Türk Telekomünikasyon Anonim Sirketi (TTKOM) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Costantino, your Chorus Call operator. Welcome, and thank you for joining the Türk Telekom conference call and live webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] We are here with the management team, and today's speaker is CEO, Umit Onal. Before starting, I kindly remind you to review the disclaimer on the presentation. Now I would like to turn the conference over to Mr. Umit Onal, CEO. Sir, you may now proceed.

Hello, everyone. Welcome to our conference call. Today, we will talk about a widely followed topic of critical importance to Türk Telekom's fixed line concession. Thank you for joining us on this very special day, marking the start of a truly exciting era for our company, I must say. We are extremely pleased to announce the successful conclusion of a long and comprehensive process resulting in an amendment and extension of our fixed line services concession until 2050. We are confident that the next chapter opens a clear path to creating greater value through our lifted competitions in this very strategic zone. The agreement is a significant milestone not only for the continuity, visibility and value of our company but for building Turkey's digital future. We are honored to have once again been entrusted on this responsibility that we have long led in the sector. In my presentation, firstly, I will take you through the details of the agreement. Secondly, I will talk a little bit about Turkey's digital journey so far and our vital role in that. And thirdly, how we plan to unlock the value of this unique and we will mandate granted solely to us. Starting on Slide #5. The renewed concession agreement land as the ability and flexibility to reshape our fixed line services strategy in order to continue our fiberization and digital transformation agenda throughout a long horizon as well as seize new opportunities ahead. The prior agreement has been amended in a holistic approach to capture the technology and digital trajectory of the next 2.5 decades. As such, the new agreement covers a broad range of activities that include developing the fixed telco infrastructure in Turkey, operating the fixed telco network providing wholesale and/or retail telco services through the fixed telecom network and marketing of these services developing and offering cybersecurity services and digital products, developing new infrastructure suite technology advancement as well as providing telco services in relation to them. We are highly satisfied by the fact that the financial terms of the agreement were determined and agreed upon following an extensive and detailed work shared by all parties that are on the table. As per the agreement, Türk Telekom agrees to pay USD 2.5 billion plus VAT of concession fee to the information and communication technologies authority over an extended period of 10 years, starting from 2026. The payment schedule for the concession fee is as shown in the top right table. The agreement reflects trust in our quality, execution and potential to contribute. By the same token, it equips us with visibility and confidence we seek for to continue investing decisively in tomorrow's building blocks. Accordingly, Türk Telekom commits to an investment plan of USD 17 billion in areas covered by the agreement through 2050 with building flexibility over years that enable Türk Telekom continue to manage its CapEx budget in alignment with the need to preserve its financial discipline. This is not a random but thoroughly workout number to maintain our strong position in the fixed line services domain and engage in new initiatives where feasible and necessary. Türk Telekom's fixed line investments over the past 2 decades, adding up to a comparable size should also help us put this number into a relative context. Moving on to Slide #7. Türkiye has been rapidly closing the digital gap with the OECD peers in internet adoption and fixed internet usage. While the country had less than 9 broadband subscriptions per 100 habitants in 2009, that figure has reached almost 23 recently with a much faster growth rate of 7% compared to OECD's average 3%. Slide #8, please. Through dedicated investments and our motivation for fixed line services, we remain the leader of the fixed broadband market with heavy shares in both wholesale and retail segment. A major portion of our CapEx has gone into fixed line investments for years, warranting this solid position. Our fixed line investments averaged around USD 700 million over the past 5 years. On Slide #9, we see how Türk Telekom has been at the heart of this transformation by building country's digital backbone. While Türkiy's fiber length more than doubled over the past decade, Türk Telekom has built nearly 80% of the nationwide network. Running overall of 81 cities through 500,000 fiber kilometers, Türk Telekom's network passes more than 33.5 million dwarfing any other players in the sector. With such a massive scale Türk Telekom is the undisputable leader in connectivity and the enabler of Türkiy's digital ecosystem. On Slide #10, we show how Türk Telekom has contributed to the Türkiy's high-speed fiber rollout compared to European peers. What is the truly striking is Türkiye has not only surpassed EU average in FTTH/B coverage but also maybe to fourth fastest-growing market in number of subscribers, thanks to Türk Telekom's leadership both as a network developer and wholesale and retail operators. On Slide #11, we elaborate on our stunning KPIs as we held on to our leadership in Türkiye fixed broadband transformation. Today, 9 out of 10 Türk Telekom subscribers are on fiber and FTTH/B connections comprise close to 40% of total base. Our strategy drives a further growth in FTTH/B subscription with about 25% CAGR over 2018 to 2024. We have moved 54% of our base to 50 megabits and above packages comparing more favorably to Türkiye. We build customer loyalty through quality of our assets and services, driving our churn rates to remarkably low levels. Finally, we generate double-digit real ARPU growth. All these KPIs show nothing but our superior ability to generate meaningful return on our investment. We are on Slide #12 now. Fiber has not only transformed fixed broadband, it is also a cornerstone for mobile technologies. On the verge of the 5G rollout, our extensive fiber backbone is set to ensure ultra-low latency, massive capacity and best-in-class user experience, positioning Türk Telekom uniquely to lead Türkiye into a new digital era. With 55% of Türk Telekom's LTE base stations connected with fiber, well ahead of the global targets set for 2030, we are ready to offer our scale to other sector players carrying both Türk Telekom and Türkiye to the next phase of tech transformation. On slide #14, let's take a glance at the major gains we have secured with the concession renewal process we comprehensively managed. First and foremost, with an extension period of nearly a quarter century, we reserve the opportunity to remain as the leading operator in fixed line services for the foreseeable future. Second, it allows us to continue actively building and running an end-to-end fixed-line telecom ecosystem. By operating in scale and extracting major cross-segmental synergies, we can deliver greater value more efficiently. We believe the agreement is set to form a serious barrier to duplicate investments, a win for Türk Telekom, the sector and the country altogether. We announced earlier this week that the regulator has formulated a new wholesale pricing mechanism, which greatly increases predictability and transparency for the sector participants and enables us to better manage our business with a flexible semiannual tariff adjustment structure. The agreement positions us as the sole player in the telecom sector to leverage advantages of being both the operator and developer of a gigantic network in expanding into new verticals such as digital technologies, data centers, cloud, big data, AI, IoT, cybersecurity and more and maximize our ROI. Moving on to Slide #15. Looking ahead, our ambition is clear, faster rather than stronger connectivity. We are targeting 2030 and beyond with bold and measurable goals. We have significantly built on fiber reach so far. By the end of the decade, we aim to further expand our fiber coverage to 38 million homes, ensuring that nearly every household in Türkiye has access to fiber. Going forward, our focus will be heavier on brownfield investments, which we expect to raise the ratio of FTTH/B connections to 76% by 2030. We forecast the number of our subscribers to reach 18 million with a much higher take-up rate compared to where we currently stand. Besides, we expect nearly 80% of our subscribers to sit on FTTH/B packages. With that, we remain committed to driving Türkiye's fixed Internet speeds higher and raising the average speed of our fiber subscribers by 7x. I must emphasize that this is not simply numbers we present here but a clear and carefully constructed road map of our long-term investments, growth and profitability, which has devised the connection agreements we have reached with the regulator -- concession agreements we have reached with the regulator. Slide #16. Fiber serves as the backbone of fixed Internet but perhaps more importantly, of a much wider digital ecosystem. We aspire to further expand in certain layers of the digital value chain, which we deem strategic and highly value accretive. To exemplify, we bear the first-mover advantage in data centers and still hold the largest capacity, enabling us to capture increasing demand with competitive ARPU growth. We hold market leadership in cybersecurity services for the past 5 years and rapidly expand into cloud-based solutions. Finally, let's spare some time on our strong financial position and broad funding flexibility on Slide #17. As you know, we have been preparing our balance sheet for the upcoming one-off CapEx cycle to be driven by not only the concession agreement, but also the nearing 5G tender. Therefore, we stand on a robust financial footing as of today. We delivered healthy revenue and EBITDA growth while maintaining net debt-to-EBITDA ratio at rather conservative levels, providing us with comfortable headroom for future investments. Our balance sheet is readily available to accommodate a broad range of funding options, including but not limited to debt issuance in the form of Sukuk, sustainable or green instruments, ECA-backed loans or bilateral credit facilities. We are fully equipped to meet our obligations. At the same time, we preserve financial stability and create long-term value for our stakeholders. Distinguished investors and analysts, thank you very much for listening. Now I would be pleased to open the floor for your questions. Thank you so much.

[Operator Instructions] The first question comes from the line of Demirtas Cemal from Ata Invest.

Thank you for the presentation and congratulations for the -- this action we have been waiting for a very long time. And I would like to understand the leverage side. Now we understand that there is an amount of $3 billion to be paid within the next 10 years and you have investment of $17 billion for the following 25 years, I would like to understand the net debt impact because in as of -- and when we are going to start seeing it in your financials. By the end of third quarter, are we going to see the debt level as $3 billion in your balance sheet, that's my question, the full number we are going to see. And we are waiting for 5G already. Do you have any comment on the timing of that? And with rough calculation, excluding the 5G, I'm coming up with 4x net debt-to-EBITDA levels for 2025 based on our expectations of EBITDA, I would like to understand the net debt-to-EBITDA levels you are targeting for the following several years while you are continuing your investments. And when you have like a onetime, the concession amounts. So could you give us a picture for the following 2, 3 years about the risks and the net debt to EBITDA level, where should we see Türk in terms of net debt to EBITDA within the next 2, 3 years at least in your base scenario.

[Interpreted] Thank you very much, Mr Demirtas. I will start answering your question and then for the technical detail additions, our CFO will follow up. First of all, I'd like to [indiscernible] you a recollection of a couple of quarters back, check our memory. And as you can remember, the leverage ratio of our company has been coming down recently, which the recent amount is [indiscernible]. And our concessions has been on our agenda for the last 3 years and also for the last couple of years, we have also been hearing the footstep of 5G. So for the last couple of years, you can say that we have been working on the planning of it, just like sportsman getting ready for a game. So we know that right now, our balance sheet and our leverage ratios are quite ready for that picture. And actually, what's made us achieve that leverage ratio is the fact that our -- I mean, perfect operational performance that we have served for the last 1.5 years. Moreover, when we have a look at the 2025 EBITDA and our leverage ratios, we can easily say that even after the one-off payments, our levels are quite reasonable and also in line with our target. Also I'd like to remind you that this USD 3 billion, which includes VAT amount is going to be paid within 10 years of time. So it's not going to make an effect, a one-off effect at least on the leverage of our company. Therefore, I just want to highlight and emphasize that the leverage level of our company is actually in line with the sector standards and [indiscernible] the standards and all the amounts within our calculation as we expected and get prepared within that equation for both 4G, 5G payments and the concession payments. May be our CFO would like to add on that.

Thank. Our CEO gave the details of this concession and requirements and liabilities of the concession, maybe we can separate the investment side and license payment, maybe we should take them separately. For the investment side, we are going to make this investment as we have done in the past. So we cannot expect additional leverage effect on that side for the investment side since it is a long term in 20 years -- 25 years of time, the investment liability and it will be as similar as we have done our investments in the past. For the license payment side, we are going to pay the VAT of this license payment for this year just and it is USD 500 million. And you may add the 5G license payments, let's say, we don't know the numbers. Let's say, as a total, let's say, it makes $1 billion. The effect on the leverage as Ümit defining this is 0.5. When it comes to $2 billion additional in net debt, it makes 1.7 as a leverage. So we may expect it can increase in the leverage ratio increase and make a peak in the next year but we are expecting -- based on our models and scenarios, we are expecting it will decline in the following years.

So what I understand is you are not -- you are not going to put a net debt as the lump sum numbers, what I understand. So you're going to put step-by-step am I understanding, right?

Yes, right.

The next question comes from the line of Bystrova Evgeniya with Barclays.

Yes. congratulations on the development and also a lot of thanks for the presentation on this call. I have maybe kind of a follow-up to my colleague's question. So first of all, in terms of net leverage ratio? Do you have -- like you were talking about a comfortable level? So what would be that comfortable level or maybe like a long-term target that you have? And my second question is more on the funding strategy and the capital structure. So I understand that like $17 billion investments will be made out of I assume free cash flow, but if we go to the license fee and 5G tender fees, do you plan to finance that with debt? Or do you expect any internal cash flow generation to cover part of that as well? And in terms of the recent approval that you received for up to $1 billion issuance, do you expect that to be fully to Sukuk? Or do you think it will be split between labeled bonds like Green Sustainable conventional bond and Sukuk?

[Interpreted] I will be answering the first part of your question, I mean, I'll make initial and then our CFO will be getting into the details of the leverage scenario. For the leverage ratio, I mean, we estimate that we will be parallel with the global sector averages. We will not be far from that in the consolidated amount.

Let me make some additional for the second part of the question. First of all, we are not targeting any leverage ratio. We are trying to be at a level lower than the sector standard and to financially manage our business. Firstly, for this year, we are going to pay VAT for concession. It is USD 500 million. Our cash -- our free cash and unused credits will compensate, will meet this amount of payments at the moment. But for the 5G license payment, we are making a financing plan. And as you have stated, we have the USD 1 billion from the Capital Board of Türkiye as a permission. This does not mean we will use all this amount. This is a boundary level. But from the Gulf also, there's an appetite for our possible Sukuk borrowing. So we may do both from the Eurobond and Sukuk and tap the market for the following weeks, months, let's say, it's depending on the market availability and accessibility. At the moment, it seems both from the domestic macroeconomic developments are also providing us a strong financing performance. And for the global side, we see that the market is open and we can tap the market. But as I said, we can meet our VAT payments from our own resources and our unused credit -- but for the license payments, we are going to make some financing from the international market.

So just to clarify on the $500 million, I understand your point, but for the other $3 billion plus 5G, that would be mostly debt funded, right? Is that the correct understanding?

5G side. Yes, we are planning to -- if you're asking for the 5G license payment sites, yes, we are going to borrow it from the -- we are planning to borrow from the market.

Yes. And for the rest of the license fee, $2.5 billion after 2025, so 2026 onwards.

The next payment will be the last day of next year. So we are still confident that our operations will generate cash. So some part of the payments will come from our operations as it has realized last year and this year. And for the remaining cost, yes, we may. But if we borrow from the market this year, made a prefinancing, we will meet the next year payments -- we may need the next year payments from this year's borrowing.

The next question comes from the line of Ignebekcili Murat with HSBC.

In one of the pages, you mentioned that the competition will not continue duplicate infrastructure investments. So until this day, were they still doing these duplicate investments? And after the starting of new agreements, are there any underlying methodologies where you can monetize this agreement, you can extract more value from your competition because they're using your backbone basically, and you've been complaining for a long time that the pricing here was not realistic or fair. The new wholesale pricing mechanism surely seems like a decent step but still on top of this, do you expect any more or any sort of agreements embedded in this concession agreement. Can I like to learn about that, please.

[Interpreted] Thank you very much for this question. First of all, let me sit on the table with the decision makers for the concession extension and negotiations. We have the opportunity to relay our concerns and also our opinions. We need legal regulation in order to make sure that the concession agreement. To that end, one of the main items that we have relayed on these negotiations was the regulation for the wholesale price mechanism as you know. And we managed to get this automatic update of this price revision, and this is one of the items definitely. And this week, as you know, the regulatory authority announced their decision related to that, which allows us to have more visibility and predictability in our scheme. And another agenda item in that regard about the clarity on the ownership of infrastructure problem, I mean just like the Türk Telekom, we expect the other operators to follow this program. I mean, the owner of the infrastructure is the Republic of Turkey state and only with the right of use, and we did some mechanisms and some pricing schemes that they are allowed to use it. And more importantly, it also created this irrational and legitimate infrastructure building and operations, which eroded the current concession. So we believe this project will also be handled by the regulatory authority and development authority.

So I understand that whatever infrastructure investments your competitors have made, they will also have to getting more demand bargaining process with the government and sign a concession agreement for what they have invested. Is that right?

[Interpreted] I mean what I'm trying to say here is when we are discussing for the remain of the completion, the previous one was coming from 25 years ago. Of course, it needs to be reviewed to see what is the current conditions, today's conditions and what are the competitive landscape in the market. So we saw that any erosion on Türk Telekom concession requires a reveal and maybe a regular and accordingly, regulation to that end. And we saw that a correct mechanism is important to do that. And the first example actually of our call as answered with the automation of the wholesale price revisions coming from the regulatory authority. So we consider -- we think that there may be a regulation, which will be prevented duplicated infrastructure investments from that. Because the decision makers and the regulatory authorities of this country agrees with us in that any duplicated infrastructure investments made in this country is actually a waste of resources of our country.

That's very clear. And one final question about the numbers, actually, the pledge to invest $17 billion means it's roughly $650 million to $700 million per annum. And that is quite similar to what you have in have invested to the fixed infrastructure so far in the last 5, 6 years as seen in the presentation. But this pledge, is it something incremental to existing run rate. I mean, when we look at in 2026, '27, '28, will this number be around $650 million to $700 million or it's going to be something like $800 million or $1 billion per annum run rate?

[Interpreted] Thank you very much for your question. First of all, let's clarify one thing. We shouldn't make the calculation but just divide $17 billion to $25 billion and coming up with a number for the annual [indiscernible]. We will be investing USD 17 billion within over 25 years but we don't have an obligation to make an investment of USD 710 million. As you know, we have determined our CapEx to sales ratio as 29%. Our investment for the CapEx [indiscernible] It wouldn't be correct to give an exact number here but you can assume it to be around current levels, maybe minus or plus around current level. So you shouldn't consider this amount of CapEx and there will be incremental burden on. Even we can expect this ratio to come down even further in the coming years with the increase in the revenue.

That's very clear. And is there going to be any depreciation impact because of this agreement? That's my final question.

[Interpreted] No, we don't expect a negative depreciation effect on this because we already in last year made an adjustment, so we don't expect any negative impact on the depreciation.

The next question comes from the line of Mishra Pradyumna with HSBC.

Congratulations on the agreement. So my first question is, in what was -- this new agreement is different from the old one, maybe operationally and pricing-wise. And the second question is whether 5G license terms such as pricing have been announced. And lastly, I just need a clarification. Why did this transition was priced in U.S. dollar? Any thought about that.

[Interpreted] Honestly, the new agreement is just a new regulation created by amending the existing agreement between Türk Telekom and ICTA taking into account the new conditions as required by the relevant time. I suppose to remind you that the previous 1 was 25 years ago. I mean given that information and the technological transformation, it has undergone, it's relevant to today's conditions has diminished over time. So this is a -- I mean, it has to go to a transformation in which technologies have become intertwined. So it is important and appropriate to make a current agreement, which will cover and reflect concession and the features. So what I can say is it is actually combining the old and new because there isn't that big or different obligations in the current one than the previous one. It is maybe trying to catch the period of time and also cover both concession and the future. And years ago, we didn't have AI, cybersecurity issues for digital products and the same technological advancements. So what we needed to do to be able to catch up with today and also the next [indiscernible]. And it also includes how many opportunities, which will provide us in revenue variety and also the added value. Related to 5G, nowadays we are expecting the technical documents to be announced by the relevant authority. I don't want it to be binding whoever maybe you can maybe say that or expect that around October, we can expect the 5G auction in Turkey but still it totally depends on when the regulator authority will be announcing. Our CFO may add more but I can say that the payments will remain [indiscernible] equivalents calculated on the payment pace. On the day of the payment, whichever us more, we will do the payment that way. I mean, depending on our financial plans and the reality. If it is more feasible to pay in USD, we will pay in USD. If it is in lira, then we will pay in lira.

Mr. Mishra, have you finished with your questions?

Yes. Yes.

The next question comes from the line of Campos Gustavo with Jefferies.

Congrats on the development. Yes. Before my main question, I just wanted to clarify, I wanted to understand the mechanics here. Is the license payment going to be allocated into cost and it's going to be like an operational cost? Is it going to be part of cash taxes? Or is it going to be embedded in your CapEx? And then after that, I'll ask my main question, but I wanted this clarification first.

[Interpreted] It will be recorded as a CapEx item in our balance sheet.

Understood. So first of all, could you please remind us what your expectations for EBITDA margins are and what's your expectations for CapEx to sales are? And whether this concession update changes any of your expectations over the medium term as far as these ratios? That would be my first question.

[Interpreted] Let me start with the CapEx item. I mean our CapEx to sales ratio is 29% within our guidance, and we don't expect it to deviate much from that number [indiscernible]. Of course, on the EBITDA margin as we revised in our guidance, we expect it to be 4% to 1% in 2025. Of course, it is a very significant increase compared to the previous year. So we need to digest it first, let's say, and we were going to see our budgets and look for if there is more room or headroom for it. And the first, we need to wait it for [indiscernible]. You already have [indiscernible] year and settlement to the end of the year, and we very soon start to work on 2026 budget. So once we sort it out, we will be sharing that numbers.

Okay. Yes. That is very helpful. I wanted to just clarify the number that you mentioned, was it a 42% EBITDA guidance for the margins.

41%.

41%. Okay. And you -- I understand that you may still review and digest these numbers and what these numbers may mean for your CapEx to sales over the medium term. But would you have any color as far as where do you expect CapEx to sales to go directionally because if I look at over the last few years, it's been gradually increasing. And I'm trying to understand the trajectory of your CapEx to sales over the medium term. Should we expect it to continue to increase as a percentage of sales? Or do you expect it to go down from here. That's my last question.

[Interpreted] First, I'd like to remind you one point, as a strategy, we have adopted the strategy that we are increasing our fiberization effort in order to increase our subscriber acquisition. That -- right now, we have a very highly challenging, ambitious ratio, which is the 29% of it. So we don't expect this number to deviate much from its current level, at circa this level, minus or plus this level. In the mid- to long term, we expect this entity to come down because our main motivation was to increase revenue. So once we get this revenue level is going to come down in the mid- to long term again.

Thanks a lot. I appreciate the details, and congrats again.

The next question comes from the line of [indiscernible] Investments.

I have 3 questions. The first 1 is regarding the VAT. The disclosed payment schedule only reflects the USD 2.5 billion of license fee. Could you please clarify whether the additional $500 million VAT, will we settled upfront as a single cash payment in 2026? And as of the second quarter, I see around TRY 1 billion of input VAT on your balance sheet. And we see induction to offset this amount. Should we, therefore, assume that the VAT will be -- need to be paid in cash?

Yes, we at will be paid in cash in this year, most probably in October at USD 500 million. You are right, we have assess and we may expect for the next, let's say, next 3, 5 years, illegally, we have 5 years of time for VAT refunds. So this these payments -- for this time, we can refund if any tax payment or tax requirement exist, so it will be -- exist, we will make a refund from this USD 500 million payment in 5 years of time. Our expectation is somewhere around 3 to 4 years could be.

Okay, then we should expect that in 2025, we will see 29% of sales, plus the license payments, right?

Could you repeat your question. For the last part, we couldn't understand.

Other than the -- other than your guidance in your presentations, which indicates that around 29% CapEx ratio you expect. We will also see the license payments, right? And this is different from your CapEx guidance.

[Interpreted] Sorry, we couldn't relate this VAT with CapEx number within our balance sheet. They are not related. We would [indiscernible] this $500 million VAT amount within this year upon the signing of the contracts.

Okay. My second question is that your current free float is around 13%, materially below that of the other operator. So we expect any potential change in free float? And have you evaluated a secondary public offering as a possible option?

[Interpreted] As of today, we don't have such an agenda. But in the future, if the shareholders prefer to do it and we will decision to do that, then it will be on the agenda. But as of today, there's no agenda.

And the last question, we noticed a slight intaking of approximately sevenfold increase in the average Internet speed provided to customers. Should we expect this to materially enhance your pricing power and revenue trajectory? Or would you consider the impact more limited?

[Interpreted] As you know, in Türkiye, the prices are turned over speed, and of course for the subscriber base, it's important to increase the speed. As a strategy, we have been working on the high-speed packages for so long. Also for the fixed broadband, we know that speed is a very important component here for the revenue generation, and it makes an impact on the ARPU and then it makes a multiple effect on the revenue. So our main strategy is, yes, we are working on increasing the speed and it impact on the ARPU and then [indiscernible].

[Operator Instructions] The next question comes from the line of [indiscernible] Simon with M&G Investments.

Perfect. Yes, it's a very simple question really. It's -- I'm sorry, I only jumped on the call late. I just wanted to clarify what your expected impact is going to be the fee and the incremental CapEx commitment for the fiber in terms of leverage metrics, how they -- how you expect them to move as a result of these 2 things? And also if you expect any impact on your credit ratings as a result of this.

[Interpreted] Thank you very much for your question. Actually, we have answered this question during the call. However, it's also a good opportunity for us to be able to emphasize. So we will be happy to answer your questions. For [ 2025, ] our CapEx intensity is 29% within our guidance. Also, let me remind you that our current leverage ratio is 0.68x. In the short term, we expect our CapEx intensity to be around the current levels more. But for the mid- to long term, we can expect the CapEx intensity to come down with the increase in revenue. And as our leverage, I mean, net debt-to-EBITDA would be also around the global peers, the global standard. We don't expect it to make any effect on this ratings. I mean, of course, we don't want to be saying anything binding for the rating agencies. We will be doing with them accordingly. But I can only tell you that now we have a very strong story. Our concessions have been expanded and renewed. We have a very strong story with the team, which has ARPU and subscriber growth and so many new opportunities and horizons in the coming 25 years. So all in all, we know that our leverage ratio is within the global standard, and it will be around that level. And the CapEx after tax intensity is right now 29%. And expect it to be around that level in the short term, not big variations. But for the mid- to long term, we expect it to come down a bit to the revenue increase. So we see that there's so many opportunities ahead of us, and we are very optimist.

And can I just follow up with, when you say you think your leverage is around the global standard -- what figure -- what number do you put on that when you -- what you regard as the global standard.

[Interpreted] You can take the sector average global. I mean, I don't want to name a number here but that will be in line with the factors [indiscernible] as it known by many. Let me remind you one thing. I mean, I have said it in the call -- in the beginning of the call but let me repeat it again. This concession subject has not popped out of the blue, I mean, or 5G is also a subject that we have been hearing for very long. I mean for the concession only, we have been negotiating with development authorities for more than 2 years. Also 5G is a very unknown matter, which will come before 2 years. So these are the 2 very important agenda items that we have been getting our balance sheet ready. And we have already brought down our leverage ratio 0.68x. So what we are saying is our global average here when we talk about what we can expect. We can only say that these 2 agenda items, these 2 items, concession and 5G maximum making effect to get us the global standard.

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

Well, thank you, everyone, for joining us today. The developments are really fresh and we will apparently a lot of information. I'm sure you're going to have questions in the future. And if you do, please. Thank you.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling. Have a good afternoon. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]