Turk Telekomunikasyon AS

IST:TTKOM.E

Earnings Call Transcript 2021-Q3

[Operator]

Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the Turk Telekom conference call and live webcast to present and discuss the Third Quarter 2021 Financial and Operational Results. [Operator Instructions]

We are here with the management team, and today's speakers are CEO, Umit Onal; and CFO, Kaan Aktan. Before starting, I kindly remind you to review the disclaimer on the earnings presentation.

Now I would like to turn the conference over to Mr. Umit Onal, CEO. Sir, you may now proceed.

[Ümit Önal, executive]

Hello, everyone. Welcome to our 2021 Third Quarter Results Conference Call. Thank you for joining us today. We enjoyed a normalizing environment in the past quarter as the pandemic impact has phased out gradually. Q3 '21 was clearly marked by increased mobility. People mostly enjoyed summer houses, tourism resorts or travelers abroad during the summer months. July included a long religious holiday, but August was still dominated by a holidaying spree. September, on the other hand, was routinely identified as back-to-school period, but was marked by the return of physical education after a long while. Typically a high demand for speed and data that continued during the pandemic era has remained strong in the third quarter.

In Q3 '21, once again, we focused on agility and relevance to markets, used our foresight and insight to foresee different needs, aligned our offerings to shifting market conditions and remained strongly engaged with our customers.

Starting with Slide #3 on our presentation, net subscriber additions. Total number of subscribers increased to 51.4 million, with 711,000 net adds in the quarter. Net subscriber additions were 1.9 million during the last 12 months. We extended our fixed broadband subscriber base to 14.1 million, with slightly higher-than-expected net additions of 250,000. In a more dynamic mobile market, 3 of all pandemic measures, mobile subscribers increased to 23.9 million with 503,000 of net additions, significantly ahead of our expectations. Number of fixed voice subscribers was almost unchanged from the last quarter.

Slide #4, financial and operational overview. Our company has once again announced a powerful set of financial and operational results. Consolidated revenues increased by more than 17% year-on-year to TRY 8.6 billion, with better-than-expected performance in fixed broadband and mobile. Growth in operating revenues was 18% despite the strong base of last year. Consolidated EBITDA grew above 23% to TRY 4.3 billion, with an EBITDA margin close to 50%. Profitability was fueled by the strong contribution of higher-margin fixed broadband business top-line growth and continued improvement in mobile margin. Net income grew immensely to TRY 2 billion. Thanks to robust operational performance, lower financial expenses, and a sizable tax income. Our CapEx was TRY 1.7 billion during the period. We recorded USD58 million long FX position in line with our strategy to minimize the sensitivity of the P&L to FX movements. Finally, net debt-to-EBITDA fell to 0.96x.

Slide #5, fixed broadband performance. We recorded 250,000 net adds in fixed broadband. In a normalizing environment with higher mobility, we addressed the need for new connections in summer locations through targeted seasonal campaigns. Back to school season also helped new acquisitions. Fixed broadband revenue still being the locomotive of the strong top-line growth, surged by 29% year-on-year, along with price adjustments, upselling and efficient seasonal campaigns.

Continued expansion of total subscriber base and need for higher speed pushed ARPU growth above 15% year-on-year. Our analytics-driven activation and churn management help us attain higher ARPU growth and strengthen our subscriber base. Upsell numbers remains elevated with 91% of third quarter performance, driven by upgrades to higher speed tariffs. 24 megabits and above packages made 58% of new acquisitions and intensified push at the higher end of the portfolio with smartly designed marketing campaigns around the back to school period gave a handsome boost to 35 megabits and higher package sales. The share of these packages in new sales was 13% higher in September compared to its Q2 level.

Moving on to mobile performance, Slide #6. Increased mobility in a normalizing environment presented a more dynamic mobile market. The MNP market continued contracting year-on-year, but picked up Q-on-Q for the first time since Q3 '20. Seasonal pricing strategy is dominated, but a more rational competitive environment since Q2 remains unchanged so far as the operators' willingness to catch-up with increasing inflation grew.

Price adjustments continued across the board with varying timings by different operators. Already strong data consumption was further lifted by mobility and seasonality. The average data consumption per LTE user peaked to 10.3 gigabytes with an 8% Q-on-Q increase. Benefiting from a recovering mobile market and a meticulous churn management, mobile subscriber base grew beyond our targets with 503,000 net additions.

Low churn ratios, despite our ongoing value-maximizing strategy, do not only prove the accuracy of our analytics-driven portfolio optimization and offerings, but also confirm that we managed to establish a more stable subscriber base through improved network quality and customer experience. The share of postpaid customers in total portfolio exceeded 65% despite the first positive net add in the prepaid segment after 6 quarters.

Total Prime base grew 64% year-on-year in Q3 '21. The share of Prime subscribers within the total postpaid base rose above 29% as our focus on tailored offers and upsell performance paced the ongoing premiumization process.

Resultantly, ARPU grew close to 14%, and mobile revenues rose more than 17% year-on-year. Once again, we were pleased to see the positive reflection of our strategies on mobile top-line growth, which kept trending up over the last 6 quarters. In mobile and fixed business lines, we are also making important progress in our new technology initiatives.

Now let's take a look at where we are at that front on Slide #7. As Turkey's leading integrated telecommunications operator, we do not only aim to lead the 5G transition in Turkey, but also position ourselves among global players who set the standards of next-generation technologies. Turk Telekom's R&D company Argela and its U.S.-based innovation on Netsia, present ambitious 5G solutions to the world. Right in the middle of an innovation centric ecosystem in Silicon Valley, in close proximity to industry experts, business partners, large tech investors and customers, Netsia enjoys active participation in important initiatives as well as the opportunity to work with world's leading telecom companies.

Netsia's flagship open source broadband network solution, Netsia BB Suite, features a hardened, telco-grade distribution of ONF's SEBA, the SDN Enabled Broadband Access. It presents an opportunity to increase security, service agility, capacity and scale and minimize latency via centralized management of networks. It enables tailor made solutions through virtualization and cloud-based technology. With its first commercial deployment, SEBA is currently live on Turk Telekom's fiber network since 2019.

Netsia BB solution has already taken a leading position in the world market and attracting growing attention day by day. Today, Netsia BB Suite is in trial stage with several leading operators in Latin America, Europe and Asia. As you know, we announced a sales and cooperation agreement on our vRAN project with Juniper Networks last year. Netsia's vRAN solution, which provides many operational and commercial benefits, including performance increase, efficiency and scalability on 5G networks was licensed by Juniper. It has been decided in January 2021 to integrate vRAN to Juniper's worldwide portfolio. Netsia's Radio Intelligent Controller enables an AI-based management and orchestration of mobile networks over cloud through virtualization and slicing.

Recently, we have taken our collaboration with Juniper to a next stage. Accordingly, Turk Telekom will become the first operator to allocate capacity per base stations through use of RIC. We believe in importance of strategic cooperation with global operators, other technological business partners and open source communities, and we continue our business development activities in this direction.

Moving on to Slide #2021 revised guidance. Third quarter performance was significantly better than we expected in subscriber growth, revenue progression and profitability. July and August performances were moderately better compared to our forecasts, but September was visibly higher.

As a result, the recent run rates along with the year-to-date figures required a third upward revision to our 2021 guidance. We now expect operating revenues to grow 18% year-on-year. EBITDA to be TRY 16.2 billion and CapEx to be TRY 8.7 billion. While the change in EBITDA is driven by improved top-line growth, mainly led by the fixed broadband and mobile segments, the revised CapEx figure reflects the FX impact.

Before I finish, I would also like to share with you that within the scope of Turk Telekom's sustainability goals, we have obtained a Renewable Energy Certificate from The International REC Standard for our data centers. With this certificate, we have validated that we use green energy in our data centers. In this respect, we are delighted to see that by making not only Turk Telekom, but also our customers who use our data centers, consume green energy, we can amplify the impact of our sustainability initiatives.

We are thrilled to see our financial and operational results, once again, underlining our strengths; our history, know-how, top-quality assets, investment decisions, human capital and execution capabilities. We stand more powerful and equipped than ever before to continue our sustainable growth and deliver on our key responsibilities to our stakeholders.

Now I will hand over the call to Kaan to discuss our financial performance in detail. Thank you.

[Kaan Aktan, executive]

Thank you very much. Good morning, and good afternoon, everyone. We are now on Slide 10, with financial performance. Our consolidated revenues excluding the IFRIC 12 impact, increased by 18% along with the ongoing strong performance in both fixed broadband and mobile. Normalization, seasonality and back-to-school market this term with higher subscriber growth ahead of our expectations. We have now secured 19% growth in the first 9 months of the year, and we feel very comfortable about our revised 18% operating revenue growth target for the full year, although we will now be cycling last year's 20% growth in the fourth quarter.

In contrast to our expectations for a quarterly slowdown in base, 29% revenue growth in fixed broadband was driven by a larger subscriber base year-over-year and the highest ARPU growth since 2009. A micro-managed portfolio around segmentation and seasonality, together with continued strong demand for higher speed, pushed ARPU growth above 15% year-over-year. In a normalized environment, we experienced a dynamic mobile market faster recovery than we expected towards pre-pandemic trends. Effective management of our subscriber base through postpaidization and premiumization, along with low churn rates led both the ARPU and revenue growth.

As a result, mobile revenues grew about 17%, once again, tripping up for the sixth quarter in a row. In line with our expectations, fixed voice subscriber trends stabilized after a few quarters of normalization following last year's extraordinary net adds that benefited from a highly vibrant fixed broadband market. As such, fixed voice revenues remain flattish annually.

On the TV side, new sales remained subdued due to seasonality, with people spending less time at home, our subscriber base was flattish quarter-over-quarter. Our pricing actions from the previous quarter paid off those leading to14% Tivibu home ARPU increase, which lifted TV revenue growth to above 13%, the highest level since fourth quarter of 2019. Growth in corporate data revenue paced up to 16% year-over-year, whereas the increase in international segment, which mainly includes Turk Telekom International's contribution, slowed to 12% as it cycled last year's highest base with more than 52% growth last year.

Moving on to operational performance on Slide 11. The consolidated EBITDA rose more than 23% to TRY 4.3 billion, EBITDA margin close to 50%, up by around 50 basis points quarter-over-quarter and 240 basis points year-over-year. We are positively surprised by the margin evolution in the third quarter, with higher profitability than we expected in fixed broadband and mobile as well as stronger contribution from both business lines at the top line. Pandemic-driven savings on certain OpEx lines remained a supporting factor in annual comparison. Excluding the IFRIC 12 impact, EBITDA margin declined about 0.5 percentage points quarter-over-quarter, but improved almost 2.5 percentage points year-over-year to 52%. Operating expenses grew close to 12% year-over-year, once again, well below the increase in operating revenues.

Looking at the main highlights in the OpEx items, interconnection costs grew by a mere 5% year-over-year due to the high base effect of last year's increased international traffic volume. 15% increase in the tax expense was led by frequency and treasury fees attached to mobile revenues. Provisions for Doubtful Receivables decreased by 35%, mainly due to a decline in device receivable provisions compared to last year. This was also driven mainly by the successful collection performance, which led to a decrease in device receivables despite the increase in device sales volume year-over-year.

Cost of equipment and technology sales grew by 6% only over last year's high base, amid increased activations in broadband segment around the back to school season. Other direct costs grew 31%, along with the pickup in value-added services and shared revenues. Network and technology expenses grew 31% due to increased energy prices. Personnel expense increased by 21% with recently signed Labor Agreements. Commercial costs increased by 26% year-over-year and 4% quarter-over-quarter, ramping up to normalized levels in line with our expectations.

As implied by our revised guidance, we expect some normalization in the EBITDA margin in the last quarter of the year, particularly with some pickup in certain operating expenses. Our company moved to a hybrid model, working model, starting from early October. This should trigger a rise in some office and personnel expenses that we have been saving for some time due to COVID-19. Similarly, the ramping up of commercial cost to normalized levels should continue. Our CapEx spending was TRY 1.7 billion in the third quarter, and we'll touch up to our full year guidance in the last quarter.

Now coming to the bottom line. Net income increased by 370% year-over-year to TRY 2 billion, owing to operating performance, lower financial expenses and the large tax income. As you know, we moved to a more comprehensive hedging approach starting from last quarter of last year, with the aim to maintain an FX neutral P&L. Accordingly, the quarterly EBITDA growth has fully trickled down to the bottom line so far, increasing the visibility of our operational performance.

Yet, net income expansion was amplified by a few below EBITDA items, mainly by the tax income we recorded this quarter. The one-offs that affected net income performance included, firstly, around TRY 400 million of deferred tax income triggered by a recent addition to the tax court, allowing the revaluation of fixed assets. And secondly, around TRY 150 million of net gains driven by investment and R&D incentives, coupled with few onetime expenses in our mobile arm. It's worth stating that without -- even without these one-off impacts, we are still looking at a 258% annual growth in net income. 9 months net income now reached TRY 4.7 billion, surpassing the full year 2020 figure by almost 50%. TRY 900 million of net financial expenses was slightly lower quarter-over-quarter, confirming our mentioned expectation of a similar run rate to second quarter. As you know, we went through restructuring of some swap contracts in the second quarter.

In the third quarter, on the other hand, we slightly changed the composition of the hedge portfolio by undertaking additional long-term swap contracts. It's reasonably favorable rates. As a result, we ended the quarter with $58 million of long FX position. The portion of short-term derivative instruments within our hedge portfolio decreased after the newly acquired swap contracts, further reducing our risk against high volatility in the market. The increased share of participating cross-currency swap contracts with higher protection levels, on the other hand, offers more resilience to possibly high currency fluctuations.

Moving on to slide with debt profile. We maintained a strong and resilient balance sheet as of the third quarter. Net debt-to-EBITDA further improved to 0.96x, below 1 multiple, mainly as a result of the strong operating performance and healthy free cash flow generation. Cash and cash equivalents were TRY 4.8 billion, of which 81% is FX based. And lastly, we reported $58 million of long FX position compared to $38 million long as of the last quarter. The net FX exposure included the USD equivalents of 2.5 billion of FX debt, 2.1 billion of total hedge position and around $440 million of FX cash.

We are now on Slide 12. We stick to our targets of maintaining an FX neutral position and P&L. Our primary purpose is to minimize the impact of the FX rate fluctuations on the P&L and increase the visibility or the bottom-line performance. Accordingly, the FX sensitivity analysis report regularly in our quarterly financials suggests, assuming all else constant, a 10% increase FX rates would have almost no impact on the pretax income recorded as of the third quarter. Thanks to the long FX position, compensating the weakness in the hedging portfolio.

On the flip side, the sensitivity analysis produces about TRY 111 million of positive impact in case of a similar appreciation of lira. This is mainly because the negative impact of the long FX position in this scenario will be more than offset by the protection offered by the participating cross-currency structures.

Finally, the unlevered free cash flow was TRY 2.5 billion, 37% higher year-over-year, mainly driven by the improved operating performance. We expect a robust performance in our businesses to continue in the last quarter, in parallel to our revised guidance and support a healthy 2021 full year free cash flow generation.

This will conclude my presentation. We can now open up the Q&A session.

[Operator]

[Operator Instructions] The first question is from the line of Kennedy-Good Jonathan with JPMorgan.

[Jonathan Kennedy-Good, analyst]

I just noted earlier this week that Bloomberg was reporting Turkey's Minister of Communications and Transportation stating that the extension of Turk Telekom's operational rights is off the agenda and that an auction had to take place for, presumably, an extension of those operational rights. Can you clarify those comments and your views around what 2026 could bring in terms of auction prices, et cetera? And then secondly, on your longer-term capital intensity ratios have risen from 18% to 20% to 24% in 2020 and now rising again. Can you provide some context as whether that's largely currency-driven or whether we should expect higher CapEx intensity ratios going forward to support the fixed-line growth?

[Unknown Executive]

[Foreign Language] Allow me to answer your first question related to the statements of the Ministry of Transportation. And then our CFO, Kaan will answer your second question. First of all, we believe that the Ministry of Transportation was answering a Q&A session, and his remarks were like an instantaneous answer to a question that was asked to him. So he said that, yes, this -- I mean as of today, the auction is not on the agenda, but also this statement does not mean that such an agenda will not exist in this coming period. So that's for your question related to the Transportation Ministry of Turkey.

Moreover, related to the extending the concession, we have a right to ask for the extension of the concession before 2026, but it's not with a tender. And this question-- I mean, this question will be evaluated depending on the environment. I mean, about if we are going to ask for an extension or not. Moreover, we will be mostly discussing related to 5G in the coming period and the 6 assets and 5G assets are a whole. I mean, they cannot be considered separately. But still, we still have so much time on ROE to discuss this issue. As of today, the minister just answered an instantaneous question, which was not finding.

[Kaan Aktan, executive]

Let me take the CapEx intensity question. First, for the guidance, the change in the guidance, we didn't change actually the plans for CapEx, but we simply reflected a potential FX pressure on the full year numbers. For next year, obviously, we will have to wait for the official guidance announcement to take place in the early next year. But when we do the planning, obviously, there's always this challenge coming from the FX now. So more than 50% of the CapEx base is directly priced with the currency rate.

But other than that, all the decisions that we make on the investment front is totally protecting or improving the value of the company rather than creating value erosion because we spent more than we generate for the cash flow. So the market is very dynamic right now. So these are all being reflected to our numbers as well. So there's a great healthy demand for access services, both fixed and also mobile. And there is also the demand for anything in the digital domain, which provides other potential revenue growth opportunities. So we really like to see to get the best from this dynamic market environment. And if you feel like spending some more CapEx for those opportunities will bring higher and better value for the company. So we may continue spending around a similar percentage in terms of the total CapEx spending.

[Operator]

The next question comes from the line of Nagy Nora with Erste Group.

[Nora Nagy, analyst]

Only one question from my side, please. How does the increase in energy prices affect your operations? Can you share how much of your energy expenses have a contracted nature?

[Kaan Aktan, executive]

Just to confirm, are you asking the impact on our overall OpEx base coming from the impact of energy prices?

[Nora Nagy, analyst]

Yes, this is correct.

[Kaan Aktan, executive]

All right. Yes, we -- especially in the third quarter, we started feeling more pressure for the -- mainly consume electricity when it comes to overall energy cost. So we started seeing a significant uplift in the electricity prices in the third quarter, and it looks like more to come should be expected going forward. So there is also a correlation between natural gas prices and electricity prices, other than the impact to come from the currency and FX rate. I think that will also be something that we will frequently mention next year as well.

[Operator]

The next question comes from the line of Cabejsek Ondrej with UBS.

[Ondrej Cabejšek, analyst]

I have 2 questions, please. One is more technical in terms of the special tax item, sorry if I missed this, but can you maybe explain the accounting of this and whether this will form or not based for any kind of dividend decision at the end of the year? And then a broader question, it seems like you're almost surprised with the combination of strong performance in both broadband and mobile. So maybe can you explain, did you expect, for example, once the economy opens up, mobility opens up, which you mentioned, that's part of the fixed broadband market would maybe switch back to mobile or where is the surprise actually coming from? Because I feel like you kind of outperformed compared to your expectations and maybe even in both areas.

[Kaan Aktan, executive]

For the tax part, the majority of it is coming from the revaluation of the fixed assets. So that came as a new addition to the tax cost. So we had the right to revalue our fixed assets, which means there will be more depreciation to deduct from the tax space. That's a tax benefit that's now being created with the new tax code. Obviously, when there is a one-off benefit that you should expect in the foreseeable future, we have to record it as a deferred tax asset whenever we have the -- in the quarter that we have the revaluation.

So we had TRY 2 billion of revaluation difference in the fixed asset base and around TRY 400 million tax benefit that we recorded as a deferred tax asset in the quarter. So most of it will be translated to real cash benefit in a meaningful period of time. And it's part of the -- again, our regular net income performance and be considered as base for the dividend distribution. That shouldn't be -- there wouldn't be any differentiation between that part of the net income and the remaining part of the net income, especially as I mentioned, since it will also translate to real cash benefit in the next few quarters.

[Unknown Executive]

[Foreign Language] Allow me to answer your question related to mobile's effect to fixed with normalization. Of course, with the normalization, we have been experiencing that with the tourist lines and the increasing use of mobile data, there's an increase in the use of mobile usage, but it doesn't negatively affect the fixed broadband. Mostly, it affects positively the mobile usage. What we observed is the need for high speed that is also triggered by the digitalization, actually boost the fixed broadband need. And with the continuation of the normalization, it makes a permanent effect on fixed broadband. Just a simple example, we have gone back to face-to-face education. It may actually trigger a question mark, if it isn't to make a negative impact on demand. Just on the contrary, we experienced a movement in new sales during the back crop period and similarly, a better outlook emerged in the cancellations than we expected as well. Also normally, summer internet needs were contracted on this specific period of the year. But with distance working and everything, now people are using summer houses for longer periods of time. What we see is a positive effect on the fixed broadband as well with that support. And the demand that we observed and the demand for the high speed supports our arguments in that regard.

[Operator]

The next question is from the line of Demirtas Cemal with Ata Invest.

[Cemal Demirtas, analyst]

My question is regarding your FX position side, we see that you are almost squared. But in third quarter, again, we see not a small number in the FX side. In the second quarter and third quarter, we had similar FX and hedging cost and interest expenses. For the following quarters, assuming that the U.S. dollar will remain at this level. What could be the trends? Because from the footnotes, it's very difficult to read the mechanism of your FX mechanism. So it will be more helpful to see the following 2 quarters, whether you are going to be affected more significantly or less? And at least I say absolute numbers, could we assume that your FX income total in FX hedging interest and others to sustain at current levels in the fourth quarter, assuming that the rates in the U.S. dollar will remain -- U.S. dollar, Turkish lira will remain at current levels?

[Kaan Aktan, executive]

Well, there are 2 moving FX rates, as you mentioned, one of them. But when it comes to ways through which we manage the -- that specific subject. As I mentioned in my part, we changed the structure or the composition of the hedging portfolio. We went from -- partially from short-term to long-term that brought some cost benefit. At the same time, we also saw the interest rates or the average cost of the short-term positions coming down with the reduced interest market rate. So the other factor that the company is in a natural deleveraging phase. Obviously, in the quarter, we now handle less debt, which creates a bit less cost to the company. On the FX side, as you mentioned, we're now running a very dynamic treasury activity, which actually almost like a bank, we are balancing our position on a daily basis by executing necessary transactions. So if there are further moves in the FX rate, we want to restructure the part of current portfolio, if we feel they become a bit weak. So they may brought some additional costs. But all in all, I would say that when you include all those factors together for the next few quarters, I think the current -- or the actual number for second and third quarter is the total financing cost will be a meaningful and relevant benchmark. But other than that, I think we should really see where the market will take us in terms of the interest rates first and then also the FX rates.

[Operator]

[Operator Instructions] The next question comes from the line of Mandaci Ece with Unlu Securities.

[Ece Mandaci Baysal, analyst]

I was just wondering about the current competitive environment since we have seen a significant recovery in your subscriber additions both in fixed broadband and mobile segments. Going forward, would you expect our plan in further price adjustments in both categories in order to have the inflationary effect on pricing? And how this could affect your competitive power in the market? And what could be the reaction of other competitors going forward? If you just give a broad picture about this, it would be very helpful.

[Unknown Executive]

[Foreign Language] For some time, we have a strategic approach, which balances price and subscriber gain, which actually sets the ground for our strategy. The mobile market, which started the year with price the regions in 2021, witnessed the intensification of competition, again, under the influence of short-term attractive campaigns, so with the increase in restrictions caused by the pandemic. Again, for the mobile side, in second quarter, we saw that operator pricing became more rational due to both partial normalization and driving inflation pressure. We expect MNP market to grow a little more compared to this year as the effect of the price will decrease further in 2022.

But honestly, we don't expect the competition based on price in the market. We don't think the market is feasible for that. For the fixed broadband side, the competition has been aggressive at times, but we focus more on a seasonal action in the third quarter. What we saw in this period is that other ISPs focused on subscriber acquisition with regional aggressive campaigns but increased prices in most campaigns. We had the highest share in the market, I mean, as the operator, and we are going to position ourselves according to the realities of work.

[Operator]

[Operator Instructions] The next question comes from the line of Annenkov Evgeny with Bank of America Merrill Lynch.

[Evgeny Annenkov, analyst]

I have a question on your international revenue. The growth slowed down a bit in Q3, but on a high base and actually accelerated on a 2-year basis. Can you please discuss in more detail opportunities that you see in international revenue segment? And can you please remind what is the EBITDA margin, specifically in this segment? How dilutive it is for the group margin?

[Kaan Aktan, executive]

Well, as you mentioned, we had a base impact coming from significant revenue of last year. So interconnection revenues, especially with the voice business create some seasonality in the numbers. And also the FX rates, obviously, taking the revenue or cross-currency equivalent revenues up when there's the devaluation of the lira. Going forward, I think those 2 factors would also continue impacting our numbers. We do not provide margin performance based on the international local businesses. But it's a carrier business. It's a voice interconnection business also attached to that. And they are not very different than the average profitability for such types of businesses.

[Operator]

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Turk Telekom management for any closing comments. Thank you.

[Unknown Executive]

Thank you, everyone, for joining us today. We want to thank your and wish you a happy new year.

[Ümit Önal, executive]

Thank you. Bye-bye.

[Operator]

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you for calling, and have a good afternoon.