Turkcell Iletisim Hizmetleri AS Annual Report 2015

FY2015 Annual Report · Turkcell Iletisim Hizmetleri AS

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Turkcell İletişim Hizmetleri A.Ş.
Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi
No:20 Küçükyalı Ofispark B Blok - Maltepe / İstanbul
Tel: +90 (212) 313 1000 Fax: +90 (216) 504 4058
Customer Services Tel: 532 or +90 (532) 532 0000
www.turkcell.com.tr
Trade Registry Number: 304844

ANNUAL
REPORT
2015

CONTENTS

TURKCELL GROUP

FINANCIAL INDICATORS
MESSAGE FROM THE CHAIRMAN
MESSAGE FROM THE CEO
BOARD OF DIRECTORS
EXECUTIVE OFFICERS
2015 AT A GLANCE
OUR VISION, VALUES AND STRATEGY

ACTIVITIES IN 2015

ALWAYS FORWARD WITH OUR SUPERIOR TECHNOLOGY
SUSTAINABLE GROWTH THROUGH OUR CONVERGED STRUCTURE
HAND IN HAND TO IMPROVE LIVES
HUMAN RESOURCES
TURKCELL ACADEMY
ALWAYS FORWARD IN THE INTERNATIONAL ARENA
TOP MANAGEMENT OF SUBSIDIARIES
DOMESTIC SUBSIDIARIES
AWARDS
TURKCELL IN THE INTERNATIONAL MEDIA
TURKCELL’S 15TH YEAR AT BIST AND NYSE

CORPORATE GOVERNANCE

INVESTOR RELATIONS
CREDIT RATING GRADES
IMPORTANT DEVELOPMENTS AFTER THE REPORTING PERIOD
CORPORATE GOVERNANCE COMPLIANCE REPORT
CONCLUSION OF AFFILIATION REPORT

SECTORAL AND FINANCIAL INFORMATION

TELECOMMUNICATIONS SECTOR IN TURKEY
TURKCELL GROUP: 2015 FINANCIAL AND OPERATIONAL REVIEW
FORWARD LOOKING STATEMENTS
INDEPENDENT AUDITOR’S REPORT AND
CONSOLIDATED FINANCIAL STATEMENTS

GLOSSARY

7
8
12
14
16
20
22

26
34
52
62
64
68
70
76
78
81
82

90
93
94
108
119

122
125
131

135

302

All financial results in this annual report are prepared in accordance with International Financial Reporting Standards (IFRS) and expressed in Turkish Lira (TRY or
TL) unless otherwise stated. The only exception is the use of figures in the Message from the Chairman and the Message from the CEO sections, in which the figures
are given exactly as they are in our annual report in Turkish.

KAZAKHSTAN – Kcell3
Mobile Subscribers (mn) 10.4
Revenue (USD million) 758

AZERBAIJAN – Azercell3
Mobile Subscribers (mn) 4.1
Revenue (USD million) 408

GEORGIA – Geocell3
Mobile Subscribers (mn) 1.9
Revenue (USD million) 95

MOLDOVA – Moldcell3
Mobile Subscribers (mn) 0.9
Revenue (USD million) 64

GERMANY - TURKCELL
Europe4
Mobile Subscribers (mn) 0.3

We serve in
countries
to

9
68.9

million
subscribers

TURKEY - TURKCELL1
Mobile Subscribers (mn) 34.0
Fixed Subscribers (mn) 1.5
IPTV Subscribers (tho) 224
Revenue (TRY million) 11,481

UKRAINE – lifecell2
Mobile Subscribers (mn) 13.5
Revenue (TRY million) 564

BELARUS - life :)
Mobile Subscribers (mn) 1.5
Revenue (TRY million) 142

TRNC - KKTCell
Mobile Subscribers5 (mn) 0.5
Revenue (TRY million) 131

1 The Group has aggregated its operations under two main reportable segments within the year of 2015 in accordance with its converged communication and technology services
strategy as Turkcell Turkey and Turkcell International, which represent economic integrity. Turkcell Turkey's reportable segment includes the operations of Turkcell İletişim Hizmetleri
A.Ş., Superonline İletişim Hizmetleri A.Ş., Turkcell Satış ve Dağıtım Hizmetleri A.Ş., the group call center operations of Global Bilgi Pazarlama Danışma ve Çağrı Servisi Hizmetleri A.Ş.,
Turktell Bilişim Servisleri A.Ş., Turkcell Teknoloji Araştırma ve Geliştirme A.Ş., Turkcell Interaktif Dijital Platform ve İçerik Hizmetleri A.Ş., Kule Hizmet ve İşletmecilik A.Ş., Rehberlik Hiz-
metleri Servisi A.Ş., Turkcell Ödeme Hizmetleri A.Ş., and Turkcell Gayrimenkul Hizmetleri A.Ş.. The information in this report concerns Turkcell Turkey under this definition. Stand-alone
information on Turkcell İletişim Hizmetleri A.Ş. is indicated.

2 “life:)” brand has been changed to “lifecell” on January 15, 2016 and the legal entity name has been changed to lifecell LLC on February 2, 2016.

3 Owned indirectly through our subsidiary Fintur, in which we hold a 41.45% stake.

4 The business model between our company’s subsidiary Turkcell Europe GmbH operating in Germany and Deutsche Telekom had been modified. Accordingly, as per the new model, the
transfer of Turkcell Europe subscribers and operations to Deutsche Telekom’s subsidiary was completed on January 15, 2015.

5 Updated from our previously released Q415 results. Accordingly, total number of subscribers increased to 68.9 million from previously announced 68.8 million.

TURKCELL ANNUAL REPORT 2015

TURKCELL GROUP

9countries

68.9million total

subscribers

1.5million

fixed subscribers

600thousand

TV subscribers**

* EBITDA is a non-GAAP financial measure.
** Includes mobile TV, web TV and IPTV users as at February 18, 2016.

12.8

TRY billion Revenues

4.1

TRY billion EBITDA*

2.1

TRY billion Net Income

26.2

TRY billion Total Assets

FINANCIAL INDICATORS

TURKCELL GROUP

TURKCELL TURKEY

Revenue (TRY Million)

5.6%

12,044

YoY Growth (%)
6.0%

12,769

2014

2015

Revenue (TRY Million)

YoY Growth (%)

4.8%

10,480

2014

9.5%

11,481

2015

EBITDA (TRY Million)

EBITDA Margin (%)

EBITDA (TRY Million)

EBITDA Margin (%)

31.2%

3,762

2014

32.4%

4,141

2015

31.7%

3,326

2014

32.7%

3,760

2015

Net Income (TRY Million)

Adjusted Net Income1
(TRY Million)

Net Income (TRY Million)

Adjusted Net Income1
(TRY Million)

2,190

1,865

2,590

2,068

2,406

1,913

2,484

2,256

2014

2015

2014

2015

1 We use “adjusted net income” as a means of presenting our income excluding net foreign currency gain / (loss) (including tax and minority impact), monetary gain (inflation impact),
interest Income on time deposits of Turkcell İletişim Hizmetleri and items which we believe to be “one-off” or items that took place for the first time in the relevant year. The reconciliation of
adjusted net income to income is included on page 129 of this report. Please note that this is a non-GAAP measure and that we may in future presentations change the scope of items that we
deduct from net income to arrive at “adjusted net income.”

TURKCELL ANNUAL REPORT 2015

MESSAGE FROM
THE CHAIRMAN

Turkcell Group has concluded
an important year of change, in
which it registered successful
results. With the great effort
and determination of our
employees, we trust that the
actions implemented by Turkcell
management on the basis of our
Board of Directors’ decisions
have created value for both our
shareholders and our country.

AHMET AKÇA
Chairman of the Board of Directors

2015 was quite a dynamic year for the region, our country and Turkcell
itself. Ongoing civil wars to the south of our border, calamitous
developments in global markets and two general elections in our
country have resulted in a predominantly political agenda. We view
the strong political stability on the back of the last general election as
a promising progress for our country, and believe wholeheartedly that
the planned fundamental changes and structural reforms will further
carry Turkey forward from its current solid position.

2015 was a year of change, progress and growth for Turkcell where
the Company has revisited its vision for the next three years. While
doing this, we have taken Turkey’s 2023 vision as a cornerstone for us.
Having set off with the target of contributing our share to Turkey’s aim
of ranking among the top ten economies in the world, we leave behind
this year of change with our focus of further progress and sustainable
growth.

The record results we registered almost every quarter in 2015 have
indicated that we, as Turkcell Group, can set stronger goals while
planning our future. Turkcell Group grew by 6.0% on an annual
basis, reaching TRY 12,769 million in revenues. The EBITDA margin
increased to 32.4%, rising by 1.2 percentage points. Turkcell Turkey,
the flagship of the Group, generated TRY 11,481 million revenue, while
our international business recorded TRY 856 million revenue. Group
net income rose to TRY 2,070 million with a 10.9% yearly increase. We
continued to invest in our business in the amount of TRY 2,594 million
(excluding license fees) in 2015 only, which has helped us take our
service quality further forward.

This strong performance, which has encouraged us for the upcoming
period, was the result of actions following the key decisions taken by
the Board of Directors, the outstanding execution performance of the
Turkcell management team, our new organizational structure providing
efficiency and simplicity in our business processes and, above all, the
support of our customers, who have continued to prefer Turkcell quality.

This was a year in which Turkcell’s vision, values and strategic priorities
were reconsidered and renewed in accordance with current needs.
We have set the vision of positioning Turkcell, which now became
an integrated telecommunications services provider, as the market
leader in revenue terms within three years. I truly believe that we have
on board a determined and decisive management team and valuable
employees necessary to achieve this goal, and trust that Turkcell, the
leader in the mobile market, will also become the leader of the total
telecommunication market by 2018. In this regard, we will continue
to invest in both Turkcell and Turkey, and work towards providing the

latest technologies for our people. In doing so, we also aim to register a
double-digit top-line growth along with increasing profitability.

With the spectrum tender we participated and
received authorization in 2015, not only did
we secure being the fastest in 4.5G, but also
the opportunity to pioneer in 5G. With these
investments in Turkey’s future, Turkcell will,
once again, be one of the biggest contributors to
the economy.
We secured the largest number of frequencies (172.4MHz in total) at
the most affordable price on a per subscriber basis, which will enable
us taking the speed of mobile internet to the next level in Turkey.
Following the tender held by the Information and Communication
Technologies Authority on August 26, 2015, Turkcell will be the
strongest contributor to our national economy in 4.5G with a total
payment of EUR 1.9 billion including VAT to the Turkish Treasury.

Strategic collaborations; innovative actions
The next step toward our objectives, having succeeded at the
spectrum tender, was strategic collaboration in the development of 5G
technology.

Accordingly, we have signed a memorandum of understanding with
Chinese technology giant Huawei for collaborative work, and research
and development of 5G technology.

We also took a concrete step towards strengthening Turkey’s software
and hardware research and development capacity by signing a
framework document with Aselsan. As two national brands with the
aim of making Turkey a producer country in 5G technology, we began
to work on the 5G roadmap. Becoming a country that produces, rather
than consumes technology remains our greatest motivation.

Strong management; swift execution
2015 was a year in which we strengthened our corporate governance
structure, took important steps toward this objective, and shifted towards
a more efficient process. A dividend distribution decision was taken at the
General Shareholders’ meeting held in March. Accordingly, we distributed
a total of TRY 3.9 billion in dividends, with which we hope to have pleased
our shareholders, who had been waiting for this for five years.

TURKCELL ANNUAL REPORT 201510

We observe the positive outcome of the harmonious work between the
strong management team and the Board of Directors, with its independent
members. We believe that our actions towards improving our corporate
governance practices have increased the trust in Turkcell in the financial
markets. This was proven in the “investment grade” Turkcell received
from the world’s three leading credit rating agencies. Our ability to raise
USD 2.9 billion in funds, USD 500 million of which in Eurobonds, within
an extraordinarily short period of time for infrastructure investments and
potential new investments, clearly confirms our outstanding performance
and the trust of the financial markets in Turkcell.

Strategic actions executed have proven that we
are advancing towards becoming a regional power.
We have also taken important decisions concerning our subsidiaries
with the aim of carrying Turkcell Group forward and creating greater
value for our shareholders. Accordingly, we have established a consumer
financing company to continue supporting the financing of our customers’
technology needs.

We restructured the outstanding debt of both lifecell, our subsidiary
in Ukraine and BeST, our subsidiary in Belarus. Having eliminated the
currency risk from the financial debt of these companies, we also enabled
them to work more efficiently. Providing 3G services since June, lifecell is
set to improve its market position going forward.

In accordance with Turkcell’s strategy of expanding in the region, we
closely monitor M&A opportunities. We will continue with our disciplined
and consistent decision making approach in this regard.

Apart from technology and the economy, 2015
was an important year with regards to our social
responsibility investments in Turkey’s future.
We will continue our social responsibility
investments for a better future
As Turkey’s Turkcell, we have been fulfilling our responsibilities to the
community with projects in numerous areas including education, the
arts and sports since the Company was established. 2015 was another
important year with regards to our social responsibility investments in
Turkey’s future.

Our aim is for Turkey to become a country without boundaries; one
where our disadvantaged citizens enjoy equal opportunities with others
in society; and where children have the opportunity and support required
to achieve their dreams. With the new project under the auspices of the
Ministry of Education, we are proud and pleased to have already realized
a part of our objective. Our aim is to reach 10 thousand students at 80

schools within 2 years with the “Education Without Borders Program”.
Over the coming years, we will continue to work with great enthusiasm
and determination to remove obstacles from the lives of community.

Turkey’s international source of pride
2015 witnessed a historically important day for Turkcell. We celebrated
the 15th anniversary of our listing at the traditional closing bell ceremony
of the New York Stock Exchange on September 1, Tuesday. While the
flags of Turkey and Turkcell were proudly raised at the NYSE building, we
also wished to one day see the flags of other Turkish companies raised
there.

Change, development and growth on our
horizon
The year 2015, in which we achieved significant milestones, concluded
on the back of harmonious work between the Board of Directors,
the management team and Turkcell employees. We continue to take
confident steps towards a future full of promising opportunities. By
transforming these into value, we shall strive to grow our company and
to contribute to the national economy, while increasing value for our
shareholders. An even greater objective of ours is to prepare Turkey’s
Turkcell for future decades along with our customers, the efforts of the
entire Turkcell family, and the support of our shareholders. I sincerely
thank all members of the Turkcell family, who are dedicated to making
this objective a reality.

Yours sincerely

AHMET AKÇA
Chairman of the Board of Directors

TURKCELL ANNUAL REPORT 201512

AFTER 2015, THE YEAR OF RECORDS,
OUR AIM IS 2016 AT 4.5G SPEED

In 2015, the year of records for
Turkcell, we have defined our
medium term objectives and taken
bold steps towards achieving
them. The coming term will be
one in which we continue to
grow with increasing profits and
advance through confident steps
towards our aim of becoming the
telecommunication sector leader.

We concluded the year of 2015 having accomplished all of our targets with
an improving performance every quarter. We recorded historic high revenue
and EBITDA, as both Turkcell Turkey and Turkcell Group. Turkcell Turkey,
generating 90% of Group revenues, grew 9.5% with an EBITDA margin of
32.7%. Turkcell Group revenues rose 6.0% yearly to TRY 12.8 billion with
EBITDA reaching TRY 4.1 billion with a 10.1% increase, while the EBITDA
margin reached 32.4% on a rise of 1.2 percentage points. Our adjusted Group
net income1 increased 18.2% to TRY 2.6 billion whereas net income according
to TFRS was TRY 2.1 billion. This year, the ratio of operational capex to sales
was recorded at 20%.

We confirmed, once again, the trust invested in
Turkey and Turkcell in international markets
Our new vision and strategic steps that we have taken in this context were
well received in the international markets. We also became the only Turkish
company to receive “investment grade” rating from the world’s three leading
credit rating agencies. We raised close to USD 2.9 billion in funds, of which
USD 500 million in Eurobonds, within the short period of 2 months for
infrastructure investments, restructuring of existing debt, and the financing
of possible new investment opportunities.

Key growth drivers were our data and services businesses. Our data revenues
increased 38.1% in 2015, reaching TRY 3.5 billion on the back of Turkcell’s
superior network experience, while our service revenues grew 38.5% to
TRY 659 million.

In 2015, the total number of subscribers in the five countries where we have
direct operations reached 51.5 million. In Turkey, this was 35.8 million2 with
strong performance in postpaid, fiber and TV.

An important development in 2015 was the General Assembly, which took
place after a number of years. Accordingly, we distributed a total dividend of
TRY 3,925 million, corresponding to TRY 1.78 per share.

We offer globally relevant products
Notable among Turkcell’s innovative services which play a significant role
in our ambition of providing globally relevant product and services, our new
generation communication platform, BiP has been downloaded 6.2 million3
times. Launched in Germany, Ukraine, Belarus and the Turkish Republic
of Northern Cyprus after Turkey, BiP has since been downloaded in 189
countries.

Turkcell TV+, which plays an important role in our convergence strategy,
reached 558,000 customers in 2015. The active users of Turkcell Smart
Storage, which is the most widely used personal cloud service in Turkey
have exceeded 1.7 million3 and Turkcell Music downloads have reached 5.4
million3.

We took bold steps towards being an effective
player in our region
We acquired the remaining 44.96% stake in lifecell, our subsidiary in Ukraine
for USD 100 million where we have recently announced its rebranding as part
of Turkcell’s brand integrity strategy. Within a short period after launch on
Jun 4, two million of lifecell’s 13.5 million customers have already switched
to 3G+ services.

We took significant steps to improve the group balance structure and
to create value for our shareholders. Furthermore, we established a
consumer financing company to continue providing financial flexibility for
our customers’ technology needs. Meanwhile, we structured the financial
debts of our international subsidiaries lifecell and BeST, and eliminated the
exchange rate risk generated from those debts.

We are investing in the speed of the future
Undoubtedly, the most important topic in the sector in 2015 was the 4.5G
tender. At the tender, we purchased 47% of the total frequency for EUR 1.9
billion (including VAT). With this investment in the future of Turkey, Turkcell
is once again set to provide the greatest value to both its customers and the
economy. With Carrier Aggregation Technology in 4.5G, Turkcell will yet
again be the first and only company to provide speeds of above 1000 Mbps in
mobile devices in the coming term. In a sense, this means providing ‘wireless
fiber’ speed! Going forward, these frequencies will make us the leader in 5G.

A time of change and growth for Turkcell
Our strategic priorities to create more value for our shareholders in the
coming term shall be to position Turkcell as a converged company, strengthen
our position in Turkey, focus on international expansion and take value
creating actions to strengthen our balance and cash generation ability.

Our aim is to expand the extent of the innovative products and services
we provide through our integrated mobile and fixed network platform as
a regional player in converged communication and technology services. In
this context, we aim to present the full range of our services in an integrated
and coordinated manner by integrating our marketing and sales force, and
our infrastructure. We believe that this change will carry our competitive
structure and results one step further.

Special thanks to the Turkcell Family
In 2015, we accomplished results that would enhance our sector, our country
and the surrounding region besides Turkcell. We took great steps towards
new achievements. We are glad to have also recorded achievements in
our corporate social responsibility projects. I have the pleasure to say that
the most important factor enabling this success, achieved under tough
macroeconomic conditions, is the harmonious teamwork among our Board
of Directors, senior management and employees. I would therefore like to
express my special thanks to the entire Turkcell Family. I also would like to
voice our gratitude towards our customers, who have always been with us in
our success story.

1 Please refer to page 129 for an explanation on adjusted net income
2 The total number of mobile, fixed and IPTV subscribers
3 As of 18 February 2016

KAAN TERZİOĞLU
Turkcell CEO

TURKCELL ANNUAL REPORT 201514

BOARD OF
DIRECTORS

AHMET AKÇA
Chairman of the Board and
Independent Board Member*
Ahmet Akça was appointed to the
Board of Directors by Capital Markets
Board decision. From 1980 to 1988,
Mr. Akça served as a Foreign Trade
Manager in the glass and food
industry. In 1988 he became CEO of
an International Trading Company, a
position he held until 1992. He later
started his own business, which he
still runs. Mr. Akça is the founder and
Chairman of the Board of Directors
of logistics company Akça Lojistik
Hizmetleri ve Ticaret A.Ş. He was
a member of the Committee of
Trustees in January 2010, at the time
of the Bezmialem Vakıf University
establishment, and has been serving
as the Chairman of the Committee of
Trustees since November 2011. After
studying mathematics at Middle East
Technical University and sociology at
Istanbul University for a certain period,
Mr. Akça graduated from the Bursa
Economics and Commercial Sciences
Academy’s Department of Economics.

ATİLLA KOÇ
Independent Board Member*

MEHMET HİLMİ GÜLER
Independent Board Member*

Atilla Koç was appointed to the Board
of Directors by Capital Markets
Board decision. Having working as
an Undersecretary at the Ministry
of Interior and as the Chief of Police
in Konya, he served as the District
Governor of the Ulubey, Nusaybin and
Bayındır districts, and as the Governor
of Siirt and Giresun provinces. He
has also been the Prime Minister’s
Undersecretary, the General Secretary
of Ankara Metropolitan Municipality,
and the Central Governor. Then, Mr.
Koç served as AKP Aydın Deputy in
22nd and 23rd period of Grand National
Assembly of Turkey and the Minister
of Culture and Tourism in the 59th
Government. He graduated from
Ankara University’s Faculty of Political
Science.

Mehmet Hilmi Güler was appointed
to the Board of Directors by Capital
Markets Board decision. He formerly
worked as a Project Engineer and
Group Chairman at TUSAŞ Aerospace
Industries. Mr. Güler also served as
Vice President and Board Member
of the Scientific and Technological
Research Council of Turkey (TÜBİTAK),
as Chairman and General Manager of
the Machines and Chemical Industries
Board (MKEK), as the General
Manager and Chairman of Etibank,
as the Chief Undersecretary to the
Prime Minister, and as Board Member
and Executive Director at ERDEMİR
and İGDAŞ. Mr. Güler also served
as Minister of Energy and Natural
Resources in the 58th, 59th and 60th
Governments. Mr. Güler graduated
from Middle East Technical University’s
Department of Metallurgical and
Materials Engineering where he
obtained his Master’s and Doctorate
degrees.

* Appointed by the Capital Markets Board as “independent board member” pursuant to Article 17, paragraph two, of Capital Markets Law No. 6362 on March 11, 2013.

MEHMET BOSTAN
Board Member**

BEKİR PAKDEMİRLİ
Board Member**

JAN ERIK RUDBERG
Board Member***

ERIK BELFRAGE
Board Member***

Mehmet Bostan was appointed to the
Board of Directors by Capital Markets
Board decision. He serves as the
Chairman of the Board of Directors of
Turkcell Global Bilgi since 2014 and
Turkcell Global Ödeme Sistemleri since
2015. Mr. Bostan formerly worked as
Senior Relationship Manager at BNP
Ak Dresdner Bank A.Ş, Manager at
TSKB, Chief Turkey Representative
of Dresdner Bank AG and Deputy
General Manager at Güneş Sigorta. He
has served as the General Manager
and Board Member of Vakıf Emeklilik
since 2010. He is a Board Member
of the Pension Monitoring Center
and Turkish Tennis Federation. Mr.
Bostan graduated from International
Relations, from the Faculty of
Economics, at İstanbul University. He
holds an MBA from Bilgi University.

Bekir Pakdemirli was appointed to the
Board of Directors by Capital Markets
Board decision. Over the past 10 years,
he has worked as Regional Manager
for the Middle East of a multinational
company, General Manager of a ceramic
company in İzmir and General Manager of
a publicly-listed food company. Currently,
he is Business Development Manager
of the company McCain and provides
consultancy services on management,
finance, efficiency and restructuring to
corporations. Mr. Pakdemirli is a Board
Member of Tarkem, historical Kemeraltı
Inc., a member of Board of Trustees of
the Anatolia Foundation for Autism and a
member of the Capital Markets Investors
Association. Mr. Pakdemirli presents a
weekly economic program on Ege TV. He
is an amateur captain, amateur pilot and
amateur radio operator. After graduating
from Bilkent University, Faculty of
Business Administration, he completed his
Master’s degree in Management at Başkent
University. Currently, Mr. Pakdemirli
is working towards his PhD degree in
Economics at Celal Bayar University.

Jan Erik Rudberg was appointed to the
Board of Directors by Capital Markets
Board decision. He is currently Chairman
of the Board of Directors of Kcell JSC
(Independent Director) and the Chairman
of the Board of Directors of Hogia
AB. Since 2010, Mr. Rudberg is also a
member of the Board of Directors of
OJSC MegaFon (Independent Director).
Between 1994 and 2003 he held various
executive positions at Telia AB, after
having served as the Chief Executive
Officer of Tele2 AB, Executive Vice
President of Nordbanken AB, Chief
Executive Officer of Enator AB, as well
the Chief Executive Officer of Ericsson
Information Systems Sweden AB and
holding several managerial positions
at IBM. Mr. Rudberg has a degree in
Economics and Business Administration
from the Gothenburg School of
Economics.

Erik Belfrage was appointed to the
Board of Directors by Capital Markets
Board decision. In the 70´s and 80´s,
Mr. Belfrage worked as a Swedish
diplomat in Geneva, Washington,
Bucharest, Beirut, and in Paris. Since
1987 he has served as Senior Vice
President at SEB, and as an advisor
to Dr. Peter Wallenberg, an advisor
to the Chairman at the companies
Investor AB Jacob Wallenberg and
SEB Marcus Wallenberg. In 2012 Mr.
Belfrage set up a consultancy, Consilio
International AB, where he also is
the Chairman. The firm advises large
Nordic corporates. Currently, Mr.
Belfrage is chairman of several boards.
He holds an MBA from the Stockholm
School of Economics.

The board members who satisfy independency criteria were appointed by the Capital Markets Board pursuant to sub-paragraph (k) of the first paragraph of Article 128 of Capital Markets Law
No. 6362 on August 15, 2013.

*** The board members who satisfy independency criteria were appointed by the Capital Markets Board pursuant to sub-paragraph (k) of the first paragraph of Article 128 of Capital Markets Law

No. 6362 on September 13, 2013.

TURKCELL ANNUAL REPORT 201516

EXECUTIVE
OFFICERS

Kaan Terzioğlu
İlter Terzioğlu
Murat Doğan Erden
İlker Kuruöz

Doğuş Kuran
Seyfettin Sağlam
Murat Erkan
Serhat Demir
Burak Sevilengül*

* Resigned from his role as of Feb 29, 2016.

TURKCELL ANNUAL REPORT 201518

EXECUTIVE
OFFICERS

KAAN TERZİOĞLU
Chief Executive Officer

MURAT DOĞAN ERDEN
Executive Vice President - Finance

Kaan Terzioğlu was appointed Turkcell’s Chief Executive
Officer on April 1, 2015. He began his professional life in
1990 as an Independent Auditor and CPA at Arthur Andersen
Turkey. In 1992, Mr. Terzioğlu joined Arthur Andersen USA
as the IT Strategies and Security Specialist, and in 1994,
began working at Arthur Andersen Belgium as the Leader
of Information Management and Digital Strategy Services.
In 1998, he was appointed Vice President of Consultancy
Services Turkey Operations. Between 1999 and 2012, he
served as the Team Leader of E-Commerce Strategies for
the EMEA region, Sales Director of Advanced Technologies
for the EMEA region, Managing Director of Technology
Marketing Organization for the EMEA region, and Vice
President of Central and Eastern Europe at the Cisco
Systems Brussels branch, respectively. Between April 3, 2012
and April 1, 2015, Mr. Terzioğlu was a Member of the Board
of Directors at Akbank, Aksigorta A.Ş., Teknosa İç ve Dış
Ticaret A.Ş. and Carrefoursa A.Ş. Kaan Terzioğlu graduated
from the Department of Business Administration at Boğaziçi
University.

SERHAT DEMİR
Executive Vice President - Legal and Regulation

Serhat Demir joined Turkcell as the Executive Vice President
of Legal and Regulation Function in May 2015. Mr. Demir
started his career in 1997 at Dun&Bradstreet’s Turkey office.
He worked in Legal Advisory at Yıldız Holding between
2003 and 2007 and became Legal Advisor of Çalık Holding
in 2007. Between 2009 and 2015, he served as Director
of Legal Affairs at Çalık Holding, and at the same time, as
a board of directors member at various group companies
operating in the holding, telecom and finance sectors.
Serhat Demir graduated from the Faculty of Law at Istanbul
University.

Murat Doğan Erden started his career at the Treasury
and Capital Markets Department of Bankers Trust Turkey.
He joined Turkcell as the Director of Treasury and Risk
Management in 2001. Since 2006, Mr. Erden has served
as a Member of the Board of Directors of Turkcell Group
companies and continues his Board of Directors activities.
Mr. Erden is a graduate of Istanbul High School and the
Department of Economics at Boğaziçi University and
received his MBA degree from San Diego State University in
1995. He completed the Wharton Executive Development
Program and holds certificates in Mergers and Acquisitions
and Strategic Finance and Derivatives from similar
international institutions. Fluent in English and German,
Murat Doğan Erden is married with two children.

MURAT ERKAN
Executive Vice President - Sales

Murat Erkan joined Turkcell Group in June 2008 as the
General Manager of Turkcell Superonline and as of
December 1, 2015, he was appointed Executive Vice
President of Sales. Prior to this position, he had served as
the Senior Vice President of Retail and Active Sales and
Senior Vice President of Home and Consumer Business,
respectively. Mr. Erkan, who started his professional life
at Toshiba, became an Application Engineer at Biltam
Mühendislik and then became the first “System Engineer”
of Turkey at Cisco Turkey. He served as Chief Officer at
Cisco Systems in charge of technology, sales, business
development and channel management for ten years.
Prior to his position at Turkcell Superonline, Mr. Erkan had
been the Business Unit Manager at Aneltech working on
solutions related to Telecommunication, Mobile, ICT, the
defense industry and industrial products sectors since 2006.
Murat Erkan graduated from the Yıldız Technical University
Electronics and Telecommunication Engineering Department
in 1992. He completed the Strategic Marketing Program at
Harvard Business School in 2010.

DOĞUŞ KURAN
Senior Vice President - Customer Services

SEYFETTİN SAĞLAM
Executive Vice President - Business Support

Doğuş Kuran joined Turkcell as Senior Vice President of
Customer Services Function as of October 1, 2015. He
had begun his career at Alcatel-Teletaş. After holding
executive positions in sales, business development and
internet solutions consultancy within Cisco Systems and
Microsoft Turkey organizations, he served as Chief Sales and
Operations Officer at Ericsson Turkey. Prior to his position
in Turkcell, he worked as a partner at the Accenture Turkey
Office responsible for the telecommunication, media and
technology sectors. Mr. Kuran graduated from the Istanbul
Technical University, Electrical and Electronics Engineering
department in 1995. He received his Master’s degree in
Management Engineering from Portland State University in
1997.

İLKER KURUÖZ
Executive Vice President - Technology

İlker Kuruöz joined Turkcell as Services and Product
Development Division Head in 2006. He has been serving
as the Executive Vice President of Technology since
December 2013. Previously, he was the Chief Information
and Communication Technologies Officer of Turkcell. İlker
Kuruöz started his professional life in 1994 at ABT. He then
worked at NCR as System Consultant, at Garanti Teknoloji
as Division Manager, and in Accenture as Senior Manager.
İlker Kuruöz graduated from Bilkent University in Computer
Engineering and Information Sciences and received a
Master’s degree from the same university.

Seyfettin Sağlam joined Turkcell as Chief Group Human
Resources Officer in July 2014. He was appointed Executive
Vice President of Business Support Officer in April 2015.
He began his career in MSC Consulting lnc. in 1998. He
worked as a HR professional at Tekstilbank and as the
Human Resources Group Manager at Yıldız Holding,
responsible for the Packaging, IT, Finance and Retail Groups.
He served as the Assistant General Manager of T.C. Ziraat
Bankası. Subsequently, he was appointed Vice Chairman
and Member of the Executive Committee at Rixos Hotels
and Sembol Construction Inc. Mr. Sağlam served as an
Executive Vice President of Borsa İstanbul. He graduated
from the Department of Sociology at Middle East Technical
University. He received a Master’s degree from the
Marmara University Business Administration Department
in International Quality Management. He completed the HR
Management & Leadership Programs at INSEAD.

İLTER TERZİOĞLU
Executive Vice President - Strategy

İlter Terzioğlu had worked for Ericsson Turkey as the
Assistant General Manager responsible for Turkcell between
1994 and 2002 and joined Turkcell as Business Strategies,
Regulation and Risk Consolidation Division Head in 2003.
In October 2015, he was appointed as the Executive Vice
President of Strategy. Previously, he served as Senior Vice
President of International Business under the Strategy
Function. He has also undertaken the roles of acting Chief
of International Business, Chief Strategic Projects Officer
and Chief Network Operations Officer at Turkcell. Prior
to joining Turkcell, he had worked as Assistant General
Manager at Turkcell Group companies, including Show TV
and Superonline. He graduated from the Department of
Econometrics at Istanbul University.

TURKCELL ANNUAL REPORT 201520

2015

AT A GLANCE

Acquired the most advantageous lot, Lot 1 at the 3G tender in UkraineDistributed dividends of TRY 3.9 billionCompleted convergence of organizational structureIncreased ownership in lifecell to 100%Restructured financial debt of lifecellAcquired largest spectrum at the 4.5 G auction21

TURKCELL ANNUAL REPORT 2015Established a consumer finance company Marked Turkcell’s 15th year of listing on BIST and NYSERestructured financial debt of BeSTRaised USD 2.9 billion in funds for TurkcellReceived “investment grade” from 3 rating agencies22

OUR VISION,
VALUES AND
STRATEGY

OUR VISION

TARGETS

VALUES

STRATEGY

NS AN D T E C
R IN THE REGIO
ALUE FOR CUSTO
D ECOSYSTE M P A

E R

E V
T
A
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E
D
A
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L O G Y S ERVICES COMPA

E A G U E S ,
S
R

L
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S, C
R

GLO

FOCUS ON S

R
I

I
T

L
Y

E
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R
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S

R
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L
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V
A
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T S
E

RVICES

DIFFERENTIATE WITH TE C H N O L
RSHIP AND SOLUTION OR I E N T E D A
VERGED TELECOM LE A D E R I N T

A C H

R K EY

TURKCELL ANNUAL REPORT 2015POSITION TURKCELL AS A CONVERGED COMPANYSTRENGTHEN OUR POSITION IN TURKEYFOCUS ON INTERNATIONAL EXPANSIONCREATE PREDICTABLE AND SUSTAINABLE VALUE

ACTIVITIES
IN 2015

ALWAYS FORWARD WITH OUR
SUPERIOR TECHNOLOGY

We are ready for
the future with our
converged network!

With the investments and efforts made within 2015,
we have brought our mobile and fixed networks
even closer with the power of our widespread fiber
infrastructure. While maintaining our technological
leadership in competition with our convergence vision
in both our core network and access infrastructures,
we have advanced our quality of service and service
levels offered to our customers. With our converged

network, we can offer innovative services to our
customers with attractive business models. The
delivery of all necessary telecom solutions for digital
transformation of our corporate customers from a
single-point has become possible. We have made
our operations more efficient through significant
optimizations in investment and operational costs
with collaborative network management.

THE FASTEST OF 4.5G: TURKCELL!
We secured the largest spectrum at the tender held on August 26,
2015, obtaining a total bandwidth of 172.4 MHz. With this tender,
Turkcell owns 43% of the total available spectrum, reaching a total
spectrum of 234.4 MHz. The new spectrum acquired is technology
neutral and may be employed in 2G, 3G, 4.5G and future 5G
networks.

Having gained 13 years of authorization with the spectrum tender,
Turkcell will begin to provide 4.5G service to its customers on April
1, 2016. At the launch, we will be the only operator providing up to
a 375 Mbps speed experience to our customers with our spectrum,
and will remain the fastest operator in comparison to our competitors
by providing speeds of 1 Gbps and above in the upcoming periods as
technology develops. With 2x10 MHz, which we acquired at 800 MHz,
we will rapidly enable coverage across wide areas and within buildings.

TURKCELL ANNUAL REPORT 201528

At the tender, we purchased the C1 package, the largest package at
1800 MHz, gaining 29.8 MHz. 1800 MHz, the most commonly used
spectrum in the world for 4.5G, is the most efficient spectrum both in
terms of coverage and capacity, and is also the spectrum with the most
widespread terminal support. By means of purchasing an additional
2x10 MHz at 2100 MHz, we have secured the highest bandwidth within
this spectrum, which we may use both in 3G and 4.5G. We will notably
be able to employ our 2600 MHz FDD and TDD spectrum in additional
capacity requirements, and also in hotspots and within buildings for a
high speed experience.

We have expedited our infrastructure investments
for the best 4.5G service.
In 2015, we had worked intensively to prepare our network to provide
the best 4.5G service to our customers. We have prepared the
infrastructure of our fields for the set-up of 4.5G base stations, and the
set-up has already begun.

We continue with 4.5G preparations in our mobile subcarrier network.
We are increasing our mobile subcarrier network capacity to 10G using
the power and superiority of our fiber infrastructure. Thus, we will
provide infrastructure to support an escalation of speeds up to 1000+
Mbps with 5-carrier aggregation using our frequency superiority in 4.5G.
We are establishing the infrastructure necessary to enable value-added
services in 4.5G, and that will meet our future requirements.

We have made our core network infrastructure compatible with 4.5G. We
have determined the most suitable technologies and products with our
4.5G trial networks.

Next Generation HLR/HSS structure is in service
& 4.5G HSS readiness is completed.
Next Generation HLR/ HSS structure has been renewed from legacy HLR
structure which stores each customer profiles and authorizes service
requests from customers. NG HLR is a central database for all the 2G, 3G
and also 4.5G customer profiles. Thus, network efficiency, operational
flexibility and high service availability are obtained. Turkcell is the first
operator to complete this critical transformation in our country. Common
database will allow us to easily reach our customers with enriched and
integrated services in 4.5G technology.

Turkcell subscribers experience LTE/LTE-A
abroad.
Having made the necessary preparations, we have made it possible for
Turkcell customers who travel abroad to communicate at 4G speed.

As of 2015, Turkcell customers are able to use LTE/LTE-Advanced
technology in 52 countries with 70 operators.

OUR TESTS SET A RECORD WITH A SPEED
OF 1200 MBPS.

In tests conducted using the 5-carrier
aggregation technique in December,
we set a record by reaching a speed
of 1200 Mbps. Turkcell subscribers
will experience this speed, attained
in the test conducted with the
bandwidths that will be the most
preferred for the highest speed and
largest capacity in 4.5G, once the
terminals supporting this technology
are in place. They will then enjoy a
19 times faster mobile internet speed
compared to 3G speed of 63.3 Mbps.

Another First from Turkcell

Turkcell became the first to test the “Enriched
VoLTE” service in Turkey.
In 2015, we were the first operator in Turkey to test “Enriched VoLTE”
technology, which provides a brand new call experience via 4.5G. In
tests conducted together with Ericsson, besides crystal sound quality
and the ability to make calls instantly with VoLTE, we successfully
displayed enriched services such as the ability to draw on the display
image simultaneously with the call, to start a call by adding a message,
photograph and location and to make an HD video conference call.

Once again, Turkcell became one of the first
operators in the world to test LAA, which is
part of 4.5G technology.
We are also now among the first operators in the world to test LAA
(License Assisted Access) technology, which simultaneously uses
licensed and unlicensed bands with the Carrier Aggregation technology
in 4.5G. LAA, the standardization of which will be completed with
3GPP Release 13, is expected to initially be used in small cells on 4.5G
networks as the device and network support become ready over the
coming years.

TURKCELL IS THE LEADER IN 5G AS WELL!
Through the 5G agreements with Huawei, Aselsan and Ericsson, we
have also proven our leadership in 5G. In Turkey, we play an active role
in supporting 5G Research and Development activities, whereas in the
international arena, we take part in the 5G activities of NGMN and GSMA.

We have signed a mutual memorandum of understanding with Huawei for
cooperation in collaborative work and research and development on 5G
technology. While taking our strategic partnership to the next level within
the scope of the signed memorandum, we have also taken an important
step in determining the opportunities to increase future cooperation for
research and development, especially of 5G technologies.

With Aselsan, we aim to render Turkey a 5G technology producer country.
Accordingly, we will work on the course of 5G technology, ensure
participation in international standardization processes and make a joint
effort toward commercial success in local and international markets with
products to be developed.

With our cooperation with Ericsson, we aim to develop mutual
understanding regarding the use, requirements and implementation
scenarios of 5G. We believe that this cooperation will make it easier for us
to focus on the requirements and expectations of consumers and corporate
customers from different sectors.

TURKCELL ANNUAL REPORT 201530

OUR INFRASTRUCTURE INVESTMENTS
We are among the leading telecommunication players in the world with our transmission infrastructure.
Being one of the few operators in the world to integrate “Full
Outdoor” products with our radio link infrastructure, we have shown
our leadership in using technology, while also reducing our energy
consumption. We enabled the first commercial WSON (wavelength
switched optical network) application in the world, independent of
direction and wavelength, which was brought to life in 2011 on the
Istanbul subway network, to our entire network in 2015.

We are successfully testing Terabit capacity DWDM (Dense
Wavelength Division Multiplexing) systems, allowing an increase
in the capacity of our current fixed network fiber infrastructure by
2.5 times, and we continue necessary investments in building and
expanding the infrastructure compatible with this technology. We
use state-of-the-art systems in our fixed network and are ready to
implement future technologies.

2G
Population Coverage

99.85%

3G
Population Coverage

95.03%

Fiber to
2.4 mn

Households

35,269
km Fiber
Infrastructure

63.3 Mbps speed in Mobile1000 Mbps speed in Fiber31

We have increased customer satisfaction
with improvements to our infrastructure.
Spreading our Transparent Internet Caching (TIC) infrastructure such
that it encompasses mobile internet traffic, we have increased customer
satisfaction by moving 18% of our traffic to this closer infrastructure,
while cutting annual operational costs.

We have begun infrastructure renewal
operations to increase our 3G Network coverage.
The frequency tender held on 26 August gave Turkcell the opportunity to
increase its 3G network capacity. With two additional carriers acquired
at 2100 MHz, our bandwidth in 3G has increased from 2x20 MHz to 2x30
MHz. We will be able to use these frequencies for other technologies as
they evolve going forward.

To increase our 3G network coverage further, we have begun renewal
operations at our network infrastructure in order to provide UMTS 900
service.

Our fiber infrastructure has exceeded
35 thousand kilometers.
At the end of 2015, we reached 2.4 million households in 15 cities
with our fiber infrastructure. Our fiber infrastructure reached 35,269
kilometers.

This year, the city of Eskişehir was also introduced to Turkcell fiber
internet. As Turkcell, we offer 10 times faster than average internet
speed in Turkey to our customers in Eskişehir. When complete, we aim to
offer fiber broadband to more than 110 thousand households in this city.

Moreover, we continue to connect our base stations to our fiber
infrastructure. Thus, we guarantee our continued provision of the fastest
and top-quality broadband experience to our customers, and at the same
time, ensure that our network is ready for 4.5G.

We have increased our transmission capacity to
over 13.5 Tbps.
We have increased the amount of traffic carried on our transmission
backbone by 58% year-on-year to 13.5 Tbps. With the expansion and
optimization projects in our main backbone to meet the increasing data
traffic demand in our mobile and fixed services, and to provide high
performance access service to our customers, we have expanded our
10G based transmission infrastructure to 100G based infrastructures and
transmitted from Edirne to Şırnak.

With investments in our Carrier Grade NAT (CGN) infrastructure,
we have increased our volume of fixed network customers receiving
service via CGN by 36%, and have reduced the in-use Public IP ratio
from 70% to 57%. Thus, we now use our limited number of IPv4
sources more efficiently.

We have taken important steps toward
becoming the leading player both in Turkey and
the surrounding region by strengthening our
internet infrastructure.
With our total international capacity bandwidth, which we have
raised to 2 Tbps by increasing it approximately 500-fold over the
past five years, we have undertaken an important role in meeting the
increasing demand for internet, particularly in the Middle East, and have
supported the entry of new global operators and investors into the
Turkish market. At the same time, with our strategic partnerships, we
enable operators in the Middle East and Caucasus, and our customers, to
quickly reach the largest operators in the world, while maintaining high
quality.

Additionally, we create a variety of routes through our business
partnerships with Europe’s most important infrastructure and capacity
provider operators and contribute to Turkey and countries in the region
experiencing “continuous internet”.

On one hand, this continuous increase in the total international
bandwidth capacity is of great importance in terms of the contribution
it makes to our vision of rendering Turkey a regional internet base and
Istanbul an internet capital. And on the other, it encourages content to
remain within the country by providing the internet output of major
national players and content owners through this high capacity.

With our high traffic, we encourage new global operators and investors
to enter the Turkish market and grow the market with the economy that
this traffic has created.

We give particular importance to operational
sustainability.
With the Terminal Server project, we have made it possible to access
devices, access to which is lost via our own network in the event of a
disaster. To avoid POPs remaining isolated and to maintain operational
sustainability in cases such as multi-fiber or equipment failure, we
kicked-off the Terminal Server project as part of Turkcell NDC, Main and
Midi POP points to access relative equipment through console interface
or current NMS systems through alternative channels (ADSL, 3G) that do
not use Turkcell network sources.

TURKCELL ANNUAL REPORT 201532

NEW PRODUCTS; NEW SOLUTIONS
Full support to the availability of local products!
Turkcell continues to give extensive support to the projects involving
local products. We cooperate with local companies regarding base
stations, antennas, transport and infrastructure solutions. Since the
agreement signed between SSM and Turkcell in March 2014, we have
supported the ULAK Project, which is on developing local base stations,
with our most experienced Turkcell engineers. In 2015, we contributed to
the product development by transferring mobile operations experience
and providing a test environment. Turkcell’s goal in this project, which
we have stated before, is to contribute to the positioning of 4.5G base
station manufactured locally as a competitive product not only in Turkey
but also in the region and beyond.

We offer switchboard services to our customers
through “Smart Switch”.
In respect of our fixed voice infrastructure being an IMS (IP Multimedia
Subsystem), we are able to provide fast communications services in
parallel to global trends. At the head of these services is our “Smart
Switch” service, launched this year. With this service, we are able to
provide switchboard services to our corporate customers through our
network without them having to incur investment costs.

We provide the Smart Switch service, which is among our Unified
Communications services, to our clients with a mobility feature by
enriching it with the soft client service provided on PC & mobile devices.

In the upcoming period, we will continue to rapidly bring new generation
services to life with services such as video-conference and WebRTC.

We have developed creative solutions with small
cell.
We have prepared product and network infrastructures to provide
location based services to our customers with Femto solutions positioned
as Small Access Points. Thus, we can inform a 3G subscriber once they
enter a Femto service area.

We have completed the installation of agricultural
meteorological observation stations.
We handle the TARBİL (Agricultural Tracking and Information System)
project together with Istanbul Technical University. This project which
aims to increase agricultural productivity and to support farmers’ income,
is owned by the Turkish Ministry of Food, Agriculture and Livestock. Our
subsidiary Global Tower carries out the installation and maintenance of
agricultural meteorological observation stations in agricultural areas as
part of the project.

We have built the wireless infrastructure of the
Gendarmerie Integrated Communications and
Information System.
We are carrying out Aselsan’s “Gendarmerie Integrated Communications
and Information System (JEMUS)” project providing possibilities such as
voice communication of high quality, the exchange of electronic mail, file
sharing, intranet access, safe and fast data transfer, crime and criminal
investigations, and so forth, for the Gendarmerie General Command.
Moreover, Global Tower conducts wireless infrastructure system
installation operations in the Black Sea and Eastern Anatolian regions as
part of the project.

Our customers can use “Corporate Wi-Fi” services
without incurring equipment investment costs.
We have introduced our “Corporate Wi-Fi” service for wireless internet
services that our corporate customers are willing to offer to their own
customers. We provide a turn-key service, where their services are
managed 24/7 and the regulatory responsibilities are carried out without
our corporate customers investing in equipment.

OUR ENVIRONMENTALLY-CONSCIOUS APPROACH
As Turkcell, we became the first telecommunications
operator in Turkey to receive the ISO 14064 –
Accounting and Verification of Corporate Greenhouse
Gas Emissions document.
In 2015, we were awarded ISO 14064 Certification, which is the
management standard of voluntary and independent greenhouse gas
emissions projects. As Turkcell, we have fulfilled all our responsibilities
regarding greenhouse gas emissions standards, and we became the
first telecommunications operator in Turkey to receive the ISO 14064
– Accounting and Verification of Corporate Greenhouse Gas Emissions

We consumed
approximately

80.2

million
kilowatt-hours
less energy
within 2015

Certification. We are conducting studies into the risks caused by climate
change and the new opportunities to be created, and are making these
studies part of our strategic plans.

We are reducing our carbon footprint with energy
efficiency initiatives.
With the new generation energy efficient equipment and energy saving
implementation in our network, we are continuing to invest in reducing our
carbon footprint. Key actions taken in this regard and the amount of energy
saved were as follows:

• 43,700,000 kilowatt-hours per year from inverter type air conditioners at
18,222 sites with high energy efficiency preferences in product selection,

• 13,150,000 kilowatt-hours from high efficiency power supplies in 10,311 sites,
• 7,313,000 kilowatt-hours per year from passive cooling systems in 11,348

• 400,000 kilowatt-hours per year from locally manufactured outdoor

cabinets in 700 sites,

• 3,000,000 kilowatt-hours per year through optimizing the number of

power source modules,

• 6,000,000 kilowatt-hours per year from equipment modernizations in

1,707 sites in 2015 alone,

• 355,000 kilowatt-hours per year through the use of renewable energy

systems,

• 1,300,000 kilowatt-hours per year with improvement works made in the

energy infrastructures of buildings,

• 5,000,000 kilowatt-hours per year with the revision works of buildings’

lighting and mechanical systems.

Thus, we have saved as much energy as the annual energy consumption of
29,700 households by consuming approximately 80,218,000 kilowatt-hours
less within a year.

sites,

TURKCELL ANNUAL REPORT 201534

SUSTAINABLE
GROWTH
THROUGH OUR
CONVERGED
STRUCTURE

We aim to offer our
communication and
technology services in
an integrated manner
from our sales points
to our call centers.

TURKCELL AS A CONVERGED COMPANY
In 2015, we have restructured our operations end to end to be able to
provide all our mobile, fixed and broadband services in an integrated
and coordinated manner to meet the expectations of our consumer and
corporate customers.

Our aim is to increase customer loyalty, competitiveness and operational
efficiency which in turn enables sustainable growth by providing our
converged communications and technology services and our customers’
experience at Turkcell end to end from our stores to our call centers,
and from integrated offers to our post-sales services. While our leader
position in the mobile market allows us to penetrate our converged new
services to our clients much faster, being a challenger in the fixed market
and a new player in the TV market supports our potential for growth in
these markets.

In the upcoming terms, we trust that we will strengthen our position
providing converged communications and technology services in Turkey
and the surrounding region with the support of our strong 4.5G and fiber
network.

As a company providing converged communications and technology
services:

• We will provide converged offers, in which our customers will be able
to receive mobile broadband , fixed broadband, TV and other media
services together.

• Our customers will be able to purchase these products from all our

sales points.

• Our call centers and post-sales services will become one.

• We will be able to provide a single bill to our customers preferring this

option.

OUR STRONGER POSITION IN TURKEY
We meet the communication needs of our
customers with our mobile, fixed broadband and
TV products in the best way possible.
In Turkey, we provide services to our consumer and corporate customers
with our mobile, fixed broadband and TV products.

In 2015, we maintained our position as the leader in the mobile industry
with 34 million customers. We continued to rapidly grow, reaching 1.5
million customers on fixed broadband. The number of customers using
our Turkcell TV+ product, which we introduced almost a year ago, has
reached 558 thousand.

NUMBER OF SUBSCRIBERS

MOBILE SUBSCRIBERS (million)

34.6

34.3

34.0

34.2

44%

45%

47%

34.0

49%

15.2

15.5

15.9

16.1

16.6

4Q14

1Q15

2Q15

Total

Postpaid

3Q15
4Q15
Postpaid Ratio (%)

FIXED SUBSCRIBERS (thousand)

1,191

1,277

1,346

1,419

735

776

818

852

1,520

899

4Q14

1Q15

2Q15

3Q15

4Q15

Total

Fiber

Our post-paid mobile customer base continued to grow on the back of
our superior network quality and innovative products and services. Our
post-paid customers, which reached 16.6 million on a yearly increase of
1.4 million, constitute 49% of our total mobile customer base.

In 2015, we diversified our packages of high quota to meet our clients’
increasing mobile data requirement. We have enabled our customers
to enjoy data by offering our “Large Data” packages to our post-paid
customers and “Generous Data” packages to our prepaid customers.
We have increased the number of mobile internet users through new
introductory campaigns. Additionally, we have improved customer
satisfaction with our limit notifications and our Turkcell Solution for
Exceeding the Limit.

We have continued our investments at full steam in order to continue
providing the best service to our customers. Owing to the frequencies
for which we have gained the right to use within the 4.5G authorization
tender, we will be the only mobile operator to provide 375 Mbps mobile
internet speed with Carrier Aggregation Technology, as of April 1, 2016.

We have responded to our customers’ ever-increasing data requirements
with our fixed broadband products by means of our integrated
communications infrastructure and technological services. With our fiber,
VDSL and ADSL campaigns, we have continued to offer our customers
the experience of internet at the speed of light.

899

thousand
fiber subscribers

While our number of fixed broadband customers consisting of fiber and
ADSL customers reached 1.5 million with a 329 thousand increase, 899
thousand have preferred fiber speed internet. We have continued to gain
customers with triple play offers that include our Turkcell TV+ product.
The ratio of customers who use our Turkcell TV+ service in addition to
fixed broadband and fixed voice services within our broadband customer
base was 23% as at the end of 2015.

23%triple play ratio

TURKCELL ANNUAL REPORT 2015

We meet the needs of our consumer and corporate customers in different
fields through our numerous services and applications by combining our high
technology with an ease of use experience. With our notable services such as
BiP, Smart Storage and Turkcell Music, we enrich the lives of our customers.

We have achieved our 52% smartphone penetration target through an
increase in the number of smartphones on our network by 3.4 million this
year. This increase was on the back of extensive device portfolio, which also
included T50 and T60 branded smartphones, in the distribution network, and
various offers and campaigns.

Smartphone users on our network have continued
to increase.

DATA REVENUES (TRY Million)

SMARTPHONE PENETRATION

30%

9.6

19%

6.2

52%

16.1

40%

12.7

793
29.8%

837
30.0%

187

606

200

638

940
31.0%

213

727

968
32.3%

228

740

744

178

27.3%
567

2012

2013

2014

2015

4Q14

1Q15

Smartphone (million)

Penetration (%)

Fixed Broadband

2Q15
3Q15
Mobile Broadband

4Q15

Total

Share of Total Data Revenue in Turkcell Turkey (%)

TURKCELL T60: TURKCELL’S
SMARTEST PHONE TO DATE

T-series smartphones have reached
more than 2 million users to date.
The T60 smartphone is differentiated from similar
devices at the same price level by its new features
such as heat and pressure sensors and smart
signals. With its easy mode of operation, it has
gained appreciation from our elderly customers
less confident in the use of smartphones. It
became the third best-selling smartphone in
Turkey in August and September 2015.

OUR UNDERSTANDING OF
NEW AGE MARKETING
Our new marketing approach, through which we
provide efficient, value-driven and real-time offers
for our customers’ needs analyzed through the use
of technology, rests on three main pillars:

L L

L TUR K

A
T
I
G

I
D

M
E

D BASED A P P

O ACH

Real-time
With our analytical marketing
approach, we fulfill our customers’
communications needs in real-time and by
presenting the right offers. We intensively use
our analytical abilities and advanced modeling
techniques to address our customers’
requirements in the best manner possible,
and to approach them with the right
offers at the right time.

Digital
Turkcell
With digitalization, we enable
our customers to fulfill a higher
number of their requirements
rapidly and conveniently in
a digital environment
with an end-to-end
experience.

Need
based approach
On top of our communications and
technology solutions, we increase the
loyalty of our customers by offering
additional advantages that add
value to their lives and that are in
accordance with their lifestyles
with a segment-based
approach

TURKCELL ANNUAL REPORT 2015
38

EFFECTIVE SEGMENT MANAGEMENT

We manage our consumer business under 8 different segments defined by customer behavior. With our
segments, which we name “premium and platinum”, “youth”, “professionals”, “housewives”, “disabled”,
“farmers”, “civil servants” and “golden ages”, we work to better understand and address our customers’
needs in the best possible way. Our aim is to increase the satisfaction and loyalty of our customers
through targeted offers as per their needs.

THE YOUTH

In 2015, we launched campaigns for the usage requirements of young people. We offered
the “Never-ending Internet” campaign, in which the internet quota tops up when the data
quota is halved, and “Transfer Me To Gnctrkcll” which featured generous data to meet all GSM
requirements. On the launch day of the “Everyone Wins” campaign, 4 million people were sent
a message saying “We need to talk”. The viral campaign video was watched 3 million times in
total and 2.2 million times on YouTube only within the first week of launch. Furthermore, the
Gnctrkcll Mobile Application was downloaded over 1 million times. Gnctrkcll app users can
monitor their current usage and package information, reach customer services exclusive to
young people (“Gencaver”), and access their current campaign password with a single button.

PROFESSIONALS

In 2015, we launched high quota internet packages to meet the increasing internet
requirements of our White Collar customers. In addition to finding a solution to the
communication needs of our customers, we have added value to their social lives through
the collaboration we have made with different brands to address their needs, ranging from
holidays to shopping and from sports to healthy living.

PREMIUM AND PLATINUM

Marking a first for Turkey, we launched 10 GB packages for our customers with the largest
communication needs. And by further digitalizing our Platinum world in 2015, we allowed our
customers to benefit from, and be informed of our products and services more easily.
The Turkcell Platinum application, the single platform where all privileges can be accessed,
has been downloaded over 600 thousand times.

THE GOLDEN AGES

We have offered our customers aged 60 and above an effortless smartphone experience and
enabled them to become more acquainted with technology with T60 Easy Use, and made their
lives easier with “Easy Use”. In 2015, we strengthened our bonds with our elders who give
great importance to religious and national holidays by celebrating their holidays with live calls.

CIVIL SERVANTS

In another first for Turkey, and having fulfilled the requirements of the Turkish Presidency of
General Staff, Turkcell launched Askercell for soldiers, and at no charge. Turkcell customers
using Askercell can talk and text as much as they want with their loved ones at military
barracks. Turkcell is still the only operator offering this service.

THE DISABLED

In 2015, we pioneered in accessibility by giving life to the audio description feature, i.e. My Dream
Companion application which enables the visually impaired to watch a movie at a cinema. Having
listened to our disabled customers, we have expanded our world of offers for both postpaid and
prepaid, and offered large data packages for internet requirements. We have strengthened our
slogan “Together. Forward. Every Day.” with the education and services that bring added benefits
to the lives of the disabled in the areas of technology, personal development and career.

HOUSEWIVES

While the internet usage of housewives who enjoy internet has increased by 60%, their
smartphone penetration has also reached 40%. Considering the home, upkeep and mothering
circumstances of over 2.5 million members of the Smart Women’s Club, we made it possible
for them to save approximately TRY 7 million by working with numerous female oriented
brands in these fields.

FARMERS

For the first time in Turkey, our farmers were able to instantly access critical information
allowing them to maximize the efficiency of their work, such as weather forecasts specific
to villages, regional purchase and sales prices and early warning messages against diseases.
With our “Secure Transformer” service, we have secured the transformers of our farmers, who
frequently suffer transformer theft, and have eliminated their losses in the process.

TURKCELL ANNUAL REPORT 2015*Figures are as of February 18, 2016.

OUR INNOVATIVE SERVICES
Our products and services facilitate our customers’ greater daily use of technology with a view to
making their lives easier.

Turkcell TV+: The TV Platform of the Future
Thanks to Turkcell TV+, which we began to offer a year ago, our
customers have been experiencing new generation TV in their homes,
and on their mobile phones, tablets and computers.

Having changed user habits from the first day and transformed any
screen into a television with features such as pausing, rewinding and
recording of live broadcasts with the advantages of cloud technology,
Turkcell TV+ has reached 600,000 customers (including mobile TV, web
TV and IPTV users) in a year.

Going forward, Turkcell TV+ is positioned as one of the drivers behind
Turkcell’s growth.

600 thousand customers
9.6 hours average daily viewing time

from home

Coming up next

Dynamic and interactive content with an extensive application store
High resolution, detailed and clear image with 4K UHD

Note: The figures are as at February 18, 2016 which is the 2015 full year results disclosure date.

TURKCELL ANNUAL REPORT 2015

BiP: The New Generation Communication
Platform

We have added a new feature to existing features such as disappearing
messages and creating CAPS to differentiate our new generation IP
based communication platform BiP from its competitors. BiP users are
able to make voice or video calls by pressing the call button without
having to leave the messaging screen.

Having been downloaded approximately 6.2 million times as at February
18, 2016, BiP is developed in Turkey with local knowledge and resources.
We provide a high speed and high quality service to our customers with
BiP, which leverages Turkcell’s powerful infrastructure.

BiP, with its rapidly growing user base, has so far been downloaded in
189 countries. After Turkey, the countries with the most downloads were
Azerbaijan and Germany. 36% of users in Turkey comprise the customers
of other operators.

million

6.2

downloads

36%

users

non-Turkcell

Turkcell Music: The Leading Music Service
With its renewed mobile application in 2014 and hundreds of new lists
added and its user-friendly interface developed in 2015, Turkcell Music
has become the first choice among our customers as a music application.
Turkcell Music, providing our customers the opportunity to listen to

music without reducing their internet quota, has become the largest
music platform in Turkey by tripling its number of users and its revenues
in 2015 year-on-year.

million

5.4

downloads

500

playlists
over

Note: The figures are as at February 18, 2016 which is the 2015 full year results disclosure date.

million

270

recorded data

Smart Storage: Cloud Technology For
Everyone
Providing the opportunity to safely store and share photographs,
videos, music and files, Smart Storage, with its easy use, renewed
interface and improved automatic backing up feature, has reached 1.7
million users. Smart Storage, for which we increased the capacities
offered within packages ten-fold in July, has gained a leading position
in the Turkish market.

Smart Storage is the only personal cloud application in the world
with the features of previewing saved photographs on printed paper,
choosing and sending pictures to print, and shipping printed pictures
with ordered format and in requested number of copies to users’
addresses.

million

1.7

users

Goals on Mobile: An Exclusive Service for Football Supporters
With our Goals on Mobile application, prepared exclusively for the fans
of the four largest teams (Goals on Mobile 1903, Goals on Mobile 1905,
Goals on Mobile 1907, Goals on Mobile 1967), we provide services such
as live goals, the latest news and exclusive videos, live scores from

around the world, score histories, league tables and live commentaries
during games. Our application, enabling fans to discuss and chat about
the game with others at the stadium, was downloaded 1.8 million times,
as at February 18, 2016.

million

1.8

downloads

million
videos viewed

Note: The figures are as at February 18, 2016 which is the 2015 full year results disclosure date.

TURKCELL ANNUAL REPORT 201544

Turkcell My Account: Our Aim Is To Make Our
Customers’ Lives Easier
Our customers have made over 1 billion transactions in a year via our
digital channels. We aim to provide a unique, user-friendly, easy and
simple experience to these customers with our best infrastructure at global
standards and our technological capabilities.

Within this framework, we introduced the “Turkcell My Account”
application in 2014 with the aim of making the lives of our customers easier
and allowing them to access any information about Turkcell from anywhere.
Having reached 2.1 million users as of the end of 2015, this application
enables our customers to get information, make transactions, purchase
services and access customer services. At The Loyalty Awards in 2015, we
were awarded the first prize in the “Best User Experience” category for our
website, turkcell.com.tr and My Account application.

million

2.1

users

5.4 million downloads

My Official Transactions: Easier Tracking of Official Transactions
Our customers are able to follow up on their children’s exam results
and cases opened against them, learn their tax debts and traffic fines, if
any, and query information such as retirement age and total number of
years of service with our Turkcell My Official Transactions application.

We offer this application through a combination of the assets of public
institutions with our mobile infrastructure. In 2015, 22 million messages
were sent with the application, which enables them to be sent without
the need to constantly query requested information.

Proactive

22 million SMS traffic

My Dream Companion: Rich Content with “Pioneering Work”
With our Turkcell My Dream Companion application enabling our visually impaired
customers to access information faster and easier, and to become more active and
independent in their social lives, we provide these customers the opportunity to follow
current news and articles, listen to thousands of audio books and magazines, and benefit
from hundreds of courses.

In 2015, we have developed our application further with new features. My Dream
Companion users are now able to find stores and directions by receiving audio guidance
with the navigation system developed with Beacon technology. Since September, we
have been providing the opportunity for the visually impaired to listen to movies at the
cinema through the application with the Audio Description feature without requiring any
extra equipment. This feature is a first for the world.

My Dream Companion Audio Description was recognized for "Best Use of Mobile for
Accessibility and Social Inclusion" by the GSMA at the Global Mobile Awards in Mobile
World Congress 2016.

Audio
Description Feature

My Route Companion Feature

Mobile Payment: The Leader in Mobile Payment in Turkey
In March 2015, we established Turkcell Ödeme Hizmetleri A.Ş. (TÖHAŞ)
within the framework of Payment Services legislation no. 6493 to
create the best payment solutions for the needs of our customers, and
to provide a faster and easier shopping experience. By expanding the
network of over 2 thousand member merchants where the Turkcell

Mobile Payment service is accepted, we have provided faster and easier
payment methods in numerous new fields such as application stores,
restaurant chains, car parks, insurance premium payments and fast
track services at airports.

million

2.3

users

thousand
member merchants

over 2

TURKCELL ANNUAL REPORT 201546

OUR CORPORATE BUSINESS
Nine out of ten companies in the Fortune 500
Turkey list prefer Turkcell.
We support our corporate customers in making a difference in their
businesses, becoming prominent in a competitive environment,
and in growing their businesses with solutions and approaches in
communications and technology, apart from our superior network
platform. We provide service to every 9 out of 10 companies on the
Fortune 500 list of the largest companies in Turkey.

Our Real-Time Enterprise Vision
By simplifying the Real-Time Business vision, which we created for
our corporate customers to enable them to provide the best service to
their own customers, we renewed it as Real-Time Enterprise, which all

companies can make use of. With this approach, we support companies in
their transformation of being able to manage and monitor their systems
and processes anytime anywhere.

Mobile Internet

Digital Services

Internet of Things

Big Data & Analytics

Cloud Solutions

Real-Time
Enterprise

Zero Infrastructure
Enterprise

Real-Time
Marketing

END TO END SOLUTIONS

We provide the following services within our Real-Time Enterprise solution
at different levels:

• Real-Time Enterprise: Companies, assigning the management of their

employees’ communications needs Turkcell, are provided with devices and
mobile internet connection from the Turkcell Smart Device portfolio. This
service allows them to take company courses anywhere any time with
Turkcell Corporate Academy, and hold meetings anytime and anywhere
with Turkcell Video Conference. Within this service, Turkcell Smart
Fax manages their faxes from smart devices, and Turkcell TeamMobile+
tracks assigned work and provides information to the company from any
location. With Mobile Field Solutions, they also manage field operations
from outside the office and exchange information in real-time.

• Zero Infrastructure Enterprise: The intra-office communication

requirements of companies entrusting Turkcell with their infrastructure
management are met with Turkcell’s Smart Switch service. This service
manages files with Turkcell Cloud Solutions from anywhere and any
device, hires servers, reduces physical server costs from Turkcell, and
increases and reduces the capacity of servers with remote administration
in real-time.

Internet of Things
With our Machine to Machine communication (M2M) solutions, Turkcell
Smart Device enables route optimization of fleets and fuel efficiency
through remote tracking, and Smart Energy Tracking enables real-time
tracking and intervention in the energy efficiency of all branches and
offices. With Turkcell Smart Industry solutions, it is possible to remotely
track all machines, equipment, assets and processes in operation in real-
time, and to instantly intervene in extraordinary cases.

We continued to contribute to the Turkish
economy with our machine to machine
communication application.
We achieved the following in Turkey with our M2M infrastructure:

• By transforming over 650,000 devices into Smart Vehicle, we saved

approximately TRY 1.5 billion in fuel.

• With our Smart Energy service, we increased the number of meters we
read remotely to over 182,000 at 21 electricity distribution companies.

• Real-Time Marketing: With Turkcell Mobile Marketing Solutions, in

• We increased our number of new generation cash register users to

which data is instantly processed to manage customers more efficiently,
it is possible to reach current and potential customers when they sign-in
at determined times and locations. This service also allows users to
reach customers of whom they do not have contact information, with
Turkcell Smart Talents, to view the location of their target audience and
to organize the marketing and opening of new branch operations on the
basis of large volumes of data with Turkcell Smart Map.

over 100,000.

• Our number of customers within TeamMobile exceeded 100,000. We
expanded TeamMobile from mobile phones to business management
and launched TeamMobile+.

• We aim to deliver Smart City technologies to every region in Turkey.

With this objective, we held our first launch in Gaziantep.

SPEEDS UP OUR
BUSINESS

INCREASES EFFICIENCY
OF OUR BUSINESS

DECREASES OUR
COSTS

83%

80%

62%

BENEFITS OF
BECOMING
A REAL-TIME
ENTERPRISE

Source: The results
of the web survey
conducted by Turkcell
with 683 companies in
February 2015

TURKCELL ANNUAL REPORT 201548

Data Center and Cloud Services
We provide Turkey’s largest data center and
cloud services infrastructure.
With our data center, server hosting, cloud and security and
accessibility services, we thoroughly support the infrastructure of
our corporate customers end to end and facilitate their resource
management.

We aim to increase the capacity of our Turkcell Data Centers currently
having a total area of 7,500 m2 at 7 points to 30,000 m2 in three years.
Our new data center in Gebze, Istanbul, the construction of which is
on-going, will become the largest and most efficient data center in a
single location in Turkey. At the same time, it will be the first service
provider data center to have the Tier-3 design and operation certificate
in Turkey. Additionally, protected carrier path for Turkcell fiber optic
infrastructure will be provided with alternative carrier option.

7 data centers
7,500 m2 area (2015)
30,000 m2 area (2018)

Our Alternative Sales Channels
We have transformed incoming calls from inbound sales, on which we
focus in the Telemarketing Channel, into sales at a ratio of approximately
15%. On the strength of this ratio, which was previously at around 6%,
we received a Silver Stevie award in the “Sales Growth Achievement”
category. Our ability to make more profitable sales with lower costs and
at higher volumes has positively impacted company profitability.

Our Online Sales Channel enables our customers to easily access our
products and services at any time and from any location. In 2015, we
launched the “With A Single Click” project and have facilitated the
port-in from other mobile operators with the convenience and ease of a
single click. We have begun to provide a new and easy experience that
diversifies delivery alternatives for our customers through the pilot study
of the “purchase online, collect from the store” project. This has been
initiated in parallel to our multiple channel management vision. With the
vision of transforming every smartphone into a store, we have enabled
contracted and upfront payment sales through mobile devices.

1,080

Turkcell Communication
Centers

million visitors (per month)

20
over 11 thousand

sales points

TURKCELL SALES CHANNELS
We are focused on offering the best services at
every point where we meet our customers.
Our Channel Structure
We continue to provide services and solutions through our Turkcell
Consumer Sales Channel, Alternative Sales Channels, Turkcell
Superonline Fiber and DSL Solution Centers and Corporate Sales
Channel.

Within the framework of our converged structure, we have begun to
provide our fixed and mobile integrated Turkcell solutions from Turkcell
Communications Centers (TİM) in the city of Kocaeli. Going forward,
we aim to deliver all our fixed and mobile integrated services to our
customers from all TİMs across Turkey.

In the Exclusive Channel, we serve our customers with a team of 9,000
service personnel and 157 specially trained Technology Experts at 1,080
TİMs. We offer consultancy services with our experts in communications
technologies to around 20 million visitors each month concerning new
technologies to make their lives easier. We enable our customers to
experience new products with our Technology Experts, who also train
store employees on the use of technology.

In the Non-exclusive Channel, we supply and provide information
about our products and services to 2,232 Authorized Sales Points and
9,078 Turkcell Sales Points (TSN) through 34 Turkcell Distribution
Centers (TDM). We introduce our new technologies, services and
offers to our customers with our Field Activity Team of 230 people, the
extension of TDM in the field, and 70 TSN Support Experts.

Turkcell Flagship Stores provide service at 6 popular locations in
three major cities (Istanbul, Ankara, and Antalya). These stores reflect
Turkcell’s leadership in the telecommunications industry to the retail
sector as an “experience transfer platform” for Turkcell’s wide retail
channel. The Communications Consultants employed at our Flagship
stores, which serve as pioneers in design and provide unique customer
satisfaction in service and sales models, are positioned as role models
with their sales methods and retail practices. We continuously train
them in becoming experts through courses in technology solutions and
sales.

In terms of Non-telecommunications Sales Channels, we make
sales at over 15,000 national and local supermarkets and post offices
(PTT), and continuously expand our network for the convenience of
our customers in reaching Turkcell products and services swiftly and
conveniently regardless of location.

TURKCELL ANNUAL REPORT 201550

We have integrated the services that we already provide in 81 cities
to our individual consumers with a new sales channel exclusive to our
corporate customers. We provide quality services to our customers 24/7
with the continuously updated and improved interface, accelerating
delivery periods, and constantly expanding our technological product
portfolio.

In our Self-Service Channels, we constantly maintain a wide network
of ATMs, call centers and Internet branches of banks whereby our
customers can quickly and easily access Turkcell services from any
possible location.

Corporate Sales
In corporate sales, we continue to provide service with Turkey’s largest
and most widespread sales force, customer management, retail and digital
channels. We provide mobile, fixed and DC/Cloud services on an end-to-
end basis.

A team of 1,300 employees at our Corporate Solutions Centers makes
active sales to small scale companies. Additionally, we provide services
from our Global Bilgi Call Center for all company requests. We also provide
portfolio management services by conducting regular calls with 400
portfolio managers.

CUSTOMER EXPERIENCE SOLUTIONS CENTER
Turkcell Global Bilgi develops innovative solutions for next generation
customer management by closely monitoring technological innovations;
this in addition to our 16 years of experience in the industry. With this
approach, Turkcell Global Bilgi has been serving Turkcell customers,
enabling them to reach desired solutions via their preferred channel.

Turkcell Global Bilgi has been a pioneer in facilitating the expansion
of call centers across Turkey. Accordingly, we have contributed to the
national economy by introducing a new initiative. And by providing job
opportunities, particularly for women and disabled individuals, we have
contributed to national employment.

Our Erzurum Call Center, established 10 years
ago, has contributed TRY 1.1 billion to the city’s
economy.
Turkcell Global Bilgi’s first call center in Eastern Turkey in the city
of Erzurum was established 10 years ago with a view to creating job
opportunities for unemployed youth. Its contribution to the city’s
economy has reached TRY 1.1 billion. The call centers in Anatolia today,
which we pioneered with the Erzurum facility, provide jobs to over
38,000 people in around 50 cities.

As at the end of 2015, Turkcell Global Bilgi operates in 24 locations (20 in
Turkey and 4 in Ukraine), 15 of which are owned. In total, Turkcell Global
Bilgi employs 12,000 people, approximately 10,000 of whom are on its
payroll. Answering approximately 550,000 calls a day, Turkcell Global
Bilgi provides services to over 70 million people in Turkey and over 10
million people in Ukraine and Russia.

Another award for Turkcell Global Bilgi.
A pioneer in the sector since the day it was established, Turkcell Global
Bilgi has also achieved significant success in the international arena
with its technology and business models. At the “2015 Top Ranking
Performers” awards organized by “ContactCenterWorld.com”, one of
the most important events in the call center sector, Turkcell Global Bilgi,
was awarded first place in the world in the “Best Self Service” category
with “Audio Response System Recognizing Wide-Ranging Expressions,”
developed in-house, and also in the “Best Home Agent Management”
category with the working- from-home model.

TURKCELL ANNUAL REPORT 201552

HAND IN HAND TO
IMPROVE LIVES

We move forward toward our
dreams as Turkey’s Turkcell.

Since the day we were established, as Turkey’s
Turkcell, we have fulfilled our responsibilities to
society with projects realized in various fields such
as education, culture, the arts, and sports, among
others.

We strive with all our strength to accomplish the
best for our country and to improve lives with our
technology. It is a pleasure for us when we serve as
a bridge for a child on the path to their dreams. Our
days are brighter when we shine light on worlds with
boundaries. We only breathe easily when we are able
to offer individuals equality in education and give
them hope for their future. We take joy in lending a
hand to our athletes, bright minds of the future and
skillful women. It gives us great pride to be of use to
our country when we see the results of our support
for the arts, science and entrepreneurs.

We are Turkey’s Turkcell. Thus, we will continue to
carry out our responsibility to society in different
fields with sincerity and our best efforts as long as
we exist.

TURKCELL ANNUAL REPORT 201554

PEOPLE WITHOUT BOUNDARIES
As the Turkcell family, we attach great importance to equal opportunities
among all segments of our society for the economic and social
development of our country, and are taking concrete steps in this regard.
In accordance with this vision, we provide solutions in a diversity of fields
under the “People Without Boundaries” roof to make the lives of our
disabled citizens easier and to better integrate them into life.

We employ 500 disabled citizens at Turkcell
Group.
We employ 500 disabled citizens at our Turkcell Group Companies and
Turkcell Call Centers. 50% of our employees at Turkcell Global Bilgi Van-
Erciş Call Centers are disabled personnel.

We support the development of disabled children
with our Education Without Boundaries Program.
We have carried out a new project with the Turkish Ministry of Education
for disabled children with special education requirements to enable them
to participate in daily social life. We support the development of disabled
students towards education and employment with the “Education Without
Boundaries Program” under the auspices of the Ministry of Education to
increase the competencies of disabled children with special education
requirements, and to enable them to become part of social life. As part of
this program, we plan to create professional workshops and technology
classes in 80 schools where disabled students receive special education. In
2015, we have constructed 10 schools, reaching our target. Now, our aim is
to reach 10 thousand students within 2 years.

Within this program, we will establish “Technology” and “Information
Technologies” classes at 15 schools for the visually impaired and
20 schools for the hearing impaired to contribute to the students’
development and to generate opportunities through the use of
technology. Additionally, we will prepare visually impaired students for
business life with the carrier workshops to be designed at 45 Special
Education - Carrier Education Schools. We will set up information
technologies classes to support the employment of hearing impaired
youth in graphic design, computer technologies and similar fields. In
these technology classes, we will enable them to access information
more easily, and enable their personal and professional development
with the advantages of technology, utilizing devices specially developed
for the visually impaired.

We also offer “Turkcell – YGA Visually Impaired Individuals’ Leadership
Program” to visually impaired students. At the initial phase of the
program, where disabled leaders with the potential to be role models are
trained, 50 visually impaired students of secondary school age participate
in a 10-week education program. Twenty five visually impaired students
who successfully complete the program participate in a 5-day Leadership
Camp. At this camp, through an intensive training program, students learn
to ‘succeed together’ by better experiencing projects they participate
in, and are inspired by the speeches of role model leaders. The stars
selected from among the candidates, and who are trained for 10 weeks at
workshops, receive one-on-one coaching from a role model leader.

We continue to carry out initiatives in different
fields for our disabled citizens to integrate them to
everyday life.
We continue to carry out our activities in different fields for our disabled
citizens to integrate them to everyday life through our cooperation with
the Blind Sports Federation in the sporting arena. Having started our
cooperation with the Turkish Football Federation and Turkish Blind Sports
Federation in 2013, we remain the main sponsor of the National Blind
Football Team and the name sponsor of the Turkcell Those Who See the
Sound League, which is a football league for the visually impaired.

Turkcell has supported the “Dialogue in the Dark” exhibition in Turkey
which has had over 8 million visitors in 135 cities of 32 countries. With
Turkcell’s support, the exhibition, where participants experience the
everyday lives of the visually impaired, have enriched its content and also
provides employment to the visually impaired guides. The new sections
included at the exhibition with Turkcell’s partnership have paved the way
for new perspectives regarding visual impairment.

development guides and fairy tales; information services such as astrology,
exchange rates, weather forecasts and Goals on Mobile; and also numerous
courses, which are indispensable for their integration into society.

The “Audio Description” service, which we have included in the Turkcell
My Dream Companion service, is now available through a mobile
application for the first time anywhere in the world. With “Audio
Description”, in which the scenes in films without dialogue are described
in detail, the visually impaired can watch movies with the same joy as any
moviegoer.

Courses ranging from technology to personal development, business to
leadership and innovation to entrepreneurship can also be found for the
hearing impaired with sign language and subtitles through “Academy
Without Borders” within Turkcell Academy. Turkcell Academy continues
to provide “Turkish Sign Language” courses in cooperation with the
Federation of the Deaf. Furthermore, visually impaired individuals can
learn to use smartphones with iOS-Android courses developed for them.

TURKCELL ANNUAL REPORT 201556

DEVELOPERS OF THE FUTURE
We have now completed the second year of our
Developers of the Future Project, which we built
on our desire to contribute to increasing Turkey’s
share of the software economy, and our need to
ascertain how to create value for the ecosystem.
In two years, we have facilitated educational, developmental and
employment opportunities in informatics for nearly 60 thousand young
people.

We have determined the objective of the project as providing software
proficiency to young people, supporting entrepreneurship and
transforming innovative ideas into profit for Turkey. In light of this
philosophy, we continue to reach hundreds of thousands of people with
our project by creating more education, development and jobs, thereby
uniting the potential in the informatics sector on the back of our strength
in integrated technology and communications services provision.

In two years, individuals have signed up for Turkey’s first and most
extensive application development platform from various countries,
naturally including Turkey, but also Kyrgyzstan, Poland, Romania, China,
Afghanistan, and Ghana. Besides, nearly 60 thousand people have
benefited from the “gelecegiyazanlar.turkcell.com.tr” platform of the
Developers of the Future Project. Young people trained on this platform
are able to develop software for mobile operating systems such as
Android, iOS, Windows Phone, etc. as well as web programs. This project
that run in three stages continues to produce useful output for society,
while improving the lives of youth and children by not only offering
education, but also by helping them to better stand on their own feet.

Besides online courses to keep the youth up-to-date on developments
in the software sector, we held face-to-face meetings with over 6,500
students at 101 universities in 81 cities in Turkey.

Within the project, we have also taken action enabling children to
develop technology instead of merely consuming it. Accordingly, we have
supported them in developing their own applications with face-to-face and
online courses.

We have established bridges between our mentors and project beneficiaries
during the production phase. We have encouraged the participants to
develop applications in various fields such as health, education and finance.

We have brought each participant, who has improved their knowledge
and skills, together with the leading institutions and non-governmental
organizations in the sector, positioning the developers of the future
as today’s employment ambassadors. 11,000 developers were issued
certificates of achievement, confirming their readiness to contribute to
Turkey’s growing potential.

We believe in a better future made possible by the software that the youth
itself will develop. And so, we continue to work hard to build the future by
harnessing technology’s power to develop and improve.

WOMEN EMPOWERMENT IN THE ECONOMY
“Women Empowerment in the Economy Project” was initiated in
collaboration with the Turkish Foundation for Waste Reduction (TISVA)
to enable women to better contribute to the economy by reducing the
gap between equality of payments and opportunities. Having completed
its third year of operation in 2015, we have provided microcredit support
across 69 provinces to 70,000 women entrepreneurs, who are keen to
become independent contributors to the economy. With more than TRY 1
million in loans extended over three years, we have positively impacted the
lives of 300,000 people, including the families of our women entrepreneurs.

Our female entrepreneurs’ products are available for purchase at the
Turkcell Handcrafts online store, established through our collaboration
with the highly-visited e-commerce website, n11.com.

SNOWDROPS
We have provided over 100 thousand
scholarships to 30 thousand girls over 15 years.
On the 15th anniversary of the Snowdrops Project, through which we have
provided over 100 thousand scholarships to 30 thousand girls, we have
continued to support the education of girls. Following the completion of
their high school and university education, thousands of our Snowdrops
have embarked upon their careers. The project was recognized globally by
the United Nations in March 2010 as an exemplary scheme.

We continue to support girls, including those with disabilities, to succeed
in high-school and university education as part of the project.

TURKCELL ANNUAL REPORT 2015National Blind Sports Team and League Sponsorships
In the sports arena we continue our activities in different fields to enable our
disabled citizens to be a part of everyday life through cooperation with the
Blind Sports Federation. Through our partnership with the Turkish Football
Federation and Turkish Blind Sports Federation beginning in 2013, we continue
to be the “Main Sponsor” of The National Blind Football Team and the Name
Sponsor of the “Turkcell Those Who See The Sound League,” which is a
football league for the visually impaired.

Our National Blind Football Team became the European Champions,
defeating its rivals in the 2015 European Championship held in England.
Furthermore, with this championship the team has qualified to take part in
the 2016 Rio Olympics.

SPONSORSHIPS
We support the development of Turkish sports.
We have always been supportive, playing a pioneering role in the
development of Turkish sports and enhancing the good reputation
that Turkish athletes and our National Teams enjoy, domestically and
internationally. In 2015, we continued to provide support to the team
sports of basketball and football, and to the individual sports of athletics
and swimming.

Football and Basketball
We had launched our support of the National Football Team by becoming
its Official Communication Sponsor back in 2002, thereafter becoming its
“Main Sponsor” in 2005. Having successfully qualified for Euro 2016, the
National Team will represent our country at the European Championship in
France in 2016. We will continue to support the National Team for the next
three years.

As the biggest supporter of football in Turkey, we have also added “Official
Communications Sponsorship of Spor Toto Super League” to our football
sponsorships and “PFD Football Awards Sponsorship” held by the Turkish
Professional Footballers Association in August this year. Our support for
football will increasingly continue in 2016.

We are the sponsor of the National Basketball Team, which represented
our country at the 2015 European Basketball Championship, since 2002.

Football's Great!

Swimming and Athletics
Turkcell provides the greatest support for amateur
sports.
We have planned to invest TRY 28 million until 2020 in the Swimming and
Athletics Performance projects, initiated in 2013, under the auspices of the
Turkish Ministry of Youth and Sports. We provide the greatest support for
amateur sports seen to date through these projects.

We are active at every stage of the project that aims to train 200 thousand
qualified athletes and to attain international success for Turkish sports. We
collaborate with Athletics and Swimming Federations on various elements
of the project, including management, athlete selection, training techniques
and institutional development consultancy. Our focus remains on the
training of promising national athletes for the 2016 and 2020 Summer
Olympics. Moreover, our aim is to create federations with strong corporate
structures and sustainable success, and to extend these sports to wider
group of people. We do our very best to bring success to Turkish sports by
supporting more individuals every year.

Culture and Arts
As Turkcell, we consider culture and arts to be among Turkey’s greatest
attributes. In order to support and further elevate these values, we have
been the Communications and Technology Sponsor of Istanbul Modern,
Turkey’s first contemporary art gallery, since 2012. In this regard, we
have developed solutions and applications unique to Istanbul Modern:
we initiated its use of QR codes, and installed talking tags featuring NFC
technology to enhance art enthusiasts’ experience during their visits. We
have pioneered in Turkey the first museum application to be compatible
with Beacon.

We have become the Communications and Technology sponsor of the
Sakıp Sabancı Museum in 2014. With our “My Ticket on Mobile” service,
we make purchasing tickets easier and provide visitors convenience
at museum entrances. For the first time in Turkey, we have designed
education programs for families with children of 0-36 months to
participate at the museum.

We will continue to support arts and culture by integrating our
technology into museums in order to improve peoples’ lives.

THE TURKCELL GALLIPOLI MARATHON

The Turkcell Gallipoli Marathon held on the 100th anniversary of
the Gallipoli War took place on October 4 on the historic Gallipoli
peninsula with the participation of over 2,000 professional
and amateur athletes from 13 countries under the sponsorship
of Turkcell. Our
support for the
marathon, the
first of which was
held this year,
will increasingly
continue next year.

TURKCELL ANNUAL REPORT 201560

SUSTAINABILITY INITIATIVES
A major award for Turkcell from the Carbon
Disclosure Project.
As a company which has long since adopted climate change awareness,
we have been working on the risks caused by climate change and the new
opportunities it creates, and have made these initiatives a part of our
strategic plans. We completed the CDP Turkey (Carbon Disclosure Project)
survey for the first time in 2013, and publicly disclosed a more extensive
report for 2014.

With our efficiency initiatives, we have reduced Scope 2 emissions by
approximately 5% with the energy savings we have accomplished since
2013. We have improved the efficiency of base stations by reducing
electricity consumption, particularly with improvements and innovative
implementations made regarding the energy management used at base
stations within the context of emission reduction projects. By developing
Turkcell power saving algorithms for base stations having energy
requirements varying at different times of the day, we have established
an energy management system. Thus, we have reduced 3,837 tons of
greenhouse gas emissions at the base stations.

In 2014, we had also reduced 7,287 tons of CO2 with our energy efficiency
projects. This value is considered to be equivalent to preventing
approximately 3.5 million kg of coal burning, amounting to the electricity
usage of approximately 1,000 households in a year. (source:http://www.
epa.gov/cleanenergy/energy-resources/calculator.html#results)

Receiving the highest scores among companies that disclose climate
change strategies using the CDP platform, we ranked among the 5
companies within the top 10% of the “Carbon Disclosure Leadership
Index” in 2015. Subsequently, we were awarded the “CDP 2015 Turkey
Climate Disclosure Leadership” award.

A first for the GSM sector: “ISO 14064
Certification”.
We have proven to be an environmentally friendly company with human
and benefit-oriented initiatives related to international standards in social,
economical and environmental areas of influence. We have fulfilled all
our responsibilities regarding greenhouse gas emissions standards, and we
became the first telecom operator to receive the “ISO 14064 – Accounting
and Verification of Corporate Greenhouse Gas Emissions” certificate in
Turkey. Our initiatives, such as exhibiting consistency and transparency
in the determining, tracking, reporting and reduction of greenhouse gas
emissions, developing and implementing greenhouse gas management
strategies at the company, and creating plans for the future have been
confirmed by independent supervisory authorities. Subsequently, we were
awarded ISO 14064 certification.

BIST Sustainability Index
With the sense of responsibility that comes with our position in the
industry, we adopt sustainability as a principle in environmental, social
and corporate governments. The BIST Sustainability Index provides a
performance evaluation means to make improvements in companies and
to establish new objectives. The index also provides the opportunity for
companies to develop their risk management skills regarding corporate
transparency and sustainability with accountability. As Turkcell, we have
been on the 2014 and 2015 BIST Sustainability Index on the back of our
achievements in relation to the selection criteria.

HUMAN
RESOURCES

A more agile
organization

We have made organizational changes to Turkcell,
Turkcell Superonline and Global Tower companies
in parallel with our corporate strategies in 2015.
With these changes, we have facilitated a more
efficient management of company resources and
have reshaped processes and structures in line with
our strategic objectives and trends in the sector.
With the new structure, we have created a flexible
Turkcell organization, where group companies work
in an integrated manner, the customer experience
is managed end-to-end, the sales channels attain a
more effective function, and customer requirements
are responded to faster. The new Turkcell Group
organization has become simpler and more agile.

Our most valuable asset:
Our employees.
We have determined strategic HR initiatives to support
Turkcell Group’s objectives and strategies for the
next three years. In light of these initiatives, we have
established our work environment on systems and
standards that instill a tangible sense of success among
our employees.

Accordingly, we show our appreciation of our
employees at every opportunity and show them our
gratitude with different reward schemes. The total
amount of awards we distributed to 1,250 of our
Turkcell Group employees in this regard was TRY 4.6
million under various projects including “Now This
Deserves An Award” projects that honor those who
make a difference; TİP awards for innovative ideas

through the Turkcell Innovation Platform; CEO and
CXO awards, where the Chief Executive Officer and
Deputy Executive Officers show their appreciation
of employees creating a difference; patent awards,
which we present to our Research and Development
Engineers; and seniority awards given to employees,
who have worked for five years or multiples thereof at
Turkcell Group.

We attach importance to and support the career
development of our employees at Turkcell Group. And
plan our “Talent and Succession” processes accordingly.
We prefer to assign our talented employees to
appropriate and available management positions. We
filled 82% of our management positions with our own
talent within the company.

A new perspective to HR:
HR Analytics.
HR Analytics became one of our most significant focal
areas in creating an organization making decisions
based on data and to provide insight into the design
of our corporate projects. We gathered all our human
resources data in an original platform by bringing to
life systems that enable us to access the correct data
at the right time. Text mining and segmentation, which
we carry out with envisaged and descriptive statistical
analyses, enabled us to better manage the career path
of our employees, the corporate culture which has an
effect on our corporate objectives, and our leadership
model operations. As our operations in HR Analytics
enable a data-based work culture to be created at

TURKCELL İLETİŞİM
EMPLOYEE DATA

31%

27%

Turkcell İletişim had 3,851
employees as of December
31st, 2015; whereas Turkcell
Group was 16,649 in total.

69%

73%

24%

68%

Female

Male

Female Manager

Male Manager

Graduate
High School

Two-year degree
Master & PhD

Turkcell HR, these operations also place us in an HR
position. With these, we are positioned as a “producer
of new point of view”, rather than “executer” having
entered world literature in the field of HR Analytics
as an exemplary operation at conferences in London,
Amsterdam and Barcelona.

All our efforts are for our
employees: Our new Headquarters
at Küçükyalı Plaza.
In 2015, we gathered all 2,500 employees, who were
previously at different locations, under the same roof
at Turkcell Küçükyalı Plaza. The move to our 36,000
m2 office building in Küçükyalı, Istanbul marked an
important step in creating synergy and productivity.
Employees enjoy a gross area of 14 m2 per person at
our new smart building. With our new office which
has a view of the Prince Islands, we have provided a
modern and social office environment with numerous
facilities including a 273-person conference room, a
336 m2 gym, 71 meeting rooms, 3 restaurants, 2
café-shops, a supermarket, dry cleaning, hairdressers
for men and women, a prayer room, an infirmary
equipped for response to emergencies, dietician
services, a professional green box studio, a music
room, and a hobby area, among others.

TURKCELL VOLUNTEERS
Turkcell Volunteers have completed
10 years of impacting the lives 50
thousand children.
Having been formed voluntarily by Turkcell Group
employees, Turkcell Volunteers have now dedicated
10 years and reached out to over 50 thousand children
in various projects across Turkey. With the regular
donation and active work of over 21 thousand Turkcell
employees to date, the volunteers have carried
out over 30 projects focused on children and social
responsibility including “Mobile Kindergarten”, “Toy
Museum”, “Children To The Street”, “Water Bowls for
Birds” and “Sweet Serenity”. Turkcell Volunteers share
the happiness of thousands of children who were given
science laboratories and play areas, as well as curiosity

rooms, their first holidays, and water in villages that
had previously lacked a supply.

We launched the “Choose Your
Sibling” project with 1,094 children
in 2015.
We began 2015 with our “Choose Your Sibling” project
creating a special bond between Turkcell Volunteers
and 1,094 children, receiving their education in 11
village schools in 7 cities. We also had the chance to
purchase specific presents for each student with lists
we prepared with information based on their favorite
color and what they want to be when they grow up.
We added special written notes to the presents. At the
same time, we met the basic needs of the children such
as coats, boots, books and notebooks. Our volunteers
also handed out presents to villages in Samsun, Van,
Sinop, Tokat, Diyarbakır, Çanakkale and Ordu.

We initiated our “Greetings from
Hopa” project for Sugören Village,
which suffered great damage from
floods.
In September 2015, we initiated our “Greetings from
Hopa” project for Hopa’s Sugören Village, which
suffered considerable flooding damage. Our volunteers
also repaired the kindergarten of Sugören Primary
School. We renovated the inside of the kindergarten
from curtains to tables, and purchased necessary
educational equipment. We transformed an unusable
room into a Curiosity Library. We hand-delivered new
coats, boots, rain boots, stationery equipment and toys
to 200 students. With the children, we also painted the
school walls with graffiti. We then attended plays at the
theatre with children who had never before seen a play.

Evaluating the requests received from schools
throughout the year, we provided coats and boots
to children in need at Şanlıurfa Çanakçı Primary
School. We also set up “Curiosity Libraries” at Sinop
Taşmanlı Dizdaroğlu Şehit Erol Keçeci Primary School,
Tokat Karakaya Yunus Emre Primary School and
Kahramanmaraş Çatova Secondary School.

TURKCELL ANNUAL REPORT 201564

TURKCELL
ACADEMY

We create equal opportunity of access to information and education
with our “again and afresh” vision.

As Turkcell Academy, established in 2006 and based on Turkcell’s value of
“investing in people” to support the development of Turkcell employees,
as well as their business ecosystem, we provide information incorporated
with Turkcell technology to wide audiences. With the courses we have
prepared in light of global developments, we support Turkcell and Group
employees on voluntary teaching. This in turn helps us economize
through the use of internally provided educational resources.

Turkcell Academy, providing online classes, web-video, e-learning and
mobile learning technologies in its education and development solutions,
is focused on “equal opportunities in education.” Moreover, the Academy
was made available nationwide through digitalization in 2014. As Turkcell
Academy, we continue to take significant steps in improving Turkey
with our mission of learning “again and afresh”, which is one of the most
important integral parts of our vision.

Turkcell Academy improves its ecosystem
with value created through collaboration with
universities.
While we focus on the development, and ensure the continuity of our
employees’ and managers’ performance through our development
solutions, we also support and improve our promising youth with talent
in technology as well as our business partners. In parallel with this
object, 1.9 million hours of training were given to 925 thousand people in

the Turkcell Group ecosystem in 2015 at Turkcell Academy: The average
number of hours of education per person was 38.

In 2015, we continued to support and improve our new employees
at customer contact points and sales teams with “Video Training”,
“Beginners Coaching” solutions and “Beginning Work Programs”
containing in-class case applications aimed at preparing them for
providing service in Turkcell quality standards.

The MBA Certificate Program organized with Bahçeşehir University’s
contributions was one of the ongoing projects in 2015 geared at
increasing Turkcell corporate customer managers’ dominance in business
dynamics. Additionally, we initiated the “Real-Time Business Solutions”
development program for our Corporate Sales teams to transform
Turkcell’s corporate customers into “Real-Time Businesses” and facilitate
their lives by digitalizing their business processes.

In 2015, we prepared the “Retail Management Certificate Program”
with Koç University to increase the expertise of teams doing retail
management of exclusive and non-exclusive channels.

Another development program initiated in 2015 with Okan University
was the “TİM Coordinator Development Program” for developing the
management skills and retail visions of coordinators working at Turkcell
Communications Centers with responsibility of more than one store.
In 2015, we also reached 18,000 people with profile-based courses to
enhance the expertise of our field personnel.

2014 and 2015 Turkcell Digital Academy figures.

Regional academy educators support our
employees.
We have increased the knowledge and skills of our employees working
at Corporate Solutions Centers, Fiber Solutions Centers and TİMs with
our Regional Academy Educators, and contributed to finding solutions for
local needs.

With the leadership and skill development solutions that we offer as
Turkcell Academy, we aim to transform development investment and
carry Turkcell Group into the future, from a new manager right through to
executive officer level, into a measurable value for the company. In 2015,
we continued to improve Turkcell Group leaders with programs aimed at
approximately 950 managers in Turkcell Group with the Turkcell Academy
Leadership and Skill Development Team.

We initiated the “TİM Transformation Development Program” for the
employees of 60 renovated stores to enable a customer experience that
fosters the mindset of “Good job I bought it from Turkcell” and “Turkcell
will find me a solution”. In the program, including our employees and
store managers, we took part in simulation workshops increasing
knowledge with digital and in-class education in the areas of retail, smart
devices, customer processes and systems, service and sales skills from a
single point, unique customer experience and store management.
We increase expertise with our technology
development program.
As part of the Technology Development Program, we delivered 700
courses to increase expertise among technical teams. We also offered
development solutions for 297 analysts in the Analyst Development
Program and 57 project managers in the Project Management
Development Program. Furthermore, we contributed to the development
of 2,200 people working with Regional Solutions Partners for the
continuity of Turkcell’s superior network quality with 110 in-class and
distance courses.

We are educating leaders to carry Turkcell into the
future.

We reach all of our employees with the live
“Programs About Life” broadcast.
Once again, in 2015, we carried out “Programs About Life” courses to
support personal development. This year, we added experimental courses to
our program which has reached 28 thousand people in five years; and aimed
at increasing awareness of Turkcell Group employees by providing different
experiences such as sailing, the dialogue in the dark project, and piloting.

We support young people on their journeys to
improvement with our collaborations.
As Turkcell Academy, we support the developmental journey of young
people through university-industry cooperation realized to provide the
sector with a skilled workforce. Throughout October 2014 - December 2015,
we provided a skilled workforce to the informatics sector by reaching out
to 2,000 students at 14 universities with nine certificate programs prepared
with the corporate knowledge and experience of Turkcell Academy.

Bringing 16,000 students from 32 universities together with Turkcell Group
managers at 65 events, we lead the way in transferring Turkcell’s vision in
terms of “Transformation in Society with 4.5G”, “Mobile Innovation”, career,
leadership, new technologies and entrepreneurship.

2014 and 2015 Turkcell Digital Academy figures.

TURKCELL ANNUAL REPORT 201566

TURKCELL DIGITAL ACADEMY
“Turkcell Academy - Corporate” education
platform adds value to development of
corporates and ecosystems.
In 2014, we initiated Turkcell Academy, one of our solutions that brings
added value to the business world and society alike, by “creating equal
opportunities in accessing information”. With over 3,000 courses, more
than nine million views and providing the opportunity to learn English
and prepare for exams to over 600 thousand people, Digital Academy,
with its rich content, swiftly became a key resource for individuals and
institutions in 2015.

We embraced all of Turkey with “Turkcell Academy - Corporate”
initiated in 2015 by developing our area of activity primarily to spread
online education, which is rapidly spreading across the world, across
Turkey. We aim to provide an end-to-end service to our corporate
customers with online courses enabling a more efficient developmental
journey for their employees through Turkcell Academy - Corporate.

Turkcell Academy, operating in Turkey and worldwide, and improving
employees through new generation learning methods and educational
consulting services, contributes to a more efficient development of
corporate ecosystems. Employees are able to take courses anywhere
and anytime, be evaluated through tests and have access to the
most updated and reliable information through the Turkcell Academy
educational infrastructure.

We support career development with Turkcell
Academy’s certificate programs!
By establishing a strategic collaboration with Massachusetts Institute
of Technology (MIT) in accordance with its belief in equal opportunities
in education, we offered the first online Innovator’s MBA Program in
the world at EdX and Turkcell Digital Academy platform, free of charge.
With the program, prepared in Turkish and English and followed by 120
thousand people, we have provided access to courses equivalent to a
semester at MIT in the areas of “The Basics of Entrepreneurship” and
“Entrepreneurship From the User”.

In order to support the entrepreneurial ecosystem in Turkey, as Turkcell
Academy, we guided the participation of a Turkish entrepreneur, who
completed the Turkcell- MIT Innovator’s MBA program ranking first

in class, to the MIT Entrepreneur Bootcamp organized worldwide, to
which only a limited number of entrepreneurs qualify to attend.

In terms of collaborations with universities, we have played an
important role in providing the sector with an equipped workforce
by initiating the “Sales and Retail Development Program” and “SPL
License Level 1 - Program for Exam Preparation” with Bilgi University
and “Call Center Certification Program” with Ege University in 2015.
We also provided the opportunity for individuals wishing to improve
themselves in marketing to reach experts on digital courses in the
“Turkcell Academy Marketing Certification Program”, one of the most
searched programs by young people.

Developmental categories offered on the Turkcell Digital Academy
platform in 2015 were English, Exam Preparation, Certification
Programs, Personal Development, Entrepreneurship, Innovation,
Technology, Education without Borders, and Khan Academy Turkish.

We have raised awareness in society with our initiatives that enable
the disabled to be employed and educated, and that eliminate daily
obstacles, and through our “Education without Borders” initiative.
With foundational courses offered within Turkcell Digital Academy,
we have supported the development of the disabled and their families.

Turkcell Academy awarded “best corporate
university in the world”.
Having received over thirty prestigious international awards since its
establishment, Turkcell Academy received “The BEST” award in 2015
by being selected “The Best Corporate University” by the American
Association for Talent Development (ATD). In the evaluations made
by the ATD jury, the value Turkcell Academy added to Turkcell’s
ecosystem, sector and society came to prominence.

Another award given to Turkcell Academy came from Brandon
Hall, that has a 21-year deep-rooted past. The “Ground Breaking
Customer Experience” implementation designed to increase customer
satisfaction and benefit-oriented solutions sales was deemed
worthy of a silver prize in the “Best Program for Sales Training and
Performance” category.

Furthermore, in 2015, the European Business Awards awarded
Turkcell first prize in the “Customer Focus” category, marking a first,
having evaluated the value offered to its customers through Turkcell
Digital Academy.

TurkcellAkademi-220X280_ENG.pdf 1 23/02/16 15:54

CMY

ALWAYS FORWARD IN THE
INTERNATIONAL ARENA

As Turkcell Group, we continue our operations
in Ukraine, Belarus and the Turkish Republic of
Northern Cyprus through our subsidiaries and in
Kazakhstan, Azerbaijan, Georgia and Moldova
through our stake in Fintur. We also operate
in Germany under a marketing partnership
agreement.

TURKCELL INTERNATIONAL*
REVENUE BREAKDOWN - 2015

17%

15%

lifecell

KKTCell

BeST

Other

66%

* In 1Q15, Turkcell has divided its main operations into two groups: “Turkcell Turkey”
and “Turkcell International” within the framework of the strategy of providing converged
communications and technology service, and so as to enable economic integrity. The
operations of Turkcell International contain the operations of the following companies:
Cyprus Telekom, Eastasia, Euroasia, lifecell, Beltur, Beltel, Belarusian Telecom, UkrTower,
Global Ukraine, Turkcell Europe, Lifetech and Fintur.

TURKCELL ANNUAL REPORT 201570

TOP
MANAGEMENT
OF
SUBSIDIARIES

BURAK ERSOY
General Manager of lifecell

DINA TSYBULSKAYA
General Manager of BeST

İSMET YAZICI
General Manager of Turkcell Northern Cyprus

Burak Ersoy began working at Turkcell
in December 2006. Since October
2015, Ersoy has been the General
Manager of lifecell Ukraine. Prior
to being appointed to this position,
he had served as the Turkish Retail
Sales Manager, Small Scale Business
Channel Director and Executive
Vice President of Consumer Sales,
respectively. Beginning his professional
career in 1993 as an investment
advisor at Bayındır Menkul Kıymetler,
Ersoy worked as the Ankara Regional
Manager at Marsh until 1999 and
as Trade Marketing Manager, Sales
Development Manager and Turkey
Sales Manager at MarSA Kraft until
2006. Following his graduation from
the Middle East Technical University
Mining Engineering Department and
from Gazi University Marketing with a
post-graduate degree, Ersoy completed
the Strategic Development programme
at the University of Chicago Booth
School of Business.

In March 2016, Dina Tsybulskaya was
appointed as the General Manager
of BeST. Prior to being appointed to
this position, Tsybulskaya had worked
as the Chief Marketing Officer from
July 2012. Tsybulskaya began her
career in 2004 at the Belarus office of
Publicis, one of the largest advertising
agencies in the world. Transferring
to the telecommunication sector in
2007, Tsybulskaya worked as the
Marketing Director at the mobile
operator velcom until joining Turkcell
Group. Dina Tsybulskaya received her
bachelor degree of Foreign Languages
and International Politics from the
Minsk University (Linguistics) in 2000
and then received her post-graduate
degree in International Politics at the
European Humanitarian University.
Tsybulskaya also received professional
certificates and diplomas of General
Management and Economics from the
Ontario Business School in 1999, of
Marketing from the Charted Institute
of Marketing London in 2007 and
of Business Development for Top
Management from the TAG Business
School and INSEAD Business School
in 2012.

İsmet Yazıcı joined Turkcell in 2009.
Since December 2015, Yazıcı has been
working as the General Manager
of Turkcell Northern Cyprus. Before
being appointed to this position, Yazıcı
worked as the Deputy General Manager
of Sales and Business Development at
Global Tower between 2009-2010 and
then as the General Manager between
2010-2011. Between 2011-2015, he
served as the General Manager at
BeST, Turkcell’s subsidiary in Belarus.
Beginning his professional career in
1993, Yazıcı served as the Research &
Development Engineer, International
Sales Engineer, Romanian Country
Manager, Product Marketing Manager,
EMEA Region CDMA Business
Development Director, and Enterprise
Leader respectively at the Turkey and
USA offices of Nortel until 2009. İsmet
Yazıcı received his bachelor degree
in Electric-Electronics Engineering
at Hacettepe University in 1992, and
post-graduate degrees in Political
Science at Marmara University in 1998
and in International Marketing and
Management at the University of Texas
in 2001. Yazıcı also received his second
bachelor degree in 2011 from Istanbul
University Law School.

AHMET SEZER
General Manager of Inteltek

EREN EYGİ
General Manager of Azerinteltek

ÇAĞATAY AYNUR
General Manager of Turkcell Global Bilgi

UFUK M. BEYAZIT
General Manager of Turkcell Finansman A.Ş.

Ahmet Sezer joined İnteltek in 2004
as the General Manager. Sezer began
his career at Aselsan. Afterwards, he
served as the System Engineer, Senior
Deputy General Manager, Deputy
General Manager and General Manager
at IBM Turk, Intertech and Vestel Group
and Vestel Consulting respectively,
and General Manager at Probil. Ahmet
Sezer graduated from Istanbul Technical
University in 1982, having studied at
the Electronics and Communication
Engineering Department.

In July 2015, Eren Eygi was
appointed as the General Manager of
Azerinteltek. Beginning his professional
career at Saben in 1993, Eygi then
worked at Gama Construction Russia
as a Resident Engineer between 1994-
1995, Uniroyal Chemical Company
as the Regional Manager for Central
Asian Countries between 1996-1997,
Colgate-Palmolive as the Country
Manager of Uzbekistan, Turkmenistan,
Tajikistan, and the General Manager
in Kazakhstan between 1997-2008,
Kcell as the Marketing Director in
2008, and Danone CIS as the Country
Manager of Belarus and Danone
Russia as the Regional Commercial
Director and Regional Administrative
Director between 2008-2015. Eren
Eygi graduated from the Department
of Mechanical Engineering at Boğaziçi
University in 1993.

Çağatay Aynur joined Turkcell Group
in 2000 as an Account Manager. In July
2015, he was appointed as the General
Manager of Turkcell Global Bilgi. Prior
to being appointed to this position,
he served as the Regional Manager
in Charge of Strategic Customers and
Public Affairs, Sales Manager in Charge
of Large Scale Businesses, Corporate
Sales Director in Charge of Large Scale
Businesses and Corporate Sales Director
in Charge of Mid Scale Businesses.
Beginning his professional career at
Erkunt Döküm Sanayi, Çağatay Aynur
served as the Sales Manager as Martı
Ltd. Çağatay Aynur graduated from the
Department of Metallurgical Engineering
at Middle Eastern Technical University
in 1993.

Ufuk M. Beyazıt joined Turkcell Group
in 2013 as the Director of Treasury,
Tax and Risk Management and
appointed as the General Manager of
Turkcell Finansman A.Ş. (consumer
finance company) as of 2015. Beyazıt
began his professional career in
1994 as an Analyst at Bankers Trust,
then served respectively as Head of
Trading at Garanti Bank International
N.V. Amsterdam, Global Financial
Market Director at American Express
Bank and Standard Chartered Bank
in London, COO and Board Member
at Bank of America Merrill Lynch
Istanbul. Ufuk M. Beyazıt received his
bachelor degree from the Department
of Economy at Boğaziçi University
in 1995 and then received his post-
graduate degree on Money and
Banking at Istanbul University.

TURKCELL ANNUAL REPORT 201572

UKRAINE: lifecell

We became the sole owner of lifecell having acquired the 44.96% stake
of SCM Holdings Limited on June 26, 2015 for USD 100 million. Thus, we
aim to manage lifecell more efficiently so as to strengthen its position in
the market, and to increase its contribution to Turkcell Group.

Established in February 2005 to provide mobile service in Ukraine, lifecell
covers 99% of Ukraine’s population and 95% of its land area. As of the
end of 2015, the number of registered customers of lifecell was 13.5
million, while its 3-month active customers had reached 10.6 million.

lifecell acquired the most advantageous
frequency to provide outstanding customer
experience in 3G services.
lifecell was awarded the 3G Lot 1 package by placing the highest bid
(UAH 3.36 billion) at the national tender organized by the Ukrainian
Regulatory Government Committee in February 2015. lifecell’s 15-year
3G spectrum license for the Lot 1 package is the most advantageous and
investment promising lot providing the rights to use the 1920-1935 and
2110-2125 MHz band frequency.

Burak Ersoy who served as Senior Vice President of Retail and
Distribution at Turkcell was appointed the lifecell CEO as of October 1,
2015.

lifecell, the first operator in the market to provide 3G services in June
2015, uses the most advanced three carrier aggregation technology
enabling speeds of up to 63.3 Mbps. Providing 3G service in 7 city centers

and over 180 residential areas as at the end of 2015, lifecell plans to
provide 3G service in all regional centers in Ukraine within 18 months,
and in residential areas having over 10 thousand inhabitants within 6
years.

As at the end of 2015, lifecell had 2 million 3G data users active for 3
months and a 46% smartphone penetration.

We have restructured lifecell’s financial debt and
strengthened the company’s balance sheet.
In the third quarter of 2015, a significant part of lifecell’s debt was
converted into subordinated loans and the remaining debt was
restructured to prevent the risk of foreign currency fluctuation and
eliminate its potential impact on consolidated financials. Accordingly,
lifecell’s capital was increased by USD 686 million and lifecell had assumed
loans of UAH 2.5 million and a subordinated loan of USD 66 million.
Outstanding lifecell loans from financial institutions amounted to TRY 442
million, all denominated in local currency, as of December 31, 2015.

With annual revenue growth of 10% in local currency terms, Astelit’s
EBITDA also increased by 20% to UAH 1.5 billion with effective cost
management. Increasing year over year by 2.7 percentage points, the
EBITDA margin rose to 33.2%. In Turkish Lira terms, Astelit’s revenue
and EBITDA in 2015 declined by 26% and 19% to TRY 564 million
and TRY 188 million, respectively, given the significant local currency
devaluation.

LIFECELL: CONTINUES TO GROW

Revenue Growth (UAH)

10%

11%

13%

10%

EBITDA Margin (%)

25.5%

28.2%

30.5%

33.2%

Revenue Market Share*(%)

12%

14%

15%

16%

2011

2012

2013

2014

2015

* 2015 data has been calculated according to Q315 results.

TURKCELL ANNUAL REPORT 2015

WE INTRODUCED THE LIFECELL BRAND
TO OUR CUSTOMERS

The Company announced in January 2016 that it would be serving
its customers under the new “lifecell” brand within the scope of
the new era of 3G+ and Turkcell’s brand integration strategy. The
emergence of the new brand name and identity marks the merger
of brand image as a dynamic, young and innovative operator with
Turkcell’s technology leadership and experience. Under the brand
change, 184 stores in 91 Ukrainian cities will be redecorated with
the lifecell logo and Turkcell’s brand colors: yellow and blue. In
addition, 144 sales points will
serve customers under the
lifecell brand.

BELARUS: BeST

In July 2008, Turkcell acquired an 80% stake in Belarusian
Telecommunications Network (BeST). The first carrier in Belarus to
launch 3G services, in November 2009, BeST had increased its population
coverage to 99.8% (94.1% geographical coverage) within five years.
BeST’s subscriber market share reached 12.4% by the end of September
2015. The company is the third-ranked mobile operator in the market with
1.5 million subscribers.

In the third quarter of 2015, the outstanding debt of BeST was
restructured. Within this framework, BeST’s total existing intra-group
loans have been converted into a subordinated loan, directly from
Turkcell. As at the end of 2015, BeST had an outstanding loan of TRY 6
million to financial institutions.

NORTHERN CYPRUS:
KKTCELL

Kuzey Kıbrıs Turkcell (KKTCELL) was established in 1999 as a 100%
Turkcell-owned affiliate. Having operated until 2007 as part of a revenue-
sharing agreement with the Northern Cyprus Telecommunication
Department, the company signed an 18-year GSM license contract in the
same year. Offering 3G products and services in October 2008, Kuzey Kıbrıs
Turkcell conducted its 4G technology tests, which were initially undertaken
in 2009, publicly in 2014.

Having acquired international outflow in 2010, Kuzey Kıbrıs Turkcell
obtained authorization for internet service provision, infrastructure
installation and operation in 2012 under the Turkish Republic of Northern
Cyprus’ (the KKTC’s) Electronic Communications Law.

The company is the market leader in the KKTC with an infrastructure
covering 100% of the population and a market share of 71% according to
data from the Information and Communication Technologies Authority as of
the third quarter of 2015.

FİNTUR

Turkcell participates in mobile operations in Azerbaijan, Kazakhstan,
Moldova and Georgia through Fintur Holdings B.V. (Fintur), in which it
holds a 41.45% stake.
Fintur’s subscriber numbers decreased by 4.9% in 2015 on a yearly basis,
to 17.3 million. Its consolidated revenues were USD 1,325 million on a
yearly decrease of 26%. As accounted for by the equity method, Fintur’s
contribution to Turkcell’s 2015 net profit was USD 136 million.
On September 17, 2015, TeliaSonera, one of the major Turkcell shareholders
and 58.55% majority shareholder in Fintur, announced its intention to exit
its Eurasia operations, including Fintur.

On November 25, 2015, the Turkcell Board of Directors disclosed its
decision to offer a non-binding indicative offer for the acquisition of the
remaining shares in Fintur.

Kazakhstan: Kcell

Owned 51% by Fintur, Kcell was founded in 1998. Kazakhstan’s mobile
communication market leader Kcell’s total subscriber number had
decreased by 0.8 million over the previous year to 10.4 million by the end
of 2015 due to market competition.

Azerbaijan: Azercell

Fintur holds approximately a 51.3% stake in Azercell, a company
established in 1996 as the first GSM carrier in Azerbaijan and positioned
as the market leader. Azercell is also the majority shareholder of
Azeronline, an Internet service provider. By the end of 2015, Azercell had
4.1 million subscribers.

Georgia: Geocell

Owned 100% by Fintur, Geocell was founded in 1996 as Georgia’s first
GSM carrier. By the end of 2015, Geocell’s subscriber base was 1.9 million.

Moldova: Moldcell

Moldcell, 100%-owned by Fintur, was founded in 1999. By the end of
2015, Moldcell had 0.9 million subscribers.

Note: The definition of pre-paid mobile subscriber has changed at Fintur companies in Q115.
A user is defined as a subscriber if any transaction has been done within the past 3 months.
Previous periods have been recalculated according to this definition.

GERMANY:
TURKCELL EUROPE

Turkcell Europe, which was established in Germany as a Virtual Mobile
Network Operator in 2010, continues to operate through a “Marketing
Partnership” agreement with Telekom Deutschland Multibrand (TDM)
signed on August 27, 2014. As per the new business model, the
customers and operations of Turkcell Europe were transferred to TDM
on January 15, 2015. The Turkcell Europe brand continues to provide
services to its subscribers in Germany with the advantages arising from
the TDM partnership.

TURKCELL ANNUAL REPORT 201576

DOMESTIC SUBSIDIARIES

GLOBAL TOWER

Founded in 2006 as a 100% Turkcell affiliate with the vision of “making
communication possible everywhere,” Global Tower is Turkey’s first and
only technology infrastructure operator.

Having entered the market as a tower services provider, Global Tower
meets every technological infrastructure need of its industry customers,
including GSM and landline carriers, TV and radio broadcasters,
government institutions and network and telemetry service providers.

Offering fast and high-quality services to customers through
cooperation with its partners, Global Tower conducts leasing,
maintenance and new installation operations together with its
ecosystem comprising regional solution partners.

Global Tower helps its customers expand their networks and increase
their operational quality through end-to-end telecommunications and
broadcasting infrastructure solutions, turnkey installation services, and
professional operational and maintenance services. The company also
increases the operational efficiency levels of its customers by combining
networks of similar infrastructure through passive infrastructure
sharing, differentiating itself with its patents and useful business
models.

With Ukrtower, its investment in Ukraine, Global Tower has taken a step
toward becoming a regional player.

İNTELTEK

İnteltek (owned 55% by Turktell, 20% by Intralot SA, and 25% by
Intralot Iberia Holding SA) conducts Head Agency, Central Betting
Administration and Risk Management operations as part of Turkey’s
sports games betting administration through an exclusive contract with
Spor Toto.

Under the “iddaa” brand, and operating a game under the same name,
İnteltek is one of the world’s largest operators of state-controlled betting
games. In 2015, “iddaa” created over TRY 3 billion in added value for the
Turkish economy in the form of taxes and public shares.

Inteltek has operations in the same field in Azerbaijan through its 51%
stake in “Azerinteltek”, which successfully operates its “Topaz” brand.

TURKCELL FİNANSMAN
On August 25, 2015, the Turkcell Board of Directors decided upon
taking the necessary actions and obtaining the necessary approvals for
the establishment of a consumer finance company, the equity ceiling of
which will be up to TRY 500 million. In this regard, Turkcell Finansman
A.Ş. has commenced operations on February 2, 2016.

The company extends the Turkcell quality to the financial sector by
offering flexible payment solutions through financing loans for our
customers’ device needs.

TURKCELL GLOBAL BİLGİ
As Turkey’s leading customer experience center, Turkcell Global
Bilgi serves over 60 companies within six sectors across a total of
24 locations: 20 in Turkey and 4 in Ukraine. The company has a desk
capacity of 8,000.

Ranked among the 500 largest companies in Turkey, Turkcell Global
Bilgi generates the highest revenue in the call center sector based on
2014 revenues according to “Bilişim 500” (Informatics 500) research.

Turkcell Global Bilgi, making the first technology investment in Eastern
Turkey with Erzurum call center, is the first, and still the only Turkish
call center providing service abroad with its investments in Ukraine.

In revenue terms Turkcell Global Bilgi is the leader in the Ukrainian
outsourced-call center market. Furthermore, it ranks among the top
ten companies in terms of size in the Russian outsourced-call center
market.

TURKCELL TEKNOLOJİ
Turkcell Teknoloji conducts its R&D and innovation operations at
Turkey’s largest R&D Center in a single location, Küçükyalı Teknoloji
Plaza, where 691 R&D personnel are employed.

Enabling the end-to-end administration of product and service
development processes under a single roof, this center provides
services to Turkcell Group, as well as to 15 countries in each of its
specialty departments: Big Data Processing, Business Intelligence
Applications, Customer Relations Management Solutions, Network
Management Solutions, Location-Based Technologies, Next-
Generation Value-Added Services, SIM Technologies, Mobile
Financial Systems, Music and Entertainment Services, IPTV
Services, Revenue Management Competencies, Cloud Computing,
Terminal Applications, Mobile Marketing Solutions, Machine to
Machine (M2M) Communication Technologies, and Campaign
Management Systems.

Specific R&D fields, including Cloud Computing, Big Data, Micro
Location, Social Network Analyses, M2M, Customized Plan &
Package Offers and Campaign & Billing & Charging Systems
will determine the future orientation of developments, solution
management and project efforts at Turkcell Teknoloji.

Turkcell Teknoloji continues its successful
operations abroad.
Turkcell Teknoloji successfully maintains its technology and
software export activities in the Commonwealth of Independent
States, the Middle East, Africa and Europe. Sales and maintenance
after sales operations are carried out with 24 products abroad. Both
designed and developed by Turkcell Technology, RoamSelect is used
in 10 countries, SimSelect in 7 counties and Campaign Management
System (CMS) in 6 countries.

Turkcell Technology is the market leader in Turkish
telecommunications market with 514 national, 56 international
patent applications and 145 registered certificates to its name
since 2008. Turkcell Technology, aims to sustain its market leader
position going forward with 145 patent applications in 2015.

TURKCELL ANNUAL REPORT 201578

AWARDS

Webrazzi Awards
As Turkcell, we were selected as the “Brand Using Social Media the Best”
Stars of Technology
Our Turkcell My Dream Companion service, which makes it easier for the
visually impaired to access information, won the “Grand Jury Prize” at the
“Stars of Technology” award ceremony held for the first time this year by
Yıldız Teknik University Teknopark.
Brandon Hall Awards
Our HR implementations in management, sales, learning and technology
were awarded Excellence Awards by Brandon Hall, one of the most
prestigious consultancy companies in the world.

Capital Magazine Awards

Once again, we came first in Capital Magazine’s “Turkey’s Favorite
Companies” survey. According to the results of the 15th survey
published this year, Turkcell maintained its place at the top of the list
for the 7th time in the past 8 years.

Stevie Awards
Our telemarketing team was awarded the silver prize for “Sales Growth
Achievement” at The Stevie Awards, one of the world’s most significant
awards in the sales arena. We received this award, which recognizes
success in telemarketing growth, by significantly increasing our rate of
transforming calls into sales.

TMME Award

As Turkcell, we were awarded the most prestigious award, the Black Statue,
for maintaining our first place in customer satisfaction for 10 years in
“Turkey’s Customer Satisfaction Index” organized by KalDer. At the same
time, we also won the Golden Statue with the “Sustainable Success Award”
and the Silver Statue with the “2014 First Place In The Sector” award.

Mixx Awards
With our gnctrkcll operations, we won 4 awards at the Mixx Awards. We
received gold in the “Mobile Applications” category with gncapp, gold in
“Creativity Inspired By Data” once again with gncapp, gold in “Outdoor Digital”
with gncfest, and bronze in “Online Advertisement Film” with 14 Kubat.
4th Turkish Patent Awards
Our CEO Kaan Terzioğlu accepted the third place award of the Turkish
Patent League from President Recep Tayyip Erdoğan at the ceremony held
in Ankara.
Interactive Media Awards
With Passolig Social Media Management, we won the “Best In Class” award
in the “Social Networking” category at the Interactive Media Awards.
MIGFED Turkey’s Success Oscars 2014
For the way in which Turkcell reflects all work processes onto shareholder
expectations, it was awarded for creating social responsibility and
sponsorship projects in accordance with these expectations.
600 Minutes CFO Award
At the “600 minutes CFO” organization held by Management Events, our
“Online Limit Project,” which we had brought to life last year, was named
project of the year.

Contact Center World Awards

Global Telecom Business Innovation Awards

On ContactCenterWorld.com, we came first in the EMEA region in the
“Best Self Service” and “Best Home Agent Management” categories.

At the “Global Telecom
Business Innovation
Awards” where the
most innovative
applications around
the world in the
telecommunications
sector are selected,
Turkcell was considered
worthy of awards in
three categories, in
which it had made it to the finals. Accordingly, Turkcell Group received
the first prize in the “Business Services” category for Smart Energy
Tracking, in the “Wholesale Services” category for the 4G Roaming
project, and in the “Customer Services” category for the SMS Ticket
project brought to life by Belarus Life:).

SHV Energy Award
For the first time, a competition was organized in the “Sales and
Marketing” category at the Sales and Marketing Conference by the world’s
leading LPG company, SHV Energy, and held in Milan between April 22 –
24, 2015. The campaign, taking women’s budgets into account, and which
Turkcell Smart Women’s Club carried out with İpragaz, was the winner of
the “Sales and Marketing Award”.
Effie Awards
Gnctrkcll was presented with the Silver Effie for the “Love Bug Package” in
the Information Technologies category; Gnctrkcll was also awarded the Bronze
Effie for gncfest in the Tourism-Entertainment-Sports category; and Turkcell
Superonline was presented with the Bronze Effie for “Celebrities Getting
Angry At Buffering Internet” in the Information Technologies category.

MIT Technology Review

My Dream Companion Project, which Turkcell brought to life for the
visually impaired through the Young Guru Academy (YGA) partnership,
was presented with an award in a competition organized by the
MIT Technology Review magazine of the Massachusetts Institute of
Technology (MIT), one of the world’s most prestigious educational
institutions. Visually impaired Duygu Kayaman, one of the creators of
My Dream Companion service, was listed among “the innovators of
the year around the world” as determined by a jury in the ‘Innovators
Under 35’ Competition.

The Loyalty Awards

While the www.turkcell.com.
tr website and “My Account”
application, gathering all the
digital services and products
presented by Turkcell in a single
platform, came first in “Best User
Experience”, the Turkcell Platinum
application was widely praised.

IAC Awards
Turkcell and Turkcell Superonline projects were awarded in 11 different
categories at Internet Advertising Competition IAC Awards.

Summit International Awards
We returned home with four awards from the Summit International
Awards, which have been held since 1994, and which rank among the
most prestigious awards for marketing communications. While the
Turkcell TV+ advertisement received the gold prize, we were also
deemed worthy of bronze prizes for our “Kerem Bursin Buffering” work
in the “Online Display Advertising” category and our “Y Not” work in
the “Consumer Magazine” category. With the Money Bingo application,
which Global Bilgi had carried out at the New Year for the Money Club
Card, we also received a silver prize in the “Social Media” category.

2015 Top Ranking Performers Awards

Turkcell Global Bilgi came first in the world in the “Best Self Service”
category for the audio response system and in the “Best Home Agent
Management” category for the work from home model at the 2015
Top Ranking Performers awards organized by Contact Center World,
the world’s largest organization in the call center sector.

Information Technologies Without Boundaries Awards
As part of the 2015 Information Technologies Without Boundaries Awards
organized by the Turkish Informatics Platform Without Boundaries,
Turkcell was given the “Informatics Without Boundaries Education Award”
for its “Education Program Without Boundaries”.
Baykuş Awards
At the Turkish Researchers Association Baykuş Awards ceremony, we
were chosen from among hundreds of research projects for our “Jingle
Test Research” using Neuromarketing techniques, receiving the “Silver
Innovative Baykuş” award.
Digital Communication Awards
We received the gold prize in the “Mobile Display Ad – Custom” category
aimed at offline consumers to emphasize Turkcell Music’s offline listening
feature.
IAB MIXX Awards
With our Turkcell Connect (Internet in Offline Mode) project, we were
awarded first prize in the “Project & Strategy - Best Company” category at
the IAB MIXX Awards, one of the most prestigious contests in the world.
The Crystal Apple Awards
At the Crystal Apple Awards, organized annually by the Association of
Advertising Agencies and rewarding the success of people and establishments in
the advertising sector, we received 13 awards for our advertisement project.

TURKCELL ANNUAL REPORT 201580

Altın Örümcek Awards
We received five awards including “Turkey’s Best Corporate Web Site
Award” at the 13th Altın Örümcek Awards, which we entered with
www.turkcell.com.tr.
Smarties EMEA 2015
At the Smarties EMEA 2015 Global and Turkey awards, Turkcell
Healthmeter Application, Turkcell Connect, Turkcell Digital Academy and
Turkcell Platinum marketing efforts won 12 awards, including the “Best
in Show” award.
Boğaziçi Information Technologies Awards
At the Boğaziçi Information Technologies Awards organized for the third
time this year by Compec (Boğaziçi University Information Technologies
Club), we were awarded the first prize in the “Best GSM Operator” and
“Best Internet Provider” categories as a result of jury and public voting.
Boğaziçi Business World Awards
We were named “Technology Company of the Year” at the Boğaziçi
Business World Awards organized by the Boğaziçi University Engineering
Club within the context of Management Study with Executives (MSE)’15.
Leadership Award in Development of Technology
Brands
Within the context of Innovation Week, we were awarded the
“Leadership Award in Development of Technology Brands.”
New York W3 Awards
Turkcell Superonline won the gold award this year with Turkcell TV+
website in W3 awards competition, where projects from all over the
world are evaluated by Academy of Interactive and Visual Arts in New
York every year.

Turkcell Investor Relations Awarded First Place By TÜYİD

This year, Turkcell Investor
Relations came first in the
“Financial Results Disclosure
of the Year” category at
the awards, where the
best implementations are
evaluated by the Turkish
Investor Relations Society.

Brandon Hall Awards

With its successful programs, Turkcell Group won four awards at the
Brandon Hall “Excellence Awards”. The best companies in the world
competed in seven main categories within the program organized by
Brandon Hall, and regarded as the most prestigious award show in the
international arena.
Brandon Hall considered Turkcell worthy of an award for the “Journey
of HR Analytics at Turkcell” implementation, aimed at revealing
critical findings regarding organizational culture with a behavioral
model using Human Resources Analytics methods, and employing
data mining methods as an innovative example. Turkcell Group Human
Resources was awarded a golden prize in the “Best Advance in HR
Data Analytics” category.

Global Mobile Awards 2016

Social Innovation Award

My Dream Companion Audio Description, developed in partnership
with YGA and with the support of Audio Description Association
was recognized for "Best Use of Mobile for Accessibility and Social
Inclusion" by the GSMA at the Global Mobile Awards in Mobile World
Congress 2016.

Turkcell was awarded the “Social Innovation Award” for My Dream
Companion during the Innovation Week.

TURKCELL IN THE INTERNATIONAL MEDIA

Gavin Patterson
CEO
BT

Stéphane Richard
CEO
Orange

FIVE OPERATORS FROM RUSSIA
AND THE CIS

2015 could be a

break or make
year for BT’s CEO
Gavin Patterson.
The British operator
has dominated
headlines with its

proposed £12.5 billion acquisition
of EE. It is yet, however, to receive
approval for the deal from the
UK’s Competition and Markets
Authority and is attracting fierce
criticism from rivals such as
Vodafone, TalkTalk and Sky, which
have called for the operator to be
separated from Openreach. The
move for EE would give it a
stronghold on the quad-play
market in the UK, but at what
cost?

Alejandro Plater
CEO
Telekom Austria Group

Alejandro Plater

took the helm at

2015 could be a

Gavin Patterson
CEO
BT

Telekom Austria
Group after Hannes
Ametsreiter
unexpectedly
resigned in June to
break or make
become CEO of Vodafone
year for BT’s CEO
Germany. Plater’s appointment
Gavin Patterson.
was backed by the group’s two
The British operator
majority shareholders, América
has dominated
Móvil and Österreichische Bundes-
headlines with its
und Industriebeteiligungen (ÖBIB).
proposed £12.5 billion acquisition
It has been viewed by some
of EE. It is yet, however, to receive
market watchers as evidence of
approval for the deal from the
América Móvil’s growing influence
UK’s Competition and Markets
at the company, which has been
Authority and is attracting fierce
one of its more successful
criticism from rivals such as
acquisitions in the European
Vodafone, TalkTalk and Sky, which
market to date.
have called for the operator to be
separated from Openreach. The
move for EE would give it a
stronghold on the quad-play
market in the UK, but at what
cost?

Alejandro Plater
CEO
Telekom Austria Group

Alejandro Plater

took the helm at

Telekom Austria
Group after Hannes
Ametsreiter
unexpectedly
resigned in June to
become CEO of Vodafone
www.globaltelecomsbusiness.com
Germany. Plater’s appointment
was backed by the group’s two
majority shareholders, América
Móvil and Österreichische Bundes-
und Industriebeteiligungen (ÖBIB).
It has been viewed by some
market watchers as evidence of
América Móvil’s growing influence
at the company, which has been
one of its more successful
acquisitions in the European
market to date.

Serving as chief

executive of

Orange since
September 2009,
Stéphane Richard
became the centre
of political
controversy recently after
suggesting the company would
cease conducting business in
Israel during a trip to Egypt. His
comments attracted death threats
and he subsequently travelled to
Israel to apologise in person to
the nation’s prime minister.
Despite this, he will be satisfied
with Orange’s performance in the
first half of 2015, which saw the
rapid growth of high-speed fixed
and mobile services in Europe and
the sustained growth of mobile
services in Africa and the Middle
East.

took the reins

Kaan Terzioglu
CEO
Stéphane Richard
Turkcell Group
Kaan Terioglu
CEO
Orange
Serving as chief

as Turkcell Group’s
new CEO in April
executive of
and since then has
Orange since
set about redefining
September 2009,
the operator as an
Stéphane Richard
integrated communications and
became the centre
technology services provider. His
of political
first move was to integrate
controversy recently after
Turkcell’s mobile and fixed
suggesting the company would
businesses, as well as place a
cease conducting business in
stronger focus on products such
Israel during a trip to Egypt. His
as its TV platform, Turkcell TV+.
comments attracted death threats
The operators has also
and he subsequently travelled to
ambitiously moved to be a
Israel to apologise in person to
regional pioneer in 5G, signing
the nation’s prime minister.
three MoUs with Ericsson, Huawei
Despite this, he will be satisfied
and Aselsan. At the end of
with Orange’s performance in the
Terioglu’s first three months in
first half of 2015, which saw the
office, Turkcell Turkey registered
rapid growth of high-speed fixed
9.2% growth while Turkcell Group
and mobile services in Europe and
revenues grew by 5.8%.
the sustained growth of mobile
services in Africa and the Middle
East.

Kaan Terzioglu
CEO
Turkcell Group

Kaan Terioglu

took the reins

as Turkcell Group’s
new CEO in April
and since then has
set about redefining
the operator as an

integrated communications and
technology services provider. His
first move was to integrate
Turkcell’s mobile and fixed
businesses, as well as place a
stronger focus on products such
as its TV platform, Turkcell TV+.
The operators has also
ambitiously moved to be a
regional pioneer in 5G, signing
three MoUs with Ericsson, Huawei
and Aselsan. At the end of
Terioglu’s first three months in
office, Turkcell Turkey registered
9.2% growth while Turkcell Group
revenues grew by 5.8%.

Jean-Yves Charlier
CEO
VimpelCom

Andrei Dubovskov
CEO
MTS

Since replacing

Jo Lunder as
group CEO in April
2015, Jean-Yves
Charlier has laid
out his vision for
VimpelCom by

promising to transform it into a
digital operator, rather let it
become a dumb pipe. Previously
the CEO of French mobile operator
SFR, he resigned following the
company’s acquisition from
Vivendi by Altice. He was also
previously CEO at Promethean, a
specialist in interactive learning
technologies, as well as Colt in
the UK.

has remained

Andrei Dubovskov

bullish as MTS
continues to face
macroeconomic
volatility in its
markets of

operations. In spite of that, the
company has maintained steady
profitability with a group adjusted
OIBDA margin at 41.2%.
Dubovskov maintains the company
has benefitted from growing
smartphone penetration as well
as increased data usage in all
customer segments.

➧

FIVE OPERATORS FROM RUSSIA
AND THE CIS

Jean-Yves Charlier
CEO
VimpelCom

Andrei Dubovskov
CEO
MTS

20 of the 20
Top Telcos
Get Better Results

Jo Lunder as
group CEO in April
2015, Jean-Yves
Charlier has laid
out his vision for
VimpelCom by

bullish as MTS
continues to face
macroeconomic
volatility in its
markets of

Since replacing

Andrei Dubovskov

has remained

➧

oracle.com/communications
or call 1.800.ORACLE.1

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.
Oracle and Java are registered trademarks of Oracle and/or its affiliates.

Global Telecoms Business September/October 2015 49

20 of the 20
Top Telcos
Get Better Results

www.globaltelecomsbusiness.com

Global Telecoms Business September/October 2015 49

oracle.com/communications
or call 1.800.ORACLE.1

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.
Oracle and Java are registered trademarks of Oracle and/or its affiliates.

TURKCELL ANNUAL REPORT 2015Turkcell CEO Kaan Terzioğlu appeared in the leading international media outlets covering business, finance and technology, sharing his views on Turkcell’s growth targets.Turkcell’s leadership in Turkey’s 4.5G tender, 5G partnerships, investments in Ukraine, dividend payment, globally relevant services were extensively covered by international media.Kaan Terzioğlu was listed among the 10 most influential names in the European telecommunications sector and the 100 most influential names in the global telecommunications sector by Global Telecoms Business Magazine.82

TURKCELL’S 15TH YEAR AT BIST AND NYSE

The shares of Turkcell, the first and only Turkish company to
be listed on the world’s leader in capital raising and equities
trading, the New York Stock Exchange (NYSE), have been
traded at the Borsa Istanbul and NYSE since 2000.

With the steps we have taken as “Turkey’s
Turkcell”, we, once again, took pride in being one
of the leading representatives of our country
in the international arena. As a group providing
converged telecommunications services, we have
broken new grounds and led the way in many areas
while progressing to where we are today. One to
name is our listing on the NYSE, the arena of global
players, fifteen years ago. We gathered with our
shareholders in New York by organizing a series of
events for the 15th anniversary of our listing on the
Borsa Istanbul and NYSE.

September 1, 2015 NYSE Closing Bell Ceremony-New York

We marked Turkcell’s 15th year of being listed on
the NYSE with a traditional Closing Bell ceremony
on Tuesday September 1, 2015. Mr. Ahmet Akça,
Chairman of the Turkcell Board of Directors,
rang the Closing Bell on behalf of Turkcell at the
ceremony. Apart from the Turkcell delegation
and NYSE representatives, Mr. Hüseyin Zafer,
Executive Officer at Borsa Istanbul and Mr. Ertan
Yalçın, the Turkish Consul General in New York
joined the ceremony hosted by Mr. Tom Farley, the
President of the NYSE, along with members of the
press.

Turkcell ranks within

the top 500

among more than 2,400 companies
trading on the NYSE.

TURKCELL ANNUAL REPORT 2015201120052000201584

TURKCELL RECEPTION
IN HONOR OF 15th
ANNIVERSARY
In honor of the 15th anniversary
of Turkcell’s listing, we organized
a reception under the auspices of
the Turkish Consulate General in
New York at The Plaza Hotel New
York on August 31, 2015. Over
one hundred guests honored the
reception, to which prominent
names from the American and
Turkish business world, and
public and non-governmental
organizations were invited.

The evening began with an
introductory film about Turkcell,
which marked its first step
towards being publicly listed in
2000, preceded by the opening
speeches of hosts Turkcell
Chairman Mr. Ahmet Akça and
CEO Mr. Kaan Terzioğlu. At the end
of the evening, commemorative
plaques were presented to the
representatives of the New York
Stock Exchange, Borsa İstanbul
and the Turkish Consulate General
in New York in gratitude for their
contributions throughout Turkcell’s
15 years of listing. Following
plaque presentations to Mr. Stefan
Jekel, Head of International Client
Services at the New York Stock
Exchange, Mr. Hüseyin Zafer,
Executive Officer at Borsa İstanbul;
and Mr. Ertan Yalçın, the Turkish
Consul General in New York, the
honorary guests Eric Adams, the
Brooklyn Borough President and
Yaşar Halit Çevik, an Ambassador
and Permanent Representative
were also thanked for attending the
event.

HÜSEYİN ZAFER
Executive Officer,
Borsa İstanbul
“Turkey’s Turkcell, the good
governance practices and
growth of which we closely
observe, is of great value for
our stock exchange.”

AHMET AKÇA
Chairman of the
Turkcell Board of Directors
“Our main source of pride is
the trust our customers and
shareholders put in us.”

STEFAN JEKEL
Head of International Client Services,
New York Stock Exchange
“We truly enjoy the
partnership with Turkcell in
the global capital markets.”

TURKCELL_NYSE_AMERIKA_ILAN_ING_22x28.pdf 1 29/02/16 11:32

TURKCELL MANAGEMENT PAYS A VISIT TO TECHNOLOGY GIANTS
The Board of Directors and senior management of Turkcell paid a visit
to the foremost technology companies of the world in Silicon Valley.
Company success stories, sector dynamics and potential synergies

were discussed at the meetings held with the senior executives of
technology giants.

HUAWEI87

TURKCELL ANNUAL REPORT 2015HUAWEIHUAWEIUBERINTELGOOGLEGOOGLEQUALCOMMGOOGLEQUALCOMMCORPORATE
GOVERNANCE

INVESTOR RELATIONS

Turkcell is the only Turkish company listed on the BIST and NYSE. Its Eurobond issued this year
trades at the Irish Stock Exchange.

SHARE PERFORMANCE
Turkcell shares commenced trading simultaneously at the Borsa Istanbul
(BIST) and the New York Stock Exchange (NYSE) on July 11, 2000.
Turkcell shares are traded as American Depositary Shares (ADS) at the
BIST under the TCELL ticker, and at the NYSE under the TKC ticker. Two
ADSs represent five shares (1 ADR = 2.5 shares). Turkcell’s issued capital
is a nominal TRY 2,200,000,000, and each share represents TRY 1 nominal
value with 2,200,000,000 shares in total. Being the only Turkish company
to be listed on both BIST and NYSE, Turkcell was the fourth largest

company among those being traded at the BIST with a market value of
TRY 21.8 billion (USD 7.5 billion) as of December 31, 2015.

Turkcell marked its 15th year of listing on September 1, 2015 at the
Closing Bell Ceremony held at the NYSE.

On October 16, 2015, Turkcell issued bonds of an aggregate principal
amount of USD 500 million with a 10 year maturity and coupon rate of
5.75% based on a 5.95% reoffer yield to be traded on the Irish Stock
Exchange.

SHARE PERFORMANCE (RELATIVE)

1.2

1.1

1.0

0.9

0.8

0.7

0.6

SHARE PERFORMANCE*

TCELL (TRY)

2011

2012

2013

2014

Lowest

Highest

Closing

6.39

9.51

7.71

7.03

8.86

9.36

10.07

11.07

12.81

13.55

10.03

9.86

12.42

TKC (USD)

2011

2012

2013

2014

Lowest

9.00

9.41

11.25

10.48

2015

9.90

2015

8.38

Jan-15

Feb-15

M ar-15

Apr-15

M ay-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Highest

15.40

14.02

15.43

14.42

14.35

Closing

10.21

14.02

11.60

13.13

8.49

BIST100

Turkcell

Source: Bloomberg

*Share prices are adjusted for dividend payments. (Source: Bloomberg)

OUR BUSINESS PRINCIPLES
We adopt corporate governance principles.
The basic work policies adopted by the Turkcell Investor Relations
Department include accessibility, rapid feedback to stakeholders and
analysts, and always informing stakeholders transparently, consistently
and in a timely fashion. Accordingly, we disclose information to all
investors through user-friendly, up-to-date website, Investor Relations
Application (IR App) and Twitter on a timely basis.

Investor Relations team members have a deep and active understanding
of the company and sector dynamics, and are able to clearly
communicate the company’s story. Thus, the Turkcell Investor Relations
team fully understand and analyze the company, better comprehend
its strategies, and make a difference to stakeholders by communicating
those strategies in the most efficient manner possible. As the Investor
Relations Department, throughout 2015, we:
• held 460 meetings with analysts and institutional investment funds,
• participated in 15 investor conferences,
• met with 53 bond investors at the bond roadshow held in America and

Europe and

• shared our strategies and medium-term targets with a group of
approximately 100 analysts and investors at the meeting held in
London on November 9.

35 analysts, almost half of which are foreign companies, actively cover
Turkcell. As of the end of 2015, there were 10 analysts with “buy”, 18
analysts with “hold”, and 7 analysts with “sell” recommendations.
We work to provide the maximum benefit to
Turkcell and our stakeholders.
Investor relations standards are shaped by the constantly developing
and intensifying needs of the capital markets. The implementation of any
practice that carries a publicly traded company one step further creates a
strategically valuable differentiation between companies and, ultimately,
contributes to the Turkish Capital Markets.
Our focus is on creating value for our
stakeholders.
Our aim is to transparently share the value created by Turkcell
with our stakeholders, be it through financial and operational
performance, strategic priorities, or via our strong reputation and
powerful brand management, always ensuring that the company is well
understood.

We work to ensure a high level of satisfaction.

First place from TÜYİD in the “Financial
Results Disclosure of the Year” category

Turkcell was once again awarded first place in the “Financial Results
Disclosure of the Year” category, at the awards where the Turkish
Investor Relations Society (TÜYİD) appraises the best practices.
Turkcell was praised for its practice in its extensive financial
disclosures where the best practices are evaluated according to the
score cards prepared by investor relations experts and objective
evaluation made by KPMG.

We make a difference with our communication.
Turkcell believes in simultaneous and open communication with its
stakeholders. In this regard, our Board members, CEO and executive
management shared their 3-year targets at the “Turkcell Capital Markets
Day” openly held for the participation of all our analysts and investors, in
London in November. Our stakeholders had the opportunity to listen to
our executive officers outlining our strategies towards leadership in the
telecommunication industry, which we aim at achieving within 3 years.

As Turkcell Investor Relations, we use social media tools such as
Twitter and the Investor Relations application as well as communication
channels such as the web site and Public Disclosure Platform to provide
extensive, accurate and timely information to our investors. With the
Turkcell IR App, our investors and analysts can follow the most recent
announcements, financial quarter results, press releases, operational
results, presentations and annual reports in both Turkish and English on
iOS and Android based smartphones and tablets, at any time and from any
location.

We care about sustainability.
In 2014, the Borsa Istanbul launched the Sustainability Index. This index
indicates each company’s approach to significant sustainability-related
issues important for both Turkey and the wider world, including global
warming, the depletion of natural resources, including water, as well as
healthcare, safety, and employment. In total, the index enables companies’
activities and decisions to be assessed from an independent perspective,
and then be confirmed by Borsa Istanbul. In the second year of the
Sustainability Index comprising November 2015 - October 2016, Turkcell,
one of the 29 companies in the index, has remained on it since its inception.

TURKCELL ANNUAL REPORT 201592

Turkcell issued a 10-year Eurobond.
Turkcell issued a USD 500 million Eurobond on October 15, 2015.
Almost fourfold oversubscribed, this has been the first and only
Eurobond issuance at this size in international markets by a
Turkish company from the non-financial sector in 2015. Turkcell
Eurobond is traded at the Irish Stock Exchange.

Despite the volatility of international markets and the distrustful
view of the global market towards developing countries, Turkcell
has succeeded in generating funds through the international
capital markets through its 10-year Eurobond which had a high
demand from US and Europe.

October 2015

Ekim 2015

Turkcell İle*şim
Hizmetleri A.Ş.
As the Issuer

USD 500,000,000
5.750% Notes
due October 2025

Turkcell İle*şim
Hizmetleri A.Ş.
İhraççı

500,000,000 ABD Doları
%5,750 Eurobond
Ekim 2025

Turkcell Capital Markets Day - November 9, 2015 - London

CONTACT INFORMATION FOR INVESTOR RELATIONS

Tel: +90 (212) 313 18 88, Fax: +90 (216) 504 40 58, E-mail: investor.relations@turkcell.com.tr
Web: http://www.turkcell.com.tr/en/aboutus/investor-relations
Address: Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No:20 B Blok Küçükyalı Ofispark, 34854 - Maltepe / İSTANBUL

RESTRICTED

CREDIT RATING GRADES

Only Turkish company with “investment
grade” rating from big 3 credit rating agencies!

In 2015, Turkcell continued to strengthen its financials with its Eurobond
issue and the signing of loan agreements with international banks. The
clearest sign of a balanced improvement in balance sheet structure and
international market confidence in Turkcell is the “investment grade”
level ratings Turkcell has received from three leading international credit
rating agencies. Turkcell’s bond is also rated in line with the company’s
“investment grade” rating by all three rating agencies.

STANDARD & POOR’S
Standard & Poor’s raised Turkcell’s long-term credit rating to investment
grade level “BBB-” from “BB+” with a “stable” outlook in September
2015.

The upgrade primarily reflects the improvement in Turkcell’s corporate
governance, fully functioning and effective decision making in the
structure of the Board of Directors and clearly set long-term financial
policy targets. S&P believes that Turkcell will maintain its leading
position and profitability in the future due to its superior network
quality, and strong spectrum position and reach, as well as its established
brand.

MOODY’S
Moody’s upgraded Turkcell’s long-term credit rating to investment grade
level “Baa3” from “Ba1” with a “negative” outlook in September 2015.

The upgrade primarily reflects a strong market position, improving
corporate governance and strong financial profile and liquidity.

FITCH
Fitch assigned Turkcell a long-term investment grade level “BBB-” credit
rating with a “stable” outlook in September 2015.

Fitch’s key rating drivers include Turkcell’s strong position in the Turkish
mobile market, growing fixed line operations and sound financial
performance.

S&P

MOODY'S

FITCH

Outlook

Grade

Outlook

Grade

Outlook

Grade

Last Update

September 2015

Local Currency

Stable

LT Foreign Currency

Stable

BBB-

Negative

Baa3

Stable

BBB-

TURKCELL ANNUAL REPORT 201594

IMPORTANT DEVELOPMENTS AFTER THE REPORTING PERIOD

PUBLIC DISCLOSURES FROM JANUARY 1 - MARCH 4, 2016*

January 28, 2016
Amendment of Articles of Association
Turkcell Board of Directors has decided to amend the Articles of
Association as attached, subject to the approval of the Capital Markets
Board and the Ministry of Customs and Trade in accordance with the

principles of Capital Markets Law, Turkish Commercial Code, and
related legislation. This amendment is subject to approval of General
Assembly.

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. AMENDMENT on ARTICLES OF ASSOCIATION

CURRENT VERSION

AMENDED VERSION

ARTICLE 3 - PURPOSE AND SUBJECT-MATTER

ARTICLE 3 - SCOPE OF BUSINESS

The Company is incorporated primarily for the provision of any
telephone, telecommunication and similar services in compliance
with the Telegraph and Telephone Law number 406 and services
stated in the GSM Pan Europe Mobile Telephone System bid that was
signed with the Ministry of Transportation and to operate within
the authorization regarding the IMT-2000/UMTS services and the
infrastructure.

The Company is incorporated to primarily provide the services
authorized within the context of concession agreements signed with
the Information and Communications Technologies with regard to
“Granting License of Establishing and Operating GSM Pan Europe
Mobile Telephone System”, “Establishing, Operating and Providing
IMT-2000/UMTS Infrastructures and Services” 2000/UMTS ture bidof
concession contract and “Authorization Certificate for Limited Usage
Rights with regard to IMT Services” and any other services authorized
pursuant to relevant legislation and regulatory decrees.

In order to achieve the above-mentioned subject matter, the Company
may:

In order to achieve the above-mentioned scope of business, the
Company may:

1) enter into service, proxy, agency, commission agreements,
undertakings and any other agreements within the purpose and the
subject-matter of the Company and within this scope obtain short,
middle and long term credits and loans or issue, accept and endorse
bonds, extend credits to the companies in Turkey and abroad, in which
it has direct or indirect shareholding interest, to its main company and
group companies, in Turkish Lira or other foreign currencies, on condition
that such extensions do not contradict with laws and regulations.

2) cooperate, establish new partnerships or companies or enterprises
with existing or future local or foreign individuals or legal entities;
completely or partially acquire local or foreign companies or enterprises,
participate in share capitals of such companies or enterprises, establish
representative offices in Turkey and abroad, participate in foundations
constituted for various purposes, reserve part of the profit for or be
authorized to pay dividends and make donations to this kind of real or
legal person and in the event a donation is made or part of the profits
is reserved for foundations or this kind of real or legal entity, the rules
provided by the Capital Markets Board will be complied with and the
notifications required by the Capital Markets Board will be made,

2) cooperate, establish new partnerships or companies or enterprises
with existing or future local or foreign individuals or legal entities;
completely or partially acquire local or foreign companies or enterprises,
participate in share capitals of such companies or enterprises, establish
representative offices in Turkey and abroad, participate in foundations
constituted for various purposes, establish foundations, reserve assets
to these foundations, reserve part of the profit for or be authorized to
pay dividends and make all kind of donations and aids to this kind of real
or legal person without vitiating its purpose and subject matter and
provided that, those are not contrary to transfer pricing regulations
of Capital Market Law and other related legislation, necessary public

*As per Capital Markets Board Communiqué regarding Material Events and in line with the Company’s Disclosure Policy, such events were announced through Public Disclosure Platform
throughout 2015.

CURRENT VERSION

AMENDED VERSION

3) issue, acquire, sell, create security over or to perform any other
legal actions of all kind of securities, commercial papers, profit sharing
instruments, bond and convertible bonds via board resolutions under
the conditions authorized by the relevant legislation provided that
such actions are not qualified as brokerage activities and portfolio
management;

disclosures are made and donations made within a year are submitted
to the shareholder’s information at general assembly.

3) issue, acquire, sell, create security over or to perform any other
legal actions of all kind of securities, commercial papers, profit sharing
instruments, bond and convertible bonds via board resolutions when
authorized by the relevant legislation and provided that such actions
are not qualified as investment services and activities.

4) enter into licence, concession, trademark, know-how, technical
information and assistance and any other intellectual property right
agreements and acquire and give a license to such rights and register them;

4) enter into license, concession, trademark, know-how, technical
information and assistance and any other intellectual property right
agreements and acquire, lease and register them;

5) acquire, lease, rent and sell of all types of movable and immovable
property; construct plant or any other buildings; enter into financial
leasing agreements; acquire any of the personal or property rights
regarding movable and immovable property, including but not limited
to, promise to sell, pledges, mortgages and commercial business
pledges; register them in title deeds; accept mortgage from third
parties; discharge pledges and mortgages created in favour of the
Company; create security over movable and immovable properties
owned by the Company, including creation of mortgage, pledge and
commercial enterprises pledge, on its own or in favour of the companies
which are fully consolidated in financial statements of the Company
or in favour of the third parties’ on condition that the context of
the ordinary business operations of the Company directly requires,
as necessitated by the purpose and subject matter of the Company,
provided that the Company shall comply with the principles regulated
in accordance with the capital markets legislation regarding the
transactions of providing guarantees or pledges including mortgages to
third parties and disclosures necessary in accordance with the Capital
Market Board within the scope of special circumstances, be made in
order to inform investors in transactions to be performed in favour of
third parties.

5) acquire, lease, rent and sell of all types of movable and immovable
property; construct plant or any other buildings; enter into financial
leasing agreements; acquire any of the personal or property rights
regarding movable and immovable property, including but not limited
to, promise to sell, pledges, mortgages and commercial business
pledges; register them in title deeds; accept mortgage from third
parties; discharge pledges and mortgages created in favour of the
Company; create security over movable and immovable properties
owned by the Company, including creation of mortgage, pledge and
commercial enterprises pledge, on its own or in favour of the companies
which are fully consolidated in financial statements of the Company
or in favour of the third parties’ on condition that the context of the
ordinary business operations of the Company directly requires, as
necessitated by the scope of business of the Company, provided that
the Company shall comply with the principles regulated in accordance
with the capital markets legislation regarding the transactions of
providing guarantees or pledges including mortgages, to third parties
and regarding disclosures necessary in accordance with the Capital
Market Board in case of special circumstances, be made in order to
inform investors in transactions to be performed in favour of third
parties;

6) enter into other enterprises, relevant transactions and agreements
necessitated by the purpose and the subject matter of the Company;

6) found other enterprises and enter into relevant transactions and
agreements necessitated by the scope of business of the Company;

7) register SIM card trademark and symbol; sell, lease, re-purchase, re-
sell the same; agree with dealers abroad or in the country for the sale of
such cards; export same; import other SIM cards and perform all related
actions;

In addition, if it is deemed appropriate and beneficial for the Company to
perform any transactions other than those stated above, upon the

The Company, by resolution of General Assembly may perform
activities other than listed herein, by fulfilling related legal

TURKCELL ANNUAL REPORT 201596

CURRENT VERSION

AMENDED VERSION

proposal of the Board of Directors, the matter shall be submitted to the
approval of the General Assembly and may be performed pursuant to
the resolution of the General Assembly. In order for such changes to be
effective, the permissions of the Foreign Investment Directorate, the
Ministry of Industry and Commerce and the Capital Market Board shall
be obtained, registered with the Trade Registry and announced in the
Trade Registry Gazette as amendments to the Articles of Association.

requirements and in condition that these activities are not in
contradiction with legislation, which are related to or to be deemed
expedient for its subject matter.

ARTICLE 4 – HEADQUARTER AND BRANCHES

The Company shall be headquartered in Istanbul, at the address of
Turkcell Plaza, Meşrutiyet Caddesi, No:153, Tepebaşı, Beyoğlu/İstanbul.

The headquarters of the Company shall be in Istanbul, at the address
of Aydınevler Mahallesi, İnönü Caddesi, No:20, Küçükyalı Ofispark,
34854, Maltepe-İstanbul.

The new address, whenever changed, shall be registered with the Trade
Registry and published in the Trade Registry Gazette and notified to the
Capital Market Board and the Ministry of Industry and Commerce.

The new address, whenever changed, shall be registered with the Trade
Registry and published in the Turkish Trade Registry Gazette and notified to
the Capital Market Board as well as the Ministry of Customs and Commerce.

Any notification sent to the address registered and published shall be
deemed as received by the Company. If the Company changes its address
and does not register the new one in due time, the situation will be
deemed as one of the termination causes of the Company.

The Company may open branches and representative offices in or outside
Turkey provided that the Ministry of Industry and Commerce, Foreign
Investment Directorate and the Capital Market Board are informed
thereof.

The Company may open branches and representative offices in or outside
Turkey provided that the Ministry of Customs and Commerce, Foreign
Investment Directorate and the Capital Market Board are informed
thereof.

ARTICLE 6 – SHARE CAPITAL

The registered capital of the Company is 2.200.000.000
(Twobilliontwohundred-million) New Turkish Liras, divided into
registered shares of 2.200.000.000 (Two-billiontwohundredmillion),
having a value of 1.- (One) New Turkish Liras each.

The Company’s issued share capital, is 1,474,639,361
(Onebillionfourhundred-seventyfourmillionsixhundredandthirtyninet
housandthreehundredandsixtyone) New Turkish Liras and fully paid in
compliance with the Incentive and Investment Allowance Certificate of
Foreign Capital General Directorate of the Undersecretariat of Treasury
of the Prime Ministry of the Republic of Turkey dated 23 August 1993
and numbered 1746 and its special conditions dated 19.12.1994 and
Incentive and Investment Allowance Certificate dated 6 November
1997 and 2741 numbered and its special conditions dated 16.07.1999,
16.12.1999 and 30.11.2000 and Incentive and Investment Allowance
Certificate dated 26 February 2001 and 3704 numbered and is divided
into 1,474,639,361 (Onebillion fourhundredandseventyfourmillion
sixhundredandthirtyninethousandthreehundredandsixtyone) shares

The company adopted the registered capital system according to the
Capital Market Code and carried the said system into practice by
Capital Market Board’s permit dated 13.04.2000 and numbered 40/572.

The ceiling for registered capital of the Company is 2.200.000.000
(Twobilliontwohundred-million) TL and divided into registered share
of 2.200.000.000 (Two billiontwohundred million) having a value of
1,00 (One) Turkish Lira each.

The Company’s issued share capital is 2.200.000.000
(Twobilliontwohundred million) TL and fully paid and is divided into
registered share of 2.200.000.000 (Two billion and two hundred million
Turkish Lira) shares having a value of 1,00 (One) TL each.

The authorization of the ceiling of registered capital given by the
Capital Market Board, shall be effective for the years between 2016-
2020 (5 years). Even though the ceiling of the registered capital is not
reached, after the year 2020, it is mandatory for the Board of Directors,
to obtain permit of the General Assembly in order to pass a resolution
to increase the capital by way of also having authorization of Capital
Market Boards for the ceiling previously authorized or for a new ceiling

CURRENT VERSION

AMENDED VERSION

amount which is not more than five years. In case the abovementioned
authorization is not taken, capital increase cannot be made with a
Board of Directors resolution.

The Board of Directors, between the years 2016-2020, in accordance
with the provisions of Capital Market Act, when necessary, is
authorized to increase the issued share capital by issuing registered
shares up to the authorized share capital; and authorized to resolve
on the matters which are relating to limiting the right of obtaining
new shares of the shareholders’ and issuing of premium shares.
Authorization to limit the right of obtaining new shares shall not be
used unequally amongst the shareholders.

Shares representing the issued share capital are tracked in connection
with the dematerialization principles.

ARTICLE 7 - SHARE TRANSFER

Transfer of Shares is subject to the provisions of the Turkish Commercial
Code, Capital Market Legislation and the Regulations on Value Added
Telecommunications Services.

The Board of Directors may restrict the share transfers to the foreigners
in order to comply with the restrictions concerning the shareholders
determined under the Regulations on Value Added Telecommunications
Services and/or other legislation, of which the Company is subject to.

Transfer of shares is subject to the provisions of the Turkish Commercial
Code, Capital Market Legislation and Regulation on the Authorization on
the Electronic Communication Sector, Concession Agreement with regard
to Granting License of Establishing and Operating GSM Pan Europe Mobile
Telephone System, Concession Agreement of Establishing Operating and
Providing IMT-2000/UMTS Infrastructures and Services and Annex of
Authorization Certificate for Limited Usage Rights with regard to IMT
Services-Rights and Obligations with regard to Establishing, Operating
and Providing IMT Infrastructures and Services.

The Board of Directors may restrict the share transfers to the foreigners
in order to comply with the restrictions concerning Regulation on the
authorization on the Electronic Communication Sector and Concession
Agreement with regard to Granting License of Establishing and Operating
GSM Pan Europe Mobile Telephone System, Concession Agreement of
the Establishing Operating an Providing IMT-2000/UMTS Infrastructure
and Services, and Annex of Authorization Certificate for Limited Usage
Rights with regard to IMT Services-Rights and Obligations with regard to
Establishing, Operating and Providing IMT Infrastructures and Services
and/orother restrictions concerning the shareholders of which the Company is
subject to. Article 137/3 of the Capital Markets Law is reserved.

ARTICLE 8 – CAPITAL INCREASE AND SHARE CERTIFICATES

This Article was removed from the text.

The Board of Directors of the Company is authorised to increase the issued
share capital by issuing new shares up to the authorised share capital,
to resolve to restrict the pre-emption rights of the shareholders and to
take resolutions regarding the issuance of premium shares whenever it is
deemed necessary, in compliance with the Capital Market Law.

During capital increases shares remaining pursuant to the exercise of
pre-emptive rights and in the event pre-emptive rights are restricted, all
of the newly issued shares shall be offered to the public at their market
value but not less than their nominal value.

TURKCELL ANNUAL REPORT 201598

CURRENT VERSION

AMENDED VERSION

New shares may not be issued until all the issued shares are fully sold
and paid. The issued share capital has to be indicated on all documents
bearing the trade name of the Company.

The Board of the Directors of the Company may issue share certificates in
different denominations representing more than one share in compliance
with the relevant regulations of the Capital Market Board.

ARTICLE 9 - BOARD OF DIRECTORS

The Company is managed and represented by the Board. The Board is fully
authorised to carry out the affairs of the Company and management of
Company assets and the activities relating to the Company purpose and
subject matter other than those that have to be solely carried out by the
General Assembly.

The Board is comprised of 7 (seven) members elected by the General Assembly.

In case the Board of Directors is informed that a member of the
Board of Directors no longer has any relation with and is no longer a
representative of the legal entity it represents or that a legal entity having
a representative on the Board of Directors has transferred its shares to
a third party, such member of the Board of Directors and representative
of the such legal entity shall be considered as having resigned from its
membership on the Board of Directors and the Board shall temporarily
appoint another member until the next General Assembly.

The Company is managed and represented by the Board of Directors.
The Board of Directors is fully authorized for all matters relating to the
Company’s business and to carry out the affairs of the Company and
management of Company assets and the activities relating to the Company’s
scope of business other than those fallen within the competence of the
General Assembly.

The Board of Directors shall be comprised of 7 (seven) members to be
elected by the General Assembly.

The relevant legislation shall be applicable to the formation, rules
of procedures of the committees which The Board of Directors is
responsible to establish within the context of Capital Markets Law,
Turkish Commercial Code and relevant legislation and to relations of
those committees with the Board of Directors.

ARTICLE 10 – DUTY PERIOD

ARTICLE 10 – TERM OF OFFICE

The members of the Board of Directors may be elected for a period of
maximum three years.

The members of the Board of Directors whose duty period ends may be
re-elected. If one of the memberships is left during the duty period, new
members may be elected to replace these in accordance with the related
provisions of the Turkish Commercial Code and Article 11 of this Article Of
Association

The members of the Board of Directors whose term of office expires may be
re-elected. If one of the memberships becomes vacant or an independent
board member ceases to be independent, an appointment shall be made in
accordance with provisions of Turkish Commercial Code and Capital Markets
Board regulations and submitted to approval of the first general assembly.

ARTICLE 11 – MEETINGS OF THE BOARD OF DIRECTORS

1) Meetings of the Board of Directors:

The Board of Directors shall meet whenever necessitated by the affairs
of the Company. Meetings of the Board of Directors shall be held at the
headquarters of the Company or at any place agreed upon.

Pursuant to article 1527 of the Turkish Commercial Code, members who
have a right to attend the Board meetings, may attend such meeting by
electronical means. Pursuant to the Communiqué on Electronic Meetings
Held in Companies Other Than General Meetings of the Joint Stock
Companies, the Company may either set up the Electronical Meeting
System, which enables right holders to attend such meetings and vote on

CURRENT VERSION

AMENDED VERSION

the agenda items; or purchase related services from the systems providers
that are specifically found for such purposes. During these meetings, right
holders shall be provided to enjoy their rights electronically, as stipulated
under the aforementioned Communiqué, either be over a set up system or
a purchased system which are both established subject to this provision
of the articles of association of the Company.

2) Meeting and Decision Making Quorum:

2) Meeting and Decision Quorum:

Quorum for Board meetings shall consist of a minimum 5 directors.
Ordinary actions of the Board shall be taken by affirmative votes of 4 of
the directors upon the presence of 5 directors and affirmative votes of 5
directors upon the presence of more than 5 directors.

Quorum for Board meetings shall consist of a minimum 5 members. Decisions
regarding ordinary actions of the Board of Directors shall be taken by
affirmative votes of 4 of the members upon the presence of 5 members and
affirmative votes of 5 members upon the presence of more than 5 members.

ARTICLE 12 – BINDING AND REPRESENTATION OF THE COMPANY

All documents, bonds, powers of attorney, written undertakings,
contracts, offers, demands, acceptances, announcements and all other
documents related with the Company, will be valid and binding the
Company, if signed by person or persons so authorized by the Board
of Directors on condition that they sign under the Company name, in
circumstances registered and published as allowing such signature. The
Board of Directors will determine the conditions on which the person(s)
authorized to bind the company will sign.

ARTICLE 13 – SHARING DUTIES AND ASSIGNING DIRECTORS

The Board of Directors may assign all of its authorities related to
management and representation or the parts pertaining to the execution
phase of the company business or the parts it finds necessary to delegate
members of the Board of Directors or to General Directors or Directors or
other officers for whom it is not necessary to have a share and the Board
of Directors may give them authority to sign. Minimum one member of
the Board of Directors shall have the authority to represent the Company
even if the authority to manage and represent the Company is left to
the General Directors or Directors or other officers who do not hold
any shares in the Company. The Board of Management may give Third
Persons special authority to represent and bind the Company. The duty
period of other officers who have the authority to put the signatures
of the General Directors and Directors is not limited with the election
periods of the Board of Directors members. The provisions of 11-2 article
of these Articles of Association are preserved.

The Board of Directors shall always be free to cancel such delegated
authority of such members and directors.

The authority to represent and bind the Company is vested with the
Board of Directors. All documents, bonds, powers of attorney, written
undertakings, contracts, offers, demands, acceptances, announcements and
all other documents related with the Company, shall be valid and binding
for the Company, if signed by person or persons so authorized by the
Board of Directors on condition that they sign under the Company name,
in circumstances registered and published as allowing such signature. The
Board of Directors shall determine the conditions on which the person(s)
authorized to bind the company will sign.

ARTICLE 13 – DELEGATION OF AUTHORITIES AND APPOINTMENT
OF MANAGERS

The Board of Directors, in accordance with Article 367 of Turkish
Commercial Code, is authorized, in whole or in part to delegate the
management to one or more Board of Directors members or a third
person pursuant to Internal Guidelines prepared by itself excluding
the duties and authorities which are defined under Article 375 of the
Turkish Commercial Code and which cannot be delegated . In addition,
the Board of Directors may delegate its authority to represent the
Company to one or more executive directors or to a third person as a
director.

The General Manager is the head of the execution. He performs his
duties in such capacity in accordance with the instructions given by
the Board of Directors or General Assembly, and within the scope and
authority granted by the Board of Directors or General Assembly. He
reports to the Board in respect of his executive act.

ARTICLE 14 - AUDITORS AND THEIR DUTIES

The General Assembly shall elect 2 auditors from among either the
shareholders or third parties.

This article was removed from the text.

TURKCELL ANNUAL REPORT 2015100

CURRENT VERSION

AMENDED VERSION

The auditors shall be elected for a period of maximum three years. The
auditors may be re-elected.

The auditors are responsible for fulfilling the tasks stated in Articles 353
to 357 of the Turkish Commercial Code.

ARTICLE 15 – DIRECTORS AND AUDITORS FEE

ARTICLE 15 – REMUNERATION OF BOARD OF DIRECTORS’

The General Assembly determines the fee to be paid to the members of
the Board of Management and to the Auditors.

The remuneration of the Board of Directors shall be determined by the
General Assembly.

ARTICLE 16 – INDEPENDENT AUDITOR

ARTICLE 16 – AUDIT

In addition to the auditors, the Board of Directors shall elect one of the
international auditing firms incorporated in Turkey and acceptable to the
Capital Market Board as an Independent Auditor for the yearly auditing
of the Company’s commercial book and records. The provisions of
Capital Market Board regarding the approval of independent auditor and
principals of independent auditing shall be applied.

Relevant provisions of Turkish Commercial Code and capital market
legislation shall be applicable with regard to audit of the Company.

ARTICLE 17 – GENERAL ASSEMBLY

The below issues shall be applied for the General Assembly:

The followings shall be applied to General Assembly meetings:

1. Convening: The meeting of the General Assembly shall convene
either for ordinary or extraordinary meetings. The convening for the
meetings shall be made in accordance with the provisions of the Turkish
Commercial Code and Capital Market Law. The General Assembly may
convene without invitation in accordance with Article 370 of the Turkish
Commercial Code.

1. Convening: The meeting of the General Assembly shall convene either
as ordinary or extraordinary meetings. In these meetings the agenda
items, prepared by the Board of Directors, shall be discussed and
resolved within the scope of the relevant provisions of the Turkish
Commercial Code. The extraordinary meetings of the General
Assembly shall convene and resolve as deemed necessary by the
Company’s business.

The convening for the meetings shall be made in accordance with the
respective provisions of the Turkish Commercial Code and Capital Market
Law.

The General Assembly meeting procedures are regulated under the
Internal Guidelines. General Assembly meetings shall be conducted
in accordance with the related provisions of the Turkish Commercial
Code and the Internal Guidelines.

2. Attending the General Assembly meeting by Electronical Means: Right
holders, who have a right to attend the general assembly meetings,
can attend such meetings by electronic means pursuant to article
1527 of the Turkish Commercial Code. Pursuant to the Communiqué on
Electronic Meetings Held in Companies Other Than General Meetings
of the Joint Stock Companies, the Company shall procure the right
holders to attend, to deliver an opinion and to vote by electronical
means, either setting up the electronic general assembly system;
or purchase related services from the system providers that are
spesifically found for such purposes. Pursuant to this provision of

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CURRENT VERSION

AMENDED VERSION
the articles of association of the Company, right holders and their
representatives shall be procured to enjoy their rights, as stipulated
under the aforementioned Communiqué.

2. Date: Ordinary meetings of General Assembly shall convene once a
year and within the three months following the end of Company’s fiscal
year, the Extraordinary meetings of the General Assembly shall convene
whenever necessitated by the affairs of the Company.

3. Date: Ordinary meetings of General Assembly shall convene once a
year and within the three months following the end of Company’s fiscal
year; the extraordinary meetings of the General Assembly shall convene
whenever necessitated by the affairs of the Company.

3. Voting Rights and Appointing Proxy: In Ordinary or Extraordinary
meetings of the General Assembly, shareholders or their proxies shall
have one vote per share. In General Assembly meetings, shareholders
may have themselves represented through a proxy who may be a
shareholder or a non-shareholder. Proxies who are also shareholders of
the Company are authorised to vote both for themselves and on behalf of
the shareholders being represented by such proxies.

Regulations of the Capital Market Board relating to proxy votes on behalf
of the shareholders shall apply.

4. Voting Method: Votes are cast in General Assembly meetings by the
raising of hands. However, votes shall be cast by secret ballot upon
the request of the shareholders representing one tenth of the shares
represented in a meeting. The related provisions of the Capital Market
Board shall apply.

5. Presidency of the General Assembly: President of the General
Assembly meetings shall be the chairman of the Board of Directors,
in his absence, the deputy chairman or in the absence of both, one of
the members of the Board of Directors. The secretary of the General
Assembly may be elected from among the shareholders or non-
shareholders.

6. Meetings and Decision Making Quorum: At meetings of the General
Assembly, the items specified in Article 369 of the Turkish Commercial
Code shall be discussed and resolved. Save as higher quorums are
provided for in the Turkish Commercial Code, meeting quorum at the
General Assembly requires the presence of at least 51% of shareholders
represented by themselves or proxies and save as higher quorums are
provided for in the Turkish Commercial Code decision making quorum
requires the majority of the affirmative of shareholders present at the
meeting.

However, the decisions regarding the amendments to the Articles of
Association of the Company excluding the increase in the ceiling of
the authorized share capital requires the presence of shareholders
holding the 2/3 of the share capital and affirmative votes of 2/3 of the
shareholders represented in the meeting.

4. Voting Rights and Appointing Proxy: Right holders or their
representatives attending the General Assembly meeting shall enjoy
their voting rights pro rata to the sum of their nominal shares. Each
shareholder has one voting right. In General Assembly meetings,
shareholders may have themselves represented through a proxy who
may be a shareholder or a non-shareholder. Proxies who are also
shareholders of the Company are authorized to vote both for themselves
and on behalf of the shareholders being represented by such proxies.

Regulations of the Capital Market Board relating to proxy votes on behalf
of the shareholders shall apply.

5. Voting Method: Votes are cast in General Assembly meetings by raising
of hands. However, votes shall be cast by secret ballot upon the request
of the shareholders representing one tenth of the shares represented in a
meeting. The related provisions of the Capital Market Board shall apply.

6. Presiding Committee of the General Assembly: President of the
General Assembly meetings shall be the Chairman of the Board of
Directors, in his absence, the Vice-Chairman; or in the absence of
both, President of the General Assembly shall be elected from among
the shareholders or non-shareholders.

7. Meetings and Decision Quorum: Save as higher quorums are provided
for in the Turkish Commercial Code and the Capital Markets Law,
meeting quorum at the General Assembly requires the presence of at
least 51% of shareholders represented by themselves or proxies and save
as higher quorums are provided for in the Turkish Commercial Code and
the Capital Markets Law, decision quorum requires the majority of the
affirmative votes of shareholders present at the meeting.

As an exception to the above-mentioned rule, and save as higher
quorums are provided for in the Turkish Commercial Code and the
Capital Markets Law, the decisions regarding the amendments to
the Articles of Association of the Company excluding the increase
in the ceiling of the authorized share capital requires the presence
of shareholders holding the 2/3 of the share capital and affirmative
votes of 2/3 of the shareholders represented in the meeting.

TURKCELL ANNUAL REPORT 2015102

CURRENT VERSION

AMENDED VERSION

7. Place of Meeting: General Assembly meetings shall convene at the
Company’s headquarters or upon the decision Board of Directors at another
suitable place of the city where the headquarters of the Company is located.

8. Place of Meeting: General Assembly meetings shall convene at the Company’s
headquarters or upon the decision of the Board of Directors at another suitable
place of the city where the headquarters of the Company is located.

ARTICLE 18 – PRESENCE OF A COMMISSIONER AT THE MEETINGS

The presence of T.R. Ministry of Industry and Commerce Commissioner
is necessary at both ordinary and extraordinary General Assembly
meetings. The commissioner has to sign the meeting reports. General
Assembly meeting decisions taken in the absence of the commissioner
and reports which do not bear the commissioner’s signature shall not be
valid.

ARTICLE 18 – PRESENCE OF A MINISTRY REPRESENTATIVE AT
THE MEETINGS

The presence of T.R. Ministry of Customs and Commerce Representative
is necessary at both ordinary and extraordinary General Assembly
meetings. The Ministry Representative shall sign the meeting
minutes. General Assembly meeting decisions taken in the absence of a
Ministry Representative and minutes which do not bear the Ministry
Representative’s signature shall not be valid.

ARTICLE 19 - ANNOUNCEMENTS AND ANNUAL REPORTS OF
THE COMPANY

Announcements concerning the Company shall be made in the newspaper
published at the city where the Headquarters of the Company are located at
least 15 days in advance provided that the provisions of Article 37/4 of the
Turkish Commercial Code are reserved. If there is no newspaper published at
the place where the Headquarters are located, then the announcement shall
be made in the newspaper published at the closest place to the Headquarters.

However, announcements regarding the invitation of the General Assembly,
in accordance with Article 368 of the Turkish Commercial Code, excluding
the dates of announcement and invitation shall be made two weeks in
advance and the date of the meeting shall be notified to the shareholders via
registered mail.

ARTICLE 19 - ANNOUNCEMENTS AND ANNUAL REPORTS

Announcements with regard to the Company shall be made in accordance
with provisions of Turkish Commercial Code, Capital Markets Board
regulations and relevant legislation.

The announcement period requirements, with regard to announcements
of the General Assemblies, provided by the applicable Turkish
Commercial Code, capital market legislations and the Capital Markets
Board’s Corporate Governance Principless shall be complied with. The
announcement of the General Assembly meeting shall be notified to the
shareholders minimum three weeks before the date of General Assembly
meeting, in addition to the means provided in the legislation, via any
means of communication including electronic communication that ensure
attendance of maximum number of shareholders.

Provisions of Articles 397 and 438 of the Turkish Commercial Code shall be
applicable to the announcements regarding the share capital decrease and
liquidation of the Company.

Any other announcement and information responsibilities pursuant to the
Capital Market legislation and the Turkish Commercial Code are reserved.

Financial tables and reports and also independent audit reports required by
the Capital Market Board shall be disclosed to the public and delivered to the
Capital Market Board in accordance with the provisions and principles of the
Board of Directors.

The Board of Directors’ activity report and independent audit report
together with annual balance sheets and profit-loss statements, and copies
of each minutes of the general assembly meetings and list of attendees;
shall be provided at least within one month, prior to the date of the general
assembly meeting, with the Ministry of Customs and Commerce or the
attending Ministry Representative.

Financial tables and reports required by the Capital Market Board and
independent audit report, shall be disclosed to the public according to rules and
procedures set forth by Turkish Commercial Code and Capital Markets Board.

ARTICLE 21 - DETERMINATION AND DISTRIBUTION OF THE
PROFIT

If any, the net profit drawn up in the annual budget after the deduction
of all expenses and depreciation sums, reserves and taxes needed to be
paid by or charged to the Company, from the revenues of the Company as
determined by the end of the accounting term and after the deduction of
the previous years loss, shall be distributed in accordance with the Capital
Market Law and communiqués of the Capital Market Board as follows:

If any, the net profit drawn up in the annual budget after the deduction
of all expenses and depreciation sums, reserves and taxes needed
to be paid by or charged to the Company, from the revenues of the
Company as determined by the end of the accounting term and after
the deduction of the previous years’ loss if any, shall be distributed
respectively as follows:

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CURRENT VERSION

AMENDED VERSION

General Statutory Reserve Fund:

a) 5% statutory reserve fund shall be set aside as the first statutory
reserve fund.

a) 5% shall be set aside as the statutory reserve fund.

First Dividend:

b) The first dividend shall be set aside from the remaining amount in the
ratio determined by the Capital Market Board.

c) Amount of the net profit remaining after the deduction of the amounts
stated in (a) and (b) may be distributed partially or fully as second
dividend or set aside as extraordinary statutory reserve fund as per
the General Assembly resolutions. The General Assembly may set aside
an amount as profit share for the members of the Board of Directors,
officers, employees and workers and foundations constituted for various
purposes and this kind of real or legal persons.

d) It may not be resolved that any other reserve funds be set aside
or left for the following year unless reserve funds and first dividend
stated in the Articles of Association for the shareholders are set aside
in compliance with the legislation and it may not be resolved that the
profit be distributed to the members of the Board of Directors, officers
and employees and foundations constituted for various purposes and this
kind of real or legal persons unless first dividend is distributed.

e) The dividend can be distributed to all the shares that exist as of the
accounting period, irregardless of their issue or enforcement dates.

Article 466/2(3) of the Turkish Commercial Code is reserved.

b) Profit share shall be set aside from the remaining amount
calculated by adding the amount of donation if made within a year,
over the ratio set by General assembly in line with the dividend
distribution policy of the Company according to Turkish Commercial
Code and capital market legislation.

c) Following the deduction of the above amounts the General
Assembly has the right to distribute dividend to the Board of
Directors members, employees of the Company, foundations and real
and legal persons apart from the shareholders.

Second Dividend:

d) The General Assembly is entitled to distribute, partially or
fully, the amount of the net profit remaining after the deduction of
the amounts stated in (a), (b) and (c) or to set aside this amount
as a reserve fund voluntarily according to Article 521 of Turkish
Commercial Code.

e) 10% of the amount, which were calculated by the deduction of
profit share in the amount of %5 of the capital from the portion which
were decided to be distributed to shareholders and other persons who
participate the profit, shall be added to general statutory reserve fund
according to 2nd paragraph of Article 519 of Turkish Commercial Code.

Unless statutory legal reserves and dividend portion which is determined
to be distributed to the shareholders by the articles of association or
dividend distribution policy of the company are set aside the Company
shall not decide to reserve any other funds, to carry out profit to the next
year, to distribute dividend for the members of the Board of Directors,
employees of the Company, foundations and real or legal persons apart
from shareholders and unless the dividend determined to be distributed
to the shareholders is paid in cash, any portion of the dividedn cannot be
distributed to these persons.

Dividend shall be distributed equally to all current shares as of the date of
distribution regardless their issuance and acquisition dates.

The procedures and date of dividend distribution shall be decided by
General Assembly upon Board of Directors’ proposal.

Resolution of General Assembly regarding distribution of dividend which
was taken pursuant to this Article of Association cannot not be revoked.

TURKCELL ANNUAL REPORT 2015
104

CURRENT VERSION

AMENDED VERSION

The Company is entitled to decide to distribute advance dividend in
accordance with the conditions established by the capital market
legislation and other related legislation.

ARTICLE 24 - LEGAL PROVISIONS

The provisions of the Turkish Commercial Code, the Capital Market Law
and related legislations shall be applicable to matters not covered by the
Articles of Association.

ARTICLE 24 - LEGAL PROVISIONS

This Article was removed from the text.

ARTICLE 25 - BONDS AND OTHER SECURITIES

The Company may issue bonds and any other debt securities bearing the
features of capital market securities which the Board of Directors may be
authorized to issue, in order to sell them to individuals or legal entities,
in Turkey or abroad in accordance with the Turkish Commercial Code, the
Capital Market Law and any other related legislation via resolutions of
Board of Directors.

The Company may also issue convertible bonds as per resolutions of
Board of Directors in compliance with the regulations of the Capital
Market Board.

The Company shall be entitled to issue bonds and other capital market
instruments by way of a Board of Directors’ resolution, in accordance
with the provisions of the Turkish Commercial Code and capital
market legislation.

ARTICLE 26 - COMPLIANCE WITH CORPORATE GOVERNANCE
PRINCIPLES

Compliance with the Capital Market Board’s mandatory Corporate
Governance Principles shall be ensured. Transactions and Board
of Directors’ decisions in violation of the mandatory Corporate
Governance Principles shall be deemed to be in violation of the
articles of association, and invalid.

With regard to the transactions deemed material within the context
of implementation of Corporate Governance Principles, and related
party transactions of the Company as well as for the transactions
with respect to giving guarantee, pledge and mortgage in favor of the
third parties, Corporate Governance regulations of Capital Market
Board shall be complied with.

The number and qualifications of independent board members who
will be appointed to the Board of Directors shall be determined
in accordance with the regulations in the Corporate Governance
Principles of Capital Market Board

105

January 29, 2016
Turkcell Finansman A.Ş.’s Operations Approval

Turkcell Finansman A.Ş. got approval for its operations from Banking
Regulation and Supervision Agency in accordance with respective
legislations. The decision has been published in official gazette today.

Pursuant to our announcement on 27.08.2015, the capital of Turkcell
Finansman A.Ş. will be increased to TRY 500,000,000 by our Company.

Date of the Board of Directors’ decision regarding the acquisition

Name of the acquired financial asset

Field of activity of the acquired financial asset

Capital of the acquired financial asset

The acquisition method for financial asset

Any obligation of a tender offer

In case of a tender offer, any application of an exemption

Is there any valuation report?

If there is not any valuation report, why?

February 11, 2016
Change in Management

Burak Sevilengül, who joined our Company in 2001, and who has served as
the Executive Vice President of Marketing Function, decided to resign as
of February 29, 2016. We thank him for his valuable contributions to the
Company over past years, and wish him every success in his future career.

25.08.2015

Turkcell Finansman A.Ş.

Financing purchases of goods and services

TRY 70,000,000

Incorporation

Not required.

February 18, 2016
The Sale and Leaseback Transactions of lifecell’s
Towers
Our Board of Directors has decided to carry out sale and leaseback
transactions with respect to 811 towers of LLC lifecell (“lifecell”), a
subsidiary of our Company located in Ukraine, with Ukrtower LLC
(“Ukrtower”), also a subsidiary of our Company located in Ukraine, in return
for a minimum amount of USD 52 million plus taxes. In this respect, the
decision has also been made on a capital increase for Ukrtower through
increasing the capital of our Company’s other 100% owned subsidiary,
Turktell Bilişim Servisleri A.Ş. by a minimum of the aforementioned amount.

TURKCELL ANNUAL REPORT 2015106

February 18, 2016
The Board of Directors’ Resolution on Annual
General Assembly
The Turkcell Board of Directors has decided:

• to call the Annual General Assembly Meeting of our Company pertaining
to the year of 2015 to convene on March 29, 2016 at 10.00 am at the
address of “Aydınevler Mahallesi, İnönü Caddesi, No:20/36, C Blok
Conference Hall, Küçükyalı Ofispark, 34854, Maltepe/İstanbul” and to
discuss the attached agenda; and

• to submit the Share Buyback Plan as attached hereto, and the

authorization to be granted to the Board of Directors for carrying out
the share buyback in line with the attached plan, within the scope of the
Communiqué on Buy-backed Shares (numbered II-22.1), for the approval
of the shareholders at the Ordinary General Assembly for 2015.

TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
AGENDA OF THE ANNUAL GENERAL
ASSEMBLY MEETING OF THE 2015
1- Opening and election of the Presidency Board;
2- Authorizing the Presidency Board to sign the minutes of the

meeting;

3- Reading the Annual Report of the Board of Directors relating to

fiscal year 2015;

4- Reading the summary of the Independent Audit Firm's report

relating to fiscal year 2015;

5- Reading, discussion and approval of the Turkish Commercial

Code and Capital Markets Board Balance Sheets and Profits/Loss
statements relating to fiscal year 2015;

6- Release of the Board members individually from the activities
and operations of the Company pertaining to the year 2015;
7- Discussion of and decision on Board of Directors’ proposal on

Company’s Donation Policy; submitting the same to the approval
of shareholders;
Informing the General Assembly on the donation and
contributions made in 2015; discussion of and decision on Board
of Directors’ proposal concerning determination of donation limit
to be made in 2016, starting from the fiscal year 2016;

9- Subject to the approval of the Ministry of Customs and Trade
and Capital Markets Board; discussion of and decision on the

amendment of Articles 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16,
17, 18, 19, 21, 24, 25 and 26 of the Articles of Association of the
Company;

10- Election of new Board Members in accordance with related
legislation and determination of the newly elected Board
members’ term of office if there will be any new election;
11- Determination of the remuneration of the Board of Directors

members;

12- Discussion of and approval of the election of the independent
audit firm appointed by the Board of Directors pursuant to
Turkish Commercial Code and the Capital Markets Legislation for
auditing of the accounts and financials of the year 2016;
13- Discussion of and decision on Board of Directors’ proposal on
share buyback plan and authorizing the Board of Directors for
carrying out share buyback in line with the mentioned plan,
within the scope of the Communiqué on Buy-backed Shares
(numbered II-22.1);

14- Decision permitting the Board Members to, directly or on behalf
of others, be active in areas falling within or outside the scope
of the Company's operations and to participate in companies
operating in the same business and to perform other acts in
compliance with Articles 395 and 396 of the Turkish Commercial
Code;

15- Discussion of and decision on the distribution of dividend for the
year 2015 and determination of the dividend distribution date;
16- Informing the shareholders regarding the guarantees, pledges

and mortgages provided by the Company to third parties or the
derived income thereof, in accordance with the Capital Markets
Board regulations;

17- Closing.

TURKCELL İLETİŞİM HİZMETLERİ A.Ş.
SHARE BUYBACK PROGRAM

The Purpose of Share Buyback Program

The purpose of our Company’s buyback program is to buy back its own
shares on Borsa İstanbul A.Ş. within the framework of employee share
ownership plans for Turkcell’s or its consolidated subsidiaries’ employees
with the approval of General Assembly.

Duration of Share Buyback Program

5 (five) years within the framework of employee share ownership plans for
Turkcell’s or its consolidated subsidiaries’ employees.

107

Maximum Number of Shares to be Bought Back

It is foreseen to buy back shares, in conformity with relevant legislation and
within the limits of the total funds allocated as stated below, up to 10% of
the Company’s paid-in capital of TRY 2,200,000,000 (two billion two hundred
million Turkish Lira). In case of a change in the legislation or increase in the
paid-in capital, the transactions shall be made in line with the changes.

The program will be completed once the maximum amount of shares subject
to buyback are purchased.

Total Amount and Source of the Funds Allocated for
Share Buyback
TRY 200,000,000 (two hundred million Turkish Lira) has been allocated for
share buyback coming from the company’s resources and cash flow from its
operations.

The nominal value of the bought back shares cannot exceed 10% of
the paid-in capital. Bought back shares sold during the program are not
included in the calculation of this ratio as a reduction item. The total value
of the shares bought back cannot exceed the total of the funds that can be
distributed as dividends.
Lower and Upper Price Limits for the Share Buyback

The lower price limit is TRY 0 (zero Turkish Lira) and the upper price limit is
TRY 15 (fifteen Turkish Lira) for the share buyback.

Authority Duration and Transaction Procedure requested
from the General Assembly

The Company’s Board of Directors has been authorized for a period of 5
years. Board of Directors is authorized not to start buyback transactions or
to end the program at any time based on the capital market conditions or
the Company’s financial position. Within the authorization period, Board of
Directors can carry out one or more buyback programs.

Board of Directors is authorized for the transactions, in accordance with the
legislation, of share buyback, disposal of the purchased shares and carry out
related transactions in line with the purpose of the buyback program for 5
years following the authorization.

Board of Directors may hold one or more buyback programs within the
framework of conditions set forth in this buyback program during the
authorization period.
Authorization for Purchases

Board of Directors, who is authorized by the General Assembly, may
delegate its authorization to natural persons or legal entities to be
designated by itself.

Potential impacts of buy-back program on the Company’s
financial position and results of its activities

Total fund set aside for buyback is TRY 200,000,000 (two hundred
million Turkish Lira) which corresponds to 0.8% of the total assets in the
consolidated financial statements as of the end of December 31, 2015. In this
regard, we do not expect any material impact on the Company’s financial
position and operational results of its activities as a result of this buyback
program.
Information on subsidiaries, if any, which may acquire
shares under the program

None.
Minimum, Maximum and Weighted Average Share Price
Information in the last year*

For the year ended December 31, 2015;
Minimum share price: TRY 9.90
Maximum share price: TRY 13.55
Weighted average share price: TRY 11.71
Minimum, Maximum and Weighted Average Share Price
Information in the last 3 months*

For the three months ended February 18, 2016;
Minimum share price: TRY 9.42
Maximum share price: TRY 12.20
Weighted average share price: TRY 10.53
Benefits to be obtained by related parties, if any

None.

February 26, 2016
Providing a Binding Offer for Fintur
Turkcell Board of Directors decided to submit a binding offer for the
remaining 58.55% stake of Sonera Holding B.V. (TeliaSonera) in Fintur
Holdings B.V.** (Fintur) and TeliaSonera’s 24% direct stake in Kcell
JSC operating in Kazakhstan. Fintur is currently 58.55% owned by
TeliaSonera and 41.45% by Turkcell.

*Share prices are adjusted. Weighted average share price is the average of daily weighted average share prices during the related period.
** Fintur companies operate in Kazakhstan, Azerbaijan, Moldova and Georgia.

TURKCELL ANNUAL REPORT 2015108

2015 FINANCIAL YEAR
CORPORATE GOVERNANCE COMPLIANCE REPORT

The 2015 Corporate Governance Compliance Report of Turkcell İletişim
Hizmetleri A.Ş (the “Company”) has been prepared in accordance with
the format disclosed in the Capital Markets Board Bulletin no. 2014/02,
dated January 27, 2014.

SECTION 1- CORPORATE GOVERNANCE
COMPLIANCE STATEMENT
We have begun to implement Corporate Governance mechanisms in
parallel with the Corporate Governance efforts we launched in tandem
with the Company’s IPO and accelerated in 2003 by establishing an
Investor Relations Department. This step was based on the belief that
maintaining high standards of corporate governance is crucial to the
perpetuation of successful business practices and the generation of long-
term economic value for the Company’s shareholders.

Regarding principle no. 1.6.1 of the corporate governance principles
specified in the annex of the Corporate Governance Communiqué
(”Communiqué”) No. II-17.1 on the Corporate Governance of the Capital
Markets Board (CMB) in effect during the financial year of 2015, the
Dividend Distribution Policy of the Company, which has been adopted
by our Company’s Board of Directors under its resolution no.1104, dated
February 18, 2014 and has been disclosed to the public, was submitted to
the first ordinary General Shareholders’ Meeting held on March 26, 2015
for approval within the framework of Article 19 of the Capital Markets
Law (CML) and the Dividends Communiqué provisions of the CMB.
On the other hand, non mandatory principles which do not necessarily
have to be applied with regard to the Company have been substantially
adopted by the Company. Regarding principle no.1.3.11, the General
Shareholders’ Meetings of the Company are held in a manner closed to
the media and the results thereof are immediately made public.

With corporate governance principles being adopted and applied in
our Company, amendments to the Articles of Association which are
mandatory based on conformity to the principles were submitted to the
first ordinary General Shareholders’ Meeting held on 26 March 2015 for
approval through being bound to the decision of the Board of Directors
and receiving the appropriate opinion of the CMB and the permission
of the Ministry of Customs and Trade; however, they could not be
finalised as a sufficient quorum was not reached. In the following General
Shareholders’ Meeting, amendments to the Articles of Association were
also aimed. On the other hand, the process regarding the election of
independent members could not be initiated due to conflicts continuing
between the controlling shareholders of the Company and brought
before the court , and the election of other members of the Board of
Directors and the determination of the office term, which were on the
agenda at the General Shareholders’ Meeting held on March 26, 2015

could not be put to a vote as there were no proposed candidates. In this
regard, conformity with the principle no.4.3.7 is aimed in the following
general shareholders meetings.

SECTION 2 – SHAREHOLDERS
Shareholder Structure (31 December 2015)

SHAREHOLDER

NOMINAL VALUE
(TRY)

PERCENTAGE
SHARE

Turkcell Holding A.Ş.

1,122,000,000,238

51.00%

Sonera Holding A.Ş.

287,632,179,557

13.07%

Çukurova A.Ş.

995,509,429

0.05%

Free Float

789,372,310,776

35.88%

Total

2,200,000,000,000

100.00%

2.1 Investor Relations Department
The communication between Turkcell İletişim Hizmetleri A.Ş. and its
investors is maintained through the Investor Relations and Business
Development Department, reporting to the Deputy General Directorate
of Strategy. The duties stipulated in article 11 of the Communiqué are
performed by our Company’s full-time employees whose contact details are
given below.

Investor Relations and Business Development Department Executive: Nihat
Narin
Address: Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No:20
B Blok Küçükyalı Ofispark 34854 Maltepe/Istanbul
Phone: +90 (212) 313 18 88
E-mail: nihat.narin@turkcell.com.tr
Licence: Capital Market Activities Advanced Level Licence No: 207872,
Corporate Governance Rating Specialist Licence No: 701483

Investor Relations Officer: Müge Tüzmen Orman
Address: Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No:20
B Blok Küçükyalı Ofispark 34854 Maltepe/Istanbul
Phone: +90 (212) 313 18 88
E-mail: muge.tuzmen@turkcell.com.tr
Licence: Capital Market Activities Advanced Level Licence No: 205763

109

The main activities of the Investor Relations Department in 2015 are
briefly summarized as follows:

• The maintenance of the records with respect to the correspondences

between the investors and the Company as well as other information and
documents has been ensured in a reliable, safe and up-to-date manner
and the transactions at Merkezi Kayıt Kuruluşu A.Ş. (Central Registry
Agency) have been coordinated with the Legal Affairs Department.

• The questions addressed to the department and the shareholders’

requests for information regarding partnership during the reporting
period, excluding those regarding undisclosed information considered
as confidential and a trade secret, have been responded in an open and
transparent manner either face-to-face or through various communication
means in accordance with the disclosure policy of the Company.

• During the reporting period, the ordinary General Shareholders’ Meeting
was held in cooperation with the related departments and the Legal
Affairs Department in accordance with the provisions of the applicable
law, Articles of Association and other internal rules and regulations.

• Methods to facilitate the participation of shareholders in the general
assembly of shareholders and to strengthen communication during
the meeting have been developed; an Investor Package containing
documents, of which shareholders can make use, has been created; and
the website is regularly updated so that shareholders can have constant
and open information.

• The Company’s shares performance, and domestic and international

comparable Company financial and operational benchmark analyses have
been conducted and the outcomes of these studies have also contributed
to the Company’s communication strategies.

• Documents regarding the issuing of bonds in 2015 were prepared,
information concerning a road show in America and Europe was
transferred for bond investors, and the important information for the
investors to follow was shared on the website.

• In addition to material event disclosures made in accordance with the
legislation, the coordination of the communication with the public has
been ensured, meetings with investors and analysts have been made,
additionally conferences, panels, seminars and road shows have been
participated in by paying regard to the fulfilment of obligations arising
from the Capital Markets Legislation including any issue related with the
corporate governance and the public disclosure.

During 2015, the Investor Relations Department participated in 15 investor
conferences (2 domestic and 13 international); held 25 investor meetings
at the Company headquarters, and communicated with 460 analysts and
investors. Furthermore, said departments also spoke to 53 bond investors
at the bond road shows held in America and Europe. Over 1,000 information
requests were received during the year via phone or e-mail, all of which
were responded to.

The Investor Relations Department regularly provides the Board of
Directors with a report regarding the operations which are carried out.
Additionally, the strategy plan regarding the Investor Relation pertaining to
the next year is presented to the CEO at the end of each year.

2.2 The Use of Shareholders Rights to Obtain
Information
The Company’s shareholders and stakeholders made many requests
for information concerning various subjects throughout 2015. These
requests, excluding those concerning undisclosed information considered
as confidential and a trade secret, were filed in an open and transparent
manner within the shortest time possible in accordance with the
disclosure policy of the Company.

The Company launched its website (www.turkcell.com.tr) in 1996
and began to provide its shareholders, both local and foreign, with
information foreseen for the website within the CMB’s Corporate
Governance Principles in both Turkish and English, under the Investor
Relations section of the website allowing them to exercise their right
to information. Updating and monitoring information posted on the
Company’s website was carried out under the responsibility of the
Investor Relations and Business Development Department.

As per the regulations, the disclosures filed to the Public Disclosure
Platform (KAP) were also provided to those registered in the Company’s
database by e-mail, social media and smartphone application, both in
Turkish and in English.

During the year, no information or disclosures which could influence the
exercising of shareholding rights were published on the website of the
Company.

The appointment of a special auditor has not been separately included
in the Company’s Articles of Association since this is a right extended to
the minority shareholders by law. During the period, no requests for the
appointment of a special auditor were submitted.

2.3 General Shareholders’ Meetings
Pursuant to Article 410 of Turkish Commercial Law, the Company
Ordinary General Meetings of 2010, 2011, 2012, 2013 and 2014 were held
at the head office at the following address: Turkcell Plaza Meşrutiyet
Cad. No: 71 Tepebaşı Beyoğlu, Istanbul on 26 March 2015 upon the
invitation of the Board of Directors.

The convocation pertaining to the General Shareholders’ Meeting dated
March 26, 2015 was made in a timely manner by publishing the same
in the Turkish Trade Registry Journal Issue No. 8768, dated February
27, 2015 and Dünya Newspaper dated February 27, 2015 and Güneş
Newspaper dated February 27, 2015 announcing it on the Electronic
General Assembly System (EGKS) and on the Company’s website at www.
turkcell.com.tr and on the Public Disclosure Platform as well as notifying
the same to the holders of the registered shares through registered
letters with a return receipt so as to contain the agenda and the date of
the meeting, the Capital Markets Board Corporate Governance Principles
and the Articles of Association and furthermore, the shareholders were
provided with access to all kinds of information including the annual
report and the financial statements related to the General Shareholders’
Meeting including the announcement thereof on the website of the
Company and the same was made available in hard copy at the Company’s
registered office for the examination of shareholders within the scope of

TURKCELL ANNUAL REPORT 2015110

the Corporate Governance Principle no 1.3.1. At the same time, invitations
were also issued for the shareholders abroad. The General Shareholders’
Meeting convened in a manner closed to the media.

The agenda of the General Shareholders’ Meeting included the items of
approving the balance and profit and loss account regarding the activities
in 2010, 2011, 2012, 2013 and 2014; discussing and resolving the acquittals
of the members of the Board of Directors and statutory auditors as of the
terms they are assigned and determining the date of the profit distribution;
approving the amendments to the Company’s Articles of Association drawn
up for the purpose of compliance with new Turkish Commercial Code
No.6102 and Capital Markets Law No.6362 containing the appropriate views
of the CMB and permission of the Ministry; approving the Internal Directive
on Working Principles of General Shareholders’ Meetings; electing new
board members and determining their duty periods; electing independent
auditors for 2015; discussing and approving the “Company Dividend
Distribution Policy” within the Corporate Governance Principle; informing
the Shareholders about the “Compensation Policy” for the Members of
the Board of Directors and the Senior Executives as per the Corporate
Governance Principles; providing information about the donations and the
aids granted in 2011, 2012, 2013 and 2014; discussion of and decision on
Board of Directors’ proposal concerning determination of donation limit to be
made in 2015, starting from the fiscal year 2015; granting permission to the
Company’ members of the Board of Directors as per the provisions of Articles
395 and 396 of the Turkish Code of Commerce; providing the shareholders
with the information about securities, pledges and mortgages provided
in favour of third parties as well as incomes or benefits acquired by the
Company under the regulations of the Capital Markets Board.

2.4 Voting Rights and Minority Rights
Pursuant to the Articles of Association of the Company, there is no
concession regarding the voting right for any group or shareholder.

The minority shareholders and beneficiaries are not represented in the
Board of Directors and the rate stated in the Turkish Commercial Law and
Capital Markets Law provisions concerning minority rights are applied.

However, three independent board members serve to equally represent all
shareholders, particularly minority shareholders, and benefit holders.

The Company has no mutual shareholding relation with its affiliates
and subsidiaries and thus, no situation which would require voting
rights stemming from such a relationship to be frozen at the General
Shareholders’ Meeting has taken place as of December 31, 2015.

2.5. Right to Dividend
The Articles of Association do not grant any privileges regarding
participation in the Company’s profits. Each share is entitled to an equal
dividend.

The Dividend Distribution Policy of the Company approved under the
Board of Directors’ resolution dated May 13, 2013 and revised pursuant to
the Capital Markets legislation and adopted under the Board of Directors’
resolution no. 1104 dated February 18, 2014 to be submitted to the
General Shareholders’ Meeting for approval was announced to the public
and has been approved by the General Assembly.

Each year, the annual report includes the dividend distribution policy and
information regarding dividend distribution as required by the legislation.

The distribution of dividend pertaining to 2010, 2011, 2012, 2013 and
2014 was resolved at the Ordinary General Shareholders’ Meeting
held on March 26, 2015 and a decision was made to distribute the
net distributable profit for the period within the Company’s financial
statements which were published considering the Company’s cash
position and requirements in the following sums after the contingency
reserves which have to be allocated as per the mandatory provisions
of the Company’s Articles of Association, Turkish Commercial Code No.
6102 and Capital Markets Law No. 6362 have been allocated for each
financial year in the agenda, and another decision was made to distribute
the following sums to the shareholders by April 6, 2015 at the latest.

2010 TRY 753,000,000

2011 TRY 503,000,000

2012 TRY 885,000,000

2013 TRY 990,000,000

2014 TRY 794,000,000

The dividend distribution policy of the Company has been announced
on the Company’s website and submitted to the KAP after having been
approved by the Board of Directors. This policy states that by taking
into consideration the operational performance, financial status of the
Company and further developments in other factors, and subject to
the Company’s cash projections, business outlook, investment plans
and capital market conditions, approval of and amendments by Board
of Directors and the General Assembly and pursuant to the applicable
legislation in Turkey, the dividend payout in cash shall not be less than
50% of the Company’s distributable net income.

2.6. Transfer of Shares
While there is no limitation in the Articles of Association of our Company
with respect to the transfer of shares, the provisional article 4, clause
1, paragraph c, phrase 4 of the Authorizing Regulations Relating to the
Electronic Communication Sector to which we are subject to states that
the written approval of the Information and Communication Technologies
Authority is required for “share transfers, acquisitions and movements
resulting in a change of control”.

SECTION 3 – PUBLIC DISCLOSURE AND
TRANSPARENCY
3.1. Corporate Website and Its Content
Turkcell’s corporate website (www.turkcell.com.tr) was launched in
1996 in order to provide shareholders, stakeholders and the general
public with information in an open, clear and timely manner. Turkcell
has disclosed the Communiqué on Corporate Governance Principles as
well as resolutions and announcements concerning the implementation
of these principles published by the Capital Markets Board on the
Company’s corporate website under the Investor Relations section
(http://www.turkcell.com.tr/en/aboutus/investor-relations) and

111

regularly provides updates. The website content is also provided in
English. The Company website additionally includes matters specified in
the corporate governance principles.

3.2. Annual Report
The 2015 Annual Report was prepared by paying regard to the Turkish
Commercial Code and its related legislation, as well as the Capital Markets
legislation, and corporate governance principles within this scope.

SECTION 4 – STAKEHOLDERS

4.1 Stakeholder Communication
Turkcell informs its stakeholders by organizing pre-scheduled and
regular meetings such as employee communication meetings, platforms
where the employees can communicate their ideas and provide their
suggestions, supplier events for the members of the supply chain,
business partner events for the partner companies of Turkcell for
providing value-added services and dealership meetings. Information is
shared at periodic meetings, and/or through e-mail and intranet system.

The Company has set policies and procedures to inform its employees
and stakeholders.

It is possible for Turkcell customers to reach the Company for their
questions through various communication channels. Questions can be
communicated in writing or verbally through Turkcell Customer Services
Call Centres and Video Customer Services at 532 or 5325320000,
over Turkcell Service accounts on social media, complaint sites or via
government institutions and organizations. Although the Company receives
questions or complaints through various channels, these are directed to one
centre which handles and resolves them as necessary. The Company has
established a necessary infrastructure for transferring complaints through
relative channels and this infrastructure is continuously updated.

4.2. Participation of Stakeholders in Management
There is no special arrangement concerning the participation of
stakeholders in management; however, when required, stakeholders
(themselves)/senior managers are invited to participate in Board of
Directors meetings in order to provide information. Shareholders and
other stakeholders are represented by independent members with seats
at the Board of Directors.

4.3. Human Resources Policy
The main principles of our Company’s Human Resources Policy are
to provide high ethical standards determined by Turkcell Common
Values and Business Ethic Rules by adopting the responsibilities of the
employees against society, the market, the Company and each other.

The duty and the authority of conducting employee relations have
been assigned to Seyfettin Sağlam, the Executive Vice President of
Business Support. The main tasks of the said individuals are to secure
employee commitment, and to enhance organizational efficiency, to
design all HR strategies, policies and implementations and to ensure their
implementation in accordance with our strategic priorities.

Written procedures and guidelines concerning all Human Resources
processes (recruitment, career movements, performance and talent
management, human resource planning, compensation and benefits,
organizational development and process improvements, internal
communication) are available and these documents are kept in a portal
that is accessible by all employees. Furthermore, employees are informed
about these subjects on a regular basis via internal postings and e-mail.

In Recruitment, Training & Development, Performance and Talent
Management, Career Management, Compensation and other human
resources processes, all employees are treated equally in accordance with
the equal opportunities policy without any discrimination of ethnicity,
language, religion, race or gender.

In 2015, the Company had not received any complaints of discrimination
from its employees.

Job descriptions, performance and rewarding criteria were determined
with the internal guidelines of the Company and these documents are
kept in a portal that is accessible by all employees.

4.4. Code of Ethics and Social Responsibility

Code of Ethics

The Company’s Code of Ethics has been regulated by Turkcell’s internal
directives of Common Values and Business Ethics Rules. Turkcell’s
Business Ethics Rules are in unity with Turkcell’s policies, values and
principles, and all employees including the senior management are
requested to comply with them.

Each employee of Turkcell is obliged to notify the cases and the
allegations which may constitute a contradiction with the rules and
the regulations set forth in Turkcell’s Common Values and Business
Ethics Rules Handbook or which cause reasonable doubt or concern
for constituting such a contradiction to Turkcell’s Ethics Committee
through suitable notification channels. Being a part of the stakeholders,
the employees may directly inform the Audit Committee or indirectly
inform them via internal forms on the intranet, or by telephone, or e-mail
the Ethics Committee regarding transactions that are contrary to the
legislation and are unethical. On the other hand, the transactions of other
stakeholders such as customers and suppliers which are contrary to the
legislation and are unethical are conveyed to the Ethics Committee or the
Audit Committee by way of notification and complaint.

Human Resources (HR) processes within the Company are developed by
an Organisational Development team reporting to the Deputy General
Directorate of Business Support, and the Turkcell Employee Relations
Management Department executes these processes.

In general, the Code of Ethics is posted on the Company’s corporate
website, under the Investor Relations section under the Corporate
Governance heading. These codes of ethic are complementary to other
related policies, codes of conduct, and guides that have already been

TURKCELL ANNUAL REPORT 2015112

published or shall be published by the Company. Training programmes and
notifications are provided to employees through various channels during
the year in order to increase their awareness and acknowledgement with
respect to the Common Values and Business Ethics Rules.

Ongoing and new social responsibility projects of the Company in 2015
are listed below.

Contribution to Education

• Snowdrops

The Snowdrops Project which was recognized globally by the United
Nations in March 2010 as an “exemplary” scheme marked its 15th
anniversary. Following the completion of their high school and university
education, thousands of our Snowdrops have embarked upon their careers.
To date, we have provided over 100 thousand scholarships to 30 thousand
girls and we continue to support students, including those with disabilities,
for their high-school and university education as part of the project.

• People Without Boundaries

We employ 500 disabled citizens at Turkcell Group and Turkcell Call
Centers. 50% of our employees at Turkcell Global Bilgi Van-Erciş Call
Centers are disabled.

We support the development of disabled students towards education
and employment to increase the competencies of disabled children with
special education requirements and to enable them to become part of
social life with the “Education Without Boundaries Program” under
the auspices of the Ministry of Education. As part of this program, we
plan to create professional workshops and technology classes in 80
schools where disabled students receive special education. In 2015, we
have constructed 10 schools, reaching our target. Our aim is to reach 10
thousand students within 2 years.

We also offer “Turkcell – YGA Visually Impaired Individuals’ Leadership
Program” to visually impaired students. Twenty five visually impaired
students who successfully complete the program, where disabled
leaders with the potential to be role models are trained, participate in a
Leadership Camp. Ten stars are then selected from among the candidates
who are trained for 10 weeks at workshops, receive one-on-one coaching
from a role model leader.

With Turkcell’s support, the “Dialogue in the Dark” Exhibition, where
participants experience the everyday lives of the visually impaired, have
enriched its content and also provides employment opportunities to the
visually impaired guides.

With the “Turkcell My Dream Companion” service, disabled citizens
can listen to the following free of charge: recent news from Turkey and
around the world, columns, thousands of books including world classics,
personal development guides and fairy tales; information services such
as astrology, exchange rates, weather forecasts and Goals on Mobile. The
“Audio Description” service, which we have included in this service, is
now available through a mobile application for the first time in the world.
With “Audio Description”, in which the scenes in films without dialogue

are described in detail, the visually impaired can watch movies with the
same joy as any moviegoer.

Diverse range of courses for the hearing impaired with sign language
and subtitles can be reached through “Academy Without Borders” within
Turkcell Academy. Turkcell Academy continues to provide “Turkish Sign
Language” courses in cooperation with the Federation of the Deaf.
Furthermore, visually impaired individuals can learn to use smartphones
with iOS-Android courses developed for them.

Through our partnership with the Turkish Football Federation and Turkish
Blind Sports Federation since 2013, we continue to be the “Main Sponsor”
of The National Blind Football Team and the Name Sponsor of the
“Turkcell Those Who See The Sound League,” which is a football league
for the visually impaired.

Our National Blind Football Team became the European Champions,
defeating its rivals in the 2015 European Championship. Furthermore,
with this championship the team has qualified to take part in the 2016 Rio
Olympics.

• Developers of the Future

Through Developers of the Future Project, which we built on our desire
to contribute to increasing Turkey’s share of the software economy,
and our need to ascertain how to create value for the ecosystem two
years ago, we facilitate educational, developmental and employment
opportunities in informatics young people. Nearly 60 thousand people
have benefited from the “gelecegiyazanlar.turkcell.com.tr” platform. To
keep the youth up-to-date on developments in the software sector, we
held face-to-face meetings with over 6,500 students at 101 universities
in 81 cities in Turkey. 11,000 developers were issued certificates of
achievement, confirming their readiness to contribute to Turkey’s
growing potential.

Contribution to Sports

We continue to provide support to the team sports of basketball and
football, and to the individual sports of athletics and swimming.

Football and Basketball Sponsorships

We support the National Football Team since 2002 through our
sponsorship. Having successfully qualified for Euro 2016, the National
Team will represent our country at the European Championship in France
in 2016. We will continue to support the National Team until 2019.

This year, we have also added “Official Communications Sponsorship
of Spor Toto Super League” to our sponsorships and “Professional
Footballers Awards Sponsorship”. Our support for football will
increasingly continue in 2016.

We continue to support our National Basketball Team, which represented
our country at the 2015 European Basketball Championship, as a sponsor
since 2002.

113

We have planned to invest TRY 28 million in the Swimming and Athletics
Performance projects under the auspices of the Turkish Ministry of Youth
and Sports.

We are active at every stage of the project that aims to train 200,000
qualified athletes, and to attain international success for Turkish sports.
Our focus remains on the training of promising national athletes for
the 2016 and 2020 Summer Olympics. Moreover, our aim is to create
federations with strong corporate structures and sustainable success,
and to extend these sports to a wider group of people.

Contribution to Culture and Arts

We have been the Communications and Technology Sponsor of Istanbul
Modern, Turkey’s first contemporary art gallery, since 2012. We have
developed solutions and applications unique to Istanbul Modern, pioneering
in Turkey with the first museum application compatible with Beacon.

We have included another support to the culture and arts by becoming the
Communications and Technology sponsor of the Sakıp Sabancı Museum in
2014. With our “My Ticket on Mobile” service, we make purchasing tickets
easier and provide visitors convenience at museum entrances. For the first
time in Turkey, we have designed education programs for families with
children of 0-36 months to participate at the museum.

We will continue to support art and culture by integrating our technology
into museums in order to improve peoples’ lives.

Women Empowerment In The Economy

“Women Empowerment in the Economy Project” was initiated in
collaboration with the Turkish Foundation for Waste Reduction (TISVA)
to enable women to better contribute to the economy by reducing the
gap between equality of payments and opportunities. Having completed
its third year of operation in 2015, we have provided microcredit
support across 69 provinces to 70,000 women entrepreneurs, keen to
become independent contributors to the economy.

Sustainability at Turkcell

As Turkcell, we continue to work to do our duties in the best way
possible in environmental, social and corporate management, and to
create a better future for all of us.

As a result of our successful operations in energy, in 2014 we were
awarded the ISO50001 Energy Management System Standard
certificate. By receiving the ISO 14064 – Accounting and Verification
of Corporate Greenhouse Gas Emissions document to carry out all
our responsibilities regarding greenhouse gas standards with our
implementations protecting the environment and enabling efficiency
and savings to be made in 2015, we became the first GSM company in
Turkey to receive this certification. Our report filed to CDP Turkey for
2014 was presented an award by being one of the top 5 companies to
receive the highest points in the Carbon Disclosure Project’s Climate
Disclosure Leadership Index. Furthermore, we became one of the
29 companies chosen to be in the index in 2015 through meeting the
criteria of the Borsa Istanbul’s Sustainability Index.

SECTION 5- BOARD OF DIRECTORS
5.1. Structure and Formation of the Board of
Directors
According to the provisions of the second paragraph of article 17 of the
Capital Markets Law No. 6362, Ahmet Akça, Atilla Koç and Mehmet
Hilmi Güler have been appointed as the board members under the
resolution no. 2013/8 of the CMB dated March 11, 2013 for holding this
office until the election of independent board members in place of them
duly or until the adoption of a new resolution related thereto by the
CMB in order to ensure the fulfilment of the requirement with respect
to the election of independent board members among the Corporate
Governance Principles pursuant to the second paragraph of article 17 of
the Capital Markets Law No. 6362;

Mehmet Bostan and Bekir Pakdemirli have been appointed as the board
members under the resolution no. 2013/27 of the CMB dated August
15, 2013 pursuant to the provision of the sub-paragraph (k) of the first
paragraph of the article 128 of the Capital Markets Law No. 6362 in place
of the board members who have been elected in General Shareholders’
Meeting dated April 29, 2010 for a duty period of 3 years and whose
duty periods have expired but their successors could not be elected by
the shareholders to hold this office until election of new members by
the Company’s General Shareholders’ Meeting in accordance with the
legislation or appointment of other members by the CMB in addition
to 3 independent board members appointed pursuant to the resolution
no. 8/271 of CMB dated March 11, 2013 and; Erik Belfrage and Jan Erik
Rudberg notified to the Capital Markets Board by Sonera Holding BV
have been appointed as the board members under the resolution no.
2013/30 of the CMB dated September 13, 2013 for 2 board memberships
remained vacant as a result of ex-officio appointments made to the
board of directors under resolutions no. 8/271 and 28/921 of the Board
dated March 11, 2013 and August 15, 2013 respectively in order to hold
this office until the election of new members by the Company’s General
Shareholders’ Meeting in accordance with the legislation or appointment
of other members by the CMB.

Following the appointment of the board members made by the CMB, the
Board of Directors of Turkcell currently consists of 7 (seven) members
meeting the independency criteria in total and 3 (three) of them are
independent members.

Ahmet Akça
Chairman of the Board and Independent Board Member

Ahmet Akça has been appointed as the member of Turkcell’s Board of
Directors under the resolution adopted by the CMB Bulletin no.2013/8
dated March 11, 2013 for holding this office until a new independent
board member is elected in his place duly and takes the office or until
adoption of a new resolution related thereto by the CMB and as the
President of Turkcell’s Board of Directors on August 19, 2013. He also
acts as the President of Turkcell’s Audit Committee and Candidate
Nomination Committee. From 1980 to 1988, Mr. Akça served as a Foreign

TURKCELL ANNUAL REPORT 2015114

Trade Manager in the glass and food industry. In 1988 he became CEO
of an International Trading Company, a position he held until 1992.
He later started his own business, which he still runs. Mr. Akça is the
founder and Chairman of the Board of Directors logistics company Akça
Lojistik Hizmetleri ve Ticaret A.Ş. He was a member of the Committee of
Trustees in January 2010, at the time of the Bezmialem Vakıf University
establishment, and has been serving as the Chairman of the Committee
of Trustees since November 2011. After studying mathematics at Middle
East Technical University and sociology at Istanbul University for a
while, Mr. Akça graduated from the Bursa Economics and Commercial
Sciences Academy’s Department of Economics.

Atilla Koç
Independent Board Member

Atilla Koç has been appointed as the member of Turkcell’s Board of
Directors under the resolution adopted by the CMB Bulletin dated
March 11, 2013 for holding this office until a new independent
board member is elected in his place duly and takes the office or
until adoption of a new resolution related thereto by the CMB. He
also acts as the President of Turkcell’s Compensation Committee.
Having working as an Undersecretary at the Ministry of Interior
and as the Chief of Police in Konya, he served as the District
Governor of the Ulubey, Nusaybin and Bayındır districts, and as
the Governor of Siirt and Giresun provinces. He has also been the
Prime Minister’s Undersecretary, the General Secretary of Ankara
Metropolitan Municipality, and the Central Governor. Then, Mr. Koç
served as AKP Aydın deputy in 22nd and 23rd period of Grand National
Assembly of Turkey and the Minister of Culture and Tourism in the
59th Government. He graduated from Ankara University’s Faculty of
Political Science.

Mehmet Hilmi Güler
Independent Member of Board of Directors

Mehmet Hilmi Güler has been appointed as the member of Turkcell’s
Board of Directors under the resolution of the CMB dated March 11,
2013 for holding this office until a new independent board member
is elected in his place duly and takes the office or until adoption
of a new resolution related thereto by the CMB. He also acts as
the President of Turkcell’s Early Detection of Risks Committee and
Corporate Governance Committee. He formerly worked as a Project
Engineer and Group Chairman at TUSAŞ Aerospace Industries.
Mr. Güler also served as Vice President and Board Member of the
Scientific and Technological Research Council of Turkey (TÜBİTAK),
as Chairman and General Manager of the Machines and Chemical
Industries Board (MKEK), as the General Manager and Chairman of
Etibank, as the Chief Undersecretary to the Prime Minister, and as
Board Member and Executive Director at ERDEMİR and İGDAŞ. Mr.
Güler also served as Minister of Energy and Natural Resources in the
58th, 59th and 60th Governments. Mr. Güler graduated from Middle
East Technical University’s Department of Metallurgical and Materials
Engineering where he obtained his Master’s and Doctorate degrees.

Mehmet Bostan
Member of Board of Directors

Mehmet Bostan has been appointed as the member of Turkcell’s Board
of Directors under the resolution of the CMB dated August 15, 2013 in
order to hold this office until election of new members by the Company’s
General Shareholders’ Meeting in compliance with the legislation or
appointment of other members by the CMB. He serves as the Chairman
of the Board of Directors of Turkcell Global Bilgi since 2014 and Turkcell
Global Ödeme Sistemleri since 2015. Mr. Bostan formerly worked as
Senior Relationship Manager at BNP Ak Dresdner Bank A.Ş, Manager
at TSKB, Chief Representative of Dresdner Bank AG Turkey and Chief
Financial Officer at Güneş Sigorta. He has served as the General
Manager and Board Member of Vakıf Emeklilik since 2010. He is a
Board Member of the Pension Monitoring Center and Turkey Tennis
Federation. Mr. Bostan graduated from International Relations, from the
Faculty of Economics, at İstanbul University. He holds an MBA from Bilgi
University.

Bekir Pakdemirli
Member of Board of Directors

Bekir Pakdemirli has been appointed as the member of Turkcell’s
Board of Directors under the resolution of the CMB dated August 15,
2013 in order to hold this office until election of new members by the
Company’s General Shareholders’ Meeting in compliance with the
legislation or appointment of other members by the CMB. Over the
past 10 years, he has worked as Regional Manager for the Middle East
of a multinational company, General Manager of a ceramic company in
İzmir and General Manager of a publicly-listed food company. Currently,
he is Business Development Manager of the company McCain and
provides consultancy services on management, finance, efficiency
and restructuring to corporations. Mr. Pakdemirli is a board member
of Tarkem, historical Kemeraltı Inc, a Board Member of the Anatolia
Foundation for Autism and a member of the Capital Market Investors
Association. Mr. Pakdemirli presents a weekly economic program on
Ege TV. He is an amateur captain, amateur pilot and amateur radio
operator. After graduating from Bilkent University, Faculty of Business
Administration, he completed his Master’s degree in Management at
Başkent University. Currently, Mr. Pakdemirli is working towards his
PhD degree in Economics at Celal Bayar University.

Jan Erik Rudberg
Member of Board of Directors

Jan Erik Rudberg has been appointed as the member of Turkcell’s
Board of Directors under the resolution of the CMB dated September
13, 2013 in order to hold this office until election of new members
by the Company’s General Shareholders’ Meeting in compliance with
the legislation or appointment of other members by the CMB. He is
currently Chairman of the Board of Directors of Kcell JSC (Independent
Director) and the Chairman of the Board of Directors of Hogia AB.
Since 2010, Mr. Rudberg has also a member of the Board of Directors
of OJSC MegaFon (Independent Director). Between 1994 and 2003

BOD MEMBER
NAME, SURNAME

DUTY

DUTIES WITHIN
GROUP

DUTIES OUTSIDE THE GROUP:
COMPANY NAME

DUTIES OUTSIDE THE
GROUP: TITLE

Ahmet Akça

Chairman of the
Board

Chairman of the
Board of lifecell
LLC

(1) Akça Lojistik Hizmetleri ve Ticaret A.Ş.

(2) Bezmiâlem Foundation University

(1) Chairman of the Board
of Directors

(2) Chairman of the
Board of Trustees

115

TERM OF OFFICE /
REMAINING TERM
OF OFFICE

Until replacement

Mehmet Hilmi
Güler

Board Member

Atilla Koç

Board Member

Mehmet Bostan*

Board Member

Bekir Pakdemirli**

Board Member

Jan Erik Rudberg

Board Member

Chairman of the
Board of Superonline
İletişim Hizm. A.Ş.

Chairman of the
Board of KKTCELL

- Chairman of the
Board at Global Bilgi
Pazarlama Danışma
ve Çağrı Hizm. A.Ş.

- Chairman of the
Board at TÖHAŞ

- Fintur Holdings
B.V. Board Member

- KKTCELL Board
Member

- TÖHAŞ Board
Member

Chairman of the
Board at CJSC
“Belarusian
Telecomunication
Network”

Erik Jean Christian
Antoine Belfrage

Board Member

lifecell LLC Board
Member

(1) Mir Teknoloji Holding A.Ş.

(1) Board Member

(2) ICBC Turkey Bank A.Ş.

(2) Board Member

Until replacement

(1) Vakıf Emeklilik

(2) Pension Monitoring Center

(3) Turkey Tennis Federation

(1) Board Member

(2) Board Member &
General Manager

(3) Board Member

(1) Adres Danışmanlık Ltd. Şti.

(2) McCain Foods Limited

(1) Chief Advisor

(2) Business Development
Manager

Until replacement

(3) Tarkem Tarihi Kemeraltı A.Ş.

(3) Board Member

Until replacement

(4) Anadolu Otizm Vakfı

(5) Sermaye Piyasası Yatırımcıları Derneği

(1) Hogia AB

(2) Kcell JSC

(3) PJSC Megafon

(1) KIBI AB

(2) Eramet Steel

(3) Philippines (Stockholm)

(4) The International Council of Swedish
Industry

(5) International Chamber of Commerce-
Committee on Corporate Responsibility and
Anti-Corruption

(6) International Chamber of Commerce-
Finance Committee

(7) The Trilateral Commission

(8) Sigtunaskolan Humanistiska Laroverket
(Sigtuna School)

(9) SEB Marcus Wallenberg

(10) Investor AB Jacob Wallenberg

(4) Member of Board of
Trustees

(5) Member of the Society

(1) Chairman of Board of
Directors (Independent)

(2) Chairman of Board of
Directors (Independent)

(3) Board Member
(Independent)

(1) Board Member

(2) Board Member

(3) Honorary General
Consul

(4) Chairman of Board of
Directors

(5) Chairman

(6) Vice Chairman

(7) Board Member

(8) Chairman

(9) Advisor to Chairman

(10) Advisor to Chairman

Until replacement

* Mehmet Bostan has been appointed as the President of Republic of Turkey Prime Ministry Privatisation Administration with the decision published on the Official Gazette dated February 26, 2016.
** Bekir Pakdemirli has been appointed as Board Member at TÖHAŞ with the resolution registered with the trade registry on February 25, 2016.

TURKCELL ANNUAL REPORT 2015116

he held various executive positions at Telia AB, after having served as
the Chief Executive Officer of Tele2 AB, Executive Vice President of
Nordbanken AB, Chief Executive Officer of Enator AB, as well the Chief
Executive Officer of Ericsson Information Systems Sweden AB and
holding several managerial positions at IBM. Mr. Rudberg has a degree
in Economics and Business Administration from the Gothenburg School
of Economics.

Erik Belfrage
Member of Board of Directors

Erik Belfrage has been appointed as the member of Turkcell’s Board of
Directors under the resolution of the CMB dated September 13, 2013 in
order to hold this office until election of new members by the Company’s
General Shareholders’ Meeting in compliance with the legislation
or appointment of other members by the CMB. In the 70´s and 80´s,
Mr. Belfrage worked as a Swedish diplomat in Geneva, Washington,
Bucharest, Beirut, and in Paris. Since 1987 he has served as Senior Vice
President at SEB, and as an advisor to Dr. Peter Wallenberg, an advisor
to the Chairman at the companies Investor AB Jacob Wallenberg and SEB
Marcus Wallenberg. In 2012 Mr. Belfrage set up a consultancy, Consilio
International AB, where he also is the Chairman. The firm advises large
Nordic corporates. Currently, Mr. Belfrage is chairman of several boards.
He holds an MBA from the Stockholm School of Economics.

Kaan Terzioğlu
Chief Executive Officer

Kaan Terzioğlu was appointed Turkcell’s Chief Executive Officer on April
1, 2015. He began his professional life in 1990 as an Independent Auditor
and CPA at Arthur Andersen Turkey. In 1992, Mr. Terzioğlu joined Arthur
Andersen USA as the IT Strategies and Security Specialist, and in 1994,
began working at Arthur Andersen Belgium as the Leader of Information
Management and Digital Strategy Services. In 1998, he was appointed
Vice President of Consultancy Services Turkey Operations. Between 1999
and 2012, he served as the Team Leader of E-Commerce Strategies for
the EMEA region, Sales Director of Advanced Technologies for the EMEA
region, Managing Director of Technology Marketing Organization for the
EMEA region, and Vice President of Central and Eastern Europe at the
Cisco Systems Brussels branch, respectively. Between April 3, 2012 and
April 1, 2015, Mr. Terzioğlu was a Member of the Board of Directors at
Akbank, Aksigorta A.Ş., Teknosa İç ve Dış Ticaret A.Ş. and Carrefoursa
A.Ş. Kaan Terzioğlu graduated from the Department of Business
Administration at Boğaziçi University.

In the past years, the Board of Directors has had female members, thus
a policy for having female members in the Board of Directors has not yet
been established.

At the Ordinary General Shareholders’ Meeting held on March 26, 2015,
members of the Board of Directors were granted permission regarding
their activities within the prohibition of competition with operations
conducted by himself/herself or on behalf of another individual as per
Articles 395 and 396 of the Turkish Code of Commerce.

5.2. Principles of Activity of the Board of
Directors
The agenda of the meetings of the Board of Directors is prepared by the
Chairman of the Board of Directors, who takes into account requests
made by members of the Board of Directors and executives.

The Board of Directors met a total of 13 times during 2015 via physical
participation and teleconference. The overall rate of attendance at these
meetings was 92%. The resolutions in the meetings were adopted with
unanimity at a rate of 99%.

In order to assure proper attendance, Turkcell set the schedule of the
Board meetings to be held in the following year at the end of the current
year and notified these to the members. Thus, the members are offered
the opportunity to schedule their activities according to their meetings,
and the date of the next board meeting is also determined taking the
requests of the members into account at each board meeting. In urgent
matters, additional meetings can always be convened without waiting
for the next meeting date. Invitations to the meetings are sent via e-mail.
In line with the Corporate Governance Principles, the Secretariat which
has been set up within the structure of the Board of Directors informs
the Board members by notifying the agenda of the meeting and the
documents related to the agenda, writes and archives the discussions
conducted by the Board members during the meetings on a report, and
records the reasons of the counter votes regarding matters for which a
different opinion has been expressed.

As per articles of association:

Board meetings are possible with there being a quorum of at least five
members at the meeting. At board meetings, ordinary resolutions are
made with four affirmative votes at meetings with five members and
with five affirmative votes at meetings with more than five members.

Neither the Chairman of the Board of Directors nor the Board members
hold any preferential voting rights or the right to veto the resolutions
made by the Board of Directors. All Board members, including the
Chairman, have equal voting power.

Any damage to the Company which may be caused by the failures of the
Board members during the performance of their duties has been insured
and the insurance limit in the September 2014 – September 2015 period
was accepted as USD 400 million and USD 850,500 insurance premium
was paid.

5.3. Number, Structure and Independence of
the Committees Established Under the Board of
Directors
Throughout the financial year of 2015, the Audit Committee, Corporate
Governance Committee, Compensation Committee and Early Detection
of Risks Committee carried out their operations. The following decisions
were made during the meeting of our Company’s Board of Directors
dated August 19, 2013 regarding the distribution of work:

117

• the Audit Committee being constituted of Ahmet Akça, Mehmet Hilmi
Güler and Atilla Koç of our independent Board members as well as
appointing Ahmet Akça as the chairman of the Committee;

Internal Audit function mainly comprise of operational audits conducted
pursuant to annual audit plans and audits in accordance with Article 404
of the Sarbanes-Oxley Act.

• the Early Detection of Risks Committee being constituted of Mehmet

Hilmi Güler, Mehmet Bostan and Bekir Pakdemirli as well as appointing
Mehmet Hilmi Güler as the chairman of the Committee;

• the Corporate Governance Committee1 being constituted of Mehmet

Hilmi Güler, Mehmet Bostan and Bekir Pakdemirli as well as appointing
Mehmet Hilmi Güler as the chairman of the Committee;

• the Compensation Committee being constituted of Atilla Koç, Mehmet
Hilmi Güler and Mehmet Bostan; as well as appointing Atilla Koç as the
chairman of the Committee;

• the Candidate Nomination Committee being constituted of Ahmet
Akça, Mehmet Hilmi Güler, Atilla Koç, Mehmet Bostan and Bekir
Pakdemirli as well as appointing Ahmet Akça as the chairman of the
Committee.

Each board member is commissioned in more than one committee due to
the structuring of the Board of Directors.

The activities and working principles of the committees are generally
disclosed to the public on the Company’s website.

None of the other Board Members commissioned in committees are
executive members. The meetings of the committees meetings are held
at necessary intervals or by taking the request of any member into
consideration and conducting meetings in parallel with dates of Board
meetings has been agreed upon.

Information regarding the committees formed under the Board of
Directors is available on the Company’s corporate website (www.
turkcell.com.tr) in the Investors Relations section under the Corporate
Governance heading.

1 Investor Relations and Business Development Executive Nihat Narin joined
the Corporate Governance Committee as of February 19, 2015.

5.4. Risk Management and Internal Control
Mechanisms
During our Company’s Ordinary General Shareholders’ Meeting held
on March 26, 2015, DRT Bağımsız Denetim Serbest Muhasebeci Mali
Müşavirlik A.Ş. was appointed as the Company auditor for auditing
our Company’s financial statements of 2015 as per the Turkish Code of
Commerce.2

Operational audit activities are carried out according to annual audit
plans prepared with respect to a risk based audit approach. The objective
of these audits is to provide assurance with regard to the sufficiency and
efficiency of business processes and suitability thereof with regulations
so as to enable Company activities to be carried out in accordance with
internal and external regulations and strategic objectives.

On the other hand, as we are listed on the New York Stock Exchange
in the United States, audits are conducted within the framework of
the annual plan to provide assurance in terms of the existence and
sufficiency of an internal control structure across Turkcell and Turkcell
Group Companies, which are consolidated, and whether this structure
operates effectively, in compliance with the provisions of Article 404
of the Sarbanes-Oxley Act, which all publicly traded companies are
required to comply with. All stages from the planning stage to the
specified internal control insufficiencies and following and concluding
actions of the audit activities carried out in accordance with said Article
are reported to the Audit Committee, CEO and Chief Finance Officer at
regular intervals.

The Internal Audit Unit also prepares research reports by providing
consultancy in current matters and matters requested by the
management.

The Internal Audit Unit reports the compliance practices as per Sarbanes
Oxley Rule Act Section 404 to the Audit Committe and the CEO while
Corporate Risk Management Unit reports to the Early Detection of
Risks Committee and the CEO. The Internal Audit mechanism operates
with a risk based audit perception. Within this scope, functionally
and institutionally probable risks are continuously reviewed and
the possible effects of these risks and risk appetite according to our
managing capacity are determined. The risk analyses resulting from these
conducted operations constitute the main input of audit activities.

Furthermore, there is an Enterprise Risk Management (ERM) process
which comprises identifying the risks that may affect Turkcell’s
performance in achieving its targets, to coordinating risk analysis
activities, planning necessary actions, sharing, reporting and following
the outcomes with the Company management. The Enterprise Risk
Management Unit is responsible for coordinating the ERM process under
the supervision of the Group Internal Audit Directorate. The Turkcell
Enterprise Risk Management Unit aims at developing an approach, where
the risk management process is conducted in an integrated manner
with the fundamental management processes. While enabling this, a
framework associated with the process was identified in accordance
with an Enterprise Risk Management procedure as per the COSO
framework and ISO 31000 standard. During the risk identification and
evaluation period, different methods such as Delphi research, workshops,

2 Our Company’s Board of Directors decided to appoint Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş (PricewaterhouseCoopers) as the independent audit firm
to audit our Company’s accounts and operations for the year 2016. This decision shall be submitted to the approval of our shareholders during the first Annual General Assembly Meeting of
our Company.

TURKCELL ANNUAL REPORT 2015118

brainstorming sessions, reports from risk contacts, thorough interviews,
research reports, etc. are used. Thus, the objective was to extensively
identify, evaluate and effectively manage risks causing uncertainties.

As of the end of the financial year of 2012, the “Early Detection of Risks
Committee” has been in operation in order to perform activities in a
manner affiliated with the Board of Directors within the scope of Article
378 of the Turkish Commercial Code and the Communiqué on Corporate
Governance of the Capital Markets Board. The Early Detection of Risks
Committee supports the Board of Directors by performing studies for
the purpose of early diagnosis of the risks which may jeopardize the
existence, development and continuity of the Company, implementing
the necessary measures related with the identified risks and managing
the risks. The Committee reports to the Board of Directors once every 2
months and the reports are sent to an independent audit Company. The
Board of Directors regularly provides an evaluation regarding the risks
affecting the Company through the Early Detection of Risks Committee.

The Corporate Risk Management Unit is responsible for coordinating
the risk assessment and risk avoidance activities at departments as
well as reporting the results to the Early Detection of Risks Committee
within the scope of Corporate Risk Management methodology. During
this process, the ownership of the risks and the responsibility of risk
avoidance activities belong to the business and not transferred to the
responsibility of the Corporate Risk Management Unit.

In 2000, Turkcell formulated its business continuity plans in a manner
also encompassing its technical operations and repositioned its business
continuity plan as Business Continuity Management by broadening the
extent thereof in 2004.

With the restructuring in 2011, the scope of the program expanded so
as to comprise Turkcell Group companies and suppliers. Turkcell Group
Business Continuity Management System has been structured and
certified in a manner ensuring the continuity of our call, messaging,
Internet and societal security services as per the “ISO 22301, Societal
security - Business continuity management systems” standard. Regular
drills are conducted for our business continuity plans formed by
considering the customers’ expectations, corporate policies and legal
obligations in order to guarantee their operation in emergency cases.

Thanks to our geographically dispersed technical infrastructure,
extensive coverage, solution partner network, mobile exchanges,
additional capacity, emergency centres and extensive experience in
handling emergencies enable us to minimize the impact of risks as much
as possible and additionally, the experience of our Group companies in
customer services, our high speed fibre-optic infrastructure, data storage
services and our experienced software development teams allow us to
effectively manage any disasters from another centre, thereby ensuring
the continuity of our activities.

5.5. Strategic Goals of the Company
As Turkcell Group, we aim to become the leader in integrated
telecommunication market in Turkey, to rise to the leading position in
every country we operate in through being one of the top 2 in each, and
to provide globally relevant products with over 100 million users with
our ‘Converged Communications and Technology Services Company
with Globally Relevant Services’ vision. To reach this objective, we have
determined our values as operating freely, genuinely and confidently
together with our employees, group companies, ecosystem and
customers. We adopt a culture, where we value and work together to
create value, and are focused on a unique customer experience; and
also make a difference with our technology leadership and focus on
solutions. Our strategy throughout this path is to provide integrated
telecommunication and technology services; and to hold a strong
position in Turkey and to take actions which will enable us to grow
internationally and creating value.

5.6. Financial Rights
The shareholders were informed with a separate agenda topic at the
Ordinary General Shareholders’ Meeting held on March 26, 2015 within
the framework of the Wages Policy approved with the decision of
the Company’s Board of Directors and made public on the Company’s
website. During the 2012 financial year, a Compensation Committee
which is responsible for determining the remuneration principles that
apply to the Board members and senior management taking into account
the long-term strategic goals of the Company, for setting out the
remuneration criteria for the Board members and senior management’s
performance and makes compensation recommendations to the Board
had been established.

All rights, benefits and remuneration provided to board members and
senior management on a cumulative basis and the criteria along with
remuneration principles used in the determination of these are being
shared with the public through the Company’s wages policy and annual
reports.

The total benefit paid and provided to the key management personnel
amounts to TRY 66 million 876 thousand for the financial year which
ended on December 31, 2015.

In addition to their salaries, the Company provides fringe benefits to
the directors and the executive officers as well as contributes to their
pension plans. The Company is obliged to contribute to such pension
plans at a certain percentage of the employee’s salary.

With the scope of the resolution adopted at General Shareholders’
Meeting dated April 29, 2010 for the payment of net EUR 250,000 per
year to the Chairman of the Board of Directors and net EUR 100,000 per
year to each member of the Board of Directors during the period of their
service, said payments are continued.

No loans, credits or assurances such as the surety for benefit are granted
to Board Members and senior executives of the Company.

119

CONCLUSION OF
AFFILIATION REPORT

01.01.2015-31.12.2015 Fiscal Year
Conclusion of the Report on relationship among
the Parent Company and the subsidiaries as per
the Article 199 of the Turkish Commercial Code:
“Details of the legal transactions of our Company with Turkcell Holding
A.Ş. and its subsidiaries during the fiscal year 2015 are given in the above
tables. There is neither any legal transaction made in favor of Turkcell
Holding A.Ş or one of its subsidiaries nor any action taken or avoided in
favor of Turkcell Holding A.Ş. or one of its subsidiaries upon directive by
Turkcell Holding A.Ş.

Details of services provided and/or fixed asset purchases/sales
performed under operational activities carried out between our
Company and Turkcell Holding A.Ş. and/or its subsidiaries that are fully
in conformity with the market during the fiscal year 2015 are included in
this Report.”

TURKCELL ANNUAL REPORT 2015SECTORAL AND
FINANCIAL
INFORMATION

122

TELECOMMUNICATIONS
SECTOR IN TURKEY

The Information and Communication Technologies Authority
(ICTA) established for the regulation and supervision of the
telecommunication sector as an independent management authority
has been in operation since August 2000.

In the third quarter of 2015, the number of xDSL subscribers
approached 6.9 million and that of fiber subscribers came close to 1.6
million. As of the third quarter of 2015, the total length of the fiber
infrastructure of alternative operators had reached 55,393 km.

According to the ICTA Market Data report, the number of players in
the Turkish electronic communications sector was 676 as of the third
quarter of 2015 and the number of authorizations given to these
players was 1,108.

While the total volume of mobile traffic in the third quarter of 2015
was 56.4 billion minutes, the amount of fixed traffic was determined
to be 2.6 billion minutes. And while the amount of mobile traffic
stayed stable quarter-on-quarter, the amount of fixed traffic
decreased by about 11.2%. The majority of the traffic (91.9%) was
constituted by mobile to mobile traffic.

As a result of the “IMT authorization tender regarding service and
infrastructures” held by the ICTA on August 26, 2015 for mobile
services to be improved, the frequency assigned to operators was
increased from 183.8 MHz to 549.2 MHz. With operators beginning
to provide service with IMT-Advanced technology as of April 1, 2016,
the speed of mobile broadband internet is aimed to be increased by at
least 10-fold.

FIXED LINE MARKET

Fixed line penetration in Turkey decreased by 0.3 points quarter-on-
quarter, reaching 15.1% with 11,696,067 fixed telephone subscribers
as at the end of the third quarter of 2015.

INTERNET & BROADBAND MARKET

The number of broadband internet subscribers, which was around 6
million in 2008, had exceeded 46.7 million as of the end of the third
quarter of 2015. In the third quarter of 2015, there was an increase
in internet subscriptions of approximately 5.4% in comparison to
the previous three-month term, and the general upward trend in the
number of internet subscribers continued with the increase in mobile,
cable and fiber internet subscribers. Whereas, the annual rate of
increase in the total number of internet subscribers was 17.4%.

The total amount of revenue in relation to internet service providers
in the third quarter of 2015 was approximately TRY 1.2 billion.
Approximately 62% of fixed broadband subscribers in Turkey were
seen to prefer packages offering connection of 10-30 Mbit/sec. When
we look at internet subscribers’ amount of usage on mobile computers,
the percentage of users with over 100 MB usage is understood to be
at 82.8%. The percentage of users with the least amount of usage
within the range of 0-50 MB was 14.2%. Furthermore, the percentage
of subscribers with over 100 MB usage among mobile internet
subscribers was 72.5%. The share of service provided with xDSL
technology by alternative operators in the broadband industry was at
14.8% as of the third quarter of 2015.

MOBILE MARKET

As of the end of September 2015, there were 73,235,783 mobile
subscribers corresponding to approximately 94.3% penetration in
Turkey. Excluding the population aged 0-9 years, mobile penetration
exceeds 100%.

In the third quarter of 2015, 3G subscriber number reached
63,066,580, while 3G mobile broadband subscribers through mobile
computer and mobile phones increased to 35,876,101. Total mobile
internet usage was at 156,669 TByte in the same period. As of the
third quarter of 2015, the number of M2M subscribers had reached
2.9 million; the number of pre-paid broadband subscribers had
reached 17,128,083; and the number of post-paid mobile broadband
subscribers had reached 20,410,815. When we look at the third
three-month term in 2015, pre-paid subscribers were 53% of
mobile subscribers, and the percentage of post-paid subscribers
rose from 42.9% to 47% on a yearly basis. The percentage of those
switching mobile phone carriers within the third three-month term
of 2015 declined by 13.7% to 2,651,835. As of November 10, 2015,
87,469,269 subscribers had switched their mobile phone carriers.

As of the third three-month term of 2015, Turkcell had 46.8%,
Vodafone had 30.1% and Avea had a 23.2% subscriber market share.
As of the third term of 2015, 50.1% of Avea, 47.1% of Turkcell and
44.5% of Vodafone subscribers were post-paid.

When the traffic data of the third three-month term of 2015 is
compared to the previous three-month term, the total amount of
traffic is seen to have increased by 1.2% and by 7.4% on a yearly
basis. Individually, Turkcell’s traffic increased by 2.5%, Vodafone’s
traffic climbed by 0.6% and Avea’s traffic rose by 0.1% quarter-on-
quarter.

In terms of total revenues as of the third quarter term of 2015,
the market share of Turkcell is 43.2%, and those of Vodafone and
Avea are 35.9% and 20.9%, respectively. Turkcell’s and Vodafone's
market shares increased by 0.2 percentage points, while Avea’s market
share decreased by 0.4 percentage points, quarter-on-quarter.

As of the third quarter of 2015, the revenue market share of Turkcell
was 47.5%, and those of Vodafone and Avea were 30.4% and 22.1%,
respectively.

TV MARKET

As of the third term of 2015, total number of cable TV subscribers
were at 1,156,133 while subscribers of digital cable TV provided under
the Teledünya brand stood at 759,341. While there are 26 operators
holding cablecast service management authorization, only Türksat is
actively in-service.

Companies such as Digital Platform Teknoloji Hizmetleri AŞ (Digitürk),
Doğan TV Digital Platform İşletmeciliği AŞ (DSmart), Platformturk
Dijital Platform Hizmetleri AŞ (Filbox) and TTNET A.Ş. (Tivibu) are
authorized to provide a satellite platform service and are operating
actively.

123

KEY REGULATORY CHANGES IN 2015
The 4.5G Authorization Tender
“The IMT Authorization Tender Regarding Service and Infrastructures”
held on August 26, 2015 was approved with decree no. 2015/YK-
YED/390 of the Information and Communication Technologies Authority
(ICTA) dated August 27, 2015, and IMT Authorization Documents given
to the operators at a ceremony attended by the Turkish President held on
October 27, 2015.

The Authorization Document will be valid for 13 years until 2029. In
accordance with the spectrum being assigned in a technologically neutral
manner, it will be possible to directly apply new technologies to be
developed in compliance with IMT standards over the coming years.

After the Authorization Document was signed, an obligation was imposed
to supply 30%, 40% and 45% domestic products in the 1st, 2nd and 3rd
year, respectively. The obligation to make purchases from suppliers and
SMEs having Research and Development centers employing numerous
employees, which was previously introduced with 3G concession
agreements, was retained. Furthermore, the condition that products to
be purchased from SMEs must be produced in our country was enforced.

Another obligation stating that 95% of the entire population, and 90%
of the entire population on the basis of each city has to be covered
within 8 years was also imposed. In addition to these obligations, another
obligation specifying that 99% of all highways and high-speed rail lines
need to be covered within 3 years, 95% of all divided highways within
6 years and 90% of all conventional railway lines within 10 years was
imposed. As these locations can be covered with 4.5G, they can also be
covered with 3G if the quality of service specified in the Authorization
Document is provided. Inversely, locations requiring coverage with 3G
technology in accordance with the 3G concession agreement can be
covered with 4.5G technology as well. In addition, a further obligation
was imposed for all areas detailed above, to be covered with service
quality at a minimum download speed of 2Mbs with 95% probability.

An obligation was imposed for operators to share their access networks
with active radio sharing at all of the new antenna facilities to be set up
for all residential areas with a population of under 10 thousand, as well
as highways, high-speed rail lines, divided highways and conventional
railway lines to be covered.

Operators will be able to share networks, which they will be using to
provide 4.5G technology and subsequent technologies developed in
compliance with IMT standards, with fixed operators with the condition
of receiving ICTA consent.

TURKCELL ANNUAL REPORT 2015124

The obligation for operators in the 3G concession agreement to pay
15% of their gross revenue to the treasury was also protected in the
IMT Authorization Document. In this context, 15% of gross revenue
is to be obtained from all networks to be established with 4.5G and
subsequent technologies to be developed in compliance with IMT
standards in the future.

The Board Decision Concerning the Maximum
Price Tariff
The Maximum Price Tariff for Mobile Electronic Communications
Services was updated with ICTA’s Board Decision no. 2015/DK-
ETD/435 valid as of November 1, 2015. While no changes were made
to call or SMS costs in the updated tariff, the maximum costs that can
be collected in cases of “Name/Title Changes”, “Number Changes”
and “Sim Card Changes Due to Loss, Theft, User Error” were reduced,
and a decision was made for “SIM Card Changes As Part of Guarantee”
processes to be free.

Market Analyses in the Electronic
Communications Sector
Market analysis operations, which are performed by the ICTA once
every three years at the latest, have been initiated, and these
analyses are aimed to be completed within 2016. The conducting of
market analyses is expected to foster competition in the sector and
a re-evaluation of the obligations introduced to operators having
Significant Market Power in related markets. The mobile and fixed
markets analyzed within the study are as follows:
• Mobile Access and Call Origination Market,
• Mobile Call Termination Market,
• Fixed Call Termination Market,
• Fixed Call Origination Market,
• Wholesale Broadband Access Market,
• Physical Infrastructure Access Market.

Procedures and Principles Regarding
Communicating for Purposes Such As
Marketing and Promotion
The Procedures and Principles Regarding Communicating for Purposes
Such As Marketing and Promotion were published on August 6, 2015,
and the 5th Article, the first paragraph of the 7th Article and the first
paragraph of the 9th Article of the Procedures and Principles came into
effect as of October 1, 2015, and the other articles came into effect
as of May 1, 2015. With the relevant procedures and principles, the
communications for marketing and promotion were arranged so as to

be carried out without requiring an additional consent when receiving
contact information from the subscriber with the same purposes
during the establishment of the subscription. Regarding the receiving
of content and consent for communication in the Procedures and
Principles, ICTA has specified the sample texts and determined that
the operators can make contact with their subscribers’ a maximum of
twice a year to receive consent.

Other Regulations
The directive regarding Making Changes to the Directive Concerning
Processing Personal Data and Protecting Confidentiality was
cancelled with a Constitutional Court decision, and the annulment
decision came into effect on January 26, 2015.

Digitürk Sub-licensing
Upon the decision of the Competition Authority, Krea İçerik Hizmetleri
ve Prodüksiyon Anonim Şirketi A.Ş. (content provider to Digitürk) was
obliged to sub-license the broadcasting rights license of the 2015-
2016 and 2016-2017 Super League football season matches (matches
within Package A Broadcasts) from the Turkish Football Federation to
other companies.

Directives of the Ministry of Customs and
Trade
Directives prepared by the Ministry of Customs and Trade, based on
articles no. 6502 “The Law on the Protection of the Consumer” and
no. 6563 “The Law on the Arrangement of Electronic Trade” came
into effect. Accordingly, the “Directive of Contracts Drawn Outside
the Workplace”, “Directive of Subscription Contracts”, “Directive of
Distance Contracts” and “Directive of Installment Sales” prepared
within the scope of article no. 6502 “The Law on the Protection of
the Consumer”, came into effect on April 14, 2015, April 24, 2015,
February 27, 2015 and January 14, 2015, respectively. The “Directive
on Service Providers and Intermediary Service Providers in Electronic
Trade” and the “Directive on Commercial Communication and
Commercial Electronic Messages” prepared based upon article no.
6563 “The Law on the Arrangement of Electronic Trade” came into
effect on August 26, 2015 and July 15, 2015, respectively.

Licence Application of TÖHAŞ
As per the law no. 6493, Turkcell Ödeme Hizmetleri A.Ş. (TÖHAŞ) has
applied the Banking Regulation and Supervision Agency (BDDK) in
March 2015 to obtain a licence to provide payment services. TÖHAŞ
has met the regulatory requirements in full in this regard.

125

TURKCELL GROUP: 2015
FINANCIAL & OPERATIONAL
REVIEW

Our audited annual consolidated financial statements including
our consolidated statements of financial position as of December 31,
2015 and 2014 and our consolidated statements of profit and loss,
comprehensive income, changes in equity and cash flows for the
three years in the period ended December 31, 2015 and the related
notes included in this annual report have been prepared in accordance
with International Financial Reporting Standards as issued by the
International Accounting Standards Board (“IFRS Report”).
The following financial and operational overview focuses principally on
the developments and trends in our business in the full year 2015 and
should be read in conjunction with the IFRS report. The figures
are expressed in Turkish liras (TRY) unless otherwise stated. A year on
year comparison of key indicators is provided and figures in parentheses
following the operational and financial results for the year end 2015 refer
to the same item for the year end of 2014 unless otherwise stated.

TURKCELL ANNUAL REPORT 2015126

Turkcell Group: Financial Performance

CONSOLIDATED PROFIT & LOSS STATEMENT (MILLION TRY)

Revenue

Direct cost of revenues1

Depreciation and amortization

Gross Profit Margin

Administrative expenses

Selling and marketing expenses

EBITDA2

EBITDA Margin

Net finance income / (expense)

Finance costs

Finance income

Share of profit of equity accounted investees

Other income / (expense)

Monetary gain

Non-controlling interests

Income tax expense

Profit for the year

1 Including depreciation and amortization expenses.
2 EBITDA is a non-GAAP financial measure.

CONSOLIDATED BALANCE SHEET DATA (YEAR END) (MILLION TRY)

Cash and cash equivalents

Total assets

Long term debt

Total debt

Total liabilities

Total equity

2014

12,043.6

(7,383.9)

(1,639.4)

38.7%

(562.7)

(1,974.6)

3,761.8

31.2%

(291.6)

(1,247.0)

955.4

207.3

(76.3)

205.1

428.2

(730.4)

1,864.7

2014

9,031.9

23,694.2

1,247.9

3,697.7

6,983.6

16,710.6

2015

12,769.4

(7,769.5)

(1,667.8)

39.2%

(625.3)

(1,901.9)

4,140.5

32.4%

(43.4)

(799.5)

756.1

367.3

(225.9)

0.0

164.1

(667.1)

2,067.7

2015

2,918.8

26,207.3

3,487.8

4,214.2

11,788.4

14,418.9

% CHANGE

6.0%

5.2%

1.7%

0.5pp

11.1%

(3.7%)

10.1%

1.2pp

(85.1%)

(35.9%)

(20.9%)

77.2%

196.1%

(100.0%)

(61.7%)

(8.7%)

10.9%

% CHANGE

(67.7%)

10.6%

179.5%

14.0%

68.8%

(13.7%)

127

% CHANGE

10.1%

298.0%

(45.6%)

(221.6%)

(324.2%)

(342.3%)

(24.2%)

(67.7%)

% CHANGE

0.5pp

1.2pp

0.7pp

40.0pp

3.5pp

2014

3,761.8

(2,144.8)

819.3

(1,633.8)

100.5

903.0

9,031.9

2014

38.7%

31.2%

15.5%

41.8%

98.3%

2015

4,140.5

(8,536.2)

445.8

1,987.0

(225.3)

(2,188.1)

6,843.8

(3,925.0)

2,918.8

2015

39.2%

32.4%

16.2%

81.8%

101.8%

CONSOLIDATED CASH FLOW (MILLION TRY)

EBITDA1

LESS:

Capex and license

Net interest income/ (expense)

Other

Net change in debt

Cash generated / (used)

Cash balance before dividend payment

Dividend paid

Cash balance after dividend payment

1 EBITDA is a non-GAAP financial measure.

PROFITABILITY AND SOLVENCY RATIOS (%)

Gross Profit Margin

EBITDA Margin

Net Profit Margin

Total Liability / Equity Ratio

Total Debt / EBITDA Ratio

Explanatory Notes:
Revenue2: Group revenues grew by 6.0% to TRY12,769 million
(TRY12,044 million) in 2015. Turkcell Turkey revenues, constituting
90% of Group revenues, increased by 9.5% to TRY11,481 million
(TRY10,480 million) on the back of a 10.2% rise in consumer segment
revenues to TRY9,127 million (TRY8,282 million) and 6.5% growth in
corporate segment revenues to TRY2,032 million (TRY1,907 million).
Voice revenues, comprising 52% of Turkcell Turkey revenues, declined
by 2.7% in parallel to industry trends while data revenues rose by
38.1% with increased smartphone penetration to 52%, a higher number
of data users and increased data usage, and services and solutions
revenues increased by 38.5%. Turkcell International revenues decreased
by 24.8% to TRY856 million (TRY1,138 million) mainly due to yearly
currency devaluation in Ukraine and Belarus, and decline in Turkcell
Europe revenues due to change in its business model. Other subsidiaries’
revenues, comprised of our information and entertainment services,

call center revenues, and inter-business eliminations, grew by 1.6% to
TRY432 million (TRY425 million).

Direct cost of revenues: Direct cost of revenues rose by 5.2% to
TRY7,769 million (TRY7,384 million) while as a percentage of revenues
falling to 60.8% (61.3%) in 2015. This was driven by the decrease in
interconnect costs (0.7pp) and depreciation and amortization expenses
(0.6pp), more than offsetting the rise in various other cost items (0.8pp).

Administrative expenses: Administrative expenses as a percentage of
revenues rose by 0.2pp to 4.9% (4.7%) in 2015 due to the increase in
various cost items as a percentage of revenues in 2015.

Selling and marketing expenses: Selling and marketing expenses as a
percentage of revenues declined by 1.5pp to 14.9% (16.4%) due to lower
selling expenses (1.0pp), marketing expenses (0.4pp) and other cost items
(0.1pp) in 2015.

2 Please refer to page F55 in this report for the definition of Turkcell Turkey, Turkcell International and Other Subsidiaries in the Notes to the Consolidated Financial Statements.

TURKCELL ANNUAL REPORT 2015TRY1,775 million of our consolidated debt is set at a floating rate,
while TRY726 million will mature within less than a year. (The figures in
parentheses refer to US$ or EUR equivalents).

Cash flow analysis: Capital expenditures, including non-operational items
and 4.5G license, were at TRY8,536 million, of which TRY7,752 million was
related to Turkcell Turkey and TRY770 million to Turkcell International.
In 2015, operational capex as a percentage of revenues was realized at
around 20%.

Donations: Turkcell İletişim Hizmetleri A.Ş. donated TRY 11,989,544 to
various associations, foundations and charitable organizations in 2015.

128

EBITDA: Group EBITDA rose by 10.1% to TRY4,141 million (TRY3,762
million) with an EBITDA margin improvement of 1.2pp to 32.4% (31.2%)
in 2015. This was achieved by a decline in selling and marketing expenses
of 1.5pp as opposed to the rise in direct cost of revenues of 0.1pp and
general administrative expenses of 0.2pp.

Net finance expense: Turkcell Group registered a lower net finance
expense of TRY43 million (TRY292 million) in 2015, mainly due to lower
translation losses of TRY489 million (TRY1,111 million), despite the
increase in interest expenses and decline in interest income from time
deposits.

The share of profit of equity accounted investees: Our share in the
net income of unconsolidated investees, comprised of Fintur, increased
by 77.2% to TRY367 million (TRY207 million)* in 2015. In 2014, Fintur’s
financials were impacted by non-cash charges of US$125 million,
stemming from a write down of operational assets and impairment charges
relating to goodwill and fixed assets. These charges negatively impacted
our Group financials by TRY116 million on the basis of our 41.45% share in
Fintur in 2014.

Income tax expense: The income tax expense declined by %8.7 to
TRY667 million (TRY730 million), of which TRY591 million comprised
current tax charges and TRY76 million was the deferred tax expense
recorded.

Net income: Group net income as per IFRS rose by 10.9% to TRY2,068
million (TRY1,865 million) year-on-year, mainly due to higher EBITDA,
lower translation losses recorded and higher contribution from Fintur,
despite the decline in interest income earned on time deposits, the rise in
interest expenses on loans and one-off impacts.

Total debt: Total debt as of December 31, 2015 rose to TRY4,214 million
from TRY3,467 million as of September 30, 2015, in consolidated terms.
We issued a Eurobond with an aggregate principal amount of US$500
million and utilized EUR500 million of debt under our loan agreement with
China Development Bank, while we performed loan repayments of US$700
million this quarter following the debt restructuring of lifecell and BeST.

Turkcell Turkey’s debt balance was TRY3,766 million, of which TRY1,631
million (US$560.9 million) was denominated in US$ and TRY1,628
(EUR512.2 million) in EUR. The debt balance of lifecell was TRY442
million, denominated in UAH. Meanwhile, BeST had a debt balance of TRY6
million, denominated in BYR.

* In 2014, share of profit of equity accounted investees also included A-Tel.

129

Adjusted Net Income - Net Income Reconciliation:
We use “adjusted net income” as a means of presenting our income
excluding net foreign currency gain / (loss) (including tax and minority
impact), monetary gain (inflation impact), interest income on time
deposits of Turkcell İletişim Hizmetleri and items which we believe to be
“one-off” or items that took place for the first time in the relevant year.

The reconciliation of adjusted net income to income is as shown below.
Please note that this is a non-GAAP measure and that we may in future
presentations change the scope of items that we deduct from net income
to arrive at “adjusted net income.”

Below table presents reconciliation of Turkcell Turkey adjusted net income to net income per IFRS:

NET INCOME IMPACTS (MILLION TRY)

Adjusted net income

Net foreign currency gain/(loss)

Interest income on time deposits of Turkcell İletişim
Hizmetleri A.Ş.

Cancellation of provision booked for A-Tel

Subscriber reimbursements

ICTA penalties

Other impacts

FY14

1,913

151

470

(36)

(108)

(8)

NET INCOME IMPACTS (MILLION TRY)

Adjusted net income

Net foreign currency gain/(loss)

Interest income on time deposits of Turkcell İletişim
Hizmetleri A.Ş.

Contract termination expense

Additional cost in relation to Turk Telekom settlement

4.5G VAT receivables discount

ICTA penalties

Other impacts

Net income - IFRS

2,406

Net income - IFRS

Below table presents reconciliation of Turkcell Group adjusted net income to net income per IFRS:

NET INCOME IMPACTS (MILLION TRY)

Adjusted net income

FY14

2,190

NET INCOME IMPACTS (MILLION TRY)

Adjusted net income

Net foreign currency gain/(loss) (tax & minority included)

(703)

Net foreign currency gain/(loss) (tax & minority included)

Interest income on time deposits of Turkcell İletişim
Hizmetleri A.Ş.

Monetary gain

Fintur impairment expense

BeST impairment expense

Cancellation of provision booked for A-Tel

Subscriber reimbursements

ICTA penalties

Other impacts

Net income - IFRS

470

205

(111)

(35)

(36)

(108)

(31)

1,865

Interest income on time deposits of Turkcell İletişim
Hizmetleri A.Ş.

Monetary gain

Contract termination expense

Additional cost in relation to Turk Telekom settlement

4.5G VAT receivables discount

ICTA penalties

Other impacts

Net income - IFRS

FY15

2,256

302

181

(129)

(51)

(30)

(10)

(35)

2,484

FY15

2,590

(404)

181

(129)

(51)

(30)

(10)

(79)

2,068

TURKCELL ANNUAL REPORT 2015130

Operational Review (Turkey):

SUMMARY OF OPERATIONAL DATA

2014

Number of subscribers
Mobile Postpaid (million)
Mobile M2M (million)
Mobile Prepaid (million)
Fiber (thousand)
ADSL (thousand)
IPTV (thousand)
Churn (%)
Mobile Churn (%)1
Fixed churn (%)
ARPU-Average Monthly Revenue per User (TRY)
Mobile ARPU, blended2
Postpaid
Postpaid (excluding M2M)
M2M
Prepaid
Fixed Residential ARPU, blended
Mobile MOU-Average Monthly Minutes of usage per subs (blended)

35.9
15.2
1.5
19.4
735.1
456.2
60.1

28.3%
17.7%

22.5
37.7
41.5
3.2
11.6
47.4
275.3

2015

35.8
16.6
1.9
17.4
899.4
620.8
223.7

27.3%
16.7%

24.5
38.5
42.7
3.3
12.4
48.7
296.6

% CHANGE

(0.3%)
9.2%
26.7%
(10.3%)
22.4%
36.1%
272.2%

(1.0pp)
(1.0pp)

8.9%
2.1%
2.9%
3.1%
6.9%
2.7%
7.7%

1 As per our churn policy, prepaid subscribers are disconnected from the system if they do not top-up above TRY10 during a nine month period. Additionally, in the fourth quarter of 2015, 379
thousand subscriptions which had not topped-up at all within the stipulated period were also disconnected.
2 In our 2014 Annual Report, Q414 release, and 2014 20-F, we presented mobile ARPU blended, postpaid and prepaid for 2014 of US$11.2, US$18.8 and US$5.8, respectively. These figures have
since been revised to US$10.3, US$17.2 and US$5.3, respectively. No changes have been made to the corresponding TRY figures.

On the mobile side, our postpaid customer base continued to expand
and reached 16.6 million on 1.4 million net additions during the year, we
believe driven by our value focus. Accordingly the postpaid share in the
total subscriber base reached 48.7% (43.9%). Total mobile customers
declined by 624 thousand to 34.0 million in 2015 due to the contraction
in the more price sensitive prepaid segment.

On the fixed front, our growth momentum continued, with customers
exceeding 1.5 million on the back of our expanding fiber network, strong
sales force and customer care efforts. The Turkcell TV platform continued
its firm growth throughout the year, reaching 224 thousand users.
Including mobile TV and web TV users, Turkcell TV users reached 558
thousand as at the end of 2015.

Mobile churn rate was at 27.3% (28.3%) in 2015 while fixed churn rate
stood at 16.7% (17.7%) .

Mobile ARPU rose by 8.9% to TRY24.5 (TRY22.5) with the continued
favorable change in subscriber mix, our upsell strategy, increased mobile
broadband usage, mobile services revenue growth and our focus on high
value customer groups. Fixed Residential ARPU improved by 2.7% to
TRY48.7 (TRY47.4).

Mobile MoU rose by 7.7% to 296.6 minutes (275.3 minutes) in 2015 with
our increased postpaid base and upsell strategy.

Smartphone penetration on our network reached 52%, supporting higher
data usage. We registered 3.4 million3 yearly additions and reached 16.1
million smartphones on our network, of which over one third is already
4G enabled.

3 Approximately 1.1 million of these smartphone net additions were due to an adjustment in relation to devices which were not previously classified as smartphones.

131

FORWARD LOOKING STATEMENTS

In 2015, we delivered on our guidance for consolidated revenue growth, EBITDA margin and
operational capex/sales ratio (excluding license fees).

TURKCELL GROUP 2016 GUIDANCE

For 2016, we expect a revenue growth target of 8%-10% for both Turkcell Turkey and Turkcell Group,
consolidated EBITDA margin to be within the 31%-33% range and an operational capex (excluding
license fees) over sales ratio of around 20%.

Although Turkcell believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to
be correct. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. For a discussion of certain risk factors and challenges that
may affect the outcome of such forward looking statement, please visit our Investor Relations website and consult the financial and other reports available on such website, as well as the
financial and other reports available on the websites of the regulators of the stock exchanges on which our shares are listed. All subsequent written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

TURKCELL ANNUAL REPORT 2015132

REVIEW OF RISK ASSESSMENT
The headlines below with regards to financial, operational, strategic,
legal and regulatory, reputational and business continuity risks are
monitored within the context of our corporate risk governance practice:
• Any challenges in competition in the Turkish market where majority of

our revenues are generated;

• The possibility of not attaining expected returns on new investments

and new businesses;

• Regulatory decisions and changes in the regulatory environment;

• Any downturn in the macroeconomic environment or political

instability in Turkey and internationally;

• Any regulatory and legal regulations having adverse effect on our

operations in those countries where we have operations;

• Macroeconomic instability and currency fluctuations in those

countries where we have operations;

• Foreign exchange rate risks and risks relating to our cash balance

management that could significantly affect our results of operation;

• Increase in our borrowing requirements as a result of cash generated

from operations and related costs;

• Limitations on spectrum as a scarce resource in mobile

telecommunication systems and speculation regarding base
transceiver stations;

• Turkcell’s existing ownership structure and ongoing disagreements

among our main shareholders;

• Our dependence on certain systems and third-party suppliers related

to the products and services we provide;

• Transition period in case of a resignation of our key personnel, our

partners and their employees;

• Resolutions in various claims and legal actions arising in the ordinary

course of our business;

• Risk of errors, misconduct or omissions in financial reporting despite

regular internal controls;

• Threats of natural disasters and/or cyber risks towards our information

technology infrastructure;

• Risk of decrease in our market share as a result of not being able
to develop products and services that meet customers’ needs and
expectations and

• Risk of not being able to meet the expected increase in value as a

result of falling behind of expected developments and improvements
in sales channels.

Risk Management and Internal Control
Mechanisms
The Group’s risk management policies are formed in order to proactively
identify and analyze the risks that have the potential to negatively
impact the Company achieving its targets, to set appropriate control
systems and processes to manage these risks and turn them to
opportunities, and to provide maximum contribution to the Company’s
efforts in meeting its targets. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the
Group’s activities.

During our Company’s Ordinary General Shareholders’ Meeting held
on March 26, 2015, DRT Bağımsız Denetim Serbest Muhasebeci Mali
Müşavirlik A.Ş. was appointed as the Company auditor for auditing
our Company’s financial statements of 2015 as per the Turkish Code of
Commerce.

Moreover, the Internal Audit Unit operates with the Board of Directors
and is responsible for the auditing of Turkcell İletişim A.Ş. and all of
the Group Companies which are subsidiaries, and reports the results of
the audit carried out within generally accepted international auditing
standards to the Audit Committee and CEO. The auditing activities of the
Internal Audit function mainly comprise of operational audits conducted
pursuant to annual audit plans and audits in accordance with Article 404
of the Sarbanes-Oxley Act.

The Internal Audit Unit also prepares research reports by providing
consultancy in current matters and matters requested by the
management.

133

TURKCELL ANNUAL REPORT 2015134

135

TURKCELL ILETISIM HIZMETLERI A.S.
AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2015 AND
INDEPENDENT AUDITOR’S REPORT

136

137

TURKCELL ANNUAL REPORT 2015138

139

TURKCELL ANNUAL REPORT 2015140

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

Assets

Property, plant and equipment
Intangible assets

GSM and other telecommunication operating licenses
4.5G license not yet available for use
Computer software
Other intangible assets

Investment properties
Investments in equity accounted investees
Other investments
Other non-current assets
Trade receivables
Deferred tax assets
Total non-current assets

Inventories
Other investments
Due from related parties
Trade receivables and accrued income
Other current assets
Cash and cash equivalents

Total current assets

Total assets

Equity

Share capital
Share premium
Capital contributions
Reserves
Retained earnings

Total equity attributable to equity holders of
Turkcell Iletisim Hizmetleri AS

Non-controlling interests

Total equity

Liabilities

Loans and borrowings
Employee benefits
Provisions
Other non-current liabilities
Trade and other payables
Deferred tax liabilities

Total non-current liabilities

Bank overdraft
Loans and borrowings
Income taxes payable
Trade and other payables
Due to related parties
Deferred income
Provisions
Total current liabilities

Total liabilities

Total equity and liabilities

Note

13
14

15
16
17
18
20
19

17
35
20
21
22

23
23
23
23
23

26
27
29
25
30
19

22
26
12
30
35
28
29

2015

6,821,494
8,232,637
2,520,785
3,984,954
1,570,346
156,552
49,572
981,939
-
441,940
836,256
48,615
17,412,453

75,471
-
11,760
4,098,928
1,689,902
2,918,796
8,794,857

26,207,310

2,200,000
269
35,026
861,111
11,258,411

14,354,817

64,085

14,418,902

3,487,786
114,869
130,619
366,670
1,270,610
113,437
5,483,991

-
728,744
12,855
5,283,070
6,555
121,078
152,115
6,304,417

11,788,408

2014

5,893,596
2,447,395
1,002,090
-
1,336,804
108,501
13,398
667,539
-
525,572
779,925
59,074
10,386,499

71,322
19,350
12,938
3,502,515
669,706
9,031,881
13,307,712

23,694,211

2,200,000
269
35,026
430,387
14,427,741

17,093,423

(382,778)

16,710,645

1,247,868
96,278
278,386
309,551
-
60,314
1,992,397

-
2,450,626
154,785
2,067,129
24,632
164,423
129,574
4,991,169

6,983,566

2013

5,864,657
2,362,394
1,114,243
-
1,161,358
86,793
16,304
535,622
8,219
251,779
528,928
73,277
9,641,180

70,102
57,686
21,369
2,763,141
602,197
8,128,925
11,643,420

21,284,600

2,200,000
269
35,026
113,751
12,567,620

14,916,666

(181,531)

14,735,135

1,528,480
82,617
289,248
272,485
-
65,630
2,238,460

506
1,806,141
138,888
1,902,758
90,235
196,826
175,651
4,311,005

6,549,465

26,207,310

23,694,211

21,284,600

F 1

The notes on page 7 to 159 are an integral part of these consolidated financial statements.

141

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

Revenue
Direct costs of revenue
Gross profit

Other income
Selling and marketing expenses
Administrative expenses
Other expenses
Results from operating activities

Finance income
Finance costs
Net finance (costs) / income

Monetary gain
Share of profit of equity accounted investees
Profit before income tax

Income tax expense
Profit for the year

Profit / (loss) attributable to:
Owners of Turkcell Iletisim Hizmetleri AS
Non-controlling interests
Profit for the year

Basic and diluted earnings per share
(in full TL)

Note

2015

2014

2013

11
11

12,769,415
(7,769,483)
4,999,932

44,454
(1,901,859)
(625,279)
(270,446)
2,246,802

756,039
(799,514)
(43,475)

-
367,336
2,570,663

(667,112)
1,903,551

2,067,654
(164,103)
1,903,551

12,043,587
(7,383,947)
4,659,640

58,929
(1,974,608)
(562,694)
(135,177)
2,046,090

955,401
(1,246,986)
(291,585)

205,068
207,287
2,166,860

(730,444)
1,436,416

1,864,640
(428,224)
1,436,416

11,407,887
(7,063,857)
4,344,030

35,502
(1,843,641)
(550,339)
(94,300)
1,891,252

759,862
(204,581)
555,281

176,871
297,260
2,920,664

(591,398)
2,329,266

2,325,914
3,352
2,329,266

0.94

0.85

1.06

The notes on page 7 to 159 are an integral part of these consolidated financial statements.

F 2

TURKCELL ANNUAL REPORT 2015
142

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

Profit for the year

1,903,551

1,436,416

2,329,266

2015

2014

2013

Other comprehensive income / (expense):

Items that will not be reclassified to profit or loss:
Actuarial (loss) / gain arising from employee benefits
Tax effect of actuarial gain / (loss) from employee benefits

Items that will or may be reclassified subsequently
to profit or loss:
Change in cash flow hedge reserve
Foreign currency translation differences
Share of foreign currency translation differences of the equity accounted investees
Tax effect of foreign currency translation differences

Other comprehensive (expense) / income for the year, net of income tax

(13,466)
2,563
(10,903)

719
166,730
(551,196)
(5,749)
(389,496)

(400,399)

(819)
196
(623)

1,089
477,592
(9,114)
(3,646)
465,921

465,298

5,287
(1,026)
4,261

541
(233,074)
46,155
6,766
(179,612)

(175,351)

Total comprehensive income for the year

1,503,152

1,901,714

2,153,915

Total comprehensive income attributable to:
Owners of Turkcell Iletisim Hizmetleri AS
Non-controlling interests

1,616,867
(113,715)

2,098,610
(196,896)

2,194,151
(40,236)

Total comprehensive income for the year

1,503,152

1,901,714

2,153,915

F 3

The notes on page 7 to 159 are an integral part of these consolidated financial statements.

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T

TURKCELL ANNUAL REPORT 2015

144

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

Note

13
14
11
12
16, 36

20
36

21
18
36

25
27
29

11
11

Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation and impairment of fixed assets and investment property
Amortization of intangible assets
Net finance (income)
Income tax expense
Share of profit of equity accounted investees
(Gain)/loss on sale of property, plant and equipment
Unrealized foreign exchange and monetary gain/loss on operating assets
Allowance for trade receivables and due from related parties
Negative goodwill
Deferred income
Reversal of provision for equity accounted investees
Loss on sale of A-tel
Impairment losses on equity accounted investees and other non-current investments

Change in trade receivables
Change in due from related parties
Change in inventories
Change in other current assets
Change in other non-current assets
Change in due to related parties
Change in trade and other payables
Change in other non-current liabilities
Change in employee benefits
Change in provisions

Interest paid
Income tax paid
Dividends received
Net cash generated by operating activities

Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from currency option contracts
Payment of currency option contracts premium
Change in financial assets
Acquisition of subsidiary net off cash acquired
Proceeds from sale of A-tel
Advanced paid for a acquisition of property, plant and equipment
Interest received
Net cash provided/(used in) investing activities

Cash flows from financing activities
Proceeds from issuance of loans and borrowings
Proceeds from issuance of bonds
Repayment of borrowings
Change in non-controlling interest
Dividends paid
Increase in cash collateral related to loans
Net cash generated (used in) by financing activities

Net increase/ (decrease) in cash and cash equivalents

Cash and cash equivalents at 1 January

Effects of foreign exchange rate fluctuations on cash and cash equivalents

Cash and cash equivalents at 31 December

2015

1,903,551

1,118,499
549,251
(515,040)
667,112
(367,336)
(13,141)
579,372
196,588
-
8,095
-
-
-
4,126,951

(821,208)
3,907
(4,526)
(771,583)
(70,030)
(20,530)
348,472
(14,088)
5,125
23,423
2,805,913
(153,529)
(751,078)
-
1,901,306

(2,135,358)
(2,461,612)
24,192
1,070
-
19,350
(267,920)
-
228,070
761,328
(3,830,880)

4,866,381
1,439,862
(6,551,001)
-
(4,025,515)
(349,243)
(4,619,516)

(6,549,090)

9,031,881

436,005

2,918,796

2014

1,436,416

1,157,720
481,737
(855,645)
730,444
(226,448)
(10,158)
943,303
155,931
(2,085)
(24,935)
(19,161)
902
-
3,768,021

(1,156,196)
7,838
(2,541)
(77,524)
(31,927)
3,131
191,011
29,045
12,842
(51,806)
2,691,894
(94,107)
(699,293)
92,263
1,990,757

(1,553,590)
(575,885)
28,094
2,770
(33)
38,336
(27,900)
597
(236,042)
945,663
(1,377,990)

4,736,913
-
(4,635,652)
(75)
(8,172)
-
93,014

705,781

8,128,418

197,682

9,031,881

2013

2,329,266

1,138,128
456,274
(640,561)
591,398
(297,260)
(12,239)
(117,157)
153,378
(186)
48,266
-
-
37,957
3,687,264

(874,637)
(8,970)
17,073
(101,507)
(28,311)
(9,271)
117,739
43,830
14,012
34,789
2,892,011
(113,365)
(647,678)
79,584
2,210,552

(1,348,604)
(460,019)
21,492
870
(189)
(18,783)
(1,520)
-
-
721,253
(1,085,500)

1,705,223
-
(1,934,740)
75
(1,046)
-
-230,488

894,564

6,998,870

234,984

8,128,418

F 5

The notes on page 7 to 159 are an integral part of these consolidated financial statements.

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

145

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015
(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

Notes to the consolidated financial statements

1. Reporting entity

2. Basis of preparation

3. Significant accounting policies

4. Determination of fair values

5. Financial risk management

6. Operating segments

7. Acquisition of subsidiaries

8. Revenue

9. Other income and expenses

10. Personnel expenses

11. Finance income and costs

12. Income tax expense

13. Property, plant and equipment

14. Intangible assets

15. Investment property

16. Investments in equity accounted investees

17. Other investments

18. Other non-current assets

19. Deferred tax assets and liabilities

20. Trade receivables and accrued income

21. Other current assets

22. Cash and cash equivalents

23. Capital and reserves

24. Earnings per share

25. Other non-current liabilities

26. Loans and borrowings

27. Employee benefits

28. Deferred income

29. Provisions

30. Trade and other payables

31. Financial instruments

32. Operating leases

33. Guarantees and purchase obligations

34. Commitments and contingencies

35. Related parties

36. Subsidiaries

37. Subsequent events

Page

F18

F50

F52

F55

F60

F62

F63

F64

F66

F68

F74

F76

F78

F79

F82

F83

F84

F86

F87

F90

F91

F92

F93

F94

F102

F103

F151

F156

F159

F 6

TURKCELL ANNUAL REPORT 2015
146

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

1. Reporting entity
Turkcell Iletisim Hizmetleri Anonim Sirketi (the “Company”) was incorporated in Turkey on 5 October 1993 and commenced its operations in 1994.
The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark / Istanbul. It is engaged in
establishing and operating a Global System for Mobile Communications (“GSM”) network in Turkey and regional states.

In April 1998, the Company signed a license agreement (the “2G License”) with the Ministry of Transport, Maritime Affairs and Communications of
Turkey (the “Turkish Ministry”), under which it was granted a 25 year GSM license in exchange for a license fee of $500,000. The License permits
the Company to operate as a stand-alone GSM operator and releases it from some of the operating constraints in the Revenue Sharing Agreement,
which was in effect prior to the 2G License. Under the 2G License, the Company collects all of the revenue generated from the operations of its
GSM network and pays the Undersecretariat of Treasury (the “Turkish Treasury”) a treasury share equal to 15% of its gross revenue from Turkish
GSM operations. The Company continues to build and operate its GSM network and is authorized to, among other things, set its own tariffs within
certain limits, charge peak and off-peak rates, offer a variety of service and pricing packages, issue invoices directly to subscribers, collect payments
and deal directly with subscribers. Following the 3G tender held by the Information Technologies and Communications Authority (“ICTA”) regarding
the authorization for providing IMT-2000/UMTS services and infrastructure, the Company has been granted the A-Type license (the “3G License”)
providing the widest frequency band, at a consideration of EUR 358,000 (excluding Value Added Tax (“VAT”)). Payment of the 3G license was made in
cash, following the necessary approvals, on 30 April 2009.

On 26 August 2015, “Authorization Tender on IMT Services and Infrastructure” publicly known as 4.5G license tender, was held by the ICTA and the
Company was awarded with a total frequency band of 172.4 MHz for 13 years. The tender price is EUR 1,623,460 (equivalent to TL 5,158,706 as at 31
December 2015) (excluding VAT of 18%). IMT authorization period expires on 30 April 2029 and operators will be able to commence service delivery
for 4.5G starting from 1 April 2016. 2x1.4 MHz frequency band in 900MHz spectrum and 2 units of 2x5 MHz frequency bands in 2100 MHz spectrum
are commenced as at 1 December 2015, remaining packages will be ready to use on 1 April 2016. For details please refer to Note 14.

On 25 June 2005, the Turkish Government declared that GSM operators are required to pay 10% of their existing monthly treasury share to the
Turkish Ministry as a universal service fund contribution in accordance with Law No: 5369. As a result, starting from 30 June 2005, the Company pays
90% of the treasury share to the Turkish Treasury and 10% to the Turkish Ministry as universal service fund.

In July 2000, the Company completed an initial public offering with the listing of its ordinary shares on the Istanbul Stock Exchange and American
Depositary Shares, or ADSs, on the New York Stock Exchange.

As at 31 December 2015, two significant founding shareholders, Sonera Holding BV and Cukurova Group, directly and indirectly, own approximately
37.1% and 13.8%, respectively of the Company’s share capital and are ultimate counterparties to a number of transactions that are discussed in the
related parties footnote. Alfa Group holds 13.2% of the Company’s shares indirectly through Cukurova Holdings Limited and Turkcell Holding A.S.

F 7

147

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

1. Reporting entity (continued)
The consolidated financial statements of the Company as at and for the year ended 31 December 2015 comprise the Company and its subsidiaries
(together referred to as the “Group”) and the Group’s interest in one associate. Subsidiaries of the Company, their locations and their business are
given in Note 36. The Company’s and each of its subsidiaries’ and associate’s financial statements are prepared as at and for the year ended 31
December 2015.

2. Basis of preparation
(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the
International Accounting Standards Board (“IASB”).

The Company selected the presentation form of “function of expense” for the statement of comprehensive income in accordance with IAS 1
“Presentation of Financial Statements”.

The Company reports cash flows from operating activities by using the indirect method in accordance with IAS 7 “Statement of Cash Flows”, whereby
profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or
payments, and items of income or expense associated with investing or financing cash flows.

Authority for restatement and approval of consolidated financial statements belongs to the Board of Directors. Consolidated financial statements are
approved by the Board of Directors by the recommendation of Audit Committee of the Company.

The Group’s audited consolidated financial statements prepared as at and for the years ended 31 December 2010, 2011, 2012, 2013 and 2014 were
approved by the General Assembly on 26 March 2015.

The consolidated financial statements as at and for the year ended 31 December 2015 were approved by the Board of Directors on 18 February 2016
and updated by the management for any subsequent events up until 18 March 2016.

(b) Basis of measurement

The accompanying consolidated financial statements are based on the statutory records, with adjustments and reclassifications for the purpose of
fair presentation in accordance with IFRSs as issued by the IASB. They are prepared on the historical cost basis adjusted for the effects of inflation
during the hyperinflationary periods in accordance with International Accounting Standard No 29 “Financial Reporting in Hyperinflationary Economies”
(“IAS 29”), where applicable, except that the following assets and liabilities are stated at their fair value: put option liability, derivative financial
instruments, consideration payable in relation to acquisition and financial instruments classified as available-for-sale.

F 8

TURKCELL ANNUAL REPORT 2015
148

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(b) Basis of measurement (continued)

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the
Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is
determined on such a basis, except for leasing transactions that are within the scope of IAS 17 “Leases”, and measurements that have some similarities
to fair value but are not fair value, such as net realizable value in IAS 2 “Inventories” or value in use in IAS 36 “Impairment of assets”.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to
the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as
follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly;

and

• Level 3 inputs are unobservable inputs for the asset or liability.

Hyperinflationary period ceased by 31 December 2005 in Turkey and commenced on 1 January 2011 and ceased by 1 January 2015 in Belarus. In
the financial statements of subsidiaries operating in Belarus, restatement adjustments have been made to compensate the effect of changes in the
general purchasing power of the Belarusian Ruble in accordance with IAS 29. IAS 29 requires that financial statements prepared in the currency of
a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date. One characteristic that necessitates the
application of IAS 29 is the cumulative three-year inflation rate approaching or exceeding 100%. Such cumulative rate in Belarus was 52% for the
three years ended 31 December 2015 (31 December 2014: 65% and
31 December 2013: 196%) based upon the consumer price index (“CPI”) announced by the National Statistical Committee of the Republic of Belarus.
Accordingly, the economy of Belarus was considered to transit out of hyperinflationary status and determined to cease applying IAS 29 starting from
1 January 2015. Therefore, subsidiaries operating in Belarus have not applied IAS 29 in 2015.

Such index and the conversion factors used to adjust the financial statements of the subsidiaries operating in Belarus for the effect of inflation as at
31 December 2014 are given below:
Dates
31 December 2010
31 December 2011
31 December 2012
31 December 2013
31 December 2014

Conversion Factor
3.4406
1.6487
1.3538
1.1625
1.0000

Index
1.6387
3.4197
4.1645
4.8501
5.6381

F 9

149

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(b) Basis of measurement (continued)

The annual change in the BYR exchange rate against USD and Euro can be compared with the rates of general price inflation in Belarus according to
the CPI as set out below:
Years
Currency change USD (%)
Currency change Euro (%)
CPI inflation (%)

2014
25%
10%
16%

2013
11%
15%
16%

2015
57%
41%
12%

As at 31 December 2015 the exchange rate announced by the National Bank of the Republic of Belarus was BYR 18,569 = USD 1, BYR 20,300 = Euro 1
(31 December 2014: BYR 11,850 = USD 1, BYR 14,380 = Euro 1).

The main guidelines for the IAS 29 restatement are as follows:

- All statement of financial of position items, except for the ones already presented at the current purchasing power level, are restated by applying a

general price index.

- Monetary assets and liabilities of the subsidiaries operating in Belarus are not restated because they are already expressed in terms of the current

measuring unit at the balance sheet date. Monetary items presents money held and items to be received or paid in money.

- Non-monetary assets and liabilities of the subsidiaries operating in Belarus are restated by applying, to the initial acquisition cost and any

accumulated depreciation, the change in the general price index from the date of acquisition or initial recording to the balance sheet date. Hence,
property, plant and equipment, investments and similar assets are restated from the date of their purchase, not to exceed their market value.
Depreciation is similarly restated. The components of shareholders’ equity are restated by applying the applicable general price index from the
dates the components were contributed or arose otherwise.

- All items in the statement of profit or loss of the subsidiaries operating in Belarus, except non-monetary items in the statement of financial position
that have effect over statement of profit or loss, are restated by applying the relevant conversion factors from the dates when the income and
expense items were initially recorded in the financial statements.

- The gain or loss on the net monetary position is the result of the effect of general inflation and is the difference resulting from the restatement of
non-monetary assets, shareholders’ equity and statement of profit or loss items. The gain or loss on the net monetary position is included in net
income.

- The comparative amounts relating to the subsidiaries operating in Belarus in the consolidated financial statements of 2011, 2012, 2013 and 2014
are not restated. The translation effect of Belarusian Ruble (“BYR”) denominated equity accounts determined upon the application of inflation
accounting to TL is accounted under translation reserve in the consolidated financial statements as at 31 December 2015.

F 10

TURKCELL ANNUAL REPORT 2015
150

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(c) Functional and presentation currency

The consolidated financial statements are presented in Turkish Lira (“TL”), rounded to the nearest thousand. Moreover, all financial information
expressed in US Dollars (“USD” or “$”), Euro (“EUR”) and Ukranian Hryvnia (“UAH”) and Belarusian Ruble (“BYR”) has been rounded to the nearest
thousand. The functional currency of the Company and its consolidated subsidiaries located in Turkey and Turkish Republic of Northern Cyprus is
TL. The functional currency of Euroasia Telecommunications Holding BV (“Euroasia”) and Financell BV (“Financell”) is USD. The functional currency
of Eastasian Consortium BV (“Eastasia”), Beltur Coöperatief UA, and Turkcell Europe is EUR. The functional currency of LLC Astelit (“Astelit”), LLC
Global Bilgi (“Global LLC”) and UkrTower LLC (“UkrTower”) is UAH. The functional currency of Belarusian Telecommunication Network (“Belarusian
Telecom”) and LLC Lifetech is BYR. The functional currency of Azerinteltek QSC (“Azerinteltek”) is Azerbaijan Manat.

(d) Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.

Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant
effect on the amounts recognized in the consolidated financial statements are described in Notes 4 and 36 and detailed analysis with respect to
accounting estimates and critical judgments of allowance for doubtful receivables, useful lives or expected patterns of consumption of the future
economic benefits embodied in depreciable assets, commission fees, revenue recognition, income taxes and impairment testing for cash-generating
unit containing goodwill are provided below:

Key sources of estimation uncertainty
Belarus

Belarusian economy is still expected to continue contracting while vulnerabilities to external developments remain. In December 2015, Belarusian
Statistics Office announced that GDP contracted by 3.9% in 2015. Contraction in economy resulted from weak economic activity in Russia, weak
domestic demand and devaluation in BYR along with tight monetary stance. National Bank of the Republic of Belarus (“NBRB”) raised its refinancing
rate to 25% in January 2015 with worsening expectations for the Russian economy. BYR depreciated by 25% throughout 2014 and 57% in 2015
against USD and finished the year at 18,569 on 31 December 2015. BYR rate against USD stood at 20,985 as of 10 March 2016. Tight monetary
policy is still seen necessary because of weak domestic demand and foreign exchange rate concerns. Foreign exchange reserves excluding gold and
IMF money (SDR) have decreased by $0.65 million to $2.2 million within 2015 and decreased by another $0.33 million to $1.9 million at the end of
February 2016. Belarus repaid $6 million of internal and external foreign currency debt in 2015. On the other hand, Russia’s postponing payments
of loans maturing in 2015 and allowing payments to be made in Russian Ruble rather than USD led external debt repayments to be made in 2015
decrease from $4 million to $2.7 million. RMB swap agreement made with the Chinese Central Bank also strengthened Belarus’s debt repayment
ability. Annual inflation for the year 2015 decreased to 12%, the lowest level for the last four years. In spite of the devaluation in BYR since 2014,
inflationary pressures are expected to ease over the medium term due to Central Bank policies prioritizing the fight against inflation.

F 11

151

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(d) Use of estimates and judgments (continued)
Key sources of estimation uncertainty (continued)
Belarus (continued)

The three-year cumulative inflation at the end of 2011 was 153% primarily influenced by the high inflation of 109% experienced in 2011. As the
cumulative inflation in the last three years exceeded 100%, Belarus was considered a hyperinflationary economy at the end of 2011. In this context, IAS
29 “Financial Reporting in Hyperinflationary Economies” was being applied by subsidiaries operating in Belarus in financial statements starting from
their annual financial statements for the year ending 31 December 2011. However, decrease in inflation rate in subsequent years led the three-year
cumulative rate as of the end of 2014 to decrease to 65% (31 December 2015: 52%). Accordingly, the economy of Belarus was considered to transit
out of hyperinflationary status determined to cease applying IAS 29 starting from 1 January 2015. Therefore, subsidiaries operating in Belarus have not
applied IAS 29 in 2015.

Ukraine

Ukrainian economy is still struggling with high level of inflation and economic recession but growth outlook has turned positive for 2016 at around 1-2%
after 2015 GDP data showed pace of economic contraction sharply slowing and successful debt restructuring negotiations with creditors. IMF agreement
reached in the first half of 2015 and fiscal and financial reforms that were approved in accordance by the parliament turned the economic outlook to
positive. IMF disbursed a total of $11 million with two tranches in 2015; one in March and the other in August. As of December 2015, current account
deficit improved by $4.4 million (down from $4.6 million in January-December 2014 to $0.2 million in January-December 2015). Ukraine international
foreign exchange reserves increased by $5.8 million to $13.3 million at the end of December 2015, compared to year-end 2014 due to IMF agreement
and fiscal and economic reforms approved by the parliament. Foreign exchange reserves increased by another $0.2 million to $13.5 million at the end of
February 2016.

2014 GDP had contracted by 6.8% and even though the contraction continued in all quarters of 2015, it slowed down to 1.2% in fourth quarter of 2015
from 7.2% in the third quarter of 2015. World Bank and IMF forecast 2015 economic recession to be 11% and 12%, respectively. 2015 annual inflation
has decreased to 43.3% as of December 2015. 2015 year end inflation that still stood elevated due to rising food and energy prices and devaluation of
local currency is expected to slow further as hikes in regulated prices less pronounced and positive base effects.

The local currency has stabilized with IMF agreement and National Bank of Ukraine’s (“NBU”) restrictions on foreign exchange market. In order to
comply with IMF aid agreement, NBU introduced free float foreign exchange rate regime as well in February 2015. With the correction after the IMF aid
agreement, UAH rate managed to fall to 21.53 on September 2015 but continued its devaluation with volatility in emerging markets and delayed IMF aid
tranches in September-December and lost 52% of its value against USD to finish the year at 24.00 on 31 December 2015. UAH rate against USD stood at
26.18 as of 10 March 2016.

Ukraine finalized a debt restructuring deal of $18 million with foreign creditors at the end of August, 2015. With no debt repayments until 2019, risks for
debt outlook are limited in the medium term.

In order to stop depreciation of UAH, NBU raised its refinancing rates to 9.5% from 6.5% on 15 April 2014, to 12.5% from 9.5% on 18 July 2014, to 14% from
12.5% on 13 November 2014, to 19.5% from 14% on 6 February 2015 and lastly to the highest policy rate in the world, 30% on 2 March 2015. NBU decided
to ease its policy rate due to slowing inflation and stabilization of foreign exchange market from 30% to 27% in August 2015 and to 22% in September 2015.

F 12

TURKCELL ANNUAL REPORT 2015
152

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(d) Use of estimates and judgments (continued)
Key sources of estimation uncertainty (continued)
Ukraine (continued)

Although the conflict in the eastern part of Ukraine continues to affect country’s economy, positive effects of IMF aid on reform process, frozen
situation in the eastern part of the country and debt restructuring deal completed with foreign creditors are expected to support growth in future
years by limiting further depreciation in UAH and decreasing risk premiums.

As of 31 December 2014, Astelit has impaired its assets in Crimea region amounting to TL 17,951. The risk of further annexations of Luhansk and
Donetsk regions still remain as a possibility. As of 31 December 2015, the net book value of non-current assets of the Group located in Donetsk and
Luhansk amounts to TL 20,687 and TL 2,908 respectively (31 December 2014: TL 33,478 and TL 5,493 respectively).

Current and potential future political and economic changes in Belarus and Ukraine could have an adverse effect on the subsidiaries operating in these
countries. The economic stability of Belarus and Ukraine depends on the economic measures that will be taken by the governments and the outcomes
of the legal, administrative and political processes in these countries. These processes are beyond the control of the subsidiaries established in these
countries.

Consequently, the subsidiaries operating within Belarus and Ukraine may subject to foreign currency and interest rate risks related to borrowings
and the subscriber’s purchasing power and liquidity and increase in corporate and personal insolvencies, that may not necessarily be observable in
other markets. The accompanying condensed interim consolidated financial statements contain the Group management’s estimations on the economic
and financial positions of its subsidiaries operating in Belarus and Ukraine. The future economic situation of Belarus and Ukraine might differ from
the Group’s expectations. As of 31 December 2015, the Group’s management believes that their approach is appropriate in taking all the necessary
measures to support the sustainability of these subsidiaries’ businesses in the current circumstances.

Azerbaijan

In 2015, AZN was devalued twice against USD by total of 99%. On 21 February 2015, AZN was depreciated by 34% from 0.78 to 1.05 against USD.
Secondly, on 21 December 2015, AZN depreciated by 48% from 1.05 to 1.55 against USD. AZN rate against USD stood at 1.63 as of 10 March 2016.

F 13

153

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(d) Use of estimates and judgments (continued)
Critical accounting judgments in applying the Group’s accounting policies

Certain critical accounting judgments in applying the Group’s accounting policies are described below:

Allowance for doubtful receivables

The Group maintains an allowance for doubtful receivables for estimated losses resulting from the inability of the Group’s subscribers and customers
to make required payments. The Group bases the allowance on the likelihood of recoverability of trade and other receivables based on the aging of the
balances, historical collection trends and general economic conditions. The allowance is periodically reviewed. The allowance charged to expenses is
determined in respect of receivable balances, calculated as a specified percentage of the outstanding balance in each aging group, with the percentage of
the allowance increasing as the aging of the receivable becomes longer.

Useful lives of assets

The economic useful lives of the Group’s assets are determined by management at the time the asset is acquired and regularly reviewed for
appropriateness. The Group defines useful life of its assets in terms of the assets’ expected utility to the Group. This judgment is based on the experience
of the Group with similar assets. In determining the useful life of an asset, the Group also follows technical and/or commercial obsolescence arising on
changes or improvements from a change in the market. The useful lives of the licenses are based on the duration of the license agreements.

In accordance with IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”, the residual value and the useful life of an asset shall be
reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) shall be accounted for as a change in an
accounting estimate in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”. As part of yearly review of useful lives of
assets, the Group performed the necessary evaluation by considering current technological and economic conditions and recent business plans. Based on
the evaluation performed, changes in the useful lives caused the following impacts on depreciation and amortization charges.

Depreciation and amortization charge for the year ended 31 December 2015

Previous
accounting estimate
1,673,168

Current accounting
estimate
1,667,750

Impact
5,418

Due to the impracticability, the Group has not disclosed the effect of the change for the future periods.

Commission fees

Commission fees relate to information and entertainment services performed in Turkey where the Group acts as an agent in the transaction rather than
as a principal. In April 2009, the IASB issued amendments to the illustrative guidance in the appendix to IAS 18 “Revenue” in respect of identifying an
agent versus a principal in a revenue-generating transaction. Based on this guidance; management considered the following factors in distinguishing
between an agent and a principal:

• The Group does not take the responsibility for fulfillment of the games.

• The Group does not collect the proceeds from the final customer and it does not bear the credit risk.

• The Group earns a pre-determined percentage of the total turnover.

F 14

TURKCELL ANNUAL REPORT 2015
154

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(d) Use of estimates and judgments (continued)
Critical accounting judgments in applying the Group’s accounting policies (continued)
Revenue recognition

In arrangements which include multiple elements where the Group acts as principal, the Group considers the elements to be separate units of
accounting in the arrangement. Total arrangement consideration relating to the bundled contracts is allocated among the different units according the
following criteria:

• the component has standalone value to the customer; and

• the fair value of the component can be measured reliably.

The arrangement consideration is allocated to each deliverable in proportion to the fair value of the individual deliverables. If a delivered element of a
transaction is not a separately identifiable component, then it is accounted for as an integrated part of the remaining components of the transaction.

Income taxes

The calculation of income taxes involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally
determined until resolution has been reached with the relevant tax authority or, as appropriate, through formal legal process.

As part of the process of preparing the consolidated financial statements, the Group is required to estimate the income taxes in each of the
jurisdictions and countries in which they operate. This process involves estimating the actual current tax exposure together with assessing
temporary differences resulting from differing treatment of items, such as deferred revenue and reserves for tax and accounting purposes. The Group
management assesses the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent the recovery is not
considered probable the deferred asset is adjusted accordingly.

The recognition of deferred tax assets is based upon whether it is probable that future taxable profits will be available, against which the temporary
differences can be utilized. Recognition, therefore, involves judgment regarding the future financial performance of the particular legal entity in which
the deferred tax asset has been recognized.

F 15

155

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(d) Use of estimates and judgments (continued)
Critical accounting judgments in applying the Group’s accounting policies (continued)
Provisions, Contingent Liabilities and Contingent Assets

As detailed and disclosed in Note 34, the Group is involved in a number of investigations and legal proceedings (both as a plaintiff and as a defendant)
during the year arising in the ordinary course of business. All of these investigations and litigations are evaluated by the Group Management in
accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” and disclosed or accounted in the consolidated financial statements.
Future results or outcome of these investigations and litigations might differ from Group Management’s expectations. As of the reporting date, Group
Management believes that appropriate recognition criteria and measurement basis are applied to provisions, contingent liabilities and contingent assets
and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount by considering current conditions
and circumstances.

Annual impairment review

The Group tests annually whether goodwill and intangible asset not yet available for use have suffered any impairment in accordance with the
accounting policy stated in Note 3. Additionally, the carrying amounts of Group’s nonfinancial assets are reviewed at each reporting date to determine
whether there is an indication of impairment. If any indication exists the assets recoverable amount is estimated in accordance with the accounting
policy stated in Note 3. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations
require the use of estimates as discussed in Note 14.

Fair value measurements and valuation processes

Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability,
the Group uses market-observable data to the extent it is available. Where Level 1 and 2 inputs are not available, the Group can engage third party
qualified valuers to perform the valuation, if necessary. The management works closely with the qualified external valuers to establish the appropriate
valuation techniques and inputs to the model. Information about the valuation techniques and inputs used in determining the fair value of various assets
and liabilities are disclosed in Note 31.

Contracted handset sales

The Company, the distributors and dealers offer joint campaigns to the subscribers which may include the sale of device by the dealer and/or distributor
and a communication service to be provided by the Company. The Company does not recognize any revenue for the device in these transactions by
considering the below factors:

- the Company is not primary obligor for the sale of handset,
- the Company does not have control over the sale prices of handsets,
- the Company has no inventory risk,
- the Company has no responsibility on technical compability of equipment delivered to customers
- the responsibility after sale belongs to the distributor and
- the Company does not make any modification on the equipment.

F 16

TURKCELL ANNUAL REPORT 2015

156

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

2. Basis of preparation (continued)
(d) Use of estimates and judgments (continued)
Changes in accounting policies

Other than the adoption of the new and revised standards as explained in Note 3(u), the change of the presentation currency of the consolidated
financial statements from US Dollars to TL which is the functional currency of the Company and change in Company’s reportable segments (Note 6)
the Group did not make any major changes to accounting policies during the current year.

Changes in accounting estimates

If the application of changes in the accounting estimates affects the financial results of a specific period, the changes in the accounting estimates are
applied in that specific period, if they affect the financial results of current and following periods; the accounting estimate is applied prospectively
in the period in which such change is made. A change in the measurement basis applied is a change in an accounting policy, and is not a change in an
accounting estimate. When it is difficult to distinguish a change in an accounting policy from a change in an accounting estimate, the change is treated
as a change in an accounting estimate.

The Group did not have any major changes in the accounting estimates during the current year, except for the useful lives of property, plant and
equipment.

Comparative information and revision of prior period financial statements

The consolidated financial statements of the Group have been prepared with the prior periods on a comparable basis in order to give consistent
information about the financial position and performance. If the presentation or classification of the financial statements is changed, in order to
maintain consistency, the financial statements of the prior periods are also reclassified in line with the related changes. Since the presentation
currency of the consolidated financial statements changed from US Dollars to TL, the consolidated financial statements of the years ended December
31, 2014 and 2013 have been presented in TL for consistent presentation.

F 17

157

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been
applied consistently by the Group entities other than the change of the presentation currency of the consolidated financial statements from US Dollars
to TL which is the functional currency of the Company and change in Company’s reportable segments (Note 6).

(a) Basis of consolidation
(i) Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at
fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to
the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are
generally recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

• deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with

IAS 12 “Income Taxes” and IAS 19 “Employee Benefits” respectively;

• liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group
entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date; and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”

are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the
fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities
assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s
previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

F 18

TURKCELL ANNUAL REPORT 2015
158

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(i) Business combinations (continued)

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event
of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the
acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling
interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration
arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in
a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional
information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that
existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent
reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability
is remeasured at subsequent reporting dates in accordance with IAS 39 “Financial Instruments: Recognition and measurement”, or IAS 37 “Provisions,
Contingent Liabilities and Contingent Assets”, as appropriate, with the corresponding gain or loss being recognized in profit or loss.

(ii) Subsidiaries

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to its acquisition-date
fair value and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition
date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate
if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the
acquisition date that, if known, would have affected the amounts recognized at that date.

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by
the Company and its subsidiaries. Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

F 19

159

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(ii) Subsidiaries (continued)

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to
give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in
assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• potential voting rights held by the Company, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the

time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the
subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit
or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests.
Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the
non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies.

F 20

TURKCELL ANNUAL REPORT 2015
160

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(iii) Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as
equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognized directly in equity and attributed to owners of the Company. In this context, the Group’s ownership interest
in Euroasia was increased to 100% in July, 2015 and the deficit representing the difference between the non-controlling interests derecognized and
the consideration paid for the acquisition of shares amounting to TL 929,013 has been reduced from retained earnings in July 2015 and attributed to
the owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including
goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in
relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified
to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in
the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when
applicable, the cost on initial recognition of an investment in an associate or a joint venture.

(iv) Acquisition from entities under common control

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are
excluded from the scope of IFRS 3 “Business Combinations”. In business combinations under common control, assets and liabilities subject to business
combination are accounted for at their carrying value in consolidated financial statements. Statements of profit or loss are consolidated starting from
the year that the comparative financial statements are presented and financial statements of previous financial years are restated. Any positive or
negative goodwill arising from such business combinations is not recognized in the consolidated financial statements. Residual balance calculated by
netting off investment in subsidiary and the share acquired in subsidiary’s equity accounted for as equity transactions (i.e. transactions with owners
acting in their capacity as owners).

(v) Transactions eliminated on consolidation

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in
full on consolidation. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent
of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no
evidence of impairment.

F 21

161

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(vi) Non-controlling interests

Where a put option is granted by the Group to the non-controlling interests shareholders in existing subsidiaries that provides for settlement in cash or
in another financial asset, the Group recognizes a liability for the present value of the estimated exercise price of the option. The interests of the non-
controlling shareholders that hold such put options are derecognized when the financial liability is recognized. The corresponding interests attributable
to the holder of the puttable non-controlling interests are presented as attributable to the equity holders of the parent and not as attributable to
those non-controlling interests’ shareholders. The difference between the put option liability recognized and the amount of non-controlling interests’
shareholders derecognized is recorded under equity.

Subsequent changes in the fair value of the put option liability are recognized in equity for the business combinations before 1 January 2009 other than
unwind of discount and associated foreign exchange gains and losses. For the business combinations after 1 January 2009, subsequent changes in the
fair value of the put option liability are recognized in profit or loss.

(vii) Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating
policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint
arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method
of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS
5 “Non-current Assets Held for Sale and Discontinued Operations”. Under the equity method, an investment in an associate or a joint venture is initially
recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and
other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s
interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the
associate or joint venture), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the
Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

F 22

TURKCELL ANNUAL REPORT 2015
162

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(vii) Investments in associates and joint ventures (continued)

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate
or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share
of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount
of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognize any impairment loss with respect to the Group’s investment
in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with IAS 39 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying
amount.

Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance
with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the
investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a
financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in
accordance with IAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued,
and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the
determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognized in
other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had
directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate
or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from
equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a
joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group
reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that
reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

F 23

163

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(vii) Investments in associates and joint ventures (continued)

When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or
joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not
related to the Group.

(b) Foreign currency
(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the
exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at
the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the
exchange rate at the end of the period.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognized in the statement of
profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, which are recognized directly in equity.

Exchange differences are recognized in profit or loss in the period in which they arise except for:

• Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of

those assets where they are regarded as an adjustment to interest costs on those foreign currency borrowings;

• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur,
which form part of the net investment in a foreign operation, and which are recognized in the foreign currency translation reserve and recognized in
profit or loss on disposal of the net investment.

F 24

TURKCELL ANNUAL REPORT 2015
164

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(b) Foreign currency (continued)
(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to TL from the
functional currency of the foreign operation at foreign exchange rates ruling at the reporting date. The income and expenses of foreign operations
are translated to TL at monthly average exchange rates excluding foreign operations in hyperinflationary economies which are translated to TL at
exchange rates at the reporting date.

The income and expenses of foreign operations in hyperinflationary economies are translated to TL at the exchange rate at the reporting date. Prior to
translating the financial statements of foreign operations in hyperinflationary economies, their financial statements for the current period are restated
to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.

Foreign currency differences arising on retranslation are recognized directly in the foreign currency translation reserve, as a separate component
of equity. Since 1 January 2005, the Group’s date of transition to IFRSs, such differences have been recognized in the foreign currency translation
reserve.

Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange
differences arising are recognized in other comprehensive income.

Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither
planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognized directly in
equity in the foreign currency translation reserves which shall be reclassified from equity to profit or loss on the disposal of a foreign operation. The
Company has recognized net foreign exchange losses net of tax amounting to TL 200,248 and TL 62,260 resulting from net investment in their foreign
operations located in Belarus and Ukraine respectively, in foreign currency translation reserves in the current period (31 December 2014: None).

(iii) Translation from functional to presentation currency

Items included in the financial statements of each entity are measured using the currency of the primary economic environment in which the entities
operate, normally under their local currencies.

The consolidated financial statements are presented in Turkish Liras, which is the presentation currency of the Group. The Group started to use TL as
the presentation currency starting from 31 December 2015 since the majority of the Group’s income and expenses are in TL. This change will align the
Group’s in the Republic of Turkey and United States.

Assets and liabilities for each statement of financial position presented (including comparatives) are translated to TL at exchange rates at the
statement of financial position date. Income and expenses for each statement of profit or loss (including comparatives) are translated to TL at monthly
average exchange rates excluding operations in hyperinflationary economies which are translated to TL at exchange rates at the reporting date.

Foreign currency differences arising on retranslation are recognized directly in a separate component of equity.

F 25

165

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(c) Financial instruments
(i) Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans
and borrowings, and trade and other payables.

Non-derivative financial instruments which are not recognized or designated as financial instruments at fair value through profit or loss are recognized
initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured
as described below:

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable
on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the
statement of cash flows.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal
right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

(ii) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

Accounting for finance income and costs is discussed in Note 3(m).

• Financial assets at fair value through profit or loss

An instrument is classified as financial asset at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of

short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

F 26

TURKCELL ANNUAL REPORT 2015
166

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(ii) Derecognition of financial assets (continued)

A financial asset other than a financial asset held for trading may be designated as at fair value through profit or loss upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on
a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is
provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as at fair

value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit
or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the
statement of profit or loss.

• Held-to-maturity financial assets

If the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as held-to-maturity. Held-to-maturity
financial assets are recognized initially at fair value plus any directly attributable transaction costs. Held-to-maturity financial assets are held-to-
maturity investments that are measured at amortized cost using the effective interest method, less any impairment losses.

Any sale or reclassification of a more than insignificant amount of held-to-maturity investments not close to their maturity would result in the
reclassification of all held-to-maturity investments as available-for-sale, and prevent the Group from classifying investment securities as held-to-
maturity for the current and the following two financial years.

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the
previous categories.

The Group’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial
recognition, they are measured at fair value and changes therein, other than impairment losses (see Note 3(h)(i)), and foreign exchange gains and
losses on available-for-sale monetary items (see Note 3(b)(i)), are recognized directly in equity. When an investment is derecognized, the cumulative
gain or loss in equity is transferred to the statement of profit of loss.

• Other

Other non-derivative financial instruments are measured at amortized cost using the effective interest method, less any impairment losses.

F 27

167

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(iii) Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency risk exposures arising from operational, financing and investing activities.
In accordance with its treasury policy, the Group engages in forward, swap and option contracts. However, these derivatives do not qualify for hedge
accounting and are accounted for as trading derivatives.

Embedded derivatives are separated from the host contract and accounted for separately if
a) the economic characteristics and risks of the host contract and the embedded derivative are not closely related, b) a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative, and c) the combined instrument is not measured at fair value through
profit or loss.

Also the Group enters into derivative financial instruments to manage its exposure to interest rate, including interest rate collar. Further details of
derivative financial instruments are disclosed in Note 26 and 32.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair
value at the end of each reporting period. The resulting gain or loss is immediately recognized in the statement of profit or loss unless the derivative is
designated and effective as a hedging instrument, in which event the timing of the recognition in statement of profit or loss depends on the nature of the
hedge relationship.

Hedge Accounting

The Group designates certain hedging instruments which include cash flow hedges. At the inception of the hedge relationship, the Group documents the
relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various
hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly
effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive
income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in
the statement of profit or loss, and is included in the “finance income / costs” line item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or
exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity
at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in statement of profit or loss. When a forecast
transaction is no longer expected to occur, the gain or loss accumulated in equity is immediately recognized in the statement of profit or loss in the same
financial statement line item as the recognized hedged item.

F 28

TURKCELL ANNUAL REPORT 2015
168

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(iv) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity item in accordance with the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity
instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Group’s own equity instruments is recognized and deducted directly in/ from equity. No gain or loss is recognized in profit or loss on
the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Subordinated debt instruments
The foreign subsidiaries of the Company have issued subordinated debt instruments to the Company. These instruments are treated as equity
instruments in subsidiaries’ separate financial statements and carried at historic cost in accordance with IAS 32 Financial Instruments: Presentation as it
includes no contractual obligation to deliver cash or another financial asset to another entity or to exchange financial assets or financial liabilities with
another entity under conditions that are potentially unfavorable to the issuer.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as at fair value through profit or loss where the financial liability is either held for trading or it is designated as at fair
value through profit or loss.
Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or
loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the finance income and
cost line items. Fair value is determined in the manner described in Note 31.
Other financial liabilities
Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an
effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference
between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

F 29

169

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(d) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are initially stated at cost less accumulated depreciation (see below) and accumulated impairment losses (see
note 3(h)(ii)). Property, plant and equipment related to the parent and subsidiaries operating in Turkey are adjusted for the effects of inflation during
the hyperinflationary period which ended on 31 December 2005. Since the inflation accounting commenced on 1 January 2011, property, plant and
equipment related to the subsidiaries operating in Belarus are adjusted for the effects of inflation. However, decrease in inflation rate in subsequent
years led the three-year cumulative rate as of the end of 2014 to decrease to 65%. Accordingly, the economy of Belarus was considered to transit out of
hyperinflationary status and 2015 is determined to be appropriate to cease applying IAS 29. Therefore, subsidiaries operating in Belarus ceased applying
IAS 29 in 2015.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials
and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling and
removing the items and restoring the site on which they are located, if any. Borrowing costs related to the acquisition or construction of qualifying assets
are capitalized as part of the cost of that asset.

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and
equipment.

Gains/losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount
of property, plant and equipment and are recognized net within other income or other expenses in the statement of profit or loss.

Changes in the obligation to dismantle, remove assets on sites and to restore sites on which they are located, other than changes deriving from the
passing of time, are added or deducted from the cost of the assets in the period in which they occur. The amount deducted from the cost of the asset
shall not exceed the balance of the carrying amount on the date of change, and any excess balance is recognized immediately in the statement of profit
or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced item is
derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in the statement of profit or loss as incurred.

F 30

TURKCELL ANNUAL REPORT 2015
170

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(d) Property, plant and equipment
(iii) Depreciation

Depreciation is recognized in the statement of profit or loss on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the
asset. Leased assets are depreciated over the shorter of the lease term or their useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

Buildings
Mobile network infrastructure
Fixed network infrastructure
Call center equipment
Equipment, fixtures and fittings
Motor vehicles
Central betting terminals
Leasehold improvements

21 – 25 years
4 – 20 years
3 – 25 years
4 – 8 years
2 – 10 years
4 – 6 years
5 – 10 years
3 – 5 years

Depreciation methods, useful lives and residual values are reviewed at least annually unless there is an indicator of impairment.

(e) Intangible assets
(i) GSM and other telecommunication operating licenses

GSM and other telecommunication operating licenses that are acquired by the Group are measured at cost adjusted for the effects of inflation during
the hyperinflationary period, where applicable, less accumulated amortization (see below) and accumulated impairment losses (see note 3(h)(ii)).
GSM and other telecommunication operating licenses related to the parent and subsidiaries operating in Turkey are adjusted for the effects of inflation
during the hyperinflationary period which ended on 31 December 2005. Since the inflation accounting commenced on 1 January 2011 and ceased by
1 January 2015, GSM and other telecommunication operating licenses related to the subsidiaries operating in Belarus are adjusted for the effects of
inflation until 1 January 2015.

Amortization

Amortization is recognized in the statement of profit or loss on a straight line basis primarily by reference to the unexpired license period. The useful
lives for the GSM and other telecommunication operating licenses are as follows:

GSM and other telecommunications licenses

3 – 25 years

F 31

171

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(e) Intangible assets (continued)
(ii) Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software.

Costs associated with maintaining computer software programs are recognized as an expense as incurred. Costs that are directly associated with the
development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs
beyond one year, are recognized as intangible assets. Costs include the software development employee costs and an appropriate portion of relevant
overheads.

Amortization

Amortization is recognized in the statement of profit or loss on a straight-line basis over the estimated useful lives from the date the software is
available for use. The useful lives for computer software are as follows:

Computer software

3 – 8 years

(iii) Other intangible assets

Other intangible assets that are acquired by the Group which have finite useful lives are measured at cost adjusted for the effects of inflation during the
hyperinflationary period, where applicable, less accumulated amortization (see below) and accumulated impairment losses (see note 3(h)(ii)). Other
intangible related to the parent and subsidiaries operating in Turkey are adjusted for the effects of inflation during the hyperinflationary periods ceased
by 31 December 2005. Since the inflation accounting commenced on 1 January 2011 and ceased by 1 January 2015, other intangible assets related to the
subsidiaries operating in Belarus are adjusted for the effects of inflation until 1 January 2015.

Indefeasible Rights of Use (“IRU”) correspond to the right to use a portion of the capacity of an asset granted for a fixed period of time. IRUs are
recognized as an intangible asset when the Group has specific indefeasible right to use an identified portion of the underlying asset and the duration of
the right is the major part of the underlying asset’s economic life. IRUs are amortized over the shorter of the expected period of use and the life of the
contract.

(iv) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset (that is purchased from
independent third parties) to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in
the statement of profit or loss as incurred. Capitalized costs generally relate to the application development stage; any other costs incurred during the
pre and post-implementation stages, such as repair, maintenance or training, are expensed as incurred.

F 32

TURKCELL ANNUAL REPORT 2015
172

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(e) Intangible assets (continued)
(iv) Subsequent expenditure (continued)

Borrowing costs should be capitalized as part of the cost of qualifying assets. Borrowing costs eligible for capitalization may include:

• interest on loans and borrowings calculated using the effective interest rate method as described in IAS 39 - Financial Instruments: Recognition and

Measurement; and

• finance charges in respect of finance leases recognized in accordance with IAS 17 Leases.

• exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are included in the cost of that asset.
Such borrowing costs are capitalized as part of the cost of the asset when it is probable that they will result in future economic benefits to the entity
and the costs can be measured reliably. An entity shall cease capitalizing borrowing costs when substantially all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete.

An entity shall suspend capitalization of borrowing costs during extended periods in which it suspends active development of a qualifying asset.

Exchange differences arising from foreign currency borrowings should be capitalized.

The amount of borrowing costs that may be capitalized should lie between the following two amounts:

• actual interest costs denominated in the foreign currency, translated at the actual exchange rate on the date on which the expense is incurred; and

• notional borrowing costs based on commercial interest rates prevailing in the functional currency at the date of initial recognition of the borrowing.

F 33

173

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(e) Intangible assets (continued)
Amortization

Amortization is recognized in the statement of profit or loss on a straight line basis over the estimated useful lives of intangible assets unless such useful
lives are indefinite from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

Transmission lines
Central betting system operating right
Customer list
Brand name

5 – 10 years
7 – 10 years
2 – 15 years
9 – 10 years

Amortization methods, useful lives and residual values are reviewed at least annually unless there is an indicator of impairment.

Goodwill

From 1 January 2010 the Group has applied IFRS 3 (2008) “Business Combinations” in accounting for business combinations.

For acquisitions on or after 1 January 2010, the Group measures goodwill as the fair value of the consideration transferred (including the fair value of
any previously-held equity interest in the acquiree) and the recognized amount of any non-controlling interests in the acquiree, less the net recognized
amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date.

When the excess is negative, a bargain purchase gain is recognized immediately in the statement of profit or loss.

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses if any. In respect of equity accounted investees, the carrying amount of goodwill is
included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset including goodwill, that
forms part of the carrying amount of the equity accounted investees.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

F 34

TURKCELL ANNUAL REPORT 2015

174

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(e) Intangible assets (continued)
(v) Internally generated intangible assets – research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if,
all of the following have been demonstrated:

• The technical feasibility of completing the intangible asset so that it will be available for use or sale;

• The intention to complete the intangible asset and use or sell it;

• The ability to use or sell the intangible asset;

• How the intangible asset will generate probable future economic benefits;

• The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally generated intangible assets is the sum of expenditure incurred from the date when the intangible asset
first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is
charged to the statement of profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortization and accumulated
impairment losses, on the same basis as intangible assets acquired separately.

(vi) Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising
from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are
recognized in profit or loss when the asset is derecognized.

(f) Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial
recognition, the leased asset and related financial liability are measured at an amount equal to the lower of its fair value or the present value of the
minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that
asset.

All other leases are operating leases and the leased assets are not recognized on the Group’s statement of financial position.

F 35

175

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(g) Inventories

Inventories are measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of
business, less selling expenses. The cost of inventory is determined using the weighted average method and includes expenditure incurred in acquiring
the inventories and bringing them to their existing location and condition. As at 31 December 2015 and 2014, inventories mainly consist of simcards,
scratch cards, handsets, modems and set-top box.

(h) Impairment
(i) Financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence
that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and
the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present
value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial
asset is calculated by reference to its fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups
that share similar credit risk characteristics.

All impairment losses are recognized in the statement of profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognized
previously in equity is transferred to the statement of profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial
assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in the statement of profit or
loss. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in other comprehensive income. For available-
for-sale equity investments carried at cost, the reversal is not permitted.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories, and deferred tax assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and
intangible asset not yet available for use, the recoverable amount is estimated each year at the same time.

F 36

TURKCELL ANNUAL REPORT 2015
176

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(h) Impairment (continued)
(ii) Non-financial assets (continued)

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or group of assets (the “cash-generating unit”). The recoverable amount of an asset or
cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are
discounted to their present value using a post-tax discount rate adjusted for the effects of tax cash outflows that reflects current market assessments
of the time value of money and the risks specific to the asset. The goodwill acquired in a business combination, for the purpose of impairment testing,
is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the
recoverable amount is determined from the cash-generating unit to which corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment
losses are recognized in the statement of profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce
the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a
pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at
each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized.

Goodwill that forms part of the carrying amount of an investment in an associate is not recognized separately, therefore, is not tested for impairment
separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that
the investment in an associate may be impaired.

F 37

177

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(i) Employee benefits
(i) Retirement pay liability

In accordance with existing labor law in Turkey, the Company and its subsidiaries in Turkey are required to make lump-sum payments to employees who
have completed one year of service and whose employment is terminated without cause or who retire, are called up for military service or die. Such
payments are calculated on the basis of 30 days’ pay up to a of maximum full TL 4,093 as at 31 December 2015, which is effective from 1 January 2016,
per year of employment at the rate of pay applicable at the date of retirement or termination. Reserve for retirement pay is computed and reflected in
the consolidated financial statements on a current basis. The reserve has been calculated by estimating the present value of future probable obligation of
the Company and its subsidiaries in Turkey arising from the retirement of the employees.

(ii) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no
legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as an employee
benefit expense in the statement of profit or loss when they are due.

The assets of the plan are held separately from the consolidated financial statements of the Group. The Company and other consolidated companies that
initiated defined contribution retirement plan are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund
the benefits. The only obligation of the Group with respect to the retirement plan is to make the specified contributions.

(j) Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
The unwinding of the discount is recognized as finance cost.

Onerous contracts

Present obligations arising under onerous contracts are recognized and measured as a provision. An onerous contract is considered to exist where the
Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be
received under it. Other than the contract signed with Ministry of Transport, Maritime Affairs and Communications regarding the construction and
operation of mobile communication infrastructure in rural areas (“Evrensel Project”) as explained in Note 34, the Group did not have any significant
onerous contracts as at 31 December 2015 (31 December 2014: None except Evrensel Project).

F 38

TURKCELL ANNUAL REPORT 2015
178

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(j) Provisions (continued)
Dismantling, removal and restoring sites obligation

The Group is required to incur certain costs in respect of a liability to dismantle and remove assets and to restore sites on which the assets were
located. The dismantling costs are calculated according to best estimate of future expected payments discounted at a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the liability.

Bonus

Provision for bonus is provided when the bonus is a legal obligation, or past practice would make the bonus a constructive obligation and the Group is
able to make a reliable estimate of the obligation.

(k) Revenue

Revenues is recognized at the fair value of the consideration received or receivable, net of returns, trade discounts and rebates. Communication
fees include postpaid revenue from incoming and outgoing calls, additional services, prepaid revenue, interconnect revenue and roaming revenue.
Communication fees are recognized at the time the services are rendered.

With respect to prepaid revenue, the Group generally collects cash in advance by selling scratch cards to distributors. In such cases, the Group does
not recognize revenue until the subscribers use the telecommunication services. Deferred income is recorded under current liabilities.

Services may be bundled with other products/services and these bundled services and products involve consideration in the form of fixed fee or a
fixed fee coupled with a continuing payment stream. Total arrangement considerations relating to a bundled contract is allocated among the different
units accounting the following criteria:

• the deliverable has standalone value to the customer; and

• the fair value of the deliverable can be measured reliably.

The arrangement consideration is allocated to each deliverable in proportion to the fair value of the individual deliverables. If a delivered element of a
transaction is not a separately identifiable component, then it is accounted for as an integral part of the remaining deliverable of the transactions.

Revenue allocated to products given where the Group is the principal, which is included in other revenue, is recognized when the significant risks and
rewards of ownership have been transferred to the buyer, collection is probable, the associated costs and possible return of goods can be estimated
reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.

The Company, the distributors and dealers offer joint campaigns to the subscribers which may include the sale of device by the dealer and/or
distributor and a communication service to be provided by the Company. In particular campaigns, the dealer makes the handset sale to the subscribers
whose instalments will be collected by the Company based on the letter of undertaking signed by the subscriber. With the letters of undertaking, the
dealer assigns its receivables from device sale to the distributor and the distributor assigns its receivables to the Company.

F 39

179

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(k) Revenue (continued)

The Company pays the distributor the net present value of the instalments to be collected from the subscribers upfront and recognizes contracted
receivable in its statement of financial position. The undue portion of assigned receivables from the distributors which were paid upfront by the
Company is classified as “undue assigned contracted receivables” in trade receivables (Note 20). When monthly installment is invoiced to the subscriber,
related portion is presented in “receivables from subscribers”. The Company collects the contracted receivables in installments during contract period
and does not recognize any revenue for the device in these transactions as the Company is not the principal for the sale of handset.

Starting from 2014, the subscribers have an option to buy the handset by bank loan whose instalments will be collected by the Company on behalf of the
bank. The Company does not bear any credit risk in this type of transaction. Since the Company collects the receivables during the contract period and is
agent for the sale of device in this bank loan structure, the Company does not recognize any revenue for the device in these transactions.

Monthly fixed fees represent a fixed amount charged to postpaid subscribers on a monthly basis without regard to the level of usage. Fixed fees are
recognized on a monthly basis when billed.

Commission fees mainly comprised of net takings earned to a maximum of 1.4% of gross takings, as a head agent of fixed odds betting games starting
from 1 March 2009 and mobile agent revenues comprised of 2.24%-3.62% of mobile agency turnover after deducting VAT and Gaming tax as head
agent starting from 23 March 2010. Commission revenues are recognized at the time all the services related with the games are fully rendered. Under
the agreement signed with Spor Toto Teskilat Mudurlugu AS (“Spor Toto”), Inteltek Internet Teknoloji Yatirim ve Danismanlik AS (“Inteltek”) is obliged to
undertake any excess payout, which is presented on net basis with the commission fees.

AzerInteltek received authorization from Azeridmanservis Limited Liability Company set under the Ministry of Youth and Sport of the Republic of
Azerbaijan to organize, operate, manage and develop the fixed odds and paramutual sports betting business. Since AzerInteltek acts as a principal,
total consideration received from the player less payout (distribution to players) and amounts collected from players on behalf of Ministry of Sports is
recognized at the time all the services related with the games are fully rendered.

Azerinteltek has been authorized for the Lottery games by Azerlotereya. Azerinteltek has been generating commission revenue over Lottery games
turnover through its own agencies by applying 15% commission rate according to agreement between Azerinteltek and Azerlotereya. Commission
revenues are recognized at the time all the services related with the games are fully rendered.

Simcard sales are recognized upon delivery to distributors, net of returns, discounts and rebates. Simcard costs are also recognized upon sale of the
simcard to the distributors.

Call center revenue are recognized at the time services are rendered.

The revenue recognition policy for other revenue is to recognize revenue as services are provided.

F 40

TURKCELL ANNUAL REPORT 2015
180

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(k) Revenue (continued)

Volume rebates or discounts and other contractual changes in the prices of roaming and other services are anticipated, as both the payer and the
recipient, if it is probable that they have been earned or will take effect. Thus, contractual rebates and discounts are anticipated, but discretionary
rebates and discounts are not anticipated because the definitions of asset and liability would not be met.

(l) Lease payments

Payments made under operating leases are recognized in the statement of profit or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance cost and the reduction of the outstanding liability. The
finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if
fulfillment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement
conveys to the Group the right to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Group separates
payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative
fair values.

(m) Finance income and costs

Finance income comprises interest income on funds invested (including available-for-sale and held-to-maturity financial assets), late payment interest
income, interest income on contracted receivables, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial
assets at fair value through profit or loss and gains on derivative instruments that are recognized in the statement of income. Interest income is
recognized as it accrues, using the effective interest method.

Finance costs comprise interest expense on borrowings, litigation late payment interest expense, unwinding of the discount on provisions, changes in
the fair value of financial assets at fair value through profit or option premium expense.

Foreign currency gains and losses are reported on a net basis.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take
considerable time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready
for their intended use or sale. Investment income earned by the temporary investment of the part of the borrowing not yet used is deducted against
the borrowing costs eligible for capitalization.

All other borrowing costs are recognized in the statement of profit or loss in the period in which they are incurred.

F 41

181

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(n) Transactions with related parties

A related party is essentially any party that controls or can significantly influence the financial or operating decisions of the Group to the extent that
the Group may be prevented from fully pursuing its own interests. For reporting purposes, investee companies and their shareholders, non-controlling
shareholders at subsidiaries, key management personnel, shareholders of the Group and the companies that the shareholders have a relationship with
are considered to be related parties.

(o) Income taxes

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of profit or loss except to the extent that it
relates to items recognized directly in equity or in other comprehensive income.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the consolidated statement
of profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.
Current tax is calculated using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous
years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to
investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future as the Group is
able to control the reversal of the temporary difference. Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset
realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and
liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same
tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax
assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which temporary difference can be
utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realized.

Interest and penalties assessed on income tax deficiencies are presented based on their nature.

F 42

TURKCELL ANNUAL REPORT 2015
182

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(p) Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable
to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is equal to
basic EPS because the Group does not have any convertible notes or share options granted to employees.

In Turkey, companies can raise their share capital by distributing “Bonus Shares” to shareholders from retained earnings. In computing earnings per
share, such “bonus share” distributions are treated as issued shares. Accordingly, the retrospective effect for such share distributions is taken into
consideration in determining the weighted-average number of shares outstanding used in this computation.

(q) Operating segment

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses including
revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly
reviewed by the Group management to make decisions about resources to be allocated to the segment and assess its performance, and for which
discrete financial information is available.

Starting from 2015, the Group has changed its reportable segments which are based on the dominant source and nature of the Group’s risk and returns
as well as the Group’s new internal reporting structure (Note 6).

The Group revised its operations under three reportable segments within the year 2015 in accordance with its integrated communication and
technology services strategy as Turkcell Turkey, Turkcell International and Other which represent economical integrity.

(r) Subscriber acquisition costs

The Group capitalizes directly attributable subscriber acquisition costs when the following conditions are met:

• the capitalized costs can be measured reliably;

• there is a contract binding the customer for a specific period of time; and

• it is probable that the amount of the capitalized costs will be recovered through revenue generated by the service contract, or, where the customer

withdraws from the contract in advance, through the collection of the penalty.

Capitalized subscriber acquisition costs are amortized on a straight-line basis over the minimum period of the underlying contract. In all other cases,
subscriber acquisition costs are expensed when incurred.

F 43

183

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(s) Government grants

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will
comply with all attached conditions.

Government grants relating to costs are deferred and recognized in the statement of profit or loss over the period necessary to match them with the
costs that they are intended to compensate.

Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government grants and are transferred to
the statement of profit or loss on a straight-line basis over the expected useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred recognized in profit or loss in the period in which they
become receivable.

(t) Investment property

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes).
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at
cost less accumulated depreciation and any accumulated impairment losses.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic
benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized.

(i) Depreciation

Depreciation is recognized in the statement of profit or loss on a straight-line basis over the estimated useful lives.

The estimated useful lives for the current and comparative periods are as follows:

Investment Property

25 - 45 years

Depreciation methods, useful lives and residual values are reviewed at least annually unless there is a triggering event.

F 44

TURKCELL ANNUAL REPORT 2015
184

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(u) New standards and interpretations
(i) Amendments to IFRSs affecting amounts reported and/or disclosures in the consolidated financial statements

None.

(ii) New and Revised IFRSs applied with no material effect on the consolidated financial statements
Amendments to IAS 19

Defined Benefit Plans: Employee Contributions 1

Annual Improvements to
2010-2012 Cycle
Annual Improvements to
2011-2013 Cycle

IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and IAS 38, IAS 24 1

IFRS 1, IFRS 3, IFRS 13, IAS 40 1

1 Effective for annual periods beginning on or after 1 July 2014.

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

This amendment clarifies the requirements that relate to how contributions from employees or third parties that are linked to service should be
attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years
of service, in that contributions, can, but are not required, to be recognised as a reduction in the service cost in the period in which the related service
is rendered.

Annual Improvements to 2010-2012 Cycle

IFRS 2: Amends the definitions of ‘vesting condition’ and ‘market condition’ and adds definitions for ‘performance condition’ and ‘service condition’.

IFRS 3: Require contingent consideration that is classified as an asset or a liability to be measured at fair value at each reporting date.

IFRS 8: Requires disclosure of the judgments made by management in applying the aggregation criteria to operating segments, clarify reconciliations
of segment assets only required if segment assets are reported regularly.

IFRS 13: Clarify that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure certain short-term receivables and
payables on an undiscounted basis (amends basis for conclusions only).

IAS 16 and IAS 38: Clarify that the gross amount of property, plant and equipment is adjusted in a manner consistent with a revaluation of the
carrying amount.

IAS 24: Clarify how payments to entities providing management services are to be disclosed.

F 45

185

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(ii) New and Revised IFRSs applied with no material effect on the consolidated financial statements (continued)
Annual Improvements to 2011-2013 Cycle

IFRS 1: Clarify which versions of IFRSs can be used on initial adoption (amends basis for conclusions only).

IFRS 3: Clarify that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint
arrangement itself.

IFRS 13: Clarify the scope of the portfolio exception in paragraph 52.

IAS 40: Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property.

(iii) New and Revised IFRSs in issue but not yet effective

The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRS 9

IFRS 14

Amendments to IFRS 11

Amendments to IAS 16 and IAS 38

Amendments to IAS 16 and IAS 41

IFRS 15

Amendments to IAS 27

Amendments to IFRS 10 and IAS 28
Annual Improvements to
2012-2014 Cycle
Amendments to IAS 1

Financial Instruments 2

Regulatory Deferral Accounts 1

Accounting for Acquisition of Interests in Joint Operations 1

Clarification of Acceptable Methods of Depreciation and Amortisation 1

Agriculture: Bearer Plants 1

Revenue from Contracts with Customers 2

Equity Method in Separate Financial Statements 1

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1

IFRS 5, IFRS 7, IAS 19, IAS 34 1

Disclosure Initiative 1

Amendments to IFRS 10, IFRS 12 and IAS 28

Investment Entities: Applying the Consolidation Exception 1

IFRS 16

Leases 3

1 Effective for annual periods beginning on or after 1 January 2016.
2 Effective for annual periods beginning on or after 1 January 2018.
3 Effective for annual periods beginning on or after 1 January 2019.

F 46

TURKCELL ANNUAL REPORT 2015
186

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(iii) New and Revised IFRSs in issue but not yet effective (continued)
IFRS 9 Financial Instruments

IFRS 9, issued in November 2009, introduces new requirements for the classification and measurement of financial assets. IFRS 9 was amended in
October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to
include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment
requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a “fair value through
other comprehensive income (“FVTOCI”) measurement category for certain simple debt instruments.

IFRS 14 Regulatory Deferral Accounts

IFRS 14 Regulatory Deferral Accounts permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to
account, with some limited changes, for ‘regulatory deferral account balances’ in accordance with its previous GAAP, both on initial adoption of IFRS
and in subsequent financial statements.

IFRS 14 was issued by the IASB on 30 January 2014 and is applied to an entity’s first annual IFRS financial statements for a period beginning on or
after 1 January 2016.

Amendments to IFRS 11 Accounting for Acquisition of Interests in Joint Operations

This amendment requires an acquirer of an interest in a joint operation in which the activity constitutes a business to:

• apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in

IFRS 11,

• disclose the information required by IFRS 3 and other IFRSs for business combinations.

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation

This amendment clarifies that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not
appropriate for property, plant and equipment, and introduces a rebuttable presumption that an amortisation method that is based on the revenue
generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the
intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits
of the intangible asset are highly correlated. The amendment also adds guidance that expected future reductions in the selling price of an item that
was produced using an asset could indicate the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a
reduction of the future economic benefits embodied in the asset.

F 47

187

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(iii) New and Revised IFRSs in issue but not yet effective (continued)
IFRS 15 Revenue from Contracts with Customers

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are as follows:

•

Identify the contract with the customer,

• Identify the performance obligations in the contract,

• Determine the transaction price,

• Allocate the transaction price to the performance obligations in the contracts,

• Recognise revenue when the entity satisfies a performance obligation.

Amendments to IAS 27 Equity Method in Separate Financial Statements

This amendment permits investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate
financial statements.

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

This amendment clarifies the treatment of the sale or contribution of assets from an investor to its associate or joint venture.

Annual Improvements 2012-2014 Cycle

IFRS 5: Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases
in which held-for-distribution accounting is discontinued.

IFRS 7: Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting
disclosures in condensed interim financial statements.

IAS 19: Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the
same currency as the benefits to be paid.

IAS 34: Clarify the meaning of ‘elsewhere in the interim report’ and require a cross-reference.

F 48

TURKCELL ANNUAL REPORT 2015
188

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

3. Significant accounting policies (continued)
(iii) New and Revised IFRSs in issue but not yet effective (continued)
Amendments to IAS 1 Disclosure Initiative

This amendment addresses perceived impediments to preparers exercising their judgment in presenting their financial reports.

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

This amendment addresses issues that have arisen in the context of applying the consolidation exception for investment entities by clarifying the
following points:

• The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary

of an investment entity, even if the investment entity measures all of its subsidiaries at fair value.

• A subsidiary that provides services related to the parent’s investment activities should not be consolidated if the subsidiary itself is an investment

entity.

• When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair

value measurement applied by the associate or joint venture to its interests in subsidiaries.

• An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12.

IFRS 16 Leases

This new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and
finance leases. Lessor accounting however remains largely unchanged and the distinction between operating and finance leases is retained. IFRS
16 supersedes IAS 17 “Leases” and related interpretations and is effective for periods beginning on or after 1 January 2019, with earlier adoption
permitted if IFRS 15 ‘Revenue from Contracts with Customers’ has also been applied.

The Group is evaluating the effects of these standards on the consolidated financial statements.

F 49

189

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

4. Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and
liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further
information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Property, plant and equipment

The fair value of property, plant and equipment recognized as a result of a business combination is based on market values. The market value of property
is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length
transaction after proper marketing wherein the parties had each acted knowledgeably, willingly. The market value of items of plant, equipment, fixtures
and fittings is based on the quoted market prices for similar items.

(ii) Investment property

The fair value of investment property is based on valuations performed by appointed independent registered appraisers taking into account valuation
methods such as market data, discounted cash flow (“DCF”) method, replacement cost method, or the combination of two or all of these methods
based on the applicability of the valuation method to the respective property. All these methods often provide different values for investment property,
therefore the appraisers reconcile the varying results and meld the results of the methods utilized in a reasonable way. Based on the valuation method
utilized, appraisers estimate the value of investment property which best reflects the market conditions at the balance sheet date.

(iii) Intangible assets

The fair value of the brand acquired in the Superonline Iletisim Hizmetleri AS (“Turkcell Superonline”) business combination is based on the discounted
estimated royalty payments that have been avoided as a result of the brand being owned. The fair value of customer list acquired in the Turkcell
Superonline business combination are valued using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair
return on all other assets that are part of creating the related cash flows.

The fair value of the custom duty and VAT exemption agreement in the Belarusian Telecom business combination is based on the incremental cash flows
method (cost saving approach) and this was used for the valuation analysis.

The fair value of mobile telephony licenses (GSM & UMTS) in the Belarusian Telecom business combination is based on the Greenfield (build-out)
method, which is estimated to be appropriate and commonly used for the valuation of licenses, and this was used for the valuation analysis.

The fair value of customer list acquired in business combinations was valued using the cost approach where by the subject asset was valued by using the
information on a cost per subscriber basis under current market conditions and rates.

The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

F 50

TURKCELL ANNUAL REPORT 2015
190

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

4. Determination of fair values (continued)
(iv) Investments in equity and debt securities

The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined
by reference to their quoted bid price or over the counter market price at the reporting date. The fair value of held-to-maturity investments is
determined for disclosure purposes only.

(v) Trade and other receivables / due from related parties

The fair values of trade and other receivables and due from related parties are estimated as the present value of future cash flows, discounted at the
market rate of interest at the reporting date.

(vi) Derivatives

The fair value of forward exchange contracts, swap contracts and option contracts are based on their listed market price, if available. If a listed market
price is not available, then fair values are derived from inputs other than quoted prices that are observable for the asset or liability or are derived by
discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-
free interest rate (based on government bonds) or option pricing models.

(vii) Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted
at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease
agreements.

(viii) Contingent Consideration

The consideration the Group transfers in a business combination in exchange for the acquiree includes any asset or liability resulting from a contingent
consideration arrangement. The Group recognises the acquisition-date fair value of contingent consideration as part of the consideration transferred
in exchange for the acquiree.

The Group classifies an obligation to pay contingent consideration that meets the definition of a financial instrument as a financial liability or as equity
on the basis of the definitions of an equity instrument and a financial liability considering IAS 32 Financial Instruments: Presentation.

If the consideration is within the scope of IAS 39, it shall be measured at fair value at each reporting date and changes in fair value are recognised in
profit or loss in accordance with IAS 39.

If the consideration is not within the scope of IAS 39, it shall be measured at fair value at each reporting date and changes in fair value shall be
recognised in profit or loss.

F 51

191

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

5. Financial risk management
The Group practice is to centrally manage the Group’s predetermined capital / debt ratios by capital injection or using available credit facilities. The
Group obtains short and long-term borrowings according to the Group’s financial needs and market predictions. Debt instruments include commercial
bank loans to Export Credit Agency loans, money market instruments and capital market instruments such as debt securities issued which are seldom
used in order to maintain diversified source of financing. The Group’s financial borrowing ratios are monitored for all transactions in order to prevent any
negative effect on the Group’s credit ratings.

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and
managing risk, and the Group’s management of capital. Please refer to Note 31 for additional information on the Group’s exposure to risks.

Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Additionally, the
Company established a Risk Committee in accordance with the new Turkish Commercial Code effective from 1 July 2012.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the
Group’s activities.

For the year ended 31 December 2014, TL depreciated against USD by 8.6% and appreciated against the EUR by 3.9% whereas for the year ended 31
December 2015 TL depreciated against both USD and EUR by 25.4% and 12.7% respectively. For the year ended 31 December 2014, UAH depreciated
against the USD by 97.3% compared to 31 December 2013 and 52.2% for the year ended 31 December 2015 compared to 31 December 2014. BYR
depreciated against USD by 24.6% through 2014 compared to 31 December 2013 and 31 December 2015 depreciated by 56.7% when compared to the
exchange rates as at 31 December 2014. Additional information related to Group’s exposure to currency risk is disclosed in Note 31.

F 52

TURKCELL ANNUAL REPORT 2015
192

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

5. Financial risk management (continued)
Risk management framework (continued)
Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and arises principally from the Group’s receivables from customers and investment securities.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group may require collateral in respect
of financial assets. Also, the Group may demand letters of guarantee from third parties related to certain projects or contracts. The Group may also
demand certain pledges from counterparties if necessary in return for the credit support it gives related to certain financings.

In monitoring customer credit risk, customers are grouped according to whether they are an individual or legal entity, aging profile, maturity and
existence of previous financial difficulties. Trade receivables and accrued income are mainly related to the Group’s subscribers. The Group’s exposure
to credit risk on trade receivables is influenced mainly by the individual payment characteristics of postpaid subscribers. The Group establishes an
allowance for impairment that represents its estimate of incurred losses in respect of trade receivables.

The Group establishes an allowance for doubtful receivables that represents its estimate of incurred losses in respect of trade and other receivables.
This allowance includes the specific loss component that relates to individual subscribers exposures, and adjusted for a general provision which is
determined based on the age of the balances and historical collection trends.

Investments are preferred to be in liquid securities. The counterparty limits are set depending on their ratings from the most credible rating agencies
and the amount of their paid in capital and/or shareholders equity. Policies are in place to review the paid-in capital and rating of counterparties
periodically to ensure credit worthiness.

Transactions involving derivatives are with counterparties with whom the Group has signed agreements and which have sound credit ratings.

At the reporting date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying
amount of each financial asset in the statement of financial position.

The Group’s policy is to provide financial guarantees only to majority-owned subsidiaries. At 31 December 2015, TL 1,101,195 guarantees were
outstanding (31 December 2014: TL 3,191,271).

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to manage liquidity is
to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation. Typically, the Group ensures that it has sufficient cash and cash
equivalents to meet expected operational expenses, including financial obligations.

F 53

193

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

5. Financial risk management (continued)
Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the
value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return on risk.

The Group buys and sells derivatives in order to manage market risks. All such transactions are carried at within the guidelines set by the Group treasury
and risk management.

Currency risk

The Group is exposed to currency risk on certain revenues such as wholesale revenues, purchases and certain operating costs such as roaming expenses
and network related costs and resulting receivables and payables, borrowings, payable in relation to the acquisition of a telecommunication license in
Turkey, deferred payments related to the acquisition of Belarusian Telecom that are denominated in a currency other than the respective functional
currencies of Group entities, primarily TL for operations conducted in Turkey. The currencies in which these transactions are primarily denominated are
EUR and USD.

The Group holds a significant portion of its cash portfolio in foreign currency to manage currency risk. Additionally, derivative financial instruments such
as forward, swap and option contracts are used to hedge exposure to fluctuations in foreign exchange rates.

The Group’s investments in its equity accounted investee Fintur are not hedged with respect to the currency risk arising from the net assets as those net
investments are considered to be long-term in nature.

Interest rate risk

The Group’s exposure to interest rate risk is related to its financial assets and liabilities. The Group manages its financial liabilities by providing an
appropriate distribution between fixed and floating rate debts. The risk is managed by the Group by maintaining an appropriate mix between fixed and
floating rate borrowings. The use of financial derivatives is governed by the Group’s policies approved by the Audit Committee, which provide written
principles on the use of financial derivatives consistent with the Group’s treasury and risk management strategy. The Group also closely monitored
various hedging alternatives to hedge interest risk with a minimum cost. In June 2011, the Group engaged in forward starting collar agreements for the
half of its debt which are due in 2015 and exposed to interest rate risk. The collars hedged the variable interest rate risk for the period between 2013 and
2015.

F 54

TURKCELL ANNUAL REPORT 2015
194

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

6. Operating Segments
Starting from 2015, the Group has changed its reportable segments which are based on the dominant source and nature of the Group’s risk and returns
as well as the Group’s new internal reporting structure. Prior year corresponding information has been also restated in the current period according to
the new reportable segments.

Some of these strategic segments offer the same types of services, however they are managed separately because they operate in different
geographical locations and are affected by different economic conditions.

The Group has two main reportable segments as of 2015 in accordance with its integrated communication and technology services strategy as
Turkcell Turkey and Turkcell International. Turkcell Turkey reportable segment includes the operations of Turkcell, Superonline İletisim Hizmetleri A.S.
(“Turkcell Superonline”), Turkcell Satis ve Dagitim Hizmetleri A.S. (“Turkcell Satis”), group call center operations of Global Bilgi Pazarlama Danisma
ve Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Turkcell Teknoloji Arastirma ve Gelistirme A.S.
(“Turkcell Teknoloji”), Turkcell Interaktif Dijital Platform ve Icerik Hizmetleri A.S. (“Turktell Interaktif”), Kule Hizmet ve Isletmecilik A.S. (“Global
Tower”), Rehberlik Hizmetleri Servisi A.S. (“Rehberlik”), Turkcell Odeme Hizmetleri A.S. (“Turkcell Odeme”), Turkcell Gayrimenkul Hizmetleri A.S.
(“Turkcell Gayrimenkul”). Turkcell International reportable segment includes the operations of Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris
Telekom”), Eastasia, Euroasia, Astelit, Beltur , Beltel, Belarusian Telecom, UkrTower, Global LLC, Turkcell Europe, Lifetech LLC and Fintur Holdings B.V.
(“Fintur”). The operations of these legal entities aggregated into one reportable segment as the nature of services are similar and most of them share
similar economic characteristics. Other reportable segment mainly comprises the information and entertainment services in Turkey and Azerbaijan and
non-group call center operations of Turkcell Global Bilgi.

In first, second and third quarter of the year 2015, the operations of Turkcell Global Bilgi were included in Turkcell Turkey reportable segment. Since
the Group changed its reportable segments which are the dominant source of information to evaluate the performance and to allocate resources in
the fourth quarter of 2015, group call center operations of Global Bilgi were included in Turkcell Turkey reportable segment whereas non-group call
center operations of Global Bilgi were included in Other reportable segment. Corresponding information for prior years have been also restated in the
current period according to the new reportable segments. Since the assets and liabilities of Turkcell Global Bilgi could not be allocated to group and
non-group operations and are mainly related to group operations, total assets and liabilities of Turkcell Global Bilgi are reported under Turkcell Turkey
reportable segment except trade receivables.

Segment reporting of revenue has been revised to reflect the focus of the Group Management in marketing and sales around consumer and corporate
customer groups.

Information regarding the operations of each reportable segment is included below. Adjusted EBITDA is used to measure performance as management
believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these
industries. Adjusted EBITDA definition includes revenue, direct cost of revenues excluding depreciation and amortization, selling and marketing
expenses and administrative expenses. Adjusted EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and
may not be comparable to other similarly-titled indicators used by other companies.

The accounting policies of operating segments are the same as those described in the summary of significant accounting policies.

F 55

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R

TURKCELL ANNUAL REPORT 2015

198

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

6. Operating segments (continued)

31 December 2015

31 December 2014

31 December 2013

3,759,590
245,959
134,484
511
4,140,544
756,039
(799,514)
-
44,454
(270,446)
367,336
(1,667,750)
2,570,663
(667,112)
1,903,551

3,326,389
281,011
154,643
(248)
3,761,795
955,401
(1,246,986)
205,068
58,929
(135,177)
207,287
(1,639,457)
2,166,860
(730,444)
1,436,416

3,149,335
288,277
107,711
(871)
3,544,452
759,862
(204,581)
176,871
35,502
(94,300)
297,260
(1,594,402)
2,920,664
(591,398)
2,329,266

31 December 2015
22,162,600
85,884
(10,921)
981,939
2,987,808
26,207,310

31 December 2015
7,350,215
105,460
(10,089)
4,342,822
11,788,408

31 December 2014
13,810,557
82,083
(8,097)
667,539
9,142,129
23,694,211

31 December 2013
12,379,148
75,419
(8,525)
535,622
8,302,936
21,284,600

31 December 2014
2,960,645
117,552
(8,225)
3,913,594
6,983,566

31 December 2013
2,908,223
112,827
(11,230)
3,539,645
6,549,465

Turkcell Turkey adjusted EBITDA
Turkcell International adjusted EBITDA
Other
Intersegment eliminations
Consolidated adjusted EBITDA
Finance income
Finance costs
Monetary gain
Other income
Other expenses
Share of profit of equity accounted investees
Depreciation and amortization
Consolidated profit before income tax
Income tax expense
Profit for the period

Assets
Total assets for reportable segments
Other assets
Intersegment eliminations
Investments in equity accounted investees
Other unallocated assets
Consolidated total assets

Liabilities
Total liabilities for reportable segments
Other liabilities
Intersegment eliminations
Other unallocated liabilities
Consolidated total liabilities

F 59

199

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

6. Operating segments (continued)
Geographical information

In presenting the information on the basis of geographical segments, segment revenue is based on the geographical location of operations and segment
assets are based on the geographical location of the assets.

31 December 2015

31 December 2014

31 December 2013

Revenues
Turkey
Ukraine
Azerbaijan
Belarus
Turkish Republic of Northern Cyprus
Germany

Non-current assets
Turkey
Ukraine
Belarus
Turkish Republic of Northern Cyprus
Azerbaijan
Germany
Unallocated non-current assets

11,779,345
571,630
145,654
141,219
125,668
5,899
12,769,415

10,735,138
765,410
179,628
151,845
135,954
75,612
12,043,587

10,076,874
866,846
130,710
150,697
126,177
56,583
11,407,887

31 December 2015
15,032,606
993,546
224,784
116,180
14,727
-
1,030,610
17,412,453

31 December 2014
8,764,282
491,639
288,853
104,122
10,689
106
726,808
10,386,499

31 December 2013
7,562,211
998,380
344,595
98,870
10,584
9,422
617,118
9,641,180

7. Acquisition of subsidiaries
Acquisition of Metronet Iletisim Teknoloji AS

On 31 January 2014, Superonline Iletisim Hizmetleri AS (“Turkcell Superonline”) signed a Share Purchase Agreement (“SPA”) to acquire a 100% stake
in Metronet Iletisim Teknoloji AS (“Metronet”), which is specialized in rendering of telecommunications services. On 15 April 2014, the control over
Metronet is acquired from ES Mali Yatirim ve Danismanlik AS for a nominal consideration of TL 27,045.

Subsequent to the acquisition, Metronet reported revenue of TL 1,894 and loss of TL 904 until Turkcell Superonline merger. Since Metronet’s statement
of profit or loss prepared in accordance with IFRS for the year ended 31 December 2013 is not available, the estimated revenue and profit or loss for the
current reporting period if the acquisition had occurred on 1 January 2014 could not be disclosed.

After the acquisition of Metronet in 2014, management merged the Metronet’s operations with its wholly owned subsidiary, Turkcell Superonline on 4
July 2014.

F 60

TURKCELL ANNUAL REPORT 2015
200

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

7. Acquisition of subsidiaries (continued)
Acquisition of Metronet Iletisim Teknoloji AS

The acquisition of Metronet had the following effect on the Group’s assets and liabilities on the acquisition date:

Pre-acquisition

carrying amounts Fair value adjustments

Recognized values
on acquisition

Property, plant and equipment
Intangible assets
Other non-current assets
Deferred tax assets
Trade receivables and accrued income
Other current assets
Cash and cash equivalents
Loans and borrowings-non current
Loans and borrowings-current
Trade and other payables
Net identifiable assets and liabilities

Present value of the acquisition consideration
Less: fair value of identifiable net assets acquired
Bargain purchase gain on acquisition

Consideration paid in cash
Add: cash and cash equivalent balances acquired
Net cash and cash equivalent effect of the
business combination

38,995
542
5,302
6,326
2,004
931
446
(900)
(1,474)
(2,086)
50,086

(26,897)
702
-
5,239
-
-
-
-
-
-
(20,956)

12,098
1,244
5,302
11,565
2,004
931
446
(900)
(1,474)
(2,086)
29,130

27,045
(29,130)
(2,085)

(26,445)
446

(25,999)

The fair value of intangible assets and liabilities recognized on acquisition has been determined based on independent valuation.

The bargain purchase gain on the acquisition has been included in other income in the Group’s consolidated statement of profit or loss.

The Group incurred acquisition-related costs of TL 70 related to external consultancy costs which are included in administrative expenses in the
Group’s statement of profit or loss.

F 61

201

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

8. Revenue

Communication fees
Revenue from betting business
Call center revenue
Commission fees on betting business
Monthly fixed fees
Simcard sales
Other revenue (*)

2015
10,813,598
145,654
185,771
131,871
33,018
31,518
1,427,985
12,769,415

2014
10,437,154
179,628
165,714
118,290
51,518
31,700
1,059,583
12,043,587

2013
10,242,800
130,710
110,703
99,664
75,900
29,784
718,326
11,407,887

(*) Other revenue consists of handsets, modems, internet subscription revenue, tower rent incomes and other several revenue.

9. Other income and expenses
Other income amounts to TL 44,454, TL 58,929 and TL 35,502 for the years ended 31 December 2015, 2014 and 2013, respectively. Other income for
the year ended 31 December 2015 mainly consists of gain on disposal of fixed asset sales. Other income for the year ended 31 December 2014 mainly
consists of proceeds from sale of A-Tel amounting to TL 19,161 as explained in Note 16.

Other expenses amount to TL 270,446, TL 135,177 and TL 94,300 for the years ended 31 December 2015, 2014 and 2013, respectively. Other expenses
for the year ended 31 December 2015 mainly consist of commercial agreements termination expenses and litigation expenses. Other expenses as of 31
December 2014 mainly consist of payments and provisions for the penalties imposed by ICTA for not complying with relevant regulations as explained
in Note 34 and payments regarding to litigation expenses to consolidated financial statements. Other expenses as of 31 December 2013 mainly consist
of payments and provisions for the penalties imposed by ICTA for not complying with relevant regulations as explained in Note 34, and impairment
recognized on the Group’s investment in T-Medya and Aks TV amounting to TL 18,466 and TL 19,408 respectively.

10. Personnel expenses

Wages and salaries (*)
Increase in liability for long-service leave (**)
Contributions to defined contribution plans

2015
1,317,655
30,593
8,364
1,356,612

2014
1,185,382
32,435
7,876
1,225,693

2013
1,129,914
28,673
6,576
1,165,163

(*) Wages and salaries include compulsory social security contributions and bonuses.
(**) The actuarial losses / (gains) for the years ended 31 December 2015, 2014 and 2013 amounting to TL 13,466, TL 819 and TL (5,287) respectively, are reflected in other
comprehensive income.

F 62

TURKCELL ANNUAL REPORT 2015

202

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

11. Finance income and costs

Recognized in the statement of profit or loss:

Interest income on bank deposits
Interest income on late payment and
contracted receivables
Premium income on option contracts
Discount interest income
Other interest income
Finance income

Net foreign exchange loss
Interest expense on financial liabilities
measured at amortized cost
Litigation late payment interest expense
Option premium expense
Other
Finance cost
Net finance income / (loss)

2015
303,221

436,024
1,070
13,865
1,859
756,039

2014
650,780

285,916
2,770
9,596
6,339
955,401

2013
511,432

217,672
870
23,780
6,108
759,862

(489,320)

(1,110,833)

(75,592)

(224,724)
(68,083)
(2,290)
(15,097)
(799,514)
(43,475)

(120,414)
(6,963)
(33)
(8,743)
(1,246,986)
(291,585)

(113,267)
(3,864)
(189)
(11,669)
(204,581)
555,281

Capitalization rates and amounts other than borrowings made specifically for the purpose of acquiring a qualifying asset are 9.7%, 12.8% and 11.4%,
TL 75,315, TL 15,320 and TL 14,451 for the years ended 31 December 2015, 2014 and 2013, respectively.

Net finance income or expense amounts to TL (43,475), TL (291,585) and TL 555,281 for the years ended 31 December 2015, 2014 and 2013,
respectively.

The foreign exchange income amounting to TL 555,297, TL 230,246 and TL 146,269 have been presented on net basis with foreign exchange losses for
the years ended 31 December 2015, 2014 and 2013, respectively.

Net foreign exchange loss is mainly attributable to the foreign exchange losses in Belarusian Telecom operating in Belarus amounting to TL 392,607,
TL 294,532 and TL 123,575 and foreign exchange loss in Astelit operating in Ukraine amounting to TL 465,452, TL 991,150 and TL 7,588 foreign
exchange loss for the years ended 31 December 2015, 2014 and 2013 respectively. Foreign exchange losses from Belarusian Telecom and Astelit
exclude foreign exchange losses arising in the foreign operations’ individual financial statements which have been recognized directly in equity in the
foreign currency translation differences in the consolidated financial statements in accordance with accounting policy for net investment in foreign
operations as disclosed in Note 3b.

F 63

203

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

12. Income tax expense

Current tax expense
Current period

Deferred tax benefit
Origination and reversal of temporary differences
Utilization of previously unrecognized tax losses

Total income tax expense

Income tax recognized directly in equity

2015
Foreign currency translation differences
Change in cash flow hedge reserve
Change in actuarial gain / (loss)

2014
Foreign currency translation differences
Change in cash flow hedge reserve
Change in actuarial gain / (loss)

2013
Foreign currency translation differences
Change in cash flow hedge reserve
Change in actuarial (loss) / gain

2015

2014

2013

(591,297)

(709,437)

(650,513)

(98,678)
22,863
(75,815)
(667,112)

(21,384)
377
(21,007)
(730,444)

23,012
36,103
59,115
(591,398)

Before tax

(384,466)
719
(13,466)
(397,213)

468,478
1,089
(819)
468,748

(186,919)
541
5,287
(181,091)

Tax (expense)/
benefit

(5,749)
-
2,563
(3,186)

(3,646)
-
196
(3,450)

6,766
-
(1,026)
5,740

Net of tax

(390,215)
719
(10,903)
(400,399)

464,832
1,089
(623)
465,298

(180,153)
541
4,261
(175,351)

F 64

TURKCELL ANNUAL REPORT 2015
204

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

12. Income tax expense (continued)
Reconciliation of effective tax rate

The reported income tax expense for the years ended 31 December 2015, 2014 and 2013 are different than the amounts computed by applying the
statutory tax rate to profit before income tax of the Company, as shown in the following reconciliation:

Profit for the year
Total income tax expense
Profit before income tax

Income tax using the Company’s
domestic tax rate
Effect of tax rates in foreign jurisdictions
Tax exempt income
Non-deductible expenses and permanent differences
Tax incentives
Utilization of previously unrecognized
tax losses
Unrecognized deferred tax assets
Difference in effective tax rate of equity
accounted investees
Deferred tax effect of investment in
subsidiaries
Other
Total income tax expense

2015
1,903,551
667,112
2,570,663

(514,133)
(52,688)
3,685
(16,104)
3,378

22,863
(198,364)

20%
2%
-
3%
-

-
12%

2014
1,436,416
730,444
2,166,860

(433,372)
(51,277)
5,867
(72,484)
2,984

377
(255,048)

20%
1%
-
1%
-

(1)%
2%

2013
2,329,266
591,398
2,920,664

(584,133)
(23,018)
2,210
(42,698)
1,883

36,103
(66,559)

55,100

(1)%

30,423

(2)%

44,697

32,926
(3,775)
(667,112)

-
(2)%

-
42,086
(730,444)

-
(1)%

-
40,117
(591,398)

20%
2%
-
1%
-

(1)%
8%

(2)%

(1)%
-

The income taxes payable amounting to TL 12,855, TL 154,785 and TL 138,888 as at 31 December 2015, 2014 and 2013, respectively, represents the
amount of income taxes payable in respect of related taxable profit for the years ended 31 December 2015, 2014 and 2013, respectively netted off with
advance tax payments.

The Turkish entities within the Group are subject to corporate tax at the rate of 20%. In Turkey, there is no procedure for a final and definitive
agreement on tax assessments. Companies file their tax returns at the end of April following the close of the accounting year to which they relate. Tax
authorities may, however, examine such returns and the underlying accounting records and may revise assessments within five years. Advance tax
returns are filed on a quarterly basis.

Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses,
and by deducting tax exempt income.

In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit distribution via
transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated 18 November 2007 sets details about implementation.

If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance
with arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit
distributions through transfer pricing are not accepted as tax deductible for corporate income tax purposes.

F 65

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TURKCELL ANNUAL REPORT 2015

206

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D
N
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207

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

13. Property, plant and equipment (continued)
Leased assets

The Group leases equipment under a number of finance lease agreements. At the end of each lease period, the Group has the option to purchase the
equipment at a beneficial price. As at 31 December 2015, net carrying amount of fixed assets acquired under finance leases amounted to TL 91,395 (31
December 2014: TL 107,207 and 31 December 2013: TL 111,194).

Property, plant and equipment under construction

Construction in progress mainly consisted of capital expenditures resulting from 4.5G license as at 31 December 2015 and GSM and fixed-line network of
the Company, Astelit, Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), Belarusian Telecom and Turkcell Superonline as at 31 December
2014.

14. Intangible assets
Turkcell 2G License

In April 1998, the Company signed the License with the Turkish Ministry, under which it was granted a GSM license, which is amortized over 25 years
with a carrying amount of TL 333,372 as at 31 December 2015 (31 December 2014: TL 379,355). The amortization period of the license will end in 2023.

Turkcell 3G License

On 30 April 2009, the Company signed a license agreement with ICTA which provides authorization for providing IMT 2000/UMTS services and
infrastructure. The Company acquired the A type license providing the widest frequency band for a consideration of EUR 358,000 (excluding VAT). The
license is effective for a duration of 20 years starting from 30 April 2009. The carrying amount as at 31 December 2015 is
TL 512,958 and the amortization period of the license will end in 2029 (31 December 2014: TL 551,430).

Turkcell 4.5G License

On 26 August 2015, “Authorization Tender on IMT Services and Infrastructure” publicly known as 4.5G, license tender, was held by the Information
Technologies and Communication Authority. The Company has been awarded for 13 years with; 2x10 MHz frequency band in 800 MHz spectrum for
EUR 372,926 (equivalent to TL 1,185,010 as at 31 December 2015), 2x1.4 MHz frequency band in 900 MHz spectrum for EUR 39,940 (equivalent to TL
126,913 as at 31 December 2015), 2x29.8 MHz frequency band in 1800 MHz spectrum for EUR 430,000 (equivalent to TL 1,366,368 as at 31 December
2015), 2 units of 2x5 MHz frequency band in 2100 MHz spectrum for EUR 348,000 (equivalent to TL 1,105,805 as at 31 December 2015), 1x10 MHz
frequency band in 2100 MHz spectrum for EUR 35,664 (equivalent to TL 113,326 as at 31 December 2015), 2x25 MHz frequency band in 2600 MHz
spectrum for EUR 384,000 (equivalent to TL 1,220,198 as at 31 December 2015) and 1x10 MHz frequency band in 2600 MHz spectrum for EUR
12,930 (equivalent to TL 41,086 as at 31 December 2015). The tender price for total frequency band of 172.4 MHz is EUR 1,623,460 (equivalent to TL
5,158,706 as at 31 December 2015) (excluding VAT by 18%). IMT authorization period expires on 30 April 2029 and operators will be able to commence
service delivery starting from 1 April 2016. 2x1.4 MHz frequency band in 900MHz spectrum amounting to EUR 39,940 (equivalent to TL 126,913 as
at 31 December 2015) and 2 units of 2x5 MHz frequency band in 2100 MHz spectrum amounting to EUR 348,000 (equivalent to TL 1,105,805 as at 31
December 2015) are in operation as at 1 December 2015 and have been recorded as GSM and other telecommunication operating licenses. Remaining
packages amounting to EUR 1,235,520 (equivalent to TL 3,925,988 as at 31 December 2015) will be ready to use on 1 April 2016 and have been recorded
as 4.5G license not yet available for use. As at 31 December 2015, the carrying amount of 4.5G License is TL 5,222,687.

F 68

TURKCELL ANNUAL REPORT 2015
208

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

14. Intangible assets (continued)
Turkcell 4.5G License (continued)

Tender price amounting to EUR 1,623,460 (equivalent to TL 5,158,706 as at 31 December 2015) (excluding VAT of 18%) will be paid semi-annually by
four equal installments total of which are amounting to EUR 1,655,290 (equivalent to TL 5,259,850 as at 31 December 2015) including interest and
excluding VAT of 18%. On 26 October 2015, the Company made the payment amounting to TL 1,321,873 for the original amount of EUR 413,823 as
first installment and total VAT amounting to TL 933,447 for the original amount of EUR 292,223 in cash. Last installment will be paid on 27 April 2017.

Astelit 3G License

3G License tender in Ukraine was held on 23 February 2015. Astelit submitted a bid of UAH 3,355,400 (equivalent to TL 406,495 as at 31 December
2015) and was awarded the first lot for 15 years, which is the 1920-1935 / 2110-2125 MHz frequency band. Official notification was received on 2
March 2015 and the license payment was made on 19 March 2015. The cost of 3G license has been presented in GSM and other telecommunication
operating licenses as at 31 December 2015. In May 2015, Astelit made the payment amounting to UAH 357,568 (equivalent to TL 43,318 as at 31
December 2015) for the first installment of conversion of spectrum from military use and committed approximately UAH 426,311 (equivalent to
TL 51,646 as of 31 December 2015) for the remaining installments of the conversion. Committed amount will be subject to change according to the
inflation rates at the date of the payments.

Impairment testing for long-lived assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Long-lived assets were tested for impairment as at 31
December 2015.

Astelit

Independent appraisals were obtained for fair values to determine recoverable amount for Astelit. For the purpose of impairment testing, assets that
cannot be tested individually are grouped together into the smallest group of assets, cash generating units. As at 31 December 2015, impairment test
for long-lived assets of Astelit is made on the assumption that Astelit is the cash generating unit.

As the recoverable amounts based on the value in use of cash generating units was higher than the carrying amount of cash-generating units of
Astelit, no impairment was recognized. The assumptions used in value in use calculation of Astelit were:

A 29.5% post-tax WACC rate for 2016 to 2021, a 28.7% post-tax WACC rate for after 2021
and a 6.0% terminal growth rate were used to extrapolate cash flows beyond the 6-year forecasts based on the business plans. The pre-tax rate for
disclosure purposes was 30.6%.

F 69

209

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

14. Intangible assets (continued)
Belarusian Telecom

The aggregate carrying amount of goodwill arising from the acquisition of Belarusian Telecom was totally impaired as at 31 December 2011. The
gross amount of goodwill accumulated impairment losses adjusted for the effects of hyperinflation and translation would have been amounting to TL
412,059 as at 31 December 2015 (31 December 2014: TL 514,964 and 31 December 2013: TL 507,867). The cumulative impairment loss recognized in the
statement of profit and loss is TL 228,774.

Independent appraisals were obtained for fair values to determine recoverable amount for Best. For the purpose of impairment testing, assets that
cannot be tested individually are grouped together into the smallest group of assets, cash generating units. As at 31 December 2015, impairment test for
long-lived assets of Best is made on the assumption that Best is the cash generating unit.

As the recoverable amounts based on the value in use of cash generating units was higher than the carrying amount of cash-generating units of Best, no
impairment was recognized. The assumptions used in value in use calculation of Best were:

A 31.1% post-tax WACC rate for 2016 to 2020, a 30.5% post-tax WACC rate for after 2020 and a 11.0% terminal growth rate were used to extrapolate
cash flows beyond the 5-year forecasts based on the business plans. The pre-tax rate for disclosure purposes was 32.6%.

Impairment testing for cash-generating units containing goodwill

Goodwill allocated to cash generating units and carrying values of all cash generating units are annually tested for impairment. The recoverable amounts
(that is, higher of value in use and fair value less cost to sell) are normally determined on the basis of value in use, applying discounted cash flow
calculation. Independent appraisals were obtained for fair values to determine recoverable amounts for Belarusian Telecom and Turkcell Superonline as
at 31 December 2015, the date of the goodwill impairment test.

In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including
management’s expectations of growth in adjusted EBITDA, calculated as results from operating activities before depreciation and amortization and other
income / (expenses), timing and quantum of future capital expenditure, long term growth rates, and the selection of discount rates to reflect the risks
involved.

Turkcell Superonline

As at 31 December 2015, the aggregate carrying amount of goodwill allocated to Turkcell Superonline is
TL 32,834 (31 December 2014: TL 32,384 and 31 December 2013: TL 32,834).Independent appraisal was obtained for fair value to determine recoverable
amounts. As the recoverable value based on the value in use of the cash generating units was estimated to be higher than carrying amount, no
impairment was required for goodwill arising from the acquisition of Superonline as at 31 December 2015. The calculation of the value in use was based
on the following key assumptions:

Values assigned to adjusted EBITDA for the periods forecasted include the expected synergies to be achieved from operating as a part of the Group.
Values assigned to this key assumption reflect past experience except for efficiency improvements and synergies. Management believes that any
reasonably possible change in the key assumptions on which Superonline recoverable amount is based would not cause Superonline’s carrying amount to
exceed its recoverable amount.

The projection period for the purposes of goodwill impairment testing was taken as 5 years between 1 January 2016 and 31 December 2020.

F 70

TURKCELL ANNUAL REPORT 2015
210

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

14. Intangible assets (continued)
Impairment testing for cash-generating units containing goodwill (continued)
Turkcell Superonline (continued)

Cash flows for further periods (perpetuity) were extrapolated using a constant growth rate of 3.5%. This growth rate does not exceed the long-term
average growth rate for the market in which Superonline operates.

A 16.5% post-tax WACC rate was applied in determining the recoverable amount of the cash-generating unit. Discounting post-tax cash flows at a
post-tax discount rate and discounting pre-tax cash flows at pre-tax discount rate gave same results, since the pre-tax discount rate is the post-tax
discount rate adjusted to reflect the specific amount and timing of the future tax cash flows. For disclosure purposes pre-tax discount rate is 20.2%.

Impairment testing for intangible assets not yet available for use
Turkcell

As at 31 December 2015, impairment test for long-lived assets of Turkcell was performed on the assumption that Turkcell Turkey Mobile is a cash
generating unit. As the recoverable amounts based on the value in use of cash generating units was higher than the carrying amount of cash-
generating units of Turkcell, no impairment was recognized. The assumptions used in value in use calculation of Turkcell were:

A 14.0% post-tax discount rate and a 5.0% terminal growth rate were used to extrapolate cash flows beyond the 5-year forecasts based on the
business plans. The pre-tax rate for disclosure purposes was 16.2%.

F 71

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F 72

TURKCELL ANNUAL REPORT 2015

212

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213

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

15. Investment property
The Group transferred various properties from owner occupied asset to investment property to earn rental income and/or for capital appreciation in
2015.

Determination of the fair value of the Group’s investment properties

The fair value of the Group’s investment properties as at 31 December 2015 has been arrived at on the basis of a valuation carried out on the respective
dates by independent valuation companies which are authorized by the Capital Markets Board, and have appropriate qualifications and recent experience
in the valuation of properties in the relevant locations. The fair value of these investment properties was determined using a variety of valuation
methods which are: income approach methods, (direct capitalization approach and income capitalization approach), cost approach and market approach.
In estimating the fair value of the properties, the highest and best use of the property is its current use.

The rental income obtained during the year ended 31 December 2015 is TL 1,836 (31 December 2014: TL 1,102). Total direct operating expense from
investment property during the year ended 31 December 2015 is TL 126 (31 December 2014: TL 119).

Details of the Group’s investment properties and information about the fair value hierarchy as at 31 December 2015 and 2014 are as follows:

31 December 2015
Investment properties in İstanbul:

Istanbul Tepebasi

Kucukcekmece

Investment properties in Gebze

Investment properties in Izmir

Other investment properties

Total

Level 1

Level 2

Level 3

Valuation Method

310,070

Direct capitalization

Market approach &
Cost approach

Income capitalization

Market approach

Cost approach

12,240

11,802

39,867

22,281

5,199

401,459

31 December 2014

Level 1

Level 2

Level 3

Valuation Method

Investment properties in Gebze

13,398

Income capitalization

(*) There were no transfers between Level 1 and Level 2 during the year.

F 74

TURKCELL ANNUAL REPORT 2015
214

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

15. Investment property (continued)
Significant unobservable inputs and sensitivity of the respective investment properties based on the valuation method are as follows:

Fair value of the investment property which is measured based on the “direct capitalization” approach will increase / (decrease) significantly, when
there is a significant decrease/ (increase) in capitalization rate and a significant increase/ (decrease) in current market rentals. Capitalization rate is
calculated by dividing comparable properties’ annual net operating income by the selling price of the respective properties.

In the “income capitalization” approach, a significant increase/ (decrease) in rentals will cause a significant increase/ (decrease) in the fair value. In
addition, a slight decrease/ (increase) in risk premium and discount rate which are calculated by considering the current market conditions will cause a
significant increase/ (decrease) in the fair value.

In the “cost approach”, a significant increase/ (decrease) of construction costs and miscellaneous costs of any similar properties in the market will
cause a significant increase/ (decrease) in the fair value.

In the “market approach”, a significant increase/ (decrease) in the market value of any properties which are located in the similar areas with similar
conditions will cause a significant increase (decrease) in the fair value.

Cost value
Opening balance
Transfer from tangible fixed assets (*)
Ending balance

Accumulated depreciation
Opening balance
Transfer from tangible fixed assets
Charge for the year and impairment

during the period (**)

Ending balance

Carrying value

31 December
2015

31 December
2014

20,199
144,268
164,467

(6,801)
(101,634)

(6,460)
(114,895)

49,572

20,199
-
20,199

(3,895)
-

(2,906)
(6,801)

13,398

(*) The real estates of the Group, which are held for obtaining rental or appreciation income as of 31 December 2015, are classified as investment property.
(**) The impairment losses on investment property for the year ended 31 December 2015 is TL 2,592 and recognized in depreciation expense.
(31 December 2014: TL 2,364)

F 75

215

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F 76

TURKCELL ANNUAL REPORT 2015

216

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

16. Investments in equity accounted investees (continued)
Fintur

The Company’s investment in Fintur Holdings BV (“Fintur”) amounts to TL 981,939 as at 31 December 2015 (31 December 2014: TL 667,539).

In 2013, Fintur decided to distribute a dividend amounting to $105,000. The Company reduced the carrying value of investments in Fintur by the
accrued dividend of $43,523 and this amount has been collected in July 2013.

In the General Assembly of Shareholders’ Meeting of Fintur, it has been decided on 23 July 2014 to distribute a dividend amounting to $112,000. The
Company reduced the carrying value of investments in Fintur by the accrued dividend of $46,424 and this amount has been collected in July 2014.

In April 2008, the privatization of the Republic of Azerbaijan’s 35.7% ownership in Azercell Telecom B.M. (“Azercell”), a 51% owned consolidated
subsidiary of Fintur, was completed. The non-controlling shareholders in Azercell acquired the 35.7% shares of Republic of Azerbaijan increasing
their effective ownership in Azercell to 49%. At the same time, the non-controlling shareholders in Azertel increased their ownership to 49%.
Fintur’s effective ownership in Azercell therefore remained at 51%. One of the non-controlling shareholders was also granted a put option, giving
the shareholder the right to sell its 42.2% stake to Fintur at fair value in certain deadlock situations regarding significant decisions at the General
Assembly. Fintur has initially accounted for the present value of the estimated option redemption amount as a provision and derecognized the non-
controlling interest and the amounts recognized in equity regarding the measurement of put option amounting to TL (633,351) is accounted under
equity, in accordance with the Group’s accounting policy.

On 17 September 2015, TeliaSonera, which is one of Company’s major shareholders and also the shareholder of Fintur with a 58.55% stake,
announced its intent to exit from its Euroasian assets. The Company has appointed a strategic and financial advisor for the potential acquisition of the
remaining 58.55% stake in Fintur. As of 26 February 2016, the Company has submitted a binding offer to acquire TeliaSonera’s 58.55% stake in Fintur
and its 24% direct stake in Kcell JSC (Kazakhstan).

Reconciliation of the above summarized financial information to the carrying amount of the interest in Fintur recognized in the consolidated financial
statements:

Net assets of Fintur
Proportion of the Group’s ownership interest in Fintur
Goodwill
Carrying amount of the Group’s interest in Fintur

Significant restrictions

2015
2,049,934
849,697
132,242
981,939

2014
1,291,430
535,297
132,242
667,539

As at 31 December 2015, significant exchange restrictions and state controls exist in most jurisdictions in which Fintur operates. The local currencies
of Fintur subsidiaries in Kazakhstan, Azerbaijan, Georgia and Moldova are not convertible outside of the respective countries. Future movements of
exchange rates will affect the carrying values of the Fintur’s assets and liabilities. The translation of underlying local currency amounts into USD in
Fintur’s consolidated financial statements should not be construed as a representation that such local currency amounts have been, could be or will in
future be converted into USD at the exchange rates shown or at any other exchange rate.

F 77

217

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

16. Investments in equity accounted investees (continued)
A-Tel

The Company accounted for its joint venture A-Tel by applying equity method accounting until 27 August 2014. The Company’s investment in A-Tel
amounts to TL 46,624 as at 31 December 2013. In accordance with Settlement Protocol signed with Bereket Holding A.Ş. (formerly known as Bilgin
Holding A.Ş.) on 27 August 2014, it has been decided to pay a compensation amounting to TL 30,428 to A-Tel and TL 19,161 has been recorded as other
income after the elimination as a result of the decline in initial provision accrued amount from TL 68,750 to TL 30,428. Bereket Holding A.Ş. and Savings
Deposits Insurance Funds (“SDIF”) have waived from the lawsuit regarding alleged loss occurred from termination of Service Provider Agreement.

Additionally, Turkcell’s whole stake in A-tel has been transferred to Bereket Holding A.Ş. for a consideration of TL 31,025 within the context of the Share
Sale Agreement signed on 27 August 2014. Loss on sale amounting to TL 902 was recognized in the statement of profit or loss as detailed below:

Share sale price
Less: carrying amount of investment on the date of sale
Loss recognized

31 December 2014
31,025
(31,927)
(902)

17. Other investments
Current investments:

Held to maturity financial assets:
Corporate debt securities
Available for sale financial assets:
Time deposits mature over 3 months

2015

-
-

2014

11,207

8,143
19,350

As at 31 December 2014, corporate debt securities with a carrying amount of TL 11,207 have effective interest rates of 9.8% to 13.8%.

F 78

TURKCELL ANNUAL REPORT 2015
218

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

18. Other non-current assets

Prepaid expenses
VAT receivable
Receivables from Public Administration (Note 34)
Deposits and guarantees given
Advances given for fixed assets
Others

19. Deferred tax assets and liabilities
Unrecognized deferred tax liabilities

2015
175,543
121,905
72,848
23,671
7,972
40,001
441,940

2014
131,964
119,880
-
17,808
236,042
19,878
525,572

At 31 December 2015, a deferred tax liability of TL 92,725 (31 December 2014: TL 64,436) for temporary differences of TL 463,623 (31 December
2014: TL 322,179) related to investments in subsidiaries was not recognized because the Company controls whether the liability will be incurred and it
is satisfied that it will not be incurred in the foreseeable future.

Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Deductible temporary differences

Tax losses

Total unrecognized deferred tax assets

31 December 2015

31 December 2014

80,910

457,271

538,181

107,896

362,420

470,316

The deductible temporary differences do not expire under current tax legislation. Turkish tax legislation does not allow companies to file tax returns
on a consolidated basis. Therefore, deferred tax assets have not been recognized in respect of these items resulting from certain consolidated
subsidiaries because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

F 79

219

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

19. Deferred tax assets and liabilities (continued)
Unrecognized deferred tax assets (continued)

As at 31 December 2015, expiration of tax losses is as follows:
Expiration Date

Amount

2016

2017

2018

2019

2020

2021 - 2025

4,726

172

1,006,740

1,011,857

As at 31 December 2015, tax losses which will be carried indefinitely are amounting to TL 1,438,300 (31 December 2014: TL 1,248,270).

Recognized deferred tax assets and liabilities

Deferred tax assets and liabilities as at 31 December 2015 and 2014 are attributable to the following:

Property, plant &
equipment and
intangible assets
Investment
Provisions and employee
terminaton benefit
Trade and other payables
Tax credit carry forwards
(Investment tax credit)
Other items
Tax assets / (liabilities)
Net off of tax
Net tax assets /
(liabilities)

Assets

2015

9,172
34,765

70,206
36,632

29,799
142,344
322,918
(274,303)

2014

17,307
1,531

90,627
54,790

27,369
99,745
291,369
(232,295)

Liabilities
2015

2014

Net
2015

(303,063)
(69,502)

(244,987)
(45,411)

-
-

-
(15,175)
(387,740)
274,303

-
(109)

-
(2,102)
(292,609)
232,295

(293,891)
(34,737)

70,206
36,632

29,799
127,169
(64,822)
-

48,615

59,074

(113,437)

(60,314)

(64,822)

2014

(227,680)
(43,880)

90,627
54,681

27,369
97,643
(1,240)
-

(1,240)

F 80

TURKCELL ANNUAL REPORT 2015
220

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221

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

20. Trade receivables and accrued income

Undue assigned contracted receivables
Receivables from subscribers
Accounts and checks receivable
Accrued income

2015
2,216,010
1,218,126
271,743
393,049
4,098,928

2014
1,828,618
1,101,091
210,919
361,887
3,502,515

Trade receivables are shown net of allowance for doubtful debts amounting to TL 816,071 as at 31 December 2015 (31 December 2014: TL 727,652). The
change in allowance for trade receivables and due from related parties is disclosed in Note 35.

Letters of guarantee received with respect to the accounts and checks receivable are amounted to TL 134,798 and TL 162,204 as at 31 December 2015
and 2014, respectively.

The undue assigned contracted receivables are the remaining portion of the assigned receivables from the distributors related to the handset campaigns
which will be collected from subscribers in instalments by the Company. When monthly instalment is invoiced to the subscriber, related portion is
transferred to “receivables from subscribers”. The Company measures the undue assigned contracted receivables at amortized cost, bears the credit risk
and recognizes interest income throughout the contract period.

The accrued income represents revenue accrued for subscriber calls (air-time) which have not been billed and will be billed within one year. Due to the
volume of subscribers, there are different billing cycles; accordingly, an accrual is made at each period end to accrue revenue for rendered but not yet
billed. Contracted receivables related to handset campaigns, which will be invoiced after one year is presented under non-current trade receivables
amounting to TL 834,833 (31 December 2014: TL 779,925).

The Group’s exposure to currency risks and impairment losses related to trade receivables are disclosed in Note 31.

21. Other current assets

VAT receivable
Restricted cash
Prepaid expenses
Prepayment for subscriber acquisition cost
Advances to suppliers
Special communication tax to be collected from subscribers
Amounts to be received from Ministry of Transport, Maritime Affairs and Communications
Receivables from personnel
Interest income accruals
Currency forward contracts (*)
Other

2015
763,844
349,243
290,063
98,656
34,554
32,755
29,782
10,054
2,769
216
77,966
1,689,902

2014
16,836
-
228,798
85,311
40,831
35,882
174,978
5,248
23,712
-
58,110
669,706

F 82

TURKCELL ANNUAL REPORT 2015
222

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

21. Other current assets (continued)
The increase in VAT receivable mainly results from 4.5G license VAT payment made as at
26 October 2015 amounting to TL 933,447. Discount impact of VAT receivable amounting to TL 36,976 is recorded in finance costs (Note 11).

As at 31 December 2015, restricted cash amounting to TL 349,243 represents the amounts deposited at a bank as guarantees in connection with the
loans utilized by Astelit (Note 26) (31 December 2014: None).

Prepaid expenses mainly comprises prepaid rent expenses and prepaid credit management fees.

The amount to be received from the Ministry of Transport, Maritime Affairs and Communications is related with the construction and operation
of mobile communication infrastructure in rural areas (“Evrensel Project”) as explained in Note 34. Receivables from Evrensel project have been
presented on net basis with provision accrued amounting to TL 29,782.

Subscriber acquisition costs are subsidies paid to dealers for engaging a fixed term contract with the subscriber that require a minimum consideration.

(*) Details of currency forward contracts are given below:
Forward Currency contracts
Buy

Exchange Rate
(TL)

Foreign
currency

Notional
Amount

Fair value

Maturity

2.9144

USD

57,732

216

4 January 2016

22. Cash and cash equivalents

Cash in hand
Cheques received
Banks

- Demand deposits
- Time deposits

Investment funds, bonds and bills
Cash and cash equivalents in the statement of cash flows

2015
453
3
2,912,741
572,895
2,339,846
5,599
2,918,796

2014
246
79
9,026,576
574,005
8,452,571
4,980
9,031,881

As at 31 December 2015, the average maturity of time deposits is 27 days (31 December 2014: 67 days).

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 31.

F 83

223

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

23. Capital and reserves
Share capital

As at 31 December 2015, common stock represented 2,200,000,000 (31 December 2014: 2,200,000,000) authorized, issued and fully paid shares with a
par value of TL 1 each. In accordance with the Law No. 5083 with respect to TL, on 9 May 2005, par value of each share is registered to be TL 1. In this
respect, share capital presented in the consolidated financial statements refers to nominal amount of share capital registered by trade registry.

The holders of shares are entitled to receive dividends as declared and are entitled to one vote per share at meetings of the Company.

As at 31 December 2015, total number of pledged shares hold by various institutions is 995,509 (31 December 2014: 995,509).

Capital contribution

Capital contribution comprises the contributed assets and certain liabilities that the government settled on behalf of the Group that do not meet the
definition of a government grant which the government is acting in its capacity as a shareholder.

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign and domestic
operations from their functional currencies to presentation currency of TL.

Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognized
or the asset is impaired.

Legal reserve

Under the Turkish Commercial Code, Turkish companies are required to set aside first and second level legal reserves out of their profits. First level legal
reserves are set aside 5% of the distributable income per statutory accounts each year. The ceiling on the first legal reserves is 20% of the paid-up
capital. The reserve requirement ends when the 20% of paid-up capital level has been reached. Second legal reserves correspond to 10% of profits
actually distributed after the deduction of the first legal reserves and the minimum obligatory dividend pay-out (5% of the paid-up capital). There is no
ceiling for second legal reserves and they are accumulated every year. In this respect, legal reserve presented in the consolidated financial statements
refers to nominal amount of legal reserve.

Cash flow hedging reserve

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments
entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognized and
accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or
loss, or included as a basis adjustment to the non-financial hedged item, consistent with the relevant accounting policy.

F 84

TURKCELL ANNUAL REPORT 2015
224

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

23. Capital and reserves (continued)
Reserve for non-controlling interest put option liability

The reserve for non-controlling interest put option liability includes the difference between the put option liability granted to the non-controlling
shareholders in existing subsidiaries recognized and the amount of non-controlling interest derecognized. Since the current option relates to the
business combinations before 1 January 2009, subsequent changes in the fair value of the put option liability other than unwind of discount and
associated foreign exchange gains and losses are also recognized in this reserve.

Dividends
Turkcell:

On 25 March 2015, the Company’s Board of Directors has proposed a dividend distribution for the year ended 31 December 2010, 2011, 2012, 2013
and 2014 amounting to TL 3,925,000 (equivalent to $1,535,903 as at 26 March 2015, date of Ordinary General Assembly Meeting), which represented
42.5% of distributable income. This represents a net cash dividend of full TL 1.784091 (equivalent to full $0.70 as at 26 March 2015, date of Ordinary
General Assembly Meeting) per share. This dividend proposal was discussed and approved at the Ordinary General Assembly of Shareholders held on
26 March 2015. The dividend was paid in three installments on 6 April, 8 April and 13 April 2015 to the shareholders.

Due to the seizure on all receivables of Cukurova Holding AS. including its dividend receivables as detailed in Note 34, dividend payables to Çukurova
Holdings AS. was paid to SDIF.

Azerinteltek:

In the Ordinary General Assembly of Shareholders’ Meeting of Azerinteltek held on 25 February 2014, it had been decided to distribute dividends
amounting to AZN 227 (equivalent to TL 424 as at
31 December 2015). The dividend was paid in two installments on 19 March 2014 and 27 March 2014 to the shareholders.

In the Ordinary General Assembly of Shareholders Meeting of Azerinteltek held on 25 February 2014, it has been decided to pay dividends to the
Shareholders in proportion of their shares on interim basis in advance during 2014 financial year after fulfillment of liabilities arising from the
Shareholder Agreement and payment of the current debts. According to the resolution of the General Assembly Meeting of the Company, on 17 April
2014 Azerinteltek’s Board of Directors has decided to distribute the dividend accrued in the first quarter of 2014 financial year amounting to AZN
3,631 (equivalent to TL 6,777 as at 31 December 2015). Dividend payments have been completed as at 4 August 2014.

According to the resolution of the General Assembly Meeting of Azerinteltek, Azerinteltek’s Board of Directors has decided to pay the dividend
accrued in the second and third quarters of 2014 financial year amounting to AZN 2,146 (equivalent to TL 4,005 as at 31 December 2015) on 23
October 2014. Dividend payments have been completed as at 4 November 2014.

According to the resolution of the General Assembly Meeting of Azerinteltek, Azerinteltek’s Board of Directors has decided on 22 January 2015 to pay
the dividend accrued in the fourth quarter of 2014 financial year amounting to AZN 2,258 (equivalent to TL 4,214 as at 31 December 2015). Dividend
payments have been completed as at 28 January 2015.

F 85

225

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

23. Capital and reserves (continued)
Dividends
Azerinteltek (continued):

According to the resolution of the General Assembly Meeting of Azerinteltek, Azerinteltek’s Board of Directors has decided on 30 April 2015 to pay the
dividend accrued in the first quarters of 2015 financial year amounting to AZN 2,151 (equivalent to TL 4,015 as at 31 December 2015) and the remaining
amount of AZN 134 (equivalent to TL 250 as at 31 December 2015) from 2014 financial year. Dividend payments have been completed as at 4 May 2015
and 5 May 2015.

According to the resolution of the General Assembly Meeting of Azerinteltek, Azerinteltek’s Board of Directors has decided on 9 July 2015 to pay the
dividend accrued in the second quarter of 2015 financial year amounting to AZN 530 (equivalent to TL 989 as at 31 December 2015). The dividend was
paid in two installments on 10 July 2015 and 7 August 2015 to the shareholders.

According to the resolution of the General Assembly Meeting of Azerinteltek, Azerinteltek’s Board of Directors has decided on 12 October 2015 to pay
the dividend accrued in the third quarter of 2015 financial year amounting to AZN 822 (equivalent to TL 1,534 as at 31 December 2015). The dividend
was paid in two installments on 16 October 2015 and 3 December 2015 to the shareholders.

Inteltek:

Furthermore, according to the resolution of the Ordinary General Assembly Meeting of Inteltek Internet Teknoloji Yatirim ve Danismanlik Ticaret A.S.
(“Inteltek”), Inteltek’s Board of Directors has decided on 25 June 2015 to pay the dividend accrued in 2012, 2013 and 2014 financial years amounting to
TL 173,456. The dividend was paid in two installments on 29 July 2015 and 19 August 2015 to the shareholders.

Furthermore, according to the resolution of the Extraordinary General Assembly Meeting of Inteltek held on 11 November 2015, Inteltek’s Board of
Directors has decided on 13 November 2015 to pay the dividend accrued in the first nine months of 2015 financial year amounting to TL 32,192. Dividend
payments have been completed as at 30 November 2015.

24. Earnings per share
The calculations of basic and diluted earnings per share as at 31 December 2015 were based on the profit attributable to ordinary shareholders for the
years ended 31 December 2015, 2014 and 2013 of
TL 2,067,654, TL 1,864,640 and TL 2,325,914 respectively and a weighted average number of shares outstanding during the years ended 31 December
2015, 2014 and 2013 of 2,200,000,000 calculated as follows:

Numerator:
Net profit for the period attributed to owners
Denominator:
Weighted average number of shares
Basic and diluted earnings per share

2015

2014

2013

2,067,654

1,864,640

2,325,914

2,200,000,000
0.94

2,200,000,000
0.85

2,200,000,000
1.06

F 86

TURKCELL ANNUAL REPORT 2015
226

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

25. Other non-current liabilities

Consideration payable in relation to
acquisition of Belarusian Telecom
Deferred revenue
Deposits and guarantees taken from agents
Accrual for Evrensel Project (Note 34)
Other

2015

235,281
83,889
47,500
-
-
366,670

2014

163,234
38,098
38,583
62,874
6,762
309,551

Consideration payable in relation to the acquisition of Belarusian Telecom represents the present value of the long-term contingent payment to the
seller. Payment of $100,000 (equivalent to TL 290,760 as at 31 December 2015) is contingent on the financial performance of Belarusian Telecom, and
based on management’s estimations, expected to be paid during the first quarter of 2020 (31 December 2014: the first quarter of 2022).

26. Loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortized
cost. For more information about the Group’s exposure to foreign currency for interest bearing loans, see Note 31.

Non-current liabilities
Unsecured bank loans
Secured bank loans
Finance lease liabilities
Debt securities issued

Current liabilities

Unsecured bank facility
Secured bank facility
Current portion of unsecured bank loans
Current portion of secured bank loans
Current portion of finance lease liabilities
Debt securities issued
Currency swap contracts (*)
Option contracts used for hedging

F 87

2015

2014

2,086,871
4,262
36,449
1,360,204
3,487,786

130,109
311,682
196,385
1,930
5,389
80,959
2,290
-
728,744

1,204,833
6,986
36,049
-
1,247,868

1,639,816
-
755,953
48,651
5,369
-
-
837
2,450,626

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(

TURKCELL ANNUAL REPORT 2015

228

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

26. Loans and borrowings (continued)
Following the acquisition of 44.96% interest in Euroasia from SCM Holdings Limited’s (“SCM”), Astelit’s borrowings obtained from and with guarantee
of SCM Group have been repaid in July 2015. The Group converted a material portion of Astelit’s borrowings to equity and restructured Astelit’s
remaining borrowings in order to mitigate the foreign exchange risks associated with borrowings denominated in foreign currency. Astelit’s capital
has been increased by $686,000 (equivalent to TL 1,994,614 as at 31 December 2015) and Astelit obtained $66,000 (equivalent to TL 191,902 as at
31 December 2015) subordinated loan directly from the Company in the third quarter of 2015. Additionally, under the guarantee of Turkcell, Astelit
utilized loans fully denominated in local currency which is UAH 3.55 million (equivalent to TL 430,071 as at 31 December 2015). Regarding UAH 2.5
million (equivalent to TL 302,867 as at 31 December 2015) of these loans, a cash collateral of $120,114 (equivalent to TL 349,243 as at 31 December
2015) has been provided by Turkcell and recognised in other currents assets in the financial statements as at 31 December 2015.

In line with the Group’s strategic priority of improving balance sheet structure, the Company has restructured the outstanding debt of Belarusian
Telecom. As part of the restructuring, Belarusian Telecom’s total existing intragroup loans were converted into a EUR 610,213 (equivalent to TL
1,939,013 as at 31 December 2015) subordinated loan, provided directly by Turkcell.

The Company signed a loan agreement with BNP Paribas, Citibank, HSBC, ING and Intesa Sanpaolo SpA for an amount of $500,000 (equivalent to TL
1,453,800 as at 31 December 2015) and EUR 445,315 (equivalent to TL 1,415,033 as at 31 December 2015) with an availability period until 30 June
2016 to be utilized by the Company and its subsidiaries for the purpose of funding infrastructure investments and any other potential investment
opportunities. Each respective unsecured loan has 2 years grace period, 5 years maturity, principal repayment every 6 months and an annual interest
rate of 3 month LIBOR/EURIBOR+ 2%. As at 31 December 2015, the Company has not utilized any amount under this agreement.

Additionally, as at 23 October 2015 the Company signed a loan agreement package with China Development Bank (CDB) for an amount of up to
EUR 500,000 (equivalent to TL 1,588,800 as at 31 December 2015) with 2 years availability period to refinance the Group’s existing loans and
for an amount of up to EUR 750,000 (equivalent to TL 2,383,200 as at 31 December 2015) with 3 years availability period to finance the Group’s
procurements from China in relation to infrastructure investments. The total loan package has 10 years final maturity with 3 years grace period and
will be paid back in equal installments. The annual interest rate of the loan is EURIBOR + 2.2%. As at 26 October 2015, the Company utilized EUR
500,000 (equivalent to TL 1,588,800 as at 31 December 2015) under this agreement.

The Company has completed the sale process of its debt securities issuance on 15 October 2015; for an aggregate principal amount of USD 500,000
(equivalent to TL 1,453,800 as at 31 December 2015) with 10 years maturity, a redemption date of 15 October 2025 and a coupon rate of 5.75% being
paid semi-annually, priced on a 5.95% reoffer yield to qualified investors domiciled outside of Turkey. The notes are listed on the official list of the
Irish Stock Exchange and the proceeds have been transferred to the Company’s accounts on 15 October 2015.

F 89

229

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

26. Loans and borrowings (continued)
Finance lease liabilities are payable as follows:

31 December 2015

Future minimum
lease payments

Interest

Present value of
minimum lease
payments

31 December 2014

Future minimum
lease payments

Interest

Present value of
minimum lease
payments

Less than one year
More than one year

Currency swap contracts:

Exchange Rate

1.0942
1.0947

Foreign
currency

EUR
EUR

6,627
42,357
48,984

1,238
5,908
7,146

Buy

Currency Swap Contracts

Notional
Amount

Foreign
currency

5,389
36,449
41,838

Sell

6,574
42,423
48,997

1,205
6,374
7,579

5,369
36,049
41,418

Notional
Amount

Fair value

Maturity

180,000
277,000
457,000

USD
USD

196,961
303,218
500,179

(769)
(1,521)
(2,290)

4 January 2016
4 January 2016

Interest collars:
Under interest rate collar contracts, the Group agrees to exchange the difference between the collar (1.25% - 4%) and floating rate (LIBOR) interest
amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the cash
flow exposures on the issued variable rate debt. The fair value of interest rate collar at the end of the reporting period is determined by the quotations
by the financial institutions and is disclosed below.

The following tables detail the notional principal amounts outstanding at the end of the reporting period.

Interest collar

US$

2015
-

2014
86,000

2015
-

2014
(837)

Currency

Notional amount

Fair value asset / (liability)

All interest rate collar contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order
to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The interest rate collars and the interest payments
on the loan occur simultaneously and the amount accumulated in equity is reclassified to profit or loss over the period that the floating rate interest
payments on debt affect profit or loss.

27. Employee benefits
International Accounting Standard No 19 “Employee Benefits” (“IAS 19”) requires actuarial valuation methods to be developed to estimate the enterprise’s
obligation under defined benefit plans. As detailed in Note 10, such actuarial gains/losses are recognized within other comprehensive income starting from
31 December 2012. The liability for this retirement pay obligation is recorded in the accompanying consolidated financial statements at its present value
using a discount rate between 4.55% and 4.80% depending on the expected payout date (31 December 2014: between 3.46% and 3.82%).

F 90

TURKCELL ANNUAL REPORT 2015
230

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

27. Employee benefits (continued)
Movement in the reserve for employee termination benefits as at 31 December 2015 and 2014 are as follows:

Opening balance
Provision set/reversed during the period
Actuarial loss
Unwind of discount
Payments made during the period
Closing balance

2015
96,278
26,403
13,466
4,190
(25,468)
114,869

2014
82,617
28,110
819
4,325
(19,593)
96,278

Actuarial loss amounting to TL 13,466 has been reflected in other comprehensive income for the year ended 31 December 2015 (31 December 2014: TL
819 actuarial loss).

The liability is not funded, as there is no funding requirement.

Obligations for contributions to defined contribution plans are recognized as an expense in the consolidated statement of profit or loss as incurred.
The Group incurred TL 8,364, TL 7,876 and
TL 6,576 in relation to defined contribution retirement plan for the years ended 31 December 2015, 2014 and 2013, respectively.

28. Deferred income
Deferred income primarily consists of right of use sold but not used by prepaid subscribers and it is classified as current as at 31 December 2015 and
2014. The amount of deferred income is TL 121,078 and TL 164,423 as at 31 December 2015 and 2014, respectively.

F 91

231

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

29. Provisions
Non-current provisions:

Balance at 1 January 2014
Provision made/ used during the year
Unwind of discount
Transfer from current provision
Effect of change in foreign exchange rate
Balance at 31 December 2014

Balance at 1 January 2015
Provision made/ used during the year (*)
Unwind of discount
Transfer to current provision
Effect of change in foreign exchange rate
Balance at 31 December 2015

Obligations for
dismantling, removing
and site restoration
133,762
(4,603)
4,233
-
(16,299)
117,093

Obligations for
dismantling, removing
and site restoration
117,093
12,622
3,308
-
(6,507)
126,516

Legal
155,486
574
4,784
449
-
161,293

Legal
161,293
(155,792)
-
(1,398)
-
4,103

Total
289,248
(4,029)
9,017
449
(16,299)
278,386

Total
278,386
(143,170)
3,308
(1,398)
(6,507)
130,619

(*) Regarding the settlement made with Turk Telekom Group (Note 34), the Company has reversed legal provision amounting to TL 156,864 as at 31 December 2015.

Legal provisions are set for the probable cash outflows related to legal disputes.

The Group is required to incur certain costs in respect of a liability to dismantle and remove assets and to restore sites on which the assets were located.
The dismantling costs are calculated according to best estimate of future expected payments discounted at a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the liability.

The above mentioned additions to obligations for dismantling, removing and site restoration during the period are non-cash transactions recorded
against property, plant and equipment.

Current provisions:

Balance at 1 January 2014
Provision made/ (reversed) during the year
Provisions used during the year
Unwind of discount
Transfer to non-current provision
Effect of change in foreign exchange rate
Balance at 31 December 2014

Legal
49,392
108,033
(145,724)
367
(449)
(3,508)
8,111

Bonus
126,259
128,799
(130,842)
-
-
(2,753)
121,463

Total
175,651
236,832
(276,566)
367
(449)
(6,261)
129,574

F 92

TURKCELL ANNUAL REPORT 2015
232

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

29. Provisions (continued)

Balance at 1 January 2015
Provision made/ (reversed) during the year
Provisions used during the year
Unwind of discount
Transfer from non-current provision
Effect of change in foreign exchange rate
Balance at 31 December 2015

Legal
8,111
2,811
(1,861)
13
1,398
(212)
10,260

Bonus
121,463
178,416
(155,491)
126
-
(2,659)
141,855

Total
129,574
181,227
(157,352)
139
1,398
(2,871)
152,115

Legal provisions are set for the probable cash outflows related to legal disputes. In Note 34, under legal proceedings section, detailed explanations are
given with respect to legal provisions.

The bonus provision totaling to TL 141,855 comprises mainly the provision for the year ended 31 December 2015 and is planned to be paid in March 2016.

30. Trade and other payables

The breakdown of trade and other payables as at 31 December 2015 and 2014 is as follows:

4.5G license payable
Payables to suppliers
Taxes and withholdings payable
Payables regarding the legal settlement
with Turk Telekom Group
License fee and ICTA share accrual
Selling and marketing expense accrual
Accrual for Evrensel Project (Note 34)
Other

2015
2,591,235
1,555,767
319,542

309,250
216,602
68,531
39,767
182,376
5,283,070

2014
-
1,158,374
377,710

-
192,147
137,437
-
201,461
2,067,129

4.5G license payables are related to the frequency bands which the Company has been awarded with, from Authorization Tender on IMT Services and
Infrastructure tender. Non-current trade and other payables consist of 4.5G license payable amounting to TL 1,270,610 as at 31 December 2015
(Note 1 and 14).

Balances payables to suppliers are arising in the ordinary course of business.

Taxes and withholdings include VAT payable, special communications tax, frequency usage fees payable to ICTA and personnel income taxes.

Turkcell and Turk Telekom Group agreed to settle ongoing lawsuits and disputes as at 31 December 2015. In this regard, Turkcell agreed to make a
payment of TL 309,250 (including VAT and special communication tax) to Turk Telekom Group. The payment was made on 14 January 2016.

In accordance with the license agreement, Turkcell pays 90% of the treasury share, which equals 15% of its gross revenue, to the Turkish Treasury
and 10% of the treasury share as universal service fund to the Turkish Ministry.

Selling and marketing expense accrual is mainly resulted from services received from third parties related to marketing activities of the Group which
are not yet invoiced.

F 93

233

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments
Credit risk
Exposure to credit risk:

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
2014
4,282,440
9,031,635
41,334
9,777
12,938
11,207
8,143
13,397,474

Trade receivables
Cash and cash equivalents*
Other current assets**
Other non-current assets**
Due from related parties-current
Held-to-maturity
Available for sale

2015
4,935,184
2,918,343
394,089
12,687
11,760
-
-
8,272,063

20
22
21
18
35
17
17

* Cash on hand is excluded from cash and cash equivalents.

** Non-financial instruments such as prepaid expenses and advances given are excluded from other current assets and other non-current assets.

The maximum exposure to credit risk for trade receivables arising from sales transactions including those classified as due from related parties at the
reporting date by type of customer is:

Receivable from subscribers
Receivables from distributors and other operators
Other

2015
4,600,214
283,095
63,635
4,946,944

2014
4,029,290
210,380
55,708
4,295,378

F 94

TURKCELL ANNUAL REPORT 2015
234

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments
Credit risk (continued)

The aging of trade receivables and due from related parties as at 31 December 2015 and 2014:

Not past due
1-30 days past due
1-3 months past due
3-12 months past due

Impairment losses

2015
4,508,081
197,250
125,497
116,116
4,946,944

The change in allowance for trade receivables and due from related parties as at 31 December 2015 and 2014 is as follows:
2015
727,732
196,588
-
(2,563)
(105,384)
816,373

Opening balance
Impairment loss recognized
Acquisition through business combination
Effect of change in foreign exchange rate
Amounts written-off
Closing balance

2014
3,897,333
159,946
124,008
114,090
4,295,377

2014
691,550
155,931
2,316
(7,372)
(114,693)
727,732

The impairment loss recognized of TL 196,588 for the year ended 31 December 2015 relates to its estimate of incurred losses in respect of trade
receivables and due from related parties (31 December 2014: TL 155,931).

Trade receivables and due from related parties are reserved in an allowance account until the Group can determine that the amounts are no longer
collectible. When this becomes probable the Group reverses the allowance and writes-off the receivable.

Liquidity risk

Current cash debt coverage ratio as at 31 December 2015 and 2014 is as follows:

Cash and cash equivalents
Current liabilities
Current cash debt coverage ratio (*)

2015

2,918,796
6,304,417
46%

2014

9,031,881
4,991,169
181%

(*) Fluctuation between cash debt coverage ratios as at 31 December 2015 and 2014 resulted from the dividend paid in 2015, current portions of 4.5G license payable and debt
securities issued (Note 23, 30 and 26 respectively).

F 95

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F 96

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236

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments (continued)
Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts is as follows:

Foreign currency denominated assets
Other non-current assets
Due from related parties-current
Trade receivables and accrued income
Other current assets
Cash and cash equivalents

Foreign currency denominated liabilities
Loans and borrowings-non current
Other non-current liabilities
Loans and borrowings-current
Trade and other payables
Due to related parties

Net exposure

Foreign currency denominated assets
Other non-current assets
Due from related parties-current
Trade receivables and accrued income
Other current assets
Cash and cash equivalents

Foreign currency denominated liabilities
Loans and borrowings-non current
Debt securities issued-non- current
Other non-current liabilities
Loans and borrowings-current
Debt securities issued-current
Trade and other payables-current
Trade and other payables-non-current
Due to related parties
Currency swap contracts
Buy
Sell
Currency forward contracts
Buy

Net exposure

F 97

31 December 2014

USD

EUR

57
4,519
31,901
10,852
1,556,596
1,603,925

(362,578)
(88,021)
(990,122)
(139,005)
(2,107)
(1,581,833)
22,092

2,131
190
30,557
4,215
4,466
41,559

(14,983)
-
(2,093)
(23,912)
(3,390)
(44,378)
(2,819)

31 December 2015

USD

EUR

2,576
3,553
21,536
141,385
618,831
787,881

(63,152)
(467,810)
(96,481)
(2,066)
(27,844)
(264,091)
-
(312)
(500,179)
-
(500,179)
57,732
57,732
(1,364,203)
(576,322)

2,131
207
29,947
6,200
17,911
56,396

(499,911)
-
-
(12,328)
-
(833,791)
(399,865)
(141)
457,000
457,000
-
-
-
(1,289,036)
(1,232,640)

237

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments (continued)
Exposure to currency risk (continued)

The following significant exchange rates are applied during the period:

Average Rate

Closing Rate

31 December

2015

2.7271

3.0219

15,917

21.7893

2014

2.1850

2.9004

10,255

11.8661

2015

2.9076

3.1776

18,569

24.0007

2014

2.3189

2.8207

11,850

15.7686

USD/TL

EUR/TL

USD/BYR

USD/UAH
Sensitivity analysis

The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The aggregate foreign
exchange exposure is composed of all assets and liabilities denominated in foreign currencies. The analysis excludes net foreign currency investments.

10% strengthening of the TL, UAH, BYR against the following currencies as at 31 December 2015 and 2014 would have increased / (decreased) profit or
loss before by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

USD
EUR

Profit or loss
2015

167,572
391,683

2014

(5,123)
795

10% weakening of the TL, UAH, BYR against the following currencies as at 31 December 2015 and 2014 would have increased / (decreased) profit or loss
before tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

USD
EUR

Profit or loss
2015

(167,572)
(391,683)

2014

5,123
(795)

F 98

TURKCELL ANNUAL REPORT 2015
238

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments (continued)
Interest rate risk

As at 31 December 2015 and 2014 the interest rate profile of the Group’s interest-bearing financial instruments was:

Fixed rate instruments
Time deposits
USD
EUR
TL
Other
Restricted cash
USD
Held-to-maturity securities
TL corporate securities
Finance lease obligations
USD
EUR
Unsecured bank loans
USD fixed rate loans
TL fixed rate loans
UAH fixed rate loans
Secured bank loans
BYR fixed rate loans
UAH fixed rate loans
Trade and other payables (*)
EUR fixed rate payables
Debt securities issued
USD
Variable rate instruments
Held-to-maturity securities
TL corporate securities
Secured bank loans
USD floating rate loans
Unsecured bank loans
USD floating rate loans
EUR floating rate loans

Note

31 December 2015

Effective
Interest
Rate

2.6%
2.6%
12.8%
16.6%

2.3%

20.5%
3.4%

-
10.2%
24.4%

11.9%
29.1%

2.6%

5.8%

3.1%
2.4%

Carrying
Amount

1,787,190
54,814
481,264
16,578

349,243

(88)
(41,750)

-
(507,775)
(130,109)

(6,192)
(311,682)

(3,861,845)

(1,441,163)

(189,542)
(1,585,939)

(*) Includes 4.5G license payables related to the frequency bands which the Company has been awarded with.

31 December 2014

Effective
interest
rate

2.6%
1.0%
11.2%
18.3%

10.1%

2.2%
3.4%

6.0%
9.8%
-

11.9%
-

-
-
-

12.1%

6.3%

2.1%
-

Carrying
Amount

3,696,607
11,155
4,708,441
36,368

2,965

(733)
(40,685)

(281,157)
(474,688)
-

(9,521)
-

-
-
-

8,242

(46,116)

(2,844,757)
-

F 99

239

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments (continued)
Sensitivity analysis
Cash flow sensitivity analysis for variable rate instruments:

A change of 100 basis points in interest rates as at 31 December 2015 would have increased / (decreased) equity and profit or loss by the amounts shown
below. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant. The analysis is performed on the same basis
as at 31 December 2015 and 2014.

31 December 2015
Variable rate instruments
Cash flow sensitivity (net)
31 December 2014
Variable rate instruments
Cash flow sensitivity (net)

Fair values

Profit or loss

Equity

100 bps increase

100 bps decrease

100 bps increase

100 bps decrease

(17,755)
(17,755)

(9,632)
(9,632)

17,755
17,755

9,632
9,632

-
-

Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis

Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives
information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and
inputs used).

Fair values

31 December
2015

31 December
2014

Fair Value
hierarchy

Valuation Techniques

Currency swap contracts

Currency forward contracts
Option contracts used for hedging
Consideration payable in relation to
acquisition of Belarusian Telecom

(2,290)

216
-

-
(837)

Level 3

Level 3
Level 2

Pricing models based on discounted cash flow
analysis using the applicable yield curve
Pricing models based on discounted cash flow
analysis using the applicable yield curve
Quoted bid prices in financial institutions

(235,281)

(163,234)

Level 3

Net present value (*)

There were no transfers between Level 2 and 3 in the period.

(*) Discount rate of 5.1% used for the present value calculation for the consideration payable in relation to acquisition of Belarusian Telecom as of 31 December 2015 (31 December

2014: 5.0%). Company management expects consideration payable to be paid during the first quarter of 2020 (31 December 2014: the first quarter of 2022).

Relationship of unobservable inputs to fair value is the higher the discount rate, the lower the fair value.

F 100

TURKCELL ANNUAL REPORT 2015

240

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

31. Financial instruments (continued)
Fair values (continued)

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required).

Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recognized in the
consolidated financial statements approximate their fair values.

The categories of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are
required) are stated below:

Assets carried at amortized cost
Other non-current assets**
Due from related parties-short term
Trade receivables and accrued income*
Other current assets**
Currency forward contract
Held-to-maturity
Available for sale
Cash and cash equivalents***

Liabilities carried at amortized cost
Loans and borrowings-long term
Loans and borrowings-short term
Debt securities issued
Trade and other payables****
Due to related parties
Currency swap contracts

Note

18
36
20
21
21
17
17
22

26
26
26
30
36
26

31 December 2015

31 December 2014

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

12,687
11,760
4,935,184
393,873
216
-
-
2,918,796
8,272,516

9,777
12,938
4,282,440
41,334
-
11,207
8,143
9,031,881
13,397,720

(2,127,582)
(645,495)
(1,441,163)
(5,726,862)
(6,555)
(2,290)
(9,949,947)

(2,127,582)
(645,495)
(1,430,409)
(5,726,862)
(6,555)
(2,290)
(9,939,193)

(1,247,868)
(2,449,789)
-
(1,158,374)
(24,632)
-
(4,880,663)

* Includes non-current trade receivables amounting to TL 836,256 (31 December 2014: TL 779,925).
** Non-financial instruments such as prepaid expenses and advances given are excluded from other current assets and other non-current assets.
***Cash and cash equivalents are the only level 1 item on above stated tables all other items are level 2.
**** Advances taken, taxes, withholdings payable and accruals are excluded from trade and other payables.

The methods used in determining the fair values of financial instruments are discussed in Note 4.

Reconciliation of Level 3 fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring base is stated
below:

Consideration payable in relation to acquisition of Belarusian Telecom:

Opening balance
Total gains or losses:
in profit or loss
Closing balance

F 101

2015
163,234

72,047
235,281

2014
147,382

15,852
163,234

241

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

32. Operating leases
The lease contracts, which mainly comprise leases of radio, transmission, office and internet capacity, expire on various dates. The Group does not have
right to purchase the leased asset at the end of the lease period. Price escalation clauses of renewal conditions in operational lease agreements differ
according to various conditions.

The future minimum lease payments under non-cancellable leases are as follows:

Less than one year
Between one and five years
More than five years

Payments recognized as an expense:

Minimum lease payments
Contingent lease payments
Total

2015
163,526
206,030
7,478
377,034

2015
751,816
1,733
753,549

2014
573,973
2,848
576,821

2014
128,840
118,564
17,375
264,779

2013
616,771
-
616,771

33. Guarantees and purchase obligations
As at 31 December 2015, outstanding purchase commitments with respect to the acquisition of property, plant and equipment, inventory and purchase of
sponsorship, rent and advertisement services amount to TL 2,752,139 (31 December 2014: TL 3,793,226). Payments for these commitments are going to
be made in a 5 year period.

As at 31 December 2015, the Group is contingently liable in respect of bank letters of guarantee obtained from banks given to customs authorities,
private companies and other public organizations, provided guarantees to private companies and financial guarantees to subsidiaries totaling to
TL 2,058,810 as at 31 December 2015 (31 December 2014: TL 3,789,979).

As at 31 December 2015, the amounts the Company has commitments regarding Astelit’s 3G license purchases amounted to UAH 426,311 (equivalent to
TL 51,646 as of 31 December 2015) (Note 14).

At 31 December 2015, the total amount of guarantee obtained from banks and provided to Spor Toto amounted to TL 184,752 (31 December 2014: TL
188,739). The targeted payout is 50% of the turnover balance, including the VAT. The fact that Inteltek is obliged to pay the difference between the
realized and the targeted payout balances, whenever the pool balance falls negative, creates an excess payment risk.

F 102

TURKCELL ANNUAL REPORT 2015

242

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies
License Agreements
Turkcell:

On 27 April 1998, the Company signed the Agreement for grant of concession for the establishment and Operation of the Pan-European Mobile
Telephone System, GSM (hereinafter referred to as the “License Agreement”) with the Turkish Ministry. In accordance with the License Agreement,
the Company was granted a 25 year license for the provision of GSM services for a license fee of $500,000. The License Agreement permits the
Company to operate as a stand-alone GSM operator. Under the License, the Company collects all of the revenue generated from the operations of its
GSM network and pays the Turkish Treasury a treasury share and universal service fund, respectively, equal to 15% of its gross revenues from Turkish
GSM operations. In February 2002, the GSM License of the Company was renewed under provisions of the new License Agreement signed with the
ICTA and in accordance with the License Agreement, the Company became obliged to pay 0.35% of its yearly gross revenue once a year as ICTA Fee.
Moreover on 25 June 2005, the Turkish government declared that GSM operators are required to pay 10% of their existing monthly treasury share to
the Turkish Ministry as a universal service fund contribution in accordance with Law No: 5369. As a result, starting from 30 June 2005, the Company
pays 90% of the treasury share to the Turkish Treasury and 10% to the Turkish Ministry as universal service fund. The Company is authorized to,
among other things, set its own tariffs within certain limits, charge peak and off-peak rates, offer a variety of service and pricing packages, issue
invoices directly to subscribers, collect payments and deal directly with subscribers.

In accordance with the renewed License Agreement signed with the ICTA in February 2002, the Company became subject to a number of new
requirements, including those regarding the build-out, operation, quality and coverage of the Company’s GSM network, prohibitions on anti-
competitive behaviour and compliance with national and international GSM standards. Failure to meet any requirement in the renewed License, or
the occurrence of extraordinary unforeseen circumstances, can also result in revocation of the renewed License, including the surrender of the GSM
network without compensation, or limitation of the Company’s rights thereunder, or could otherwise adversely affect the Company’s regulatory
status. Thereafter, the provisions of the License granted to the Company was revised and updated twice under the subsequent License Agreements
signed between the Company and the ICTA in 2006 and in 2009. As of the date of this report, the License Agreement dated 21 February 2009 is still in
effect.

Certain conditions of the current License Agreement include the following:

Coverage: The Company had to achieve population coverage of 50% with certain exceptions within the first three years, and 90% of the population
of Turkey within five years from the effective date of the first License granted to the Company.

Service offerings: The Company must provide certain services in addition to general GSM services, including free emergency calls and technical
assistance for subscribers, free call forwarding to police and other public emergency services, receiver-optional short messages, video text access,
calling and connected number identification and restrictions, call forwarding, call waiting, call hold, multi-party and third-party conference calls,
billing information and barring of a range of outgoing and incoming calls.

F 103

243

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
License Agreements (continued)
Turkcell (continued)

Service quality: In general, the Company must meet all national and international service quality standards determined and updated by both the ICTA
and the European Telecommunications Standards Institute and Secretariat of the GSM MoU. Service quality requirements include that call blockage
cannot exceed 5% and unsuccessful calls cannot exceed 2%.

Tariffs: ICTA sets the initial maximum retail tariffs in TL and USD. Thereafter, the revised License provides that the ICTA will adjust the maximum tariffs
at most every six months or, if necessary, more frequently. The Company is free to set its own tariffs up to the maximum tariffs.

Rights of the ICTA, Suspension and Termination:

The revised License is not transferable without the prior approval of the ICTA. In addition, the License Agreement gives the ICTA certain monitoring
rights and access to the Company’s technical and financial information and allows for inspection rights, and gives certain rights to suspend operations
under certain circumstances. Also, the Company is obliged to submit financial statements, contracts and investment plans to the ICTA.

The ICTA may suspend the Company’s operations for a limited or an unlimited period if necessary for the purpose of public security and national defence
etc. During period of suspension, the ICTA may operate the Company’s GSM network itself.

The License term will be extended by the period of any suspension. The revised License may also be terminated upon a bankruptcy ruling against the
Company or for other license violations, such as operating outside of its allocated frequency ranges, and the penalties for such violations can include
fines, loss of frequency rights, revocation of the license and confiscation of the network management centre, the gateway exchanges and central
subscription system, including related technical equipment, immovables and installations essential for the operation of the network.

Based on the law enacted on 3 July 2005 with respect to the regulation of privatization, gross revenue description used for the calculation of treasury
share has been changed. According to this new regulation, accrued interest charges for the late payments, taxes such as indirect taxes, and accrued
revenues are excluded from the description of gross revenue. Calculation method of gross revenue for treasury share stipulated in the law according to
the new regulation shall be valid as of the application date of the Company with the claim of amendment of its license agreement in compliance with the
said Law. In the meanwhile, the Company realized the payments including above-mentioned items between 21 July 2005 and 10 March 2006, when the
amendment in license agreement was effective.

F 104

TURKCELL ANNUAL REPORT 2015
244

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
License Agreements (continued)
Turkcell (continued)

Rights of the ICTA, Suspension and Termination (continued):

On 9 June 2008, the Company filed a lawsuit before Administrative Court for the difference between the aforementioned period amounting to TL
102,649 and interest amounting to TL 68,276 (equivalent to till to the date the case is filed. The Administrative Court rejected the case with the
reason that there is not any definite and executable process and the Company appealed the decision. The Council of State rejected the appeal request.
The Company requested correction of the decision. The Council of State rejected the Company’s request for the correction of the decision.

On 26 August 2013, the Company filed a lawsuit before ICC against Undersecretariat of Treasury. The lawsuit is still pending. The arbitral tribunal
accepted the case with respect to all claims and ruled Treasury to pay Turkcell amounting to TL 102,649 together with its interest from date of the
each payment made between 2005 and 2006 till the date of refund. Treasury filed a lawsuit for cancellation of the Final Award.

3G License

On 30 April 2009, the Company signed a separate License Agreement with ICTA which provides authorization for providing IMT 2000/UMTS
services and establishment and operation of the required infrastructure. Turkcell acquired the A license providing the widest frequency band for
a consideration of EUR 358,000 (excluding VAT). The license is effective for duration of 20 years starting from 30 April 2009. According to the
agreement, operators have provided IMT 2000/UMTS services starting from 30 July 2009.

In accordance with the 3G License Agreement, the Company must cover the population within the borders of all metropolitan municipalities and
borders of all cities and municipalities in three and six years, respectively. Moreover, the Company must cover the population in all settlement areas
with a population higher than 5,000 and 1,000 within eight and ten years, respectively following the effective date of the IMT 2000/UMTS License
agreement.

4.5G License

In the 4.5G (IMT) tender held on 26 August 2015, the Company purchased a total of 172.4 MHz, the broadest 4.5G (IMT) spectrum allocation of any
operator in Turkey (including widest frequency bands on 1800 MHz and 2600 MHz) for EUR 1,623,460 (equivalent to TL 5,158,706 as at 31 December
2015). (excluding VAT of 18%) will be paid semi-annually by four equal installments total of which amount EUR 1,655,290 (equivalent to TL 5,259,850
as at 31 December 2015) including interest and excluding VAT of 18%. As at 26 October 2015, the Company made a payment of TL 1,321,873 for the
original amount of EUR 413,823 as first installment and total VAT amounting to TL 933,447 for the original amount of EUR 292,223 in cash. Last
installment will be paid on 27 April 2017.

The 4.5 licensing process is finalized by signing of IMT License Commitments Document by Turkcell and therefore, ICTA granted Turkcell 4.5G License
on 27 October 2015. The 4.5G License is effective for 13 years until 30 April 2029. According to the License, Turkcell expect to commence providing
4.5G services from 1 April 2016.

F 105

245

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
License Agreements (continued)
Turkcell (continued)
4.5G License (continued)

According to the IMT License Commitments Document, the Company;

a) must achieve population coverage of 95% of the population of Turkey and coverage of 90% of the population within the borders of all cities and

all city districts within eight years,

b) must cover 99% of highways, high speed railroads and tunnels with lengths more than one kilometers within three years, 95% of double roads

within six years and 90% of conventional railroads within ten years and,

c) is obliged to share actively with other mobile operators, any new 3G or 4.5G site which it will decides to build within settlement areas with a

population of less than 10,000 and highways, double roads, tunnels, high speed railroads and conventional railroads.

from the effective date of the first License granted to the Company.

Also, Turkcell must to only purchase locally produced network equipment and purchase up to 45% of the network equipment and services from
vendors with local research and development centers while building its infrastructure for 4.5G networks.

Belarusian Telecom:

Belarusian Telecom owns a license issued on 28 August 2008 for a period of 10 years and was valid till 28 August 2018. According to the Sale and
Purchase Agreement signed, the State Property Committee of the Republic of Belarus committed to grant the license from the acquisition date of 26
August 2008 for a period of 10 years. In accordance with the Edict of the President of the Republic of Belarus dated 26 November 2015, numbered
475, the license is now issued without limitation of the period of validity. Starting from 1 March 2016, the license is valid from the date of the licensing
authority’s decision on its issue and for an unlimited period. Under the terms of its license, Belarusian Telecom is required to gradually increase its
geographical coverage until the end of 2017. Belarusian Telecom has fulfilled all coverage requirements except covering all Belarusian settlements. The
number of uncovered settlements is 648 out of a total of 22,552 settlements.

F 106

TURKCELL ANNUAL REPORT 2015
246

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
License Agreements (continued)
Astelit:

Astelit owns three activity licenses: GSM 900, GSM 1800 and a technology neutral license, issued for 3G. As at December 31, 2015, Astelit owned
26 frequency use licenses for UMTS 2100, GSM 900, GSM 1800, CDMA and microwave Radiorelay, which are regional and national. In addition to the
GSM licenses, Astelit owns one license for international and long-distance calls and eight PSTN licenses for eight regions in Ukraine. Additionally,
Astelit holds a specific number range—three NDC codes for mobile networks, four permissions on a number of resources for short numbers, eleven
permissions on a number of resources for SS-7 codes (7 regional and 4 international), one permission on a number of resources for Mobile Network
Code and sixteen permissions on a number of resources for local ranges for PSTN licenses.

According to the licenses, Astelit must adhere to state sanitary regulations to ensure that the equipment used does not injure the population by means
of harmful electromagnetic emissions. Licenses require Astelit to inform authorities of the start/end of operations within four months and changes in
the incorporation address within 30 days.

Also, Astelit must present all the required documents for inspection by the NCCIR by their request. The NCCIR may suspend the operations of
Astelit for a limited or an unlimited period if necessary due to the expiration of the licenses, upon mutual consent, or in the case of a violation of the
terms regarding the use of radio frequencies. If such a violation is determined, the Ukrainian Telecommunications Authority will notify Astelit of the
violations and will set the deadline for recovery. If the deadline is not met, the licenses may be terminated.

Inteltek:

Inteltek, following an international bidding process, signed a contract on 30 July 2002 which provides for the installation, support and operation of
an on-line central betting system as well as maintenance and support for the provision of football games. The Central Betting System Contract was
scheduled to expire on 30 March 2008.

Inteltek signed another contract with General Directorate of Youth and Sports (“GDYS”) on 2 October 2003 which authorized Inteltek to establish and
operate a risk management center and become head agent for fixed odds betting. The Fixed Odds Betting Contract was scheduled to expire in October
2011. However, in relation to the lawsuits related to the operations of Inteltek, GDYS ceased the implementation of the Fixed Odds Betting Contract
starting from March 2007. Following this annulment decision, Spor Toto and Inteltek signed a new Fixed Odds Betting Contract on 15 March 2007,
with less-advantageous conditions compared to previous contract signed in 2003, which expired on 1 March 2008.

Inteltek signed a new Fixed Odds Betting Contract with Spor Toto, having the same terms and conditions with the latest contracts signed with Spor
Toto which took effect on 1 March 2008. At the same time, Inteltek signed a new Central Betting System Contract with Spor Toto, which took effect
on 31 March 2008 as having the same conditions with the current contract and both contracts were to be valid for one year almost until the operation
started as a result of the new tender.

F 107

247

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
License Agreements (continued)
Inteltek (continued)

On 12 August 2008, Spor Toto conducted a tender which allowed private companies to organize fixed odds and paramutual betting games based on
sports competitions. Inteltek gave the best offer for the tender. On 29 August 2008, Inteltek signed a contract with Spor Toto, receiving the rights to
operate the fixed odds and paramutual betting games based on sports competitions for the next ten years. New commission rate, which is 1.4% of
the takings arising from the operation of the fixed odds and paramutual betting games based on sports competitions (until 1 March 2009, commission
rate was 7% of gross takings), is applicable starting from March 2009. As of December 31, 2015, Inteltek has a letter of guarantee of TL 159,752 (31
December 2014: TL 159,752) provided to Spor Toto.

Inteltek has a mobile agency agreement with Spor Toto, receiving the rights to assign mobile sub agencies to operate the fixed odds and paramutual
betting games based on sports competitions. Inteltek has mobile agency commission revenue by applying commission rate between % 2.24 - % 3.62
of mobile agency turnover after deducting VAT and Gaming Tax. As of 31 December 2015, Inteltek has a letter of guarantee of TL 25,000 (31 December
2014: TL 28,987) provided to Spor Toto for mobile agency agreement. The targeted payout is 50% of the turnover balance including VAT. The fact that
Inteltek is obliged to pay the difference between the realized and the targeted payout balances, whenever the pool balance falls negative, creates an
excess payment risk.

Kibris Telekom:

On 27 April 2007, Kibris Telekom signed the License Agreement for Installation and Operation of a Digital, Cellular, Mobile Telecommunication System
(“Mobile Communication License Agreement”) with the Ministry of Communications and Public Works of the Turkish Republic of Northern Cyprus which
is effective from 1 August 2007, replacing the previous GSM-Mobile Telephony System Agreement dated 25 March 1999. In accordance with the Mobile
Communication License Agreement, Kibris Telekom was granted an 18 year GSM 900, GSM 1800 and IMT 2000/UMTS license for GSM 900, GSM 1800
frequencies while the usage of IMT 2000/UMTS frequency bands is subject to the fulfillment of certain conditions.

On 14 March 2008, Kibris Telekom was awarded a 3G infrastructure license at a cost of $10,000.000 including VAT, which was paid at the end of
March 2008. Under the terms of the license, the system had to be operational by mid-October 2008. In 2010, Kibris Telekom has completed the radio
transmission (air link) project providing direct international voice and data connection with mainland and started using it from the third quarter of 2010.
The Project is the only direct connection in Turkish Republic of Northern Cyprus besides Telecommunication Authority.

Under the Mobile Communication License Agreement, Kibris Telekom also pays the tax authorities of Turkish Republic of Northern Cyprus a treasury
share on monthly basis equal to 15% of gross revenues excluding accrued interest charges for the late payments, indirect taxes and accrued revenues for
reporting purposes, payments made to third parties for value added services, interconnection revenues, roaming income from own subscribers after the
related payment made to other operators.

F 108

TURKCELL ANNUAL REPORT 2015
248

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
License Agreements (continued)
Turkcell Superonline:

Turkcell Superonline was authorized as a Fixed Telephony, Satellite Communication Service, Infrastructure, Internet Service Provider, Cable Broadcast
Service and Mobile Virtual Network Operator.

Authorization By-Law for Telecommunication Services and Infrastructure published in Official Gazette on dated 26 August 2004 abrogated the
By-Law on Authorization for Electronic Communications Sector dated 28 May 2009. According to this abrogation, Superonline’s “License” on,
Infrastructure Operating Service, Internet Service Provision, Satellite Communication Service has been changed to “Authority” on, Infrastructure
Operating Service, Internet Service Provision, Satellite Communication Service, Cable Broadcast Service and Superonline’s “License” on Long Distance
Telephony Services License has been changed to “Authority” relevant to the Fixed Telephony Services.

In accordance with the new legislation issued by ICTA, the infrastructure operator authorization right of Superonline has become infinite. As a result,
Superonline revised the expected useful lives of its operating license and related fixed network equipment from 15 years to 25 years.

Superonline was authorized as Platform Operator and Infrastructure Operator, according to the Radio and Television Supreme Council’s decision
numbered 24, dated 26 March 2014.

Such Authorizations have been provided by the Radio and Television Supreme Council, according to the rules of the Media Law and also the Radio and
Television Supreme Council By-Law on Broadcasting via Cable Networks.

In accordance with the Media Law and its regulations, the Platform Operator Authorization and Infrastructure Operator Authorization are provided
annually.

Within the scope of the Platform Operator Authorization and Infrastructure Operator Authorization, Superonline has the right to operate the platform
and Infrastructure of TV services.

Azerinteltek:

Azerinteltek, in which Inteltek’s shareholding is 51%, was established on 19 January 2010, and authorized to organize, operate, manage and develop
the fixed-odds and para-mutual sports betting games by the Ministry of Youth and Sports of Azerbaijan for a period of 10 years. The agreement
signed with Azeridmanservis which is founded by the Ministry of Youth and Sports of Azerbaijan is renewed with the same terms and conditions in
accordance with the new legislation enforced in Azerbaijan regarding the betting games based on sports on 30 September 2010. Azerinteltek officially
commenced sports betting games on 18 January 2011. On 4 March 2015, Azerinteltek authorization of organizing, operating, managing and developing
the fixed-odds and para-mutual sports betting games of was extended till 2 March 2025.

Starting from 1 January 2013, Azerinteltek has been authorized for 3 years regarding the sales of Lottery tickets by Azerlotereya. On 1 January 2016,
Azerinteltek authorization regarding the sales of Lottery tickets was extended for 1 year.

F 109

249

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Interconnection Agreements

The Company has entered into interconnection agreements with a number of operators in Turkey and overseas including Turk Telekom, Vodafone
Telekomunikasyon AS (“Vodafone”), Avea Iletisim Hizmetleri AS (“Avea”), Milleni.com GmbH and Globalstar Avrasya Uydu Ses ve Data Iletisim AS
(“Globalstar”).

The initial Access and Interconnection Regulation became effective when it was first issued by the ICTA on 23 May 2003, on 14 June 2007 and 8
September 2009, two subsequent Access and Interconnection Regulations were issued by the ICTA which repealed the previous Regulation. As of the
date of this report, the Access and Interconnection Regulation dated 8 September 2009 (the “Regulation”) is still in effect.

The Regulation is driven largely by a goal to improve the competitive environment. Under the Regulation, the ICTA may compel all telecommunications
operators to accept another operator’s request for use of and access to its network. All telecommunications operators in Turkey may be required to
provide access to other operators on the same terms and qualifications provided to their shareholders, subsidiaries and affiliates.

In accordance with the Regulation, the Company entered into access and interconnection agreements with 53 different operators.

In addition, the ICTA has required operators holding significant market power, as well as Turk Telekom, to share certain facilities with other operators
under certain conditions and to provide co-location on their premises for the equipment of other operators at a reasonable price. The ICTA has also
required telecommunications operators to provide number portability, which means allowing users to keep the same phone numbers even after they
switch from one network to another starting from 9 November 2008.

Under a typical interconnection agreement, each party agrees, among other things to permit the interconnection of its network with the Company’s
network to enable calls to be transmitted to, and received from, the GSM system operated by each party in accordance with technical specifications set
out in the interconnection agreement. Typical interconnection agreements also establish understandings between the parties relating to a number of key
operational areas, including call traffic management, quality and performance standards, interconnection interfaces and other technical, operational and
procedural aspects of interconnection.

There are no minimum payment obligations under the interconnection agreements; however, failure to carry the counterparty’s traffic may expose
the Company to financial and other penalties or loss of interconnection privileges for its own traffic. On the other hand, ICTA regulates “Standard
Interconnection Tariffs” for domestic traffic.

As at 31 December 2014 the management believes that Turkcell is in compliance with the above mentioned license and interconnection agreements’
conditions and requirements in all material respects.

F 110

TURKCELL ANNUAL REPORT 2015
250

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Commitments and Contingencies related to Turkcell
Onerous contracts

The Company won the tender regarding the construction and operation of mobile communication infrastructure in rural areas (“Evrensel Project”)
with the Ministry of Transport, Maritime Affairs and Communications on 17 January 2013. The Company is liable to complete the construction
for a predetermined amount in TL while most of the expenditures are in foreign currencies. The appreciation in the foreign exchange rates has
resulted in the unavoidable costs of meeting the obligations to exceed the economic benefits expected to be received. Therefore, the Company
accrued a provision amounting to TL84,693 for the difference between the unavoidable costs and benefits expected to be received for this onerous
contract. However, the Company has also increased their foreign currency denominated bank deposits position within the period of undertaking the
project in order to hedge against the currency risk associated with the contract and additionally recognized accumulated foreign exchange gains over
these deposits as a result of the appreciation in the foreign exchange rates in the consolidated financial statements as of 31 December 2015.

In the consolidated financial statements as of 31 December 2015, TL 44,925 of the respective amount was netted off with expenses paid upfront in
relation to “Evrensel Project” under short-term prepaid expenses

Legal Proceedings

The Group is involved in various claims and legal actions arising in the ordinary course of business described below.

Concession Agreement
Dispute on treasury share in accordance with the amended license agreement

Based on the law enacted on 3 July 2005 with respect to the regulation of privatization, the calculation basis for the treasury share has been changed.
According to this new regulation, accrued interest charges for the late payments, taxes such as indirect taxes, and accrued revenues are excluded from
the calculation basis. Calculation method of gross sales for treasury share stipulated in the law according to the new regulation shall be valid as of the
application date of Turkcell with the claim of amendment of its license agreement in compliance with the said Law. In the meanwhile, Turkcell realized
the payments including above-mentioned items between 21 July 2005 and 10 March 2006, when the amendment in license agreement was effective.

On 9 June 2008, Turkcell filed a lawsuit before Administrative Court for the difference between the aforementioned period amounting to TL
102,649 and interest amounting to TL 68,276 till to the date the case is filed. The Administrative Court rejected the case without any examination
and reasoned that the case shall be settled by arbitration. Turkcell appealed the decision. The Council of State rejected the appeal request. Turkcell
requested correction of the decision. The Council of State rejected the Turkcell’s request for the correction of the decision.

On 26 August 2013, Turkcell filed a lawsuit before International Chamber of Commerce (“ICC”) Court of Arbitration against the Undersecretariat
of Treasury. The arbitral tribunal accepted the case with respect to all claims and ruled Treasury to pay Turkcell amounting to TL 102,649 together
with its interest from date of the each payment made between 2005 and 2006 till the date of refund. Undersecretariat of Treasury filed a lawsuit for
cancellation of the Final Award.

Since it is not virtually certain that an inflow of economic benefits will arise, no asset or related income is recognized in the consolidated financial
statements as at and for the period ended 31 December 2015 (31 December 2014: None).

F 111

251

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
Disputes regarding the contribution share payments arising after the amendments made to the Concession Agreement in
accordance with the Code numbered 5398

Based on the 9th article of the license agreement dated 10 March 2006, Turkcell has been obliged to pay 0.35% of its yearly gross revenue once a year as
ICTA Fee.

However, in the previous license agreement, Turkcell was obliged to pay 0.35% of its yearly gross revenue after deducting treasury share, universal
service fund and other indirect taxes from the calculation base whereas in the new agreement, these aforementioned payments are not deducted from
the base of the calculation. Therefore, on 12 April 2006, Turkcell filed a lawsuit for the cancellation of the 9th article of the new license agreement.

On 10 March 2009, the Court rejected the case. Turkcell appealed the decision. The Council of State decided to approve the decision of the First Instance
Court. Turkcell applied for the correction of the decision. The correction of the decision process is still pending.

On 21 June 2006, ICTA notified Turkcell that the ICTA fee for the year 2005 which had been already paid in April 2006 should have been calculated
according to the new license agreement dated10 March 2006 instead of the previous license agreement which was effective in the year 2005. Therefore,
ICTA requested Turkcell to pay additional TL 4,011 and its accrued interest. Turkcell made the payment and filed a lawsuit for the stay of execution
and cancellation of the aforesaid decision of ICTA on 28 August 2006. On 24 July 2009, the Court decided in favor of Turkcell and annulled additional
payment request of ICTA. The ICTA appealed the decision. The Council of State reversed the decision with the reason that the case shall be settled by
arbitration. ICTA applied for the correction of the decision. The Council of State rejected ICTA’s request for the correction of the decision. The First
Instance Court granted its decision in line with the reversal decision and rejected the case. Both Turkcell and ICTA appealed the decision. Turkcell replied
this request. The Council of State approved the First Instance Court decision. Turkcell requested for the correction of decision in due time. The correction
of the decision process is still pending.

Turkcell received the related principal amount of TL 4,011 on 8 February 2010 and recorded income in the consolidated financial statements as at and for
the year ended 31 December 2009. Upon the reversal decision of the Council of State, ICTA re-claimed the aforementioned amount which returned to
Turkcell in accordance with the first instance court decision. Turkcell paid back the aforementioned amount with its accrued interest on 24 January 2013.

On the other hand, as the interest was not paid with the payment that ICTA made on 8 February 2010, Turkcell initiated a lawsuit on 17 March 2010, for
the accrued interest amounting to TL 3,942 for the time being devoid of the amount which was paid to ICTA. The Court decided in favor of Turkcell for
the part of TL 1,392 of the compensation request. ICTA appealed the decision. Turkcell also appealed the decision’s rejected part. The appeal process is
still pending. Turkcell received the aforementioned amount on 18 May 2011 and recorded as income in the consolidated financial statements as at and for
the year ended 31 December 2011. Upon the re-pay request of the ICTA, Turkcell paid back the aforementioned amount on 24 January 2013.

F 112

TURKCELL ANNUAL REPORT 2015
252

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
Dispute on the discounts which are paid over the treasury share and ICTA fee

At the end of 2006, Tax Auditors of Turkcell claimed that gross revenue in the statutory accounts should include discounts granted to distributors
although Turkcell recorded these discounts in a separate line item as sales discounts.

Starting from 1 January 2007, Turkcell started to deduct discounts granted to distributors from gross revenue and present them on a net basis.
Accordingly, Turkcell decided that, it has paid excess treasury share and universal service fund for the year 2006 totaling TL 51,254.

Through the letter dated 23 February 2007, Turkcell requested treasury share amounting to TL 46,129 and interest accrued amounting to TL 5,020
from Turkish Treasury and universal service fund amounting to TL 5,125 and interest accrued amounting to TL 558 from Turkish Ministry to be paid
in 10 days. Since Turkish Treasury and Turkish Ministry have not made any payment, Turkcell started to deduct these amounts from ongoing monthly
payments. As at 31 December 2007, Turkcell deducted TL 51,254 from monthly treasury share and universal service fund payments.

Turkish Treasury sent a letter to Turkcell dated 17 July 2007 and objected the deduction of the discounts granted to the distributors from the treasury
share payments. Accordingly, Turkcell is asked to return TL 2,960 that is deducted from treasury share payment for May 2007. Turkcell has not
made the related payment and continued to deduct such discounts treasury share and universal service fee amount related to discounts granted to
distributors for the year 2006.

Management believes that Turkcell has the legal right to make deductions with respect to this issue. Accordingly, the Company has not recorded any
provisions with respect to this matter in its consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014:
None).

Turkcell filed two lawsuits before ICC claiming that Turkcell is not obliged to pay treasury share and ICTA Fee in accordance with the 8th and 9th
Articles of the Concession Agreement, respectively, on discounts granted to distributors. On the both lawsuits, ICC has decided in favor of Turkcell.
As stated in both of the Final Awards, Turkcell is not under obligation of paying Treasury Share and the Contribution to the expenses of Authority
pursuant to Article of 8 and 9 of the Concession Agreement dated 10 March 2006. ICTA filed lawsuits for cancellation of these Final Awards. In both
lawsuits, the Court decided in favor of Turkcell. ICTA appealed the decisions. Turkcell replied to the appeal requests. The Court of Cassation reversed
the decisions of the First Instance Court. Turkcell has applied for the correction of the decision. The Court of Cassation rejected the request for
correction of the decision of Turkcell. On the hearing dated 28 November 2012, the Local Court decided to accept the lawsuit in accordance with the
reversal decision of The Court of Cassation. Full decisions are notified to Turkcell. Turkcell appealed the decisions. Appeal process is still pending.

F 113

253

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
Dispute on payments of additional treasury share payment for the period between 1 June 2004 and 9 March 2006

Turkish Treasury, through a letter which is based on the Report of the Treasury Controller’s Board following the examinations covering the period
between 1 June 2004 and 9 March 2006, requested additional treasury share payment regarding the mentioned period. Turkcell initiated a lawsuit
before ICC on 18 December 2009 in order to obtain a declaratory judgment that Turkcell is not obliged to pay TL 3,320 of the requested amount and
treasury share over the exchange differences arising from roaming revenue. The arbitral tribunal partially accepted Turkcell’s claims and decided that
Turkcell is not obliged to pay TL 885. ICTA filed a lawsuit for cancellation of the in favor parts of the Final Award. Subsequently Turkcell filed a lawsuit
for cancellation of the disadvantageous part of the Final Award. The lawsuit filed by Turkcell has been dismissed. The final award is appealed by ICTA.
Turkcell submitted its responses to the appeal. Appeal process is still pending.

ICTA, through a letter dated 14 May 2010 which is based on the Report of the Treasury Controller’s Board following the examinations covering the period
between 1 June 2004 to 9 March 2006, requested additional treasury share payment of TL 4,909 together with the penalty of TL 12,171 on the ground
that the treasury share and treasury share over the exchange differences arising from roaming revenue are not paid entirely.

On 26 May 2010, Turkcell, in order to provide the suspension of the payment, requested a preliminary injunction from the Civil Court of First Instance
based on the grounds that the payment of additional treasury share payment of TL 4,909 together with the penalty of TL 12,171 is a pending case
before ICC Arbitration Court. The Civil Court of First Instance accepted Turkcell’s request. ICTA raised an objection to the preliminary injunction and this
objection has been rejected.

Turkcell filed a lawsuit before ICC on 27 January 2012 claiming the contradiction to law of the penalty of TL 12,171. ICC Arbitration Court decided in
favor of Turkcell, accepting all its claims. ICTA filed a lawsuit for cancellation of the final award in the Ankara Civil Court of First Instance. The Court held
its award rejecting ICTA’s claim of cancellation. ICTA appealed the decision. The appeal process is still pending.

The ICTA, through a letter dated 19 October 2010 which is based on the Report of the Treasury Controller’s Board following the examinations covering
the period between 10 March 2006 and 31 December 2008, requested treasury share of TL 72,527 and conventional penalty of TL 205,594. Turkcell paid
TL 1,535 of the aforementioned amount.

On 13 December 2010, Turkcell, seeking to suspend the payment, requested a preliminary injunction from the Civil Court of First Instance based on the
grounds that the payment of treasury share of TL 70,992 and conventional penalty of TL 205,594 was a pending case before ICC Arbitration Court. The
Court accepted Turkcell’s request. The ICTA’s objection against the decision has been rejected.

F 114

TURKCELL ANNUAL REPORT 2015
254

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

Turkcell filed lawsuit request for arbitration before ICC on 12 January 2011 regarding the allegedly underpaid treasury share payments over
certain revenue items as discussed in the Treasury Controller’s Report dated 30 May 2010, and corresponding purported penalty in amount
of TL 205,594. Turkcell requested the Arbitral Tribunal to award that TL 68,365 of the total amount requested in the Treasury Controller’s
Report has either been paid or is the subject matter of other arbitration cases. Turkcell further requested the Tribunal to declare that the
request for treasury share payment of the remaining TL 4,163 is unfounded, together with a declaration that Turkcell should not be obliged
to make treasury share payment over certain revenue items as discussed in the Treasury Controller’s Report. Finally, Turkcell requested
the Tribunal to award that it is not obliged to pay the requested penalty and declare that penalty cannot be accrued where the basis of the
penalty request is disputed. On 18 March 2013, the Tribunal awarded that Turkcell is not obliged to pay TL 1,351 of the remaining amount
requested by the Treasury (The relief sought by Turkcell for the treasury share payment of TL 2,812 requested over SIM card and equipment
sales abroad was rejected). The Tribunal declared that Turkcell is not obliged to pay penalty in amount of TL 205,594; but dismissed (without
prejudice) the requests for declaration that Turkcell should not be obliged to make treasury share payment over certain revenue items as discussed
in the Treasury Controller’s Report, and that penalty cannot be accrued where the basis of the penalty request is disputed. The ICTA, Undersecretariat
of Treasury and the Ministry of Transport, Maritime Affairs, and Communications filed two separate lawsuits for cancellation of the Final Award.
Subsequently Turkcell filed a lawsuit for cancellation of the disadvantageous part of the Final Award. The Court has decided to consolidate the
lawsuits under the lawsuit filed by Undersecretariat of Treasury and the Ministry of Transport. The Court decided to appoint an expert committee for
examination of the file. The expert report which is in favor of Turkcell was submitted to the file.

The Court decided to obtain an additional expert report. The additional report is in favor of Turkcell. The lawsuits are still pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is not probable,
thus, no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Dispute on treasury share amounts which are absorbed due to retrospective board decisions taken by ICTA

In consequence of collection of treasury share from Turkcell without considering its payments to the other operators and some subscribers due to the
retrospective procedure amendments of ICTA on both interconnection fees and some tariffs; Turkcell commenced a lawsuit on 5 August 2010 before
ICC on the ground that treasury share which collected from diminishing returns are unlawful and deductions committed by Turkcell between the years
2006 - 2010 from the treasury share are rightful and claimed payment of TL 1,600 and its interest to the overpayment amount which is paid under the
name of treasury share, against ICTA due to its administrative act leading to this case and against Turkish Undersecretariat of Treasury and Turkish
Ministry of Transport, Maritime Affairs, and Communications due to making benefit from aforementioned amount.

F 115

255

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
Dispute on treasury share amounts which are absorbed due to retrospective board decisions taken by ICTA (continued)

ICC Arbitration Court decided partially in favor of Turkcell in March 2012 and ordered that deductions committed by Turkcell between the years 2006
- 2010 from the Treasury Share are rightful, and ICTA should refund TL 1,371 paid by Turkcell in this respect as Treasury Share and ICTA fee and reject
Turkcell’s claim to refund TL 273 paid as ICTA fee between 2006 - 2008. ICTA, Undersecretariat of Treasury and the Ministry of Transport, Maritime
Affairs, and Communications filed a lawsuit for cancellation of the Final Award. The lawsuit initiated by ICTA has been consolidated by the court with the
lawsuit initiated by Undersecretariat of Treasury and the Ministry of Transport, Maritime Affairs, and Communications. The court rejected both lawsuits.
ICTA and Undersecretariat of Treasury and the Ministry of Transport, Maritime Affairs, and Communications appealed the decision. Turkcell replied the
appeal request. Appeal process is still pending.

Since it is not virtually certain that an inflow of economic benefits will arise, no asset or related income is recognized in the consolidated financial
statements prepared as at and for the period ended 31 December 2015 (31 December 2014: None).

The allegation of deficient treasury share payment and the penalty imposed within the context of 2G Concession Agreement

The Treasury Controller’s Board under the Undersecretariat of Treasury, for the period of 1 January 2009 – 31 December 2009 and 10 March 2006 – 31
December 2008, requested additional treasury share payment in the amount of TL 16,387 by alleging that Turkcell paid the treasury share deficient in
accordance with the 2G Concession Agreement. Turkcell has objected to the amount of TL 16,121 of the requested amount on the ground that it was
contrary to the Concession Agreement, and paid the remaining portion of it with reservation. ICTA by its letter dated 1 August 2013, imposed a penalty in
the amount of TL 47,648 according to the Concession Agreement over the Treasury Share amount which was alleged that was paid deficient by Turkcell.
Undersecretariat of Treasury revised the unpaid treasury share amount as TL 16,062 by its letter dated 16 August 2013 and consequently ICTA by its
letter dated 4 September 2013 revised the amount of penalty as TL 47,505.

Turkcell requested a preliminary injunction from the Ankara Civil Court of First Instance in order to provide the suspension of the payment of treasury
share of TL 16,062 and the penalty of TL 47,505 until the end of the case to be filed before ICC Arbitration Court. The Court accepted Turkcell’s request.
ICTA and Undersecretariat of Treasury and the Ministry of Transport objected the decision of the Court. The Court rejected ICTA’s objections. ICTA and
Undersecretariat of Treasury and the Ministry of Transport appealed the decision. The Court of Appeal rejected the request for appeal and upheld the
decision in favor of Turkcell.

F 116

TURKCELL ANNUAL REPORT 2015
256

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
The allegation of deficient treasury share payment and the penalty imposed within the context of 2G Concession Agreement
(continued)

ICTA also by its letter dated 5 August 2013 requested additional contribution share payment in the amount of TL 382 for the period of 1 January
2009 – 31 December 2009 and 10 March 2006 – 31 December 2008 based on the Report of the Treasury Controller’s Board by alleging that it was paid
deficient. ICTA by its letter dated 13 September 2013 has revised the amount of additional contribution share payment as TL 381 and requested it to
be paid.

Turkcell requested a preliminary injunction from the Ankara Civil Court of First Instance in order to provide the suspension of the payment of
contribution share until the end of the case to be filed before ICC Arbitration Court. The Court accepted Turkcell’s request. ICTA objected the decision
of the Court. The Court rejected ICTA’s objections. ICTA appealed the decision. Turkcell submitted its reply to the appeal request of ICTA. The Court of
Appeal rejected the request for appeal and upheld the decision in favor of Turkcell.

Turkcell commenced a lawsuit on 2 October 2013 before ICC, claiming that Turkcell is not obliged to pay treasury share in the amount of TL 16,062
and contribution share in the amount of TL 381 requested based on the Treasury Auditors Board Report relating Turkcell’s Treasury Share calculations
during 1 January 2009 - 31 December 2009 in respect of the 2G Concession Agreement, which was revised by the letter of Undersecretariat
of Treasury dated 16 August 2013 and conventional penalty in the amount of TL 47,505 requested by the letter of ICTA dated 20 August 2013.
The hearings were held in April and September 2014. The arbitral tribunal, with respect to all claims, awarded in favor of Turkcell. ICTA and
Undersecretariat of Treasury and The Ministry of Transport filed two separate lawsuits for cancellation of the Final Award. The cases filed by the
Undersecretariat of Treasury are rejected in favor of Turkcell.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain, thus,
no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

The allegation of deficient treasury share and contribution share payment and the penalty imposed within the context of 3G
Concession Agreement

The Treasury Controller’s Board under the Undersecretariat of Treasury requested additional treasury share payment, for the period of 30 April 2009
– 31 December 2009, in the amount of TL 1,193 by alleging that Turkcell, contrary to the 3G Concession Agreement, paid the treasury share deficient.
Turkcell objected to TL 1,184 of the requested amount, on the grounds that this request is contrary to the Concession Agreement. Turkcell paid the
remaining part of this request, with reservation. Turkcell filed a lawsuit against Undersecretariat of Treasury, ICTA and Ministry of Transportation,
Maritime Affairs and Communications, for the cancellation of the Undersecretariat of Treasury’s administrative act, which is related to the additional
treasury share request of the Undersecretariat of Treasury and also for the cancellation of the Treasury Report which is the legal basis of the
aforementioned administrative act. The Concil of State rejected the Turkcell’s stay of execution request. Turkcell objected to this decision. Objection
was rejected. The case is still pending.

F 117

257

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
The allegation of deficient treasury share and contribution share payment and the penalty imposed within the context of 3G
Concession Agreement (continued)

ICTA by its letter dated 1 August 2013 imposed a penalty in the amount of TL 3,119 according to the Concession Agreement over the Treasury Share
amount which was alleged that paid deficient. Turkcell filed a lawsuit against ICTA and Undersecretariat of Treasury for the cancellation of ICTA’s
decision which is the legal basis of the aforementioned penalty, before the Council of State. The Council of State rejected the stay of execution request
of Turkcell. Turkcell objected to this decision. Objection was rejected. The case is still pending.

ICTA by its letter dated 5 August 2013 requested additional contribution share payment according to the 3G Concession Agreement in the amount of
TL 28 for the period of 30 April 2009 – 31 December 2009 based on the Report of the Treasury Controller’s Board by alleging that it was paid deficient.
Turkcell filed a lawsuit against ICTA for the cancellation of ICTA’s decision and administrative act related to ICTA’s additional contribution payment
request, before the Council of State. The case is still pending.

The total amount of TL 5,195 mentioned on the letters of ICTA dated 1 August 2013 and 5 August 2013, were paid to ICTA on 12 September 2013 and
recognized as expense in the consolidated financial statements as at and for the period ended 31 December 2013.

The Treasury Controller’s Board under the Undersecretariat of Treasury requested additional treasury share payment, for the years 2010 and 2011, in the
amount of TL 13,034; by alleging that Turkcell, contrary to the 3G Concession Agreement, paid the treasury share deficient. Turkcell filed a lawsuit for
the stay of execution and the cancellation of the aforementioned administrative act and the Treasury Report which is the legal basis of the respective
act, against Undersecretariat of Treasury, ICTA and Ministry of Transportation, Maritime Affairs and Communications.

In addition to this, ICTA Board’s decision dated 3 February 2016 was received on 25 February 2016, requesting the payment of additional treasury share
payment in the amount of TL 13,034 and the penalty fee in the amount of TL 36,896 to be paid within one month. The Company shall file a lawsuit in due
time, for the stay of execution and the cancellation of the aforementioned Board decision and related administrative act.

On 23 February 2016, ICTA also requested additional ICTA contribution payment over the same basis in the amount of TL 304 (interest to be calculated)
to be paid within one month. The Company shall also file a lawsuit in due time, for the cancellation of the respective administrative act.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is not probable, thus,
no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015.

Dispute regarding the ICTA decision increasing The Turkcell’s 3G coverage obligations

By the amendment of the Law for Metropolitan Municipalities, the number of metropolitan municipalities increased and the borders of some
metropolitans were extended. On the grounds of this law amendment, ICTA increased the Turkcell’s coverage obligations, defined in the Turkcell’s
concession agreement, by its decision dated 21 July 2014 and numbered 2014/DK-YED/376. Turkcell filed a lawsuit for the stay of execution and the
cancellation of the aforesaid decision. The Court proposed the stay of the execution. ICTA objected to this decision. The objection is rejected. The case is
pending.

F 118

TURKCELL ANNUAL REPORT 2015

258

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Concession Agreement (continued)
Dispute on Turk Telekom Group

Turkcell Group and Turk Telekom Group reached an agreement to mutually settle the ongoing lawsuits, enforcement procedures and disputes between
Turkcell companies including Turkcell İletişim Hizmetleri AS, Superonline İletişim Hizmetleri AS, Kule Hizmet ve İşletmecilik AS. and Turk Telekom
Group companies including Türk Telekomünikasyon AS, Avea İletişim Hizmetleri AS and TTNet AS.

In this regard, the Company made a payment of TL 225,000 to Turk Telekom Group which is the net of right, receivables and claims of both parties
(excluding VAT and special communication tax, including all other tax and financial obligations and interest) on 14 January 2016 (Note 7).

The provision amounting to TL 156,864 in the consolidated financial statements as at and for the period ended 31 December 2014 has been presented
in trade and other payables in the consolidated financial statements as at and for the period ended 31 December 2015 together with the additional
charges and taxes payable due to the settlement.

Disputes regarding the Law on the Protection of Competition
Dispute regarding the fine applied by the Competition Board

The Competition Board commenced an investigation of business dealings between the Company and the mobile phone distributors in October 1999.
The Competition Board decided that the Company disrupted the competitive environment through an abuse of a dominant position in the Turkish
mobile market and infringements of certain provisions of the Law on the Protection of Competition.

As a result, the Company was fined a nominal amount of approximately TL 6,973 and was enjoined to cease these infringements. The Company
initiated a lawsuit before Council of State for the injunction and cancellation of the decision. On 15 November 2005, the Court cancelled the
Competition Board’s decision.

After the cancellation of the Competition Board’s decision, the Competition Board has given the same decision again on 29 December 2005. On 10
March 2006, the Company initiated a lawsuit before Council of State for the injunction stay of execution and the cancellation of the Competition
Board’s decision dated 29 December 2005. On 13 May 2008, Council of State rejected the case. The Company appealed the decision. The Council
of State rejected the Company’s request for appeal. The Company applied for the correction of the decision. The correction of the decision request
is rejected. So that, the first instance court decision, given against the Company, is finalized. Based on the decision of Competition Board, Ankara
Tax Office requested Turkcell to pay TL 6,973 through the payment order dated 4 August 2006. On 25 September 2006, Turkcell made the related
payment and initiated a lawsuit for the cancellation of this payment order. The Court dismissed the lawsuit. Thereupon Turkcell appealed this decision.
On 17 March 2009, Council of State reversed the judgment of the Local Court. Local Court decided in line with the decision of Council of State. On 18
December 2009, the Court rejected the case and Turkcell appealed this decision. Council of State reversed the judgment of the First Instance Court.
First Instance Court decided in line with the decision of Council of State. On 15 June 2011, the Court rejected the case again.

F 119

259

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Disputes regarding the Law on the Protection of Competition (continued)
Dispute regarding the fine applied by the Competition Board (continued)

Turkcell also appealed this decision. Council of State accepted Turkcell’s stay of execution request made during the appeal phase. Council of State
reversed the judgment of the Instance Court again. The Inheritance and Charges Tax Office applied for the correction of the decision. Turkcell replied
this request. The Council of State rejected the correction of the decision request of The Inheritance and Charges Tax Office. The Court of First Instance
decided to comply with the Council of State’s reversing decision and decided to cancel the payment order. The Inheritance and Charges Tax Office
appealed the decision. Turkcell replied this request. The appeal process is still pending.

Dispute regarding the fine applied by the Competition Board regarding mobile marketing activities

On 23 December 2009, as a result of an investigation initiated by the Competition Board, Turkcell was fined amounting to TL 36,072, based on the
grounds that Turkcell violated competition rules in GSM and mobile marketing services markets. The payment was made within 1 month following the
notification of the decision of the Competition Board. Therefore, 25% discount was applied and TL 27,054 is paid as the monetary fine on 25 May 2010.
Turkcell filed a legal case on 25 June 2010 for the stay of execution and cancellation of the aforementioned decision. The Court rejected the Turkcell’s
stay of execution request. Turkcell objected to the decision. The objection was rejected. The Court rejected the case. Turkcell appealed the decision. The
appeal process is still pending.

Avea, depending on the Competition Board decision, initiated a lawsuit against Turkcell claiming a compensation from Turkcell for its damages amounting
to TL 1,000, with reservation of further claims, on the ground that Turkcell violated the competition. During the judgment, Avea increased its request of
material compensation to TL 5,000 and in addition requested TL 1,000 for non-pecuniary damages. The Court decided to separate these requests and to
reject the lawsuits demanding compensation and moral damages. Avea appealed the case. Turkcell has submitted its response to appeal. The Court of
Appeal rejected Avea’s request for appeal and upheld the decision in favor of Turkcell. Avea applied for the correction of decision. The Supreme Court of
Appeals reversed the decision of the court of first instance. The first Instance Court insisted on the decision and rejected the case in the favor of Turkcell
aspects of both cases.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain, thus, no
provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Dispute with the Competition Board regarding the business practices with sub-distributors

On 1 December 2009, Competition Board decided to initiate an investigation against Turkcell whether Turkcell, violated the related clauses of the
Competition Act numbered 4054 by its applications on its sub-distributors.

F 120

TURKCELL ANNUAL REPORT 2015
260

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Disputes regarding the Law on the Protection of Competition (continued)
Dispute with the Competition Board regarding the business practices with sub-distributors (continued)

As a result of the respective investigation, on 9 June 2011 the Competition Board imposed an administrative fine on Turkcell amounting to TL 91,942
on the grounds that Turkcell violates its dominant position in GSM services market. On 8 December 2011, Turkcell filed a lawsuit for annulment of
the decision. Turkcell requested stay of execution for the aforementioned Competition Board decision. The Council of State accepted the request
of Turkcell for stay of execution for the part of the Competition Board decision fining Turkcell amounting to TL 91,942 but rejected the request for
the parts of the decision determining that Turkcell abused its dominant position with its practices subject to the Competition Board decision and have
to end the violation. The Competition Board objected to the decision. Turkcell objected to the decision for the rejected part. The Plenary Session of
Administrative Law Divisions of the Council of State cancelled the stay of execution decision and decided to send the file back to the First Instance
Court to be examined with respect to the reasons related to the basis of the Competition Board’s decision. Upon this decision, The Council of State
rejected the Turkcell’s stay of execution request. Turkcell objected to the decision. Objection was rejected. The case is still pending.

On 8 March 2012, payment order has been sent to Turkcell by the Tax Office. Turkcell filed a lawsuit for cancellation of the payment order on 13 March
2012. The Court accepted Turkcell’s stay of execution request until the Tax Office’s legal argument is submitted to the Court. Upon submission of the
Tax Office’s legal argument to the Court, the Court rejected the request of Turkcell for stay of execution. Turkcell objected to the Court’s decision.
The objection was dismissed. Turkcell requested a stay of execution for the second time but the Court rejected the request. Turkcell objected to the
Court’s decision, but the objection was dismissed. Subsequently, the Court accepted the lawsuit and cancelled the payment order. Tax Office appealed
the decision. Turkcell replied the appeal request. Appeal process is still pending. The blockage applied by the Tax Office with respect to the payment
order on Turkcell’s deposit amounting to TL 91,942 has been released in 2014.

Pamuk Elektronik, a former dealer of Turkcell whose contract has been terminated, initiated a lawsuit against Turkcell on 19 December 2011 claiming
TL 2,100 by reserving its rights for surpluses on the ground that Turkcell caused that damage by unjust termination of the contract and actions which
are stated in the Competition Board decision in which the Board imposed TL 91,942 administrative fine to Turkcell. Turkcell replied in due time. On 19
April 2012, the Court decided to reject the lawsuit with the reason that the dispute must be solved with arbitration procedure because of the term in
the agreement. Pamuk Elektronik appealed the case. Turkcell submitted its answer to the appeal. The Court of Cassation approved the decision of the
First Instance Court. Pamuk Elektronik applied for the correction of the decision. Turkcell replied to the correction of decision. The Court of Cassation
rejected Pamuk Elektronik’s correction of the decision request. Pamuk Elektronik has sent a warning to Turkcell in order to initiate arbitration
procedure. Turkcell has responded to the warning. Arbitration proceedings have been initiated by Pamuk Elektronik against Turkcell and the lawsuit
petition has been served to Turkcell. Turkcell submitted its reply to the case. The lawsuit is pending.

Dogan Dagitim AS filed a lawsuit against Turkcell on 5 June 2012 claiming TL 110,484 together with up to 3 times of the loss amount to be determined
by the court for its material damages by reserving its rights for surpluses allegedly on the ground that Turkcell caused that damage by its applications
to its sub-distributors which constituted a violation of the Law no. 4054 and that violation was proved by the Competition Board decision in which the
Board imposed TL 91,942 administrative fine to Turkcell. The lawsuit is pending.

F 121

261

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

On 31 December 2008, Mep Iletisim ve Dis Ticaret AS, which is former distributor of Turkcell and whose agreement is no longer valid, initiated a lawsuit
against Turkcell claiming that it has a loss of TL 64,000 due to the applications of Turkcell and requested TL 1,000 and remaining amount to be reserved.
An expert report from committee of experts appointed by the Court has been submitted to the Court. The Court decided to obtain a supplementary
report from the same committee. In the supplementary expert report submitted to the file by the committee, the damages amounting to TL 64,000
claimed by Mep Iletisim ve Dis Ticaret AS was calculated as TL 16,700. Mep Iletisim ve Dis Ticaret AS increased its claim and demanded TL 16,700 from
Turkcell. Turkcell and MEP Iletisim ve Dis Ticaret AS made a settlement to solve this dispute. MEP Iletisim ve Dis Ticaret waived from the lawsuit.

Mobiltel Iletisim Hizmetleri Sanayi ve Ticaret AS (“Mobiltel”) filed a lawsuit against Turkcell on 17 August 2012 claiming TL 500 together with up to
3 times of the loss amount to be determined by the court for its material damages by reserving its rights for surpluses allegedly on the ground that
Turkcell gives exclusive competence to its sub-dealers and that violation was proved by the Competition Board decision in which the Board imposed TL
91,942 administrative fine to Turkcell and that Mobiltel was not able to sale any product to the sub-dealers which were given exclusive competence by
Turkcell. The court decided to obtain an expert report. The lawsuit is pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain and a
reliable estimation of the amount of the obligation, if any, cannot be made; thus, no provision is recognized in the consolidated financial statements as at
and for the period ended 31 December 2015 (31 December 2014: None).

Investigation of the Competition Board regarding vehicle tracking services

The decision of the Competition Board dated 2 April 2008, regarding the allegation that Turkcell has exclusive practices on vehicle tracking services
market, was cancelled by the Council of State. Accordingly, the Competition Board decided to initiate an investigation regarding the same. After the
aforementioned investigation, the Competition Board decided that Turkcell infringed competition rules by its exclusive practices on vehicle tracking
service market and imposed a fine amounting to TL 39,727. The reasoned judgment has been delivered to Turkcell on 15 May 2014.

Since the administrative fine amounting to TL 39,727 was paid within 1 month following the notification of the decision of Competition Board, 25%
discount was applied and payment amounting to TL 29,795 was made on 13 June 2014 and recognized as expense in the consolidated financial
statements as at and for the period ended 31 December 2014.

Turkcell filed a lawsuit on 11 July 2014 for the stay of execution and the cancellation of the aforementioned administrative act and fine. The Court
decided to reject the stay of execution request. Turkcell objected to this decision. Objection was rejected. The hearing was held and it is expected from
the Court to render its judgement. The case is pending.

F 122

TURKCELL ANNUAL REPORT 2015
262

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Disputes regarding the Law on the Protection of Competition (continued)
Carrying international voice traffic

In May 2003, Turkcell was informed that the ICTA had initiated an investigation against Turkcell claiming that Turkcell has violated Turkish laws by
carrying some of its international voice traffic through an operator other than Turk Telekom. On 5 March 2004, ICTA fined Turkcell a nominal amount
of approximately TL 31,731 with the claim that Turkcell exceeded its authorization given by its concession agreement.

Turkcell filed a lawsuit for the cancellation of the related administrative acts and decision of ICTA, however, paid the administrative fine on 9 April
2004. On 5 November 2004, Council of State grant a motion for stay of execution. With respect to that decision, ICTA paid back TL 18,000 on 26
January 2005 and deduct a sum of TL 13,731from the radio utilization and usage fee that shall be paid on December. On 26 December 2006, the
Council of State canceled the decision and the fine imposed by the ICTA yet rejected the case regarding the part related to the Regulation which is the
legal basis of the administrative fine. ICTA appealed the decision. The decision was approved by the Council of State, Plenary Session of the Chamber
for Administrative Divisions. ICTA applied for the correction of the decision. The Council of State, Plenary Session of the Chamber for Administrative
Divisions rejected the ICTA’s correction of the decision request. Therefore, the Court decision is finalized in favor of Turkcell. On 6 June 2012, Turkcell
filed a lawsuit against ICTA in order to cover its damages in the amount of TL 5,783 occurred between the period when Turkcell made the payment of
the aforementioned administrative fine and collected it back from ICTA. The Court decided to obtain an expert report. The expert report is in favour of
Turkcell. Turkcell amended its claim and increased its request to TL 10,070 according to the expert report. The case is still pending.

Dispute on National Roaming Agreement

The ICTA decided that Turkcell has not complied with its responsibility under the Regulation on National Roaming which was enacted pursuant to
article 10 of the Telegram and Telephone Law numbered 406 which obliges Turkcell to provide national roaming services and fined Turkcell by nominal
amount of approximately TL 21,822. On 7 April 2004, although Turkcell made the related payment with its accrued interest, it also filed a lawsuit
before the Council of State for the cancellation of the respective administrative fine and the regulation of the ICTA which sets the ground for the
administrative fine. Upon the Council of State decision for the stay of execution of the administrative fine imposed to Turkcell until the conclusion
of the law suit on 1 December 2004, Turkcell re-collected the respective amount from the ICTA on 3 January 2005. Following the cancellation of the
administrative fine and finalization of this decision on 22 July 2010, Turkcell initiated a lawsuit against ICTA for the collection of TL 7,111 which is the
accrued interest of the total amount that Turkcell could not benefit between the period when Turkcell made the payment and ICTA returned the same
amount to Turkcell. The Court partially accepted the lawsuit and decided that ICTA should pay TL 6,505 to Turkcell with the accrued interest. On 15
April 2013, ICTA paid TL 6,505 with its accrued interest amounting to TL 1,596 to Turkcell. ICTA appealed the decision. Thereupon, Turkcell replied to
this request and also appealed the parts of the decision that the Court rejected against Turkcell. The Council of State rejected ICTA’s request for the
stay of execution during the appeal process. Appeal process is still pending.

Although payment was received from ICTA, the Court decision is not finalized. Therefore, it is not virtually certain that an inflow of economic benefits
will arise, and no income is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014:
None).

F 123

263

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Disputes regarding the pricing applications
Dispute regarding the fine applied by ICTA on pricing applications of Turkcell

On 7 April 2010, ICTA decided to impose administrative fine to Turkcell amounting to TL 4,008 for misinforming the Authority and TL 374 for making
some subscribers suffer. The payment was made within 1 month following the notification of the decision of the ICTA. Therefore, 25% discount was
applied and TL 3,287 is paid in total as the administrative fine on 9 June 2010. Turkcell filed two lawsuits on 22 September 2010 for the stay of execution
and cancellation of the aforementioned decision. The Court rejected Turkcell’s stay of execution requests and Turkcell objected to the decisions but
the objections are rejected. On 28 April 2011, the Court rejected the cases. Turkcell appealed the decisions. Council of State rejected Turkcell’s stay of
execution requests at appeal phase. Appeal processes are pending.

Since it is not virtually certain that an inflow of economic benefits will arise, no contingent asset or related income is recognized in the consolidated
financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Dispute on campaigns

On 21 May 2008, ICTA decided that Turkcell damaged the subscribers’ financial interests related to the campaigns in which free minutes or counters
are given and requested TL32,088. On 10 July 2008, Turkcell filed a lawsuit for the injunction and cancellation of the ICTA’s decision. However, Turkcell
benefited from the early payment option with a 25% early payment discount and paid TL 24,066 on 1 August 2008. On 10 November 2010, the Court
decided to reject the case. Turkcell appealed the decision. The State of Council rejected Turkcell’s request for the stay of execution of the First Instance
Court’s decision. The appeal process is still pending.

F 124

TURKCELL ANNUAL REPORT 2015
264

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Disputes regarding the pricing applications (continued)
Dispute regarding the fine applied by ICTA on tariffs above upper limits

On 21 April 2010, ICTA decided to impose administrative fine to the Company amounting to TL 53,467 by claiming that the Company applied tariffs
above the upper limits of GSM-GSM in GSM Upper Limits Table approved by ICTA on 25 March 2009. The payment was made within 1 month
following the notification of the decision of the ICTA. Therefore, 25% discount was applied and TL 40,100 is paid as the administrative fine on 3 June
2010. The Company filed a lawsuit on 28 June 2010, for the cancellation of the aforementioned decision. The Court overruled the stay of execution
claim, Turkcell objected to the decision and the Court accepted this objection and decided for the stay of the execution. Accordingly, ICTA paid back TL
40,100 on 27 January 2011. On 3 May 2011, the Court rejected the case. Turkcell appealed the decision and paid back TL 40,100 to ICTA on 6 October
2011. Council of State rejected Turkcell’s stay of order request at appeal phase. Appeal process is pending.

Amount to be reimbursed to the subscribers was calculated as TL 46,228 and deducted from revenues in the consolidated financial statements as at
and for the year ended 31 December 2009. Reimbursement to subscribers was made in January 2010.

ICTA notified Turkcell on 23 November 2011, to pay the amount of TL 13,367 which is the unpaid portion arising from the 25% cash discount of the
administrative fine amounting to TL 53,467 that was imposed for applying tariffs above the upper limits. Turkcell filed a lawsuit on 23 December 2011
for stay of execution and for the annulment of this process. The Court accepted the request of Turkcell for stay of execution. ICTA objected to the
decision but the objection is rejected. The Court decided in favor of Turkcell. ICTA appealed the decision and Turkcell replied this request. The Council
of State rejected ICTA’s request for stay of execution during the appeal process. Appeal process is still pending.

On 20 February 2012, payment order has been sent to Turkcell by the Tax Office. On 24 February 2012, Turkcell filed a lawsuit for cancellation of the
payment order. The Court accepted the request of Turkcell for stay of execution. The Tax Office objected to the decision but the objection is rejected.
The Court decided in favor of Turkcell. The Tax Office appealed the decision and Turkcell replied this request. Appeal process is still pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the additional request regarding
unpaid portion arising from the 25% discount of the administrative fine is uncertain, thus, no provision is recognized in the consolidated financial
statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Dispute on deposits at banks

Turkcell, in 2001, initiated an enforcement proceeding to collect receivables amounting to $6,329 arising from deposits in a bank. The bank has been
objected to the enforcement proceeding and Turkcell filed a lawsuit for the cancellation of the objection. The Court decided in favor of Turkcell on 1
March 2005. The bank appealed the decision and Turkcell replied the same. On 3 April 2006, Supreme Court of Appeals decided the reversal of the
Court’s decision in favor of the defendant. The Court abided by the decision of the Supreme Court of Appeals. The Court decided to obtain an expert
report. The lawsuit is pending.

F 125

265

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute on Special Communication Tax

Large Tax Payers Office levied Special Communication Tax and tax penalty on Turkcell in the amount of TL 211,056 principal and TL 316,583 totaling to
TL 527,639 based upon the claim, stated on Tax Investigation Reports prepared for the years 2008-2012, that Turkcell should pay Special Communication
Tax over the prepaid card sales made by the distributors. Turkcell filed 60 lawsuits before the Tax Courts for the cancellation of each tax and tax penalty
demand. After the lawsuits were filed, Turkcell applied to settlement procedure. The parties could not reach a settlement so that, they signed a minute
stating that there is no settlement between the parties.

Respective Courts accepted 24 of the cases filed for the cancellation of the accrual slips prepared for the year 2008 and 2009. Large Taxpayer Office
appealed the decisions. Turkcell replied this requests.

The Company shall pay the respective tax amounts with its accrued interest and tax penalty, in the case that the cases are finalized against the Company.
This interest would be calculated as a case by case basis. Accordingly, the interest that may be paid in some or all of the cases, could amount to a
significant portion of the tax assessment.

The Court partially accepted 12 of the cases filed for the cancellation of the accrual slips prepared for the year 2011. Turkcell appealed the decisions
regarding the parts against Turkcell. The Large Tax Payers Office appealed the decisions regarding the parts against the Large Tax Payers Office. The
Council of State rejected the stay of execution requests, made during the appeal process, regarding the cases filed for year 2011.

The tax and tax penalty demands, the accrual slips and its payment order issued by the Large Tax Payer’s Office, in the amount of TL 77,480 pursuant to
the court decisions for the cases related to the term 2011, were notified to Turkcell. Turkcell filed 13 lawsuits for the stay of execution and cancellation
of these tax penalty demands, the accrual slips and its payment order. The Court rejected Turkcell’s stay of execution requests. Turkcell objected to these
decisions. These objections were rejected. The Large Tax Payer’s Office has collected TL 80,355 (TL 77,480 and TL 2,876 overdue interest) by offsetting
the receivables of Turkcell from Public Administrations.

The Court partially accepted 12 of the cases filed for the cancellation of the accrual slips prepared for the year 2010. The Company appealed the
decisions regarding the parts against the Company. Tax office notified tax/penalty demands for tax, its accrued interest and penalty amounting TL 97,135
in line with tax court decision on 19 February 2016. The Company shall file lawsuits for the stay of execution and cancellation of these tax and tax
penalty demands.

The Court rejected 12 cases filed for the cancellation of the accrual slips prepared for the year 2012. The Company appealed the respective decisions.
Tax office notified tax and tax penalty demands for tax, its accrued interest and penalty amounting TL 152,212 in line with tax the court decision dated 4
March 2016. The Company shall file lawsuits for the stay of execution and cancellation of these tax and tax penalty demands.

Limited tax investigation has been performed for the year 2013, regarding the aforementioned case. As of reporting date no notification has been
received regarding the result of the investigation by Turkcell.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is not probable, thus,
no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

F 126

TURKCELL ANNUAL REPORT 2015
266

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute on over assessment following the settlement on VAT fine pertaining to International Roaming Agreements

On 9 February 2009, Turkcell applied to the Tax Office for the refund of the interest charge amounting TL 6,609 which was miscalculated after
the settlement with the Tax Office regarding the VAT and tax penalties accrued due to roaming agreement for years 2000, 2001 and 2002. Tax
Office rejected Turkcell’s request, and Turkcell filed a lawsuit with the same claim. Upon the refusal of this request, Turkcell filed a lawsuit for the
cancellation of this administrative act. The Court rejected the case. Turkcell appealed the decision. The Council of State approved the decision.
Turkcell applied for the correction of the decision. The Council of State rejected Turkcell’s correction of the decision request. Therefore, the court
decision is finalized.

Moreover, Turkcell filed another lawsuit for the cancellation of the aforementioned interest charge amounting to TL 6,609. On the other lawsuit, the
Court rejected the case. Subsequently Turkcell appealed the case. The appeal process is pending.

Lawsuit regarding the loss arisen due to the fact that Turkcell cannot write off the extra units, loaded to the cellular
phone lines of the inactive subscribers, paid for the year 2014 Corporate Tax

Turkcell filed a lawsuit for the stay of execution and the cancellation of the part of the Corporate Tax, in the amount of TL 26,620 which was subject
to the tax payment, paid with reservation in the year 2014, within the scope of the loss arisen because Turkcell cannot write off the extra units
loaded to the cellular phone lines of the inactive prepaid subscribers. The Court rejected Turkcell’s stay of execution request. Turkcell objected to this
decision. Objection was rejected. The case is pending.

Lawsuit regarding the loss arisen out of the sale of A-Tel’s shares, paid for the year 2014 Corporate Tax

Turkcell filed a lawsuit for the stay of execution and the cancellation of the part of the Corporate Tax in the amount of TL 28,345 which was subject
to the tax payment, paid with reservation in the year 2014 regarding the loss in the amount of TL 188,963 arisen out of the sale of A-Tel’s shares. The
Court rejected Turkcell’s stay of execution request. Turkcell objected to this decision. The objection is rejected. The case is pending.

F 127

267

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Lawsuit regarding the loss, arisen out of the sale of T-Medya’s shares of Turktell paid for the year 2014 Corporate Tax

Turktell filed a lawsuit for the cancellation of the part of the Corporate Tax in the amount of TL 12,986 which was subject to the payment with
reservation in the year 2014 regarding the loss in the amount of TL 17,314 arisen out of the sale of T-Medya’s shares. The case is pending.

Lawsuit filed for the recovery of the loss, arisen out of Large Tax Payers Office’s late refund

Turkcell made an application to Large Tax Payers Office for the recovery of its loss, arisen out of Large Tax Payer Office’s late payment of the tax
amounts that it should pay to Turkcell. The Tax Office rejected the application implicitly. Turkcell filed a lawsuit for the cancellation of this implicit
rejection and the recovery of its losses with its accrued interest, arisen out of Large Tax Payers Office’s late refund of the overpaid tax amounts. Turkcell
requested TL 4,903 with its legal interest accrued from 15 February 2013 and TL 2,342 with its legal interest accrued from 13 December 2013 until the
date of collection of the respective amounts. The Court accepted the part of Turkcell’s request regarding the cancellation of the implicit rejection and
recovery of its losses; rejected the part of the request regarding the interest. The Large Tax Payers Office appealed the decision. Turkcell appealed the
decision concerning the rejected part of the decision.

The lawsuit filed against EnerjiSA in order to collect the amounts which were collected from Turkcell regarding the
unpaid/illegal electricity consumption costs and etc.

Turkcell filed a lawsuit against EnerjiSA Elektrik AS in order to collect TL 107,149 which was collected from Turkcell between 1 January 2011 and 1 April
2014, with its advance interest to be accrued from the payment date of each invoice until the date of collection. EnerjiSA’s collection is composed of
unpaid/illegal electricity consumption costs, distribution costs, meter reading costs, retail sales service and transmission costs and also the TRT share,
the Energy Fund and the Municipal Consumption Tax calculated on unpaid/illegal electricity consumption costs. The case is pending.

F 128

TURKCELL ANNUAL REPORT 2015
268

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
The lawsuit filed against AKSA in order to collect the amounts which were collected from Turkcell regarding the
illegal electricity consumption and etc.

Turkcell filed a lawsuit against AKSA Elektrik AS in order to collect TL 45,744 which was collected from Turkcell between 1 April 2014 and 31 May
2015 with its advance interest to be accrued from the payment date of each invoice until the date of collection. AKSA’s collection is composed of
unpaid/illegal electricity consumption costs, distribution costs, meter reading costs, retail sales service and transmission costs and also the TRT share,
the Energy Fund and the Municipal Consumption Tax calculated on unpaid/illegal electricity consumption costs. Case is pending.

Dispute with MTN regarding Iranian GSM tender process

In 2004, Turkcell was awarded Iran’s first private GSM license through an international tender. Subsequently Turkcell was barred from concluding
its license arrangement, and Iran entered into a license agreement with the South Africa based operator MTN, instead of Turkcell. With respect to
newly received information by Turkcell indicating that the signing of the license agreement with MTN instead of Turkcell was a consequence of MTN’s
actions at that time. In light of the harm caused by MTN’s actions to both Turkcell and to its shareholders, Turkcell filed a lawsuit against MTN on 28
March 2012 seeking the compensation of such damages.

Considering extensive business dealings of both companies in the United States and due to the allegations that MTN breached rules of international
law, the lawsuit has been filed in United States District Court for the District of Columbia. The lawsuit has been withdrawn in order to file a lawsuit in
another jurisdiction.

Turkcell filed a lawsuit against MTN based on the same allegations before the South Gauteng High Court, Johannesburg, Republic of South Africa.
Turkcell submitted the revised particulars of claim. The lawsuit is still pending.

F 129

269

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute on the decision of CMB regarding audit committee member

On 15 October 2008, the CMB decided on an administrative fine amounting to TL 12 since the Company did not fulfill the decision of CMB dated 26
January 2007 and required the Company to inform its shareholders at the next General Assembly Meeting. The Company commenced a lawsuit before
the Administrative Court. The Court rejected the Company’s stay of execution request and the Company’s objection to this decision has been rejected.
On 27 May 2011, the Court rejected the case. The Company appealed the decision. Council of State rejected the injunction request of the First Instance
Court’s decision. Council of State rejected the stay of execution request of the Company. The appeal process is still pending.

Dispute on payment request of Savings Deposits Insurance Fund

On 26 July 2007, Savings Deposits Insurance Fund (“SDIF”) requested TL 15,149 to be paid in one month period on the ground that the stated amount
is recorded as receivable from the Company in the accounting records of Telsim, which is taken over by SDIF. On 20 September 2007, the Company filed
a lawsuit for the injunction and cancellation of the SDIF’s request. Council of State accepted the injunction request of the Company. On 19 January
2010, the Court accepted the Company’s claim and cancelled the aforementioned request of SDIF. SDIF appealed the decision. The Plenary Session of
Administrative Law Divisions of the Council of State approved the First Instance Court’s decision in favor of the Company. The defendant applied to the
correction of the decision. The Company replied the same. The correction of the decision process is pending.

SDIF issued payment orders for the aforementioned amount and, on 19 October 2007, the Company initiated a lawsuit for the cancellation of the
payment request of SDIF. On 29 March 2010, the Court decided on the cancellation of the payment order. SDIF appealed such decision. The Council of
State approved the first instance court decision in favor of the Company.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain, thus, no
provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

F 130

TURKCELL ANNUAL REPORT 2015
270

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute with the Ministry of Industry and Trade

Ministry of Industry and Trade notified the Company that the Company is not informing the subscribers properly before service subscriptions and
content sales and charged administrative fine of TL 68,201. On 24 August 2009, the Company initiated a lawsuit for the cancellation of the payment
notification and related decision of the Ministry of Industry and Trade. The Court rejected the Company’s injunction request. The Court cancelled
decision of the Ministry of Industry and Trade on 8 June 2010. Ministry of Industry and Trade appealed the decision. Council of State reversed the
judgment of the Instance Court. The Company requested correction of the decision. Council of State rejected the Company’s request for the correction
of the decision. The Local Court made a decision in line with the reversal decision of Council of State and rejected the case. The Company appealed the
decision. The Council of State approved the First Instance Court decision. The Company requested for correction of the decision. The Council of State
rejected the Company’s correction of the decision request. The Company made an individual application before the Constitutional Court.

On 14 December 2009, the Company filed a lawsuit for the stay of execution and the cancellation of the payment order of TL 68,201 with respect to
the decision of Ministry of Industry and Trade. The Court accepted the case. Tax Administration appealed the decision. Council of State reversed the
judgment of the Instance Court. The Company requested correction of the decision. Council of State rejected the Company’s request for the correction
of the decision request. The Court of First Instance decided to comply with the Council of State’s reversal decision and rejected the case. The Company
appealed the decision. The Council of State approved the First Instance Court decision. The Company requested for correction of the decision. The
Council of State rejected the Company’s correction of the decision request.

The administrative fine amounting to TL 68,201 was paid on 13 May 2014 with reservation and recognized as expense in the consolidated financial
statements as at and for the period ended 31 December 2014. The Company filed a lawsuit on 11 June 2014 for the cancellation of the accrual slip
which was issued by the Large Taxpayer Office, and for the reimbursement of the aforementioned amount. The Court rejected the case. The Company
appealed the respective decision in due time. Appeal process is still pending.

F 131

271

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute on VAT and SCT regarding Shell & Turcas Petrol AS campaign

The Company and Shell&Turcas Petrol A.S. signed an agreement on 27 November 2007 where eligible subscribers can get free counters and minutes
from the Company or free oil from Shell&Turcas Petrol AS.

As a result of the tax investigation, Tax Controllers notified that VAT and special communication tax are not calculated over the free counters and
minutes and imposed special communication tax amounting to TL 1,214 and tax penalty of TL 1,822 and VAT amounting to TL 874 and tax penalty
of TL 1,315. On 16 September 2009, the Company filed lawsuits for the cancellation of the tax penalty. The court decided to accept the cases.
Tax Administration appealed the decisions. The Council of State approved the first instance court’s decisions, in favor of the Company, regarding
the cancellation of the special communication tax and its tax penalty assessment. Tax Administration applied for the correction of the decision
process against the respective decisions. The Council of State rejected the Tax Administration’s correction of the decision requests made by the Tax
Administration regarding the cases filed for the cancellation of the SCT and its tax penalty. Therefore, the Court decisions, given on the aforementioned
cases are finalized in favor of the Company.

The Council of State approved the First Instance Courts’ decisions in favor of the Company, regarding the 3 cases filed for the cancellation of the VAT
and its tax penalty. Tax Administration applied for the correction of the decision process against the decisions. The correction of the decision processes
are pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain, thus, no
provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Decisions of ICTA on tariff plans

On 15 November 2009, ICTA notified that the Company has changed the conditions of a tariff plan after the launch and shall reimburse overcharged
amounts to the subscribers. On 1 February 2010, the Company initiated a lawsuit for stay of execution and the cancellation of the decision of ICTA.
The Court rejected the Company’s stay of execution request. The Company objected to this decision. The Court rejected the objection request of the
Company. The case is still pending.

Amount to be reimbursed to the subscribers is calculated as TL 15,660 and deducted from revenues in the consolidated financial statements as at and for
the year ended 31 December 2009. Reimbursement to subscribers was made in January 2010.

On 17 May 2010, ICTA decided to impose TL 802 administrative fine against the Company on the ground that one of the tariff option of the Company
contradicts the board decision which sets lower limit to the on-net tariffs. The payment was made within 1 month following the notification of the
decision of ICTA. Therefore, 25% discount was applied and TL 601 as fine on 21 June 2010. Besides, the Company filed a lawsuit on 21 July 2010 in
request for the cancellation of fine. The Court overruled the stay of execution request and the Company objected to this decision. The Court rejected
the objection request of the Company. The Court rejected the lawsuit. The Company appealed the decision. The state of Council rejected the stay of
execution request of the First Instance Court’s decision. The appeal process is still pending.

F 132

TURKCELL ANNUAL REPORT 2015
272

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Decisions of ICTA on tariff plans (continued)

ICTA decided to apply an administrative penalty in the amount of TL 26,483 to the Company on 22 September 2010 as a result of an investigation
initiated related to a tariff plan. Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount
was applied and TL 19,862 was paid on 7 December 2010. The Company initiated a lawsuit to suspend the execution of administrative fine and
cancellation, on 10 December 2010. The Court overruled the stay of execution request and the Company objected to this decision. On 17 February
2011, the Regional Ankara Administrative Court accepted the objection and decided to suspend the execution. ICTA reimbursed the paid amount on 30
March 2011. The Court rejected the case. The Company appealed the decision and also demanded the stay of execution of the decision along with this
appeal request. The Council of State, decided to approve the First Instance Court’s decision. The Company applied for the correction of the decision.
The Council of State rejected the Company’s correction of the decision request. The Company made an individual application against the respective
decision, before the Constitutional Court.

In accordance with the proceedings in the legal case, the administrative fine in the amount of TL 19,862 was refunded to ICTA on 30 January 2014 and
the reimbursement procedure, which should be made to the subscribers, was also started again in 2014.

In the consolidated financial statements as at and for the year ended 31 December 2013, provisions amounting to TL 19,862 and TL 26,716
were recognized for the administrative fine which was imposed by ICTA and for the amounts which had not been reimbursed to the subscribers,
respectively.

In the consolidated financial statements as at and for the period ended 31 December 2015, no provision is recognized for the expected reimbursement
to the subscribers (31 December 2014: TL 8,527).

Decision of ICTA regarding telephone directory and unknown numbers service

On 7 July 2010, ICTA decided to fine the Company by TL 401 and transfer back all kinds of software, hardware, infrastructure and equipment
which make available the telephone directory and unknown numbers service to the ownership of the Company from its wholly owned subsidiary
on the ground that ownership of the whole system related to telephone directory and unknown number service does not pertain to the Company.
Administrative fine was paid within 1 month following the notification of the decision of ICTA. Therefore, 25% discount was applied and TL 301 as fine
on 7 September 2010.

The Company filed a lawsuit on 22 September 2010 for the stay of execution and cancellation of the administrative fine. The Court overruled the stay
of execution request of the Company and the Company objected to this decision. The Court rejected the lawsuit. The Company appealed the decision.
The Council of State rejected the Company’s stay of execution request made during the appeal process. The appeal process is still pending.

F 133

273

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation of ICTA based on the complaint of a subscriber

After the investigation ICTA initiated against the Company upon the complaint of Ozalp Insaat Pazarlama Tic. Ltd. Sti., ICTA decided to impose
administrative fine to the Company amounting to TL 8,016 on 13 January 2011, for making some subscribers suffer and TL 2,004 for misinforming the
Authority. Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and
payment totaling to TL 7,515 is made on 17 February 2011. The Company filed two lawsuits on 14 March 2011 for the stay of execution and cancellation
of these administrative fines. The stay of execution requests have been rejected in the lawsuits. The Company objected to the decisions. The objections
were rejected. The Courts rejected both cases. The Company appealed both cases. The Council of State rejected the Company’s stay of execution
requests, during the appeal process. Appeal processes are still pending.

Dispute regarding the fine applied by ICTA regarding breaching confidentiality of personal data and relevant
legislation which is launched by ICTA

Upon the investigation ICTA decided to launch, related to breaching confidentiality of personal data and relevant legislation, within the context of
the news in the press regarding unlawful wiretapping, ICTA decided to impose an administrative fine on the Company amounting to TL 11,225 and its
decision was delivered to the Company on 6 June 2011. Since the administrative fine was paid within 1 month following the notification of the decision
of ICTA, 25% discount was applied and TL 8,418 was paid on 5 July 2011. On 24 August 2011, the Company filed a lawsuit for the annulment of the
decision with stay of execution request. The Court rejected the case. The Company appealed the decision. Council of State rejected the Company’s stay
of execution request at appeal phase. The Company requested stay of execution for the second time. The Council of State, decided to approve the First
Instance Court’s decision. The Company applied for the correction of the decision.

Dispute with Avea on SMS interconnection termination fees

On 22 December 2006, Avea initiated a lawsuit against the Company claiming that although there was an agreement between the Company and Avea
stating that both parties would not charge any SMS interconnection termination fees, the Company has charged SMS interconnection fees for the
messages terminating on its own network and also assumed liabilities for the SMS terminating on Avea’s network and made interconnection payments to
Avea after deducting the net balance of those SMS charges and accruals. Avea requested provisions of Interconnection Agreement regarding SMS pricing
to be applied and requested collection of its losses amounting to nominal amount of TL 6,480 for the period between January 2006 and August 2006
with its accrued interest till payment. On 25 November 2008, the Court decided in favor of Avea. The Company has appealed the decision.

Supreme Court of Appeal reversed the judgment of the Local Court. The Company has applied for the correction in terms of justification of the decision
for the Supreme Court’s reversal decision. Avea has also applied for the correction of the decision. Supreme Court rejected the request for correction
of the decision of Avea, and partially accepted the Company’s demand. On 13 December 2011, the Local Court decided to accept the lawsuit again.
The Company appealed the decision. The Court of Cassation decided to approve the decision of the First Instance Court. The Company applied for the
correction of the decision. The Court of Cassation rejected the correction of the decision requests. The Company applied to the Constitutional Court
against the decision.

F 134

TURKCELL ANNUAL REPORT 2015
274

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute with Avea on SMS interconnection termination fees (continued)

The Company has paid the principal of TL 6,480 late payment interest of TL 5,103 and related fees of TL 524 on 30 March 2009.

In line with the court decision stating that charging SMS interconnection termination fees violates the agreement between the Company and Avea,
neither SMS interconnection revenue nor SMS interconnection expense has been recognized from February 2005 to 23 March 2007.

Moreover, the Company applied to ICTA for the determination SMS interconnection termination fees and starting from 23 March 2007, the Company
has applied the SMS interconnection termination fees announced by ICTA until January 2009. ICTA determined new SMS termination rate in January
2009 upon the application of Avea.

Investigation initiated by ICTA upon complaint of subscriber of data tariffs’ charging

In consequence of consumer complaint, ICTA notified the Company on 3 October 2011, to impose an administrative fine amounting to TL 1,645. Since
the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and payment totaling
to TL 1,234 was made on 1 November 2011. The Company filed a lawsuit on 2 December 2011 for the stay of execution and cancellation of the
administrative fine. The stay of execution request has been rejected. The Company objected to the decision. The Regional Ankara Administrative Court
rejected the objection. The Court rejected the case. The Company appealed the decision. Council of State rejected the Company’s stay of execution
requests at appeal phase. Appeal process is still pending.

Investigation of ICTA on the implementation of article 18 of “By-law on Consumer Rights in the Electronic
Communications Sector”

On 22 February 2011, ICTA decided to investigate compatibility of Company’s practices regarding the “cancellation procedure” which is regulated at
article 18 of the By-law on Consumer Rights in the Electronic Communications Sector.

ICTA, with its decision which was notified to the Company on 19 August 2011, decided to impose an administrative fine amounting to TL 11,442. Since
the administrative fine paid within 1 month following the notification of the decision of ICTA, 25% discount applied and TL 8,581 is paid in total on
15 September 2011. On 18 October 2011, the Company filed a lawsuit for the annulment of the decision with stay of execution request. The Court
rejected the request of the Company for stay of execution. The Company objected to the decision. The objection was dismissed. The court rejected
the lawsuit. The Company appealed the decision. The Council of State rejected the Company’s request for stay of execution during the appeal process.
Appeal process is still pending.

On the other hand, ICTA, with its decision which was notified to the Company on 1 February 2013, imposed another administrative fine amounting
to TL 1,000 about the Company’s practices regarding the “subscription cancellation procedure”. Since the administrative fine paid within 1 month
following the notification of the decision of ICTA, 25% discount applied and TL 750 is paid in total on 15 March 2013. On 1 April 2013, the Company
filed a lawsuit for the annulment of the decision with stay of execution request. The Court decided to analyze the Company’s stay of execution request
after ICTA submits its plea of defense. The Court rejected the Company’s request for stay of execution. The Company objected to this decision. The
objection was rejected. The Court rejected the lawsuit. The Company appealed the decision. The Council of State approved the decision of the First
Instance Court. The Company applied for the correction of the decision in due time.

F 135

275

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation of ICTA regarding access failures on emergency call services

On 16 June 2011, ICTA decided to initiate an investigation in order to evaluate the Company’s access failures realized on emergency call services which
are deemed as critically important for end-users. Investigation Report is submitted to the Company on 28 December 2011 and the Company submitted its
defense statement to ICTA within the due date.

On 26 June 2012, ICTA decided to impose administrative fine to the Company amounting to TL 1,809 with the reasons that the Company has not given
priority to the failures and has not given the requested information for the investigation in due time.

Since the administrative fine was paid within 1 month beginning from the notification of the decision of ICTA, 25% discount was applied and TL 1,357
was paid on 3 October 2012. The Company filed two lawsuits on 5 November 2012 for the stay of execution and cancellation of the decision. The Court
rejected the Company’s stay of execution demand on the case filed for the cancellation of the administrative fine which was imposed to the Company
with the reason that the Company has not given priority to fix the failures. The Company objected to the decision, but objection was rejected. The Court
rejected this case. The Company appealed the decision. The Council of State approved the decision of the First Instance Court. The Company applied to
the correction of the decision. The Council of State rejected the correction of the decision requests. The Company made an individual application against
the decision, before the Constitutional Court.

The Court rejected the Company’s stay of execution request on the other lawsuit, which was filed for the cancellation of the administrative fine, imposed
to the Company for not giving the requested information in due time. The Company objected to the decision. The objection was rejected. The Court
rejected this case. The Company appealed the decision. The Council of State approved the decision of the First Instance Court. The Company applied to
the correction of the decision. The correction of the decision process is pending.

Investigation of ICTA regarding “Atlas of Places Only Turkcell Covers” distributed with Tempo magazine

On 2 November 2011, ICTA decided to initiate an investigation regarding “Atlas of Places Only Turkcell Covers” which locations marked on the map
of Turkey with “only” Turkcell coverage. As a result of the investigation, ICTA imposed an administrative fine amounting to TL 1,635 and the decision
was notified to the Company on 6 August 2012. Since the administrative fine paid within 1 month following the notification of the decision of ICTA,
25% discount applied and TL 1,226 was paid on 4 September 2012. The Company filed a lawsuit on 2 October 2012 for stay of execution and for the
annulment of the decision. The court rejected the stay of execution request. The Company objected the decision. The objection was rejected. The
Court rejected the lawsuit. The Company appealed the decision. The Council of State approved the decision of the First Instance Court. The Company
applied for the correction of the decision. The Council of State rejected the Company’s correction of the decision request. The Company applied to the
Constitutional Court against the decision. Examination is in progress.

F 136

TURKCELL ANNUAL REPORT 2015
276

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Dispute with ICTA regarding annual radio utilization fees

The Company filed a lawsuit before ICC in April 2012, claiming that the Company is not obliged to pay treasury share and ICTA Fee in accordance with
the 8th and 9th Articles of the Concession Agreement, respectively, on annual utilization fees deducted from the prepaid subscribers and return of
overpaid TL 5,852 treasury share for the period between August 2011 and February 2012. The Tribunal has partially accepted the case in favor of the
Company and awarded that the Company is entitled to receive overpaid treasury share amounting TL 4,100 together with simple legal interest. Two
lawsuits one by ICTA, and one by Undersecretariat of Treasury and the Ministry of Transport, Maritime Affairs, and Communications were filed for
cancellation of the Final Award. The cases were dismissed by the Courts. Both ICTA and Undersecretariat of Treasury and the Ministry of Transport
appealed the decision. The Supreme Court of Appeal reversed the decision of the First Instance Court. The Company applied for the correction of
the decision. Undersecretariat of Treasury and Ministry of Transport submitted its reply to the correction of decision The correction of the decision
process is pending. Appeal process is still pending for the lawsuit which is initiated by ICTA.

Administrative fine imposed by the ICTA regarding base stations

Istanbul Regional Directorate of ICTA, has decided to impose an administrative fine to the Company in the amount of TL 2,057, on the ground that
the measurement reports of 484 base stations was not submitted to the ICTA by the Company in the 30-day period pursuant to the regulations, after
commissioning of systems are activated. The Company filed a lawsuit on 25 April 2008 for stay of execution and for the annulment of the decision.
The court rejected the lawsuit. The Company appealed the decision. The Council of State reversed the first instance court’s decision on the ground
that Istanbul Regional Directorate of ICTA has not been authorized to impose aforementioned administrative fine. The Court of First Instance decided
to accept the lawsuit in accordance with the reversal decision of the Council of State. ICTA appealed the decision. The Company replied the appeal
request. Appeal process is still pending.

Then ICTA gave the same decision with the Regional Directorate gave before and imposed an administrative fine to the Company in the amount of
TL 2,057 again pursuant to the regulations in force in the relevant time by its decision which was notified to the Company on 5 December 2012.
The Company filed a lawsuit for stay of execution and for the annulment of the decision. The Court rejected the Company’s request. The Company
objected to the decision. The objection was also rejected. The Court accepted the lawsuit in favor of the Company. ICTA appealed the decision. The
Company replied the appeal request. The Council of State approved the first instance court’s decision. The ICTA applied for the correction of the
decision. The Council of State rejected ICTA’s correction of the decision request, in favor of the Company. Since therefore, the first instance court
decision is finalized on September 3,2015.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and TL 1,542 was
paid on 3 January 2013.

ICTA reimbursed the relative amount to Turkcell on 2 July 2014 with respect to the Court decision.

F 137

277

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by ICTA on invoicing mistakes

ICTA pursued an investigation to examine the subscribers’ complaints which are about the Company’s invoicing mistakes. On-site investigations have
been commenced between 14-17 January and 15-16 May 2014. The inquiry of investigation which includes the findings of the investigation was delivered
to the Company on 2 June 2014. On 2 July 2014 the Company filed its written defenses to ICTA. An oral hearing was held before the ICTA Board on 31
October 2014.

ICTA, by its decision dated 31 October 2014 took upon the aforementioned investigation, decided to issue an official warning to the Company as regards
to the allegation that the Company misinformed the subscribers regarding one of its Tariff Package; moreover, ICTA imposed an administrative fine of
TL 1,213 in total, with respect to its allegations that the Company violated its obligations related to correct invoicing and also violated its obligations
related to the consumer rights and the obligations arisen out of its authorization; furthermore, ICTA decided that the reimbursements (stipulated to
be made to the subscribers due to the infringements, which were alleged that occur within the scope of the aforementioned Board Decision) should be
finalized within 6 six month. The Company filed 8 separate lawsuits for the cancellation of the aforementioned decision on 15 January 2015. The Court
rejected the Company’s stay of execution request, made on the lawsuit, which was filed for the cancellation of the Article 8 of the aforementioned Board
Decision. The Company objected to this decision. Objection was rejected. All of the cases are pending.

Since the administrative fine amounting to TL 1,213 was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied
and payment amounting to TL 910 was made on 7 January 2015.

In the consolidated financial statements as at and for the period ended 31 December 2015, no provision is recognized for the expected reimbursement to
subscribers (31 December 2014: TL 2,957).

Investigation initiated by ICTA on limited usage services

ICTA initiated an investigation in order to determine whether the Company is in compliance with the regulations on limited usage services. The ICTA
Board decided that the Company’s practices are incompatible with the ICTA regulations and imposed an administrative fine of TL 18,539 to the Company.
The Board also obliged the Company to make a reimbursement amounting TL 37,184 to the subscribers within six months.

Since the administrative fine amounting to TL 18,539 was paid within 1 month following the notification of the decision of ICTA, 25% discount was
applied and payment amounting to TL 13,905 was made on 31 January 2014. The Company filed a lawsuit on 4 February 2014 for the stay of execution
and the cancellation of the aforementioned act and decision. The Court rejected the stay of execution request of the Company. The Company objected to
this decision. District Administrative Court rejected the objection. The case is pending.

In the consolidated financial statements as at and for the period ended 31 December 2015, no provision is recognized for the expected reimbursement to
subscribers (31 December 2014: TL 10,047).

F 138

TURKCELL ANNUAL REPORT 2015
278

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by ICTA about Processing Personal Data

ICTA commenced an investigation in order to determine whether Company is in compliance with the regulations on “Processing Personal Data and
Protecting of Secrecy”. As a result of the investigation ICTA decided to impose an administrative fine to the Company on 16 January 2014, amounting
to TL 1,413. The Company filed a lawsuit on 28 March 2014 for the stay of execution and the cancellation of the aforementioned decision. The Court
rejected the stay of execution request of the Company. The Company objected to this decision. Objection was rejected. The Company requested stay
of execution again. The Court rejected the stay of execution request of the Company again. The Company objected to this decision. Objection was
rejected. The case is still pending.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, and 25% discount was applied and payment
amounting to TL 1,059 was made on 7 March 2014.

Administrative fine imposed by the ICTA regarding the number of subscribers and radio utilization and usage fees of
2010-2011

ICTA commenced an investigation, against the GSM operators, on the accuracy of the subscription numbers reports of 2010 and 2011 which is
essential for the payment of radio utilization and usage fee, and on-site investigations have been commenced.

The inquiry of investigation which includes the findings of the investigation was delivered to the Company on 31 July 2013. The inquiry claims that the
Company paid less radio utilization and usage fees amounting to TL 67,493 than it was required for the years 2010 and 2011, and an administrative fine
should be imposed. On 2 September 2013 the Company filed its written defense, and an oral hearing was held before the ICTA Board on 11 December
2013 to submit the Company’s further comments. ICTA issued an official warning to the Company for the amount of TL 4,512 regarding the radio
utilization and usage fee which the Company allegedly did not pay for the years 2010-2011. In addition, ICTA imposed an administrative fine to the
Company amounting to TL 2,648 for the amount of TL 62,399 of radio utilization and usage fee which the Company allegedly did not pay for the year
2010-2011 and to initiate an in-depth investigation to further inspect the correctness of the radio utilization and usage fee payments regarding terms
do not fall under the scope of this investigation. The Company filed a lawsuit on 28 April 2014 for the cancellation of the aforementioned decision. The
case is still pending.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and payment
amounting to TL 1,986 was made on 16 April 2014.

ICTA sent notifications to the Company dated 27 May 2014 and 26 June 2014 and by these notifications, ICTA demanded the Company to pay the
radio utilization and usage fees amounting to TL 67,493; the amount which the Company allegedly paid deficiently on ICTA’s decision took upon the
aforementioned investigation on the radio utilization and usage fees regarding the term 2010-2011. After that, ICTA send another notification to the
Company on 24 July 2014 and notify the Company that it deducted the Company’s claims which the Company entitled to collect by sharing its antenna
facilities. The Company filed a lawsuit on 5 September 2014 for the cancellation of these 3 administrative acts. Moreover, the Company also requested
the Court to recourse to Constitutional Court for the cancellation of the 1st, 3rd and 5th paragraphs of the 46th article of the Code numbered 5809 by
this lawsuit.

F 139

279

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Administrative fine imposed by the ICTA regarding the number of subscribers and radio utilization and usage fees of
2010-2011 (continued)

ICTA filed a lawsuit against the Company on 13 October 2014 for the collection of TL 40,885 the amount which ICTA alleged that the Company paid
deficiently by its Board decision, took upon the investigation on the radio utilization and usage fees regarding the term 2010-2011 with its accrued
interest. The Court decided to obtain an expert report, regarding the respective case. The case is still pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request amounting to TL 67,493 is not probable, thus, no provision is recognized in the consolidated financial
statements as at and for the period ended 31 December 2015 (31 December 2014: None).

ICTA, imposed an administrative act on the Company by referring to its Board Decision took upon the investigation on the radio utilization and usage
fees regarding the period 2010-2011 and alleged that the Company has also paid the radio utilization and usage fees deficiently in the amount of TL
1,257, during the term 2013 July-December and by this administrative act, send accrual slips so as to collect the respective amount. The Company filed a
lawsuit on 8 September 2014 for the cancellation of ICTA’s aforementioned accrual slips and administrative act, implied on the Company. The Company
also requested the Court to recourse to Constitutional Court for the cancellation of the 1st, 3rd and 5th paragraphs of the 46th article of the Code numbered
5809. The case is still pending.

Due to the fact that the Company did not pay TL 1,257, the amount which was alleged that the Company paid deficiently during the term 2013 July-
December, ICTA filed a lawsuit on 23 December 2014 for the collection of the aforementioned amount with its accrued interest, which will be calculated
according to Code numbered 6183. The Court decided to consolidate this lawsuit with the lawsuit filed by ICTA on 13 October 2014. The cases are
pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain, thus, no provision is recognized
in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

F 140

TURKCELL ANNUAL REPORT 2015
280

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by ICTA on subscription numbers and radio utilization and usage fees of 2012

ICTA commenced an on-site investigations, against the GSM operators, on the accuracy of the subscriber numbers report of 2012 which is essential for
radio utilization and usage fees.

As a result of the investigation, ICTA imposed an administrative fine to the Company amounting to TL 2,802 for the amount of TL 43,736 of radio
utilization and usage fee which the Company allegedly did not pay for the year 2012.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and payment
amounting to TL 2,101 was made on 11 September 2014. The Company filed a lawsuit on 2 October 2014 for the cancellation of the aforementioned
Board Decision. The Company also requested the Court to recourse to Constitutional Court for the cancellation of the 1st, 3rd and 5th paragraphs of the
46th article of the Code numbered 5809 by this lawsuit. The case is pending.

The Company filed a lawsuit on 24 November 2014 for the cancellation of ICTA’s administrative acts implied on the Company for the collection of the
radio utilization and usage fees in the amount of TL 43,519 which was claimed to have been paid deficiently on the aforementioned administrative act.
The Company also requested the Court to recourse to Constitutional Court for the cancellation of the 1st, 3rd and 5th paragraphs of the 46th article of
the Code numbered 5809 by this lawsuit. The case is pending.

ICTA filed a lawsuit on 3 March 2015 for the collection of TL 43,519. The amount which was alleged that the Company paid deficiently by the ICTA
decision took upon the investigation on the radio utilization and usage fees, regarding the year 2012 with its accrued interest, which will be calculated.
The Court decided to take an expert report. The case is pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request amounting to TL 43,736 is not probable, thus, no provision is recognized in the consolidated financial
statements as at and for the period ended 31 December 2015 (31 December 2014: None).

In-depth investigation initiated by ICTA regarding the number of subscribers and radio utilization and usage fees of
2004-2009

ICTA commenced an in-depth investigation regarding the term 2004-2009 years, against the GSM operators, on the accuracy of the subscription
numbers’ reports, which are the essential for the payment of radio utilization and usage fees. As a result of the investigation, ICTA imposed an
administrative fine to the Company amounting to TL 2,802 with the allegation that during 2006-2009 years the radio utilization and usage fees which
Turkcell’s subscribers should pay were paid deficient. Since the administrative fine was paid within 1 month following the notification of the decision
of ICTA, 25% discount was applied and payment amounting to TL 2,101 was.

The Company filed two separate lawsuits for the cancellation of the respective parts of the aforementioned Board Decision and the respective
administrative acts.

In the meantime, ICTA, based on the aforementioned Board decision, notified the Company that Turkcell caused both deficient payment and also
overpayment of the radio utilization and usage fees from the radio utilization and usage fees that shall be paid on October-December 2005. Therefore,
ICTA deducted the amounts that were alleged to have been paid deficiently with their accrued delay penalty; from Turkcell’s overpaid amounts.
Moreover, by this administrative act, ICTA notified the Company that after this deduction, ICTA recorded the remaining Turkcell’s receivables, in
the amount of TL 13,310 into its accounts. Turkcell filed a lawsuit for the cancellation of this administrative act and the accrual slips sent by this
administrative act.

F 141

281

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
In-depth investigation initiated by ICTA regarding the number of subscribers and radio utilization and usage fees of
2004-2009 (continued)

Furthermore, demanded Turkcell to pay the radio utilization and usage fees in the amount of TL 110,722 with its accrued delay penalty, which is alleged
to have been paid deficiently during the years 2006-2009 and notified the Company that it may deduct the overpaid radio utilization and usage fees in
the amount of TL 73,200. The Company filed a lawsuit for the cancellation of the aforementioned administrative act. The cases are pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation is not probable, thus,
no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Investigation initiated by ICTA on ICTA Board Decision No: 149

ICTA carried out an investigation whether the Company is compliant with ICTA Board decision number 149 and related decisions, which set a minimum
rate for the Company’s on-net prices and an obligation to report the actual prices for tariffs.

As a result of the investigation ICTA imposed an administrative fine of TL 4,061 to the Company, for not complying with its reporting obligation set by
the aforementioned ICTA decision, by submitting false and misleading reports and information to the ICTA and for not keeping the necessary information
regarding the investigation during the term of the investigation.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and payment
amounting to TL 3,046 was made on 1 April 2014.

The Company filed 3 separate lawsuits for the stay of execution and the cancellation of the related articles of the aforementioned decision. The Court
rejected the stay of execution requests. The Company objected these decisions. Objections were rejected. The cases are pending.

Tax Penalty as a result of tax investigation regarding deduction of stamp duty calculation of the year 2009

Istanbul Large Taxpayers Group Presidency of Tax Inspection Board inspected year 2009 stamp duty in accordance with its limited stamp duty review
and issued a report on incorrect stamp duty rates applied for some rent agreements. The Company paid a total of TL 2,918 on 28 November 2015 for
stamp duty and loss of tax as a result of the compromise on 29 September 2015 and recognized as expense in the consolidated financial statements as at
and for the period ended 31 December 2015.

F 142

TURKCELL ANNUAL REPORT 2015
282

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by Competition Authority for Exclusive Agreements for the base station areas

The decision of the Competition Board based on a preliminary investigation dated 22 April 2009, on which there are no findings of an infringement of
competition rules, regarding the Company’s exclusive agreements for the areas where base stations are erected, was cancelled by the Council of State.
Accordingly, the Competition Board decided to initiate an investigation regarding the issue. The notification of the investigation has been received
by the Company on 16 August 2013. The Company has submitted its first written defense and additional information requested within due dates.
Competition Board decided to extend investigation period for additional 2 months. The report regarding the investigation and additional report has
been sent to the Company. Written defenses were submitted within due date. The Competition Authority Board decided that the Company’s practices
did not cause any infringement under the Law number 4054.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the
period ended 31 December 2015 (31 December 2014: None).

Cancellation of the administrative acts and accrual slips regarding the TRX Radio Utilization fees

The Company filed a lawsuit on September 2, 2014; for the stay of execution and the cancellation of ICTA’s administrative acts and the accrual
slips regarding the TRX Radio Utilization Fees, amounting to TL 1,418. Since ICTA ordered the Company to re-pay the radio utilization fees for the
TRXs that are relocated so that the Company had to pay the radio utilization fees retrospectively for the same TRXs in the same year, due to these
aforementioned administrative acts. Respective court case is separated into two cases. In the case, filed for the stay of execution and the cancellation
of the accrual slips, the Court rejected the Company’s stay of execution request. The Company objected to this decision. The objection is rejected. The
Company requested stay of execution again.

The Company also filed a lawsuit for the stay of execution and the cancelation of the “TRX Notification Form” and the term placed in the “Additional
TRX” definition (defined in the Explanation Guide to the respective Form) stating that “…of the new base station that is mounted, independently from
the base station that is demounted in the same year…”. The Council of State accepted the Company’s stay of execution request.

On the other hand, ICTA cancelled some of the aforementioned accrual slips and prepared new accrual slips in the amount of TL 395 instead of the
cancelled ones. The Company filed a lawsuit on 2 March 2015; for the cancellation of the respective new accrual slips and the administrative act
regarding the notification of these accrual slips. The case is pending.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the
period ended 31 December 2015 (31 December 2014: None).

Investigation initiated by ICTA on open lines

ICTA initiated an investigation about the Company’s compliance with open lines and unit/minute frauds regulations. On-site investigations have been
commenced on 18-20 August 2014. The inquiry of investigation which includes the findings of the investigation was delivered to the Company on
22 October 2014. The Company’s written defenses was submitted within due date. The oral hearing was held before the ICTA Board on 27 May 2015.

F 143

283

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by ICTA on open lines (continued)

As a result of the investigation ICTA imposed an administrative fine amounting to TL 3,082 in total for five separate violations by its decision dated 9
July 2015. The Company applied to ICTA to retrieve its aforementioned Board decision. ICTA implicitly rejected this application. The Company filed five
separate lawsuits for the cancellation of the respective Board decision and implicit rejection.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and payment
amounting to TL 2,311 was made on 2 December 2015.

Investigation initiated by ICTA on processing of personal data

ICTA initiated an investigation about the Company’s compliance with the regulations of processing personal data, withdrawal cost calculations, target
messaging, smart advertising. On-site investigations have been commenced on 22-24 January 2014 and 16-18 April 2014. The inquiry of investigation
which includes the three violation findings of the investigation was delivered to the Company on 4 November 2014. The Company’s written defenses
was submitted within due date. The oral hearing was held on 28 July 2015 before the ICTA Board. As a result of the investigation ICTA issued a legal
warning to the Company and also imposed separate administrative fines in the amount of TL 2,801 in total by its decision dated 29 July 2015. Besides
ICTA requested the Company to reimburse the overcharged amounts to the subscribers and to complete reimbursements within 4 months. Moreover, if
there be any other overcharged amount recognized between the inspection date and the date of notification of the decision have been also requested to
be reimbursed within 6 months. The Company applied to ICTA to retrieve its aforementioned Board decision. ICTA implicitly rejected this application. The
Company filed three separate lawsuits for the cancellation of the aforementioned Board decision’s respective articles and the implicit rejection.

Since the administrative fine was paid within 1 month following the notification of the decision of ICTA, 25% discount was applied and payment
amounting to TL 2,101 was made on 30 November 2015. In the consolidated financial statements as at and for the period ended 31 December 2015, no
provision is recognized for the expected reimbursement to subscribers (31 December 2014: TL 5,408).

Investigation initiated by ICTA regarding Invoice Upper Limit

ICTA initiated an investigation about invoice upper limit regulations which is about; informing subscribers during international mobile data roaming,
overcharging subscribers during the change of some tariffs and misinforming some subscribers. On-site investigation has been commenced on 14-16
October 2014 and inquiry of investigation which includes claims of the investigation was delivered to the Company on 25 February 2015. The inquiry
also states that the Company didn’t send the mandatory messages to the subscribers in most of the cases thus some subscribers were overcharged in
the amount of TL 7,170. As a result of the investigation ICTA imposed three separate administrative fines totaling to 1,016 TL by its decision dated 23
November 2015. By its aforementioned decision, ICTA also alleged that the Company overcharged its subscribers by TL 6,181 and it should reimburse
these amounts to the subscribers within 6 months.

The Company filed 3 separate lawsuits for the cancellation of the respective articles of the aforementioned Board decision.

In the consolidated financial statements as at and for the period ended 31 December 2015, provisions amounting to TL 762 for administrative fines which
was imposed by ICTA and TL 3,517 are recognized for the expected reimbursement to subscribers, respectively (31 December 2014: None).

Since the administrative fine was paid within 1 month following the notification of ICTA’s respective decision, 25% discount was applied and payment
amounting to TL 762 was made on 23 February 2016.

F 144

TURKCELL ANNUAL REPORT 2015
284

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by ICTA regarding the number of subscribers and radio utilization and usage fees of 2013

ICTA commenced an investigation on the accuracy of the subscription numbers reports of 2013 which is essential for the payment of radio utilization
and usage fee. The inquiry of investigation claims that the Company paid less radio utilization and usage fees total amounting to TL 21,191 and an
administrative fine should be imposed. The Company’s written defense was submitted within due date.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the
period ended 31 December 2015 (31 December 2014: None).

Investigation initiated by ICTA on termination of subscription

ICTA initiated an in investigation about the Company’s compliance with the regulations about subscribers’ termination demands. As a result of the
investigation ICTA decided to issue an official warning to the Company for one violation, for two violations ICTA imposed amounting to TL 3,082
for administrative fines. In addition, The Board also obliged the Company to make a reimbursement amounting TL 2,043 to the subscribers within
three months. Reimbursement procedure, which should be made to the subscribers, was also started before ICTA decision thus in the consolidated
financial statements as at and for the period ended 31 December 2015, no provision is recognized for the amount which has not been reimbursed
to the subscribers.In the consolidated financial statements as at and for the period ended 31 December 2015, provision amounting to TL 2,311 for
administrative fines which was imposed by ICTA. (31 December 2014: None).

Investigation initiated by ICTA on TRX Radio Utilization Fees

ICTA commenced an investigation on the correctness of notifications about TRX channels which are essential for the radio utilization and usage fees,
made to ICTA by the Company in 2011 and before. The inquiry claims that the Company paid less radio usage fees than it was required for the years
2005-2011, and besides an administrative fine should be imposed. The Company’s written defense was submitted within due date. After submitting the
written defense ICTA commenced a supplemental on-site investigation on 14-17 September 2015 and afterwards a new inquiry was delivered to the
Company. The inquiry claims that the Company paid less radio usage fee total amounting to TL 8,782 than it was required for the years 2005-2011, and
besides an administrative fine should be imposed. The Company’s written defense will be submitted within due date.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the
period ended 31 December 2015 (31 December 2014: None).

Investigation initiated by ICTA on solving consumer complaints

ICTA initiated an in investigation about the Company’s compliance with the regulations about resolving consumer complaints. The inquiry of
investigation which includes the two violation findings of the investigation was delivered to the Company on 31 August 2015. The Company’s written
defences was submitted within due date. The oral hearing will be held on 15 March 2016.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the
period ended 31 December 2015 (31 December 2014: None).

F 145

285

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Investigation initiated by ICTA on R&D and SME investments

ICTA initiated an in investigation about Company’s compliance with R&D and SME investments to the concession agreement. The inquiry of investigation
was delivered to the Company on 19 October 2015. The Company’s written defences was submitted within due date.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits to settle the obligation regarding the
additional utilization and usage fees request is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the
period ended 31 December 2015 (31 December 2014: None).

Investigation initiated by ICTA on Infrastructure System Notifications

ICTA initiated an investigation on the accuracy of the Company’s infrastructure system notifications with the infrastructure systems in Ankara and
Kırıkkale. The inquiry of investigation which includes a finding of the investigation was delivered to the Company on 29 February 2016. The Company’s
written defences will be submitted within due date. Based on the management opinion, the probability of an outflow of resources embodying economic
benefits to settle the obligation regarding the additional utilization and usage fees request is uncertain, thus, no provision is recognized in the
consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

Commitments and Contingencies related to Inteltek
Disputes with Spor Toto
Permission request made to Spor Toto regarding the change of Inteltek’s shareholder structure

Intralot Integrated Lottery Systems & Services (“Intralot SA”), one of the shareholders of Inteltek, notified Inteltek regarding the plan of share transfer
and merger transactions in Intralot group. Inteltek requested a written permission from Spor Toto Directorate on 30 January 2013 within the frame of
Article 18/2 of “Agreement on Assigning Fixed Odds and Joint Betting Games Based on Sports Competition to Legal Persons described on Private Law”
dated 29 August 2008 and signed between Inteltek and Spor Toto. As a result of the “implied rejection” of Inteltek’s permission request by Spor Toto,
Inteltek filed a lawsuit for the cancellation and the stay of execution of this implied rejection. The Court has decided to reject the lawsuit because of the
lack of competence. Inteltek appealed the decision. The 13th Council of State has decided to accept Inteltek’s appeal request and reversed the decision
of the Administrative Court. The defendant applied for correction of decision. It has been replied to the request for correction of decision within its legal
term by Inteltek. The Council of State decided to reject the request for correction of decision. The lawsuit file has been sent to its Court of First Instance.
The defendant has objected on competence. The court rejected the competence objection and decided to evaluate the motion for stay of execution
following the completion of the term for competence. The defendant claimed on competence. Our Company replied to this claim within its legal term.
The case file is at Court Of Jurisdictional Disputes for the determination of the competence.

F 146

TURKCELL ANNUAL REPORT 2015
286

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Commitments and Contingencies related to Astelit
Astelit 3G Agreement

In March 2015, Astelit received 3G license amounting to UAH 3,355,400 (equivalent to TL406,495 as at 31 December 2015) . According to 3G License
terms, license is covering all 27 Ukrainian regions. It is taken for 30 MHz range in 1920-1935 and 2110-2125 band and is valid for 15 years. 3G license
obligations include: to ensure quality of 3G service in regional centers within 18 months, to ensure quality of 3G service in all settlements with
population more than 10,000 within 2-6 years and to finance conversion of spectrum from military use.

Dispute of Astelit with its distributor

One of Astelit’s distributors filed a lawsuit against Astelit claiming a compensation in the amount of UAH 106,443(equivalent to TL12,895 as at 31
December 2015) which is allegedly the sum of advance payment for undelivered goods. According to the commission agreement, signed between
parties, the payment terms are 30 days after delivery date (net of distributor’s commission). The distributor violated the conditions of agreement and
did not pay on time. Therefore, Astelit made a counterclaim for the recovery of indebtedness in the amount of UAH 35,292 (equivalent to TL4,276 as
at 31 December 2015).

Dispute passed through all the instances twice. On 26 March 2012, the High Commercial Court of Ukraine approved the previous positive decision for
Astelit counterclaim.

Enforcement document was submitted to the State Enforcement Service. According to Ukrainian legislation, the distributor has a right to appeal the
decision before Supreme Court of Ukraine within three months from the date of judgment of the High Commercial Court of Ukraine but the distributor
did not use the right.

The distributor had a statute of limitation for 3 years from the date of the High Commercial Court decision, which expired on 26 March 2015. The
distributor is not conducting economic activity for a long period of time and has not appealed the decision. The possibility of such actions from
distributor is lost.

Based on the management decision, the probability of an outflow of resources embodying economic benefits to settle the obligation is uncertain, thus,
no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December 2014: None).

F 147

287

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Commitments and Contingencies related to Astelit (continued)
Dispute of Astelit related to withholding tax on interest expense

Ukrainian Tax Administration sent a tax notice to Astelit stating that withholding tax rate on interest expense for the loan agreement with Euroasia
should be 10% for the year 2009. According to Ukrainian legislation and Convention on avoiding double taxation between Ukraine and the Netherlands,
Astelit paid withholding tax at 2%. Astelit filed a suit to cancel tax notice, which imposed Astelit to pay additional UAH 11,651 (equivalent to TL1,411
as at 31 December 2015). The High Administrative Court decided in favor of Tax Administration on 27 March 2014. Therefore, Astelit paid the
aforementioned amount on 4 April 2014. Also, additional penalty based on 120% of NBU’s daily rate will be paid to the Tax Authority according to the
court decision. The court has decided that Euroasia status as financial institution must be defined under Ukrainian law.

On 27 June 2014, Astelit filed an application to the Supreme Court for review of abovementioned decision and proof that Dutch legislation should be
applied. On 14 July 2014, the High Administrative Court applied Astelit’s admission for review in Supreme Court.

On 2 December 2014, the Supreme Court has rejected Astelit`s appeal completely. The initial tax decision regarding additional withholding tax paid (UAH
11,651) (equivalent to TL1,411 as at 31 December 2015) and Euroasia qualification as nonfinancial institution remain in force.

Based on negative court decision, Ukrainian Tax Authority invited Astelit’s representatives to the meeting and proposed to pay voluntarily the difference
of withholding tax up to 10% and 3% of tax fine for the period of 2011-2012. Astelit paid this difference amounting to UAH 4,105(equivalent to TL497
as at 31 December 2015) in December 2014.

On 26 March 2015, Astelit lodged an application to the Supreme Court for review of abovementioned decision and proof that Dutch legislation should be
applied. On 30 March 2015, Supreme Court of Ukraine dismissed Astelit’s claim.

Based on the management opinion, provision amounting to UAH 4,806 (equivalent to TL582 as at 31 December 2015) has been set for the penalty risks
belonging to years 2009, 2010, 2011 and 2012 in the consolidated financial statements as at and for the period ended 31 December 2015 (31 December
2014: TL707).

F 148

TURKCELL ANNUAL REPORT 2015
288

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

34. Commitments and Contingencies (continued)
Legal Proceedings (continued)
Commitments and Contingencies related to Superonline
Order of payment notified to Turkcell Superonline according to universal service fund

On 24 October 2011, Beykoz Tax Administration notified Turkcell Superonline with an order of payment amounting to TL 1,192 for insufficient
payments made by Turkcell Superonline for universal service fund related to years of 2005, 2006, 2007 and 2008. Four legal cases have been filed as
of 31 October 2011 to revoke payment orders. Based on the management decision, TL 1,203 was paid on

7 December 2011 with its accrued interest. On 21 December 2011, based on the scope of Share Purchase Agreement, Turkcell Superonline sent a notice
in order to receive payment from Demir Toprak Ith.Ihr. ve Tic. AS, Sınai ve Mali Yatirimlar Holding AS and Endustri Holding AS. Any payment has not
been received as of 31 December 2015. Said payment shall be reimbursed in case of execution of suspension or the Court’s decision in favor of Turkcell
Superonline. On 28 November 2012, two of the said order of payments, each amounting to TL 330 and TL 450 have been cancelled in favor of Turkcell
Superonline which were notified on 23 January 2013 and 28 January 2013, respectively. The said cancellation decisions are appealed by Beykoz Tax
Administration but this application was rejected, decisions are approved. Turkcell Superonline filed two lawsuits for repayment of TL 410 and TL 558.
After the full remedy action lawsuits for repayment, Communication General Directorate which related to Ministry of Communications paid TL 330 in
regard to universal service fund for the year 2005 and TL 449 in regard to universal service fund for the year 2006 to Turkcell Superonline on 17 June
2015. Because of the insufficient amount paid for the lawsuits which we claimed other than principal that TL 80 interest for the year 2005 and TL 109
interest for the year 2006. The Company continue both lawsuits for these insufficient amounts. The other two cases were rejected by the court, those
decisions were appealed. The appeal requests for the cancellation of the both payment orders in the amount of TL 68 and TL 354 were accepted by
the Council of State in favor of Turkcell Superonline. The Court made a decision in line with the reversal decision and accepted the case filed for the
cancellation of the payment order, in the amount of TL 354.

F 149

289

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

35. Related parties
Transactions with key management personnel:

Key management personnel comprise the Group’s directors and key management executive officers.

As at 31 December 2015 and 2014, none of the Group’s directors and executive officers has outstanding personnel loans from the Group.

In addition to their salaries, the Group also provides non-cash benefits to directors and executive officers and contributes to a post-employment defined
plan on their behalf. The Group is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits.

Total compensation provided to key management personnel is TL 66,876, TL 32,817 and TL 32,528 for the years ended 31 December 2015, 2014 and
2013, respectively.

The Company has agreements or protocols with several of its shareholders, consolidated subsidiaries and affiliates of the shareholders.

Due from related parties – short term
Vimpelcom OJSC (“Vimpelcom”)
GSM Kazakhstan Ltd (“Kazakcell”)
Megafon OJSC (“Megafon”)
Millenicom Telekomunikasyon AS (“Millenicom”)
Azercell Telekom MMC (“Azercell”)
KVK Teknoloji Urunleri AS (“KVK Teknoloji”)
Other

2015
5,223
1,662
1,592
784
633
-
1,866
11,760

2014
1,875
1,135
1,169
89
564
5,904
2,202
12,938

Due from related parties short term is shown net of allowance for doubtful debts amounting to TL 302 as at 31 December 2015 (31 December 2014: TL
80).

Due from Vimpelcom, Megafon, Millenicom and Azercell resulted from telecommunications services such as interconnection and roaming.

Millenicom shares held by Cukurova Group were acquired by EWE Turkey Holding on 21 January 2016.

Due from Kazakcell, mainly resulted from the software services and telecommunications services such as interconnection and roaming.

KVK Teknoloji’s shares held by Cukurova Group were acquired by MV Holding on 6 July 2015 and receivables from KVK Teknoloji are reclassed as trade
receivables after the transfer of shares. Due from KVK Teknoloji as at 31 December 2014, mainly resulted from simcard, scratch card sales and advances
given to this company.

F 150

TURKCELL ANNUAL REPORT 2015
290

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

35. Related parties (continued)
Due to related parties – short term
Hobim Bilgi Islem Hizmetleri AS (“Hobim”)
Kyivstar GSM JSC (“Kyivstar”)
KVK Teknoloji Urunleri AS (“KVK Teknoloji”)
Krea Icerik Hizmetleri ve Produksiyon AS (“Krea”)
Other

2015
3,491
1,375
-
-
1,689
6,555

2014
7,071
465
9,411
3,491
4,194
24,632

Due to Hobim resulted from invoice printing services and subscription documents services rendered by this company.
Due to Kyivstar mainly resulted from rendering telecommunications services such as interconnection and roaming.
Due to KVK Teknoloji as at 31 December 2014, mainly resulted from payables for sales commissions, terminal purchases and payables in relation to
assigned receivables from KVK Teknoloji.
Due to Krea mainly resulted from the content services rendered by this company.
The Group’s exposure to currency risk related to due from / (due to) related parties is disclosed in Note 31.

Transactions with related parties

Intragroup transactions that have been eliminated are not recognized as related party transaction in the following table:

Revenue from related parties

Sales to KVK Teknoloji (*)

Simcard and prepaid card sales

Sales to Kyivstar

Telecommunications services

Sales to Vimpelcom

Telecommunications services

Sales to Teliasonera International

Telecommunications services

Sales to Megafon

Telecommunication services

Sales to Millenicom Telekomunikasyon AS (“Millenicom”)

Telecommunications services

Sales to Krea
Call center revenues, fixed line services, rent
and interest charges

F 151

2015

2014

2013

217,080

428,234

573,642

41,728

69,469

94,229

20,489

48,360

30,466

16,955

17,936

13,070

14,958

30,394

19,488

8,861

10,898

11,072

4,831

10,746

16,737

291

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

35. Related parties (continued)
Related party expenses
Charges from KVK Teknoloji (*)
Dealer activation fees and others
Charges from Kyivstar
Telecommunications services
Charges from Hobim
Invoicing and archieving services
Charges from Krea
Digital television broadcasting services
Charges from Millenicom
Telecommunications services
Charges from Vimpelcom
Telecommunications services
Charges from Megafon
Telecommunications services
Charges from Teliasonera International
Telecommunications services

(*) Includes the transactions until 6 July 2015.

The significant agreements are as follows:

Transactions with KVK Teknoloji:

2015

76,743

49,608

29,570

15,826

5,418

4,348

4,342

3,409

2014

112,776

69,947

36,160

12,931

7,491

13,642

12,688

15,100

2013

77,180

85,198

41,776

8,988

7,105

12,927

15,038

16,561

KVK Teknoloji, one of the Company’s principal simcard distributors, was affiliated with Cukurova Group, one of the shareholders of the Company. KVK
Teknoloji’s shares held by Cukurova Group have been acquired by MV Holding on 6 July 2015. In addition to sales of simcards and scratch cards, the
Company has entered into several agreements with KVK Teknoloji, in the form of advertisement support protocols, each lasting for different periods
pursuant to which KVK Teknoloji must place advertisements for the Company’s services in newspapers. The objective of these agreements is to promote
and increase handset sales with the Company’s prepaid and postpaid brand simcards, thereby supporting the protection of the Company’s market share
in the prevailing market conditions. The prices of the contracts were determined according to the cost of advertising for KVK Teknoloji and the total
advertisement benefit received, reflected in the Company’s market share in new subscriber acquisitions. Distributors’ campaign projects and market
share also contributed to the budget allocation.

The amount of handset sales to the subscribers of the Company performed by KVK Teknoloji for the period ended 6 July 2015, when KVK Teknoloji’s
shares are acquired by MV Holding, is TL 853,650 which is paid to KVK Teknoloji in advance in accordance with certain commitment arrangements and
collected from the subscribers throughout the campaign period (31 December 2014: TL 1,165,998). Additionally, the Group made handset purchases from
KVK for the sale of the product and marketing activities to subscribers.

F 152

TURKCELL ANNUAL REPORT 2015
292

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

35. Related parties (continued)
Transactions with Kyivstar:

Alfa Group, one of the shareholders of the Company, holds the majority shares of Kyivstar. Kyivstar is rendering and receiving telecommunications
services such as interconnection and roaming.

Transactions with Vimpelcom:

Vimpelcom, a subsidiary of Alfa Group, is rendering and receiving telecommunications services such as interconnection and roaming.

Transactions with Teliasonera International:

Teliasonera International, one of the shareholders of the Company, is rendering and receiving telecommunications services such as interconnection
and roaming.

Transactions with Megafon:

Megafon, a subsidiary of Sonera Holding, is rendering and receiving telecommunications services such as interconnection and roaming.

Transactions with Millenicom:

European Telecommunications Holding AG, a subsidiary of Cukurova Group, holds the majority shares of Millenicom. Millenicom is rendering and
receiving telecommunications services such as interconnection and roaming.

Millenicom shares held by Cukurova Group were acquired by EWE Turkey Holding on 21 January 2016.

Transactions with Krea:

Krea, a direct-to-home digital television service company under the Digiturk brand name, is a subsidiary of one of the Company’s shareholders,
Cukurova Group. SDIF took over the management of Krea in 2013.

There are no specific agreements between Turkcell and digital channels branded under Digiturk name. Every year, as in every other media channel,
standard ad spaces are purchased on a spot basis. Also, Krea provides instant football content related to Spor Toto Super League to the Company to be
delivered to mobile phones and tablets.

The Company has agreements for fixed telephone, leased line, corporate internet, and data center services provided by the Company’s subsidiary
Turkcell Superonline.

The Company’s subsidiary Global Bilgi is also providing call center services for Krea.

Çukurova Holding has signed a share purchase agreement with BeIN Media Group related to the sale of their shares in Krea. Share transfer is not
finalized as at 31 December 2015.

Transactions with Hobim:

Hobim, one of the leading data processing and application service provider companies in Turkey, is owned by Cukurova Group. The Company has
entered into invoice printing and archiving agreements with Hobim under which Hobim provides the Company with monthly invoice printing services,
manages archiving of invoices and subscription documents. Prices of the agreements are determined through alternative proposals’ evaluation.

F 153

293

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

35. Related parties (continued)
Legal restrictions on related party transactions
Notifications of levy against Cukurova Holding AS sent by various creditors

As per the notifications of levy sent by different Executive Directorates on various dates, the Company has been informed about seizure decisions on
the rights and receivables and assets of the Company in the amount of TL 260,508. However, as the dematerialized shares owned by shareholders of
the Company and also related transactions in accordance with the relevant legislation must be met by brokerage firms the required attachment of any
transaction in shares of the Company have not been established.

Attachment levied by SDIF against Cukurova Holding AS

The Company has been informed about two different seizure decisions taken on the rights, receivables and assets of Cukurova Holding A.S. in the
amount of TL 854,379 in the Company due to the debts of Cukurova Holding A.S. to SDIF. However, as the dematerialized shares owned by shareholders
of the Company and also related transactions in accordance with the relevant legislation must be met by brokerage firms the required attachment of any
transaction in shares of the Company have not been established. With a different notice by SDIF, the Company has been informed about seizure on all
receivables of Cukurova Holding AS. including its dividend receivables Dividend payables to Cukurova Holdings AS amounting to TL 1,776, were paid to
SDIF on 13 April 2015.

F 154

TURKCELL ANNUAL REPORT 2015
294

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

36. Subsidiaries
The Group’s ultimate parent company is Turkcell. Subsidiaries of the Company as at 31 December 2015 and 2014 are as follows:

Subsidiaries
Name

Kibris Telekom
Global Bilgi

Turktell Bilisim
Turkcell Superonline

Turkcell Satis
Eastasia
Turkcell Teknoloji

Global Tower
Turkcell Interaktif
Financell
Rehberlik
Beltur
Beltel
Turkcell Gayrimenkul
Global LLC

UkrTower
Turkcell Europe
Turkcell Odeme (*)
Euroasia
Astelit (**)
Turkcell Finansman A.Ş (***)
Belarusian Telecom
Lifetech LLC

Inteltek

Azerinteltek

Country of
Incorporation
Turkish Republic of
Northern Cyprus
Turkey

Turkey
Turkey

Turkey
Netherlands
Turkey

Turkey
Turkey
Netherlands
Turkey
Netherlands
Turkey
Turkey
Ukraine

Ukraine
Germany
Turkey
Netherlands
Ukraine
Turkey
Republic of Belarus
Republic of Belarus

Turkey

Azerbaijan

Business

Telecommunications
Customer relations management
Information technology, value
added GSM services investments
Telecommunications

Telecommunications
Telecommunications investments
Research and Development
Telecommunications infrastructure
business
Radio and television broadcasting
Financing business
Telecommunications
Telecommunications investments
Telecommunications investments
Property investments
Customer relations management
Telecommunications infrastructure
business
Telecommunications
GSM services
Telecommunications
Telecommunications
Financing Services
Telecommunications
Research and Development
Information and Entertainment
Services
Information and Entertainment
Services

Effective Ownership Interest
31 December
31 December
2014 (%)
2015 (%)

100
100

100
100
100

100
100
100
100
100
100
100
100

100
100
100
100
100
100
80
78

100
100

100
100
100

100
100
100
100
100
100
100
100

100
100
100
55
55
-
80
78

(*) The trade name of Global Ödeme Hizmetleri A.Ş. has changed as “Turkcell Ödeme Hizmetleri A.Ş” as at 5 October 2015.
(**)The trade name of Astelit has changed as “lifecell LLC” as at 2 February 2016.
(***) As at 22 October 2015, the consumer financing company is incorporated a capital of TL 70,000 thousand. The Company is non-operating, since official authorization does not
exist as at 31 December 2015. The company has received official authorization as at 21 January 2016.

F 155

295

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

36. Subsidiaries (continued)
The Company signed a share purchase agreement to acquire SCM Holdings Limited’s (“SCM”) 44.96% stake in its subsidiary, Euroasia on 26 June 2015
and the shares were acquired on 10 July 2015 for a total consideration of $100,000 (equivalent to TL 267,920 as at 31 December 2015). In accordance
with IFRS 10 “Consolidated Financial Statements”, the transaction has been considered as an equity transaction and the deficit presenting the difference
between the non-controlling interests derecognized and the consideration paid for the acquisition of shares amounting to TL 929,013 has been reduced
from retained earnings in July 2015.

F 156

TURKCELL ANNUAL REPORT 2015
296

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297

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

36. Subsidiaries (continued)
Summarized financial information in respect of Inteltek and Euroasia is set out below.
The summarized financial information below represents amounts before intragroup eliminations.

Inteltek

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity

Revenue
Expenses
Profit for the year

Other comprehensive income / (loss) for the year
Dividend paid to non-controlling interests

Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow / (outflow) from financing activities
Effects of foreign exchange rate fluctuations on
cash and cash equivalents
Net cash inflow / (outflow)

31
December
2015

31
December

2014

31
December
2013

203,028
25,068
31,135
55,141
141,820

303,714
24,486
28,447
44,674
255,079

212,991
29,559
27,853
39,900
174,797

2015

2014

2013

139,077
(53,829)
85,248

(379)

(92,542)

66,055
27,355
(205,648)

11,795
(100,443)

127,763
(47,484)
80,279

(13)
-

64,573
30,369
-

2,900
97,842

107,901
(50,099)
57,802

40
(1,046)

61,030
6,183
(2,325)

5,744
70,632

F 158

TURKCELL ANNUAL REPORT 2015

298

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

36. Subsidiaries (continued)
Euroasia

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Deficit in equity

Revenue
Expenses
Loss for the year

31 December
2015

31 December
2014

31 December
2013

-
-
-
-
-

108,188
471,651
1,717,812
12,678
(1,150,651)

77,337
942,187
1,592,576
25,150
(598,202)

2015 (*)

2014

2013

259,537
(725,114)
(465,577)

758,161
(1,825,047)
(1,066,886)

861,562
(922,244)
(60,682)

Other comprehensive income / (loss) for the year

122,386

514,437

(96,218)

213,957
(616,340)
417,498

(49,158)
(34,043)

153,943
(93,082)
(10,925)

(26,423)
23,513

155,775
(124,682)
(88,692)

25
(57,574)

(*) Figures for the year 2015 represent the amounts acquired till the date of acquisition of 44,96% shares of Euroasia from SCM.

37. Subsequent events
Turkcell Board of Directors has decided to convene the Annual General Assembly Meeting of the Company pertaining to the year of 2015 on 29 March
2016.

Share capital of Turkcell Finansman A.S was increased by TL 430,000 in March 2016.

F 159

299

TURKCELL ILETISIM HIZMETLERI AS AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at and for the year ended 31 December 2015

(Amounts expressed in thousands of Turkish Liras unless otherwise indicated except share amounts)

F 160

TURKCELL ANNUAL REPORT 2015
300

301

OFFICES

CITY

LOCATION

ADDRESS

İSTANB UL

HEADQUARTERS

Aydınevler Mahallesi İnönü Caddesi Küçükyalı Ofispark No:20 Maltepe/İstanbul

İSTANBUL

TURKCELL AKADEMİ

Meşrutiyet Caddesi No:71 Beyoğlu/İstanbul

İSTANBUL

ADANA

MALTEPE PLAZA

Yeni Mah. Pamukkale Sok. No:3 Soğanlık Mevkii - Kartal/İstanbul

TURKCELL TEKNOLOJİ PLAZA

Aydınevler Mahallesi İnönü Caddesi Küçükyalı Ofispark No:20 Maltepe/İstanbul

LEVENT OFFICE

KARTAL PLAZA

MAHMUTBEY OMC

ADANA PLAZA

Büyükdere Cad. Harman Sok. No:8 Levent/İstanbul

Topselvi Mah. Dipçik Sok. No: 31 Kartal/İstanbul

Mahmutbey Mah İnönü Caddesi No: 89 Bağcılar/İstanbul

Turhan Cemal Berikel Bulvarı No: 212 Seyhan/Adana

ADAPAZARI

SAKARYA OMC

Miktat Paşa Mah. Kamelya Sok. Kule Binası Sakarya/Adapazarı

ANKARA

ANTALYA

ANKARA PLAZA

Eskişehir Yolu 9.Km.No:264 Söğütözü/Ankara

ANKARA CINNAH PLAZA

Cinnah Caddesi No:15 Çankaya/Ankara

ANTALYA PLAZA

915. sokak No: 3 Kızıltoprak/Antalya

BALIKESİR

BALIKESİR OMC

Kuvai Milliye Mahallesi 194.sokak No:15/A Balıkesir

BURSA

DENİZLİ

BURSA PLAZA

DENİZLİ OMC

Organize Sanayi Bölge Müd. Kırmızı Cad. No:4 TSE yanı Nilüfer/Bursa

Bozburun Mah. 7014 sok.no:5 Merkezefendi/Denizli

DİYARBAKIR

DİYARBAKIR PLAZA

Urfa Yolu 6.km Bağlar/Diyarbakır

ERZURUM

ERZURUM PLAZA

Ilıca Yolu Organize Sanayi Bölgesi 4.Sok Erzurum

ESKİŞEHİR

ESKİŞEHİR OFFICE

Batıkent Mahallesi, Çamören Sokak No 8 Tepebaşı/Eskişehir

GAZİANTEP

GAZİANTEP PLAZA

Kocaoğlan Mah. Demokrasi Bulvarı No:185/1 Şahinbey/Gaziantep

HATAY

İZMİR

İZMİT

KAYSERİ

KONYA

HATAY OMC

İZMİR PLAZA

İZMİT OMC

KAYSERİ PLAZA

KONYA OMC

Güzelbirlik Mah. Yunus Emre Cad. No:11-B Güzelburç/Hatay

367/7. Sokak No:12 Bornova/İzmir

Yenişehir Mahallesi Gazi Mustafa Kemal Bulvarı No:159 İzmit/Kocaeli

Kayseri Organize Sanayi Bölgesi 13. Cadde No:16 Melikgazi/Kayseri

Horozluhan Mah Sıhhıye Sok No:6 1.ORG SAN. Selçuklu/Konya

MALATYA

MALATYA OMC

Hoca Ahmet Yesevi Mah. 7. Sok. Mahrukatçılar Sitesi No: 34 Merkez/Malatya

MERSİN

MUĞLA

SAMSUN

TRABZON

TEKİRDAĞ

VAN

MERSİN OMC

BODRUM OFFICE

MUĞLA OMC

SAMSUN PLAZA

TRABZON PLAZA

ÇORLU OMC

VAN OFFICE

Portakal Mah. 80050 Sok. No:3 Toroslar/Mersin

Atatürk Bulvarı no:210 Koçtaş yanı Kobnacık Bodrum/Muğla

Musluhittin Mah. Atatürk Bulvarı No:61 Muğla

Mimar Sinan Mah. 160.Sok.No:18 Atakum/Samsun

Mısırlık Mah. Hasan Turfanda Yolu Çukurçayır/Trabzon

Yulaflı Mah. Hacı Şeremet Mevkii Çorlu/Tekirdağ

Yavuzlar İş Merkezi Hafıziye Mah. Kazım Karabekir Bulvarı/Van

ZONGULDAK

ZONGULDAK / EREĞLİ OMC

Merkez Ören Köyü Bozoklar Mevkii No:47/1 Karadeniz Ereğli/Zonguldak

* OMC: Operation Maintenance Center

TURKCELL ANNUAL REPORT 2015302

GLOSSARY

ACRONYM /
TERM

4.5G

ARPU

Base Station

Carrier
Aggregation

DWDM

FDD

FTTX

GSM

GSMA

HLR

HSPA

HSS

IMS

Interconnection

ITU

LTE

LTE-A

M2M

DESCRIPTION

Third Generation

A third generation mobile telecommunication system established according to IMT-2000/UMTS standards or
standards developed based on these standards.

4.5 Generation

A generation containing technologies having more advanced features than standard 4G technology.

Fifth Generation

The communication standard planned to be brought to life following current 4G technology.

Average Revenue
Per User

Average monthly revenue generated per mobile subscriber.

A fixed transceiver device in each cell of a mobile communications network enabling communication between
mobile phones and radio signals within the cell.

A technique allowing more bandwidth and consequently higher speeds to be obtained by joining frequencies
called carriers.

Technology that allows a few independent digital information flows to appear on the same optic cable.

A technique using different frequency bands in sending and receiving processes within communication.

Dense Wavelenght
Division Multiplexing

Frequency Division
Duplex

Fiber to the X

Access technology carried out using fiber (FTTX service) internet and fiber optic cables.

Global Mobile
Communication
System

Groupe Speciale
Mobile (GSM)
Association

Home Location
Register

High Speed Packet
Access

Home Subscriber
Server

This is a digital mobile communication system, standardized by the European Communications Standards
Institute and based on digital transmission with roaming and cellular network structure being used in Europe,
Japan and various other countries. GSM systems operate at frequency bands of 900 Mhz and 1800 Mhz.

An association consisting of companies associated with mobile operators and telecommunication to
standardize and develop the mobile telecommunications sector.

Central database that contains services of each mobile phone subscriber that is authorized to use the GSM/
UMTS network.

Technology established on WCDMA networks to increase package data performance.

Central database that contains services of each mobile phone subscriber that is authorized to use the LTE/
VoLTE network. Current implementation is HSS and HLR is converged in a single HSS database, that serves all
technologies on a mobile network (2G/3G/4.5G).

IP Multimedia
Subsystem

Technology enabling audio service to be provided on the internet to fixed and mobile operators, independent
from access; and the main audio infrastructure of the LTE network of mobile operators.

The physical and logical connection of electronic communication networks to each other used by the same
or a different operator to enable the communication of users of an operator with the users of the same or a
different operator, or access to services provided by another operator.

An international standardization institution with headquarters in Geneva that determines many standards in
telecommunication.

The International
Telecommunication
Union

Long Term Evolution Technology capable of reaching very high speeds by joining carriers on the same or different frequency bands.

Long Term Evolution
- Advanced

A mobile communications standard comprising advanced features such as carrier coupling, which enables
mobile broadband speed of over 150 MBps in LTE.

Machine To Machine

The general name of technology enabling devices to exchange information and operate without human
intervention.

303

ACRONYM /
TERM

DESCRIPTION

Main and Midi POP

Large and medium sized locations containing network equipment positioned nationwide.

Mbps

MMS

NDC

NGMN

NMS

On-net

Roaming

Small Cell

SMS

Tbps

TDD

Megabits per Second A data transmission speed. 1 Mbps equals 2(20) bpse.

Multimedia
Messaging Service

A standard specified for advanced wireless terminals enabling the user to send and receive messages containing
diverse multimedia content such as images, audio and visual videos with a single transmission in non-real time.

Network Data
center

Next Generation
Mobile Network

Network
Management
System

A data center where network equipment is positioned.

An organization (Next Generation Mobile Networks Association), of which Turkcell is a member, and several
operators, suppliers and universities in the world are a part of, giving direction to technology standards and
technology producing companies in relation to operator requirements.

System and interfaces carrying out network management.

A call originating from an operator network and ending on the same operator network.

A mobile communications feature enabling the subscribers of a network to use their own mobile phones and
numbers within the coverage area of another operator.

The entirety of small physical communication devices being the common notation of femtocell, picocell and
microcell solutions, providing electronic communications services to subscribed terminal devices in the target
location, and having lower output power compared to a base station.

Short Message
Service

A mobile communication system allowing users to receive and send messages, which can be constituted of
both alphabetic and numerical characters of up to 160 characters, to and from mobile phones through a short
message service.

Terabits per Second

A speed unit symbolizing 10^12 bits passing per second.

Time Division
Duplex

The technique of using different time zones for sending and receiving processes on the same frequency band in
two-way communication.

Universal Mobile
Telecommunications
System 900 MHz

UMTS 900

Unified
Communications

This is the usage of UMTS Mobile technology on a 900 MHz frequency band. Thus, UMTS technology can be
used on a frequency band providing high coverage such as 900 MHz.

The entirety of services enabling different communications devices (switchboard infrastructure, softclient,
video conference, messaging) in the lives of corporate customers to be used on a single platform.

VoLTE

Voice over LTE

IP based high quality audio technology through a 4.5G network.

WebRTC

WiFi

WiFi Offload

WSON

Web Real Time
Communication

Technology enabling real-time communications (audio, video, messaging) services in the operator’s
infrastructure to be transmitted to an end user by developing different services on the web.

Wireless Connection
Area

A standard generated for the transfer of data through wireless cables. Laptops, smart phones, PCs, etc. having
a receiver and transmitter of WiFi standards can benefit from wireless broadband internet services.

Enabling an uninterrupted transition of 3N/4N users to a WiFi network to increase connection performance
and user experience.

Wavelength
Switched Optical
Network

Technology, in which automatic wave length routing is performed at an optical level in transmission
technology.

TURKCELL ANNUAL REPORT 2015
SIRT KALINLIĞINA LÜTFEN DİKKAT EDELİM!

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ANNUAL
REPORT
2015