, we have focused on fraud prevention for financial institution and strengthening firewall services. Tersk RPA was developed for the automation of robotic process. On IoT vertical, We launched smart utility management solution. These services will continue to assist corporates in their end to end digital transformation journey. Next slide. 3rd is our Techfin focus. Technic services revenue for the quarter rose to $240,000,000 on twenty 4% year on year growth. The contraction trend in finance sales revenue has eased of this quarter And year on year revenue are flat due to the balanced loan portfolio and higher interest rates. Paycell saw another remarkable quarter, topping 5,500,000 active users. The company has seen 78% year on year growth on the back of traction in mobile payment solutions, especially for its buy now, pay later products. Mobile payment transaction volume nearly doubled to TRY 418,000,000, Whereas Paycell card transaction volume grew 3 fold year on year. Finansel is the market leader in micro loans segment with a 20% share. It differentiates with a robust credit scoring system that produce An instant result with a much higher approval rate than the banks. Aiming to serve all Turkish customer, Finance has started to provide financing solution to Turkcell's fast growing corporate segment, almost reaching of 4,000 clients today. With this strategy, we aim to keep our focus on our product or service while providing the financing from a specialized company. This will improve risk management and balance sheet receivable with more transparent. Next slide. Now a few words on the performance of our digital channel. Digital channels play an integral part in providing our services 20 fourseven, even in extreme situation like complete lock Due to digitalization, our customer is among our top priorities. From the digital operator application, A customer can top up Turkish lira, purchase data packages or smart devices from our Extensive portfolio, while even a non Turkcell user can apply for a subscription. As such, There were 23,000,000 active digital operator users, which we refer to as digital users. Even though we have currently witnessed limited acquisition through digital platforms, the numbers have doubled year on year. Notably, data plan purchase and Turkish laptop up transaction volume over this platform were even higher for the quarter at 1.9x. Overall, with a 6.5 percentage point increase, the share of Turkcell Turkey's Consumer sales generated on these digital channels have reached 18% in the 2nd quarter. Next slide. Let's take a look at our performance in our international business. Turkcell international revenues has reached 10% of consolidated revenue, grew of 45% year on year. On the back of flourishing Ukrainian business and the positive impact on currency movements, Excluding the currency impact, the segment has an organic growth of 24%. LiveCell Ukraine revenue grew by 26% in local terms. This was driven mainly by subscriber based growth, Higher data consumption and corresponding solid R2 growth was 17%. Mobile subscriber reached of 8,400,000 on 11% year on year growth. Next slide. Now for an update on our e mobility initiative, Turkey's Automobile Project TOK. TOK has received one of the world's most prestigious design award, the IF Design Award for its fully electric SUV model. As production facility construction continues at full speed and the 1st SUV model vehicle is planned to roll out in the last quarter of 2022. In July, as a milestone, the company assembled the 1st body entirely made of domestically produced parts. As the company present opportunities in e mobility, a field we are also exploring, it has the potential to be the next strategic focus area for Turkcell. In line with this, in June, we announced increasing our stake in TOK from 19% to 23%. Considering the existing and potential synergies we talked, We believe that this investment has the potential to be value attractive for Turkcell Group in the medium term. Next slide. I'd like to touch upon our action on the ECG front in the Q2. Our subsidiary Turkcell Energy recently acquired a wind power plant located in Izmir with an 18 megawatt capacity. Furthermore, we installed solar panels at Chorlu data center. These investments are aimed to aim at fulfilling our commitment of energy procurements exclusively from renewable source by 2030. As a socially responsible company, we established Turkcell's sustainable governance principles. These principles underline our commitment to ethical behavior, human and children's rights and environmental sensitivity in our relations with our employees, customers and vendors, shortly within the Turkcell ecosystem. This year, we designed an AI based fresh graduate recruitment interview process, where we are only focused on the talent of the applicant. To note, this year, we welcome more women graduates than men. Lastly, we are in solidarity with disaster victims and heroes who are fighting the wildfires in southern Turkey. We have donated saplings, provided free data and voice packages, Set up mobile base station and build veterinary hospital with a local NGO in the region. Nature Conservancy is not only a disaster related action in Turkcell as we have donated thousands of step in to various campaign to date. Next slide. I would like to end my presentation by sharing our new guidance for the full year of 2021. Taking into consideration our healthy first half performance and our expectation for the remainder of the year, We revised our guidance upwards. Accordingly, we raised our revenue growth to around 18%, Still aiming for a real revenue growth in high inflationary environment. We revised our EBITDA expectation to around TRY 14,300,000,000. We expect to register an operational CapEx Our sales ratio of between 21% to 22%. The strong nationwide demand for fiber has led us to increase our home pass plan to $600,000 for the full year. Our CapEx expectation is also affected by the demand arising from of strong operational performance in Ukrainian business and FX fluctuation. I will now leave the floor for our CFO, Osman. Thank you, Muratve. Now let's take a closer look into our financials. Our performance in the second quarter was standing and resulted in an SEK 8,500,000,000 top line on an accelerated 23.5 percent growth year on year. Despite the strict COVID-nineteen restrictions, we were able to generate 9% quarter on quarter growth. For the first Half of the year, top line growth exceeded 20%. Our EBITDA reached TRY 3,500,000,000 on a to 2.7% increase with a 40.5% margin. Our CapEx to sales ratio rose to 24.5% in Q2 due to advanced capital spending in line with our plans. We registered a net income of TRY 1,100,000 on a 30% rise in Q2. As we disclosed last week, pursuant to Tax Law No. 7,326, we have restructured our tax assessment for the years 2017 2018. Another article of the same law allows us to revalue a part of our fixed asset investments based upon domestic PPI. The impact of the letter has more than compensated to the former. Next slide. Now some details on revenue development. In the Q2, group revenues rose 23.5% year on year, corresponding to an incremental TRY 1,600,000,000. Of this increase, TRY 1,000,000,000 drives from Turkcell, Turkey. This was a result of the strong ARPU and net debt performance mainly in the postpaid base. Turkcell international revenues rose 45% year on year, thanks to strong lifestyle operational performance and the positive impact of currency movements. Our Techfin segment contributed TRY 47,000,000 to the top line fully driven by PESAR revenues. Other segment grew by 42.1 percent, contributing TRY285 1,000,000 in this quarter on the back of higher equipment sales supported by digital channels. Next slide. Group EBITDA rose 22.7 percent year on year to TRY 3,500,000,000 driven mainly by strong top line growth. The EBITDA margin slightly decreased to 40% in Q2. The factors affecting the change in EBITDA margin, a gross margin decline of minus 0.9 percentage points, triggered mainly by increasing equipment sales and OpEx increase of minus 0.3 percentage points, mainly due to the marketing expenses that had been suspended during the COVID-nineteen lockdown period, decrease in doubtful receivables of +0.9 percentage points, thanks to better collection performance. Rising 49% year on year, Turkcell International EBITDA made a higher contribution at the group level. Strong operational performance and cost measures in our international subsidiaries, coupled with the FX impact, were instrumental in this performance. Next slide. Now I would like to talk about our balance sheet and leverage details. As at the end of Q2, our cash position decreased to TRY 12,400,000,000 from TRY 13,500,000,000, mainly due to an TRY 860 million dividend payment and TRY 1,600,000,000 debt repayment. In Q2, currency movements led to a TRY 763,000,000 increase in total debt and a TRY 265,000,000 rise in our cash position. As a result, our net debt position slightly increased to TRY 11,600,000,000 from TRY 11,400,000,000 with a 0.9x leverage ratio. Excluding the financing business, this was at 0.8x, at the same level as the previous quarter. Around the US1.3 billion dollars equivalent cash position covers our debt service until 2025. Next slide. Now I will go into the management of foreign currency risk. We continue to hold the bulk of our cash in hard currency as a natural hedging tool. With hedging instruments in place, the share of FX debt declined from 80 3% to 51% as of Q2. We are in a long net FX position of US146 $1,000,000 as at the end of second quarter. Going forward, we continue to target a neutral to lung FX position. Next slide. Let's take a closer look at our FinTech Company's performance and firstly our financing business Financet. The contraction trend in finance asset revenue has eased off this quarter and revenues are flat year on year due to a balanced loan portfolio and higher interest rate revenues. EBITDA rose by 15 percent to TRY 87,000,000 with a margin of 65%. The improvement in collection performance and the sale of doubtful receivables led to the rise in EBITDA margin. All in all, the cost of risk has reached 0.2% level, thanks also to the sale of doubtful receivables in Q2. Net income increased 44% year on year to TRY 68,000,000, driven mainly by a TRY 50,000,000 dividend payment from Paycell, strong operational performance and the lower FX loss after hedging. Next slide. Our payment services company, Paycell, continued its momentum on 78% yearly revenue growth. The demand for digital payments has been rising rapidly as payment habits change. Paycell is well positioned to meet this demand with its diverse range of services and solutions. In fact, Paysat's 3 month active users reached 5,500,000. Mobile payment transaction volume nearly doubled in this quarter to KRY 418,000,000. Additional to rising demand, The increased usage of buy now, pay later product is instrumental in this growth performance. In Q2, Paycell card transaction volume quadrupled to TRY 300 in the field year on year. We position Paycell Labs as a super app that meets daily financial and payment services needs of its users. Additional to our services, we act as a financial marketplace providing digital content and e commerce products. In Q2, we had collaborations with game platforms to sell game tokens through the Paypal app. There are numerous items of legislation in the pipeline. Digital ID Recognition, Fast and EVAN Regulation, a joint QR initiative, digital banking and open banking regulations We'll support the various verticals of Paycell for future growth. Paycell supporting the overall strength of Turkcell Group is set to sustain its strong momentum over the coming quarters. This concludes my presentation. We can now open the line for questions. Thank you very much for listening. Ladies and gentlemen, at this time, we will begin the question and answer session. Please use your handset when asking your question for better quality. The first question is from the line of Capacek Andre with UBS. Please go ahead. Hello. Congratulations on a strong quarter, and thank you for the question. A couple for me, please. First of all, on the upgraded guidance, can you maybe break down because The top line guidance, I guess, is ahead of the EBITDA guidance and also CapEx is up. So two questions here. In terms of the Offline upgrade, can you give us an idea what that is primarily driven by? Because it would seem in the context of the EBITDA That it is kind of the non core businesses that are growing faster than perhaps expected. And then in terms of CapEx, if you could break down the And how between FX, you mentioned additional fiber investments and anything else? And then second question Just for me, please, you've had another huge quarter in terms of mobile net additions. At the same time, your main competitor, I guess, highlighted that The composition in the market stabilized quite a bit during the Q2 and that is looking pretty good. Can you just talk about where these numbers are coming from and how you, as the market leader, see the competitive situation in mobile, please. Thank you very much. Okay. First of all, thank you very much. Regarding guidance revision, I think It's we achieved quite robust performance in the first half and despite the challenge of the pandemic's environment. I mean, when we look at Turkcell Turkey, we have significant growth, especially strong subscriber and ARPU performance. We achieved net subscriber addition, EUR 1,300,000 in the first half of the year, so which means this subscriber base will help us to increase our revenue level at the second half of the year. And also on the international side, We see strong organic growth in Ukraine operation, together with the positive impact of currency movement, supported top line growth. So this is also another confident situation for us for the second half. On the EBITDA guidance revision, it mainly depends on revenue increase. And regarding CapEx breakdown, because I also mentioned in the slides in the presentation, we would like to invest More on fiber, since there are demand from the customer side, so we increased number of Onpass target from 500,000 to 600,000, so which will drive the CapEx increase. Also, as I mentioned, Ukraine is a promising market. We're gaining market share. We're gaining we're increasing Our top line growth, so we would like to invest in Ukraine more. Since we invest, we get more as well. So this is The main reason for the CapEx. And obviously, since we are more customer, The customer needs more data, so we're going to invest more in this side. Regarding second question, For the net addition, first of all, our strategy is based on providing a rich value proposition to our customer through differentiated product and services. And we have Diversified business model, we offer high quality telco services, wide range of digital services as well as digital payment solution. And as clearly stated from our customer, our infrastructure Also enable us to provide all the services with maximum quality. And this help us to increase our customer bases. Also AI capabilities is important. We can go further micro segmented approach, which enables to make us right offer to the right customer at the right time. So in terms of Where are these customers? Mainly postpaid. Out of 6 17 customer, 500 of them mobile sorry, postpaid customer. And out of This postpaid customer, 40% of them switched from prepaid and 60% of them active acquisition Thank you. Thank you. May I have a very short follow-up on the CapEx question, please? You mentioned strong demand in fiber and that is consistent with what your composition is saying. Should we read this maybe that The higher target than just 0.5000000 homes per year would be not just the 2021 Target maybe going forward as well that you would accelerate the plan for the medium term as well. Exactly, because we don't want to stop after investing 600,000 home pads. So we see that the demand will continue, Especially, we have also 5 gs in front of us. When the 5 gs comes, we need more fiber. So when we invest in home pads, on Anything, it will help other businesses as well. So definitely, we'll continue to invest in fiber. I meant more than $500,000 because your previous guidance was kind of $500,000 per year over the next couple of years. Would it now be, Say $600,000 per year over the next couple of years. We hope more than that. To be honest, we hope more than that. Because when you start investment, it will take time to accelerate the machine. When the machine Get speed, you can easily increase the speed of having home pass or customer actually. So I think 600,000,000 I hope more than that. Okay. Thank you very much. The next question is from the line of Doctor. Erezlava with Goldman Sachs. Please go ahead. Yes, thank you very much for the presentation. A couple of questions. Firstly, on the 5 gs, What would be your thoughts over time and also the financial implications of the spectrum auction? And would you envision Significant investments into the network after or around the spectrum allocation. And the second question would be on the electric vehicle projects. Can you outline certain potential for further upcoming capital commitments into this project? And also the timing, the magnitude of the monetization as well as the synergies you see with Turkcell. Thank you. Okay. Slava, thank you very much. For the 5 gs, As you may recall, a couple of months ago, the Deputy Minister of Transport and Infrastructure We unofficially announced that new spectrum auction related 5 gs could be held in 2022 with the commercial launch of 2023. So this gave us some guidance. Since Dan, we don't have heard any official announcement from the government with respect to the 5 gs standards. Meanwhile, we continue our preparation for the five And we're ready to get 5 gs spectrum and license. And also as a recent development, we're working very hard on the preparation of 5 gs. And in June, we launched commercial 5 gs out on roaming services so that Turk Sales subscribers can now use 5 gs services in 29 countries. Overall, we don't have any official time line for 5 gs. However, we already have a strong 4.5 gs network, which we believe We eased the 5 gs transition. Our extensive test with the different partners on different use cases will also help us to offer a quality 5 gs service going forward. Regarding CapEx side of the 5 gs, As I said that we don't have clear schedule for the 5 gs auction. And obviously, when you wait more, Your CapEx demand decreased because the cost of equipment by nature of the technology decreased. So We'll see what's going to happen, but obviously, the announcement is there. It's not official announcement, but it's announcement. Regarding electrical vehicle project, our capital commitment To this project, it's around EUR 115,000,000. So far, we have invested around EUR 25,000,000 already. So going forward, we'll continue to release this capital during the project phases. And depends on where we need, when we need, It really depends on the project plan and the progress of the EV company. Thank you. And can you maybe elaborate on the synergies you see with Turkcell? Regarding synergy with Tog, it's e mobility is everywhere. So when we joined this partnership, the Tog partnership, Everyone was thinking that why HAL Corporation joining this EV Consortium. But everybody right now sees that e mobility is strength, the connectivity, Entertainment and the car without driver is very important, which needs high speed, Low latency and strong customer engagement. So that's main reason that we have synergies. So Turkcell and Tok can have a lot of things together, including smart living solution in smart city, Smart charging, database business model, supplier and partners with novel competencies And so on. There are integrated digital services and payment. Payment is very important as well. Charging Solution and Infrastructure, IoT is there. So there are many, many things May come during the road map, but we'll see what we can help on this side. But I think Clearly, Turkcell has vision to finalize this synergy. Thank you very much. The next question is from the line of Mataty Eze with Onlu Securities. I have a Couple of questions. The first one is on your hedging and FX costs. Compared to the Last 2 years average, we are seeing a higher level FX loss net FX loss when we also include the fair value adjustments. So the currency and FX were also volatile in the previous quarters. So what has changed specifically for this quarter? Is this 518,000,000 TLF fixed loans, is there any one off in that? Or is this the new base now? Should we consider Such number as quarterly FX losses going forward. And secondly, I'm I want to also ask about your deferred income you have generated for this quarter due to accounting change. Is this also one off or we will we going to Please touch effects in the coming quarters. And thirdly, 2 days ago, there was the emerging market news that you were in talks or started the process for the sale of stake sale in Paycell minority stake sale in Paycell. Could you also provide your prospects regarding the potential asset sale and when this could be official or when we should expect such news. So thank you very much. Ejei, thank you very much. Let me give the floor to our CFO, Osman, to answer All three questions, and then maybe I can comment at the end of the Thank you very much. Hedging and FX costs increased significantly compared to last year, especially compared to the last the average of last 3 quarters. We can associate this increase with the rising hedging costs. Short term swap rates almost more than doubled compared to last year. And this is creating this is making negative impact on our FX revenues. On the other hand, We need to generate Turkish lira for our working capital needs as well as for dividend payments. Since we hold majority of our cash in hard currency, We need to generate Turkish lira through short term FX swaps, and the cost of these short term FX swaps are also classified under hedging costs. And onethree of the FX loss that you see in this quarter is associated with This short term Turkish lira need, fair value adjustments, hedging costs to increase and Turkish lira Generation needs make up for the high effect hedging costs this quarter. We expect a gradual decrease in hedging costs and FX loss over the next quarter unless we see other sharp increase in dollar TRY parity. For the second question that you are asking, it is associated with the recent tax legislation that I tried to explain during the presentation. We made use of the right introduced by recent change in law, which which allows us to revalue some of our fixed assets and inventories. As per the law, the respective assets, These are typically network assets, especially mobile network, fixed network and data center investments. These assets can be revalued with PPI, Producer Prices Index, until the year end. And we need to pay 2% over this over the value of these assets in order to be able to revalue those. This increasing inflating the value of our fixed assets, it translates into higher Amortization and depreciation costs in the following years, which creates a deferred tax income on our balance sheet. By the way, it's a cash impact because we will be able to pay less tax on due to increasing amortization. So it translates into a deferred excess on our balance sheet and makes a positive impact on our net income. On the third question, I assume that you are referring to the news that appeared on the merger market yesterday. It's no surprise we have been expressing our interest in a potential stake sale, not only at face sale, but also in other subsidiaries, including SIPER Online. We are we continue to work on different alternatives. But I can say that so far we haven't been given any mandate by our shareholders to finalize this process. We still explore alternatives. And if something material happens, we will share with you through the disclosure platforms. Thank you. The next question is from the line of Demetas Guemal with Ata Invest. Please go ahead. You mentioned about 1 offs And we had some recently announced tax investigation numbers. I guess you recorded in Q2. Could you just give us some clarification on that? Thank you. I'm sorry, Mr. Demictas, can you please tell your question again because we cannot hear you in the beginning? Thank you. Okay. My question is about the effective tax rate. I see that you recorded tax income. Maybe during the presentation, you mentioned about the details. I don't know if you are in effect, but that's my first question. And the second question is about the one offs. You mentioned again during the presentation, but I didn't clearly hear. If you could just further elaborate that. And was the latest tax investigation In the next investigation results impact last year in 2nd quarter. Did you recall that in the second half. So thank you. Thank you very much. First of all, regarding effective The tax rate is without one offs, 23%. And regarding second questions, As we have announced last week, our company was imposed a tax assessment in relation to the Tax investigation that was conducted with respect to special communication tax for 2017 with respect to the special communication tax, value added tax and corporate tax for 2018. We also share that We will benefit from restructuring provisions for this tax assessment and will pay TRY 258,000,000 at the end of September. This led to an increase in other expenses. Okay. It was recorded under other expenses. Thank you. The next question is a follow-up question from Capatou Gondre with UBS. Please go ahead. Thank you. I have one follow-up in terms of costs as well. You mentioned about the year ago, I believe that's part of the and I think it was a half of the Selling and marketing expense decline that you saw because of the lockdowns and moving to digital Would be sustainable. Now we are I know there's been another lockdown in Turkey, but on an annualized basis, that ratio of Selling and marketing expenses was more or less flat year over year. And you mentioned in your presentation the ongoing Share of digital sales, can you maybe update us in terms of where you think the Sustainability of the I mean, there was 1.5 percentage points year over year decline in terms of Selling and marketing expenses as a percentage of revenues last year, what part of that is or would be sustainable today versus what you said about a year ago. Thank you. Thank you very much, Andre. First of all, I mean, regarding sales and marketing expense increase, the deterioration in selling and marketing expense has been mainly driven by the increase in marketing expense, not just not the selling side. We started a new communication campaign on Turkcell Ecosystem Positioning Comprising Both Telco and Digital Services. We will continue investing This campaign during the years as well, so this is one of the reasons. But regarding semiconductor expenses, Either flat or decreased due to the lockdown happened in May as well. Regarding is there any other question? Maybe just there's an update in terms of how sustainable the levels of 2QR going forward because, I mean, we may have expected a bit of a rebound in terms of Selling and marketing compared to last year, as you flagged that, only part of the decrease from a year ago was sustainable. But there was virtually no change in terms of the proportion to revenues. So is there another assessment today versus what you You said a year ago, when you said roughly half only of the savings were sustainable. Would you say it's more today? Yes. First of all, during the first half, we see that especially sales expenses decline. But During the second half, we would like to see a little bit bounce back on the selling because we'll continue to invest in our sales channel. But as you know, we would like to invest more and more in the digital sales channels. This is our focus area. If we can continue to increase digital channels spending and digital channels expenses, this It will help us to meet more savings. But obviously, it's not going to be same as the first half. We expect a little bit More on the OpEx increase during the second half. Thank you. The next question is from the line of Demirakka Kajahan with AK Investment. Please go ahead. Hi. Thank you very much for the presentation and opportunity to ask questions. I mean, as a follow-up on the CapEx side, Based on the upper end of your guidance, we're roughly looking for $100,000,000 higher CapEx compared to the previous quarter. So what I'm trying to understand, what percentage of that related to additional SEK 100 home taxes? And also very roughly, what is the incremental revenue contribution you're looking from this 600 ks home pass or in other words, what is the expected payback period for this investment? Thank you. Okay. Thank you very much for the first question regarding CapEx increase. Almost onethree of them comes from the FX increase, onethree of them comes from fiber investment And 1 third of some growth business, including Ukraine and mobile subscriber base increase as well. Regarding payback, the payback period usually Long term ROI. But we see during the pandemic, we see that fiber investment The return cycle is decreasing. So we would like to benefit on this side, but obviously, Our mainly 8, 9 years payback is acceptable on this on the fiber investment. Okay. Thank you. Because economical actually, The fiber lifetime is almost 25 years, so 8 years is okay. The next question is from the a follow-up question from Mr. Capatte Contre with UBS. Please go ahead. Sorry, one more follow-up for me, please. In terms of Superbox, I noticed that the trends of net additions has been going down quite a bit from the peak of about a year ago and you don't even talk about the product in your presentation anymore. Is that because you think the market for this product is kind of saturated by now? Or are you actively Trying to replace it strategically with fiber or any update on How you see that going forward? Thank you. Thank you. Actually, your response was quite okay. Since its launch, SuperVOX has shown substantial growth in a subscriber base, providing the demand for neat of fixed wireless success product backed by quality network. Our success at SuperBox also shown that our company is ready for the 5 gs transition period in Q1 2021. Superbux subscriber reached 626,000 on the back of increase of demand and brand awareness as well as rising household broadband demand in pandemic environment. From now on, we will be more concentrated on monetizing our superbugs subscription with a focus on network efficiency, usage optimization and price adjustment. So we recently did some price adjustment. We would like to monetize more supervised products with more efficient network infrastructure. So that was the two reasons. And superbugs is not a Cheap product. It's a high quality product with high demand. So but we would like to Focus on the OpEx side as well, the cost network cost side as well. So it's in a balance. So we are increasing superbugs ARPU in an acceptable level. And superbugs is not a Competition for fiber. And we I mean, it's a product that's specific needs or address the needs of customer in the high speed and high quality and mobility environment. Mr. Capatec, are you finished with your questions? Yes, I was muted. Thank you very much. Thank you. 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. I'd like to thank all the contributors, all the listeners. Thank you very much. Good afternoon, Good evening. Good morning for everyone. Thanks. Thank you. Well, thank you. This is the end of our call. Thank you, everyone, for taking the time to join us today. We hope to meet you in the upcoming quarters. Goodbye. On. Thank you for calling and have a pleasant evening.