Investor Update

Apr 10, 2020

Slides

Ladies and gentlemen, thank you for standing by. I am Gail your Chorus Call operator. Welcome and thank you for joining the Turkcell's conference call to present and discuss that Turkcell's initial take on COVID-nineteen. All participants will be in listen only mode and the conference is being recorded. The presentation will be star and 0 on your telephone. At this time, I would like to turn the conference over to Mr. Porjan Bilek, Treasury And Capital Markets Director. Mr. Blake, you may now proceed. Thank you, Kelly. Hello, everyone. Thank you for joining our call today. In this call, we aim to provide you with a brief overview of how the COVID 19 crisis has impacted our business operations as well as the immediate actions we have taken and how we see the long term opportunities We will also hold the Q And A session at the end of the call. Before we continue, I would like to kindly remind you to review the last page of presentation for our Safe Harbor statement. I will now leave the floor to our CFO, Mr. Osmayel. Please sir. Thank you, Korhan. Good morning, and good afternoon, everyone. It's very strange how drastically our life has changed in only a month. The COVID 19 pandemic has been disruptive for the whole world in various aspects at different levels. Each and every of us has been working to adapt our list to the new conditions. It took some, we prioritized from inside out, taking a set of actions swiftly that concerns all of our stakeholders. Employee health, uninterrupted service, and liquidity management has been on top of our list. Working into cloud's under each function we closely monitor the situation and analyze its impacts on our KPIs and our annual plan. Obviously, telecommunication services have become more vital than ever, an necessity to continue with our worklifts, our kids education, as well as for entertainment at home. As such, the sector has so far been defensive along with food and healthcare sectors. We also observed fast forward utilization both on consumer and corporate fronts. We trust that these behavioral changes likely to be permanent given the duration hence the availability of our unique portfolio of digital services and solutions, which will position us favorably in the post crisis area. And yet, we are aware of the potential risks arising from limited mobility and possibility of a prolonged scenario. Given the ambiguity and uncertainty, it is as yet early to discuss how our company performance would unfold under different scenarios. However, rest assured Turkcell management is fully aware of how we should respond under each from conservative to worst case. Moving to next slide. Now let me start by summarizing the actions taken by the Turkish government as several regulatory bodies. The list on this slide is not exhaustive, and frankly, new measures are announced almost every day. The first case was recorded in Turkey a month ago on March 10th. Within a week, all schools were closed by announcing an earlier damn planned supreme break and continuation of true online education thereafter. Places that motivate social gatherings, including restaurants, were closed as of March 21st, and a curfew was announced for the most at risk group, for example, the elderly and those with chronic disease. The curfew has recently been extended to cover youngsters. These measures are strict to practice particularly in large states. With all flights being suspended in country travel is also restricted. Besides these measures to ensure social distancing, several monetary and fiscal measures have also been announced. As such, an economic stability shield package worth 100,000,000,000 TL was announced that includes the risk the scheduling of tax duties, loan repayments, social security payments, and also incentive for businesses among others. Turkey Central Bank cut the weekly policy rate by 100 basis points to 9.75 with few liquidity measures for banks. State banks are encouraged to provide loans and below the policy rate to those in need. A cap on dividend payments was also put in place by the Ministry of Trade and confirmed by the Ministry of Treasury And Finance, limiting the payout with 25%. We currently read the decision as overriding our dividend policy. In any case, we, along with many others listed companies, are on hold regarding your call for the general assembly given the circumstances. Moving to the next Let me continue with a summary of what Turkcell's immediate actions have been so far. Actually, our immediate response concerned our human capital. Our employees, including over 10,000 call center agents, have been working remotely since March, 13th. Our ICT system have successfully entered the stress test of such a of those using the remote education portals and channels are esteemed health care workers and those subscribers still abroad. We immediately responded to the call for the closure of stores at the shopping malls. The bulk of our exclusive channels remain open for limited hours on 6 days of the week as well as non exclusive sales points. And yet, we encourage our customers to use our digital channel namely our website and our digital operator application. We bear the fruits of having made good level of investment on our infrastructure. Our network operations have been running smoothly as we make use of artificial intelligence for optimization. The teams are on alert with backup capacity in standby mode and with critical equipment orders are have already been submitted. On the balance sheet front, liquidity management has been the most critical topic on which we have increased our focus. To that end, we hold financial risk management meeting on a daily basis and to teams conduct dynamic revenue forecasting. Also, where possible, we have implemented cost control measures. Regardless, collection risk in some segments remains a concern. The trends of HP Monitor very closely. Moving to next slide. Let me now elaborate on how this crisis has reflected our business from the perspective of our 3 strategic focus areas. First, with our digital services, we have been offering alternative entertainment sources as well as platforms for communications to everyone for the past few years. As such, our communication platform beep has seen 10 fold increase in group video calls and our TV platform TV plus has recorded a doubling of data usage. Furthermore, people have been reading 75% more magazines and newspapers on our digital publishing platform directly. We are pleased to capture the rising demand for these products Secondly, regarding our digital business solutions for corporates, our teams have been extremely busy in answering 24 7 business continue for all our clients. We see a considerable increase in demand from the enterprise segment to enhance the remote working and education capabilities. This is a promising trend for the pre future. Further, given the importance of ongoing city hospital projects, they are accelerated with the call from the governmental bodies. This month, we will be opening the largest city hospital this month. Certain sectors and companies that are impacted severely by the pandemic, create the potential for the risk for this business line in terms of business content and collection. Thirdly, in our fintech services, Paycell has been busy capturing the business potential stemming from increasing demand for cashless payment methods. We observe a solid rise in usage of Paysat services, including online payment and direct carrier billing. The risk we attached to these strategic focuses, the merchant acquisition, through physical channels to slow down under these circumstances. Next slide. Now let's look at some figures from the last week of March. This is the period when the majority of social precautions were taken, including remote education and work. We have chosen this period with the week a month ago to compare before and after the current situation. Overall, total network traffic has increased by almost 35% even up to 50% in peak hours. 1 would expect the bulk of this increase to have come from the fixed network registering over 110% increase during some hours. The mobile network carried record high traffic at over 500 terabytes per day. TV plus and BIP increased their popularity with 10 fold increase in group video calls and 15% higher logins to TV. Regarding subscriptions, postpaid acquisition numbers were down 35% during subscription to, fixed broadband rose by 2%. Both businesses have seen an improvement in churn levels given the limited mobility. On the retail network front, visitors to our website and application ramp up by a 30% and 76%, respectively. We also recorded 20% higher bill payments through pay select. Next slide. Now, let me update you on the status of our international business. For Ukraine, quarantine rules still apply there. Telecom stores are allowed to remain open, but we encourage our customers to use our digital channels. While the market is prepaid dominant and remains vulnerable to the limitation of mobility, we have recorded some increase in both mobile and voice usage. Meanwhile, the Ukrainian competition board has recommended a halt to Price increases. The progress in IMF agreement talks has stabilized the financial markets and strengthened the currency in recent weeks. In Belarus, there is no official quarantine, but the public is gradually training from being mobile. This has led to a decline in store traffic impacting subscriber acquisitions and headset sales negatively. In the Turkish Republic of Northern Cyprus, the overall economy and the telecom sector are more vulnerable given the dependency on Tourism And International Student. Demand for student tariffs as well as hand san sales have significantly declined. Next slide. As we have been discussing during our quarter calls, purchasing a prudent FX risk management has been among the success factors of our business This has helped us to enter this fragile period with a long FX position of US115 $1,000,000. Our average debt maturities around 5 years, and we fund working capital requirements through bank loans, maturing the majority of our obligations. Our liquidity position offers a sufficient buffer to sustain our operations with $1,700,000,000 cash in hard currency, and only US1 billion dollars debt service in 3 years, excluding short term local currency loans. We have diverse we have available credit lines from diversified funding sources, both from local banks and international banks. The potential for a further slowdown in consumer finance business will also mean additional working capital release. Next slide. This slide features the major challenges and risks beyond paid at this stage. Again, this list shall not be considered exhaustive, but simply a list of risk factors we identify for the time being. Obviously, the declining consumer traffic at physical stores has impacted our consumer acquisitions. On the other hand, the mobile number portable to market also lost momentum contributing positively to our churn levels. Customer traffic decline has also negatively impacted top up levels in the prepaid segment particularly redosing the habit of visiting our stores and transacting in cash. The prepaid segment is a smaller part of our subscriber base with less than 20% revenue share in Turkcell turkey mobile revenues. In corporate segment, certain industries and SMEs have been vulnerable given the direct severe impact of the pandemic. Payment deferrals and temporary discounts will be under discussion with these customers. SMEs have some 10% in Turkey revenues. 1 revenue line, namely roaming, is clearly at risk. Roaming revenues in total are around 3% of our consolidated revenues. On the other hand, roaming costs will also significantly come down limiting the impact on margins. Our consumer finance business is subject to further slow down given the decline in device sales under limited mobility. Also, BRSA's resolution on deferral of loan payments will potentially increase the cost of risk in this business. On the macro front, analyzing unemployment coupled with decreasing purchasing power is also likely to negatively impact our overall business. Next slide. As with every crisis, this one, we believe also offers a few opportunities some of which we expect to monetize only when the dust settles. While some companies may have been caught caught flat footed given their belated digitalization, Thanks to our digital transformation over the past few years, our service solutions as well as available to digital channels have positioned us favorably, both now and also for the future. The disaster has been instrumental accelerating the digitalization of both consumers and corporate. We expect to see a greater demand for our services supporting remote work online education and e commerce in addition to entertainment services. Our fixed wireless access product, Superbox, has increased its popularity as it is still the sole alternative to fiber like speed. We have observed 125 percent increase in Superbox acquisitions. Superbox was already popular with more than 400,000 subscribers. And now, consumers increasingly prefer superbox due to difficulties in connecting to VC and school systems with copper based solutions. One particular area of upload speeds is also very limited due to technical capabilities of ADSF. In the texting area, the cashless payment methods have become more popular than ever demand for mobile payments has surged. We trust that the change in consumer habits will be there to stay paving the way for long term contribution to our pay sell operations. Next slide. Before we end our call and switch to Q And A session, I would like to recap our key messages of today Telecom services have always been critical in the daily lives of most of us, and this pandemic has made them even more critical for almost anyone. Continuity of work, education, and life itself has become dependent on telecom services. As such, we trust that Turkcell is well positioned meet the rising demand with its quality waste portfolio of solutions and extensive sales force. The accelerated digitalization of both consumer and corporates, enhances the opportunities for business and entertainment, which only emphasizes the higher demand we expect for our digital service transformation. Optimization of our channel costs with a faster than planned shift to digital channels will also contribute to our, profitability positively. Potential risks do lie in certain areas and for certain segments, including growing income, prepaid top ups and for SMEs. Risk of disruption to the global supply chain may also emerge depending on the duration of this crisis. All in all, balance sheet quality and cash strengths are vital to the sustainable to of operations during this period. Our balance sheet remains robust with some one $700,000,000 cash in end and our long FX position. This brings us to the end of our presentation. I now would like to open the floor for the Q and A session. Thank you very The first question is from the line of Dion Cesar with Bank of America. Please go ahead. Call and, thanks for, allowing, questions. I have 2 actually. The first one would be on the, on your network and how this, 30 5 percent, kind of unexpected, increase in usage. How how is the network coping with it? And then second, on the, on the potential impact from the corporate segment, do you already see, any, any risks from, but that, seems like that SME is asking you for, discounts or, you haven't faced it as as of yet. Thank you so much. Sazak, thank you very much for your questions. On your network questions, actually Turkcell is the most prepared network operator for this sudden capacity, increase. So far, we have witnessed 35% increase on our network, when it, if we split it in two parts, mobile and fixed we see about 40% on the fixed part and about 70% on the mobile network. At the mobile network capacity increase is, mainly coming from our Superbox product, our fixed wireless access product, due to limited mobility, Excluding the Superbox, the capacity increase, the traffic increase is not significant. Actually, we have been investing a lot on our network since 2016, especially on our mobile network, because in 2016, we switched to LTE. And since then, we have been increasing investing more than $1,000,000,000 each year to increase our coverage and also increase our network quality. We are, Truxell is the 2nd fastest mobile operator in Europe in terms of capacity. So we are not much affected by this network increases. Actually, our network team also make use of artificial intelligence to optimize traffic load on network and actively manage the capacity and we have been optimizing the new investments. Normally, in spring summer periods, we invest more in southern parts of Turkey where the traffic becomes more intense due to tourism season and seasonality. But now, we switch these investments to the main cities like Istanbul, Ankara, where population density is higher and where mobility is now, much limited due to cure field decisions. Moreover, we also test the capacity on our network occasionally and we already have done stress tests for this type of increases. We sometimes increase, we double the quota of our existing clients to stress test of an additional capacity increase, traffic increase on our network. So we can comfortably say that, Turkcell's network is ready for such an increase even for a prolonged scenario. And on the second question, corporate, Actually, this is the most risky part, and, along with the roaming revenues by try to highlight during the presentations actually, our corporate revenue share on our total top line revenues like 15% to 18%. And it mainly comes from a larger segments, strategic accounts and public accounts, where we expect less risk in terms of collection and revenue decline. So far SMEs have been asking for discount but the total number we have received so far is less than 1000, which is, insignificant given the total number of total subscribers. But if this scenario prolongs, we can expect further demand for payment deferrals and extended discounts. But currently, we are not expecting a sudden surge in demand for discounts. And also, you know, government announced support for this segment, there are some, there are specific supports for this segment in terms of loan payment deferrals. And also to support, employment, the government has announced subsidies for each, employees, for this segment. So we are not, expecting a particular problem from this sector. But if this prolongs beyond June, July, it will be a bigger concern for our company as well. But initially, we can say that the risk is relatively lower. Great. Thank you so much. Just, one last question, apologies. Just wanted to check. It wasn't part of your presentation, but I just wanted to check if you could comment on this, legislation, which looks at, capping the, the maximum, of dividends companies are allowed to pay in Turkey this year. Is there, is there anything can, you can share with us? Actually, this also came as a surprise to us last week, 1st minister of trade and then confirmed by Ministry of Treasury And Finance. We heard that a 5% dividend kept would be applied to all companies in Turkey, but, I can say that this is still a draft legislation and this legislation has, is yet to be approved, from in the parliament. And, certainly, these, overrides our dividend policy which is to distribute at least 50 percent of the distributable net income. And also it contradicts with our former payout performance, which is more than 80% in the last 5 years. But this was an unexpected event and please consider in practice that any prudent company and also government officials will wait and see the normalization of creases, crisis before removing this cap. Therefore, this 25% cap does not change the practical situation And hopefully if this situation normalizes maybe in the summer months, the cap might be removed and we might talk about the normal trend of digital dividend payout. Thank you so much. Very helpful. Thank you again. The next question is from the line Yes, thank you very much for the presentation. Two questions. Firstly, can you comment on the pricing outlook? Do you think you will continue inflationary price adjustments in the current market environment? And secondly, are there any limitations on the buybacks and can you potentially substitute the dividends with the buybacks? Thank you. Actually, we can say that we are not in an inflationary, we are in a deflationary environment given the sharp decline in oil prices and given that lower demand, significantly lower demand, we will also see a deflationary environment in Turkey actually, you know, Turkey was already in a dis this inflation path and this will be accelerated by the recent plunge in commodity prices and plunge in the consumer demand. Despite depreciation of Turkish era, we are not expecting rising inflation, and the FX pass through will be lower compared to previous periods on significantly lower demand. So, what I can say for now, we will not change our pricing near feature until the dust settles. Our aim is to upsell, our customers to more favorable offers based on their usage needs because, in certain segments, we see substantial increase in usage. So, we are our marketing team proactively offers this segment, more favorable tariffs, at higher prices this will be our tactical strategy, during this pandemic, period. And after the dust settles, we will continue to adjust our prices in line with the macroeconomic conditions and given the ongoing practices in our competition. And also for the competitors, all all players in the market have, shift their focus to ensure their services without interruption. We don't see any signs of price competition. And given the fact that part of the retail channels have already been shut down, we see lower churn rates, which also works in favor of us. So I think, until, mid summer, we will not see increase in competition and price changes in the market. On buyback, actually government has not announced any limitations on buyback so far. And today, I have seen a retail, a listed retail company to is their buyback budget. And, you know, last month, we also increase our mandates, we, we, received a mandate to increase our buyback budget by an additional 150,000,000 Turkish and we can use it, when necessary. But the market, so far, since we got this mandate, market has been stable, and we didn't need to use this. You're welcome. The next question is from the line of Artem Agasoglou with BGP. Please go ahead. Hello. Thank you for the presentation. I have two questions. The first one is continent the current environment, would you think that you can reach your 2020 guidance or is there any upside or downside or a major downside? Which, how would you say or comment on that? 6 and 20? When we plan to release the, both decision on the billings payout ratio and, what case would be for the general assembly? Thank you. Actually, It's important to tell the telecom industry compared to other sectors. We'll see a limited impact, from this pandemic. But anyhow, we will see some downside risks to our guidance and our any low freight plan for 2020. But so far in March, we haven't seen any shift from annual operating front, but in early April, we see initial signs of a slowdown in certain segments, including roaming and corporate segments, For example, roaming, roaming revenues make 3% of our top line and we see a sharp slowdown in roaming because all intranations and flights have been suspended and also demand from corporates significantly came down. Most of the business has been closed since mid March. And we have started to see initial impacts in April. I think in late April when we are about to announce our Q1 financials we will be able to give more color on 2020 guidance, but, honestly, it will be, relatively downside rather than an upside shift especially in terms of revenues, but we aim to keep our profitable stable by taking necessary cost cutting measures, because some of the revenue declines will also decline our costs So we and all in all, we will be able to give you a much reasonable and comfortable the figure for the outlook, in date, April. And the date for AGM, I think the date for the AGM that will be discussed, during the board meeting in late April. But you know, currently, all AGMs have been postponed due to in conditions in the country. The board will discuss the potential date for the Asia And as soon as these restrictions are lifted, we are planning to gather AGM, to get decision on dividends and other core protections. The next question is from the line of Mandazzi Edze with Unlou Securities. Please go ahead. Hi. Thank you very much for the presentation. I have a few questions as well. One is, follow-up on, your, dividend guidance. You mentioned about the cap provided by the Ministry of Treasury. So, should this be approved in the parliament first or, should we assume it's as as to when the 5% payout is at the final payout ratio for this year's dividend And, is there a possibility for higher, dividend for next year, for example, will that be a deferral, or dividend payment? And I understand that, for the moment, you are not increasing the funds allocated for share buybacks you're over the next business days. And second question is about is again about operations. He said, that could be a downsized risk to your revenue guidance of, around 13 to 16% for 2020. This is mostly due to overwhelming revenues and some, yeah, we will see some decline in consumer finance revenues. But on the other hand, you also highlighting higher data usage and possibly even higher share of postpaid subscribers. They will see mobile, growth trends is sustained, for the 1st half, particularly above CPR growth. And could you please also elaborate on the broadband ARPU generation? Thank you very much. On your first question, dividend guidance. And, there is a draft deals, which is still under discussion and, which will probably be, discussed in the parliament early next week. I think this dividend cap will also be a part of this Omnibus bill. It has to be passed from the Parliament. But, both trade and finance ministers have, declared that the cap will be applied throughout this year. So all the all companies including the non listed ones have shifted their dividend policy accordingly. Of course, if we postpone, if we were forced to postpone this, dividend payment and if there's a check, this will inevitably impact the payout for the next years. You know, Turkcell has these type of irregularities over the last 5 years, there were periods when we couldn't distribute or distribute it at lower payout rates. And then this was compensated in the following years. This might be a similar case, if this is postponed or kept this year. It might be, compensated in the following years, but it is early to, make a direct judgment on this issue. And if the things are start to normalize, and if the things does not extent, further, to sprint month winter times, we can see, that, the government might remove this cap and, the companies can, shift back to their original dividend policies. On your second question, operational downside risks, actually, the roaming is on top of the list because we it is totally dependent on the tourism traffic, both incoming and outgoing traffic is impacting our roaming revenues. In addition to that, corporate revenue is much more cyclical than our consumer segment because 80% of the consumer revenues are contracted and that there's no other alternative for this consumer to shift, to other, type of services but in consumer segment, especially device sales, and their investment for infrastructure will inevitably come down in the coming months. Consumer Finance is the other segment that we expect lower revenue contribution in coming months. It was a it was one of our businesses, which already which was only slowing down since late 2018 on back of macroeconomic developments. And, you know, the government had introduced kept for the maximum number of installs on device handset sales. We expect further slowdown in this business given limited mobility. So, but, the impact will be very small, and it's not a big it will not cause a change in our top line, standalone basis. Mobile ARPU growth trend, we still see strong ARPU growth in Q1. We will announce the figures in April 29th and we still see about 1 third of our customers are, have been spending more than their quotas which, gives us opportunity to upsell and to shift these customers to higher tariffs. ARPU growth, in near future will not come from price increases rather, the ARPU growth can come from, upsell efforts mainly. And in addition to that, we will see lower churn rates, which will also be supportive are consumer revenues. On peak broadband alpha generation, actually, you know, since last year, there are all fixed broadband quotas are unlimited. So it gives us a very limited scope for upsell. So we are not expecting a significant increase in ARPU levels in fixed segment. I for this year, I expect lower ARPU growth in fixed segment compared to mobile segment. The next question is from the line of Capatec Andre with UBS. Please go ahead. Thank you. Hi. Thank you very much for the presentation. It's it's great to have something that's, exhaustive and transparent. That's how many companies have done that. So thank you. Two questions for me, please. One is on the fixed wireless access you're mentioning that that could be something that puts a bit of a strain on your network and seeing a huge growth in in demand there. Now with with streets presumably quite empty in in in a lot of places in Turkey, do you think that's, the could, for example, lead to higher expansion or faster expansion of your fiber network currently and then shifting some CapEx towards that, direct and second question, just a theoretical one, do you think that, there is, you know, chance or or probability of any regulatory changes from from the current situation. Thank you. For your, first question on fixed wireless access, Actually, initially, we planned, this product, to utilize, our ideal capacity on mobile network. Because we, until, until last year, our investment in mobile network was more than some of the other operators in Turkey. So we invested us, lastly on our mobile network, and we had an idle capacity. And Superbox was the best product to utilize this capacity. And, with our 3 times our profit, ADS subscriber, you know, for ADSR product, which is low quality and copper based product with very low upload speeds. We are using 2 telecom structures and we are dependent on this infrastructure. And for fiber, we use our own fiber, infrastructures And we have some constraints to make new investments in the fiber rollouts. We cannot get, approval from the minister of communications for new fiber expansion. And we can unfortunately, we cannot increase our home pass numbers since late 2018. So Superbucks has been a very good suitable product in terms of replacing low quality ADS app and also utilizing our mobile network. So far, we have not been witnessing significant burden on our mobile network, with this additional 400,000 Superbox customers. But of course, if this number grows further, we still require additional investment, but we are not complaining from additional demand. If the additional demand comes, which means additional revenues, we will invest accordingly our network capacity is sufficient to cover additional demand coming from this segment. And we are ready to invest further if the demand increases further. And so far, since early March, when the first effects of pandemic was felt in Turkey, demand for our Superbox products has increased by more than 175% because, this demand is parallel to the customer's demand for more quality, home broadband solutions. We see many customers trying to switch from ADSL to Superbucks because with ADSL product, with very low upload speeds you cannot connect to, teleconfirm video conferencing systems. You can and you have you will have problems with accessing to the online education portals, etcetera. So, we have been seeing a surging demand for superbug products and we expect this trend to to the incoming months. And your second question on regulatory changes given the current situation, the Omnibus bill, the draft bill includes also some change for the sector, but all of them are positive for our company. One significant among them, is the changing contract types, type of contracts with the customers the the plant new regulation will allow customers to make digital contracts with the operators. It's, it's, if it is approved, it will bring significant change to the industry because, it will, remove the burden of, paperwork with the new contracts, and this, and this will allow us to make contracts through online channels. We have been investing in online channels for 2 years, including digital signatures, face recognition, and video call centers, to get custom to acquire customers from digital channels. So, this will be a very positive change for the market, especially for the Turkcell. Other than that, we are not expecting any price, related pressures from the regulator or ministries, because there have been some cases in other countries, but we are not expecting a similar reaction from Turkish officials. You think this could accelerate, for example, the, regulation around, fiber wholesale? Actually, there are still ongoing discussions on fiber infrastructure sharing and easing the restrictions on Turkcell for additional fiber hump based investments. But this is not related to pandemic related regulation change. And today, all the streets are closed. Even if you want, you cannot invest in fiber because the municipalities are not allowing for the new home pest infrastructure construction. But, I think we will have much more positive developments in terms of fiber investments of Turkcell in coming months. Once the pandemic effects, anti curfew lifted. Yes, sir. Can you just clarify that last bit? You said you expect, positive developments in terms of fiber investment, but earlier you were saying that you're you're restricted from investing in fiber. So Can you explain that? We have been, even though our, because, you know, the trip telecom has some privileges and some exclusivities for fiber investments. But 3 years ago, it expired, but even, took telecom no longer has the exclusivity for fiber, rollout, took cell, has not been granted permits for fiber rollout and fiber infrastructure investments, but, it about the change, we are seeking permits to make additional home paces in large cities and especially in large cities, where we still have, some leaking, home pass, even in Istanbul. But this is not related to the regulation change with the pandemic. This is another, discussion, on under discussion with the ministry and other regulatory bodies. That's understood. Thank you very much. The next question is from the line of Ebragimova Delia with Citibank. Please go ahead. Hi, thanks very much for the call and for the opportunity to ask questions. I had a couple, please. First is on Consumer Finance. Could you please give a bit, or explain, you mentioned the consumer finance as a positive for the the potential slowdown as a positive for the working capital. So if the if the a ramp up in the new business flows, or it gets delayed, then that means that you get more of that, release that there is the payment, the repayments, but you also mentioned it as a risk, that the new measures that have been introduced may, may affect the repayments. How does, the question I had is how does the new measures that have been introduced by by the government and that may affect the repayment, or delaying repayments, how does it work and and I Maya, some, I think most of the consumer finance is also, insured. Is there a way where you can tap for into insurance to get the payments on time. And the second question is, again, on your network, and as the discussion moves about the into the popularity of the fiber fixed or fixed wireless. How does your mobile network is configured? Could you give a bit more color, like, how many sites are actually connected to fiber. So maybe you can, or in, in with cities, whether you can offload the mobile traffic directly into, a cool fiber or, yeah, if you could give a bit more color on that, that'd be great. Actually, you know, BRSA and some measures affecting all the banking sector, including consumer finance companies. But, our loans from a consumer finance, our consumer finance company are micro loans. And on average, monthly payments are around 2.30 share up, which is like $30 per month. So, we are, we are not much affected the change in macroeconomic environment. Of course, it will have more, this current environment will have more negative consequences on banking sector because the ticket size are significantly higher than our consumer finance operations. And so far, less than only less than 500 customers applied for the deferrals of their payments. So, in terms of cash flow, we will not be much affected from this, deferral application. But on the other hand, our cost of risk will inevitably be affected from these measures. Our cost of risk as of the end of, last year was around 3% And I expect this, rate to increase towards, 4% to 5% in coming months Of course, there will be some difficulties from different segments in coming months, but, it will not delay or postponed the deleveraging of the company due to lower handset sales. And on the other hand, more than 90% of the loans that we give from Turkcell Consumer Finance, have been insured, and this insurance covers the unemployment cases. So in case the unemployment rises in Turkey, which is very likely, we will have a substantial amount of claims from the insurance company, which will limit the increase in cost of risk. On your second question, increasing popularity of our fixed wireless products to products, our fixed wireless access to Supermax subscribers have already reached 400,000, and, it's already it's has been only 1 year since we started this product in less than a year, we reached 400,000. And of course, if these numbers go if the number of subscribers increase further, this will require additional investment on our, mobile network. And one other factor affecting mobile network quality is the connectivity through fiber we are almost 1 third of our, towers are connected with fiber. Unfortunately, in Turkey, we cannot increase this further due to restrictions on fiber infrastructures. But, there is an intention from the government to start 5G in Turkey if not this year, but in 3 years' time, potentially, we'll see 5G launch in Turkey. But before we are able to start 5G in Turkey, we need to have at least, more than 50% of our, towers connected with fiber. If this is not the case, we cannot talk about a full fledged 5 g launch in Turkey. So I believe in near term, we will see more more of our towers will be connected through fiber. Thanks very much. And can I just follow-up question, unrelated to the first two on subscriber acquisition costs, is there a scope, that you, some of the or subscriber acquisition cost investments will decline this year, potentially, with the further positive impact on cash flow? It's maybe it's something that is That's enough. Below EBIT below EBITDA, like, on the balance, more on the cash flow. Definitely, we will see a decline in customer acquisition costs because our acquisitions are down 35% compared to a pre COVID period. And given the fact that we spend around $200,000,000 each year for customer acquisition, we can see a significant, slowdown in customer acquisition costs. But on the other hand, we have to support our, sales channels. We cannot let them go and fail. So as we did in 2018, we will be supporting our sales channels so that they can continue their operations and we can serve we can have uninterrupted service in our sales channels. But, this is not recorded under a customer acquisition cost. This goes below EBITDA. But also we are encouraging digital channels. Our sales from digital channels were roughly 8% of our revenues year, but this year, it also reached 12%. And we see increasing demand for device sales, accessories sales through our online channels. And online channel sales, per month reached 40,000,000 Turkish. It compares on a couple of, million Turkish compared to last year. So we see increasing, traffic in online channels. Also, one other part of our business, which will be negatively impacted from this case is prepaid top ups. Most of our prepaid to password, generated through our, channels physical channels, but now we see an increasing shift to our digital operator applications, our customer care application, and also our website to xl.com.tr. Also Paysat, our Fintech application, has been, witnessing increasing traffic for bill payments and also prepaid top ups. We are investing more and more to encourage digital channels, you just we are promoting these channels by giving subscribers pre gigabytes if they use, these channels rather than our physical channels. So, even this pandemic effect, our customer acquisition costs will gradually decrease in coming years, thanks to our digitalization efforts. The next question is from the line of Vamed Ipad with AK Invest. Please go ahead. Hi. I put it in a form making a lift, packing lift. How much negative impact should we expect, on EBITDA, from the 3 minutes and data packages printed to, certain subscriber segments. Actually, we have provided pre minutes and data package only to a very limited, including health care, employees, in total, which is in total 500,000 people, they are not all Turkcell subscribers, by the way. And it does not create additional burden neither to our network nor to our profitability. And also, we have been offering data package for EBA online education portal. Normally, we were providing 3 gigabytes to each student in this portal. But after this pandemic, we have increased this quota to 6 gigabytes. And the usage so far has been relatively small and, it will not create any burden, on our profitability as well. So the EBITDA impact from these 3 minutes and data packages so far is very minimal to our profitability. And in near future, we are not planning to distribute any 3 minutes data to others to wider segments. Thank you. And also, What's the share of corporate revenues in your total, Turkish revenues? Like 18%. Thank you Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Texo Manemingent and to Mr. Blake for any closing comments. Thank you. Okay. We have a long list of web questions unfortunately, we have limited time. We will take a couple and as IR team, we will be returning all, all answering all of questions coming from the web afterwards very shortly. This one, it's from Panar, Urol, the tech portfolio, Is there a change in or will there be a change in churn policy, due to unpaid bills And, is there a change plan in CapEx plans? For churn policy, we are not planning any change in our change churn policy. And for the second question on collection terms. Actually, the unpaid fields, will not be affecting our term policy. And so far, initial, signs, from collection performance, because we have limited evidence because it's been only 1 month since this funding started. The due date performance has not been affected significantly. Still about 70% of our customers pay on time, but we expect a deterioration if this case extends further, but this will not create a negative impact on our churn policy. And also for the prepaid lines, for this segment also, we are not, planning any change. Okay. And another question comes from, Alex from Reincap. Can you share the discuss the share of SME Business in your total revenue? SME segment is almost half of our corporate segment and it makes like 7% to 8% of our corporate revenues. Okay. And maybe last question, Osman, if you may, from Alastair Jones, New Street, is there any restriction around the ability to increase tariffs, any restriction on price increases? There is, there is no restriction on, price increases, but under current circumstances, it's not reasonable to increase prices. So rather than price increases, we are encouraging our customers to switch to higher tariffs bandwidth select customers who have potential to breach their quotas. So, it either, reduce churn and also increases our revenues. Thank you very much. Stay safe. Stay healthy. Have a nice weekend. Call. Bye bye. Call. Bye bye.