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Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC)
Q3 2020 Earnings Call
Nov 6, 2020, 12:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen thank you for standing by. I am Yortha, your Chorus Call operator. Welcome and thank you for joining the Turkcell's Conference Call to present and discuss the Third Quarter 2020 Financial Results. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Korhan Bilek, Treasury and Capital Markets Director. Please Mr. Bilek, you may now proceed.

Zeynel Korhan Bilek -- Director, Treasury and Capital Markets Management

Thank you, Yortha. Hello everyone. Welcome to Turkcell's third quarter 2020 results call. Today's speakers are our CEO, Mr. Murat Erkan; and our CFO, Mr. Osman Yilmaz. We will have a brief presentation and afterwards, we'll be taking your question. Before we start, I would like to kindly remind you to review the last page of this presentation for our safe harbor statement.

Now, I hand over to Mr. Erkan.

Murat Erkan -- Chief Executive Officer

Thank you, Korhan. Good afternoon and good evening, everyone. Welcome to Turkcell's third quarter 2020 results call. Before we go into the results, I would like to extend my condolences to those who have lost their loved ones in last week's earthquake disaster in Izmit and in Greece, and wish a speedy recovery to the injured. At Turkcell, we did our best to support the search and rescue efforts by extended free voice and data plans to those in the region and by making sure our network operates at maximum capacity.

Now, it's our performance. We had a strong quarter that beat our expectations. While the business got used to the circumstances of the pandemic, our customers have gradually regained their mobile -- mobility. Hence, the reopening of economy has helped our strong performance. We registered 16% top-line growth with over a 44% EBITDA margin. The ARPU trend remained robust at 14% on the mobile side, and we closed double-digit on the fixed side.

Meanwhile, our customer base grew by 382,000 net addition, 370,000 of which were postpaid. Track driven by digitalization in the COVID period become permanent, such as, the share of digital channels in our sales at 12% in the third quarter. We recorded solid growth in all our strategic focus areas. We continue to launch new products and services and enhanced existing ones. Overall, we generated TRY1 billion free cash flow during the quarter, marking a continued solid performance. Our leverage ratio remained at 0.8 times.

Moving to next slide. As international sale was not possible, our roaming revenue remained under pressure. On a year-on-year basis, the decline was around 23%. Previous quarters that we realized, a strong growth performance despite this hassle [Phonetic]. Given the current state of pandemic, we expect a similar trend in roaming revenue in the fourth quarter as well.

We observed a shift to e-commerce in Turkey, accelerated by the pandemic has continued as user enjoy the convenience. As such, transaction through our online channels as well as through Paycell have displayed promising trend. Furthermore, demand for our digital services, particularly TV platform, remains strong motivating us to further enhance our digital services and solutions.

Moving to next slide. Now some further details on our financial performance. We recorded a TRY7.6 billion top-line, with an increase of 16% year-on-year. The first nine-month growth reached 15%. Such a performance was possible with our resilient and flexible business model. Our EBITDA reached TRY3.4 billion on a 19.6% increase, with a 44.4% margin. The third quarter is seasonally a strong period. Moreover, operational cost saving triggered by the pandemic have contributed to a higher profitability.

Net income was solid at TRY1.2 billion marking 51% yearly growth. This is the highest quarterly revenue we generated organically. We are pleased with our performance, which exceeded our expectation.

Next slide. Let's take a look at our operational performance. Our total subscriber base expanded by 382,000 net addition this quarter. In the mobile business, with our continued focus on postpaid segment, the base grew by 317,000. With this, postpaid share of total mobile subscriber reached 64%. The average month in mobile churn rate was at around the same level as last year. We believe that 2% monthly churn rate to be a healthy level in this market.

Blended mobile ARPU rose to TRY52 on a 14% increase. This growth was a result of rising data and digital services usage, the shift to higher data plans, and our new offers and tariffs designed to meet customer expectation. In the fixed broadband business, demand for our services has continued. We gained a net 45,000 fiber subscriber with new tariff choice. Residential fiber ARPU growth was at 9.4% on a year-on-year basis. Further, we registered some 39,000 IPTV subscription during the quarter.

Next slide. Now some highlight on the performance of Fintur, our fixed wireless access product. Superbox is a pioneer product in its market. With Superbox, we have addressed the rising demand for fiber speed home internet. Our well invested LTE network has proven its ability to provide this service without interruption. Superbox subscriber reached 551,000 with a net add of 60,000 this quarter. With this, Superbox subscriber base was 2.5 times that of a year ago. Strong demand has triggered price adjustment in our Superbox targets. Today, the minimum Superbox plan on shelf is TRY159 up from TRY99 a year ago. This increase should gradually reflect to it's ARPU flow.

Next slide. We are ever focused on how to improve the lives of our customers and better serve their needs. This mindset leads us to create innovative offers. As such, this quarter we launched two tariff plan with a new value proposition. Under mega plans, our customers are offered the flexibility to buy large data plan that they can consume through a year. Under Canada and France plan, our customer can form team of up to five with whom they can share their data quota. Additionally, we continue to please our customer with our legendary Shake&Win campaign through our digital connection platform.

Overall, we have recorded by far the highest NPS score in the sector with our key strength in value proposition, network quality and brand loyalty.

Next slide. Digital channels play an integral part in our distribution network model. We serve our customers through our website and our digital operator application. During the quarter, we remained focused on how to continue, diverting customer demand toward these platforms. By doing so, we registered saving particularly in sales expenses. As the visitors to these digital channels reached 28 million in a month, our conversion to sales ratio has doubled on an annual basis. The additional data plan purchases and TR top-up transaction volume over these platform have tripled on a annual basis.

Accordingly, 12% of consumer sales of Turkcell Turkey was registered over these digital channels. Even though mobility limitation were lifted in third quarter, digitalization trend and behavior driven by the COVID period have become permanent.

Next slide. Let's take a look at our performance in our strategic focus areas. First, the digital services. Standalone digital services revenue increased 28% year-on-year this quarter. Paid user, a key revenue source reached TRY2.7 million marking to 29% year-on-year growth. We introduced our secure and seamless video conference platform BiP Meet, which is well equipped to compete with its global peers. Moreover, the data generated by BiP Meet is securely stored at our data center located in Turkey.

We also introduced our TV+ Ready products. It is the first Android TV solution in Turkey that is launched by an operator and capable of converting a television in the Smart TV with a dongle. By doing so, TV+ customer can access over 150 live channels, an archive over 5,000 videos on demand, in addition to music and game application at Android market. Last but not least, our new service Lifebox Transfer is a fast, easy and secure alternative for data sharing. With this service, we suggest an alternative for those who wish to have their data sold in Turkey.

Next slide. As to our second strategic focus, namely digital business solution. Our digital business solution registered 40% yearly revenue growth. TRY938 million system integration project backlog is promising for the period ahead. We pursue a strategy of providing our customer an integrated service procurements from a single point. As such, we launched Turkcell Multicloud service, which offer global class service procurement, peer-to-peer management and consultancy services. Our Secure Digital Signature and Turkcell Digital Archive Solution will enable the digitalization of the process that require signature and generating operational efficiency.

These services also contribute to our sustainable targets by reducing paper usage. Also in the period, we have built new global vendor partnership, increasing the total to 20. All these efforts have encouraged to pursue our ultimate goal of becoming a leader in the integrated solution market.

Next slide. Now a few words on our Techfin services. Paycell sustained its revenue growth driven by continued demand for contactless payment in the pandemic environment. Accordingly, Paycell non-group revenue grew by 85% year-on-year. This quarter, we have introduced Paycell Android POS in a pilot scheme. This device is the first in the Android POS market to have secure necessary approvals and will become a new business line for Paycell.

Paycell Android POS has a smart operating system, enabling the process of collection, inventory tracking and e-invoice over a single platform. It offers cost advantage to member merchant, especially for SME. In addition to QR code payment, all bank cost can be used with this device. The portfolio will expand with the inclusion of new cost.

Next slide. And now an update on data usage and 4.5G subscription trends. Average mobile data usage rose 61% in the year to 12.2-gigabyte per user. The rise in data consumption was due mainly to higher content consumption boosted by seasonality, the growing share of 4.5G user and Superbox subscribers. Out of 32 million customers signed up for 4.5G services, 21.4 million have 4.5G compatible smartphones, still indicating room for growth. This quarter, smartphone penetration on our network reached 80% with 90% 4.5G compatible. There were 1.8 million net additional 4.5G compatible smartphones on a yearly basis.

Next slide. Let's look at our performance in international markets. We generate 9% of the group revenues. Our international operation grew by 25.3% year-on-year. This was mainly on rising voice and data usage and the positive impact of currency movement in these countries. Lifecell Ukraine revenue grew by 14.2% in local currency terms. Lifecell's bottom-line turned positive in June for the first time and in Q3, Lifecell generated net income for the whole quarter.

The performance of subsidy in Belarus has improved with the partial recovery in voice and data elements. Year top-line growth was at 1.4%, mobile ARPU grew 9.3% in a local currency terms. With higher data consumption and demand for digital services, best launch postpaid tariffs upon demand for these customers. Our subsidiary in Turkish Republic of Northern Cyprus recorded 18.5% revenue growth on the back of data and handset revenue despite continued pressure in roaming revenue.

Moving to next slide. A new era for our company began the 22nd of October. The transactions and shared increased among our major shareholders and Turkey Wealth Fund were completed on that day. As a result, Turkey Wealth Fund become the largest shareholder with its 26.2% stake. LetterOne raised its stake in Turkcell to 24.8%. With this change, our company now has a simplified ownership structure.

Long-standing shareholder dispute are over. We no longer have the uncertainties created by a three-party controlling structure. Looking at this 26-year history of Turkcell, I consider this change as milestone. I trust that we will register great result for our company and our country in this new era with Turkey Wealth Fund. Turkey Wealth Fund has already declared its support for our strategy and that it foresees great value at Turkcell. I must also add that Turkcell wins remains -- Turkcell will remain subject to CMB, SEC and SOX rules and to other regulation. We will continue to have three independent Board members ensuring best in-class corporate governance position [Phonetic].

Next slide. I would like to end my presentation by sharing our new guidance for the full year of 2020. Taking into the consideration our healthy nine-months performance and our expectation for the remainder of the year, we revise our guidance upwards. Accordingly, we raise our revenue growth to 14% to 15%, EBITDA margin to 41% to 42%, and EBIT margin to 20% to 21%. We expect to register an operational capex or sales ratio of around 19%. With this we are glad to have come back to the target level we announced before the pandemic hit the world, bringing uncertainties. We owe this performance foreseeing the right strategy with an excellent team and offering the best in-class service over a well immersed network.

I will now leave the floor to our CFO, Osman.

Osman Yilmaz -- Chief Financial Officer

Thank you, Murat. Now let's take a closer look into the financial performance. Our business displayed a solid performance in the third quarter. Group revenues rose 16.1% year-on-year corresponding to incremental TRY1.1 billion. Of this increase, TRY996 million derived from Turkcell Turkey, thanks to strong data demand from both consumers and corporates, rise in postpaid subscriber base and continued momentum in digital business solutions. The increase in use of our digital channels contributed to the performance, facilitating higher device sales.

Turkcell International revenues rose by 25.3%, contributing TRY133 million in this quarter, mainly with the contribution of Lifecell, Ukraine and currency movements. Turkcell finance company's contribution remains negative due to lower loan portfolio size, as well as lower interest on the portfolio compared to last year.

Next slide. EBITDA rose by 19.6% year-on-year to TRY3.4 billion with a margin of 44.4%. Our EBITDA margin marked 1.3 percentage point improvement on a yearly basis. This was mainly due to solid rise in revenues plus lower G&A and S&M expenses. Third quarter had been a high season typically with increased usage during the summer period and this was the case, despite the pandemic environment.

On the cost side, lower selling expenses, very limited travel expenses, lower overhead costs under our continued remote working practice have all supported the margin expansion. Moreover, decline in doubtful trade receivable provision had a positive contribution to EBITDA in this quarter. Our collection performance was strong despite cautious expectations in COVID environment. Meanwhile, increase in equipment sales had negative impact on the profitability margin level. Turkcell Turkey's EBITDA growth was stronger to 23% to -- to 23.2% year-on-year corresponding to an incremental TRY554 million. The profitability margin improved with a 2 percentage point to rise year-on-year to 44.3%.

Next slide. Now, more detail on our free cash flow. On this slide, you can clearly see the positive trend of strengthening of Turkcell's cash flow generation over the years. In Q3, we have registered TRY1 billion free cash flow, mainly on back of strong EBITDA generation. I want to emphasize that our finance company's portfolio expanded by nearly TRY100 million versus second quarter. So our free cash flow generation performance is not related with the change in finance company portfolio, but the operational performance of Turkcell.

With this, the first nine-months free cash flow amounted to TRY2.6 billion. The major items of this TRY2.6 billion cash flow includes EBITDA of TRY9 billion, acquisition of intangible assets of TRY4.8 billion, change in operating assets and liabilities of negative TRY130 million, payment of lease liabilities of TRY1.1 billion, and income tax paid of TRY436 million. Our aim is to continue free cash flow generation trend in the upcoming period.

Next slide. Now let's take a closer look at our Techfin company's performance and let's start first with Turkcell finance company. In Q3, finance revenues declined by 41.9% TL to TRY127 million on a shrinking loan portfolio and lower average interest rate on the portfolio versus last year. EBITDA declined by 32.2% to TRY97.3 million. EBITDA margin was up 10.8 percentage point year-on-year on the back of lower cost of funding and lower cost of risk, specifically, this quarter. As communicated in earlier quarters, we were expecting our finance company portfolio to stabilize by mid-2020 and then to start to grow gradually afterwards. We saw an increase of nearly TRY100 million in Q3.

Coupled with seasonality, pent-up demand in Q2 led to stronger sales in Q3, and continuance in remote education has created demand particularly for tablets. We also observed that smartphone demand was pulled forward with the expectation of price increases given the currency depreciation. Under normal condition, we expect the portfolio to grow by 10% to 15% per annum going forward.

Meanwhile, the cost of risk decreased to 2.5% by improving 1 percentage point on quarterly basis. Successful collection performance and continued improvements on risk assessment infrastructure were the main drivers of this decline. Integrating telco and financial data, we created the best in-class calling mechanism with widest reach in Turkey.

Next slide. Our payment services company, Paycell, is well on track in monetizing the shift in consumer habits in favor of e-commerce and cashless payment methods. Direct carrier billing transactions nearly doubled, while transaction volume through Paycell card is three times of last year. Quarterly growth rates in transaction volume of this business line were also strong with 26% and 63%, respectively. It is worth noting that, despite the fewer mobility limitations in Q3, we see prolonged trans in Paycell KPIs.

Overall, Paycell revenues increased by 34% to TRY78 million, EBITDA rose to TRY47 million with a margin of 60%. Non-group revenues by -- rose by 85% with share of non-group revenues reaching two-thirds of total. We saw strong demand for ready-to-use limit that we launched in June -- July with TRY30 million volume in this quarter. With this service, our customers can transfer their mobile payment limit to their Paycell cards in order to spend as any merchant credit card is accepted. As discussed, we have also launched Paycell Android POS, in a pilot scheme in this quarter. This service will create more value to Paycell with becoming widespread in 2021 and beyond.

Next slide. Now some highlights from our balance sheet and leverage. As at the end of the quarter, our gross debt position increased to TRY22.8 billion from TRY19.8 billion. Currency movements led to around TRY2.5 billion increase in total debt. In Q3, dollar appreciated by 14% and the euro by 18%. As indicated, we do not net off our derivative receivable from debt, so our reported net debt in TRY currency rise as FX appreciates. As of Q3, net debt was TRY9.3 billion with a 0.8 time leverage ratio. Excluding the Techfin business, this was at 0.7 time same as level with the previous quarter. Within TRY0.5 billion rise in net debt in Q3, currency effect was TRY1.6 billion while we generated TRY1.51 [Phonetic] billion cash from our operations.

Next slide. I will end my presentation by discussing our management of foreign currency risk. We have USD1.7 billion equivalent cash in hand with 7% of in hard currency. We deem this practice to be important as a natural hedging tool. With hedging as soon as in place, the share of FX debt had declined from 77% to 43% as at the end of Q3. Our hedge contracts, our cash flow has covering full maturity of related FX debt. We entered into these contracts, mainly in 2016 and 2017. So thanks to good timing, we have favorable exchange rates and we are able to renegotiate strike levels if we see any potential in the market. As of Q3, our net FX position is USD31 million and we will continue to keep the position neutral in the coming periods.

This concludes our presentation. Now we are ready to take your questions. Thank you very much.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from the line of Cabejsek Ondrej with UBS. Please go ahead.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Hi, thank you for taking my questions, and congratulations on a very good results. I had a couple of questions actually. So I was just thinking, if I look at your revenue growth, obviously you outperformed on both revenues and EBITDA. But if I look at your revenue growth, I would say that the service of the -- call it better outperformance were from wholesale and other. I was wondering if you could clarify a bit where exactly so much of that growth is coming from? My first question.

Second question on capex, you're now moving your guidance to 19%. I wanted to clarify whether that is just a function of FX or whether there is some new investments coming through? And lastly, just to comment, if you could please, on your -- or whether not on your but in competition, because one of your competitors yesterday was saying that the competition seems to be picking up in the acquisitions market, specifically in mobile. So if you could comment on what your view on that is and what impacts would you say that that could have on your subscriber acquisition cost going forward, because clearly they were up again in the third quarter compared to what we have seen before -- even before COVID. Thank you.

Murat Erkan -- Chief Executive Officer

Ondrej, thank you very much for the question or questions. Let me start with the revenue growth part. This was mainly driven by Turkcell Turkey's strong ARPU performance on the back of larger postpaid share and higher data consumption and upsell efforts. Equipment revenue backed by sales particularly digital channels and corporate projects also had a positive impact on Turkcell Turkey's strong top-line performance. Turkcell International revenue, which rose 25% mainly with the contribution of our Ukrainian operation and the positive impact of currency movements, supported group top-line growth as well.

Meanwhile, we saw 15% drop in other subsidiary revenue. This was a result of the declining finance business revenue due to contracting loan portfolio and declining interest rates. We also stopped our sport betting operation in Turkey by the end of August 2019, which had a negative impact on the other subsidiaries revenue as well. Excluding the finance business and sport betting operation revenue, our consolidated revenue growth would have been 19% in Q3.

For the second question regarding capex, we implement a disciplined and selective management without compromising quality in terms of coverage and capacity. By selective, we mean making new investments based on subscriber metrics while prioritizing locations having high revenue generation potentials. However, on the face of the recent volatility in Turkish lira, as well as our continued investment, we revised our guidance and now we are targeting the higher end of our initial guidance, which is around 19%.

Regarding competitive environment, actually our strategy compromise different initiative than our competition. We focus on creating higher value and richer experience to our customer by offering differentiated product and services. As rather than competing on price, we focused on additional value to be offered all our customers. Our strong NPS score and customer addition performance confirms that our strategy is paying off. Appreciation of our value proposition, by our customer also enable us to implement inflationary price. In the third quarter, we registered an ARPU growth performance, which has 2 percentage point above inflation and double the nearest competition. Going forward depending on the pace of inflation, we would be reasonable to expect our ARPU growth to be in a range plus or minus a couple of percentage points around inflation levels.

Actually as far as -- yes, I guess the -- for the wholesale side, you ask for FX effect. Yes, we have foreign exchange effects as well. But on the wholesale side, we have also some local currency level. On the other side, I believe I already explain the equipment, digital sales and corporate equipment as well.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Yes, thank you. If I may one short follow-up on the enterprise revenues. So, those seem to be very strong, but usually, those are sort of, by their nature, usually come in sort of larger projects with pretty big upfront cost meaning low margin. But it seems you've also done very well on the margins. So can you just talk a bit about the nature of these? Are they, for example, clouds better by nature a high margin or any comments on that would be helpful. Thank you.

Murat Erkan -- Chief Executive Officer

The -- for -- I mean we already -- actually initially, we said that for the corporate market we are going to focusing higher profitable areas, which are cloud business, security, IoT and that type of business. So yes we are entering into the project sites and we are going after, for instance, healthcare hospital business. But all of them has a part of data, cloud and other solution as well. So I think we are focusing very much on the enterprise segment and then profitable side of enterprise segment as well.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Thank you. I apologize, everyone on the line. Can you just please clarify in terms of the subscriber acquisition cost that I asked earlier, they seem to have jumped up again quite a bit in the third quarter. What is the outlook for those in the coming period?

Murat Erkan -- Chief Executive Officer

Yeah. To be honest, with the normalization of our mobile customer acquisition, increased 38% compared to previous quarter and third quarter, while fixed customer acquisition rose 16%. These are the main driver behind the increased subscriber acquisition cost.

Cabejsek Ondrej -- UBS Group AG -- Analyst

That's very clear. Thank you, and I'm sorry, everyone. Thanks.

Operator

The next question comes from the line of Ibragimova Dilya with Citi. Please go ahead.

Ibragimova Dilya -- Citibank -- Analyst

Yeah, thank you very much for the opportunity and congratulations on the strong results. I had a couple of questions on the similar theme where Ondrej was. First, maybe looking at the device sales. So if I'm looking at the -- there has been strong increase, but if I'm looking at the gross margin especially year-on-year, there has -- there is very or relatively liquid dilution. Can I just ask whether the device sales coming at positive margin or maybe the margin on those are improving? And also, maybe if you have a breakdown share of equipment sales that are attributable to corporate segment, please.

And my second question is on service revenue. It looks like quite a bit of growth in mobile service revenue is driven by prepaid. I just wanted to check whether that's -- how much of that is driven by pricing that you have put through in July -- June, July. And then how much of that is driven by maybe higher consumption of data as consumer just, working from home and studying from home. Thanks.

Murat Erkan -- Chief Executive Officer

Okay, thank you very much, Dilya. First of all, regarding device sales and the impact of the gross margin, so we are not doing device sales just sake of the revenue increase. Every device that we are selling to our customer has related ageism -- adjacent revenues as well, which are mainly profitable revenues. If you look at stand-alone device, the margin, it's like between 6% to 8% level. But it brings higher profitable revenue next to these devices and also increase customer stickiness and create new opportunities in the -- especially in the enterprise markets as well.

For the hike in prepaid ARPU growth, we implement price increase to bundle offers as well as data packages in the prepaid segment at the beginning of the third quarter aiming to reduce the price gap between prepaid and postpaid.

Moreover, we follow a proactive approach to prevent possible churns that will be triggered by the price adjustment with customized and exclusive offering using our analytical capabilities. This resulted in solid ARPU growth in prepaid segment in the third quarter. Yeah, actually you asked for equipment sales share, it was 10%.

Ibragimova Dilya -- Citibank -- Analyst

So it's 10% of all device sales or...

Osman Yilmaz -- Chief Financial Officer

Corporate revenue.

Murat Erkan -- Chief Executive Officer

For the corporate revenue.

Ibragimova Dilya -- Citibank -- Analyst

Okay, thanks very much.

Murat Erkan -- Chief Executive Officer

Sorry, sorry, to coming back to first question. Yeah.

Operator

[Operator Instructions] The next question comes from the line of Demirtas Cemal with ATA Invest. Please go ahead.

Demirtas Cemal -- ATA Invest -- Analyst

Thank you for the presentation and congratulations for a very good result. My question is about the prospects for 2021. Could you give any indication about the trend for 2021? Any significant change in the outlook? Roughly, what are your expectations? Thank you.

Murat Erkan -- Chief Executive Officer

Cemal, thank you very much. I think to be able to prospect from now, it is -- it might be little bit difficult, especially in the COVID environment. So now, there are some revenue rely on the -- for instance, roamings revenue rely on the COVID situation because if the COVID goes earlier, we will see the roaming revenue come back in the same level, even may be higher. So as of today, we are working on, heavily on 2021 prospects. It is not easy job by the way, but we will provide guidance soon in February with fourth quarter results. But believe me, we are working hard on the prospect for 2021 these days.

Demirtas Cemal -- ATA Invest -- Analyst

Thank you. Thank you.

Operator

We have a follow-up question from the line of Ibragimova Dilya with Citi. Please go ahead.

Ibragimova Dilya -- Citibank -- Analyst

Yeah. Thank you very much for the opportunity to pull off and to ask follow-up. I have three actually, if I may. First is on margin or maybe cost structure this quarter specifically. Do you -- if -- I understand that some of the cost may have been lower because of the lower commercial activity, for example, sales and marketing. So if we were -- if the market was open as normal, where do you think your EBITDA would have been then?

And second question is on roaming. Is there any roaming revenue in Turkish revenue this quarter? And my third question is on your guidance, top-line guidance which implies 11%, 15% growth in the fourth quarter, which seems conservative considering that it tends to be stronger quarter in device sales and the run rate that we have seen so far. Is it -- are you just being cautious in your outlook, as you mentioned that some of the device sales have been -- have moved forward as people rush to buy equipment before inflation? Is that -- or are you just being conservative? Thanks.

Murat Erkan -- Chief Executive Officer

Thank you very much. Let me start with the margin side. I mean, third quarter is the high season for telecom market in Turkey. It was historically like this. And this is due to increased usage during the summer period and this was the case despite the pandemic environment. On the cost side, lower selling expenses, very limited travel expenses, lower overhead costs under our continued remote working practice have all supported the margin. Moreover, decline in doubtful trade receivable provision had a positive contribution to the EBITDA in this quarter as well.

Our collection performance was strong despite cautious expectation in COVID environment. We believe that we will be within our guidance range for the full year, which is between 41% to 42%. As you know, digital sales channel is a focus area for Turkcell. The increasing share of digital channel leads to saving in the selling and subscriber acquisition expenses as well.

The pandemic environment had a positive impact on this trend and we believe this become permanent even in normalization period. We believe that we can sustain the saving on the selling side. On the marketing side, we either postpone or cancel part of marketing expense due to pandemic. This will bounce back to normal levels when things get back to normal, I would say.

For the pipeline guidance, sorry, for the roaming revenue in Turkey this quarter, as I indicate that, our roaming revenue decreased by 33% year-over-year. So roam part still -- obviously we get some roaming revenue, but it decreased dramatically versus last year. For the top pipeline -- top-line guidance, we increased the top-line to 14% to 15%. I believe this is reasonable achievement because last year, fourth quarter was also quite strong quarter, and I think we will try to hit higher end of the guidance. But I believe we can do this.

As you said that people rush to buy equipment, this might be changed. And also, the increase of the foreign currency, I believe will reduce the customer buying the terminal equipment this -- and in the third quarter, the Turkish, the terminal price was in Turkish lira, so we expect to increase in the terminal side as well.

Ibragimova Dilya -- Citibank -- Analyst

Thank you.

Murat Erkan -- Chief Executive Officer

Just one more addition is, it's regarding roaming revenue. In total, it is 2% of Turkcell Turkey revenue, so it has such a impact.

Ibragimova Dilya -- Citibank -- Analyst

I'm sorry, just to confirm, this quarter the roaming revenue was 2% of total Turkcell Turkey...

Murat Erkan -- Chief Executive Officer

No, no. Sorry, historically roaming revenues is around 2% of Turkey revenue. But this quarter, it decreased to -- sorry, just let me. Okay, this is the same, it's -- in this quarter, it is 2% of Turkcell Turkey revenue, the roaming revenue, for the third quarter.

Ibragimova Dilya -- Citibank -- Analyst

Okay, thank you very much.

Operator

[Operator Instructions] We have a follow-up question from the line of Cabejsek Ondrej with UBS. Please go ahead. Mr. Cabejsek, can you hear us?

Cabejsek Ondrej -- UBS Group AG -- Analyst

Oh, apologies, I was on mute. I wanted to have -- ask a question on the consumer finance business. So clearly that's -- the loan book of it has sort of bottomed out, but I believe it's bottomed out quite below what you were sort of expecting it to reach about a year ago. So I wanted to ask whether that is intentional, for example relating again to your focus on profits or marginality on devices or whether that was simply something natural that the COVID situation, for example, made happen? Can you comment on that please. Thank you.

Murat Erkan -- Chief Executive Officer

Yeah. First of all, at the beginning of the year, our -- in Turkey, the regulation is changed for the installment -- number of installment in the device business. So it reduced three installment for the price of -- toward TRY500 range and six installment lower than TRY3,500 range. So, this impacted our finance business top-line and number of device credited to customer. The main -- the reason of this -- it's not intentionally, it is due to regulation.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Okay. But, so you can confirm that despite this happening earlier this year, we've sort of annualized that, or it's in the base now and the growth, like you said, should come sort of in line with revenues from where we are today, in the loan book?

Murat Erkan -- Chief Executive Officer

Yeah, we see that sit down to the -- like mid of the year, and now we are recovering, but obviously going forward we can expect 10% to 15% portfolio growth on annual basis.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Okay, thank you. And one more follow-up please. On the prepaid market, you said you -- if I understood correctly, your strategy would be to sort of converge prepaid to postpaid pricing, logically that would be making the prepaid services more expensive.How confident you are that the market is going to follow you on that one? Because one of your mid -- medium-term target is also to be adding 1 million ARPUs per year. So, are you not scared of market share losses in this segment?

Murat Erkan -- Chief Executive Officer

To be honest, we would like to close the gap between prepaid and postpaid pricing because -- so that customer would like to move to the postpaid environment rather than prepaid environment which is more sustainable, more ARPU and more steepness for us. So this is intentional job that we're doing, during the year, actually. This is the case, I think.

As for the 1 million target, we -- I think, obviously the COVID environment impact customer acquisitions side. Mainly, we didn't see foreigner to come to Turkey and acquire more mobile lines. This has impact, but we would like to get as much as we can to the 1 million target.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Okay, thank you very much. And if there is no one else in the line maybe one follow-up on TV, please. Your competitor yesterday announced a new suite of TV services with more content, is there any reaction or potential reaction from your side in terms of how you run the TV business at Turkcell?

Murat Erkan -- Chief Executive Officer

Yes, so our TV business is quite strong and year-over-year growth is the also quite positive on our side. For the -- I didn't know that -- what the competition announced, but one of the richest content is in Turkcell TV+. Actually, we announced new things like TV+ Ready, which means we can attract competition broadband infrastructure by using OTT download bucks. So this is also, I think, one of the important achievement on our side. So, for the content side, I believe we are the -- probably, we have the richest content in Turkey in terms of TV content. Obviously, we don't have local Turkish leak rise, but I believe our competition doesn't have anyway.

Cabejsek Ondrej -- UBS Group AG -- Analyst

Yes. All right, thank you. Thank you. I appreciate all the answers. Thank you.

Operator

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

Murat Erkan -- Chief Executive Officer

Okay, this is the end of our call. Thank you all for taking time to participate in our call. Have a nice weekend. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 53 minutes

Call participants:

Zeynel Korhan Bilek -- Director, Treasury and Capital Markets Management

Murat Erkan -- Chief Executive Officer

Osman Yilmaz -- Chief Financial Officer

Cabejsek Ondrej -- UBS Group AG -- Analyst

Ibragimova Dilya -- Citibank -- Analyst

Demirtas Cemal -- ATA Invest -- Analyst

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