Turkcell Iletisim Hizmetleri's (TKC) CEO Süreyya Ciliv Discuss Q2 2014 Results - Earnings Call Transcript

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 |  About: Turkcell Iletisim Hizmetleri A.S. (TKC)
by: SA Transcripts

Turkcell Iletisim Hizmetleri (NYSE:TKC)

Q2 2014 Results Earnings Conference Call

July 24, 2014 00:00 a.m. ET

Executives

Koray Özturkler – Chief Corporate Affairs Officer

Süreyya Ciliv – CEO

Murat Erden – CFO

Analysts

Ivan Kim – VTB Capital

Hervé Drouet – HSBC

Mehmet Agyuz – YapıKredi

Ranjan Sharma – JPMorgan

Deepak Kumar – Citigroup

Operator

Good day and welcome to the Second Quarter 2014 results announcements. Today’s conference is being recorded and at this time I would like to turn the conference over (inaudible) director of Investor Relations. Please go ahead sir.

Unidentified Company Representative

Thank you, Christiana. Thank you for your participation. I would like to say welcome to (inaudible) on behalf of the management team here. We will start today with the presentation by our CEO Süreyya Ciliv and followed by CFO Murat.

Just before we start presentation, I would like to just go over a brief notice we have atypically. Please remember that any statements about our future expectations are of course subject to uncertainties. Please also note that all financial data are consolidated whereas non-financial data are unconsolidated unless otherwise specified. Süreyya, please go ahead with session, thank you.

Süreyya Ciliv

Good morning, good afternoon and welcome to Turkcell’s second quarter of 2014 results call. In this quarter, Turkcell group revenues rose by 2% year on year. Consolidated EBITDA rose by 4% while the EBITDA reached 31%. In the quarter, several factors adversely impacted revenue and EBITDA. These included lower MTR and SMS maximum price reduction compared to a year ago continue devaluation in Ukraine and a one-off TRY26.4 million in reimbursement.

Our net income was further impacted in both first and second quarters by FX loss due to the devaluation in (inaudible) and various one of items which our CFO Murat Erden will discuss in detail.

Overall, for the first half of the year group revenues rose 4% year on year. In the second half, we target higher growth rate and expect to post results parallel to our full year guidance.

Moving on to next page, page 5. In the second quarter, mobile broadband Turkcell Superonline were the key revenue growth drivers. We saw a 3% decline in Turkcell Turkey’s voice revenue resulting from the MTR cuts and one of the reimbursements. Yet this was compensated for by the 28% rise in mobile broadband revenues.

Messaging and mobile revenues decreased 19%. 22% decline in SMS revenues are mainly due to fall in SMS volume, it also reflected the ICTA decision to decrease the maximum SMS price by 20%. Mobile services, meanwhile, were negatively impacted by several regulatory decisions, going forward we expect this business to possibly contribute to overall growth.

Turkcell superonline sustained its strong growth momentum rising 39% year on year. For other subsidiaries the pace of growth decelerated due to the reduced (inaudible) contribution resulting from the FX impact.

Moving on to page 6, its highlighted during second quarter, we observe the continued negative impact of regulatory changes on overall growth and operational KPIs. Following the implementation of regulatory changes for the past four quarters of Turkcell Turkey’s pace growth decelerated. Revenues declined by almost 1% year-on-year in the second quarter. Without the MKR cut and one-off impact growth would have been 4.8%.

Specifically, the increasing minimum on-net price for Turkcell also impacted competitive dynamics allowing competitors to further reduce prices causing subscriber losses for Turkcell. In the first half, we lost more than half a million subscribers of each 157,000 during the second quarter. However, as always postpaid generating value and providing a differentiating customer experience, we registered 404,000 quarterly net postpaid additions. Blended ARPU slightly decreased year on year due to formation impacts whereas MoU rose 4% due to increased incentives and package utilization.

Moving to page 7. In contest to competitors price base strategy, raising customer focus and offering a differentiated experience through our network as well as innovative products and services will remain our strategy. With the launch of the connected car platform, first for Turkey and new applications targeting small businesses and parents, we enrich customer experience.

These initiatives will increase customer loyalty and are expected to contribute to mobile broadband growth. Furthermore, to extend access to mobile broadband we continue to promote our own branded and affordable T series smartphones. With this vision, we launched Turkey’s first operator branded 4G smartphone the T50. We also introduced the first operator branded variable technology the T-FIT which allows health tracking.

Moving to page 8. Smartphone penetration on our network maintained its growth pace. In just five years since the launch of 3G, the number of smartphone have reached 10.9 million and 35% penetration welcoming 676,000 new users for the quarter. Smartphone users on our network tend to consume almost four-time more data generating data ARPU of approximately three times more than regular handset users. Therefore, we have been working to boost smartphone penetration through our own branded devices and contracted bundled offers. We are pleased to note the contribution of our T series which has sold 1.5 million units to date thereby spreading mobile internet usage. Given the exciting (inaudible) potential in our subscriber base, we will continue enhancing our network and differentiating ourselves through our strong distribution channel, broad devise portfolio in unique mobile services.

Moving on to next page, page 9. Turkcell Superonline an important component of our business posted 39% revenue growth. EBITDA rose 30% while the margin declined to 24.4% due to some initial operational costs related to new long term project set to generate revenues in the upcoming quarters.

Turkcell Superonline including ADSL subscribers has exceeded the 1 million subscriber milestone with the contribution of successful TV bundled campaigns in collaboration with third parties. For the quarter Turkcell Superonline has 653,000 fiber customers, the 39,000 net additions. Meanwhile continued investment in our fiber network has raised our in city coverage to 1.9 million homes. During the quarter, all segments performed well. The residential segment grew by 54% is the major force boosting the top line. Meanwhile the corporate segments was 7% and the wholesale segment declined to 26%.

Moving to page 10. In the second quarter, continuing political and macro instability and further currency depreciation in Ukraine impacted our financial performance. Revenues in dollar terms saw 26% decline due to currency depreciation despite 7% top line growth in the local currency with rise in voice and data revenues.

EBITDA margin decreased to 28.9% due to currency devaluation and increased radio frequency usage fees. On the operational front, our subscriber base continue to grow with 220,000 quarterly net additions. On the political front, while matters remain Crimea and Eastern Ukraine, we continue to serve our customers in these regions. Thank you and now I will hand over to Murat for the financial review.

Murat Erden

As highlighted in the second quarter, group revenues rose to TRY2.9 million. Turkcell Turkey remain almost flat due to decreased voice SMS and service revenues mainly on regulatory decisions and one-off item broadly compensated by the sustained growth momentum in mobile broadband.

Meanwhile subsidiaries revenues grew by 17% with almost all growth coming from Turkcell Superonline. (inaudible) has made negative quarterly contribution due to devaluation in Ukraine. Consolidated EBITDA in nominal terms rose 4% mainly on top line growth while the margin rose 0.6 percentage points compared to last year. In nominal terms, the TRY68 million rise in revues was partially offset by higher sales and marketing expenses.

Let me move on to page number 12. Group net income fell 12% year on year mainly due to higher translation losses in one-off items recorded during the quarter despite higher EBITDA performance. Excluding one-off items net income will be TRY612 million. The higher interest income recorded on time deposits and higher monitory gain were netted off by translation losses and other expenses including one-offs.

In the second quarter, TRY165 million translation loss recorded as opposed to the translation gain of TRY12 million in last year was mainly due to translation losses recorded for Astelit, BeST and Turkcell Turkey. One-off items included administrative funds imposed by the ministry of industry and trade regarding the service subscriptions and content sales and by the competition board concerning the weaker tracking systems. They also included the reimbursement following the ICTA decision on limited usage services.

Moving onto the next slide, we had a net cash position of TRY4.5 billion as of end of June 2014 which was not changed materially quarter on quarter. Our consolidated debt is at TRY3.5 billion the debt balance of Ukrainian operations was TRY1.4billion and thereof to Belarus operation was TRY1.3 billion. Quarterly CapEx and advanced statements for fixed asset purchases were the major cash outflow items. Of the total CapEx of TRY314 million TRY174 million was related to Turkcell Turkey TRY103 million to Turkcell Superonline and 37 million to other subsideries.

Advance payments were related to network equipment purchases from vendor for the second half of the year in order to eliminate the FX risk. This brings our introductory presentation to the end, let me handover to (inaudible).

Unidentified Company Representative

Thank you, Murat. Christina, I guess we are ready to go for the Q&A session, could you just please initiate the Q&A session.

Question-And-Answer-Session

Operator

[Operator Instructions] our first question is from Ivan Kim of VTB Capital.

Ivan Kim - VTB Capital

Murat, good afternoon. Two questions from my side please. One on the mobile data growth, you were behind on the growth in the first half of this year versus earlier and I understand that is coming from much lower base for them but is there anything else behind this growth gap that you see and then the second thing on the mobile service and messaging revenue drop, it has materially accelerated during the second quarter versus the first quarter and obviously there is an impact from the maximum price cut on SMS but again was there anything else and do you see the acceleration of cannibalization (ph) SMS and (inaudible) by data, thank you.

Murat Erden

Hi, this is Murat. Regarding the mobile data growth, there is one important sector maybe everybody should take into account. Majority of the market is now being sold by bundled offers so the allocation of revenue among different types of services like voice, data and other services, these bundles offers makes lot of impact on the number. So this is something that needs to be taken into account. And on the other hand we are also working very hard on our mobile data plans and our plans for mobile data business and we are expecting -- we already have some slight increase in terms of the revenue growth from Q1 to Q2 and we expect this trend to increase to continue.

Sureyya Ciliv

On the second question related to mobile service and messaging revenues, as we mentioned MTR cuts and the price cap reduction were important drivers for this revenue decline and also there is cannibalization by new internet applications like Whatsapp and other applications like (inaudible) they generate greater revenue for us versus SMS messaging. So there is nothing more than these.

Ivan Kim - VTB Capital

Okay. Thanks for this and just the quick follow-up on the single-ish question. So let's say in the remainder of the year in the second half, you would expect to view more dynamics compare to the second quarter, right?

Sureyya Ciliv

Are asking about mobile data or messaging?

Ivan Kim - VTB Capital

Messaging.

Sureyya Ciliv

We don't expect major change I think the trends will probably continue.

Ivan Kim - VTB Capital

Great. Thank you.

Operator

Our next question comes from Hervé Drouet of HSBC Bank.

Hervé Drouet – HSBC

Yes. Good afternoon, good question as well from my side. First one is what makes you confident back into second half you will be (inaudible) guidance, in which segment do you think there is potential, good growth to come in second half and which segment do you think would be more difficult in second half and my second question is what type of assumptions are you taking in term of currency especially for Ukraine for the guidance compared with the current exchange rates that is Turkish Lira, thank you.

Sureyya Ciliv

About the first part, until July 1st or I should say June 30th, 2014 for one year until the day incoming voice revenues have declined because of the 20% MTR cut. So as of this quarter that we are in, the third quarter starting July 1st, incoming voice revenue will not be declining, it will be growing because it will be from the same base MTR rate. So that too will automatically make a difference. We do calculate example in the second quarter if there was no MTR cut we would have a faster growth rate as a result we expect MTR impact to generate to (inaudible) faster revenue growth in the future starting third quarter of 2014. Murat are you guidance for currency in Ukraine?

Murat Erden

Related to Ukraine, as we are all know there has been already 47% evaluation realized in the first half of the year. From now on we do see some stabilization with respect to the guidance in our business model we anticipate that we have room till of 12 as a level revenue per dollar, dollar per revenue so that's going to be the level that I can pronounce for the time being.

Hervé Drouet – HSBC

Right. Okay. Thank you. And just maybe your third question on the data and mobile data gross versus potential cannibalization of SMS, the current trend you have see in Q2 do you think it's sustainable of in the coming quarters?

Sureyya Ciliv

What we have seen the second quarter, I think our mobile data revenue growth slightly accelerated and we expect this trend to continue in H2.

Hervé Drouet – HSBC

Alright, thank you very much.

Operator

Our next question comes from Mehmet Agyuz of YapıKredi.

Mehmet Agyuz – YapıKredi

Hi, good afternoon. Looking at your first half performance, I mean despite competitive situation as well regulatory headwinds from EBTIDA performance wise, you delivered about 48% of your mid-end of your guidance for the EBITDA and when I just do a quick math, it seems like your second half you are assuming slightly lower margins compared to the first half and looking at seasonality trends and et cetera what makes you give this type of you know take this conservative approach, do you expect further deceleration in mobile pricing and may be if you could give some color on the say stand of second quarter, how the mobile pricing has evolved?

Sureyya Ciliv

We expect and we are not foreseeing deterioration in our margins we are not, so we hope and we will work hard to keep our margins like we have done in the first half we expect the same trend to continue in the second half but we keep our guidance, our guidance we gave in December-January timeframe, so we did not have any reasons to change our guidance, so we are keeping our guidance revenue also expect a competitive marketplace and we are prepared for the challenges ahead if they come.

Mehmet Agyuz – YapıKredi

Okay and may be a follow up on that, looking at your cash flow in terms of networking capital what we are seeing in the past couple of quarters increase in the trade and I suppose this is possibly related with this smartphone sales that the financing part of that, at what level of smartphone penetration you think you may change the finance in terms for this smartphone sales and we may see less pressure on the cash flow from that side?

Murat Erden

Mehmet this is Murat again. Relating with outstanding smartphone penetration and how long we can finance on our balance sheet, I do believe we have a room, I believe we have a competitive edge there and it is critical for us continue to increase the smartphone penetration in Turkey and which is going to continue to boost our revenue on data and et cetera so I believe we still have room considering still reaching 35% on the smartphone penetration.

Mehmet Agyuz – YapıKredi

Okay, thank you.

Operator

[Operator Instructions] our next question comes from Ranjan Sharma of JPMorgan.

Ranjan Sharma - JPMorgan

Good afternoon and thank you for the presentation. Two questions from my side, firstly on your data revenues and smartphones, what is the potential you see of data revenues as a percentage of mobile revenues and what is the potential of smartphone penetration in the market in Turkey and secondly on the business enterprise segments, can you please share your thoughts around how you are planning to tab the potential in this market segment, thank you.

Sureyya Ciliv

Mobile data revenues are about 19% of our revenues and obviously they are the second largest business for us after voice and also are fastest growing business in the Turkcell Turkey mobile company and our smartphone penetration for Turkcell network is about 35% and we expect this to go up by about 5% in the second half.

Ranjan Sharma - JPMorgan

Okay, can you share thoughts around how you see the mobile data revenues as a percentage increasing in the next two years or so, what do you see the potential in the market as?

Sureyya Ciliv

There is obviously huge potential. We have, the penetration is today of the 35%, one-third of the population and every year its going up at least 10%. This year it started slow because there were some limitations on spending consumer spending in Turkey but it is not unusual that it will even go more than 10% increments in the next years and there are more reasonably priced good performance smartphones like T-50 and from other vendors are coming to market. So if smartphone penetration goes up we have more customers but we also know in the last five years per users data consumption has increased 79 times so we had a potential to triple our, almost triple our smartphone customers and we also expect data consumptions to continue to grow. We see a lot of potential on the consumer side but we also see a lot of potential on the corporate space, in corporate space in addition to do mobile revolution, we are also seeing fast growth more than 30% in our fixed line business and we are a company that can deliver solutions on both fixed and mobile and also related technologies, so those are my comments, Murat do you want to add anything else?

Murat Erden

No I think it pretty much told the situation. May be just one information, last year this percentage of revenue – at the end of last year was around 16% as of Q2 we are around 20% so this might give you an idea on the potential, the percentage of data revenues over total revenue.

Ranjan Sharma - JPMorgan

Okay, thank you so much for that. On the business and enterprise segment, can you share thoughts on how you plan to tap this potential in this market?

Sureyya Ciliv

We are a major force in the business segment. We have actually higher share in the business segment versus the consumer segment, because businesses are more serious about quality they are more serious about superior network and in this new world of mobile and cloud, it’s the network that connects the terminals for the business users and the cloud or the data centers of the corporations so this—the quality of the network has to be mission critical so that companies can run their enterprise mission critical applications over this network and as a result our customers appreciate Turkcell’s quality in performance, in reliability and also we have a significant sales force. We have the strongest and the largest technology sales force in Turkey even for medium businesses we can establish direct sales channels with our customers.

Our vision in the corporate space is about mobile enterprise real time enterprise where we are partnering with companies to build smarter employees, smarter execution on the field, smarter company, smarter organization, smarter cities. And in the enterprise space, we also for almost now five years, we had a very focused approach where we have segmented the enterprise-- segmented the business customers especially in the enterprise and large organizations by their industry. So we have teams, the solution teams, technology experts, specialist, who know the applications for verticals and as a result, Turkcell has become not the GSM leaders, not only the GSM leader in Turkey by far but Turkcell has become the technology leaders in Turkey and I think we are very, very, very excited about how we can deliver tailored solutions for our customers. We have fixed networks. We have the 2G network, 3G network, we have Turkcell technology who has software development capabilities, we have direct sales, we have department ecosystem, all of this uniquely positions Turkcell as the premier technology partner for all segments of the business such as enterprise, large companies, medium companies and also small business. So in general we are growing faster in our corporate business and we still have huge potential in the enterprise in the business segment ahead.

Ranjan Sharma - JPMorgan

Thank you so much.

Operator

Our next question comes from Deepak Kumar of Citigroup.

Deepak Kumar - Citigroup

Thank you so much for the opportunity. I have a question on the competitive environment in this quarter. Looking at the mobile revenue growth in this quarter, your revenue was broadly stable on first quarter (inaudible) had shown some improvement in this quarter so is it getting hard for you defend your market share because of this (inaudible) environment or how are you able to defend your market share in second half, would you be going to get more aggressive? Thank you.

Sureyya Ciliv

First of all, we run a business and we have shareholders s, we have customers, our focus is not on the market share, our focus is and you know nobody pays money for the market share. I think basically you have to earn money so we are focused on our customers how do we deliver the best technology solution so that they have the highest value, how do we create differentiation for Turkcell and we have I think the team has been doing this extremely well. I think that's why the regulatory body in Turkey for the last seven years is always taking some kind of action to slow down Turkcell because in its – on its own (inaudible) of the team of the company we have the most superior network, we had the best partners, ecosystem, we had the best distribution channel. We have the most reliable network. We have the fasted responding and maintenance and service and sales teams in the field.

As a result I have about enjoyed of 15% market share for the long time but we are focused on growing our business, we are focused on growing these profitability and serving our customers in the best way through technology investments, through innovation. We don't feel that we are having difficulty in the marketplace I think sometimes regulation decisions have some impacts for certain period but we know that Tuekcell is a very important assets for Turkey and Turkcell's growth will be very important for Turkey and we hope that regulation eases off on the tough term sometimes. It puts on Turkcell but otherwise we feel very confident about we are ability to compete.

Deepak Kumar - Citigroup

Okay. Thank you so much.

Operator

Our next question comes from (inaudible) of Deutsche Securities, Istanbul.

Unidentified Analyst

Thank you very much for the presentation, two quick questions. First on the mobile broadband, do you, given the current pace of growth would you expect any incremental or additional CapEx that might can even to prevent any congestion on the data side and could that be a factor that might slow down more aggressive offers on the mobile data front? And secondly regarding fixed data, would you, in my understanding the competitive environment is slightly tough, would you agree with that and would you expect structural increase in the competitive environment in the fiber business? Thank you.

Sureyya Ciliv

First part, first question.

Murat Erden

This is Murat again, regarding the increased trend onto the data usage and whether our network has better we are investing enough to prevent any congestion. Let me remind you what we have done in this year 2014. You remember last year we have realized the CapEx or sales of 15% and right now our guidance for this year has already been increased by 200 basis points so it’s going to be on highest level of 17%. So we have already made our plan which is reflecting to increased data traffic. So I don't think that it is going to be any problem for us and we are going to continue differentiate our superior network quality compared to the other operator.

Sureyya Ciliv

About the second question, fixed data if I understand you correctly, the question was on the fixed data side, how is the competitive environment and do we expect increased competition in fiber? Yes I think it is the fact that we had identified fiber strategy ahead of the other mobile operators or operators in Turkey and we have been investing in fiber since 2008and Turkish Telecom obviously is a fixed line operator. They have an extensive fiber network but after them we are the second largest fiber network in Turkey and we are far ahead of the other competitors and I do expect that competition will increase in this space as well but we also feel that our – the fact that we were the only has given as a competitive advantage. And in our company Turkcell Superonline has very relevant 7-8 years of experience taking fiber to the home, FTTH and also our corporate sales force, sales teams we have one sales team that's sales and services both mobile and fiber solutions and Turkcell Superonline has done a very good job. We added additional 39,000 FTTH customers in Q2. I think this was significantly higher versus competition in the second quarter. And we are not marketing others internet connections as fiber. When you say fiber it is fiber to the home and most of our Superonline customers, they get much faster network connection through fiber versus our competition offers and as a result I think we have better customer royalty and better customer recognition because of Superonline fiber offerings. So yes competition will increase but I think market will grow and I think we can compete well.

Unidentified Analyst

Thank you.

Sureyya Ciliv

Thank you.

Operator

[Operator Instructions] We are going to take our last question from Ivan Kim of VTB Capital.

Ivan Kim - VTB Capital

Yes, sorry just a couple of follow ups. First on Superonline, the press release says the second quarter has been interested in one of your projects, could you please elaborate what kind of new projects or products those for and then secondly on the regulatory environment, it looks there are like on top of chart the increase of your full price last year there is a number of fines coming through (inaudible) not necessarily from like communication regulator. Do you feel that there is some intense regulator pressure will continue or it's more just getting some temporary issue? Thank you.

Sureyya Ciliv

Okay. On the super online EBITDA margin, we expect Superonline margin to improve in the future and in the second quarters, the margin declined we don't think this is usual it's because of one of kind of projects items and we had some big customers and there are some cost upfront, we will get the benefits of these projects in the quarters ahead but we did made some upfront investments in hardware and in preparation and this was the reason. But I do expect Superonline as this business grow, as its customer base grows we have a focus on improving margins and they have been delivering better margins for quite a few years and I think in the coming quarters we will continue to have improving margins. On the regulatory environment, yes there were three fines and one of them was related to 2012 and we had to do a reimbursement, we had taken this to the court but we made the payment and we also because of conservative accounting, we did recognize this is an expense but we think this was too heavy on us and we are going to the court.

The second one was from year 2009 it was about mobile services and again we were fined for every mobile customer the maximum fine and when you have millions of mobile service customers through partners we again felt that this was little bit too heavy and the third one was related to competition aboard and this was between the time 2008 to 2012 related to mobile vehicle tracking. In all of these, we have legal process in motion, it has not been finalized but for various reasons and to be conservative, we chose to recognize them as expenses in the second quarter. We do not think that there is any increasing pressure or any reason for fines to increase on us. It just happened to bad quarter from this finance point of view. We have also some learning to do from these maybe we can even improve further in our operations but I also know that probably these are not the last fines Turkcell will ever get but we will be more careful and I don't think we are singled out we are targeted by the authorities. It is just – it happened to be the heavy quarter from fine point of view in the second quarter.

Ivan Kim - VTB Capital

Okay. Thank you very much.

Operator

As there is no further questions at this time that would conclude today's conference or today's Q&A session. I would like to hand the call back to speakers for any additional or closing remarks.

Murat Erden

Thank you very much Christina. On behalf of management team here I would like to thank for all participants and if you do have any follow-up question please just get in touch with IR team and audio will also be available on IR website, maybe I would like to hand over to our CEO for the final remark. Please sir.

Süreyya Ciliv

Okay I just want to make a few final remarks. In Turkcell we believe that we have the strongest team in technology space in Turkey and we are recognize internationally by our leadership in mobile technologies, mobile services but we are also a team of innovation always building, investing on new businesses like we have done in mobile broadband and also with Superonline ahead of competition. And we have some new business areas that we are very excited in the future so we have a strong team, lot of experience in technology and telecommunication, mobile, fiber and mobile services. On the regulation front, we have had very tough time for the last 7-8 years mostly because we are such a strong value proposition I think the regulator fear that they need to protect other operators so that there is not monopoly in this market but at the same time if you look at other countries, which has run ahead in technology innovation like the United States, like Korea, like Japan you would see that regulators are always promoting technology innovation, fair competition, investments into technology and also how do you create additional value add and economic drivers through technology and on the regulation front, we only want fair competition and as a result I think the market regulation in Turkey will also I think change for the better and it will enable an environment that is also more fair for Turkcell.

We do have strong competition on the fixed side and mobile side and we respect our competitors but we feel that if we continue to focus on our customers, we continue to have the right vision, and invest for that towards that vision, and if we continue to deliver the best customer experience, the best value and great customer satisfaction increase our loyalty then we will continue to do well in the consumer space and also on the corporate space. At the end, we have a strong execution but we are proud of this execution but at the same time the company has great opportunities ahead having close to 35 million customers having a connection with them in education space, in healthcare, in health space, in mobile finance, in entertainment, there are huge opportunities for us. Smartphone penetration is only 35%, so 65% very reasonably priced smartphones are coming to market. This will accelerate the smart phone penetration. LT will come hopefully to Turkey towards the end of 2015, early 2016. It will open up new business opportunities as well and Turkey's economy continues to improve and as the economy improves, I think our customers will be able to effort higher ARPUs and this will also help our business. So I thank all of the analysts, all of the investors for their support and I also thank all of the Turkcell team of employees, partners, our board members and most importantly our customers. Thank you very much and have a great weekend. Bye-bye.

Operator

That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.

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