Türk Telekom profit second quarter profit jumps 186 percent on strengthening lira

ISTANBUL

The remarkable jump in the company’s gains came despite a decline in sales revenues.

Turkey’s largest telecom company Türk Telekom has almost doubled its net profit in the second quarter with a remarkable rise in financing income, stemmed from the Turkish Lira’s value increase against foreign currencies during the period.

Türk Telekom’s net profit rose 185 percent year-on-year in the second quarter to 801 million lira ($378 million), according to a statement released on the Public Disclosure Platform (KAP).

The company’s net profit in the first half became 1.18 billion liras, marking a 47 percent increase from the same period of last year, as shown by the figures.

The remarkable jump in the company’s gains came despite a decline in sales revenues.

The statement released by the firm argued the reductions in non-operational incomes and some mobile service fees caused sales revenues to drop by 1.3 percent to 3.3 billion in the second quarter. In the first six-month period, the revenues rose, albeit slightly by 0.3 percent and became 6.5 billion liras.

“The group’s revenues decreased 1 percent and realized at 3.3 billion liras due to a decline in non-operational construction income and the reduction in mobile interconnection fees imposed in the middle of last year,” Türk Telekom CEO Rami Aslan was quoted as saying in the statement.

The company’s profit rise amid the sales revenue drop has been shouldered by the jump in financing revenues, which skyrocketed to 598.5 million liras from 95.8 million from the same period of last year.

“The financing revenues sourced by the foreign currency difference with the lira’s value gain against the dollar and euro supported net profit,” Oyak investment analyst Alper Özdemir said.

Abated political risk perception after the March 30 local elections pushed the lira/dollar ratio to around the 2.12 level from the pre-election levels of 2.17.

Currency fluctuations shift the balance of Türk Telekom’s profits due to the company’s open position stemming from its foreign currency-weighed loans.