Ladies and gentlemen, welcome to Turkcell First Quarter 2019 Results Conference Call and Webcast. Please be reminded that this call is being recorded. Today's first speaker will be Mr. Korhan Bilek, Director of Treasury and Capital Markets Management. Sir, please go ahead.
Thank you, Ian. Hello, everyone. We apologize for the delay. It seems there was a technical problem with the voice recording of the webcast. Hello again. Welcome to Turkcell's First Quarter 2019 Results Call. Today's speakers are our CEO, Mr. Murat Erkan, and our CFO, Mr. Osman Yilmaz. I hand over to Mr. Erkan.
Good morning and good afternoon, everyone. Welcome to Turkcell's First Quarter 2019 Results Call. I am honored to have been appointed as Turkcell Group CEO and excited to lead the group in the next phase of the journey. I've been with Turkcell Group since 2008, first as the CEO of Superonline, our fixed business as a separate company at the time, and then as the Chief Sales Officer of Turkcell. With almost 30 years of experience in the sector, 12 of which at Turkcell alone, I will continue my efforts at centering Turkcell pioneering role in the industry. Together with highly capable Turkcell team, we will take the company to the even greater heights. In the past, I have met with some of you on several occasions. One of my priorities will be to have an open dialogue with you regarding our business and benefit from your valuable feedback.
Let's look at the highlights for this quarter. The macroeconomic environments remained fragile in the emerging market in the First Quarter of 2019. Yet we delivered robust results exceeding our target on the back of our solid business model built on strong pillars. With 19.2% annual top-line growth and TRY 2.3 billion EBITDA, we have recorded an EBITDA margin of 40.2%. Upon completion of our Fintur stake divestment on the 2nd of April, we booked TRY 772 million net income. Fintur cash proceeds of around EUR 353 million contributed to the downward trend of our leverage to 1.3x at the end of the quarter. On the operational front, our digital services gained further popularity with cumulative downloads reaching 178 million. In April, we hosted Turkey's largest technology summit for the 10th time.
With thousands of participants at 30 sessions, we both led the discussion and demonstrated new technologies, 5G, AI, and robotics, and their likely impact on the lives. Moving to next slide. Now some additional details on our quarterly financial performance. We recorded a TRY 5.7 billion top line on 19.2% growth and TRY 2.3 billion EBITDA on 12.8% growth. Our 40.2% EBITDA margin marked a 0.4 percentage point quarterly improvement. Turkcell Turkey was the main driver with its 2.2 percentage point quarterly increase. On a year-on-year basis, we observe the impact of our new business, which have relatively lower margins. To this, we may add the divestment of our high-margin sports betting business in Azerbaijan. With our effective hedge and interest rate hedging practices and the one-off Fintur sales income, we printed net income of TRY 1.2 billion this quarter.
Capital expenditures remain under control with a 15.6% operational CapEx over sales ratio. Moving to next slide. Let's look into our operational performance. Our monthly average mobile churn rate during the quarter changed to 1.9% as we faced challenges in retaining some of our budget-conscious customers. While we were timely in reflecting the prevailing inflationary environment to our prices, the market did this with a lag and to lesser than extent. We have taken several actions to retain these price-sensitive customers by implementing AI-based adaptive learning technology, which allow us to realize micro-segmented prices. We have seen the positive impact of these actions since March, when we registered positive net add numbers. Upsell to higher tariffs, coupled with price adjustment, have increased mobile ARPU by 13.4% year-on-year. On a like-for-like basis, this is more visible at 19.6%.
On the fixed broadband front, our fiber subscribers continued to grow with 25,000 net additions. Our renewed fiber tariffs offering our customer more alternatives have been instrumental in the 12.3% yearly ARPU growth. Of particular note is the double-digit ARPU growth of the fiber business. Our fixed wireless access product, Superbox, has great potential to reach those locations not covered by our fiber networks and with twice the ADSL ARPU. Instead of opting for the lower speed ADSL service, some 56,000 customers have chosen Superbox. With our wider frequency and strong infrastructure, our ability to provide Superbox confirms our readiness to 5G.
In addition, through our infrastructure sharing agreement with Turkcell, we now have nearly 10,000 cable subscribers. Next slide. Let's dive deeper into marketing campaigns, which boosts customer engagement and loyalty. Our 25th anniversary of campaign saw 4.5 million participants, 2.2 million of whom were introduced to our digital services.
Our legendary Shake & Win campaign, with over 13 million participants during the quarter, has distributed over 140 million gifts, including minutes, data, subscription to our digital services. Despite the premium pricing, our new promoter score, sorry, Net Promoter Score remained intact on the back of our network quality, sales channel efficiency, and overall brand image. Next slide. Now, the key driver of our strategy, demand for data and digital services. Average mobile data usage rose 34% in a year to 5.9 gigabytes per user in the first quarter. The main driver of this increase is the rising number of and consumption of 4.5G users at 7.4 gigabytes per users. Out of 31 million customers signed up for a 4.5G services, 18.5 million have 4.5G compatible smartphones.
Room for growth here underline the potential for greater data usage by a wider customer base, as 4.5G users consume more than twice the data. Our network registered close to 1.7 million net addition of 4.5G compatible smartphones over the past year. Despite the regulatory limitation and higher retail price, we have seen an increase of half a million in the first quarter. Next slide. A few words on our performance in the international markets. Turkcell International generates 7% of group revenue. Our operation printed top-line growth of 17% year-over-year in local currency terms on the back of strong ARPU. This rises to 52% in TRY terms with the impact of currency movements. Both Ukraine and Belarus operation have continued their focus on expanding the 4G penetration and the usage of digital services.
Accordingly, we note 1 million active digital services user in Ukraine, where 4.5G user reach 36% of data user within one year. Going forward, our strategy focus will be on three key areas: Our digital services, digital business solutions, and our TechFin platform. For digital services, we will continue to work on increasing their usage. Also, we will establish new commercial partnership to export our portfolio. We will serve the digital transformation of both private and public sector through the digital business solution arm, including mega projects like the end-to-end digitalization of City Hospital. We are capable of offering tailor-made solution, given our vast experience and strong business partners. The digitalization of financial services is another area of great potential. New technologies enabling more efficient and lower cost access to and from the customer brings the whole financial sector to the brink of major disruption.
Already invested in this area, we have the best tools and access to lead this change. This will be our third focus area. Most importantly, in the new area, we aim to center our emotional ties with our customer, positioning them at the heart of all we do. For this purpose, we have recently redesigned our sales organization. We now have a structure enabling us to design more effective services and solutions. Next slide. Strong infrastructure is a crucial in meeting our targets. Today, our well-invested mobile network operates on the widest frequency in Turkey. Our 43,000 kilometers of fiber and eight data center enable us provide a high quality services with the capability of 10 gigabit speeds at the first in Europe.
Additionally, we provide fixed broadband to more households through bilateral agreement with Turkcell and Vodafone Turkey. We have agreed not to duplicate investment. Joint infrastructure will enable Turkey to roll out 5G in the fastest and cost-effective manner. It serves the interest primarily of our country, but also of all parties involved. Therefore, we remain focused on this method to finalize it before Turkey adopts 5G. Next slide. As to our digital services, total downloads reached 178 million on a 75% increase as at the end of the quarter. With 36 million downloads to date, active BiP user exceeds 10 million. 194 million messages per day were sent through BiP in the first quarter, marking a new record high. BiP's instant translation capability in 106 languages has been widely welcomed. The leading digital publishing platform, Dergilik, has 12.1 million active users.
These have read some 1.3 million magazines and newspaper per day thanks to its expanded content. Over 8 million songs were streamed daily on average on fizy, while over 60 documents were uploaded per person per day on Lifebox. Games played on BiP reached 36 million, up from 30 million in the previous quarter. Next slide. Already active in our international subsidiaries, our digital services are set for expansion in new markets. Following the one signed with Moldcell in Moldova, we have also signed cooperation agreements with Albtelecom of Albania, CG Corp Global of Nepal, and Digicel Group of Caribbean. In total, these countries number 38. While continuing to work on increasing the usage of these digital services, we will establish new commercial partnerships for digital export. As the second pillar of our strategy, we will serve the digital transformation of both the private and public sector.
For this purpose, we have established a company which provides end-to-end ICT solution by leveraging the ability of combined telecom and IT services. The total addressable market in this field is estimated to be TRY 20 billion in Turkey, including connectivity, hardware, cloud services, security services, IT integration and solution using AI, IoT, and big data. We already have some know-how of industry digitization that includes healthcare, energy, and public sector transportation, and we'll focus further on digitizing industries. We are confident of becoming the number one IT services company in Turkey within next three years. Next slide. Our tech services portfolio is diversified by our Paycell, Financell, and Güvencell subsidiaries. Leading payment system provider, Paycell, has established key vertical business line, including mobile wallet, carrier billing, utility payment, money transfer, QR code payment, and post services. Paycell will focus on scaling its product horizontally with new partnerships.
In the first quarter, some 5 million Paycell users generated a TRY 1.7 billion transaction volume. Registered credit card on Paycell wallet continued to rise, while Paycell credit cards today number 1.5 million. Our consumer finance company, Financell, 28 million credit scored customers in multiple times higher than a sizable bank in Turkey. Underlining its potential, our insurance business, Güvencell, complements Financell perfectly and contributes to controlled cost of risk ratio. Moving to next slide. Encouraged by our first quarter performance and considering what lies ahead, we revised our 2019 revenue growth guidance upwards from 16%-18% to 17%-19%. Similarly, we are now confident of achieving our EBITDA margin of between 38%-40%. We reiterate our operational CapEx to sale ratio guidance. Next slide. Before I leave the floor to Osman, a few words on the next two big dates on our agenda.
As announced last Friday, our annual general assembly is scheduled for Friday, May 31st. We have set the date for 2019 Capital Markets Day as 31st of October, and for the first time in our history, we will hold in New York. At this event, we plan to provide an update on the group strategy along with our three-year outlook. Hope to see you all on that day. I will now leave floor to our CFO, Osman Yilmaz.
Thank you very much, Murat. Good afternoon, good evening, everyone. Let's take a closer look into the financials. In the first quarter, group revenues rose 19.2% year-on-year, corresponding to an incremental TRY 940 million. TRY 764 million of this increase is from Turkcell Turkey on back of the strong output. Our exit from the sports betting business in Azerbaijan had a 1% negative impact on the top line. Meanwhile, our new business lines, such as energy, contributed to both top line and nominal EBITDA, albeit with a lower margin. EBITDA rose by 12.8% year-on-year to TRY 2.3 billion with a margin of 40.2%. Last year, we had seen the one-time positive effect of our sales channel reorganization on EBITDA, creating a high base effect. In a quarterly trend comparison, our EBITDA margin marked a 0.4 percentage point improvement.
Turkcell Turkey was the main driver with the 2.2 percentage point increase. Next slide. Some highlights from our balance sheet and leverage. As at the end of the quarter, our net debt position came down to TRY 11.7 billion from TRY 12.7 billion, thanks to the Fintur sales proceeds of TRY 2.2 billion. Accordingly, the net debt to EBITDA ratio declined to 1.3 times below our company threshold of 1.5 times. Major factors impacting our net debt position in the first quarter include currency depreciation with a net impact of TRY 560 million, advanced vendor payments of EUR 90 million, and wireless usage fees of TRY 520 million paid every year in February. On the positive side, besides Fintur, we had a TRY 530 million cash release from the deleveraging of the consumer loan portfolio.
Excluding the consumer finance loan portfolio, our telco-only net debt was TRY 8.1 billion with a leverage ratio of 0.9 times. Next slide. A few words on our TechFin company's performance. Despite the regulatory limitation of financing installments as well as currency pressure on the smartphone device prices, Financell grew by 14% year-on-year. Meanwhile, its consumer loan portfolio decreased to TRY 3.6 billion, which has effectively led to a positive cash flow for the group. With an average ticket size of TRY 1,700, our customers paid TRY 124 per month on average. Cost of risk rose to 2.8% in March, which is still below the market average for general-purpose loans. Loan insurance penetration of 95% over the past one year will help reduce this ratio, as NPLs due to unemployment will be compensated by this insurance.
Meanwhile, our payment services company, Paycell, continued its strong momentum on 26% year-on-year revenue growth. Its EBITDA growth was 12.9% with a 71% EBITDA margin. Over the coming quarters, we expect Financell's growth to slow down in line with its loan portfolio contraction, while Paycell's growth will accelerate with new products and services. As a result, the TechFin business is expected to continue its positive contribution to the group. Next slide. Let me give you more color regarding our consolidated cash position. Our cash position rose by TRY 1.5 billion in the quarter. Our operations generated TRY 2.3 billion of EBITDA. Working capital rose by TRY 827 million due to mainly seasonal declines in trade payables. Investing activities, including advanced payments to vendors, led to a cash outlook around TRY 1.6 billion.
Of that, a €90 million advanced payment helped us to fix the currency rate and benefit from discounts on procurement. Regarding financing activities, we utilized a €235 million equivalent loan from CDB at very attractive rates. Separate vendor financing from EKN of $50 million was also secured in March. These have helped further improve our liquidity position, which has almost reached $2 billion as of the end of the quarter. Next slide. Now I will go into the management of foreign currencies. We continue to hold 100% of our cash in hard currency as a natural hedging tool. In addition, with hedging instruments in place, the share of FX debt declined from 83% to 44%. As discussed, Financell transaction proceeds have led to a long net FX position of $216 million. As stated in the fourth quarter of last year, we target a neutral FX position going forward.
This concludes our presentation. Now we are ready to take your questions. Thank you very much.
Thank you. We will now start our question and answer session. Ladies and gentlemen, if you wish to ask a question, please press 01 on your telephone keypad. As a reminder, to participate in our written Q&A, just type your question into the ask a question text area, then click the Submit button. Our first question is from Cesar Tiron from Bank of America Merrill Lynch. Please go ahead.
Yes. Hi, everyone. Thanks for the call. Congratulations on the results. I have a couple of questions. Apologies for that. The first one is on the revenue trajectory. Has there been any gradual improvement if you looked at it on a year-on-year basis between, say, March and January? Second question, moving on to OpEx. It seems that most of the cost that increased faster than revenue was cost of goods sold. Can you please shed some light on which cost exactly grew faster than revenue in cost of goods sold? Third question, can you please explain why there has been such an improvement in margins in international operations? Then finally, on shareholder remuneration, have you made or is the board planning to make a recommendation on the dividend for 2018? Thank you.
First of all, thank you very much for the question. The first one, the gradual improvement in our result, it's mainly coming from our corporate business. Actually, our corporate business year-over-year growing more than 20%, and last quarter it was 27%. Mainly, it's coming from our corporate business. On the OpEx side, cost of goods sold, which factor group, this was coming from our terminal smartphone, tablet sales, part of it. This is low margin business for us, so it impact our OpEx part. Why improvement in margin of international operations? This is mainly IFRS 16 impact of the Belarus and Ukraine operation. On the other hand, we have some organic growth as well. Out of total growth, 4% is coming from organic growth of 4% margin are organic growth of Ukraine and Belarus operation. We have 4% organic.
The other parts coming from IFRS 16 adjustment for capital expenditure side. What was the last question?
Yes. Just on the dividend and whether the board has made or will make a recommendation for the dividend that will be decided at the AGM.
Actually, we expect to see 50% of profit to be proposed by our board. It is still up to the shareholders on 31st of May, this is typical behavior of Turkcell. Our board is probably going to propose 50% of profit. Net income.
Thank you so much. Thank you.
Our next question is from Herve Durrut from HSBC. Please go ahead.
Yes, good afternoon. Yes, thank you very much for the presentation and the possibility to ask questions. My first question is regarding your digital strategy. Where do you think the future for Turkcell? Do you see a shift in the strategy for Turkcell in digital applications? What is, in your view, the most brighter future for Turkcell in digital apps? Do you think, for instance, financial apps could be something? What, in your view, could make, for example, some of your Paycell to take off strongly? What is needed, in your view, to take it up strongly? That's my first point of questions. My second question is back to the cost of goods sold. I was wondering how much of the energy resale is in your number in Q1?
Is it a significant number or not, and could have had as well an impact on cost of goods sold as well? My third question is, it looks like we've seen quarter-on-quarter churn rate, especially in Turkey, going down quarter-on-quarter. I was wondering, do you believe that decrease in churn rate is sustainable looking forward? What do you think could be the impact on the EBITDA margins? Could it be as well linked with potential cleanup of some of the SIM cards you report? Those are my main three questions. Thank you.
Okay. Thank you very much. Let's start the first question regarding our digital strategy. There was a slide about our strategy going forward. One of the pillars was our digital services. As a management team, we monitor the total value generated by our digital service in accordance with our 1440 vision. Our ambition in developing and offering digital services is to enrich our customer base by meeting all their digital needs. We focus digital services business strategy. On the other hand, one of our pillars is the TechFin platform, which is based on Paycell and Paycell application. TechFin is quite an important role and important aspect in our segment. We have 35 million clients. This is bigger than any bank in Turkey, probably bigger than. Our largest bank in Turkey has 8 million subscribers.
This clearly shows opportunity for us. We are planning to introduce new products to monetize our mobile payment and other stuff with Paycell. We do believe that we have a strong position around it. Regarding cost of goods sold, the energy part is not significant because one of the major customers of energy is our Turkcell. Out of Turkcell, to the market, our energy business, TRY 37 million is not significant. Actually, mainly cost of goods sold side relies on terminal sales. I mean, our smartphones, tablets, and other devices. What was the third question?
Churn rate.
Okay. Obviously, for the churn rate, Q4 churn rate is not organic churn rate. As you know, we are doing some action during Q4 for the customers. We are closing down, shutting down some of the customers if they don't bring any value to us. I don't think it's a good idea to compare Q4 versus Q1, but obviously we would like to keep a sustainable churn rate around 2% range. I mean, around 2% range is, I think, quite a healthy churn rate for us. You cannot compare Q4 versus other quarters. Q4 is not organic churn rate.
All right. Thank you very much.
Our next question is from Vyacheslav Degtyarev from Goldman. Please go ahead.
Yes, thank you very much for the presentation. Couple of questions. Firstly, Murat, following more than a month in a CEO role, do you see particular strategic opportunities that were not well addressed before? Also, do you aim to somehow modify your digital, your asset light or financial hedging strategy that is currently in place? Secondly, it seems like your mobile data consumption hasn't grown compared to Q4. Is there any seasonality here again or maybe some other effect here? Thank you very much.
First of all, in terms of our strategy, we do believe in digital services. Since I've been in the company for 12 years, I was part of the digital services strategy, and this is one of the strong arm of Turkcell. We'll continue to execute our digital services and digital services exportation to the outside of Turkey. On the other hand, we're focusing corporate. We do see that corporate needs digital transformation. That's why we just established a company for integration and digital transformation side of the business. We do see that there is opportunity, as I mentioned, TRY 20 billion market is around for IT and communication side. We need to capture that part as well. For the TechFin side, this is new to us, but also we're preparing ourself for the TechFin platform.
It's not just financing, it is also as a platform, Paycell, new application on Paycell, payment system, mobile payment, et cetera. This is also opportunity for us in Turkey and around Turkey as well. These are the three area. Obviously, we are very strong on the infrastructure side. We'll continue to invest our mobile infrastructure and fiber infrastructure, as well as data centers. For the second question, mobile data consumption didn't grow since Q4. As I mentioned, Q4 is exceptional quarter in terms of every reason because we did inflation campaign, inflation reduction campaign during Q4. We gave double of capacity to our customer. Our customer is very good. They utilize this capacity. Q4 is exceptional quarter in terms of usage, number of customer, et cetera. The real comparison should be Q1 2018 versus Q1 2019.
We have 34% growth, I believe. Yeah.
Thank you very much.
Our next question is from Ivan Kim, from Phasis Capital.
Yes, good afternoon. Two questions from me, please. Firstly, on the inflation or price increases, is there any pushback from the government on that or from the consumers? Secondly, about the automotive project that you were involved in, can you please comment on how much equity do you plan to commit to that? Are there going to be any other liabilities for you, like debt guarantees or something like that? Thank you very much.
Yeah. Let me start with the first question. Inflation pricing is continued. It shows in our ARPU growth. ARPU grew around 14% range, as well as our like-for-like growth is 19.6%. We're continuing doing our inflationary pricing, and it shows we need that because our cost depends on inflation. We'll continue doing inflationary pricing. We don't have anything from government. Obviously everybody would like to fight with inflation, including us. If inflation is going down, we'll stick on this one as well. The second question, how much equity to commit to car project? We have no commitment about it.
Okay. It's a significant investment that at least the government plans. For now, there is sort of nothing to comment on yet in terms of how much cash you'll contribute there?
Yeah. Actually, we are partnering with 4 other investors in this aspect. We recently assigned a CEO to our automobile business. I think he would better comment on this one, but there is no commitment yet, actually. I would rather to say this on his side.
Okay. Sure. Thank you very much.
Just let me continue. So far, we only put TRY 90 million as capital, so far.
Sure. Thank you.
Our next question is from Andre Kabatchek from UBS. Please go ahead.
Hi. Thanks for taking my question. I have a couple, please. First one is on the ICT and the digital business solutions. If you could please be more specific in terms of what the opportunity within the size of the market that you mentioned exactly is, capabilities you need to develop in order to tap into it, and whether the recent acceleration in corporate is perhaps the primary driver of your guidance increase. That's my first question. If you could please comment on how successful or not you are with upselling people. Second question is, you always spoke about the double data inflationary measure from 4Q 2018 as an opportunity to upsell people when this is reversed in 1Q 2019.
The third question would be if you could please confirm or not the target that you gave for the consumer finance company portfolio to be around $3 billion towards the end of this year. Thank you.
First of all, regarding ICT and digital business solution, we expect to see 30% cover of the business next 5 years, and we would like to reach TRY 4 billion on this side. Regarding our guidance increase, I think the first quarter strong result shows us that we can increase our target guidance increase. Also, we do trust our team and our strategy on opportunity. Also, for the second question, how successful we are on the upsell performance. Compared to February and March 2018, upsell figures increased by 30.7% in February and March 2019. Our upsell per sub package increased by 56%, which means TRY 16 versus TRY 10. At the same time, if you compare 2018 Q1 and 2019 Q1, the upsell ratio decreased by 12 points. I hope this will answer the second question.
Regarding Turkcell Financial Services portfolio, we started the year with TRY 4.2 billion. Now it is TRY 3.6 billion, and our expectation for year-end is TRY 2.7 billion.
Thank you. Can I just confirm, please? You said the ICT, just to confirm the figures, you said 33.0% CAGR over five years, you expect that business to be TRY 12 billion in size for Turkcell?
4 billion. We expect the business in five years to be TRY 4 billion Turkish lira with 30% compound annual growth rate.
Okay. Thank you. Sorry, can I just confirm that the portfolio target is at 2.6 now, is the target?
As of today, 3.6, year-end target is 2.7.
2.7. Thank you very much.
Ladies and gentlemen, I would like to remind you that if you wish to ask a question, please press 01 on your telephone keypad. As a reminder, to participate in our written Q&A, just type your question into Ask a Question text area, then click the Submit button. Our next question is from Cemal Demirtaş from Ata Invest. Please go ahead.
Thank you for the presentation. My question is about possible efficiency gains in the sector in general, and of course, for Turkcell. Ahead of 5G, I don't know when we expect 5G, do you see an opportunity for some site sharing going forward with the other operators? Do you see any potential gain from that side? Thank you.
First of all, our frequency and spectrum allow us to do 5G deployment as much as we have. Obviously, vendors and terminal side is not that ready for 5G. On the other hand, also government probably will plan to increase the spectrum or frequency part in addition to that. We see this opportunity. I don't think this is going to happen for this year, hopefully it's going to happen next year as well on the 5G side. For the infrastructure sharing part, we see infrastructure sharing as an important aspect. For the 5G, it is necessary to have infrastructure sharing. Otherwise, it is really difficult for the operator to deploy multiple 5G network and get the benefit out of it or return on investment. I think this is essential for the operators.
The 5G and site sharing needs to be part of fiber sharing as well, because without fiber sharing, I don't see any successful 5G deployment in Turkey anyway.
Does it answer your question?
Yes, thank you. As a follow-up question, as you mentioned, in the fourth quarter, there was some subscription loss, it was not organic for some other reasons. When we get into the first quarter, we also see slight decline in the postpaid subscribers. Going forward, what do you plan about, which is more important for you in terms of the ARPU, or do you care about the subscriber loss going forward? Is it reasonable to assume that you will have flat or you have some ambition to increase the postpaid subscriber going forward? Thank you.
Okay. Customer loss mainly came from the price-sensitive customers who are paying less than average package price on the postpaid front. This was mainly due to the across-the-board price increase to reflect cost inflation to our prices. Additionally, sharp contracting in disposable income due to rising inflation also contributed to this outcome. Accordingly, customer with less than TRY 25 ARPU decreased by 4%, while customer with more than TRY 50 ARPU increased by 7% from Q4 2018 to Q1 2019. This is mainly the reason. We value our customers greatly. We have taken several action to retain these price-sensitive customer by implementing AI-based adaptive learning technology, which gives us the ability to do micro-segmented pricing. We have started to see the positive impact of this action starting from March, in which we observe positive net add numbers.
Thank you.
Our next question is from Dilya Ibragimova from Federated Investors. Please go ahead.
Hi. This is Dilya Ibragimova from Citi. Thank you very much for the opportunity. I just wanted to ask a couple of questions. First, on guidance, I may have missed, but could you please give us a bit more insight what drives the upgrade of the revenue guidance? If I'm just looking at the Turkey revenue trends, excluding the wholesale and equipment sales, then the service revenue growth appears to be slowing to low teens. Is it equipment sales that you expect to be stronger? Maybe it is international performance that you expect to continue contribute to the growth on the group level. If it is Turkey service revenue, what do you expect to change going forward from now, considering that the inflation environment in 2019 is not really favorable for price adjustments? Thank you. That's the first question. I'll come back to the second question.
Okay. First of all, there are number of things that support us to increase our guidance. First of all, the first quarter performance, new organization, and marketing activities plan, it gave us the confidence. Secondly, our corporate business shows strong growth year-over-year basis, it seems it will continue to grow as well with the support of digital business solution and service revenue. I think these are the important things that gave us confidence to increase our guidance.
Okay. Thank you very much. Maybe second question on the dynamics in the active user base of the digital services. If I'm just looking at sequential growth, there is some slowdown in what historically has been high growth areas like publishing and messaging, but there is instead good growth in music and TV as well as cloud services. Is it marketing driven or is it perhaps seasonal? Maybe if you could elaborate on the trends, would really appreciate. Thank you.
To be honest, our trend in the digital service is quite positive. There are some seasonality effect or our campaign effect in app-by-app difference. As of today, when we look at our services, our BiP apps grow almost double from Q1 2018 to Q1 2019. Digiturk is a little bit in a flat basis, but this is, as I mentioned, it's a seasonality effect. The customers sometimes read more magazine or newspaper than the other season. On the music side, fizy, we have 2.9 million subs in 2018 versus 3.8 million active users. I mean, TV+ is almost more than double their performance. Lifebox, it seems 80% growth. When I go through all the apps, has increased. Digiturk itself has almost flat subscription or active usage. This is mainly seasonal impact.
Okay. That's very helpful. Thank you very much.
Ladies and gentlemen, I would like to remind you that if you wish to ask a question, please press 01 on your telephone keypad. To participate in our written Q&A, just type your question into Ask a Question text area, then click the Submit button. Thank you for holding. Our next question is from Andre Kabatchek from UBS. Go ahead.
Hi. Thank you. I have a follow-up on the ICT. Just to understand more, do you think this is your first sort of big contribution to the group in general, given your fixed business background? It seems like this is a new opportunity, or was this ever part of the midterm guidance growing your ICT business like this?
To be honest, I've been in the company for 12 years. I have contributed a lot on almost every strategy. This is team effort, as a company, we see the opportunity, we decided to invest in the ICT and digital transformation project. I think we did right because our corporate business was growing, like five years ago, single-digit ratio. Right now it is more than 20%, which gives us opportunity and confidence in this business, and confidence to grow 30% calendar as well. I think I don't count on my side. This is team effort, and everybody believes in strategy, and this is not the only strategy for us. There are others as well. This is one of the important strategy, to be honest.
Would you say, was this ever part of the midterm guidance and growth targets that Turkcell had, going back a couple of years? Is this something that is quite new?
Actually, we have been working on this digital business solution company last six to nine months. In the last six to nine months, we've been working on this one, you can count as midterm, but relatively new because we convinced the board to invest in digital business solution on this side. Also, we're working on Capital Market Day, which is going to happen 31st of October. We will give more detail about our strategy, especially on the ICT and digital business solutions side as well.
All right. Thank you very much.
Thank you.
Ladies and gentlemen.
Ayhan
I would like to remind.
Okay, Ayhan.
Yes.
If you don't see further questions, I think we are about to close the call. I think the end of the call.
Okay.
Any further questions?
There's no further questions. Back to you for the conclusion.
Okay. This is the end of our call. Thank you, Murat Bey, Osman Bey, for your presentations, and thank you all for taking the time to participate, and hope to meet you all in July with second quarter results. Have a good day. Thank you.
This concludes today's conference call. Thank you all for your participation. You may now disconnect.