Earnings Call: Q2 2018

Jul 25, 2018

Good day, and welcome to the to the Turkcell Secondons Call. For your information, today's conference is being recorded. At this time, I'd like to turn the call over to Korhan Bilic, director of investor relations and mergers and acquisitions. Please go ahead, sir. Thank you, Elliot. Hello, everyone. Welcome to Turkcell's second quarter 2018 results call. Today's speakers are our CEO, Mr. Khan Thazulu, and our CFO, Mr. Osman Neumann. We also have our sales and marketing executive vice presidents joining the call. We have a brief presentation and afterwards, we will be your questions. Before we start, I would like to remind you to review the disclaimer of our presentation. Now, I hand over to Mr. Darzol. Thank you, Korhan. Good afternoon and good evening, and welcome to Turkcell's second quarter 2018 results call. Before we get to the results themselves, I would like to take a couple of minutes to say farewell to a dear colleague and friend of ours, Blantakso. As you may have heard, Blant recently resigned from his position as Chief Financial Officer to assume a key role within the Ministry of Treasury And Finance. Milan has been particularly successful in leading the implementation of best practices innovative financing solutions and excellent risk management. With outstanding efforts, he has made notable contributions to maintaining our company's solid and healthy financial structure. I take this opportunity to thank him once more. All of his valuable contributions to Turkcell and wish him great success in his new role. Today, I have asked him to join this call as our guest. Glenn? The floor is yours. Anything you would like to say to our dear friends. Thank you, Khan. It has been a privilege to be a part of the Turkcell Management team under your leadership. In a very dynamic 2 year period, we have made significant achievements both in Turkey and our international I enjoyed working very closely with the investor and analyst community and would like to thank them all for this good relationship and continued of our efforts. Going forward, I am confident that Tucson will succeed in achieving strategic targets on its digital journey. I am fully confident that Osman will do a great job taking it further. Osman has made significant contributions to sustain the group's healthy financial performance in his role as the head of Treasury management. Finally, I'd like to think that I will continue to serve the interest of Turkey at large in my new position. Thank you all. And I hope we meet again. Well, thank you very much. I believe what is good for turkey, what is also good for Turkcell. I wish you all the best in your new, career and Osman. Welcome. Now let's take a look at the highlights of this quarter. In quarter 2, our revenues grew 18.3 percent to 5 0.1000000000. This brings the cumulative 2 year growth rate to 52% with a real growth rate of 21 after inflation. EBITDA rose $46,500,000,000 to $2,100,000,000 and our margin now stands at 41.8 percent. The share of multiply customers using our mobile voice data and digital services reached almost 61% of our total digital services downloads have already exceeded 100,000,000. 47% of fixed residential subscribers use our TV services, with 18.5 compatible smartphones on our network, the average data usage has continued to rise reaching 7 gigabytes in June. Our strong second quarter performance has prompted an update on our full year We revise our top line growth expectations from the 14% to 16% range to 16% to 18% range while keeping the EBITDA margin and CapEx over sales targets unchanged. This quarter marked an important milestone for our fiber business, in line with our asset light strategy. Our appeal for the joint deployment of fiber has finally been received positively. All leading telco players in Turkey have now signed a passive infrastructure sharing protocol, which I will elaborate shortly. Last but not least, in this quarter, we paid the first installment of TRY 635,000,000 of our 2017 dividends. With the remainder to be paid in September December in equal installments. This makes us the only dividend paying company in sector in Turkey. Next page. On a quarterly basis, with a TRY 5,100,000,000 top line and TRY 2,100,000,000 EBITDA, we recorded a 41.8 percent EBITDA margin. This is an 8 percentage point increase in the EBITDA margin. Over the year. With our 2 year cumulative top line growth of 52% 107% 2 year cumulative growth in EBITDA, we achieved stronger margins and real growth. In the quarter, we observed Turkish lira depreciation and macroeconomic volatility compounded by concerns in the emerging markets. Despite these strong headwinds, we generated a net income of 4 15,000,000. This confirms the efficiency of our long term foreign currency risk management measures and the resilience of our business model. In the first half, revenues rose 17.9 percent and EBITDA 45.5 percent resulting in 42.1 EBITDA margin. Operational CapEx as a percentage of sales in this first half was 16%. Next slide. Let's elaborate on Turkcell Turkey's operational performance. In the second quarter, we had 37,600,000 subscribers in Turkey with 950,000 yearly net additions. This quarter, we gained 174,000 mobile customers. The postpaid subscriber base continued to grow with 205,000 additions the majority of which were from the corporate segment. In the corporate segment, we recorded the lowest quarterly churn of the last past 12 years. Our tailor made end to end solutions as well as our value propositions for corporates have facilitated their digital integration. Our fiber business continued to grow with 40,000 net additions. The number of IPTV subscribers enjoying the TV plus experience rose by 25,000 this quarter. Our quarterly mobile churn rate of 5.5% compares favorably to the competitor's quarterly average of 7% over the past year. Mobile blended ARPU in Q2 grew 13.3% to 34.90 l. Successful execution of our digital services focused strategy upsell performance, inflationary price adjustments, increased share of Triple Play subscribers and the larger postpaid subscriber base have all supported the rising ARPU trends. When considering the ARPU subscribers who have been with Turkcell for over 1 year, over 1 year, In another word, like for like growth now reaches 15%. Fixed residential ARPU rose 5.1% year on year due to rising monthly TV users. Next slide. Our marketing team designs distinctive campaigns for our customers creating additional incentives that invite them to try our digital services. We continue to see great appreciation for these campaigns as in the case of the legend we shake and win. The enhanced digitized shopping experience at Turkcell stores and superior network performance verified by independent company significantly boosts customer satisfaction. Coupled with our superior services, sales and marketing initiatives also increased customer satisfaction. We are glad to see that our customers have become voluntary ambassadors promoting our services as reflected in our Net Promoter Score. In fact, our latest Net Promoter Score further widens the gap between us and both of our competitors Next slide. Demand for data and digital services remain the key driver of our strategy. Average mobile data usage rose 30% in a year to 5 gigabytes per user in the second quarter. The main driver of this increase is the rising consumption of 4.5G users, which reached 7 gigabytes in June. Out of 31,000,000 customers signed up for 4.5g Services. From 18,000,000 have 4.5g compatible smartphones. This indicates a potential of additional 13,000,004.5G users to get smartphones capable of consuming these services. Tapping into this potential, we have continued to add about 1,000,004.5G compatible smartphones to our base this quarter. We have continued to encourage our subscribers to experience 4.5g through successful campaigns and our digital service platforms. Next slide. Let's take a deeper look into 2 important performance indicators that we closely monitor. Nearly 61% of our mobile subscribers use at least one of our digital services. This indicates a 14 percentage point rise from 47% in the second quarter of last year. These triple play customers generates 77 percent of mobile revenues in the second quarter with a 12 percentage point rise year on year, reflecting their ARPU other ARPU higher than the average subscriber. On the fixed side, our IPTV reaches the homes of 47 out of every 100 fiber residential subscriber. Next slide. In the second quarter, we have continued to observe increasing engagement with our customers through our digital services. In addition to 32 minutes of GSM calls, Our customers spend 55 minutes on the TV plus application, 23 minutes reading their link on our digital magazine platform. And 23 minutes listening to music on Fizzy. The call time for voice over IP customers on DIP increased to 39 minutes, while a user on average spent 16 minutes interacting one bit, chatting, sharing videos and photos as well as playing games. We continue to advance our digital services with new differentiating features, I will elaborate Here are the key performance indicators. With 21,300,000 downloads to date, BIP has 6,500,000 active users as of end of Q2. Deep now enables the use of a second number on a single phone via the application. UPCO, which combines an enhanced calling experience with secure phone book, reached 3,200,000 downloads. Around 1,000,000 customers actively use the service where some 1,000,000 calls per day are made. Our digital publishing platform, Deric, reached 6,500,000 downloads. In May, a wide range of international magazine were introduced to the Dargillic platform, elevating the content to nearly 1500 magazines and newspapers. A monthly average of 7,900,000 customers enjoyed the benefits. Nearly 7,000,000 songs are streamed daily on fizzy our popular digital music platform, which has 1,800,000 active users. We have migrated future upgrades and additions and also international usage. 1,900,000 monthly active users on our TV plus application had 8,200,000 session logins per day. This quarter, we have seen peaks in data traffic during the general elections in Turkey and the World Cup. Lifebox into which we have successfully integrated the option of using Paycell has 1,300,000 active users. Our key tool to digitalize connection with our customers. My account currently has 11,800,000 monthly active users. My Account users have 33 percent greater ARPU. This quarter, we introduced the web version of our search engine Yani, reaching a download count of over 5,000,000 in a shorter than expected timeframe, Yani has hosted 2,000,000 searches inquiries per day. Next slide. Our mobile payments platform Paycell offers differentiated payment options. Mobile payment ability, also known as direct carrier billing, has seen traction from 5,000,000 users making transactions at up stores and most known OTT players. The PASA Lab now with the new interface, is the platform for all pay cell services, including an enhanced mobile wallet. Users can top up their pay cell credit cards make utility duplication. There are 1,600,000 registered credit cards on the app, nearly doubling in a quarter. They have at depth has reached 1,500,000 downloads. Last but not least, the pay sell card available physically and online. At 277,000 users as the end of June. Enabled by Turkcell Technology, Paycell offers a low cost and easy to use alternative to the conventional banking system for both existing bank customers and the unbanked society. Next slide. Sinoncell, our consumer finance company, continued its steady growth in Q2 with a 63% revenue rise, while more than tripling net income year on year. The net income rise was mainly due to portfolio growth and higher insurance services revenue. Financials consumer loan portfolio reached TRY 5,100,000,000 including the contracted handset receivables of Turkey. Total receivables from handset financing rose 300,000,000 during the quarter. Finnacell has a portfolio of 4,700,000 loans, the average ticket size of which approximately 1500 TL 95% of loans were for smartphones and a cornerstone of our digital strategy. Consumers pay 85 TL per month on average with over 90% also opting for add on loan protection insurance. Next slide. Let's take a deeper dive into our gaming business. Turkey's vibrant gaming market has 31,000,000 gamers and the market size of nearly $800,000,000. With our technology and customer base, we aim to create the largest gaming brand in Turkey. We have opted for a segmented approach based on H Our plan is to offer games on 3 key platforms, including Playcell for those up to age of twelve game sell for older than 12 years and Kavilek for older than eighteen years of age. Deep gaming will serve as an umbrella platform for all these platforms. So far, we offer Playcel, which is a safe zone for kids offering a variety of educational and entertaining games. Available on web and mobile formats, Playcell users doubled to 1,400,000 in June from the previous quarter with 7,200,000 page views a month. As an introductory game to Pavinik, we have launched PabloGo, a Turkish back gaming application this quarter. You will hear about game sell from us as it rolls out in the upcoming periods. Next slide. Taking a closer look into Lifestyle, our data only offering built on our digital services and mobile data platform, with its unique digital services proposition, it doubled its subscribers in the quarter to 879,000. As of mid July, more than 1,000,000 subscribers are live cell customers. 70% of postpaid live cell users our new customers to Turkcell and we welcome them to our world of enhanced digital experience through Lifecell. Using 8 gigabytes data on average, a live cell subscriber generates 1.4 times the ARPU of a Turkcell subscriber. The churn rate of live cell customers is 21% lower than that of the average Turkcell subscribers. Underlining the attractiveness of our digital brands. And now we have introduced another first for the industry Lifestyle users can curate their own unique package from among the digital services portfolio globally available. Next slide. This brings us to the Turkcell International's performance in Q2. Turkcell International generates 6.5 percent of our group revenues. Our operations grew by 28.6 percent year on year to $332,000,000 in Q2 with an EBITDA margin of 36.9 percent. Lifecell in Ukraine contributes 63% to our international business. With the rise of mobile data revenues, life sell revenues climbed to 31.6% in TL terms and the EBITDA margin came in at 47.6 percent. Lifecell, the 1st company to provide 4.5G services in all 24 of last also started to serve on 1800 Megahertz in July, reaching 817,004.5g subscribers mobile data of these users reached already 6.6 gigabytes. In Belarus, the revenues of BEST rose 25% with an EBITDA margin of 16%. Higher data and digital services usage with 4g led to revenue growth. Digital Magazine, Music TV, and gaming services are the key contributors to digital services revenue. This quarter, Fizzy has been enhanced with local content in Belarus as well. Our Turkish Republic of Northern Cypress operation, Kuzay Kibas Turkcell saw 13% year on year growth with a 38% EBITDA margin. Taking our integrated operator approach to this market, they started offering fixed broadband in addition to mobile and digital services. Lifecell Europe, which we have rebranded as a digital offering at the end of last quarter now serves 260,000 customers in Germany with Turkcell Digital Services, including international money transfer and second number integration through VIP. Next slide. We have been expressing that our international growth will not be limited to our mobile operator footprint, As such, we are taking our digital services globally. This quarter, we provide a more cell group subsidiaries and partner in Ukraine Belarus and Northern Cyprus and Germany, partnership with mobile operators of other countries through life cell ventures, We pioneered this model in Moldova with Molesale. And lastly, the standalone growth and direct and customer reach of our services in other countries. For BIPA alone, we have attracted 1,400,000 downloads. In total, the apps in our entire portfolio have reached nearly 3,000,000 downloads outside of Turkey as of June, every available platform to collaborate on fixed infrastructure investment in the interest of efficiency and effectiveness. Our efforts on this front have reached an important milestone this quarter As a result, all key sector players have signed a passive infrastructure sharing protocol. We consider this a landmark protocol that will eventually pave the way for widespread availability of fiber in Turkey. In addition, we have signed an agreement with TurkSat To mutually share existing fiber home pass, which will provide us immediate access to an additional 3,600,000 home passes. We expect this process to prompt to our business plan once all necessary bilateral agreements are finalized. In the first half of the year, We have exceeded our growth targets and thanks to mainly a strong ARPU performance and increasing customers. The remarkable ARPU performance reflects strict pricing policy, increasing 4.5G customers, a higher share of multiply customers and upsell performance, encouraged by the solid foundation amid a tougher macro environment forecast for the 2nd half, we revised our 2018 top line guidance upwards. From 14% to 16% growth to 16% to 18% growth. We reiterate our guidance for EBITDA margin and operational CapEx to sales ratio. I will now leave the floor to Osman for the financial overview. Osman? Thank you, Pam. Now let's take a closer look into the financials. In Q2, group revenues rose 18.3 percent year over year corresponding to an incremental 789,000,000 This increase is mainly comprised of 601,000,000 from Turkcell Turkey on the back of strong ARPU, 89,000,000 from Turkcell Consumer Finance and 74,000,000 from Turkcell International. EBITDA rose by 46.5% year on year to 2,100,000,000 with a margin of 41.8 percent. This was mainly due to a solid rise in revenues, lower G And A and SMB expenses. In this quarter, we printed a net income of TRY 450,000,000. The TRY677 1,000,000 higher EBITDA was partly by R4.29 1,000,000 higher D and A expenses of which R292 1,000,000 increases due to IFRS 15 and 16. Net income was also impacted by higher interest expenses due to rising interest rates and the higher loan amounts, mainly resulting from 2.6 1,000,000,000 in dividend payments during this term and 1,100,000,000 capitalized lease obligations under IFRS 16. Higher FX versus what a result of FX volatility. In Q2 2017, Turkish share had appreciated 4% against whereas, due to this year, Turkish depreciation was 16%. Our net effects for this quarter was 279,000,000 which would have been 961,000,000 without the hedging instruments in place. Next page. Now I would like to talk about our balance sheet and leverage details. As at the end of the second quarter, our net debt position was at MXN10.2 billion with an at EBITDA ratio of 1.49 times. Excluding our consumer finance company's loans, our telco only net debt is 5,500,000,000 with a leverage of 0.84 times. Our net debt position was impacted in Q2 by an FX impact of 740,000,000 and a dividend payment of BRL641 million. Next page. Let me give you more color regarding our consolidated cash position. Thanks to a successful euro bond issue in early April, we strengthened our liquidity position by R2.5 billion dollars ahead of the uncertain terms volatility in global financial markets. The major items of the car to include EBITDA of 2,100,000,000, capital expenditure of 1,200,000,000, net interest income of 474,000,000 net change in borrowing of 1,600,000,000, mainly due to the Eurobond issue and the first improvement of dividend payment of 631,000,000. Next slide. Now I will elaborate further on foreign currency risk management. As a hedging mechanism, we hold 78% of our cash in hard currency. In addition, we use cross currency swaps to convert a large portion of our long term foreign currency debt to fixed rate local currency volume to 2%. In total, our short FX position was at USD 305,000,000 as at the end of of second quarter within our comfort zone. We also diversified our net FX exposure with different currencies, including the Chinese yuan. Excluding to USD 16,000,000 FX positions stemming from the capitalized lease obligations, our net FX positions would be USD 215,000,000 We have been applying prudent risk management policy consistently over the past 2 years. This quarter, we have benefited significantly. Our net effects of this quarter of 279,000,000 would have been 961,000,000 without the hedging instruments in place. Please also keep in mind that our nearly $270,000,000 US dollar share of interest cash is not reflected on our bet on success balance sheet nor in our net FX position. This is the end of presentation, and we are ready to take your questions. Thank you. We will now start our question and answer session. Questions. To the ask a question, text area, then click the submit button. Thank you for holding until we have our first question. Our first question comes from David JPMorgan. Please go ahead. Yes, hi there. Thank you for the call. This is JP David from JP Morgan. Two questions, please. The first one is just around your buyback program. So you've made some announcements that you are participating in the size and the scale of that buyback program, both for equities and bonds, but more specifically for the equity component. Second question, can you provide a little bit more color around the talks you're having with Mail Rou to partner around IP into Turkey and possibly outside Turkey. And I guess more broadly, your view on on partnerships with other internet companies to scale JP, this is Khan. Thank you very much for the questions. First on the buyback, as you know, about a year ago, we announced almost 2 years ago, we announced buyback program, which was close to TRY 300,000,000. As of today, we have consumed about half of this buyback program throughout buyback of equities and shares. Maybe, Korhan, you can give us an update on the current portfolio in terms of the shares and the bonds on this? Yes. We did start buying back in late 2016 and recently during the last 2 weeks, we purchased some shares. In total, we have about 9,000,000 shares purchased. And also US13.5 million dollars of bonds also purchased. As mentioned, roughly half of our 300,000,000 CL budget is consumed. Of course, we should look at this as a signal to the market that we see the share price significantly undervalued rather than dictating a price, we just want to signal to the market and support the share price against high fluctuations. As you can imagine, JP, the Turkish equity market is severely depressed at this point with very low valuations. And there are lots of speculative news around, and we would like to make sure that the market feels that we feel that it is the right time to buy back and we will continue doing that. Currently, we have not changed in terms of our buyback policy of $300,000,000. And in case that happens, of course, we will make an announcement clearly. With regard to talks with mail dot through, we believe in the Russian market, mail dot through has significant digital assets, which are complementary to our current Digital Services portfolio, specifically in the areas of mail services for consumers, corporates, games, as well as social media applications. We intend to work together with them on these different areas to complement our digital services And of course, in exchange, the same thing holds true for them. So we are working and this is just one of the part collaborations that we do with digital players. As I mentioned during our call, we have recently also announced a new capability for our customers to curate any digital service that they want. That practically brings all the OTTs as partly to our curated packages where our customers can reach to OTT applications through our billing credit scoring platforms So this type of collaborations, you can expect us to do more. Thank you. Thank you very much. Our next question comes from Ravi Rohit, HSBC. Please go ahead. Yes, good afternoon. Two questions also on my side. The first one is on the churn. Can you give us a bit more color on the reason why Q2, the churn has increased? And do you think versus Q1? And do you think it's temporarily phenomena? Or do you think there has been a change in the competitive arena that made that churn slightly going up quarter on quarter. And the second question is also on the on your interest expense. And I was wondering in terms of the hedging and the hedging tools you are using, have you experienced or are you currently experiencing an increased cost of hedging especially considering the higher volatility of the currency? First of all, thanks a lot for joining and for the question as well. In terms of the, the churn rate change. First of all, I would like to clearly say that we are extremely happy with the churn rate we have As you know, this churn rate has moved from 7 percentage points to almost 4.5 and now stands at 5.5.5 which is a reflection of actually seasonally changes. As you know, we have made certain changes last year from our from 9 months to 12 months for silent accounts. And this is now actually where we see, the trend stabilizing at 5.5%, which is extremely beneficial to us considering the averages of 7% in the marketplace. So we consider this as actually a very satisfactory level from our perspective. It has not been an impact of any competitive dynamic on the contrary. As we have mentioned, our Net Promoter Scores continue to increase the widening gap of the competitors as well as the customer satisfaction ratings that we see. With regard to the hedging and the cost of hedging, I will leave Osman to comment on it. Thank you. Actually, we have done most of the hedging for our core business. And over the last 2 years, we have, made significant executions in hedging and the overall post of these hedged are 11% in TL terms. And the remainder part is, forward trucks our consumer finance company. This company's hedging program is relatively shorter term because of the nature of this business. The average duration is 1 year, but we can reflect the increase in cost to the clients, and recently we increased the prices on consumer loans. So we don't expect a significant impact on our balance sheet from increasing interest rates, because we have done most of the hedges over the last 2 years with relatively more favorable costs. Maybe one more thing I would like to add, Harry, in terms of the hedging policy we have. We actually take the hedging concept beyond the hedging of foreign currency. We have a business model hedge mechanism where we hedge not only foreign currency exposures, but also interest rate fluctuations as well as the maturity of the loans we have. And this actually brings our next 3 year business model to be fully funded and eliminating all the potential interest rate fluctuations foreign currency fluctuations through this model. All right. Thank you. Our next question comes from Mr. Salva Goldman Sachs. Please go ahead. Yes, thanks for the presentation. A couple of questions. Sorry if you answered the questions, the same as part of the call. So firstly, how would you qualitatively describe the reasons behind your guidance update on the revenue line? Do you see high demand from your digital and data services, or you feel more comfortable with the inflation pass through? And secondly, could you please update on the progress with regards to the Fintur divestments? Do you still see the possibility to sell it by the end of this year? Thank you very much. Thank you, Slava, which you go to our guidance increase. We have made, I think, very clear that our business model involves inflationary pricing and practically the performance we had in the first half demonstrates that we have been able to move our prices up and while doing that also, win customers. So the reflection and the trend in the consumer price inflation in Turkey has moved from 11 percentage points when we made our first projections to now to around 14%, fifteen percent. So By definition, our performance and our projections and plans also caters to the 16% to 18% growth is perfectly feasible for the year. With regard to Fintur, our intention is to close this process by the end of the year. We are currently in process of negotiations for the remaining assets in the company, including Moldova and Kazakhstan. And I expect that closures to be happening by the end of the year. Okay. Thanks. As a reminder, type your question into the ask a question, text area then click the submit button. Thank you for holding. Our next question comes from Johan Tim, BTPay Capital. Please go ahead. Hi. This is Juan, I came from Mr. Keppel. So I have three questions, please. First on CapEx. So given that about 2 thirds of CapEx are, if it's eliminated, how do you plan to respond to the change and, reiterate, do you think you'll be just building physically left or, we should expect some increase in CapEx, longer term. Secondly, on the automotive project participation, you got 19% stake in it. And I was wondering, what kind of capital commitments do you expect to make into this project? And thirdly, given the current macro environment, which is quite volatile and tough. Do you still think tower sale in any foreseeable future would be possible? Thank you. Thank you, John. In terms of In terms of your first question on the capital expenditures, should we expect increase? The answer is no. We will stick to our plans. We are using the advantage of our balance sheet and cash position to do necessary hedging activities also on the capital expenditures front. Including doing advanced payments at significantly beneficial discounts, as well as planning for our expansions in line with our proposed and promised capital expenditure guidelines. So you can assume us that we will be sticking to our guidance that we have provided With regard to the automobile project, as you know, we are one of the 5 shareholders of this newly established company with a 19% share And we expect not exceeding $100,000,000 level dollar level on this initiative as in terms of capital expenditure over the next 4 years. Now on the macro environment, the tower sale, is we believe our tower company is a fantastic asset and we will be looking for monetizing this asset in the best way possible creating shareholder value. At this particular moment, in the depressed equity valuations in Turkey, we do not think it is the right time, but when the right time will happen, you will see us exploring our strategic options in the front. Thank you, Kam. Our next question comes from. Yeah. Good evening all. This is from Woodland Company. Two questions, but let me add the third one. Regarding COM based comment to the cover company. Well, given that we are seeing some milestone developments on the infrastructure, sharing side with the recent protocols. You have signed the Turk Telecom and Trucksat. What are the chances that we could also see a similar development on tower side, ie? Maybe bundling old cover assets in Turkey, which will be always secured accounts, deficit friendly move and possibly supported by the government, it would, I believe, also enhance your operating leverage and tenancy at Global Tower. So that's my first question. The second one is regarding your recents. We launched, gaming platform issued given the size of the Turkish markets and the dominance of PC and console games in this segment. How do you intend to monetize this initiative as a digital operator, is this going to be limited only to small screen and mobile devices? And what kind of subscription model are you? Planning. If you could provide us any ARPU, I'll stop here. Thank you. Thank you very much. With regard to the tower infrastructure sharing, this is something already in place. We have been sharing our tower infrastructure with Vodafone and Turk Telecom in addition to the other radio companies in the country. I expect as the regulatory environment clarifies further, we can take this collaboration into a higher level. I think the example of the collaboration we have now for the fiber infrastructure will also help accelerate the collaboration on this platform. I do expect that from now on, we're going to do very calculated and cooperative investments on the tower side with the other players as well. With regard to the gaming platform, we we think small is beautiful and we will stick to the small screens on the gaming platform and digital services We are providing subscriber mechanisms for these and also naturally usage of games consuming data is part of our packages and we design them in that way. We have different platforms on this. Including our instant messaging platform, which is a unique feature set that is embedding games into the instant messaging. But also, applications and portals allowing our customers engage on this. Thank you very much ladies and gentlemen, type your question into the ask a question, text area then click the submit button. Our next question comes from Jamal Demertas. Please go ahead. Thank you for the thank you for the presentation. My first question is related to the trends in 3rd quarter. How do you see the sentiments and the, you know, the consumption plans from your side, your sectors may be much less, sensitive to the changes, but in July, This is my first question. And the second question is related to your net FX position. Normally, I follow the net FX position from the balance sheet, you know, from your footnotes. And, as far as I see from your presentation, you have around 215 I would like to under understand, you know, what could be the impact of the currency changes on your income statement and balance sheet. Because when I look at the footnotes, I see that net effect is posted in your balance sheet and I would like to, you know, I'd like to understand the the real picture in terms of, quarterly changes And does any fluctuation affect your numbers possibly, you know, quarterly transition So I would like to rather understand how these things change. And, what's the the the the numbers we see in, food mode And this number, how could we reconcile these numbers in our, you know, the models? Thank you very much, Gemal. Now your first question in terms of the trends in Q3. Naturally, increasing foreign currency rates has an impact on the prices of smartphones. Our industry has proven to be very resilient towards market changes. And the demand for data consumption, digital services consumption actually looks intact and we do not expect a negative turn on those. But clearly, increased pricing of smartphones will have an impact on the demand in terms of customer's ability to buy these products. Having said that, our position with a consumer finance company actually gives us a competitive advantage also in that particular area. Therefore, I would see that over Q3 and Q4 as the new economic model in Turkey clarifies more, we will see actually more stability on all these fronts. With regard to the foreign currency position, I will ask once more Rosemont to summarize the details of that, so that it is clear. Thank you. Actually, in this quarter, we once again demonstrated that, our net income sensitivity to changes FX is very low. In a quarter, when, Turkish had shaded 16%, our net effects was was only 279,000,000. The figure you are seeing 250,000,000 is the, net effect position, excluding the IFRS 16 impact. In fact, including the IFRS 16 impact, as you see on the presentation, our net FX position is 300,000,000 Turkish. For the next quarter, if you want to project an FX, but for the next quarter, you can take the figure as the base case. We don't have plan to expand or minimize the FX position further from disposition. Thank you, Osvandeep. I hope you understand the impact of the foreign currency lease obligations, which are now reflected in our balance sheet due to IFRS 16 implementation. So they create actually a foreign currency liability, which is related to the lease obligations we have for the next periods. So that's why we give those numbers separately. Thank you. Thank you. We have no further questions new speakers. That's it for the conclusion. Thank you very much for participating and also all these questions. It's a pleasure to spend this time together with yourselves. And, currently, any more things on your side? Thank you very much. This is the end of our call. Thank you all for participating in the call. Thank you. Thank you. Bye bye. This concludes today's conference