Earnings Call: Q4 2018

Feb 20, 2019

Good day, and welcome to the Fourth Quarter And Full Year 2018 Results Conference Call and Webcast. For your information, today's conference is being recorded. At this time, I'd like to return the call over to Korhan Villeg, Director of Treasury And Capital Markets Management. Please go ahead, sir. Thank you, Ayen. Hello, everyone. Welcome to Turkcell's 4th quarter and full year 2018 results call. Today's speakers are our CEO, Mr. Kantarzolo and our CFO, Mr. Osman Yilma. We have a brief presentation and afterwards we will be taking your questions. Before we start, I would like to remind you to review the disclaimer of our presentation. Now I hand over to Mr. Thijsoll. Thank you, Korhan. Good afternoon and good evening, and welcome to Turkcell's 4th quarter and full year 2018 results call. 2018 was a remarkable year in our digital transformation journey. Our model has passed the stress test of challenging macroeconomic conditions in local and global markets. Our above industry revenue growth coupled with increasing profitability is testament to our success of our digital operator strategy. With TRY 21,300,000,000 consolidated revenues, up 20.8% year on year and up 49% year on year. Growth, thanks to our revenues generated from new and adjacent products. Our EBITDA grew 90.2 percent on 2 year cumulative basis, reaching 8.8000000000PL with a margin of 41.3 percent. In 2018, we saw 106 9,000,000 downloads of our digital services, a key pillar of our digital operator transition. About 20% of these downloads were by non Turkcell customers. Throughout the year, we continue to expand and enrich our digital services with new features. Accordingly, we have received a higher share of our customers 14:40 minutes in a day and created greater value within those minutes. In texting solutions, we strengthened the foundations of our business, deepened our competencies and increased our customer interaction. Paycell continues its firm progress towards becoming one of the strongest players in mobile payments in the world. A TRY 5,800,000,000 transaction volume was created through Paycell in 2018. Thanks to our business model hedging strategy, We generated solid profits as well as TRY 2,800,000,000 cash through our operations. This year marked another milestone for our asset light strategy with the divestment of our stake in future. We expect approximately EUR 350,000,000 cash proceeds and around TRY 650,000,000 profit and loss contribution in the first quarter of 2019. Next slide. Let's take a closer look to our financial and operational performance in 2018. We generated revenues of TRY 21,300,000,000 and 20.8% increase year on year. This brings the 2 year cumulative growth rate to 49%. The key driver of our performance was mobile ARPU growth, which came as a result of the successful execution of our 14:40 minutes of valuable customer engagement strategy. 2018 was the 3rd consecutive year of EBITDA margin expansion, with 41.1% year on year growth. EBITDA reached TRY 8,800,000,000 with a margin of 41.3%. Our bottom line performance was delivered through a combination of revenue growth, operational efficiency, prudent foreign currency and interest rate hedging practices. As a consequence, we reported a net income of SEK2 billion rising above that of 2017. Reflecting the increasing downloads and user of our digital services, The share of mobile, multiply customers reached 66.7 percent, mainly 1 in 2 fiber residential subscribers now uses our TB Plus services. The average data usage amongst 4.5 g users has continued to rise, reaching 8 gigabytes in December. In 2018, we distributed TRY 1,900,000,000 dividends corresponding to a yield of 7.2 percent. That brings us to TRY 8,800,000,000 dividend distribution since April 2015, reflecting a total yield of 30.3% and bringing the total shareholder return to 53%. Next slide. Now let's look at our performance in the context of our 2018 guidance. In an exceptional year like 2018, we raised our guidance throughout the year to give the most current picture to our shareholders. The resulting 20.8 percent top line growth was well within our guidance range. This achievement is due to a higher postpaid ratio a higher number of 4.5 g users, increased multi play and higher data usage boosted by our digital services. In EBITDA margin, we have slightly exceeded the higher end of the guidance range with 41.3%. This is the result of a strong OpEx management in a higher inflationary environment compared to 2017. Finally, with our disciplined capital spending, coupled with foreign currency risk management practices, we delivered our operational CapEx to sales guidance despite the TL depreciation. Next slide. Now some additional details on our quarterly financial performance. With a TRY 5,600,000,000 top line and TRY 2,200,000,000 EBITDA, we recorded a 39.8% EBITDA margin Our quarterly revenue growth of 20.6 percent would have been 21.4% excluding the impact of all out war against the inflation campaign. With our efficient foreign currency and interest rate hedging practices, we have continued to generate net income at a pretty stable quarterly run rate. Accordingly, we printed net income of 864,000,000 in the 4th quarter. Next slide. Let's elaborate on our operational performance. Downloads of and subscriptions to our digital services continued to rise. By the end of 2018, our digital subscribers had reached $85,800,000, up nearly $19,000,000 year on year. Our postpaid subscriber base continued to grow with 347,000 net additions in 2018. Now it accounts for 56% of our total mobile subscribers. Our monthly average mobile churn rate during the quarter was at 2.9% with the impact of seasonality. Excluding involuntarily deactivated subscribers, our churn rate was 2.4%. Our customers increased data and digital services usage and upsell to higher tariffs had increased mobile ARPU to 37.40l, a 15.8% year on year growth. On a like for like basis, mobile ARPU growth was 18%. The impact of all out war against inflation campaign on mobile ARPU growth was 0.7 percentage points in the fourth quarter. On the fixed broadband front, our fiber business has performed well with nearly net additions of 181,000. Including OTT subscribers, total TV subscribers reached 3,400,000 by the end of the year. Superbox is our innovative wireless home broadband product. Today, it is in 33,000 Households generating 102 TL ARPU. It's superior user experience makes superbugs stand out in the fixed broadband markets. Next slide. Let's dive deeper into our marketing campaigns, which have increased customer engagement and loyalty. In a unique campaign launched in the fourth quarter, we doubled our customer's data quotas with 6,000,000 customers participating. While supporting the nationwide all out war against inflation, We opened the door to a wider data experience for our customers' interest in video, photos, gaming, and much more. This promises higher data consumption as new habits are being formed. Similarly, With our Surprise Points campaign, we have invited 7,000,000 customers to visit specific locations to collect gifts of minutes, data, or subscriptions to our digital services. Our legendary shake and win campaign with 21,000,000 participants to date, has distributed over 600,000,000 gifts. This campaign has been instrumental in engaging and retaining customers. In addition to our ever more relevant digital services, our network quality, sales channel efficiency and overall brand image continues to impact us positively. Accordingly, we maintained a wide gap with the competition in Net Promoter Score despite the fact that the The key driver of our strategy, demand for data and digital services. Average mobile data rose 37% in a year to 5.9 gigabytes per user in the fourth quarter. The main driver of this increase is the rising consumption of 4.5G users, which reached 7.6 gigabytes per user. Digital services have been instrumental in driving this increase. They generated almost 21 terabytes of traffic on our network in Q4. Out of 30,800,000 customers, signed up for our 4.5G services, $18,000,000 have 4.5G compatible smartphones. The room for growth here underlies the potential for greater data use by a wider customer base as 4.5G consumers, twice data compared to 3 gs. The regulatory change limiting installments for device financing, coupled with currency depreciation has put pressure on new smartphone device sales as mentioned in our third quarter call. And yet, our network already has a robust 74 percentage points smartphone penetration, of which 80 percent are 4.5g compatible. Next slide. In the fourth quarter, customer engagement through our digital services continued to rise. In addition to 31 minutes of GSM calls, the call time for voice over IP customers on BIC increased to 33 minutes. While a user on average spends 9 minutes interacting on our instant messaging platform, Our customers spent 81 minutes on the TV plus app, 18 minutes on reading magazines and newspapers on Dargillink, and 48 minutes listening music and video clips on fizzy. They spent 17 minutes on our gaming platform ASAP Playcell and similarly 17 minutes on beat gaming. For multiplayer online games, a tablet goes player, which is an online massive player on backgammon, has spent 35 minutes in the app. On Hadi, The live trivia game, the typical users spend 30 minutes on average on a daily basis. Some 2,700,000 searches per day are done on Yani, our search engine, while 41 documents are uploaded per person per day, and lifebox are consumer cloud service. All of these digital services have been enriched with new features in the last quarter, which I will elaborate shortly. Next slide. Looking back at their trajectories, we see each core digital service in our portfolio passing critical milestones at a faster since 2016 when we launched 4.5G. In 2017 2018, we witnessed and reach over 10,000,000 in 6 out of 8 core digital services, bringing the total to $169,000,000. In this journey, we registered a record uptake of 1,000,000 downloads of Yani, our search engine, in as little as 9 days after launch. Our efforts to make these services widely known continue at full speed, while we tirelessly enrich them with new features. Next slide. Let's look at the KPIs of our services this quarter, with 34,600,000 downloads to date active dip users increased to 11.5000000. 148000000 messages per day are dollars through dip in Q4, marking a new record high. It's money transfer and second number integration capability launched in 2018 has further differentiated dip. Apoquel, which combines an enhanced calling experience secure phone book, digitized 2,300,000 calls per day. The leading digital publishing platform, Bergelik, has 12,500,000 active users. Nearly 522,000 magazines and newspapers were read per day thanks to expanded content. Total visit downloads reached CHF 20,900,000 with over 7,000,000 songs streamed daily on average. It's launched in Germany, Ukraine, and Belarus its carplay mode and successful integration with Paycell were the highlights for Fizzi in 2018. Active TV plus users had 4,400,000, 3,400,000 sessions logins per day. Our enhanced movie content has attracted higher interest. Lifebox, our personal cloud app, has 2,600,000 active users, with 41 documents uploaded per person per day. Its ability to send content to print and phone book backup differentiate lifebox in the market. Our key tool in digitizing our customer contact formerly known as My Account, is now called digital operator, with 19,200,000 active customers that generate 27% higher ARPU on average. Digital operator brings a convenient, transparent and engaging tool to Turkcell's digital world. Yanni, our locally developed search engine, has been downloaded over 7,600,000 times, also available in web version Johnny has 3,000,000 active users. Payment platform, Paycell, hosting several texting solutions, has 5,200,000 total users, with transactions worth 5,800,000,000 in 2018. The Paycell app has 2,700,000 registered credit cards. Our fast login service, enabling secure and seamless sign in to mobile apps and online websites has 15,300,000 registered users. Fast log in is integrated to 40 services through which around 232,000,000 logins have been facilitated to date. Next one. Our data only offering, Lifestyle has continued to attract interest with users reaching 3,300,000 in February 2019. After offering users a tariff creation option, Lifecell now has more flexible and alternative tariffs. Using 8.6 gigabytes data on average, a live cell subscriber generates 1 point 3x the ARPU of a Turkcell Consumer segment subscriber. The churn rate of Lifestyle customers is 50% below that of the average Turkcell consumer segment subscriber. Next slide. We are committed to growth in the attractive gaming market with our multiple platforms, available in Vets and mobile formats playsell is a safe zone for kids, offering a variety of educational and entertaining games. Total play sell visitors reached 18,700,000 in 2018 with 81,000,000 total page views. Within less than a year, BIP gaming, unique visitors have reached 4,800,000 and active for 17 minutes on average. Multi player online games, Tal Lago and Hadi have both successfully captured consumer interest. Since since its launch, Hadi, Turkey's first online trivia game has attracted some 110,000,000 contestants. On New Year's Eve, a new record of 1,200,000 contestants on a single location was achieved. Talnago is an online version of backgammon, usually popular in Turkey. A player of Tavnago spend more than 35 minutes on average in 2018 during the play. Next slide. In the field of Texas, we provide a diverse Portfolio Services through Paycell, Humancell and Grandcell subsidiaries. Paycell, a leading payment systems provider also offers mobile wallets, carrier billing, utility payments, money transfer, and QR code payment services. Over 5,200,000 users generated a 5,800,000,000 TR transaction volume through Paycell in 2018. Our customers registered 2,700,000 credit cards on the wallets. Financell, our consumer finance company, facilitates customer access to smart devices with loans. It makes sense. We have a TRY 4,200,000,000 loan portfolio granted to 3,100,000 customers at the end of 2018. With over 28,000,000 credit cards credit score customers, in our cell has significant growth potential. This business delivers value to the group and is EBITDA accretive. In 2018, we expanded our tax and offering by establishing Bavencao Insurance, our insurance agency. Its first product was a health insurance package aimed at women. We plan to announce new products in the days ahead. Next slide. More details on Financial. As discussed in the 3rd quarter earnings call, a limitation on the financing installments for telecom devices has been introduced by the regulator as a prudential macroeconomic measure. This limitation, coupled with significant drives in the retail prices of smart devices, reflecting currency depreciation, has decelerated the revenue growth pace of financial. In the 4th quarter, the growth was 35% while the annual growth was 56%. This consumer loan portfolio has decreased to 4,200,000,000 which has effectively led to a positive cash flow for the group. As at the year end, Financial carried a portfolio of 4,400,000 loans outstanding. The average ticket size was 1700 CL. Consumers pay 116 TL per month on average, with over 88% also opting for add on loan protection insurance. Thanks to our strict credit scoring, cost of risk was at 1.9% in December, despite the challenging macro climates. Next slide. Let me share also a few words on our performance in the international markets. In 2018, we also transferred our digital competencies to our subsidiaries. Lifecell in Ukraine, the first operator to implement 4.5G services is taking firm steps towards becoming the national digital operator. The 3 month active 4.5g users reached 33% of total mobile data users. The average data consumption per user rose by 128% year on year, mainly with the higher data consumption of the 4.5G platform. In Belarus, 4g customer penetration has continued to rise generating a higher data consumption of 5.9 gigabytes on average in Q4 and greater digital service usage. In this quarter, we launched also lifebox and TV plus in this market. In the Turkish Republic of Northern Cyprus, Cuzay Kumar's Turkcell sold 13.8% year on year growth with a 32.6% EBITDA margin. In summary, these operations are well on track becoming digital operators, which promises higher growth rates and better EBITDA. Next slide. While we strengthen our operations in the existing markets, our growth strategy in the international markets will be shaped by an asset light approach. Accordingly, we established live cell ventures as the master franchise holder for our digital services for other operators. Through Lifecell Digital, our aim is to be a digital enabler for other operators under commercial agreements. Any operator willing to transform into digital provider is offered the option of acquiring our digital services portfolio in full in full, partially or as white label. In this regard, we have already signed an agreement with Moltzell in Moldova, and have more to announce next week at the GSMA event in Barcelona. Next slide. We now take one step further in building the digital future by launching our new brand, do 1440. Our region due stands for digital operator. Our strategy 1040 reflects changing the customer interaction from 32 minutes for its additional telco to 14:40 minutes reflecting our vision and strategy. To hear more of what we have to say, please join us at the Mobile World Conference in GSMA in Barcelona next week, or visit the website, wwwdigitaloperator1400.com. For highlights through Mobile World Congress. With this successful line to 2018, a solid start to 2019, Let me share our guidance outlook for the coming year. Having delivered on our 2018 guidance, we have full confidence in our ability to continue delivering solid and profitable growth 16% to 18% revenue growth for the group, mainly driven by continued growth in data and digital services and adjacent markets. With top line growth and operational efficiency, we also started an EBITDA margin of 37% to 40%. Meanwhile, we aim to stay within 16% to 18% operational CapEx over sales. Ratio range through disciplined spending. All in all, 2019 guidance reflects the 3 year targets we shared in March 2018. In 2019 and beyond, we will continue to execute our digital strategy to gain greater share of our customers 14:40 minutes that exists in a day. With that, I will now leave the floor to Osman Yilmas, our Chief Financial Officer. Osman? Thank you, Kat. Good afternoon. I'm good evening to all participants. 2018 has been a year of significant achievements for the Turkcell Group while financial markets naturally strong macro headwinds. Our business model hedges strategy, which we define as right pricing, affects an interest risk management, and liquidity management enabled us to achieve strong profitability and create shareholder value. In April, with our 10 year bond issue, He became the 1st company in Turkey to issue a tangible bond since 2015. And our balance sheet under favorable financing conditions, while confirming market confidence in Turkcell. We have also taken major steps towards our asset light strategy by divesting Fintur's assets. In the 4th quarter, group revenues rose 20.6 percent year on year corresponding to an incremental 1,000,000,000. This increase is mainly comprised of 745,000,000 from Turkcell Turkey on the back of strong ARPU, 140,000,000 from Turkcell International and 64,000,000 from Turkcell Consumer Finance. For the full year, group revenues rose 20.8% year on year. The other driver was Turkcell Turkey. Twixa International's contribution was 390,000,000 TF, and Turkcell Consumer Finance contribution to growth was 336,000,000 TF. Next slide. In the 4th quarter, EBITDA rose 28.8 percent year on year to ARS 2,200,000,000. This was mainly due to a solid rise in revenues and relatively low records of revenues. As a result, the quarterly EBITDA margin was a 3rd 39.8 percent. For the full year, consolidated EBITDA rose 41.1% to 8,800,000,000. So clearly, a nominal decrease in S and M expenses as relatively more general administrative expenses were the underlying factors. To sum up, QTSA Group delivered all time high full year revenue and EBITDA in 2018 despite the challenging macro environment. Next slide. Now I would like to talk about our balance sheet and leverage details. In the fourth quarter, our net debt position decreased to 12,700,000,000 With that, net debt to EBITDA ratio of the company declined to 1.4 times, achieving a level below our company target of 1.5 times. Major factors impacting our net debt position in the first quarter were CL depreciation, which was like 1,200,000,000 the leveraging of the consumer finance company, 600,000,000, and the last installment of, payment of our dividend also 0.6000000000. Quarterly cash generated before dividends amounted to 0.3000000000 Our telco only net debt was 8,600,000,000 with a leverage ratio of one time, notably below that of the 3rd quarter. In 2018, we actively managed our balance sheet. We issued a 10 year eurobonds in April and diversified our funding sources with vendor financing lease certificates, debt securities, and other debt instruments. Along with the leverage target, we also aim to further diversify our funding sources and to keep the average tenure of our debt portfolio at 4 to 5 years. Now I will go into the management of FX risk. As a natural hedging tool, we hold 100 percent of our cash in hard currency. In addition, by using hedging instruments, the share of FX in our debt at the end of the quarter falls from 84% to 42%. Our short FX position was at 224,000,000 USC by the end of year. As announced, we are about to complete the Fintur divestment As such, we expect to receive approximately €350,000,000 in cash in the first quarter of 2019. This transaction is not currently reflected in our financials. Once it is, our net FX positions will be 100 and 76,000,000 USD long. Going forward with Argentine neutral FX position, in 2019 and onwards. As discussed, another key development of 2018 was the sale of Fintur's subsidiaries, and ultimately, our agreement to sell our stake in Fintur Tatalia signed in December. This transaction enhances our efficient balance sheet management and focus on growth through digital services and will result in a cash inflow of 150,000,000 upon completion. Subject to the FX rate and cash position at closing, the contribution of this transaction to Turkcell's profitability is estimated at approximately TRY 650,000,000 in the first quarter of 2019. This brings us to the end of our presentation. Now we are Thank you. We'll now start our question and answer session. Just type your question and to ask the question text area, then click the submit button. Our first question is from Tazea Tyron from BAML. Please ahead. Yes, hi. Good evening, everyone. Thanks for the call and thanks for the ability to ask questions. I have two questions if I may. The first one, can you please explain a little bit the, deceleration of, of revenue growth at, at Turkcell Turkey which is now, I think, 18%, that's about 400 basis points deceleration for, this 3Q number. I mean, it's still very strong, but, I think below the, below the trend of inflation. And then my second question, the, the guidance range for, for EBITDA for 2019 is obviously quite wide. I mean, does it obviously reflect the multiple, possibilities for, for micro inflation and the lira in 2019? And do you think that this guidance is as conservative as your guidance was a year ago? Cesar, thank you very much for your questions. First of all, let me start the first question in terms of deceleration of revenue growth in Drinksdale, Turkey. Franco speaking, when you look to growth numbers, I think it is important to take the overall trend over 2 years into perspective. So we are actually quite comfortable with the level of the estimations and the guidance we have put for the first quarter. Given the macroeconomic conditions in Turkey, but more importantly, we are comfortable with the 49% year on year growth that we are exiting 2018 with. And we expect actually a similar strong performance looking into 2 year on year growth rates also in first quarter. Now guidance range overall, again, once you mentioned that it's wide. But again, if you look our 2 year on year growth rates, I think, we are maybe prudent, and I think we should be prudent in the context of the macroeconomic conditions in Turkey with an upcoming election. So we believe that these are the right figures that we can confidently share with yourselves at this particular moment. I would like to also mention that in Q4, there has been a countrywide initiative in a fight against the inflation. And our numbers also reflect 0.7percent, I think, percentage points, with regard to the doubling of the quotas. Therefore, reduction of the Kota excess revenues for Q4, which was a one off. So please keep those into consideration assessing our guidance. Thank you so much. Our next question comes from Johan Kim from CLO Capital Partners. Please go ahead. Hi, this is Mivanke from Nextelis. Sorry, just to follow-up on the EBITDA guidance. So why your EBITDA profitability would drop from 41% in 2018 to 40% or below if about a third of your above EBITDA costs are inflation linked only and you plan to grow above inflation in 2019 anyway? So just any color on that would be helpful. And then secondly, on the digital services, So it's quite clear how beneficial those are for, loyalty and LTV. But maybe you could also tell us now since it's been a while that you're developing those digital services how much revenues they generate in aggregate, at least ballpark? Is it 1%? Is it 5%? Is it 10% of your revenue? That'd be very helpful. Thank you. Yes, thanks a lot. First of all, let me share with you that as we expand our business operations and tap into the adjacent markets such as energy management services as well as system integration services. You will see us delivering further growth in the areas of these additional businesses which are nominally EBITDA accretive but which might deliver slightly less EBITDA percentage points. In terms of especially system integration businesses, the likelihood of achieving similar type of EBITDA levels may not be the same. On the other side, we were in between 34 to 37 percentage points. So we are comfortably above that level and we intend to keep that levels higher than those expectations. Also, please keep in mind that it is a year of high inflation in Turkey So please accept our prudence in making these figures. With regard to the revenues coming from digital services. I always answer this question saying that 100 percent of our revenues come from digital services. It is a matter of what value you provide to the So we are not actually at all interested in breaking down how much revenue come from digital services, whether selling growth data. I think our objective is possible to sell only process data in the form of digital services, which absolutely has an impact on loyalty and ARPU appreciation. Therefore, we will not be, you know, breaking down our revenues based on digital services. Some of our customers like to watch TV, some others like to listen music, some others read newspapers, but we are in the process of actually making our pricing more precision made based on that, and that will bring us the right approach. Thank you. Our next question is from Andre Kalijek from UBS. Please go ahead. Hi, thanks for taking my questions and congratulations on a great year. I have, I wanted to ask around the the consumer finance company. If you can give us a guidance where you expect the total portfolio to end up on, say, 12 month horizon at the end of 2019. And, whether you can comment so far, what these laws have had, what sort of impact they have had in terms of your ability to, not just sell, say, higher end devices, but also upsell to higher tariffs that usually, I assume, come with these higher end devices. And second question, was related to, the, maybe a premature one, but related to the Fintur divestment, assuming you book, say, 650, 1000000 of of of gains in your net income, would this be, would this be included in the basis for a dividend proposal, for 2019 profit? Thank you. Okay. Thank you, Andre. With regard to the Consumer Finance as we mentioned, regulatory changes and the foreign currency depreciation really reduced the affordability of smartphones by the consumers. Therefore, we expect about TRY 1,500,000,000 de leveraging on our consumer finance business in this year. Having said that, paying less for the device as an opportunity for us as the telco to increase the services component of the total offer. And this is also an important thing that we will be focusing on. In terms of high end devices, the taxation on higher devices have also increased. Therefore, we expect, actually, mid and low end devices to have a bigger share in Turkish market. And that will, of course, also encourage us for higher tariffs. Which regard to the Fintur question, the $650,000,000 expected gains. Of course, it depends on the foreign currency, in the date of the closure. This will be included for the base 4 dividend proposal. The question is, it will be in 2019. Because we were going to be booking it, this quarter. Yes. That's understood. Thank you. And just if I may, one follow-up, the 1,500,000,000 that is a reduction compared to what the 3rd quarter number or the 4th quarter number? Along the year. Along the year. So, sorry, so from 4.5 total to 3,000,000,000 roughly is your expectation by the end of 2019. Just to confirm. That's correct. By the end of the year, you should expect the 3 billing figure. Thank you. Our next question is from Salva Zekayaras from Goldman Sachs. Please go ahead. Yes. Thanks for the presentation. A couple of questions. So firstly, it seems like your mobile prepaid subscribers declined quite significantly during Q4. Is it purely due to the new policy of the subscriber definition or there is something else behind that? And secondly, how should we treat your medium term, growth guidance? It doesn't seem like you changed that despite a better 2018 results and also a better 2019 outlook. So basically, do you aim to grow 14% to 16% in 2020? So let me start answering your first question about the prepaid subs declining in Q4. This is a combination of seasonality, but more importantly, in the year end, we make an involuntary churn based on the last 9 months inactive numbers. So every year, this is a routine transaction that we do. So it is actually in line with our expectations, not an unexpected event. With regard to the midterm growth guidance, if you remember, we provided 14% to 16% over 3 years. And we, we actually indicate that now for this year, we're expecting 16 to 18. These are basically our guidance is we are not changing our 3 year guidance at this particular stage, but we hope to make another Capital Markets Day over the next 12 months period where we will be able to refresh those our 3 year numbers as well. Our next question is from Otin Austerin from Wharton Company. Please go ahead. Woodham and Company. Maybe a follow-up first on the Fintur deal details. It's listed from the fifty one off gain that you are going to book in the first quarter. This is net of tax. And given that we proceeds are euro denominated, what the underlying exchange rate assumption. That's my first question. My second question is regarding your asset light strategy given your printer access and your audience cost plans to create value crystallization at your other subsidiaries are you still planning to lift your power and fiber assets in safety? And maybe a third one earlier today, I've seen you press release from you stating that you'll be objecting to the refund. Getting tender. I'm trying to understand the rationale here, given the entrants, the other party dinner Science against group has basically lowered commission rates to almost nonexistent 0.2%. Why are you insisting trying to maintain these operating rights for the better gains. Thank you. Okay. So the first question, Fintur, one off gain in Q1 will be net of tax. So this will be a EUR 3,550,000,000 cash and EUR 650,000,000 in P and L impact. This is our expectation after the regulatory processes are completed. In terms of Fintur Exist, this was an important step into our asset light strategy. As we have mentioned earlier, within our portfolio, we have assets like towers and also the fiber company as well as our consumer finance business, who we believe, would be open for different strategic options over the next 2, 3 years, and we keep those plans intact when the market conditions are favorable. With regard to the Intelsat objection, we have been operating this business for almost 15 years. And we are well aware of the operating dynamics, the profitability and the costs that are necessary for running such a business. According to the specifications of the tender, we believe that this, percentage point offered by the competition is economically not feasible. And the tender specifications specifically state that it has to be economically feasible. That's why because of predatory pricing, reasons. And also because of technical competencies, we have made an objection and we look forward to hearing the decision of the final commission on that. To participate in the Our next question is from Chamel Demetra from Autonomous. Please go ahead. Thank you for the presentation. My question is related to your, EBITDA margin calculation in 4th quarter. As far as I see from your figures, your adjusted figures, the EBITDA margin declines to 39.8% from 41.3%. But when I look at the details, I see the gross margin is declining from 35 to 31%. And your OpEx is increasing from 11 to 14%. Did you ever need, you know, additional adjustment in 4th quarters, could you please elaborate the details about your depreciation and the other in other, some, in other, figure that affected the lower than expected, you know, contraction in EBITDA versus the growth and the OpEx side? Thank you. Considering the detail in the question, I will ask my CFO, Osman, to answer those questions. Actually, 3rd quarter is the highest season in telecom industry in Turkey, and seasonally, we have higher EBITDA margins, while we have lower margins in 4th quarter. So it's the main reason why we have a lower margin in q 4. And the second question, the only the the adjustment in q 4, As we were the 1st company to Turkey things in IFRS 16, we aligned our group companies to be adjusted as well. And in the fourth quarter, we capitalized the radio frequency costs in my cell and, best, our Ukrainian and Belarus operations and this decreased operational expenses by about $100,000,000 in the fourth quarter. It's not one of the adjustments, by the way. We will see the similar impacts throughout 2019 and onwards. Yes. Maybe this is a good point, Osman, that this was our 1st year of implementing IFRS 16 and made it the early application of that. And for our international subsidiaries, the Q4 actually was a specific timing for us. So compared to 3rd quarter, the utilization of 150 it's added an additional 100 in added to our EBITDA calculation as far as I understand. Because, you know, the numbers in the gross margin decline and the the OpEx side is much significant. So, you know, it's maybe it's higher. It looks like higher than 100,000,000 Turkish there, maybe, you know, you know, that in terms of, the difference. So if, you know, you have that gross margin decline like 5%, you know, 500 basis point and 300 basis point in the OpEx, higher OpEx. The total number is, you know, more, you know, putting the adjustment aside, the gross margin is 5% lower, and OpEx is 3% higher in terms of, you know, the the margins. So it's around 7.5% difference. But the difference in 1.5% in EBITDA margin, is much lower. So there's a you know, that might be more adjustments than maybe that figure. That's that's what I'm trying to understand. Actually, there are some other minor adjustments, but, they are not worth highlighting. We have some other, capitalizations which are, like, 35,000,000 in total. They are related to, capitalization of our digital content. Other than that, what drives our OpEx lower, is the cost control that we did throughout the fourth quarter. And, we don't see, the 4th quarter EBITDA margin is, better than what we envisaged for the 4th quarter the beginning of fourth quarter, you can explain to us by the season method. Okay. I think there is also some questions on from the okay. It's the Bank of America 1. We have another audio question from Cesar Tyrone from BML. Please go ahead. Okay. Yes, hello. Sorry for the, boring question. I was just trying to calculate the Q4 EBITDA margin in the Ukraine, and got to a very weird number, which was about 70%. Is that right? Cesar, yes, actually that is exactly the answer that Osman gave. Because we need the entire IFRS 16 adjustment in Ukraine in the last quarter. So that figure should have been actually distributed among the four quarters That's why the last quarter number is slightly higher than normal. The full year effect on the 4th quarter, that's why we have seen a substantial increase in the 4th quarter. It will be normalized in 2019. Okay, got it. Thank you so much. Thank you for holding. A question from Sierra Capital Gabor, Sunny, but I think the is right around our guidance and the EBITDA levels. So we have already answered those. Thank you, Gabor, for the question. So we have a web question from JP Morgan. I've seen for, more color on how much price increase we implemented in mobile segment in Turkey. We assume this is for the fourth quarter, or the full year, maybe we can I think, you know, the the right way to answer this question is, as you know, we have an inflationary pricing policy? So we are closely adjusting our prices based on those expectations. The only exception was the doubling of our quota's campaign in Q4, where we have disclosed the effect of that. But, our strategy of inflationary pricing has not changed and is a core, principle of our hedging strategy. Ian, do you see more questions? Yes. We have one further we have one further audio question from Antti Okstein from Wood And Company. Please go ahead. Yeah. Sorry, Coram. Maybe final one. I am looking at page 6 of your IFRS financials. In which one. And on the cash flow statements, in the pending operating asset liability side, in the last line, I see an item, changes in other working capital that is worth a negative CHF 982,000,000 And lastly, this item was significantly less than 255. Can you elaborate why this item has increased so much and what nature. And thanks very much for the question. Our short term trade receivables over the 4th quarter declined by, 305,000,000 shares. Yeah. And other current assets declined by 1,000,000,000 during the fourth quarter. The decline in the other, other current assets was mainly driven by the, which action in our, derivative, receivable, it was due to the, appreciation of Turkish there against US Dollar. And on the other hand, long term trade receivables declined by 450,000,000. Yes. And other non current assets declined by 370,000,000. Yeah. On the other hand, our trade payables increased by SEK300 1,000,000 over the 4th quarter and other credit licenses declined by 400,000,000. In sum, our working capital, needs declined by 100,000,000 Turkish over the 4th quarter. And the major 2 drivers was the reduction in our consumer finance receivables and the extended payment terms for our trade payables. Then click the submit button. Thank you for holding. So you say I need it all? We have no further audio questions. There is one more question I see, from Citibank. The question is there has been a very strong growth in lifestyle customer base. How many of these are new to Turkcell? So the answer to that is in Q4 is 25%. And overall, we have a run rate of 50% non Turkcell customers on Lifecell customer base. I guess, this concludes our call. Thank you very much for attending our call and for all the questions. It's always a pleasure to have a conversation and get your questions. I would highly, recommend that if you are in Barcelona during the mobile world congress, please visit us on 27th February at 10 o'clock. We're going to be launching our do fourteen-forty product. And we will be also making announcements about new partnerships around the world. Thank you very much. This concludes today's conference call. Thank you all for your participation. You may now disconnect.