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Turkcell Iletisim Hizmetleri A.S. (TKC 1.77%)
Q1 2021 Earnings Call
May 3, 2021, 9:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by. I'm Hailey, your Chorus Call operator. Welcome, and thank you for joining the Turkcell's Conference Call and Live Webcast to present and discuss the Turkcell's First Quarter 2021 Financial Results Conference Call.

All participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question-answer session. [Operator Instructions] At this time, I would now like to turn the conference over to Mr. Ali Serdar Yagci, Investor Relations and Corporate Finance Director. Mr. Yagci, you may now proceed.

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Ali Serdar Yagci -- Investor Relations and Corporate Finance Director

Thank you, Hailey. Hello, everyone. Welcome to Turkcell's first quarter 2021 results call. Today's speakers are our CEO, Mr. Murat Erkan; and our CFO, Mr. Osman Yilmaz. We have a brief presentation and afterwards, we will be taking your questions. 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, Ali Serdar. Good morning and good afternoon. Thank you for joining us today. We had a strong start to year delivering robust financial results, despite the prevailing challenges of pandemic. This performance was possible due to our customer-centric strategy built on a diversified business model. This strategy has enabled the continuation of solid growth in total subscriber by 705,000, marking the highest level over the past three years.

Our strong and fast network, convenient digital sales channel and value offers have been instrumental in the success. Accordingly, we recorded 17.5% topline growth, generating TL7.8 billion consolidated revenue. EBITDA reached TL3.3 billion on 17.7% growth, with a 42.2% EBITDA margin. Net income was TL1.1 billion on 26.6% year-on-year growth. Overall, these results have confirmed our confidence in achieving our full-year guidance levels.

Next slide. Let's have a look at our operational performance in the first quarter. On the mobile front, we gained a net 410,000 postpaid and 190,000 prepaid subscribers. Our postpaid customer base reached 22.4 million, reflecting 66% of total on a 3-point rise year-over-year.

Strong momentum in net addition is a reflection of our commitment to strengthen our subscriber base. Our efforts to establish a customer-driven mentality throughout the Company have played an important role in this performance. As such, our mobile churn rate was 1.8%, the lowest level over the past three years.

In the fixed broadband segment, strong demand has continued under prevailing mobile limitations and remote working conditions. We recorded 50,000 fiber subscriber addition, with our high-speed and unlimited fiber internet offers designed to meet the need for speed at home office. In addition, there were 23,000 net additions to our fixed wireless access service, Superbox, this quarter.

Further, we are pleased to see robust demand for our TV services. With the addition of net 49,000 IPTV customers, we now offer this service to 61 out of every 100 households among our residential fiber customers.

Blended mobile ARPU rose to 49.9% -- TL49.9 on a 8.7% rise. We felt the negative effect of pandemic on the roaming revenue generation and are on the trend for additional data quota purchases, despite this growth was driven by a larger postpaid subscriber base, higher data consumption and price adjustments.

Fiber residential ARPU growth was at 8.8% to TL74.3, mainly on demand for higher speeds as well as our price adjustment. Reflecting the rising trend in inflation, we expect to record double-digit ARPU growth next quarter.

Next, an update on data usage and 4.5G subscription trends. Average mobile data usage rose 29% year-on-year to 12.6 gigabyte per user. Limited mobility and continuing lockdowns impacted the mobile usage growth. 4.5G users on our network have continued their growth trend, contributing to mobile data usage. Although 32.4 million customers signed up for 4.5G services, around 70% had 4.5G compatible smartphones, still indicating significant room for growth. Overall, smartphone penetration has reached 84% with 99.1% of these being 4.5G compatible.

Next slide. We work with the mindset that prioritizes our customers' needs in our decision making. To achieve this, a segmented approach helps us address those needs more effectively. In that regard, we have applications designed to address our core segments. Their active users have increased 16% year-on-year growth, suggesting more engagement on this platform. Additionally, our key strength, including our well-invested network infrastructure, extensive distribution channel and strong brand loyalty, stands up as core factor in customer decision making. With all of the above, customers had continued to recommend Turkcell over the competition this quarter, even widening the large gap to the second best.

Next slide. I will go into detail on action in our strategic focus area on the next three slides. First, let's consider our digital services. The stand-alone revenue from digital services continued their strong growth at 28% year-over-year, reaching TL367 million. The paid user base reached 3.2 million, up by 200,000 during the quarter.

It has been an exceptional quarter for BiP. There were 32 million downloads in a single quarter, half of those were from beyond Turkey. Overall, three-month active users have reached 40 million. BiP differentiates itself from the competition, acting on its data on the BiP users' permission policy. With BiP we continued to enhance user experience, position it as the best communication platform.

It has also been a good quarter for our TV business. With greater content and penetration on big screens[Phonetic], we have gained a remarkable number of new users, both on IPTV and OTT platform. Another highlight on the quarter was the launch of our cloud gaming platform GAMEPLUS in March in collaboration with NVIDIA. It captured over 10,000 paid users in just 15 days. Thanks to cloud-based game technology eliminating the need for high-speed hardware, users can access all 950 games. Going forward, we aim to launch our own mobile game publishing business.

Over the coming quarters, we will focus on launch of the B2B models of fizy, lifebox and BiP Meet with a view to further monetization.

Next slide. Next are our digital business services. We continue to pioneer to digital transformation of corporates in Turkey. This strategy has brought a 27% increase in digital business service revenues, reaching TL452 million. We are glad to see the strong demand for our digital business services, particularly data center and cloud, security services, new generation technologies and managed services.

We signed over 700 new contracts with a total contract value of nearly TL0.5 billion. Overall, the backlog from system integration and managed services projects signed to to-date has reached TL1.1 billion.

We strengthened our global partner ecosystem with the addition of Palo Alto Networks. Our team has gained further expertise with certification program. Also this quarter, we have been busy with several launches in the area of cyber security, IoT and cloud services.

The security orchestration automation and response service facilities faster action in the event of cyberattacks. Forensic services enable the understanding of the underlying weakness in a cyberattack, along with the action plan. In IoT, the Turkish Digital Facility -- sorry, Turkcell Digital Facility with diversified services and reach, service at Kopilot as well as new user experience on Turkcell Cloud were among other highlights of the quarter.

Next slide. Third is our techfin focus. Total techfin services revenues were TL223 million, despite the continued contraction in finance Financell's revenue due to the regulatory limitation. Paycell's growth was robust at 53% on a year-on-year basis. It has been yet another successful quarter for Paycell. With its active users reaching 5.3 million, mobile payment transaction volume has doubled year-on-year. Furthermore, the volume of business realized through the Paycell card was four times that of last year.

As to handset sales, while there is contraction in the market due to regulatory limitation as well as the pandemic, we observed that some demand has shifted to cash sales over the past two years. At Turkcell, we are also relevant in cash sales through our sales channels.

Financell in its fifth year has diversified its focus to cover new segments, including residential, SMEs and corporates in addition to consumer. Financell is the market leader in the finance sector, including banks, with a 25% market share in consumer loans, below the TL5,000 threshold.

In Insurtech, our subsidiary Guvencell's product portfolio, including insurance for devices, human health and accidents, is now available through our digital platforms. We believe that the Insurtech business complements our techfin services portfolio well. In March, Guvencell begun to offer unemployment insurance that ensures Turkcell subscription for up to six months in case of our unemployment.

Next slide. Now, a few words on our performance through our digital channel. There were 32 million visits per month to our website. Our digital application had 23 million three months active users. Overall, the conversion of visit to actual transaction was 1.7 times than over the previous year. In particular, data plan purchase and Turkish lira top-up transaction volume over this platform were ever higher at 3.7 times.

As an update to our tech and electronic marketplace, our customers can now easily see and access Pasaj through our Digital Operator application. Pasaj has gained pace in expanding its portfolio and reliable supplier base. Overall, with 9 percentage point increase, the percentage of the customer sales of Turkcell Turkey generated on these digital channels has reached 15.7% in this first quarter -- in the first quarter.

Now let's take a look at our performance in the international markets. Turkcell international revenue comprising 9% of consolidated revenue grew by around 27% year-on-year in the first quarter, mainly on strong growth in Ukraine operation as well as the positive impact of currency movements. Lifecell Ukraine revenue grew by 20% in local currency terms. This was driven mainly by subscriber base growth, price increases and higher data usage despite the hit on the roaming business. Three-month active mobile subscribers reached 8 million on approximately 7% growth. Lifecell positively contributes to group performance with its increased net income and cash generation ability.

Next slide. Before I finish my part, I would like to touch upon our action on the ESG front. On the environmental front, we have committed to energy use exclusively from renewable source before 2030. We are confident that we can achieve this target, which were -- which we have recently also shared at the GSMA Mobile Net Zero event in late April.

On the social investment front, we are glad to have become the sponsor of Turkey's Women's national football team. Also given our responsibility regarding wider digital inclusion, we are building technology rooms in nursing homes for the elderly. Also starting in Q1, we have put into practice our flexible working model, shifting to remote working for a good [Phonetic]. By doing so, we aim to increase overall productivity, also contributing to our sustainability targets. Further, we have continued working on new project that aims to increase the number of women in the Turkcell workforce.

On the governance front, as I believe all of you may have noted, we held our annual general assembly on the 15th of April. With the appointments made at the meeting, all seats on our Board are now filled, in line with corporate governance principles. A dividend of TL2.6 billion has also been approved at the same meeting. The first installment of which was distributed last Friday.

I will now hand over to Osman for a look at financials. Hope you're all safe. Stay safe and healthy. Thank you.

Osman Yilmaz -- Executive Vice President, Finance (Chief Financial Officer)

Thank you very much, Murat. Now let's take a closer look into our financials. This was a strong quarter for our Company. With a 17.5% growth, we generated TL7.8 billion in revenues. While the pandemic still poses few challenges, our diversified business model, coupled with strong operational performance in our core telecom business, have been instrumental in this performance.

Group EBITDA reached TL3.3 billion on 18% growth, indicating 42.2% EBITDA margin. On the back of robust operational profitability and prudent FX risk management, we generated TL1.1 billion net income, it is 27% yearly growth. Overall, we are on track with these results toward our full-year targets.

Next slide. Before I dive into our revenue breakdown, I would like to briefly explain the changes in our reporting under IFRS from Q1 onwards. First and foremost, we now report Techfin business as a new segment reclassified from the segment called other. Techfin business include our consumer finance company, our payment services company and our Insurtech company. By doing so, we aim to monitor the overall performance as a whole and separately, as this segment have different dynamics than our core business.

Secondly, consumer operations of our subsidiary, which includes retail channel operations, smart devices management and consumer electronic sales through digital channels, have been reclassified in the other segment from Turkcell Turkey. Other segment also comprises the non-group call center operations and our energy business.

This presentation will enable us to crystallize the performances of our core telecom operations and complementary relatively lower margin and growth businesses. I should highlight that these changes have no impact on our operating profit, bottom line or the cash flow statement.

Next slide. Now some details on our revenue and EBITDA development. This quarter, the increase in revenues was by TL1.2 billion, TL700 million of it was from Turkcell Turkey. Larger subscriber base, rising data and digital services consumption and price adjustments were instrumental in Turkcell Turkey's performance. Turkcell International revenues rose by 26.6%, contributing TL150 million in this quarter. Lifecell Ukraine strong growth was the main driver in addition to the positive impact of currency movements. Under Techfin, Financell's revenue decline was compensated by the TL34 million revenue contribution from Paycell. Other segment's contribution of TL350 million was mainly through the increase in equipment revenues accelerated by the presence of our digital channels.

Strong revenue growth has been the key driver for the 18 points rise in EBITDA. With higher equipment sales, EBITDA margin remained flat.

Next slide. Now I would like to talk about our balance sheet and leverage detail. As at the end of Q1, our gross debt position increased to TL25 billion from TL21.6 billion Q4-end due mainly to currency depreciation and new borrowings. In Q1, dollar appreciated by 13% and the euro by 8.5%. Currency movements resulted in around TL2.5 billion increase in total debt.

Our cash position increased by TL1.6 billion to TL13.5 billion in Q1. This increase was mainly driven by new borrowings and FX movement. Meanwhile, our free cash flow generation was impacted by seasonal working capital needs. This mainly included TL400 million wireless usage tax payment and advance payments to our vendors reducing payables balance. Vast majority of our cash remains to be in hard currency and this cash is sufficient to cover our debt service until 2025.

As of Q1 end, group net debt was around TL11.4 billion with a 0.9 times leverage ratio. Excluding the Techfin business, this was at 0.8 times.

Next slide. Now some highlights on our foreign currency risk management and liquidity strength. Our balance sheet is strong with some $1.6 billion[Phonetic] equivalent cash in hand with a long FX position of around $200 million. With hedging instruments in place, the share of FX debt declined from 81% to 44% at the end of the quarter. This hedging instruments have limited the net FX loss with TL276 million, which would have been TL1.6 billion otherwise.

In [Phonetic] the main reason of our borrowings, I would like to share some details regarding our capex. Overall, around 75% of our operational capex is in foreign currency. And for 2021, we have planned to invest around 90% of our capex in mobile and fixed infrastructure. We deem continuous investment in our infrastructure to meet rising demand for data and to reflect that technological advancement is crucial.

Superior network quality is one of our key strengths that we are committed to keep in place. In particular, by the rising demand for mobile data, our target to increase our fiber home passed by 500,000 and continued demand for our data services, data center services and digital services are the underlying reasons for the accelerated capex budget for this year.

Next slide. Let's take a closer look at our Techfin company's performance and -- but first, Financell. In the first quarter, Financell revenue declined by 20% to TL130 million, mainly due to lower consumer loan portfolio along with lower average interest rates. Its EBITDA decline was slower resulting in 4.5 percentage points rise in EBITDA margin. This was driven mainly by the cost of risk improvement with better credit scoring, successful collection performance and sale of doubtful receivables. Accordingly, the cost of risk ratio declined to 1%. Even excluding NPL sales, cost of risk would still be below 2%, the lowest in three years. Net income increased by 51% year-on-year to TL95 million, driven mainly by lower FX loss after hedging.

Next slide. Paycell registered a remarkable performance in Q1, achieving 52.6% year-on-year revenue growth. With a focus on expanding its business, Paycell concentrated its efforts on growing non-group driven revenues. Accordingly, non-group revenues rose 81.4% year-on-year this quarter.

Paycell's growth was positively impacted by the increasing demand for e-commerce and digital payments. Paycell was able to monetize this demand with its mobile payment solutions, particularly direct carrier billing and e-money solutions. Mobile payment transaction volume more than doubled while transaction volume through Paycell card is nearly four times that of last year. The number of active Paycell cards is nearly 2.5 times over the last year and reached to around 560,000.

Paycell's three-month active users reached 5.3 million. The rise in active users was driven mainly by increased digital content consumption and expanding merchant channel, and ease of use of the Paycell application. Paycell is now accepted at 13,000 merchants as at the end of the quarter. Paycell's EBITDA rose by 46% year-on-year, resulting in an EBITDA margin of 54%. The strong operational performance resulted in a robust net income rise of 41% to TL40 million. Paycell will continue its strong growth in the upcoming periods through further penetration and service diversification.

This concludes my presentation. We can open the line for your questions. Thank you very much.

Questions and Answers:


Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] And the first question is from the line of Ece Mandaci of Unlu Securities. Please go ahead.

Ece Mandaci -- UNLU & Co -- Analyst

Hi, thank you very much for the presentation, and congratulations on the strong results. I have three questions. One is on the prospects regarding varying growth in consumer segment going forward. The inflation trends have changed in Turkey. Should it be -- would it be fair to assume a higher ARPU growth generation in the quarters ahead? This is my first question.

Secondly, could you please, if it's possible, give more information regarding the breakdown of digital service revenues? Is it fair to assume that now BiP application has a higher revenue share in overall?

And thirdly, last week there was the comment of the Chairman of ICTA regarding the 5G tender in 2022. Could you please also provide any comments about your view on the potential candidates going forward? Thank you very much.

Murat Erkan -- Chief Executive Officer

Thank you. Thank you, Ece. First of all, for the question regarding ARPU and higher assume -- higher ARPU. In the upcoming quarters, we aim to improve our ARPU growth to double-digit level and we expect the inflation to decline toward the end of the year. We believe that the gap between our ARPU growth and inflation will be contracted. In a challenging macro environment with a high inflation and rising unemployment, we will be targeting a balanced revenue growth through ARPU increase and customer additions. Moreover, as part of our diversified business model, we will also focus our strategic focus areas, which will be supporting our topline growth.

Especially, I would like to insist on the first quarter is not apple to apple in terms of roaming, because last year there was roaming revenue, after the pandemic this year, there is no roaming revenue. This also impacts the ARPU growth level as well.

Regarding breakdown of digital service revenue, to be honest, the biggest share is TV business, so we have TV, music, lifebox and BiP, are main drivers of the revenue side, but the biggest share is in the TV side.

Regarding 5G tender, so we don't have official roadmap announced by the regulation yet. And a couple of days ago, the Deputy Minister or -- of Transformation and Infrastructure stated that they are planning to hold a tender in 2022 and commercial services to be launched in 2023. On our side, we have been continuing our preparation for 5G for the last couple of years. We have conducted tests through collaboration and network vendors and then other people.

We are seriously taking an active role in the international organization, setting the standards. We are focusing on different use cases of 5G, reaching out as many vertical sectors as possible while maintaining local R&D focus. With this scope, we're testing 5G heavily, and real-time virtual reality cases, 5G live TV broadcasting and other tests are conducted. So we believe that transaction is vital for Turkey's sustainable economic growth. Going forward, we will continue to provide tests and the best-in-class technology for this purpose. But still, it's not that can be used for our side, so 2003[Phonetic] seems the service timeline. I hope I answered all three questions.

Ece Mandaci -- UNLU & Co -- Analyst

Thank you very much.


The next question is from the line of Ivan Kim of Xtellus Capital Partners. Please go ahead.

Ivan Kim -- Xtellus Capital Partners -- Analyst

Hi, and good afternoon. Three questions maybe for me too please quickly. So firstly, can you talk about the key NPS drivers for you? So what are the reasons, your guess is stronger than write-offs and for the gap to increase even though you keep increasing prices?

And then secondly, can you please talk about the fiber rollout plans? The plan for this year is clear, but longer term, do you still aim to do sharing or your decision is for as much to do it yourself now?

And then finally, can you please talk about for the opportunities to monetize deep because it looks fairly kind of very good scale now, so probably there is opportunities to get more revenue from there? Thank you.

Murat Erkan -- Chief Executive Officer

So first of all, for drivers of NPS, there are three areas. One of them is our segmented customer-centric strategy. We focus our customer based on young, premium and boom and other loyalty services. So customers appreciate our focus on the segmented side. Obviously, we invest a lot to our smart network, so we have widest, fastest, smartest networks. So this is appreciated by the customers. And also, our widest distribution network, I mean sales channel, we are not just selling product, we are giving services and supporting our customers to utilize technology. So I believe all three let us on the NPS side.

Regarding fiber rollout plans in long term. So for this year, we hope to see 500,000 home pass. Next three years, we would like to continue 500,000, even more than that next couple of years. And we see that we have a demand-driven approach by region -- regional focus. In terms of capex management and as long as demand is there, we will continue to invest in fiber. And the 500,000 is the minimum per year mix next three years, I believe.

Regarding third question, I couldn't catch the third question. Could you repeat the third question?

Ivan Kim -- Xtellus Capital Partners -- Analyst

Yeah. Yes, sure. Thank you for that, Murat. On the third question, just opportunities to monetize BiP, the messenger. Because for now, I believe there is not a ton of revenue coming from it, but now with a lot of connections that you saw in the first quarter, so maybe you can consider monetizing a little bit more. Thank you.

Murat Erkan -- Chief Executive Officer

Okay. Obviously, BiP -- we have been investing in BiP in terms of monetizing BiP. Our approach is little bit different than the OTT players, other messaging platform because we are utilizing telco capabilities into our infrastructure. So in our BiP, with a different way of approach, we can monetize it through the voice, on-net, off-net utilization with services on top of it, and obviously, we can converge it to our Paycell capabilities with BiP integration customer approach as well.

So I think we have a number of cases to monetize the BiP, but we are also looking for opportunities with the international operators for going to market together. Since we know how to deal with telco approach, there are telcos around the world who can utilize BiP as if their instant messaging platform with a white label approach, and also we are looking forward to stake for sales to other operators -- other potential stakeholders as well.

Ivan Kim -- Xtellus Capital Partners -- Analyst

All right. Thank you. The actual integrating it with Paycell was the most promising. Thank you very much for your answers.


[Operator Instructions] And the next question comes from the line of Kayahan Demirak of AK Investment. Please go ahead.

Kayahan Demirak -- Ak Yatirim -- Analyst

Hi, thank you very much for the presentation. I just had a follow-up on the ARPU growth may be, and a few questions. On the postpaid ARPU, I mean you had very strong net additions on the postpaid side for the past, maybe, more than a year, which is supported blended ARPU growth, but it seems like this impact now is fading away. So what I'm trying to understand is that how dilutive the new postpaid additions in terms of price compare to your average postpaid ARPU? So on a like-for-like basis, maybe is it possible to give a rough number for the postpaid ARPU growth excluding the new additions? And also to explain this trend, I mean do you see some kind of transition to lower priced packages within your subscriber network? So in essence from different ways, what I'm trying to understand is the reasons behind the relatively weak growth in the postpaid ARPU.

And also as, again, a follow up, this brings me to the inflationary pricing strategy. Now, there is a significant gap between the headline inflation and the ARPU growth, 8% versus 18%, 17%. So, I mean, how much do you -- this divergence stay close? Also are you basing your price increases, I mean, based on your year-end inflation prices? Do you have any targets on that side that you can share? Thank you.

Murat Erkan -- Chief Executive Officer

Kayahan, thank you very much. First of all, our postpaid ARPU is still impacted by the roaming revenue. Due to travel restrictions, some of our revenue source, like add-on data packages, causing revenue overuse charges and also impacted during two quarter. Moreover, as you know, we also focus on switching prepaid customers to postpaid subscription. While these switches have positive impact on blended ARPU, they negatively impact the postpaid ARPU as these subscribers firstly choose entry-level postpaid packages. One of our strongest part is [Technical Issues], we have ability to grow and it's up to higher packages. So a strong postpaid acquisition also had an impact on postpaid ARPU performance as well.

Our like-for-like postpaid ARPU growth was 8.4% in the first quarter. So I think, as for the compression of our ARPU growth and inflation, we started the year by adjusting our price. Yes, we cannot see the fully impact of those price action immediately due to the contracted nature of our business. Furthermore, we also observed that people in Turkey now are more concern regarding their purchasing power as well as job security. Therefore, it's more difficult to make material price adjustment in this environment.

On the other hand, due to the current macro environment in the first quarter, we saw a quick rise on the inflation side, which was beyond our expectation. All in all, these factors widened the gap between our ARPU growth and inflation in the first quarter, but we see that we are going to recover this growth level coming quarters. I'm not sure that we can meet at like 70% level, but as you know, we would like to come as close as possible.

Kayahan Demirak -- Ak Yatirim -- Analyst

Thank you. Understood. Just to make some remark on that, I mean inflation is -- the one side of the equation -- also how do you think of the FX side? I mean, yeah, there is substantial capex needs on the USD front, which related -- part of it related with your mobile business, also the long-term FX. So, I mean given the pricing, so how do you pay the FX side into account or are you considering impacts, cost pressure coming from that side? Thank you.

Murat Erkan -- Chief Executive Officer

Okay. Thank you very much. The FX is very important factor, especially in the telco business, but we were well prepared actually. Living in Turkey and operating in Turkey make us quite cautious on the FX side. So our FX part is now hedged at this moment, plus we see that FX might impact our investment. So we make our investment earlier than the plan. So this also will help us to manage this FX situation. So far, the FX is under control. We don't hope that FX really increase dramatically, so this is in our guidance and in our plan, the existing situation on the FX side.

Kayahan Demirak -- Ak Yatirim -- Analyst

Thank you. And just one final quick question. About asset monetization, you were hoping to see some development on the Superonline site this year. Is that still stands?

Murat Erkan -- Chief Executive Officer

Yeah, it is not just Superonline, but Superonline is also one of the assets that we would like to monetize. But because -- as we shared in our 2020 year-end conference call, we continuously evaluate asset in our business portfolio for strategic action in order to maximize value for our shareholders. Among those assets, Superonline stands up as the best candidate for an IPO, given the size and growth potential. At this point, we are at the exploratory phase regarding a potential IPO. However, we should note that market conditions are quite critical for an IPO decision. Currently, we observed strong demand to IPOs in Turkish market, yet the demand is mainly coming from local retail investors.

The size of those IPOs are also relatively small compared to Superonline. For a sizable potential IPO like Superonline, the interest of international investors will be also important. Therefore, foreign investor appetite to the market would be one off the critical -- one of the criteria that we're going to consider.

Kayahan Demirak -- Ak Yatirim -- Analyst

Okay, thank you. Understood. Thank you very much for your time.


[Operator Instructions] Ladies and gentlemen, there are no more questions at this time. I would now like to turn the conference back over to Turkcell management for any closing comments. Thank you.

Murat Erkan -- Chief Executive Officer

I would like to thank everyone who joined the conference call. I hope we can meet with a healthy condition next or coming quarters. Thank you very much. Good morning and good afternoon again.

Ali Serdar Yagci -- Investor Relations and Corporate Finance Director

So, ladies and gentlemen, thank you very much. This is the end of our call. Thank you all for taking the time to participate in the call.


[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Ali Serdar Yagci -- Investor Relations and Corporate Finance Director

Murat Erkan -- Chief Executive Officer

Osman Yilmaz -- Executive Vice President, Finance (Chief Financial Officer)

Ece Mandaci -- UNLU & Co -- Analyst

Ivan Kim -- Xtellus Capital Partners -- Analyst

Kayahan Demirak -- Ak Yatirim -- Analyst

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