Earnings Call: Q1 2019

Apr 30, 2019

Ladies and gentlemen, welcome to Trexor First Quarter 2019 Results Conference Call and Webcast. Please be reminded that this call is being recorded. Today's first speaker will be Mr. Coran Villeg, director of Treasury And Capital Markets Management. Sir. Please go ahead. Thank you, Iain. Hello, everyone. We apologize for the delay. Seems there was a technical problem with the voice recording of the webcast. Hello, again. Welcome to Trixad's first quarter 2019 King Results Call. Today's speakers are our CEO, Mr. Rod Dercon, and our CFO, Mr. Osman Yilman. Now I hand over to Mr. Econ. Good morning, and good afternoon, everyone. Welcome to Turkcell's first quarter 2019 results call. I'm also being appointed as Turkcell Group CEO and exec to meet the group in the next phase of the journey. IBM Mid Turkcell Group since 2008. First, as the CEO of Super Online, our fixed business as a separate company at the time and then as a Chief Sales of Soft Turkcell. We almost 30 with almost 30 years of experience in the sector, 12 of which at Tucson. I will continue my efforts at Centrelink Tuxhelping Road in the industry. Together with highly capable Tuxhel 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 benefits from your valuable feedback. Now let's let's look at the highlights for this quarter. The macroeconomic environment remain fragile in the emerging market in the first quarter of 2019. And yet, we delivered robust results exceeding our target on the back of our solid business model built on strong pillars. With 19.2% is annual top and growth and 2 point $3,000,000,000 EBITDA, you will record an EBITDA margin of 40.2%. Upon completion of our fintech divestment on 2nd April, we booked 772,000,000 CL net income. Fintur cash proceeds of around €353,000,000 contributed to 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 $178,000,000. In April, we hosted Turkish Largest Technology Summit for the time time. With thousands of participants at 30 session, we both let the discussion and demonstrated new technologies, 5g, AIN Robotics, and their life impact on the lives. Moving to the next slide. Now some additional details on our quarterly financial performance. We recorded a 5,700,000,000 tier top line on 19.2% growth and 2,300,000,000 tier EBITDA on 12.8% growth. Our 40.2 percent EBITDA margin 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 observed the impact of our new business which have relatively lower margins. To this, we may add the divestment of our high margin phosphatic business in Azerbaijan. With our effective effects and interest rate hedging practices and the 1 of Fintur sales income, we printed net income of 1,200,000,000 this quarter. Capital expenditures remain under control with a 15.6% operational CapEx oversized 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 concern us. While we work timely in reflecting the prevailing inflationary environment to our prices, the market gives us return a lack and to lesser than extended. We have taken several actions to retain this price sensitive customer by implementing AI based adaptive learning technology, which allows us to realize Metro segmented prices. We have seen the positive impact of these actions since March, then we registered positive net add numbers. Outside to high 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 such subscriber continue to grow with 25,000 net additions. Our running fiber products offering our customer more alternatives have been instrumental in the 12.3% yield to growth. Both particles not is a double digit ARPU growth of the fiber business. Our fixed wireless access product super box has great potential to reach those locations not covered by our fiber networks. And request this ADSR ARPU. Instead of opting for the lower speed ADSL service, some 56,000 customers have chosen Starbucks with our right frequency and soft infrastructure are able to provide Superbox confirms our readiness to 5G. In addition, through our infrastructure sharing agreement with Tuxat we now have nearly 10,000 cable subscribers. Next slide. Let's buy people into marketing campaigns which boost customer engagement and loyalty. Our 25th anniversary of campaign show 4,500,000 participants, 2,200,000 of Uber Intelligence Services. Our legendary shakehandling campaign with over 13,000,000 participants during the quarter has distributed over 140,000,000 chips, including Mini's data subscription to our digital services. Despite the premium pricing, Our new promo score, sorry, net promoter score remain 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 draws 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 4a half gs users and 7.4 gigabytes per users. Out of 31,000,000 customers signed up for our 5g Services, 18,500,000 had 4a half gs compatible smartphones. Loan for growth here underline the potential for greater data usage by a wider customer base as for enhanced user consume more than twice data. Our network registered close to 1,700,000 net additional 4.5g compatible smartphones over the past year. And despite the regulatory limitation and higher retail price, we have seen an increase of 500,000 in the first quarter. Next slide. A few words on our performance in the international markets. Chipset International generates 7% of group revenue. Our operation printed up and growth of 17% year over year in local local currency terms on the back of strong output. These drivers took 52% in TL turns, reached the impact of currency movements. Both Ukraine and Belarus operation have continued to focus on expanding the porting penetration and to use your VISTA services. Accordingly, we know 1,000,000 active digital services user in Ukraine, but for our how to user reach 36% of beta users within 1 year. Going forward, our strategy focus will be on 3 key areas: our digital services, digital business solutions, and our texting platform. For digital services, we will continue to work on increasing their usage Also, we will establish new commercial partnerships to export our portfolio. We will solve the digital transformation of both private and public sector through the digital business solution arm, including meg megaproject like the Anton Disportation of City Hospital. We are capable of offering tailor made solutions given our vast experience and some business partners. The digitization of financial services is another area of great potential. NIM Technologies, enabling more efficient and lower cost access and from the cost of what brings the whole financial sector to the brink of nation's disruption. Already invested in this area, we have the best tools and access to lead this change. This will be our turks area. As we move forward, we will remain alert for new business opportunities and has always expressed more to come. And most importantly, in the new area, we aim to send you our emotional ties with our customers. On positioning 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. Some infrastructures as a the meeting of targets. Today, our well invested mobile efforts or press on the widest frequency in Turkey. Our 43,000 kilometers of fiber and 8 data center enabled us provide a high quality services with the capability of 10 gigabits speeds at the 1st in Europe. Additionally, we provide fixed broadband to more households through regulatory agreement with Tucson And Motorhome Turkey. We have agreed not to duplicate investment. Joint infrastructure will enable Turkey to roll out Fashi in the fastest and cost effective manner. It's such the interest primary of our country but also of all parties involved. Therefore, we remain focused on this better to finalize it before Turkey adopts 5G. Next slide. S r digital services, total download switch 178,000,000 or a 75% increase at the end of the quarter. We've taught 6,000,000 downloads today. Active Deep user exceeds 10,000,000. 194,000,000 messages per day. Were sent through BIP in the first quarter, marking a new record high. This incident translation capability in 106 languages has been my direct company. The leading digital publishing platform directly has 12,100,000 active users. These have read some 1,300,000 magazines and newspaper per day. Nice to its expanded content. All 8,000,000 songs were streamed daily on average on while over 60 documents were uploaded to a person per day on life plans. James played on deep reach $36,000,000, up from $30,000,000 in the previous previous quarters. Next slide, overactive in our international subsidiaries, our visitor services are set for expansion in new markets. As such, following the one time with Molosa in Moldoa, we have also signed cooperation agreements with Oak Telecom, Albania, Chicicorp Group of Nepal, and this is a group of Caribbean. In total, these countries number 38. While while continuing to work on increasing the usage of this digital services, we will establish new commercial partnership for digital export. As the 2nd 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 and turn ICT solution by leveraging the ability of combined telecom services. The total addressable market in this field is estimated to be $20,000,000,000 in 20 including connectivity, hardware, cloud services, security services, IT integration and solution using AI, IoT and big data. We all have a strong know how of industrialization that includes health care, energy, and public sector, transportation and will focus further on the strategic industries. We are confident of becoming the number one IT service company in Turkey within the next 3 years. Next slide. Our tech and services portfolio diversified by our Paycell, financing, and UNSED subsidiaries. Leading payment system provider, Paycell has established 3 vertical business lines, including mobile wallet, cherry billing, utility payment, money transfer, QR code payment, and post services. Going forward, Paycell will focus on scaling its product, for example, with new partnerships. In the first quarter, some 5,000,000 Paysale users generated a 1,700,000,000 transaction volume. Registered credit card on Paysale will continue to rise, while PACE our credit card today, number 1,500,000. Our consumer finance company finances, 28,000,000 credit score customers in multiple times higher than a sizable bank in Tokyo. Underlining its potential, Our insurance business prevents us, finance, finance, and profit, and contribution to control cost of risk ratio. Moving to next slide. Encouraged by our first quarter performance and fostering what lies ahead, we revised our 2019 revenue growth guidance afterwards from 16% to 18% to 722 19%. Similarly, we are now confident of achieving our EBITDA margin of between 38% to 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 2 updates on the on our agenda. First, as announced last Friday, our annual general assembly scheduled for Friday, May 31st. Next, we have set days for 2019 Capital Market Day as 31st October 4th the first time in our history, we will fold in New York. At this event, we plan to provide an update on the group's strategy along with our 3 year outlook. Hope to see you all on that day, I will now leave floor to our CFO's, my Thank you very much, Bharat. Good afternoon. Good evening, everyone. Now let's take a closer look into the financials. In the first quarter, group revenues rose 19.2 percent year on year corresponding to PLN140 1,000,000. R64,000,000 of this increase is from Turkcell Turkey on back of the strong output. Our exit from the force facing 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 5.8% year on year to BRL2.3 billion with a margin of 40.2 percent. Last year, we had seen the onetime positive effect of our sales channel representation on EBITDA, creating a high base effect. In a quarterly trend comparison, our EBITDA margin marked a 0.4 percentage point improvement. Turksal turkey was the main driver with the 2.2 percentage point increase. Next slide. Now some highlights from our balance sheet and leverage. As at the end of the quarter, our net debt position came down to 11,700,000,000 from 12,700,000,000, thanks to the Fintur sales proceeds of TRY 2,200,000,000. 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 560,000,000. Advanced vendor payments of 1,000,000 and wireless usage fees of $520,000,000 paid every year in February. On the positive side, besides Fintur, we had a TRY 530,000,000 cash release from the deleveraging of the consumer loan portfolio. In routine fee consumer finance loan portfolio, our telco only net debt was R78.1 billion dollars with a leverage ratio of 0.9 times. Next slide. Now a few words on our texting company's performance. Despite regulatory limitation of financing installment, as well as currency pressure on the smartphone device prices, Canalcell grew by 14% year on year. Meanwhile, its consumer loan portfolio decreased to TRY 3,600,000,000, which has affected the debt to positive cash flow for the group. With an average ticket size of 1700, TL, our customers paid 124, TL per month on average. Cost of risk rose to 2.8 percent in March, which is still below the market average for general purpose loans. Loan insurance penetration of 95% over the past 1 year will help reduce this ratio as NPR due to unemployment will be compensated by this insurance. Meanwhile, our payment services company, ASL, 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 finance sales growth to slow down in line with its loan portfolio in contraction, while base sales growth will accelerate with new products and services. As a result, the texting 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 1.5000000000 in the quarter. Our operations generated TRY 2.3000000000 of EBITDA. Working capital rose by 8 7,000,000 due to mainly seasonal declines in trade payables. Investing activities, including advanced payments to vendors, led to a cash outflow around 1,600,000,000. Of debt, a 1,000,000 advance payment helped us to fix the currency rate and benefit from discounts on procurement. Regarding financing activities, we utilized a million equivalent loss from CDB at very attractive rates. Separate vendor financing from EKN of US50 million dollars was also secured in March. This have helped, further improve our liquidity position, which has almost reached $2,000,000,000 as of the end of quarter. Next slide. Now I will go into the management of foreign currency list. We continue to hold 100% of our cash in hard currency as a natural hedging In addition, with hedging instruments in place, the share of FX debt declined from 83% to 44%. As discussed, Fintur transaction proceeds have led to a long net FX position of 216,000,000 US dollars. As stated in the fourth quarter of last year, we target a neutral FX position going forward. This concludes our presentation, and now we are ready to take your Thank you very much. Ladies and gentlemen, Our first question is from Susa Tyrone from Bank of America Merrill Lynch. Please go ahead. Yes. Hi, everyone. Thanks for the call and, congratulations on the, 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 January Second question, moving on to, to OpEx. It seems that the most of the cost actually, sorry, was that increased faster than revenue was, cost of goods sold. Can you please shed some light on, which cost grew faster than revenue in cost of goods sold. So the question, can you please, explain why there has been such such an improvement in margins in international operations. And then finally, on shareholder remuneration, have you made or are you planning is the board planning to make a recommendation on the dividends for 2018. Thank you. Okay. 1st of all, thank you very 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 the last quarter was like 27%. So mainly, it's it's coming from our corporate business. On the OPEC side, cost of goods sold. This this was coming from our terminal, smartphone, tablet, sales part of it. We, and this is, this is kind of low margin business for us. So it impact our OpEx OpExPA. By improving the marginal international operator, this is mainly IFRS 16, impact of the Belarus we did our cap, we on the other hand, we have some organic growth as well out of total growth, 4% is coming from organic growth of, 4% margin, our organic growth of Ukraine and operation. So we have 4% organic. The other parts coming from IFRS 16 adjustment for the capital expenditure side. What was the last question? Sorry, Yes. Just on the on the, on the dividend and whether the, the board has made or will make a recommendation, for the, dividend that will be decided at AGM? Yes. Actually, we expect to see 60% of profit to be proposed by our board. It is still up to the shareholders on till 1st May, but this is, typical behavior of Turkcell. So we are more probably than a proportion of profit. That's it. Thank you so much. Is from Harvey DeRuth 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 see you think the future for Tuxan? I mean, do you see a shift in the strategy for Tuxan in digital applications and what is in your view the most brighter future for Turkcell in digital apps? Do you think for instance, financials apps could be something? And what in your view could make, for example, some of your for example, pay sale to take off strongly? What is needed in your view to take it up strongly? So that's my first point of questions. My second question is back to the cost of goods sold. I was wondering how of the energy resale is in your number in Q1? I mean, is it a significant numbers or not and could have had as well an impact on cost of goods sold as well. And my third question is, mean, it looks like we've seen quarter on quarter a 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? And what do you think could be the impact on the EBITDA margins? And could it be as well linked with potential cleanup of some of the SIM cards your report. So those are my main three questions. Thank you. Okay. Thank you very much. Let's start the first question regarding our digital strategy. You know, there was a slight, about our strategy going forward. 1 of the pillar was, our digital services. And as a management team, we monitor the total value generated by our digital service in the accordance with our, 14.4 division. Our ambition developing and offering digital services in services is to reach our customer lease by meeting and all their digital needs. So we we focus, digital services, digital strategy. On the other hand, one of our pillar is the texting platform, which is based on, pay cell and pay cell application. So texting is quite important role and important aspect in our segment we have, charges 5,000,000 clients. This is bigger than any bank in Turkey, probably bigger than and our largest bank in Turkey has 8,000,000 subscribers. So, you know, this is clearly shows opportunity for us. And we are planning to introduce new product to monetize our, mobile payment and other stuff with Paycell. We do believe that we have strong position around it. Regarding cost of goods sold, The energy part is not significant because, one of the, major customer of energy is is is our Tucson out of Turkcell, I mean, to the to the market, our energy business, like 37 1,000,000 pianos is a significant, actually, mainly cost of goods or silos rely on terminal sales. I mean, our smartphones tablet and other agents. What was the 3rd question? Oh, okay. This is, obviously, for the churn rate, for q4 churn rate, it's not a a organic churn rate. As you know, we're doing some action during Q4 for the customer we're closing down, shutting down some of the customer for if they don't bring any value to us. So I don't think it's a good idea to compare with Q4 versus Q1, but obviously we would like to keep the sustainable churn rate around 2% range, I mean, around 2% range is, I think, quite healthy churn rate for us. But not you cannot compare Q4 versus other quarter. Q4 is not organic churn rate. All right. Thank you very much. Our next question is from Slava DeGets from Goldman Sachs. Please go ahead. Yes, thank you very much for the presentation. A 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? And also, do you aim for some modify your digital, your asset light or financial hedging strategy that is currently in place? And secondly, it 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. 1st of all, in terms of in terms of our strategy, we do believe in digital services, Since I've been in the company for 12 years, as part of the digital service strategy and this is one of the strong arm of Turkcell. So 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 establish a company for integration and digital transformation side of the business. So we do see that there is opportunity, as I mentioned, $20,000,000,000 market is around for IT and, communication side. So we need to capture that that part as well. For the tech win side, this is new to us, but also you're you're preparing ourselves for the tech win platform. It's not just, financing. It is also as a platform pay sale, the new application on pay sale payment system, mobile payment, etcetera. This is, also opportunity, for us in Turkey and around Turkey as well. So 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 close since Q4. Q4 is, as I mentioned, Q4 is exceptional quarter in terms of every reason because, we did inflation campaign, inflation reduction reduction campaign during Q4. So we gave double of, capacity to our customer So our customer is very good. They utilize this capacity. So Q4 is is exceptional here in terms of the exceptional quarter in terms of usage, number of customers. And so the the real comparison should be the Q1 2018 versus Q1 2019, we had 34% growth, I believe. Thank you very much. Our next question is from Ivan Kane from Francis Capital. Yes, good afternoon. Two questions for me, please. Firstly, on the inflation or pricing is there any pushback from the government on that or from the consumers? And then secondly, about the automotive project you're involved in. Can you please comment on, how much equity do you plan to commit to that? Or are there going to be any other liabilities for you like debt guarantees or something like that? Thank you very much. Yes, let me start with the first question. Inflation, the pricing is continued. It shows our up in our ARPU growth. ARPU grew around 14% range as well as our like for like growth is 19.6%. So we're continuing doing our inflation and pricing, it it, it shows we need that because our our cost is depends on, inflation. So we'll we'll continue doing inflationary pricing. We don't have any any anything from government. So, obviously, everybody would like to fight with inflation including us. If inflation is going down, you'll stick on this one as well. The second question, how much equity to commit to projects, we have no commitment to the brothers. No, okay. But you, I mean, it's a significant investment that at least the government plans So for now, there is sort of nothing to comment on yet in terms of how much cash you contribute there? Yeah. Actually, we we we are partnering with, 4 other, other investor in this aspect. So we recently assigned a CEO to the to our, automotive automobile business So I think, it was better command on this one, but, there is no commitment yet, actually. So I I I would rather to status on her or his side. Just let me let me continue so far. We only put 19,000,000 Turkish lira as capital so far. Sure. Thank you. Our next question is from Andre Kabejek 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 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 of your guidance increase. That's my first question. 2nd question is, you always spoke about the double data. Inflationary measure from 4q18 as as a opportunity to upsell people, when this is reversed than 1q19. So if you could please comment on how successful or not you are with upselling people? And 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 $3,000,000,000 towards the end of this year? Thank you. First of all, regarding IC and digital business solution. We expect to see 30% cover of the business next 5 years. And we would like to reach 4,000,000,000 Turkish Stella, on the, on this side. Regarding, our guidance increase, I think, you know, the first quarter strong result shows us that we can increase our target, guidance increase. So and also We do transfer our our team and our strategy and, an opportunity. And also, you know, for the 3rd question, I'm sorry, for the second question, how successful we are on the upsell performance? Compared to February March 2018, upside figures increased by 30.7 percent in February March 2019. Our upsell per sub package increased by 56% which means 16 dirham versus Tundra. So, at the same time, if you compare 2018 Q1 and 2019 Q1, The on sale ratio decreased by 12 points. I hope this will answer the second question. Regarding, Turkcell Financial Services portfolio. This started the year with 4,200,000,000. Now it is 3,600,000,000 and our expectation for year ended 2 point $7,000,000,000. Can I just confirm, please, you said the ICT, just to confirm the figures, you said 30 3zeropercent CAGR over 5 years and you expect that business to be 12,000,000,000 size for Turicel? 4,000,000,000. We expect the business in 5 years to be 4,000,000,000. With 30% compound annual growth rate. And the sir, can I just confirm that the portfolio target? You said 2.6 now is the target? As of today, 3.6, about year end target is 2.7. 2.7. Thank you very much. Ladies and gentlemen, I would like to you. Our next question is from Gerald Demutas from Autonomous. Please go ahead. Thank you for the presentation. My question is about, possible the gains in the sector in general. And of course, you know, for Turkcell, how do you ahead of, you know, 5G may I don't know when we expect 5G, but do you see an opportunity for some side sharing going forward with the other operators do you see any potential gain from that side? Thank you. 1st of all, you know, our frequency and spectrum allow us to do 5 g deployment, as as much as we have. But obviously, vendors and and terminal is 5 is not that ready for 5 g. On the other hand, also, government is planning to the problem, we will plan to increase the spectrum or frequency part in addition to that. The receipt, we see this opportunity. So I don't think this is gonna happen for this year. But 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 SG, it is necessary to have, infrastructure sharing. Otherwise, it is it is very difficult for the operator that deploy multiple 5G network and get the benefit out of it or return on investment. So I think this is essential for the operators, but the 5 g, and and, sharing needs to be part of fiber sharing as well because, you know, without fiber sharing, I don't see any 5 g, any success of 5 g deployment in Turkey anyway. Does that answer your question? Yes. Thank you. And as a follow-up question, as you mentioned, in the 4th quarter, there was some subscription loss, but it was that, you know, the organic for some other reasons. But 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, you know, in terms of the, you know, the ARPU or the, do you care about the, you know, the subscriber log going forward? Is it, you know, reasonable to assume that you will be flat or you have some ambition to increase the, you know, the postpaid subscriber going forward. Thank you. Okay. You know, 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, a customer will less than $25,000,000 to decrease by 4% while a customer with more than CTL ARPU increased by 7% from Q4 'eighteen to Q1 'nineteen. So this is mainly the reason. We value our customers greatly. We have taken several action to retain this price sensitive customer by implementing AI based adaptive learning technology, which gives us the ability to do microsegmented prices. We have started to see the positive impact of this action starting from March in which we observed positive net add numbers. Thank you. Our next question is from Vilya Ibravenova from Federated Investment. Please go ahead. Hi. Thank you very much. Hello. This is Lily Breggin from Citi. Thank you very much for the opportunity. Wanted to ask a couple of questions first on guidance. Could you please, 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 the equipment sales, then the service revenue growth appears to be slowing to low teens. And maybe is it equipment sales that you expect to be stronger maybe is it maybe it is international performance that you expect to contribute to continue to contribute to the growth of the level, or 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 first question. And then second, yes, and then I'll come back to your second question. Okay. First of all, you know, there are number of things that, support us to increase our guidance. 1st, 1st of all, the 1st quarter performance, new organization and marketing activities plan we, it gives us confidence. The second thing, our corporate business shows some growth year over year basis. It seems it will continue to grow as well. Support of digital business solution and service revenue. So, I think these are the, important things that gave us confidence to increase our guidance. Okay. Thank you very much. And 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, growth, good growth in, music and TV, as well as cloud services. Is it, where how you is it marketing or is it perhaps seasonal? Just maybe if you could elaborate on the trends, we'd really appreciate. Thank you. To be honest, you know, our our trend in additional services is quite positive. There are some, seasonality effects or, our campaign effect in in in in f by f difference. So as of today, let me look at our services. Our BIP apps, grow like almost double from Q1 twenty eighteen to Q1 twenty nineteen. Just negative, you know, a little bit in a flat basis, but this is, as I mentioned, it's a seasonality. In fact, the the customer sometimes read more magazine or newspaper than the other Cision. On the music side, Fiji, we have a 2,900,000 subs in 2018 versus 3,800,000 active users. TV plus is almost more than double the performance. Black box, it seems, 80% low you know, when I go through all the apps has increased, just the barriers, itself has almost flat flat subscription or active usage. So this is mainly seasonal impact. Okay. That's very helpful. Thank you very session. Then click the submit button. Thank you for holding. Our next question is from Andrei Kapadia from UBS. Go ahead. Hi, thank you. I have a follow-up on the ICT. Just to understand, Muir, do you think this is your first sort of to the group in general, given your fixed business background, because it seems like this is a new opportunity or was this ever part of the midterm guidance growing your RCT business like this? To be honest, I've been in the company for 12 years. I have contributed a lot on on almost every strategy. So, the, I mean, the system effort and, as a company, we see the opportunity and we decided to invest in the ICT and, digital transformation project. And I think we did right because our corporate business was growing, like, 5 years ago, single digit ratio Right now, it is more than, 20%, which gives us, you know, opportunity and confidence in this business, and confidence to grow 30%, Calgary as well. So 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. So I think, but this is one of the important strategy And would you say, was this ever part of the midterm, guidance and growth target that takes had, you know, going back a couple of years? Or is this something that is quite new? Yes. Actually, this is We have been working on this digital business solution company last 6 to 9 months. We saw in the last six 9 months, we've been working on this one. So you can count as midterm, but relatively new, because we convinced the board to invest, in digital business solution, on this side Also, you know, we're working on, Capital Market Day, which is gonna happen, towards the 1st October you'll give more detail about our strategy, especially on the ICT and digital business solutions side as well. All right. Thank you very much. Okay. I am Yes. If you don't see further questions, I think, we are about to close the call. Yeah. No to call. Okay. Okay. Any further questions? There's no further questions. Back to you for the conclusion. Okay. Okay. So this is the end of our call. Thank you, Muratbeh, Osman May, for your presentations, and thank you all for taking the time to participate. And hope to meet you all in July 2nd quarter results. Have a good day. Thank you. Thank you. This concludes today's conference call. Thank you all for your participation. You may now disconnect.