Turkcell 2022 Integrated Annual Report OUR CONDOLENCES TO TURKEY We are deeply saddened by the loss of 21 Turkcell employees and many employees’ relatives, along with numerous citizens, in the earthquake that occurred on February 6, 2023, centered in Kahramanmaraş. We offer our prayers and thoughts to the deceased citizens and employees, patience and condolences to their loved ones, and quick recovery to the injured citizens currently receiving treatment. As Turkcell, we will continue to support communication for our users in the region and work with all our resources hand in hand with the nation to overcome these difficult times. Our Employees Who Lost Their Lives Ahmet UÇAR Kahramanmaraş Turkcell Store Employee Asım KAYA Adıyaman Turkcell Store Employee Başak BÜYÜKSAKALLI Kahramanmaraş Home Solution Center Employee Beyhan YILMAZ Network Technologies Hatay Regional Solution Partner Canan AKGÜL Diyarbakır Turkcell Global Bilgi Employee Faruk KAPLAN Kahramanmaraş Kurumsal Solution Center Employee Faruk TEPEBAŞILI Kahramanmaraş Turkcell Store Employee Gamzenur BOZKÜTÜK Adıyaman Corporate Solution Center Employee Gözde BAYANCUK Diyarbakır Turkcell Global Bilgi Employee Hamdiye Nupelda ENSARİOĞLU Diyarbakır Turkcell Global Bilgi Employee İbrahim POLAT Adıyaman Corporate Solution Center Employee İpek Ayşe ILGIN Kahramanmaraş Home Solution Center Employee Mehmet Akif ŞEKKELİ Network Technologies Regional Operations Southwest Region Employee Mehmet IRMAK Hatay Dijital Point of Sales Employee Mehmet ŞAHİN Kahramanmaraş Dijital Point of Sales Employee Meryem GAZPAK Hatay Turkcell Store Employee Nimet ARSLANOĞLU Hatay Turkcell Store Employee Özcan KILIÇLAR Paycell Employee Sevgi YILDIRIMHAN Hatay Dijital Point of Sales Employee Simge Deniz FIRAT Hatay Turkcell Contact Center Employee Ülkü SARIKAYA Kahramanmaraş Turkcell Store Employee We implemented our network actions in the fastest and most efficient way to ensure communication We are strong together We worked nonstop with our teams for uninterrupted communication. We have shipped approximately 250 mobile base stations and caravans to replace our damaged and unusable sites. We provided transmission redundancy for data centers (Gaziantep, Hatay, Diyarbakır, Malatya) by intervening in fiber interruptions. We have sent more than 1,200 field response personnel to the region. In the light of all these efforts, we activated 87% of our base stations in the region on the 3rd day and 94% on the 5th day. We installed 1,400 generators and nearly 3,400 batteries to our provinces in the earthquake zone. We provided mobile coverage to all tent cities and container cities. In addition, we brought Wi- Fi service to 79 locations. After the earthquake, we became the operator that offered the highest value in data download speed in all provinces throughout the disaster area. We provided communication support to our 6.5 million customers and all search and rescue teams in the region. We have defined the Emergency Communication Package and the Hero Package, which includes more than 90 million free calls, SMS and internet in total. By transforming our 277 Turkcell dealers in Istanbul into an Emergency Aid Collection Center, we became an intermediary for the collection of aid with the coordination of AFAD. Since the first day of the earthquake, we have provided a large number of in-kind and cash assistance from multiple charging units to clothing aid, from tent support to mobile chargers. In order to support our business partners operating in the region, we tried to meet their needs by dealing with each one individually. Turkcell and other operators provided free calls for a period of one month from the moment of the earthquake. We pledged to donate up to 3.5 billion TL to the Turkey One Heart Campaign, with which we are united as a nation. We set out two aid trucks for our employees in the region. We provided 10 thousand TL support to Turkcell Group and ecosystem employees who live in the region and personally support the region. We met the needs of 1,600 people in the earthquake area for three meals a day for a month. We mobilized to help the earthquake area with thousands of Turkcell volunteers. We distributed free SIM cards to all teams in order to meet the communication needs of rescue teams from abroad. 2 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 3 Table of Contents 06 08 10 16 22 28 29 36 Message from Chairman of the Board 42 Value Creating Turkcell 106 Inclusive Positive Imprint 194 Appendices Message from CEO Board of Directors Executive Officers Top Management of Subsidiaries About the Report Turkcell at a Glance Turkcell Group: Developments in 2022 44 Value Creating Turkcell 112 Human Capital 45 Turkcell Sustainability Management and Involvement of Senior Management 46 48 Turkcell Sustainability Priorities Turkcell Sustainability Strategy: Positive Imprint in Sustainability 50 Supported Sustainable Development Goals 59 60 52 56 58 61 63 64 66 Interactions with Our Stakeholders Turkcell Value Creation Process Measuring the Value Created Our Core Competencies Our Strategic Focuses, Initiatives and Opportunities Our Telecom Business Digital Services Digital Business Services Techfin Services 113 114 119 121 Decent Workplace Diversity, Inclusion, and Equal Opportunity Safe and Healthy Work Environment Our Productive Turkcell Family 123 Training and Development Programs 129 Making a Difference in Employment 132 Manufactured Capital 133 Strong Infrastructure 137 Strong Fiber Infrastructure 137 Strong Spectrum 139 Data Centers 140 Intellectual Capital 141 Ever-growing Intellectual Capital 144 Digital Service Portfolio 149 Digital Security and Wellbeing 151 Digital Business Services 68 Positive Imprint to Our Business 154 Social Capital 196 197 198 APPENDIX-1: Awards Received by Turkcell in 2022 APPENDIX-2: Turkcell ISO Certificates APPENDIX-3: Cooperated National, International and Non- Governmental Organizations 199 APPENDIX-4: GRI Content Index 203 APPENDIX-5: UNGC Progress Chart 204 APPENDIX-6: Sustainability Principles Compliance Framework Table 208 APPENDIX-7: Greenhouse Gas Verification Statement 210 Group Companies and Other Information on Corporate Governance 212 Our Subsidiaries 218 Subsequent Events After the Reporting Period 220 Statement of Compliance with Corporate Governance Principles 221 Corporate Governance Principles Compliance Report 225 Corporate Governance Information Form 231 Roles of Turkcell Board Members at Other Companies 231 Conclusion of the Subsidiary Report 72 78 84 Strong Corporate Governance Human Rights, Business Ethics and Common Values Competition Management Effective Risk and Crisis Management Corporate Risk and Business Continuity Management Internal Control and Continuous Improvement Internal Audit Financial Capital Strong Financial Performance Revenues From Operations Business Model Hedging Practices Efficient Capital Allocation Financing Diversity Strong and Transparent Financial Management Transparent Investor Communication – Investor Relations Digital Finance Transformation Techfin’s Shining Stars: Paycell and Financell 74 77 78 81 83 85 86 88 90 91 91 92 96 96 98 Trends 155 Brand and Responsibility 156 Strong Sales Channels and Our Services 165 Our Customer Relations 168 Value-Driven, Responsible Supply Chain Management 172 Equality of Digital and Social Opportunity 174 Social Investment and Sponsorship Projects 232 Sectoral and Financial Information 234 Turkcell Group: 2022 Financial & Operational Review 239 Forward Looking Statements 240 Our Companies and Sector Developments 178 Positive Imprint to the Environment 245 Financial Statements 182 Natural Capital 183 Environmental Management 185 Climate Change 186 Greenhouse Gas Emissions 187 Energy Management 190 Water Management 192 Waste Management 246 Financial Statements 360 Our Offices 361 Glossary 363 Other Considerations 363 Contact 4 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 5 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Message from Chairman of the Board Dear Stakeholders, The recent earthquake that affected 11 provinces has given rise to a particularly challenging time. As the Turkcell family we continue to work with all our ability to heal the wounds inflicted by the disaster. We believe that we will overcome these difficult days in the spirit of solidarity and mutual assistance demonstrated by our nation, which sets an example to the world. While 2022 is a year of challenging conditions globally, the Russia-Ukraine war in particular continues to have an international impact. Inflationary effects escalating with the conflict and resulting international tension, dif- ficulty in accessing energy and food, and disrupted chip supplies that closely concern our industry, have led to an environment of perpetual crisis worldwide. With digitalization and transformation coming to the fore in almost every sector, business processes support- ed by sustainable management models have become an important issue for all ecosystem-sensitive compa- nies. The need to adapt to the transformation in custom- er demand that accelerated during the pandemic was of paramount importance. Indeed, that demand today is now permanent, bringing major opportunities, especial- ly for our industry. As the Turkcell family, we have concluded another year of activities geared at creating sustainable value, aware of the economic and strategic importance of the telecom sector in which we operate and the responsi- bility to our ecosystem. Within the scope of our objec- tives and responsibilities, and with a focused approach maintained throughout the year we strengthened our infrastructure and invested in new technology towards achieving Turkey’s digitalization. We develop innovative solutions that meet changing needs and demands in a world where the share of digitalization in our daily activ- ities is increasing. In delivering these solutions to our cus- tomers we diligently maintain our lead role in the digital transformation journeys of diverse sectors. As a result of our operational and financial activities towards achiev- ing these goals, we have ended yet another year with sustainable growth. planning our investments sustainably, we conduct a ho- listic evaluation of the views and needs of the network, finance, sales and marketing functions. In step with our mission, we continue to support our cus- tomers’ digitalization journeys with our constantly de- veloping competencies, facilitating and enriching their lives with the opportunities technology brings. Within the scope of our digital services we play a pioneering role in Turkey’s digitalization process by providing instant messaging, TV and music platforms, personal cloud services, search engine and e-mail services. Moreover, we resumed our international partnerships with a new partnership established with Jazz in Pakistan at the end of 2022 to increase our global impact and reach of our services. As Turkcell, we play a leading role in the essential dig- ital transformation of the healthcare sector. The digital infrastructure of city hospitals, among our country’s larg- est healthcare investment areas, is managed with the “Hospital Information Management System” developed by Turkcell engineers. We also aim to serve private hos- pitals with the distinguishing quality of Turkcell as we are doing in city hospitals. With the rapid rise of digital transformation in the busi- ness world and the increasing use of technology, cyber security risks for organizations are also becoming more prevalent, as well as the advantages provided. We offer our cyber security and information security experience as a service to both our corporate and individual cus- tomers by integrating our digital operator competence. We also support cybersecurity initiatives through our investments in the Turkcell New Technologies Venture Capital Fund. With the power of this investment fund, we aim to create long-term strategic and financial value for our group by investing in technology-focused start- ups of high growth potential across diverse sectors and creating synergies with them. Sectors such as artificial intelligence, virtual reality, the internet of things, mobility, and financial technologies, where we will support com- panies in meeting their growth targets. We started planning our investment expenditures more effectively with the smart investment approach imple- mented in 2021. We maintained, with a value focus, the goal of raising our company’s cash generating abili- ty to higher levels in the long term. In this context, while We observe that the role of digitalization is gradually increasing to provide solutions for the rapidly chang- ing payment habits in our country and the wider world. Through our Paycell brand, we reliably deliver our cus- tomers innovative and easy-to-use solutions in this field. With Financell, another focus area of ours in techfin, we have applied for the incorporation permit to establish a digital bank. This move will allow us to expand product and service richness by combining the solutions portfolio offered our customers through Financell with the servic- es offered by a traditional bank. Additionally, in 2022, we established our digital insurance company to support our insurance activities in the digital environment with big da- ta-based solutions and digital processes, to benefit our customers and play a part in the sector’s transformation. As part of digital transformation, in addition to provid- ing products and services to meet customer needs, we are also digitizing our internal processes. Since the con- tribution of our digital channels is important, we will continue our efforts to increase the channel’s share of the business. We aim to provide an uninterrupted ser- vice and create additional value for our stakeholders by benefiting from cost savings. Meanwhile, by creating the “Digital Transformation” function we aim to implement good practices in the digitalization of our processes, lead our company’s digitalization journey and effectively re- alize its vision. And with the establishment of Strategy and Digitalization Committee in February we aim to im- plement the best practices by closely monitoring digital transformation, optimization and efficiency projects. Our country has taken a bold step towards creating its own brand in the automobile industry. As Turkcell we par- ticipated in Turkey’s Automobile Enterprise Group with a 23% stake to proudly play our part in this undertaking with our know-how in autonomous systems and mobili- ty. We are pleased that Togg, which aims to have robust competitive power on the global stage, had begun mass production at the Gemlik Togg Technology Campus as of October 29, 2022. Togg continues to complete necessary collaborations to build the mobility ecosystem around the electric car, which it defines as a “smart vehicle”. In this context, as Turkcell, we are in strategic cooperation with Togg to integrate digital finance and service solutions into the mobility ecosystem. As the only Turkish company traded on Borsa İstanbul (BİST) and the New York Stock Exchange (NYSE) since 2000, we comply with both Turkish and American capi- tal markets’ requirements and regularly improve our cor- porate governance processes. I trust that Turkcell, which adopts best practices in corporate governance as its guide, and through the annual self-evaluations that our Board of Directors undertake to enhance corporate relat- ed initiatives will further improve its standing in this area. As Turkcell, we make a positive contribution to socie- ty and the environment we live in with the principle of sustainability rooted in all of our processes. We strive to ensure that the environmental, social and governance di- mensions of our business are universally valuable in every sense and at all times. In addition to supplying the energy we use from renewa- ble sources within the scope of fighting climate change, we also make investments to contribute to renewable en- ergy production, and maintain our goal of being carbon net zero by 2050. And by continuing investments focused on environmental sustainability and efficiency in the up- coming periods as well we aim to reach 300 MW of in- stalled power by the end of 2025. As Turkcell, we intend to meet 100% of the energy needs of group companies from renewable energy sources by 2030, in line with na- tional and international sustainability targets through the investments we have made and management systems developed. We work towards zeroing the negative outcomes of which we are directly or indirectly a factor, creating pos- itive value and inculcating this approach among all of our stakeholders. In so doing we are not limiting the con- cept of sustainability to environmental factors alone. Our overarching objective is to make sure that thanks to the equalizing power of technology for social and digital in- clusion no one is left behind. We have set targets to increase the number of our female employees at all levels, including the Board of Directors, to champion the equal presence of women in the tech- nology arena. Accordingly, we support women’s en- trepreneurship and employment with projects such as “Women Writing the Future” and “Equal Chances and Equal Conditions”. I extend my sincere thanks to our customers for their in- terest in our products and services in the 2022 operating period, to our shareholders for the trust they have shown, and to our business partners and all our stakeholders, es- pecially our employees, who have enabled us to success- fully realize our operations. Sincerely, Bülent Aksu Chairman of the Board 6 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 7 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Message from CEO Dear Stakeholders, I would like to wish recovery to the injured and offer my condo- lences to those who lost their relatives due to the earthquake disaster of February 6th with its epicenter in Kahramanmaraş that left us all in mourning. As the Turkcell family, we have used every means available from the first day to support our citizens affected by the earthquake in a spirit of unity and solidarity. We will continue to contribute with all our efforts to overcome these difficult days as soon as possible. We continued to offer inclusive solutions to our customers’ digi- tal needs this year with brands such as BiP, TV+, fizy and lifebox, which are the key brands of the Turkcell ecosystem, and whol- ly developed by Turkish engineers. The number of standalone paid users of our digital services, which aim for prominence among global competition, rose by 28% to 5.1 million with our focus on increasing the spread of these services. Meanwhile, our standalone digital service revenues grew by 30% this year. Both globally and within our country, 2022 was a year in whi- ch the impact of challenging economic conditions brought about by high inflation was felt. During the summer months, the momentum of the tourism sector, which even exceeded pre-pandemic levels, was a prominent positive factor. While digitalization, which accelerated with the pandemic, continu- es to maintain its importance, it has become clear that the shift in consumer behavior has become permanent. As the Turkcell family, we continued our operations effectively through our diversified business strategy and proactive risk ma- nagement. This is in line with our goal of creating value for all our stakeholders in the 2022 operating period, despite being one where the markets were particularly challenged and subject to uncertainties. While we continued to offer solutions to meet customer needs with our innovative product and service port- folio, we also continued our offerings in our strategic focus areas of digital services, digital business services and techfin to meet changing customer behavior and increasing digital demand. We achieved strong financial and operational results in 2022 thanks to the performances of all our services and solutions, offered with a focus on changing customer needs. Particularly in the second half of the year, strengthening tourism activity has increased the demand for our mobile business. With the in- vestment made in our infrastructure, and our customer-orien- ted approach, we achieved 2.3 million net subscriber additions in 2022. As the pioneer of technology in our country, we further accelerated our investments to pave the way for Turkey’s digi- tal transformation and deliver our customers real fiber quality. Accordingly, we added 887 thousand new fiber homepasses in 2022. Turkcell’s consolidated revenues increased by 50% year-on-year to TRY 53.9 billion. Consolidated EBITDA incre- ased by 46.5% to TRY 22 billion. Our net income was up 119.7% year-on-year to TRY 11.1 billion. Operational capital expenditu- res (excluding license fees) at the Group level were at 20.2% of total revenues. Over the past year, the continued need for transformation ari- sing from digitalization has once again underlined the impor- tance of the telecom sector. We remain a brand focused on customer satisfaction directly shaping the sector with digital services and solutions developed for every aspect of life. In do- ing so, we remain aware of our comprehensive, environmental and social impact, embracing sustainability criteria. With our digital business services that guide Turkey’s digital transformation, we help our corporate customers stand apart from the competition by accompanying their end-to-end digi- tal transformation. The revenues of our digital business servi- ces increased by 88% to TRY 4.3 billion in 2022. And we respond to rising customer demands with our comprehensive services in areas such as data center, cloud solutions, cyber security, system integration, business applications and new techno- logies, in addition to our traditional telecom services. In 2022, in our techfin business, one of our strategic focuses, we diversified our portfolio with new initiatives. In this area, whe- re we provide services under the Financell and Paycell bran- ds, we established the Turkcell digital insurance company to enable our customers to secure themselves against risk. We also applied for an incorporation permit to establish a digital banking company to complement our existing products and services. As the digital channel share of insurance companies is lower than that of other financial sectors, it provides an im- portant transformation opportunity in terms of directing cus- tomer demand to the digital consumer experience. Therefore, we established our digital insurance company so as to play a part in this transformation with innovative solutions and di- gital processes based on big data. While the revenues of our Financell business grew by 59.4% this year, at a time when payment habits are changing and digital payment services are gaining prominence, Paycell grew its revenues by 87.2% year-on-year to TRY 876.9 million, standing out with its broad service portfolio, Turkcell’s technological infrastructure and the advantage of access to its subscriber base in a market whe- re various players focus on different solutions. With Paycell Europe, which we launched in Germany in October, we aim to engage in international money transfer and payment services, primarily in European Union countries. As Turkcell, we established Turkcell New Technologies Venture Capital Investment Fund in 2022 to provide strategic and finan- cial support to technology-oriented startups of high growth potential in diverse sectors. In addition to providing strategic and financial benefits to our company with the synergies to arise from startups, we also financially support our nation’s startup ecosystem and aim to create long term value. On October 29th, Republic Day, Togg, Turkey’s globally scaled mobility technology brand opened its Technology Campus in Gemlik. We share Togg’s excitement on its path to becoming a global automotive brand, and as Turkcell, one of its main sha- reholders since day one, we are honored to support it with our experience, knowledge and vision. As well as being inves- tors, we also work to create integrated value with our digital services in the domestic automobile project, which will beco- me a new living arena focused on the user within the mobility ecosystem. In this context, we are integrating Paycell’s payment systems solutions into Togg’s mobility systems. As we pursue our renewable energy investments aimed at re- ducing the impact of climate change while lowering energy supply costs and ensuring supply security, we have made sig- nificant progress in our strategy of becoming an auto-genera- ting digital operator. We aim to continue this focus by installing renewable energy power plants that generate 300 MW of ins- talled capacity by the end of 2025, and maintaining this focus over the coming periods. Leveraging our high-tech solutions we continue efforts to take advantage of Turkey’s geographical location, which renders the country an important transit point for internet traffic, to trans- form our country into a data base, and to keep our country’s data within its borders. While maintaining our leader position in data center operation, we continue to strengthen this position with new modules at our Gebze and Temelli data centers, the construction of which began this year. In this direction, as the pioneer of Turkey’s digital transformation we provide cost ad- vantage and help increase operational efficiency by providing data storage and cloud services to over three thousand corpo- rate customers. We achieve this on approximately 40 thousand square meters of white space at our eight data centers. With 5G, set to be among the key technological developments within our country over the coming years, developments rela- ted to the Internet of Things, autonomous vehicles and produc- tion technologies have begun to gain momentum. Thanks to the test studies carried out over our pilot networks to efficiently de- liver these technologies to our customers, we are the pioneers of 5G studies in our country. A status ensured by the lead roles we undertake in both national and international consortiums. Accordingly, we began to offer 5G technology to our customers at Istanbul Airport in 2022. With our vision of superior digital services for a better future, we work to eliminate our negative impact and increase our posi- tive one in every field through the equalizing and restorative power of technology. We realize this transformation by enga- ging our entire ecosystem, thereby transforming for the bet- ter together. This is why we have adopted the motto “Positive Imprint on Sustainability”. We pay attention to using clean and efficient energy while de- veloping our products and services, and strive to be a solution to the climate crisis with our products and services. And with our belief in circular functioning, we extend the life cycle of our products and ensure that once products become unusable their life cycle concludes through “recycling”. In this context, we have focused our strategy on environmen- tal sustainability in three areas: Efficient and renewable ener- gy use, emission reduction in our business and our customers’ lives, and circular operation. We are the only operator in Turkey to have achieved an A- score in the Carbon Disclosure Project (CDP), one of the world’s largest initiatives to fight climate chan- ge. With the purchase of a 1,000,000 kWh YEK-G license in 2022, we zeroed our indirect Category 2 emissions from impor- ted energy. On the educational front, we establish technology classrooms with our Whiz Kids project so that children become generations that produce rather than consume technology. Meanwhile, our Digital Spring project establishes technology rooms in nursing homes whereby our elderly people can also benefit from broad advantages of the online world. We also provide digital litera- cy training over Turkcell TV+. In addition, we contribute to equal participation through technology of the disabled in daily in life with projects such as “My Dream Companion”. To champion women’s equal presence in the technological are- na, we have set targets to increase the number of women in our company at the employee, executive and board levels. We sup- port women’s entrepreneurship and employment in technology with projects such as “Women Writing the Future” and “Equal Chances Equal Conditions”. In past years, we have completed our sustainability-oriented transformation with the policies and roadmaps created throu- gh an internal review of all our processes. In 2022 as part of this transformation, we continued efforts to involve our stakehol- ders across our entire ecosystem. First of all, we shared Turkcell’s roadmap to becoming a “carbon net zero company” by 2050 with all our employees. In order to increase employee motiva- tion on this topic, we supported the process with sustainability goals, competitions and awards that reflect their performance. In 2022, as the pace of digitalization increased and the impor- tance of telecom services came to the forefront in every aspect of our lives, we maintained our customer orientation, delivering innovative solutions and achieving successful results. I would like to thank all my colleagues who contributed to this success, our Board of Directors and all our stakeholders for their trust and support. Sincerely, Murat Erkan Chief Executive Officer 8 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 9 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Board of Directors Bülent Aksu Figen Kılıç Nail Olpak Chairman of the Board Board Member Board Member Bülent Aksu has 26 years of managerial experience in finance, accounting, tax and management fields in var- ious sectors including telecommunications, energy, pet- rochemicals, textiles and audit. He began his career at Inspection Board of Kuveyt Türk A.Ş. as an Auditor, and then undertook Finance Manager and Group Finance Director roles, respectively at Çalık Holding in 2003. Between 2008 and 2012, he served as CFO at Akfel Group. Mr. Aksu undertook CFO role at Azerbaijani National Oil and Gas Company’s (SOCAR) subsidiaries Petkim Petrokimya Holding A.Ş. and STAR Rafineri A.Ş., respec- tively from 2012 to 2016. Bülent Aksu carried out numerous mergers and acqui- sitions transactions in various industries, and actively managed financial transactions including project fi- nancing and bond issuance in international and domes- tic markets. He led the completion of the financing agreement of USD3.3 billion with 18 years maturity signed between 23 local and international financial institutions and STAR Rafineri, one of the most prominent industrial investments of our country. This agreement had been the top project financing transaction made in Turkey to that date in terms of amount and maturity. Bülent Aksu served as CFO of Turkcell from July 20, 2016 to July 17, 2018. Mr. Aksu made valuable contributions to Turkcell having implemented international practices enabling Turkcell to become an exemplary company of our country in terms of balance sheet and FX risk man- agement along with his innovative solutions to funding investments. In 2016 and 2018, Mr. Aksu was voted among the top 50 most influential CFOs in Turkey by the Fortune Turkey magazine. Mr. Aksu served as Deputy Minister for the Ministry of Treasury and Finance between August 3, 2018 and January 29, 2021. He served as a Board Member of Türk Telekomünikasyon A.Ş. from November 2018 to March 2019. Bülent Aksu served as a member of Turkcell Board of Directors between March 2019 and March 2020. Between May 2019 and February 2021, he served as the Chairman of Board of Directors of Turk Eximbank. Mr. Aksu was appointed as the Chairman of Turkcell’s Board of Directors effective as of March 12, 2020. Mr. Aksu represented our country as Sherpa at the G20 summit in 2018, and as Turkey Governor at the Asian Development Bank (ADB) and the African Development Bank (AfDB); Turkey Deputy Governor at the World Bank (WB), European Bank for Reconstruction and Development (EBRD) and Asian Infrastructure Investment Bank (AIIB); as Turkey Executive Director at Islamic Development Bank (IsDB) between August 2018 and January 2021. Bülent Aksu graduated from Istanbul University Faculty of Business Administration (English) in 1996. Figen Kılıç, born in 1970 in Gaziantep, graduated from Selçuk University, Electrical Electronics Engineering department and received her Master’s Degree from Gebze High Technology Institute, Electrical Engineering Department. Trained in project man- agement, process management, and test engineer- ing, Kılıç also graduated from the Anadolu University Faculty of Open Education, Department of Law, and is studying in the Department of Business Administration of the same university. Figen Kılıç, started her career as technical translator in İhlas Group, before mov- ing to İstanbul Municipality BELBİM A.Ş. in 1995 for a lengthy period, working on payment projects as R&D engineer, Project Coordinator and R&D Manager. In 2010, she transferred to E-Kent Ödeme Sistemleri A.Ş. where she served as IT and Operational team man- ager for electronic ticket and payment systems inte- gration and management projects in various cities of Turkey. In 2014, Figen Kılıç worked in Mobile Payment and M2M & IoT teams at Turkcell İletişim Hizmetleri A.Ş. and in 2015 was appointed to the Information and Communication Technologies Authority (ICTA) of Turkey as its first women board member. Kılıç became the vice president of the board in 2018. After her term in office ended in 2019, she acted as Service Delivery General Manager of the Republic of Turkey Ministry of Family, Labor and Social Services. As of January 29, 2021, she was appointed to the Turkcell Board of Directors. At the Ordinary General Assembly Meeting for 2020, held on April 15, 2021, Figen Kılıç was re-elected as the Member of the Turkcell Board of Directors. Nail Olpak, was born in 1961 in İbecik, Burdur. He graduated from Aydın High School. Having graduated from Istanbul Technical University Faculty of Mechanical Engineering, Mr. Olpak completed his master’s degree in the field of Energy. Mr. Olpak serves as the Chairman of the Board of NORA Elektrik AS and PAK Yatirim AS and as the board member of companies in which these companies have shareholdings. As part of his activities in NGOs and for public welfare; Mr. Olpak serves as the Chairman of the Board of Directors of DEİK, Board Member of Export Credit Bank of Turkey (TURK EXIMBANK), Board Member of Turkcell, Board Member of İstanbul Development Agency (İSTKA), Member of High Advisory Board of MÜSİAD, Member of the Founding Committee of International Technological, Economic and Social Research Foundation (UTESAV), Member of the Board of Trustees of Tourism Development and Education Foundation of İstanbul Chamber of Commerce (TUGEV), Member of Founders Board of İlim Yayma Foundation, Member of the Board of Trustees of Huzur Hospital Foundation, Member of the Board of Trustees of Human Development and Societal Education Foundation (İGETEV), Member of the Board of Trustees of the Foundation for the Support of İstanbul Medeniyet University. Nail Olpak also served as the 5th Period Chairman of MÜSİAD (Independent Industrialists and Businessmen’s Association) and the Chairman of MÜSİAD High Advisory Board, Council Member of B20 Steering Committee of Turkey, Council Member of İTO (Istanbul Chamber of Commerce), Board Member of İDTM (Istanbul World Trade Center), Board Member of the Huzur Hospital Foundation, Board Member of ENVERDER (Energy Efficiency Association), Member of High Advisory Board and Board Member of MMG (Architects and Engineers Group), Founding Committee Member of Turkish-Japanese University, Member of the Board of Trustees of Commercialize Center Istanbul (CCI), Board Member of Turkey Silicon Valley. Mr. Olpak was appointed as a member to the Turkcell Board of Directors, effective as of March 6, 2020. At the Ordinary General Assembly Meeting for 2021, held on June 16, 2022, Nail Olpak was re-elected as a member of the Turkcell Board of Directors. Nail Olpak was granted the title of Honorary PhD in the branch of International Relations by Ahi Evran University and Mehmet Akif Ersoy University. Olpak is married and is the father of two sons who are Architect and Mechatronic Engineer. He speaks English very well. 10 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.17 GRI 2.17 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 11 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Tahsin Yazar Şenol Kazancı Sir Julian Horn-Smith Afif Demirkıran Board Member Board Member Board Member Independent Board Member He was born in 1975, in İstanbul. He graduated from Istanbul University, Faculty of Law. Şenol Kazancı worked as TVNET General Manager between 2007 and 2011, as the Chief Advisor of the Prime Minister between 2011 and 2014, and as Chief Advisor to the President in 2014. He lastly served as the Chairman and General Manager of the Anadolu Agency between 2014 and 2021. At the Ordinary General Assembly Meeting for 2020, held on April 15, 2021, Şenol Kazancı was elected as the Member of the Turkcell Board of Directors. Tahsin Yazar was born in İspir, Erzurum in 1975. He graduated from Ankara University Faculty of Law in 1996. After starting his career as a freelance lawyer, he continued at Devres Law Office and Zorlu Holding A.S., respectively. Mr. Yazar joined Calik Holding Inc. in 2010 as Director of Energy Group Legal Affairs and also acted as a board member of Yesilirmak Electricity Distribution Inc. and Aras Electricity Retail Sales Inc. Mr. Yazar was appointed as Advisor to the Minister of Energy and Natural Resources on January 12, 2016. As of August 1, 2018, he was appointed as Advisor to the Minister of Treasury and Finance. Tahsin Yazar, who started acting as a self-employed lawyer in 2021 after the replacement of the Minister, was appointed as an independent member of the Board of Directors of Turkcell by the Capital Markets Board of Turkey on March 6, 2020. At the Ordinary General Assembly Meeting for 2020, held on April 15, 2021, Tahsin Yazar was elected as the Member of the Turkcell Board of Directors. He is married and is the father of two children. Sir Julian Horn-Smith was born in London in 1948 and graduated from London University with a B.Sc. Hons in Economics. He completed his master’s degree in Business Administration (M.Sc.) at Bath University and in 2010 was also awarded a DLL Hon. He served as Pro-Vice-Chancellor at Bath University for 8 years. He has held various senior positions at Vodafone Group since its foundation in 1984. He served as the CEO of Vodafone International between 1988 and 2006. Sir Julian also served as Vodafone Group’s COO for six years where he was a main Board Director. He also served as a member of the Board of Directors and Risk Committee of Lloyds Banking Group, and Advisor to the Chairman of Etisalat. He was appointed to the Turkcell Board of Directors on April 15, 2021. Sir Julian was honoured with a Knighthood by HM The Queen for services to International Telecommunications in 2004. In addition to his position at Turkcell, Sir Julian is also The Chairman of eBuilder AB (Sweden) and a Senior Advisor at Viasat (U.S.). He is also a Non- Executive Director of Digicel Group. He works as a Senior Advisor at AlixPartners (U.S. Consultancy) and until December 2021 as a Senior Advisor at UBS Investment Bank. Sir Julian has served on a number of public company boards including Smiths Group Engineering, Lloyds Banking Group, Sage Group (Software), China Mobile and Verizon Wireless (U.S.). He is married and has four children. Afif Demirkıran was born in Siirt in 1952. Having com- pleted his primary and secondary education in Siirt, Afif Demirkıran graduated from Mining Faculty of Istanbul Technical University in 1973. Later he studied engineering and had master’s degree at the Leeds University in UK. He served as an executive in Etibank, as Head of Foreign Investment Department at the Undersecretariat of State Planning Organization, as General Manager of Foreign Investment Directorate at the Undersecretariat of Treasury, as a Board Member of Eregli Iron and Steel Inc. and Sümerbank A.Ş., as various executive positions in private sec- tor companies, as General Manager and Chairman of Turkish Electricity Generation and Transmission Company (TEAŞ), and as General Manager of Vakıf Enerji ve Madencilik A.Ş.. Being active in politics since 2002, Afif Demirkıran served as Batman Deputy in the 22nd, and Siirt Deputy in the 23rd and 24th periods of the Grand National Assembly Turkey. In the 22nd period, he also served as a member of the State Economic Commission for Enterprises, member of Turkish Group OSCE PA and member of the Turkey-EU Joint Parliamentary Commission. In the 23rd and 24th periods, he was the President in the Turkey-EU Joint Parliamentary Commission. In the 22nd, 23rd and 24th periods, he served as the Chairman of Turkey-Spain Inter-Parliamentary Friendship Group. In the 24th pe- riod, he also was the Deputy Chairman of Turkey- Pakistan Inter-Parliamentary Friendship Group. Since 2016, he has been the Deputy Chairman of Foreign Affairs Directorate of Justice and Development Party. Mr. Demirkıran was appointed as an independent member to the Turkcell Board of Directors by Capital Markets Board Decision effective as of March 6, 2020. At the Ordinary General Assembly Meeting for 2020, held on April 15, 2021, Afif Demirkıran was re-elected as the independent member of the Turkcell Board of Directors. He is married and has four children. 12 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.17 GRI 2.17 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 13 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Hüseyin Arslan Serdar Çetin Independent Board Member Independent Board Member Prof. Dr. Hüseyin Arslan, who was born in 1968, re- ceived his bachelor’s degree from Middle East Technical University, Department of Electrical and Electronics Engineering in 1992. He completed his master’s degree in 1995 and his doctorate in 1998 at the Southern Methodist University Electrical Engineering Department. Hüseyin Arslan worked as research engineer at Ericsson, consultant at Anritsu Company, and held Membership of TÜBİTAK Science Board and ULAK A.Ş and he has also won numerous national and international scientific awards. Hüseyin Arslan, who joined the Department of Electrical Engineering at the University of South Florida in August 2002, started working as the founding dean to establish the Faculty of Engineering at Istanbul Medipol University in 2013. Hüseyin Arslan served as a consultant to many domestic and international com- panies and organizations such as Anritsu, Türksat, Savronik and TÜBİTAK. Having over 100 United States Patent and Trademark Office’s (US) patents and ap- plications, more than 10 patents of Prof. Dr. Arslan have been licensed. Working as the Dean of the Faculty of Engineering and Natural Sciences of Istanbul Medipol University and the manager of the “5G and Beyond Research Laboratory”, Prof. Dr. Hüseyin Arslan is married and has three children. At the Ordinary General Assembly Meeting for 2020, held on April 15, 2021, Hüseyin Arslan was elected as the Independent Member of the Turkcell Board of Directors. Serdar Cetin graduated from Middle East Technical University, Civil Engineering department and holds an MSc in Management (Grande Ecole) from HEC School of Management in Paris with a major in stra- tegic management. Serdar Cetin has served at the board of Play Group from July 2007 till November 2020. He was a management board member of Play (P4 Sp.zo.o.) from its inception (July 2005) till October 2006 and was a supervisory board member be- tween July 2007 and June 2017. Following the IPO of Play Group, he was appointed as a member of the Audit Committee, Remuneration and Nomination Committee and Operational and Investment Committee of Play Communications S.A. until its sale to Iliad in November 2020. Serdar Cetin was a board member of Turknet Iletisim Hizmetleri A.S. and its then parent company NetOne Holdings S.a.r.l., between 2007 until April 2013. He served as a board member or board observer in several telco or technology companies including Machinezone, which is now acquired by Applovin (USA), Netia (Poland), Forthnet (Greece) and Be* Unlimited (UK). In addition, he served as a board member of AASA Polska from August 2015 to December 2019. Serdar Cetin is a board member of WOM S.A. Chile since July 2015. Additionally, he is a partner of Novator Partners LLP, a London based investment advisory firm. Prior to joining Novator, Mr. Cetin worked at Merrill Lynch investment bank- ing and BNP Paribas Asset Management in London. At the Ordinary General Assembly Meeting for 2021, held on June 16, 2022, Serdar Cetin was elected to the Independent Member of the Turkcell Board of Directors. He is fluent in English and French. FOTOĞRAF EKLENECEK 14 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.17 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 15 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 15 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Executive Officers Murat Erkan Serhat Demir Turkcell Chief Executive Officer Executive Vice President - Legal and Regulation Murat Erkan was appointed as Turkcell Chief Executive Officer on March 15, 2019. Mr. Erkan, who started his career at Toshiba, worked as an Application Engineer at Biltam Mühendislik and then served as 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. Mr. Erkan served as the Business Unit Manager at Aneltech working on solutions related to telecommunications, mobile, ICT, the defense industry and industrial products sectors starting from 2006. Murat Erkan joined Turkcell Group in June 2008 as the General Manager of Turkcell Superonline, and he assumed the role of Executive Vice President of Sales from December 2015 to March 2019. Murat Erkan grad- uated from Yıldız Technical University Electronics and Telecommunication Engineering Department. He completed the Strategic Marketing Program at Harvard Business School in 2010. Serhat Demir joined Turkcell as the Executive Vice President of Legal and Regulation Function on May 18, 2015. In addition to his current role, he served as acting Executive Vice President of Human Resources between March 16, 2020 - August 30, 2021, and continues to serve as the chairman of Ethics Committee, Compliance Committee and Personal Data Steering Committee. Mr. Demir started his professional career in 1997 at Dun & Bradstreet Turkey office. From 2003 to 2007 he worked at Yıldız Holding Legal Consultancy Department and in 2007 he served as the Legal Counsel at Çalık Holding A.Ş. Between 2009 and 2015, Mr. Demir undertook Çalık Holding Legal Affairs Director role and in the meantime, he also served as member of Board of Directors at holding level and at group companies that operated in telecom and finance fields in Turkey and abroad. Serhat Demir graduated from the Faculty of Law at Istanbul University. He received his MBA degree from Fatih University and completed Executive Education Program at Harvard Law School. Osman Yılmaz* Kadri Özdal Executive Vice President - Finance (CFO) Executive Vice President - Consumer Sales Osman Yılmaz was appointed as Turkcell Chief Financial Officer on August 1, 2018. Mr. Yılmaz started his professional career at Türkiye İş Bankası Treasury Department in 2006. In 2007, he worked at BNP/TEB Treasury Department. From 2008 to 2016, he served as Senior Fund Manager in Structured Products and Group Head of Fixed Income and Multi Asset Funds at HSBC Global Asset Management. In August 2016, he joined Turkcell family as Director of Treasury, Risk and Collection Management. Mr. Yılmaz holds a dual BSc degree in Economics and Management from London School of Economics and Istanbul Bilgi University, MSc in Financial Engineering from Boğaziçi University and a PhD in Finance from Özyeğin University. Kadri Özdal was appointed as the Executive Vice President of Consumer Sales on September 26, 2019. He started his professional career at Vodafone in 1999 and worked in sales, marketing and commercial operations departments. He then joined Turk Telekom and held po- sitions in sales development, channel optimization and management functions. He served as sales development director and then as CSO from 2011 to 2012. Between 2012 and 2016, Kadri Özdal took part in foundation and management of n11.com which is one of the largest e-commerce platforms in Turkey and held CSO role. In February 2016, he joined Turkcell as Alternative Sales Channels Director and managed non-exclusive and dig- ital sales channels. He lastly served as Retail Channels Sales Director. Kadri Özdal graduated from Dokuz Eylül University, Faculty of Economics and Administrative Sciences, Department of Public Administration. *Osman Yılmaz has decided to resign from his position effective as of February 28, 2023. Mr. Kamil Kalyon, Financial Planning and Analysis Director at our Company, will also serve as the acting Executive Vice President of Finance in addition to his current role effective as of March 1, 2023. 16 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 17 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Ceyhun Özata Ataç Tansuğ Executive Vice President - Corporate and Residential Sales Executive Vice President - Digital Services and Solutions Ceyhun Özata was appointed as the Executive Vice President of Corporate and Residential Sales on September 26, 2019. He started his professional career at Reuters and worked as a Customer Advisor from 1995 to 1996. He held Assistant Manager of Customer Operations role at Superonline from 1996 to 1999. He served as a CRM and Product Management Manager at IXIR AŞ from 1999 to 2001. Starting from 2002, Özata held Project Manager, Online Sales Manager, CRM & Direct Sales Director, and Marketing Director positions at Turkcell Superonline. From 2008 to 2015, he served as the Vice President of Retail Sales at Turkcell Superonline which accelerated fiber infrastructure investments. Lastly, starting from 2015, he served as the Sales Director of Turkcell Residential and Small Medium Enterprises. Ceyhun Özata graduated from Boğaziçi University, Department of Electronics. Ataç Tansuğ was appointed as the Executive Vice President of Digital Services and Solutions on September 26, 2019. Mr. Tansuğ started his professional career as System Support Engineer at Datapro in 1999. Between 2002 and 2009, he served as International NGN/IMS Service Support Engineer, Team Leader and Team Manager in Alcatel-Lucent. From 2009 to 2011, he held Product Service Director role responsible for Turkey and Azerbaijan and Global Customer Service Director role in his last two years in the company. He joined Turkcell Group as the Chief Technology Officer of Turkcell Superonline in 2013. Later he was appointed as Transmission & Core Network Planning Director at Turkcell in 2016. Lastly, he held Digital Services & Solutions Technology Director position at Turkcell in 2017. He graduated from the Department of Civil Engineering at Boğaziçi University. Fatih Alper Ergenekon Serkan Öztürk Executive Vice President – Marketing Executive Vice President - Information and Communication Technologies & Executive Vice President - Digital Transformation Fatih Alper Ergenekon was appointed as the Executive Vice President of Marketing on April 29, 2020. He started his professional career as a project manag- er at OTA NGO in Berlin, Germany in 1996. He worked as a consultant at I-BIMSA between 1997-2000. After receiving his Master’s degree in Business Administration from the University of Rochester, New York in 2002, he worked as a Senior Marketing Specialist at FedEx USA headquarters in Memphis, Tennessee between 2002- 2005. He joined the Marketing Department of Turkcell in 2005 and was appointed as Marketing Manager in 2006 and Marketing Director in 2010. Lastly, he served as Strategy Director starting from September 2018. Fatih Alper Ergenekon received his Bachelor’s degree in Industrial Engineering from the Middle East Technical University in 1996. Serkan Öztürk joined Turkcell in 2000 as Project Supervisor. In September 2015, he was appointed as the Executive Vice President of Information and Communication Technologies. Between 2017-2019, he also served as the Executive Vice President of Customer Experience in addition to his existing role. Previously, he worked as project supervisor and manager at Turkcell Project Management office between 2000-2009. He served as Chief Information Technologies Officer in life – Ukraine between 2009-2010 and in Turkcell Superonline between 2010-2011. Prior his to his last appointment, he served as Customer Relations Management and Business Intelligence Solutions (CRM & BIS) Director. Serkan Öztürk graduated from Middle East Technical University Electrical and Electronics Engineering de- partment. He received his MBA degree from Istanbul University. In addition to his existing role, he assumed Executive Vice President role responsible for Digital Transformation as of August 2022. 18 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 19 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Gediz Sezgin Hüseyin Çakmak Executive Vice President - Network Technologies Executive Vice President - Human Resources (Acting) Gediz Sezgin joined Turkcell as a Network Engineer in 1995. In October 2015, he was appointed as the Executive Vice President of Network Technologies. Previously, he served as Senior Vice President of Information and Communication Technologies, Chief Information and Communication Technologies Officer, Director of Application Operations, Director of Service Network under the ICT Function and held various executive positions in the Technology Function such as Superonline Chief Technology Officer. Mr. Sezgin started his career at Alcatel Teletaş in 1991. He grad- uated from Istanbul Technical University Electronics and Communication Engineering Department and received his Master’s Degree and PhD from the same university. Hüseyin Çakmak, graduated from Anadolu University, Department of Political Science and Public Administration in 2003, and completed his master’s degree in Management Science at Kocaeli University, Department of Political Science and Public Administration in 2006. He started his career in the family company as Sales Operations Executive in 2003 and performed until 2006. In 2007, he attended Yıldız Holding Human Resources Organization and respectively acted as; Human Resources Manager of the Packaging, IT and Real Estate Group Presidency between 2007-2011; Human Resources Manager of the Food and Beverage Group Presidency between 2011-2015; Human Resources Group Manager of the Retail Group Presidency between 2015-2019. After act- ing as the Human Resources Group Director and Member of Executive Board at Aydem Holding between 2019- 2020, he joined Turkcell in August 2020 as the Employee Experience and Talent Recruitment Director. Effective as of November 24, 2022, Mr. Hüseyin Çakmak has been the acting Executive Vice President of Human Resources, which become vacant after Mr. Ali Rıza Esmen who has been serving as Executive Vice President of Human Resources of our Company since September 1, 2021. Ali Türk M. Akif Konar Executive Vice President - Supply Chain Management Executive Vice President - Strategy Ali Türk joined Turkcell as the Senior Vice President of Supply Chain Management in May 2016. He was appointed as the Executive Vice President of Supply Chain Management in March 2017. Mr. Türk started his career at Başak Hayat Sigorta in 1999. From 2002 to 2007, he held various managerial positions respon- sible for logistics planning, warehouse, and supply chain management processes at Ülker Group com- panies. From 2007 to 2011, he worked at Ceva Lojistik as Warehouse and Value-Added Operations Group Manager. Mr. Türk joined Turkish Airlines in 2011 as Cargo Operations Vice President. He was appointed as Turkish Airlines Cargo Operations President in 2012. Ali Türk graduated from Istanbul Technical University Industrial Engineering Department and completed Executive MBA program of Istanbul Technical University. M. Akif Konar was appointed as the Executive Vice President of Strategy on September 1, 2021. Starting his career in 1995, Konar worked as a Specialist at Belbim A.Ş., as Application Specialist at Vestel Group of Companies, and System Development Manager at Opet Petrolcülük A.Ş, respectively. Between 2004 and 2013, Konar served as Production Planning Manager, Investment Planning and Projects Manager, America and Far East Regional Manager, Production Planning Head, Marketing and Sales Head at Turkish Airlines, respectively. He assumed the role of Chief Commercial Officer in the company between 2013 and 2021. Mr. Konar also served as an Audit Comitee Member and as a Board Member at SunExpress and as a Board Member at TCI Turkish Cabin Interior Inc.. He completed his undergraduate and graduate studies in Management Engineering at Istanbul Technical University. 20 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 21 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Top Management of Subsidiaries Murat Erkan Erdal Yayla Chief Executive Officer See page 16 for the resume. General Manager of BeST BeST General Manager Erdal Yayla joined Turkcell İletişim Hizmetleri A.Ş. as a Financial Controller & Reporting Specialist in 2003. He served as the Manager of Financial Accounting, Controlling and Reporting Department (2004-2010), Deputy General Manager of Finance (2010-2016) and Acting General Manager (2014-2015), respectively at lifecell, Turkcell’s subsidiary in Ukraine. He served as the Deputy General Manager of Finance at BeST, Turkcell’s subsidiary in Belarus, starting from March 2016, and he assumed the Acting General Manager role starting from November 2018 un- til March 2020 in addition to his existing responsibility. Mr. Yayla serves as BeST General Manager since March 2020. Mr. Yayla started his career as a Senior Auditor at PricewaterhouseCoopers in 1999, and then worked as a Financial Controller at LafargeHolcim in 2002. Erdal Yayla graduated from Marmara University Faculty of Economics and Administrative Sciences in 1999 and completed the Executive Development Program at Wharton School in 2016. İsmet Yazıcı Çağatay Aynur General Manager of lifecell Ukraine General Manager of Turkcell Global Bilgi İsmet Yazıcı joined Turkcell in 2009. Mr. Yazıcı has been serving as the General Manager of lifecell, Turkcell’s sub- sidiary in Ukraine, since May 2017. Prior to this position, Yazıcı worked as the Deputy General Manager of Sales and Business Development at Global Tower between 2009 and 2010. He served as the General Manager of Global Tower between 2010 and 2011. From 2011 to 2015, he served as the General Manager at BeST, Turkcell’s subsidiary in Belarus, and as General Manager at Kuzey Kıbrıs Turkcell between 2015 and 2017. Beginning his professional career in 1993, Yazıcı served as the Research & Development Engineer, International Sales Engineer, Romania 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’s degree in Electrical-Electronics Engineering from Hacettepe University in 1992, and his postgraduate degree in Political Science from Marmara University in 1998 and in International Marketing and Management from the University of Texas in 2001. In 2011, he received his second undergraduate degree from Istanbul University, Faculty of Law. Çağatay Aynur joined Turkcell Group in 2000. On July 1, 2015, he was appointed as the General Manager of Turkcell Global Bilgi. Prior to this role, 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 at Turkcell. Mr. Aynur graduated from Department of Metallurgical Engineering at Middle East Technical University in 1993. 22 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 23 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Z. Korhan Bilek Erkin Kılınç General Manager of Turkcell Finansman / Financell General Manager of Turkcell Energy Solutions Korhan Bilek joined Turkcell team as Investor Relations and Mergers & Acquisitions Director in November 2016, and was appointed as Treasury and Capital Markets Management Director in December 2018. Since July 2020, he serves as Turkcell Finansman AŞ General Manager and Board Member. Korhan Bilek is also a member of the Board of Directors at Dijital Sigorta A.Ş.. He began his professional life as Research Analyst at the Federal Reserve Bank in 2000. He served as an analyst at AkInvest between 2002 and 2004 and Finance Director at Sabancı Holding between 2004 and 2013. Prior to Turkcell, he worked as CFO at Teknosa for 3 years and was a member of the Board of Directors at CarrefourSA Turkey between 2011 and 2016. Korhan Bilek has a M.S. degree from Boğaziçi University Electrical and Electronics Engineering department, and received his MBA from University of Rochester. Erkin Kılınç joined Turkcell Energy Solutions as the General Manager in 2017. Kılınç began his ca- reer at Ode Insulation as Sales Specialist in 1998. Subsequently, he served as Sales Specialist at Doğan Foreign Trade&Agency Operations (2001-2003), as Energy Trade Group Manager at Akenerji (2003- 2009), as Energy Projects Coordinator at Akfel Group (2009-2011), as Turkey Sales Director at RWE (2011-2015) and as Assistant General Manager at Limak Energy (2015-2017). Erkin Kılınç received his bachelor’s degree in Mechanical Engineering from Istanbul Technical University in 1998, and Executive MBA degree from Işık University in 2003. Murat Küçüközdemir Gürkan Arpacı General Manager of Kuzey Kıbrıs Turkcell General Manager of Turkcell Digital Business Services Murat Küçüközdemir graduated from İstanbul Technical University, Department of Electronics and Communication Engineering in 1992. He started his pro- fessional life in 1993 and assumed technical and man- agerial roles at Telemesaj A.Ş., İntelnet A.Ş. and Elkotek A.Ş. companies until 2005. He continued his career as the General Manager of Gisad Telekom A.Ş. between 2005 and 2007. Between 2007 and 2011, he worked as Assistant General Manager and General Manager at Global İletişim A.Ş. Murat Küçüközdemir, who joined the Turkcell family in 2011 after the acquisition of Global İletişim by Turkcell Group, worked as Data Center and Cloud Information Technologies Consultant, Corporate Fixed Products Marketing Director and Public Sales Director at Turkcell. In April 1, 2019 he was appointed as the Sales & Marketing Director of Kuzey Kıbrıs Turkcell. In May 1, 2021, he was appointed as the General Manager of Kuzey Kıbrıs Turkcell, where he served as Acting General Manager since February 1, 2021. He completed Insead Business School Leadership Development and IMD Business School Global Leadership programs. Gürkan Arpacı completed his bachelor’s degree in Electronics and Communications Engineering from Istanbul Technical University in 1993, and Strategic Management Programme at Cornell University in 2010. Arpacı, who began his career at Schneider Electric, worked in the Technology Department during the establishment phase of Turkcell, and served as the Founding Partner and Managing Director of EreNet & EreSis companies between 1995-1998. Subsequently, he worked as a Senior Business Consultant at Global One (Ex-Equant), and later served as the Communications Industry Business Unit Manager at HP between 2000-2008. Arpacı joined Turk Telekom in 2008 to es- tablish corporate customer segmentation and acted as Turk Telekom Group Corporate Segment Management Director. Up until the end of 2015, he managed all of the corporate segments (SME, Medium & Large Scale and Strategic) of Türk Telekom, TTNet and Avea companies, including group synergy with Innova. Gürkan Arpacı joined Turkcell team as Strategic Corporate Segment Management Director in 2015 and was appointed as General Manager of Turkcell Digital Business Services as of 1 April 2022. 24 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 25 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Atilla Yıldız Emre Erdem General Manager of Atmosware Teknoloji A.Ş. General Manager of Turkcell Superonline Atilla Yıldız joined Turkcell family in 2000. After serving at departments of Network Operations, Service Control Center and Business Intelligence Systems, he man- aged the units of Integration Management, Platforms & Services, and Value Added Services. Between 2014- 2018, he served as Application Operations Director and between 2018-2021 he served as Industrial and Financial Technology Solutions Director. In September 2021, Mr. Yıldız was appointed as Atmosware Teknoloji General Manager. Mr. Yıldız, graduated from İstanbul Technical University, Department of Electronics and Communication Engineering in 1999. Emre Erdem graduated from Istanbul Technical University, Department of Management Engineering. Starting his professional career as Financial Auditor at Arthur Andersen in 2000, Mr. Erdem worked as Senior Auditor at Ernst & Young until 2004 and transferred to the telecommunications sector, which was being liberalized at that time, as Billing & Customer Accounts Manager at Borusan Telekom. In 2007, he started working at Turkcell Superonline, the fixed telecommunication services company of the Turkcell Group, and served as Finance Manager and Customer Operations Manager, and in 2009 he worked as a manager in the newly created Operator Relations and Wholesale Department. Emre Erdem, who became a director in 2013, has been serving as Turkcell International and Wholesale Management Director since 2019. In addi- tion to this role, Emre Erdem has been working as Turkcell Superonline General Manager since April 2021. Serhat Dolaz Uğur Çağlar General Manager of Paycell General Manager of Turkcell Dijital Sigorta A.Ş. Serhat Dolaz, who joined the Turkcell family in 2009, is the General Manager of Paycell, a new genera- tion payment and financial services platform. Dolaz, graduated from Yıldız Technical University with a degree in Electronics and Communication Engineering and completed the Bahçeşehir University MBA pro- gram. After taking several technological management positions in Turkcell Teknoloji A.Ş. and Paycell, he took on responsibilities as CTO and Deputy CEO of Paycell most recently. He is also an Executive Board Member of Sofra A.Ş. (Paye) and Vice Chairman of the Board of TÖDEB (Association of Payment and Electronic Money Institutions of Türkiye). Uğur Çağlar graduated from Middle East Technical University Industrial Engineering Department and received his Executive MBA degree from Koç University. Starting his professional career as a Management Consultant at PricewaterhouseCoopers, Uğur Çağlar later worked for Booz Allen Hamilton in Turkey and the Middle East. He joined the financial services sector in 2007 with TEB (a BNP Paribas Company) as Strategic Planning Manager. He later moved on to the insurance domain with BNP Paribas Cardif as Chief Marketing Officer. He worked for Azərbaycan Sənaye Siğorta Company in Baku, Azerbaijan as an expatriate General Manager, and later as the Chairman of the Board between 2015-2019. In early 2019, he worked for MetLife as AVP of Business Development and Corporate Sales. He recently joined Turkcell as the General Manager of Turkcell Dijital Sigorta A.Ş., the insurtech initiative, in August 2022. 26 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 27 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES About the Report Turkcell at a Glance We are proud to present Turkcell’s third integrated annual report, published in line with Turkcell’s trans- parent and accountable governance principle, for the attention of our stake- holders. With the reports we publish annually, in addition to Turkcell’s finan- cial performance, we aim to reflect a holistic view of our strategies, approach- es, activities and perfor- mance in social, economic, environmental and corpo- rate governance aspects, in line with our integrated value creation model. This report, issued in compliance with the Turkish Commercial Code (TCC) the Capital Markets Board’s and (CMB) Communiqué Serial II.14.1 on “Principles on Financial Reporting in the Capital Markets” and con- Integrated Report (IR) sidering the Framework Principles published by the International Integrated Reporting Council (IIRC), aims to provide all stake- holders with a comprehensive review of Turkcell’s integrated and sustainable value creation approach, managerial capabilities and the outcomes of the efforts carried out in this regard. in accordance with İletişim Hizmetleri A.Ş. has Turkcell reported the GRI Standards, for the period from 1 January 2022 - 31 December 2022. In addition to financial and operational data presented in the report due to le- gal compliance, material sustainability issues which refer to social, econom- ic and environmental performance for the integrated value model have been identified in accordance with the principles listed in the GRI Standards. The content of the report also re- sponds to the indicators of COP on United Nations Global Compact that Turkcell joined among the signatories in 2007, CMB Sustainability Principles Compliance Framework, and SASB Telecommunication Services. The report content has been deter- mined taking into account the social, economic, environmental and gover- nance factors included in the integrat- ed value creation model in accordance with the Company’s sustainability per- spective. During the determination of these factors, we aimed at covering the information requirements of Turkcell’s long-term investors (our shareholders, bondholders and potential investors) as well as a wide-range of corporate stakeholders portfolio including pri- marily Turkcell employees, customers, public institutions and organizations, and non-governmental organizations. The terms “Turkcell”, “Company” and “Organization” used in the report refer to Turkcell Hizmetleri A.Ş. The financial data provided in the report are con- solidated so as to demostrate the or- ganizational integrity of Turkcell in ac- cordance with legal requirements and international standards. Data regard- ing social and environmental perfor- mance cover the operations in Turkey which constitute the most significant portion of the Company’s activities, un- less otherwise stated. Turkcell’s journey of creating integrat- ed value is being sustained and ex- panded gradually in every period in line with the principle of “for our stake- holders, with our stakeholders”. You may submit all your questions, opinions and feedback about our efforts, stra- tegic objectives and reporting activi- ties at dahaiyibirdunya@turkcell.com.tr Please refer to the Glossary section of the report for the explanation of ab- breviations and technical definitions used in the report. Turkcell has been op- erating in the commu- nications and technol- ogy services field as a pioneer of the tele- communications sector in Turkey since 1994. Please visit www.turkcell.com.tr for further information about Turkcell. Turkcell, which started its operations as a mobile communications company 29 years ago, has taken its place as a key player in the development of the telecommunications sector in Turkey by transferring its experience gained over the years into integrated commu- nications operatorship and then digital operatorship. Today, together with group companies operating in various service catego- ries, Turkcell serves its customers with high-quality voice, messaging, data, and IPTV services on mobile and fixed networks, and offers value added and innovative services in accordance with its strategic focus areas, namely; digi- tal services, digital business services and techfin services. Having expanded its operations abroad throughout the years, Turkcell operates in 4 countries: Turkey, Ukraine, Belarus and the Turkish Republic of Northern Cyprus. Turkcell launched LTE services on April 1, 2016. The company currently serves in 81 cities of Turkey with LTE-Advanced and 5 carrier aggregation technologies in mobile communications, reaching spe- eds up to 1.6 Gbps. The 234.4 Mhz total spectrum bandwidth owned by Turkcell, corresponds to 43% of the total spectrum in Turkey available for mobile operators’ use. Besides providing fiber data access at speeds reaching 10 Gbps in fixed te- chnology, Turkcell pioneers 5G studies in Turkey through the test runs it has been conducting through its pilot network, and the leading roles it has underta- ken in national and international con- sortiums. Upon the authorization of the Ministry of Transport and Infrastructure, Turkcell started offering the 5G techno- logy in Istanbul Airport as of July 29, 2022. Turkcell strives to offer equal and more opportunities to all its stakeholders with its vision of creating value for the society, as well as offering high-quality service and solution alternatives for the com- munication and digital service needs of its customers in its wide operational geography. Turkcell shares have been listed at both New York Stock Exchange (NYSE) and Borsa Istanbul (BIST) since July 2000. Therefore, Turkcell is the only Turkish company to be listed on both stock ex- changes. Moreover, Turkcell’s debt ins- truments are traded on the Irish Stock Exchange. Turkcell is also a constituent of the MSCI ESG Index and Borsa Istanbul Sustainability repor- ted TRY 53.9 billion of revenues in 2022 with total assets of TRY 101.3 billion as of December 31, 2022. Index. Turkcell 53.9 TRY Billion 2022 Revenue 101.3 TRY Billion Total Assets Turkcell’s Shareholder Structure Shareholders Nominal (TRY thousand) Share (%) TVF Bilgi Teknolojileri İletişim Hizmetleri Yat. San. ve Tic. A.Ş. IMTIS Holdings S.A.R.L. Publicly traded* Total 576,400 435,600 1,188,000 2,200,000 * Publicly traded shares also include ADS trading at NYSE. 26.2 19.8 54.0 100.0 28 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK B2; SPK C2.3; GRI 2.1; GRI 2.2; GRI 2.3 GRI 2.1 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 29 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Group Companies TURKCELL İLETİŞİM HİZMETLERİ A.Ş. Global Bilgi Pazarlama Danışmanlık ve Çağrı Servisi Hizmetleri A.Ş. 100% Lifecell Ventures Coöperatief U.A. 100% Beltel Telekomünikasyon Hizmetleri A.Ş. 100% Kıbrıs Mobile Telekomünikasyon Limited 100% Eastasian Consortium B.V. 100% Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. 9% CJSC20% Turktell Bilişim Servisleri A.Ş. 100% Limited Liability Company 100% Rehberlik Hizmetleri Servisi A.Ş. 100% CJSC 80% Lifecell Digital Limited 100% Turkcell Gayrimenkul Hizmetleri A.Ş 100% Turkcell Satış ve Dijital İş Servisleri A.Ş. 100% Kule Hizmet ve İşletmecilik A.Ş. 100% Atmosware Teknoloji Eğitim ve Danışmanlık A.Ş. 100% Turkcell Finansman A.Ş. 100% Lifecell DiJital Servisler ve Çözümler A.Ş. 100% Turkcell Teknoloji Araştırma ve Geliştirme A.Ş. 100% Turkcell Dijital İş Servisleri A.Ş. 100% Superonline İletişim Hizmetleri A.Ş. 100% Lifetech LLC 100% Turkcell Dijital Teknolojileri Limited 100% Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş. 23% Lifecell Bulut Çözümleri A.Ş. 100% Dijital Eğitim Teknolojileri A.Ş. 51% Turkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.Ş. 100% Boyut Grup Enerji Elektrik Üretim İnş. San. ve Tic. A.Ş. 100% BİP Digital Communication Technologies B.V. 100% BİP İletişim Teknolojileri ve Dijital Servisler A.Ş. 100% Yaani Digital B.V. 100% Lifecell LLC 100% Paycell LLC 100% Lifecell TV Yayın ve İçerik Hizmetleri A.Ş. 100% Beltower LLC 100% Turkcell Sigorta Aracılık Hizmetleri A.Ş. 100% Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. 90.91% Turkcell Dijital Sigorta A.Ş. 100% Lifecell Müzik Yayın ve İletim A.Ş. 100% Ukrtower LLC 100% Paycell Europe GmbH 100% Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş. 33.33% 30 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 31 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDIX Our Vision Superior digital services for a better future Our mission To add value to the digitalization journey of our customers, both in Turkey and across the globe, and enrich their lives with our continuously improving competencies and robust ecosystem 32 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 33 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDIX Turkcell 2022 Awards PSM Awards Social Responsibility Category Silver PSM Award – Paycell Forest Project Customer Interaction and Experience Category Silver PSM Award – Financell Loan Process Project Media Excellence Awards Auxiliary or Productivity Practices Category First Prize – Turkcell Pasaj Gift Assistant Page Stevie Awards for Women in Business Awards Female-oriented CSR Projects Category Stevie Award Women Writing the Future Climate Ideathon Ipra Golden World Awards Art Communication, Event and Sponsorship Category Awards Turkcell Vadi Turkey CXA’22 Customer Experience Awards EBest Customer Feedback and Insight Category Gold Award Project to Redesign the Invoice Process with Customer Feedbacks Best Innovation in Customer Experience (Corporations) Category Silver Award Let the Robot Do RPA Project Best Customer Services (Up to 10.000 Employees) Category Silver Award Outbound Excellence Project Best Technology Use Category Bronze Award End to End Mobile Network Experience Development Projects ACE Awards Communication (GSM) Category Diamond Award Turkcell Digital Platform Category Gold Award TV+ Internet Service Providers Category Silver Award Superonline Electronic Money Applications Category Silver Award Paycell Customer Centricity World Series Third Price in Customer-Centric Culture Category Second Price in Complaint Management Category Brandon Hall Group Excellence Awards Best Technologic Development in Testing and Learning Category Bronze Award CaseLab Stevie Awards for Sales & Customer Service Business Development Success of the Year Technology Sectors Category Bronze Stevie Award - Retail Channel Delivery Point Project SMARTIES MMA Awards Experimental-Innovative Technology Category Bronze Award Fizy IDC Türkiye Future Enterprise Awards Best in Future of Work Category First Prize Let the Robot Do RPA Project 34 | TURKCELL 2022 INTEGRATED ANNUAL REPORT 34 | TURKCELL 2022 INTEGRATED ANNUAL REPORT All awards received by Turkcell in 2022 can be accessed in Appendix-1 Turkcell 2022 Awards page of the Report. TURKCELL 2022 INTEGRATED ANNUAL REPORT | 35 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDIX Turkcell Group: Developments in 2022 Turkcell Group companies operate in 4 countries - Türkiye, Ukraine, Belarus, and the Turkish Republic of Northern Cyprus (TRNC) with 23,795 employees. BELARUS BeST 1.5 Million Mobile Customers TRY•936 Million Revenue TÜRKİYE Turkcell Türkiye TRY40.9 Billion Revenue 37.5 Million Mobile Customers 2.9 Million Fixed Customers 1.3 Million IPTV Customers UKRAINE lifecell 10.2 Million Mobile Customers TRY 4.8 Billion Revenue TRNC Kuzey Kıbrıs Turkcell 0.6 Million Mobile Customers TRY 473 Million Revenue 36 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 37 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES 2022 Strategic Goals and Management Discussion Robust revenue, EBITDA and net income performance supported by our business model diversified with strategic focus areas, sequential price adjustments and our human- oriented inclusive strategy to Our Business s.68 TRY 53.9 billion revenue on 50.0% growth TRY 22.0 billion EBITDA on 46.5% rise TRY 11.1 billion net income on 119.7% increase to Our Business s.68 Leverage level below the industry average thanks to effective balance sheet management; healthy FX position on disciplined financial risk management 0.9x net leverage level1 USD 25 million net short FX position2 to Our Business s.68 Cash flow generation with successful operational performance despite challenging macroeconomic conditions TRY 1.7 billion free cash flow generation3 to Our Business s.68 Double-digit ARPU growth supported by price adjustments, increased usage and upsell efforts Mobile ARPU at TRY 77.0 on 40.3% increase4 Residential fiber ARPU at TRY 99.2 on 26.5% growth 1Starting from Q421, we have revised the definition of our net debt calculation to include “financial assets” reported under current and non-current assets. Required reserves held in CBRT balances are also considered in net debt calculation. We believe that these assets are highly liquid and can be easily converted to cash without significant change in value. 3 Free cash flow calculation includes EBITDA and the following items as per Turkish Financial Reporting Standartds (TFRS) cash flow statement; acquisition of property, plant and equipment, acquisition of intangible assets, change in operating assets/liabilities, payment of lease liabilities and income tax paid. 2Advance payments are included 4 Excluding M2M. Inclusive s.106 Successful subscriber net addition performance on the back of strong infrastructure, high quality customer services and rich value proposition 1.9 million net mobile subscriber additions 68.1% share of postpaid subscribers 234 thousand net fiber subscriber additions 2.3 million total net subscriber additions Inclusive s.106 Continued growth in data usage with digitalization, increasing smart phone penetration and rising 4.5G users 14.7 GB monthly average mobile data usage per subscriber Inclusive Increasing share of our digital sales channels in total sales with evolving consumer habits s.106 24.9% increasing share of digital sales channels (Q422) Strong momentum prevailing in our strategic focus areas Inclusive s.106 An increase of 30% in total revenues of digital services, 61% increase in digital OTT service revenues 88% revenue growth in digital business services 72% rise in techfin revenues 87% rise in Paycell revenues Strong performance in sustainability indices to Our Business s.68 Listing in the BIST Sustainability Index since the first day Listing in the BIST Sustainability 25 Index Carbon Disclosure Project Note increased from B to A- 38 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 39 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Increasing momentum towards net zero goals Strengthening Turkey’s Sector Leadership in Intellectual Property Developing Equal Opportunities and Diversity to the Environment s.178 227,592 GJ energy saving, 414,911 ton CO2e emission reduction 1.5 MW renwable energy installed capacity with TRY 11.3 million of investment Increasing refurbishing practices in e-waste management Inclusive s.106 Inclusive s.106 965 R&D employees 325 national patent applications; 966 registered patents 8 TÜBİTAK, 10 HORIZON supported R&D projects Women Developers of the Future Climate Ideathon enabled 200 women to develop product ideas using technology to address climate change 34.6% female employee ratio 30% female employee ratio in engineering positions 35% female employee ratio in IT positions 80 Whiz Kids classes throughout Turkey Turkcell achieved successful results de- spite the challenging competitive envi- ronment in its operating markets due to the political and challenging macroe- conomic conditions globally in 2022. In line with its aim to create value for all stakeholders, Turkcell sustained its op- erations effectively with a diversified business strategy and proactive risk management during a period of mar- ket volatility and uncertainty. We achieved solid financial results in 2022 with strong performances in all of our services and solutions, which were tailored to meet our customers’ chang- ing needs. Turkcell’s consolidated reve- nues reached TRY 53.9 billion, represent- ing a 50.0% increase compared to the previous year. Consolidated EBITDA in- creased by 46.5% to TRY 22.0 billion. Net income increased by 119.7% compared to the previous year, reaching TRY 11.1 billion. Operational CAPEX (excluding li- censes) amounted to 20.2% of revenues. Thanks to our strong balance sheet, prudent risk management approach, and profitable operations that are aware of our social and environmental impact, we distributed a gross amount of TRY 1,257,774,594 in dividends to our shareholders in 2022. In recent years, the rising trend of dig- italization has increased not only the needs of individuals for digital prod- ucts and services but also the demands of companies. Following our principle of providing technology that leaves no one behind, Turkcell has taken an- other step towards financial inclusivi- ty by offering digital business services that provide the most accurate solu- tions for professional needs, in addition to individuals’ digital service needs. Along with digital services, our Paycell, Financell, and Güvencell brands offer innovative payment, financing, and insurance services to both individuals and commercial enterprises. With the increasing customer potential, our fi- nancial solutions have not only con- tributed positively to our own revenue, but also had a multiplier effect on the user and revenue growth of all our products and services. The reporting period was a year in which we carried out successful ac- tivities in many areas of sustainability management, in addition to our finan- cial and operational performance. Firstly, we published the Positive Imprint in Sustainability Strategy in line with the new company priorities we identified within the framework of our integrat- ed value creation model. Within our sustainability strategy, which we have gathered under environmental, social and governance aspects as “Positive Imprint to the Environment”, “Inclusive Positive Imprint” and “Positive Imprint to Our Business”, we aim to eliminate our negative impact while increasing our positive impact. As part of the “Positive Imprint to the Environment”, we have accelerated our investments in renewable energy production throughout the year. This has enabled us to reduce both our GHG emissions and energy costs. Through these investments, we are progressing towards becoming a preferred digi- tal service partner for customers who adopt environmentally friendly busi- ness models. We met 100% of our elec- tricity needs from renewable sources in 2022. With a solar energy investment of TRY 11.3 million, we increased our in- stalled capacity to 1.5 MW. Our goal is to produce 30% of our own electricity needs by 2025 and achieve a net zero operations level by 2050. As part of Inclusive Positive Imprint, we are implementing several projects to ensure equal, accurate, and secure access to information for everyone and to enable everyone to use the unlimited opportunities offered by the internet. To create a generation that produces technology rather than consuming it, we are creating technology classes through our Whiz Kids project for chil- dren. To help seniors benefit from the opportunities of the online world, we are establishing technology rooms in nursing homes and providing digital literacy training through Turkcell TV+. We are also implementing projects like My Dream Companion to ensure equal participation of people with disabili- ties in life through technology. We take actions to increase the pres- ence of women in technology both in our company and at the manage- ment and board levels. In this context, we have managed to increase our female employee rate to 34.6% and our female executive rate to 24.9% in 2022. Throughout the year, our female employees held 30% of engineering positions and 35% of IT positions. We continue to support women’s entrepre- neurship and employment in the tech- nology field through our projects such as Women Developers of the Future and Equal Opportunities, Equal Conditions. This year, we turned the competition part of our Women Developers of the into an Ideathon for Future project Climate Change. In this way, while sup- porting the equal presence of women in the technology field, we aim to create awareness for their equal participation in climate change solution processes and seek solutions to the climate crisis with technology product ideas. As part of our commitment to Positive Imprint to our Business, we are devel- oping systems for transparent, ac- countable, and ethical operations as we establish our responsible value chain. 40 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 41 Value Creating Turkcell As Turkcell, we continue our 29-year journey, which we started with the aim of introducing mobile communication to Turkey, by successfully breaking new grounds in our sector. Value Creating Turkcell Our Core Competencies Our Strategic Focuses, Initiatives and Opportunities TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Value Creating Turkcell Turkcell Sustainability Management and Involvement of Senior Management As Turkcell, we continue our 29-year journey, which we started with the aim of introducing mobile communication to Turkey, by successfully breaking new grounds in our sector. We have created value for all our stakeholders by gaining an integrated digital operator identity with the great development we have made over the past years. Believing in the restorative power of our strong and sustainable business model and innovative digital technology and communication tools, we will contribute to the digital trans- formation of the geographies where we operate, support the equal access of people to life and social develop- ment, create value for our stakehold- ers, particularly for our customers, shareholders and employees, and con- tinue to increase our positive impact while reducing our negative impact to zero in the forthcoming periods. In the previous periods, we have re-considered our business model with an integrated point of view and implemented a multi-capital-focused value creation perspective. During this reporting period, we aim to increase the value we produce by associating the inputs of our value creation model with the strategic focus areas that we have identified through the materiality studies we have carried out accord- ing to the feedback of our managers, employees and external stakeholders. We regularly monitor the performance we have achieved with concrete and measurable indicators, and ensure an effective management of the value we produce for all our stakeholders. Integrated Corporate Value Creation Management Structure of Turkcell Turkcell Board of Directors, whose duties and powers have been determined ac- cording to the provisions of the Turkish Commercial Code, is the highest-level management body that directs Turkcell’s strategic sustainability initiatives. In this context, the Board of Directors has the responsibility for the strategic manage- ment of our Integrated Value Creation Model, evaluating the related efforts and monitoring the progress. The connection between the strate- gic level and the action level of the is Integrated Value Creation Model Integrated realized through Turkcell Value Creation Committee, which is es- tablished at the Senior Management level, and chaired by the Chairman of the Turkcell Board of Directors. The committee monitors the activities of the Company regularly and informs the Board of Directors and the relevant Board Committees when necessary. The activities conducted within the scope of integrated value creation model and the integrated reporting process which includes the outcomes of this model are under the responsibility of Turkcell Senior Management, and Turkcell Board of Directors provides senior level super- vision. Accordingly, through the inte- grated annual report published every year, the Integrated Value Creation Committee reports the activities carried out within the scope of environmen- tal, social and governance policies in a format suitable for public disclosure to the Board of Directors and receives its approval. The responsibilities of the Integrated Value Creation Committee include; Guiding report plans within the scope of integrated value inte- creation process and grated report, Reviewing integrated the value creation process in line with Turkcell’s strategy, Guiding the content of the in- tegrated report and giving an opinion on the draft. Represented by directors of vari- ous functions, Turkcell Sustainability Committee plans the activities regard- ing the identification and realization of short and long-term action plans in accordance with environmental, social and governance policies, identification of material sustainability issues, risks and opportunities, and production of performance on these issue matters. Integrated Corporate Value Creation Management Structure of Turkcell Board of Directors Integrated Value Creation Committee The committee reports the obtained outcomes to the Board of Directors through the Integrated Value Creation Committee. Studies to improve perfor- mance in identified areas are imple- mented by Project Teams formed with the participation of Company execu- tives who are determined according to their expertise. Keeping the principles of transparen- cy and accountability at the core of its corporate philosophy, Turkcell develops corporate policies in the areas it prior- itizes and carries out its activities in line with the rules determined in these poli- cies. Turkcell’s policies within the scope of Environment, Social and Governance the Sustainability are discussed at and the Integrated Value Creation Committees, reviewed and approved by our Board of Directors. Following the Board of Directors approval, they are published on the Turkcell corporate website, under the title of sustainability for the opinions and information of our stakeholders. ISO ISO In accordance with the quality man- agement philosophy followed through- out Turkcell, many sustainability issues are managed with systems created by following ISO Standards. In this scope, ISO 9001 Quality Management System, ISO 14001 Environmental Management System, 14064 Greenhouse Gases Calculation and Verification Management 27001 System, Security Management Information System, ISO 22301 Business Continuity 45001 Management ISO Systems, Occupational Health and Safety Management System and ISO 50001 Energy Management System are among the system standards followed for the management of sustainability issues. The up-to-dateness of these system standards and their application level are controlled and certified with period- ic independent external audits. You may check our certificates in Appendix 2, ISO Certificates section. 44 | TURKCELL 2022 INTEGRATED ANNUAL REPORT 44 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.1; SPK A2.1; SPK A2.2 GRI 2.12; GRI 2.13; GRI 2.14; GRI 2.15; GRI 2.16; GRI 2.17; GRI 2.18; GRI 2.24 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 45 Sustainability Committee Project Teams You may check our certificates in Appendix 2 ISO Certificates section. TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Sustainability Priorities Turkcell Sustainability Priorities Matrix The basis of the Turkcell Sustainability Strategy and Integrated Value Model is the Turkcell Sustainability Priorities, which we determined by systematic methods in line with the principles set forth in international standards such as GRI. We re-evaluated our materiality port- folio with a comprehensive survey and analysis study we carried out during the reporting period. In this evaluation, we followed the Double Materiality approach, which creates an even stronger reference to the integrated value model logic as suggested by the standards organizations such as GRI, IIRC and SASB and regulations such as EUCSRD. In conventional materiality studies, 2 key approaches, namely “financial pri- ority” and “sustainability priority” were used. The studies carried out with the financial priority approach have con- sidered the factors that can affect the Company’s value from outside to in- side; while those with the sustainability priority approach have considered the influence of the Company on the en- vironment and society, from the inside out. The Double Materiality approach, on the other hand, combines these two consistent approaches and focuses on both the factors that may affect the financial, environmental and social performance of the Company, and the impacts that the Company may have on society and the environment. In this direction, we started the ma- teriality study initially by creating a research universe consisting of 40 social, economic, environmental and technology topics and 17 Sustainable Development Goals, which we ob- tained by screening past practices, sectoral initiatives such as GSMA, re- porting standards such as GRI and SASB, research studies such as WEF Global Risk Report, and various index contents. Then, we evaluated this sub- ject universe with a screening study with 13 Turkcell executives, 921 Turkcell employees, 105 individual customers, 91 corporate customers, 22 suppliers and business partners, and 23 stakehold- ers representing other groups such as media, NGOs, public institutions and regulatory agencies. As a result of this study, which was designed with a focus on risk, opportunity and expec- tation, with parameters customized according to stakeholder category, we have reached both a general ma- teriality portfolio and a comprehensive portrait of expectations on the basis of stakeholder groups. Finally, we held a workshop with the participation of more than thirty Turkcell executives who represent various specialization units to discuss the current sustaina- bility trends and managerial practic- es as well as the materiality portfolio we obtained. We finalized Turkcell Sustainability Priorities by presenting the workshop outputs for the opinion and approval of the Turkcell Integrated Value Creation Committee, which was convened with the participation of our Chairman of the Board of Directors and Senior Executives. Due to the fact that stakeholder expectations and the company’s impact and potential to be impacted are evaluated at the highest level, the top priority issues in the first group in the materiality matrix are the issues that form the basis of the Turkcell Sustainability Strategy and are managed with systematic targets within the scope of the value generation model. The subjects that are considered as a priority at the secondary level, on the other hand, refer to the subjects that the company aims to achieve performance through active studies. Finally, the issues that are prioritized at the third level refer to the areas that are on the agenda and follow-up of the Company’s executives, and for which practices are developed with the perspective of legal compliance and sectoral competition. High s n o i t a t c e p x E r e d l o h e k a t S Low Economic 7 8 9 10 13 14 15 24 25 26 4 5 6 19 20 29 1 2 3 11 16 17 18 27 28 Pioneering Digital Technologies and Innovation To be an Integrated Telecommunications Operator Active in a Value Chain Ranging from Fiber Infrastructure to Digital Business Services Enhancing Digital Customer Experience and Satisfaction Managing Climate Impacts Cyber Security and Data Privacy Protection Decent Workplace Business Ethics and Legal Compliance Pioneering Use of Innovative Digital Technologies in Fundemental Sectors Such as Education, Health, Agriculture, Transportation and Finance Supporting Local Technology Development 21 22 23 12 30 Company Impact High 1 2 3 4 5 6 7 8 9 Pioneering Digital Technologies and Innovation To be an Integrated Telecommunications Operator Active in a Value Chain Ranging from Fiber Infrastructure to Digital Business Services Enhancing Digital Customer Experience and Satisfaction Transparent Corporate Tax Practices and Policies Priority Given to Local Procurement Activities Protection of Intellectual Property Rights Development of the Geographical Scope of Reliable, Quality and Fast Digital Service Infrastructure Emergency Preparedness and Ensuring Infrastructure Security To Increase Access to Digital Technologies and Digital Literacy for Disadvantaged or Low-Income Groups Among the Broad Social Masses 10 Supporting Local Economy Environmental Managing Climate Impacts Managing Sustainability Impacts in the Supply Chain Supporting Circular Economy and Responsible Waste Management Efficient Use of Water Developing Environmentally and Climate-Friendly Digital Products and Services 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Social Cyber Security and Data Privacy Protection Decent Workplace Business Ethics and Legal Compliance Transparency in Product Information and Responsible Marketing Practices Supporting Social and Cultural Development of the Community Supporting the Social and Cultural Development of the Community Talent Management, Employee Development, and Training Activities The Dissemination of New Working Models such as Remote Work and Flexible Working Hours Protecting Children, Youth, and Seniors Against Cyber Risks Managing the Health Effects of Mobile Devices and Base Stations Supporting Digital Rights, Ethics, and Expression Diversity Technology Pioneering Use of Innovative Digital Technologies in Fundemental Sectors Such as Education, Health, Agriculture, Transportation and Finance Supporting Local Technology Development Support for Business Model Ideas that Aim to Solve Sustainability Issues with Digital Technologies Supporting Vocational Training Activities That Will İncrease the Capacity of Young People in the Field of Information and Communication Technologies (Ict) and Enhance Their Chances of Employment TURKCELL 2022 INTEGRATED ANNUAL REPORT | 47 46 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK D1 GRI 2.26; GRI 3.1; GRI 3.2 SPK D1 GRI 2.26; GRI 3.1; GRI 3.2 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Inclusive TURKCELL SUSTAINABILITY STRATEGY to Our Business to the Environment Equal Digital and Social Opportunities Transparency and Accountability Fighting Climate Crisis Digital Security and Wellbeing Ethical Conduct Circular Conduct Human Oriented Turkcell Culture Responsible Value Chain Efficient Technology Solutions Turkcell Sustainability Strategy: Positive Imprint in Sustainability Innovation and technology are the core catalysts of sustainable development, the key objective of the current world. Technological solutions make it possible to give an effective response to social, economic, environmental and mana- gerial problems. Thanks to the technol- ogy, we can reduce our environmental impact by efficient use of resources, in- crease social and economic coverage, and develop transparent, accounta- ble and responsible practices that our stakeholders expect. In this scope, mo- bile communication and digital tech- nology applications play a major role in creating the infrastructure of studies for sustainable development. Since we operate on a broad value chain that expands from mobile com- munication to digital applications, we aim to play a leading role in our opera- tion geography also with our sustaina- ble integrated value model, as we do in every field. Accordingly, we listen to our stakeholders at every opportunity and learn about their expectations, support sustainable development with the solu- tions we develop by following interna- tional trends and good practices, and strengthen our leading position in the sector with our effective and profitable business model that creates long-term value for our stakeholders. We follow a sustainability strategy that will produce a positive impact in the short, medium and long term by com- bining the potential of our sector, the agility of our organization and our su- perior digital service experience with sectoral risk and opportunity param- eters and Sustainable Development Goals. We periodically measure the up-to-dateness and outputs of this strategy and update our position when necessary. We reviewed our sustainability strategy with the control studies we carried out during the reporting period. As a result of this, in the light of the developments and changing stakeholder expecta- tions, we have made updates in our definitions for our strategy, for which we have determined our main slogan as “Positive Imprint in Sustainability”. THE POSITIVE IMPRINT IN SUSTAINABILITY STRATEGY CONSISTS OF 3 MAIN AXES Inclusive With the Inclusive Positive Imprint axis, we aim to provide equal opportunities in our workplace, products and services, and in our social sphere of influence, to include all segments of the society, support the state of be- ing good in the digital world and to “not leave anyone behind” in social, economic and cultural development. to Our Business to the Environment With the axis of Positive Imprint to our Business, we aim to de- velop a strong business model that is shaped by the principles of transparency, accountability and business ethics throughout our value chain, and where sus- tainability risks and opportuni- ties are effectively managed. With the axis of Positive Imprint to the Environment, we aim to manage our environmental im- pacts, protect natural life and play a leading role in tackling environmental problems, espe- cially climate change. 48 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.2; SPK A3.1; SPK B5 GRI 2.22 SPK A2.2; SPK A3.1; SPK B5 GRI 2.22 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 49 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Supported Sustainable Development Goals SDG Supported Targets Description SDG Supported Targets Description Target 7.2: Increase the share of renewable energy globally Target 7.3: Double the energy efficiency Target 7.A: Support access to clean energy, technology and investment Target 8.1: Sustainable economic growth Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation Target 8.3: Promote development- oriented policies that support productive activities entrepreneurship and new job opportunities Target 8.4: Improve resource efficiency in production and consumption Target 8.5: Achieve full employment, decent work and equal pay for work of equal value Target 8.6: Support education and employment of youth Target 8.7: End modern slavery, humman trafficking and worst forms of child labour. Target 8.8: Protect labour rights and promote safe work environments Target 8.10: Expand access to banking, insurance and financial services for all Target 8.B: Develop a global strategy for youth employment Target 9.1: Develop sustainable, resilient and inclusive infrastructure Target 9.2: Promote inclusive and sustainable industrialization Target 9.3: Increase the access to financial services and markets Target 9.4: Upgrade industry and infrastructures to make them sustainable Target 9.5: Enhance scientific research and technology in industrial sectors Target 9.A: Facilitate sustainable infrastructure development in developing countries Target 9.C: Increase access to information and communications technology for all At Turkcell, energy consumption, which is one of the root causes of climate change and a fundamental operation- al efficiency parameter, is seriously managed with interna- tional system standards such as ISO 50001. The energy con- sumption points are continuously monitored and efforts are made to increase energy efficiency with the measures taken. As of 2021, Turkcell has started supplying all its electricity from certified renewable sources, and investing in renewable energy in line with the goal of achieving net zero operations by 2050. Turkcell, the pioneer of communication and digital service tech- nologies, supports sustainable economic growth in the markets it operates in through its investments and R&D efforts in innova- tive infrastructure and application development. Thousands of Turkcell customers from various sectors have the opportunity to achieve digital transformation in their ventures through the pro- vided communication infrastructure and innovative applica- tions, leading to more efficient and productive business models. Additionally, under the umbrella of innovative techfin services such as Financell and Paycell, solutions are developed to sup- port wider societal access to insurance and financial products with more ease and advantage. As a signatory of the UN Global Compact, Turkcell aims to pro- vide a work environment that is secure, inclusive, and equal, where the rights of its employees are guaranteed. Turkcell also strives to eliminate any negative practices, such as forced la- bor and child employment, across its value chain. Adhering to the principle of equal pay for equal work, Turkcell works to not only improve access to employment but also to provide equal opportunities and rights throughout the employment process in terms of gender equality. Turkcell believes that Turkey’s young population is the main driving force behind its development. In this context, Turkcell de- velops programs aimed at enhancing the entrepreneurial spirit of the young, preparing them for their careers with a quality ed- ucation and experience in information technologies and other professional skills, thereby supporting youth employment. Turkcell aims to provide its customers with a seamless and re- liable service infrastructure through its strong network struc- ture, geographical coverage, and emergency preparedness capacity, and continually works to improve this quality. At the same time, Turkcell aims to make high technology accessible to everyone, including groups that face economic or social disadvantages, by providing access to a wide range of dig- ital services such as techfin infrastructures such as Financell, Paycell and Güvencell, as well as financial, communication, and information technology products and services. Turkcell strives to be a trusted business partner for all economic ac- tors, from small businesses to large industrial ventures, on their digital transformation journey. Target 12.2: Achieve the sustainable management and efficient use of natural resources Target 12.4: Achieve the responsible management of chemicals and all wastes Target 12.5: Substantially reduce waste generation Target 13.2: Integrate climate change measures into national policies, strategies and planning Target 13.3: Improve education and institutional capacity on climate change mitigation Target 16.5: Substantially reduce corruption and bribery in all their forms Target 16.6: Develop effective, accountable and transparent institutions at all levels Target 16.10: Ensure public access to information and protect fundamental freedoms Under the responsible management approach, Turkcell manages environmental risks arising from its operations in accordance with international standards. In this context, the company aims to improve resource efficiency, environmen- tal protection, and the development of natural resources by taking measures, particularly with regards to mitigating the effects of climate change. Through these implementations, Turkcell reduces its environmental impact while enhancing the business value of the resulting resource efficiency. Efforts are underway in areas such as energy and water resource efficiency, waste management, circular economy practices, and preservation of biodiversity. Turkcell recognizes climate change as a phenomenon that affects not only the nature but also the global economy, hu- man wellbeing and, as a result, Turkcell's business success. It is clear that if effective measures to combat climate change are developed, there will be opportunities to positively im- pact business success. In line with this, Turkcell includes the risks and opportunities arising from climate change in its corporate policies and strategies, as well as its planning processes related to operational and service development. Turkcell manages seriously the elements that may affect climate change, including energy consumption and green- house gas emissions, among its operations. Additionally, Turkcell will increase the knowledge and awareness of its stakeholders, particularly employees, on climate sensitivity and will carry out efforts to expand the scope of the fight against climate change. To enhance the effect produced, Turkcell engages in joint ventures with various stakeholders, including civil society organizations. Turkcell, as the only Turkish company simultaneously listed on the NYSE and Borsa Istanbul, adheres to internationally recognized principles of corporate governance as an inte- gral part of its management approach, in compliance with the legal regulations it is subject to. In this direction, Turkcell aims to establish a transparent, accountable, and effective corporate governance structure across the Company and its Group companies. Maintaining a superior business eth- ics mindset among all Company employees and through- out the value chain, compliance with the legal regulations, and prevention of any form of bribery and corruption are non-negotiable and uncompromisable corporate principles. To achieve this, the Group has developed management and control systems, with performance being regularly moni- tored and improvement measures taken as necessary. 50 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A3.2 SPK A3.2 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 51 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Interactions with Our Stakeholders The motto “For our stakeholders, together with our stakeholders” expresses the management approach we have adopted in order to create value for our stakeholders, which is our most fundamental goal. We determine our activities and decisions by listening to the expectations and opinions of our stakeholders, and we improve our business processes, products and services with the feedback we receive. We pay attention to being consistent, inclusive and accessible in our interactions with our stakeholders; we respond to their information and communication requests in a transparent, open and timely manner. Stakeholder group Communication tools and frequency Employees Integrated Annual Report (annual), Meetings & Interviews (periodic), C-level Open Door meet- ings (periodic), Performance Evaluations (quar- terly), Announcements (continuous), Reports, Awayday, Events (periodic), Information Reports (periodic), Publications and Bulletins (periodic), Corporate Web Site (continuous) Suppliers Customers Shareholders and Investors (continuous), Integrated Annual Report (annual), Supplier (continuous), Supplier Management System Portal Internal and External Meetings (periodic), Supplier Days (annual), Cooperation Meetings with SME and Local Manufacturers (continuous), Technopark Visits (continuous), Turkcell Partner Network (continu- ous), Corporate Website (continuous) Integrated Annual Report (annual), Media (con- tinuous), Advertising and Promotion Activities (con- (continuous), Social Media Accounts (continuous), tinuous), Corporate Website Dealers (continuous), Call Center (continuous), IVR (continuous), SMS and Email (continuous), Satisfaction Questionnaires (periodic), Turkcell App (continuous), KEP, CIMER, BTK, TSS channels (continuous) Integrated Annual Report (annual), Board of Directors Meetings (periodic), Conferences, Meetings and Roadshow activities (periodic), Investor and Analyst Day Meetings (on demand), Quarterly Financial and Operational Results Announcements and Operating Reports (quar- terly), Investor Relations Website (continuous), Teleconferences (periodic), Material Disclosures over Public Disclosure Platform (instantaneous), Explanations for Frequently Asked Questions (continuous), Email (continuous), Telephone Calls (continuous), Corporate Website (continuous) Frequently asked questions and demands in 2022 The application conditions of working models that seem to take their place in business life, such as adapting to the changing working conditions with the pandemic period, remote working and flexible working, stand out among the questions and demands conveyed by the employees during the period. Meanwhile, the needs for health and psychological sup- port have also increased during the period. Employee demands were met by creating various applications and programs for these demands. In line with macroeconomic developments, re- quests for wages and fringe benefits were re- sponded to in line with the remuneration policy. The program was introduced at meetings with the Suppliers on the Supplier-Centric Innovation Day, panels with the subject digitalization and sustainability were held and successful projects were awarded. Opinion application channels were shared and new innovative ideas were gath- ered. Moreover, throughout the year, coordination meetings were held with the suppliers to minimize the effects of global risks associated with the pro- duction and logistics processes of critical product groups, and mutual actions were defined. During the period, solving the basic ques- tions and demands of customers, service plan conditions, promotions, purchasing a service package and solving technical problems were focused on. These demands and questions are quickly resolved by the relevant units. As a result of the digitizalization efforts carried out during the period, the speed of developing solutions to customer demands significantly increased. Financial and operational information, which is the most basic expectation conveyed by share- holders and investors during the period, was met through transparent and timely disclosure through various channels. Meanwhile, the in- creasing interest and expectations of sharehold- ers and investors in cyber security, corporate gov- ernance and legal compliance practices were met with the implementation and information activities developed during the period. The process of identifying sustainabil- ity priorities is one of the key studies realized with stakeholders’ feedback. Also in the prioritization efforts carried out during the reporting period, many Turkcell stakeholders who represent the stakeholder groups have contrib- uted to this process with their feed- backs. In the stakeholder group-based analysis studies we have carried out, the top priority expectations of our individual and corporate customers concentrated on “emergency prepar- edness and infrastructure security”, “development of the geographical coverage of reliable, high quality and fast digital service infrastructure”, “cy- ber security and data privacy”, “re- newable energy use”, “leading the use of innovative digital technologies in key sectors” and “supporting voca- tional training activities that would in- crease the employment opportunities of young people by increasing their capabilities in the field of information and communication technologies”. The expectations of shareholders, in- vestors and brokerage institutions were concentrated on “leading digital technologies and innovation”, “cyber security and data privacy”, and “de- veloping environment and climate friendly digital products and services”, “to increase the access to digital tech- nologies and digital literacy of large social masses, disadvantaged or low purchasing power groups”. The expec- tations of our other stakeholder groups have also brought the same issues to the fore. Turkcell Board of Directors is informed annually about stakeholder expectations and priorities obtained through the Integrated Value Creation Committee as part of the prioritization process. Stakeholder group Communication tools and frequency Public Institutions and Regulatory Bodies Integrated Annual Report (annual) Official (continuous), Meetings & Correspondence Events (periodic), Public Opinion Documents (on demand), Information Reports (periodic), Presentations and Position Documents (on de- mand), Periodic Publications and Bulletins (pe- riodic), Corporate Website (continuous) NGO’s Media Universities, Academicians, Students Report Annual Integrated (annual), Memberships (continuous), Board of Directors Working Group and Council Meetings (pe- riodic), Workshops (on demand), Seminars, Conferences and Events (annual), Forums and Meetings (on demand), Joint Projects (on de- mand), Corporate Website (continuous), Social Media (continuous), E-mail communication (instantaneous) Integrated Annual Report (annual), Press Releases (instant), Press Meetings (instant), Meetings and Interviews (on demand), Turkcell and Turkcell General Manager Social Media Accounts (continuous), Corporate Website (continuous) Turkcell Academy Curriculum Courses (period- ic), Certificate Programs (periodic), Technical Trips (on demand), Project Contests (annual), (on demand), Joint Academic Publications Projects Information Sharing (on demand), Meetings (on demand), PhD Fellowships (on demand), Project Sponsorships (on demand), Corporate Website (continuous), Social Media (continuous) Frequently asked questions and demands in 2022 Various information and opinion demand of public institutions and regulatory bod- ies regarding the industry and the business life were responded throughout the period. Collaboration and project development de- mands were responded as long as the subject of the related application was compliant with the Company’s activities and the corporate re- sources allowed for it. The main expectations conveyed by NGOs dur- ing the period focused on information needs, membership requests, joint project and spon- sorship requests. While information requests were answered in line with corporate informa- tion sharing policies, membership, sponsorship and joint project requests were responded to as long as the relevant organization adopt- ed the values of cooperation with Turkcell, and the related work was compatible with Turkcell's corporate policies, field of activity and expectations. During the period, information requests regard- ing financials and company projects and prac- tices conveyed by members of the media to- wards Turkcell and the sector were responded to in a transparent and timely manner. Requests made by universities and academics during the term, such as course content sup- port, field visits, and support for academic re- search, were answered positively as long as it was possible. Within the scope of student fellowship demands, the demands of students working at the doctoral level in the field of ar- tificial intelligence were met. 52 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C2.2; SPK D1 GRI 2.26; GRI 2.29 SPK C2.2; SPK D1 GRI 2.26; GRI 2.29 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 53 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell’s Sustainability Initiative Memberships We believe that by meeting with our stakeholders on common values, we will create a greater value together. In this context, we provide support by participating international in many initiatives organized on a sectoral or subject basis. Some of these efforts are international initiatives created around sustainability issues. The main organi- zations we actively support in this field are UN Global Compact, WEPs, GSMA, Sustainable Development Association Telecommunication and Mobile Operators Association. Apart from them, Turkcell operates as a member of many non-governmental organiza- tions operating in different fields and is represented in their management and working groups. You can find the full list of the organizations we are a member of and their level of engagement in the Table of Appendix 3- Non-Governmental Organizations Memberships. GSMA United Nations Global Compact WEPs Business Council for Sustainable Development Since 1998 globally, we have been among the 800 GSMA member organ- izations that guide the global mobile communication sector. In addition to sharing Turkcell’s national and inter- national experiences on this platform, we also find the opportunity benefit from the experiences of other member organizations. Meanwhile we contrib- ute to the use of mobile technologies for social benefit and support the dig- ital economy via mobile platforms and the development of new generation communication technologies on the GSMA’s focus with initiatives and stud- ies such as Mobile Net Zero. Among these efforts, Mobile Net Zero is impor- tant in terms of enabling mobile oper- ators to carry out their operations with the Net Zero target within the scope of efforts to combat climate change. Turkcell also contributes to the GSMA Sustainability Network, a platform international sectoral that provides experience sharing for the develop- ment of applications in line with the Sustainable Development Goals as a sub-association of GSMA. In this con- text, Turkcell was among the first 8 companies in the world and the first company in Turkey to sign the GSMA Accessibility Principles. As a signatory of these principles, we have commit- ted to design and develop all our com- pany’s platforms in accordance with globally accepted accessibility stand- ards for our disabled customers and employees. Turkcell is also among the pilot companies that play a leading role in determining GSMA’s ESG metrics for the mobile sector. Turkcell became one of the signatories in 2007 and supports the “10 Principles” of the United Nations Global Compact, the world’s largest corporate sustain- ability initiative, and its sub-initiatives in line with sustainable development. In this context, Turkcell is among the founding members of the CFO Task Force, which brings together compa- ny CFOs around the world within the framework of sustainability. The CFO Task Force aims to make the concept of sustainable finance an im- portant factor in the policy-making processes of the leading institutions of the global business world, and to cre- ate a large, liquid and effective market for investments that serve sustainable development goals. After CFO Task Force reaches 1,000 members in 2023, it aims to invest approximately USD 500 billion with the sustainability theme in 2025. Within the framework of the joint efforts that Turkcell continues with the UN Global Compact Turkey Network, the company works for the participa- tion of institutions and organizations from Turkey in the CFO Task Force. We integrate the 10 principles that UNGC “Statement for Private Sector”, to which we became a signatory in 2020, identified under the topics of human rights, working standards, en- vironment and combating corruption into our business processes. We publish our state of adherence to the 10 princi- ples in our UNGC Communication on Progress Report (CoP) annually. As of next year, we will continue to disclose our data within the UNGC database, in line with the updated UNGC reporting system. Believing in equal opportunities at the workplace, Turkcell has been a sig- natory to the United Nations Women Empowerment Principles to promote Gender Equality, which is one of the Sustainable Development Goals, in or- der to improve the status of women in the business life and in the social life in 2012. Within the scope of UN WEPs, we continue our activities to support Turkcell’s goal of being the compa- ny that women most want to work for, thanks to its gender equality approach, by supporting practices aimed at em- powering women in the business envi- ronment, such as equal pay practices and zero tolerance for discrimination. Mobile Telecommunications Operators Association (m-TOD) Mobile The Telecommunication Operators Association was established in June 2016 by the three authorized operators of the sector to create ac- tivity areas for the solution of common problems, and to take initiatives at all stakeholder levels to implement those solutions. With the platform, of which Turkcell is among the founding mem- bers, we aim to directly contribute to pioneering an ethical, proactive, and competitive mindset in the Turkish tele- communication services sector. Murat Erkan CEO of Turkcell, Executive Vice Presidents Serhat Demir and Gediz Sezgin are members of the m-TOD Board of Directors. The Business Council for Sustainable (BCSD Turkey), Development Turkey the regional partner and part of the World Business Council for Sustainable Development (WBCSD), exchanges its sustainability experience among members on various platforms through working group activities. As part of our collaboration with the foundation, we set our initial activity areas as circular economy, sustaina- ble finance, the future of business with technology, net-zero carbon and wom- en employment. In this context, our ac- tivity memberships are carried out by Financell General Manager Korhan Bilek and Turkcell Energy General Manager Erkin Kılınç on the finance side. Turkcell is also a member of BCSD Turkey Materials Marketplace and a signatory to Business World Plastic Initiative. In this context, our commit- ment to plastic reduction continues. Our Relations with Public Institutions There are many different regulations that Turkcell and its Group Companies are subject to, and these regulations constitute the basic structure of our relations with public institutions and organizations. These regulations di- rectly affect the technical and com- mercial operations, terms of service provision, and the framework of rela- tions with stakeholders of Turkcell and Group companies. For this reason, we closely follow the legislation studies related to our activities and respond to the requests of regulatory instituti- ons during the consultation, matura- tion and implementation processes of the regulations. We provide our opini- on by analyzing the possible impacts of the relevant draft regulations on the sector in terms of legal, technical, commercial, operational and econo- mic aspects. On the other hand, we participate in the legislative work that is open to public opinion within the NGOs of which we are members, and we support the process of shaping the regulations by preparing joint position and opinion documents. On the other hand, Turkcell and its Group companies generate added value by leading the technological transformation in the countries whe- re they operate, with their mobile network, fiber infrastructure and wor- ld-class data centers, digital products and services. As a result of this value added, Turkcell provides tax and le- gal liability contribution to the public. Turkcell Group has realized around TRY 19.2 billion tax and legal liability payment it operates. in the countries where Relations with Shareholders and Investors Turkcell has applied the principles of being transparent, equitable, consis- tent and accessible to its investors and shareholders. We consider it a funda- mental responsibility to respond open- ly, accurately and in a timely manner to the information requests of our in- vestors and shareholders. With our information activities, we aim to intro- duce Turkcell correctly and convey our business model, risk and opportunity analyses and strategies to investors, enabling them to make investment de- cisions based on the right information. You may find more detailed information about the management of our relations with our shareholders and investors in the Transparent Investor Relations section of our report. 54 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.28 GRI 2.28 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 55 TURKCELL AT A GLANCE TURKCELL AT A GLANCE VALUE CREATING TURKCELL VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Value Creation Process INPUTS STRATEGIC FOCUSES CREATED VALUE OUTPUTS SDGS RELEVANT STAKEHOLDERS • Financing diversity • Efficient capital allocation • Strong revenue model • Business model hedging • Transparent financial management Financil Capital • Our competent employees and agile teams • Safe and healthy work environment • Employment practices that make a difference • Adoption of company culture and values • Flexible working model • Increasing women employment in the technology sector Human Capital Core Competencies Strong Customer Relations Strategic Business Focuses Our Telecom Business Digital Business Services Digital Services Financial Services Platform Strong Infrastructure • Robust network • Strong spectrum • Broad fiber infrastructure • Data centers Advanced Analytical and Technological Competencies Manufactured Capital • Our patents and R&D capabilities • Entrepreneurship rcosystem, start-up and university collaborations • Our developed services and applications • Artificial intelligence and blockchain applications • Strong brand awareness • Robust cybersecurity practices and services • Digital infrastructure Intellectual Capital Strong and Agile Team • Transparent and trust oriented stakeholder relations • Civil society, academy, public and corporate partnerships, international representation of our country and sector • Social investment projects and sponsorships • Turkcell volunteers • Voluntary memberships • Higher employment in call center operations • Efficient management of natural resources • Investments and projects in renewable energy • Environmental impact management through digitalization • Efficient use of energy • Turkcell waste management Social Capital Natural Capital to the Environment Fighting Climate Crisis Circular Operations Efficient Technology Solutions Inclusive Digital and Social Equality of Opportunities Digital Security and Well-being Human-Centric Turkcell Culture to Our Business Transparency and Accountability Ethical Conduct Responsible Value Chain Value created through sustainable growth Robust balance sheet structure Market capitalization of the company Dividend paid and dividend yield Value generated for the economies of countries where we operate TRY 53.9 Billion Revenue TRY 22.0 Billion EBITDA TRY 12.5 Billion EBIT TRY 11.1 Billion Net Income TRY 1.7 Billion Free Cash Flow 3.2% Dividend Yield Contribution to Employment Having a competent human capital ready for the future digital world Establishing a strong and agile employee culture Developing the competencies of women and young people to increase their employment in technology Being a good employer Employee loyalty and motivation Diversity, inclusivity, and equal opportunity Providing career development opportunities Providing fast, high-quality, and comprehensive services to customers Contributing to keeping Turkey’s data in Turkey Leadership in technology and digital transformation Access to information and the internet for everyone Development of indigenous and national technological infrastructure Portfolio of 10,910 towers Developing the innovation and entrepreneurship ecosystem through Turkcell experience. Becoming a global operator with a digital operator vision. Making life easier by developing inclusive and value-creating products and services. Better understanding the customer with data analysis skills. Reducing cyber security risks and meeting the cyber security needs of customers Ensuring ethical and equal business processes. Creating value with the use of open source code. Providing employment opportunities for Turkish/local engineers. Strong corporate governance Value creation through social investment projects Contribution to exchanging knowledge and experience among stakeholders Adopting a responsible and ethical business approach within the Turkcell ecosystem Collaborating with NGOs to contribute to the socio-economic and cultural development of the community Being a leading and guiding company in the industry and the country through representation Increasing brand trust and reputation Customer satisfaction Responsible use of resources Improving carbon emissions performance Contributing to the reduction of customers’ environmental impact Financial value created through sustainability activities Environmental awareness Reducing paper consumption Protecting sustainable agriculture and water resources Circular operations Turkcell’s Large Family of 23,795 Members 34.6% Woman Employee Rate 24.9% Woman Manager Rate 1.18 Accident Frequency Rate 706 New Recruits 1.5 Million Hours Total Trainings 4.5G Speeds up to 1.6 Gbps Fiber Internet Speeds up to 10 Gbps 65% Network Virtualization Rate 27% Network Traffic (internet) Increase Rate 11,341 Base Station Sites with Risk Assessment 99.832% Rate of Data Accessibility 965 R&D Employees 61% Growth in Digital OTT Services Revenues and 30% Growth in Digital Services Total Revenues 7 Hospitals Which We Provide Infrastructure To 325 Patent Applications 8 Number of Applications to TÜBİTAK- Supported Projects 7 Incubator Firm Collaborations 54.0 Million Group Subscriber Count 37.5 Million Mobile Subscriber Count (Turkey) 2.3 Million Net New Customers Acquired (Turkey) 17 Points The Difference in Net Promoter Score with the Closest Competitor 7 Number of Volunteer Projects 56% Local Procurement Rate 414,910.89 Tons CO2e Energy Reduction 227,592 GJ Energy Saving 267,355.3 GJ Renewable Energy Generation 3,867,355.3 GJ Renewable Energy Consumption 83.5 Tons Recovered e-Waste 100% Recycled Waste Rate Shareholders, employees, suppliers, international organizations. Shareholders, employees, suppliers, government agencies, civil society organizations, autonomous organizations, international organizations. Employees, individual customers, corporate customers, suppliers, government, autonomous organizations, international organizations. Employees, individual customers, corporate customers, suppliers, government, civil society organizations, autonomous organizations, international organizations, media, beneficiaries of corporate social responsibility projects. Shareholders, employees, individual customers, corporate customers, suppliers, government, civil society organizations, autonomous organizations, international organizations, media, beneficiaries of corporate social responsibility projects. Shareholders, suppliers, government, civil society organizations, international organizations, beneficiaries of corporate social responsibility projects. 56 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A3.1 GRI 2.25 SPK A3.1 GRI 2.25 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 57 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Measuring the Value Created Our Core Competencies We aim to deliver more up-to-date and comparable results while measuring the resulting performance of the value creation process by considering recommendations from international organizations such as the GSMA, the WEF, the GRI and the SASB, opinions of our key stakeholders as well as global and sectoral trends. As of 2021, the Sustainability Goals, which include the internalization of sustainability and ESG policies in so- cial, economic, environmental and governance areas, have been among the strategic goals of the Company and have been assigned as Key Performance Indicators descending from the Turkcell General Manager to all employees. The internalization of the policies by training the company employees at all levels in this direction was reinforced with competitions and awards that support sustainable life. Along with the sustainability priorities renewed in 2022, we have also revised the Key Performance Indicators used in performance evaluation. In this context, the Sustainability Committee continues to work on creating a sys- tem for the detailed follow-up of the sub-parameters related to perfor- mance evaluation. An important part of the analysis of our sustainability performance with internationally accepted methodol- ogies is the evaluations made within the scope of sustainability indices and evaluation systems. In this scope, we provide information to the MSCI ESG Index, Borsa İstanbul Sustainability Index, and CDP Climate Research studies every year. As Turkey’s pio- telecommu- leading neering and nications company, we started the Science-Based Targets (SBTi) study in 2021 and submitted our commitment letter in order to bring our commit- ment to combating climate change to a systematic and rational framework. At the end of the approval process, we aim the approval of the Turkcell SBTi targets in 2023. Producing continuous and high added value for its stakeholders since its establishment in 1994, Turkcell’s success lies in its corporate competencies that have developed over the past 29 years. Advanced Analytical Capabilities & Technology Greater focus on and need for analytical capability with increased digitalization Recognizing the customer and early detection of their needs by using big data and analytical modeling Capacity to develop local alternatives in digital services Strong Bond with Customers The operator meeting the customers’ continuously increasing quality service and communication needs Superior digital customer experience via growing digital services Seamless service thanks to Turkcell’s strong infrastructure and wide range of IT solution services Capacity to produce quick solutions to customer demands End-to-end financial services to customers Strong & Agile Team Strong Infrastructure Increasing importance of agile and flexible teams in accordance with the need “to master swiftly in difficult tasks”, which stems from digitalization Providing efficiency through the transformation of company culture with a flexible and agile approach Strategic workforce management Comprehensive and equitable corporate culture Unique employee experience focused on people and talent Sustaining the leading and differentiating network quality in the sector and reinforcing the leading operator position in technology with the launch of 5G when suitable conditions arise Increasing efficiency by using the technology neutral spectrum Delivering the latest and innovative solutions via fixed and mobile technologies to the consumer, corporate and residential segments Cyber security products and services that require digital operator competence Contribution to digital transformation with common infrastructure efforts A reliable network structure ready for contingencies Protection of local data within the country with a broad data center network 58 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 59 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Our Strategic Focuses, Initiatives and Opportunities Our Telecom Business We concentrate our operations in four key strategic areas with our digital services, digital business services and financial services platform that we have rapidly developed in recent years with the telecommunication services, that is our main branch of business, and the strong technical infrastructure and experience we have acquired. We continue diversifying our digital services in accordance with the devel- oping technologies and customer re- quests. Meanwhile, we are working for making the services we offer accessible for more costumers every period, and increasing the access of the disadvan- taged groups, young people and wom- en to information technologies. Within the scope of our digital business services that we have created for cor- porate customers, we support digital transformation with end-to-end solu- tions that we have developed, mainly including data center, cloud solutions, cyber security, health, and IoT. With ac- cessible service solutions, we support companies of every scale to adopt the digitalization trends. By implementing techfin business mod- els successfully, we offer different dig- ital payment options to our customers with our financial service portfolio, and provide them with financing options which facilitate their access to prod- ucts and services, and insurance solu- tions which enable them to get cover- age against risks. fields, we In our strategic evaluate the global trends and the focus development potentials in the coun- tries where we operate, and continue to quickly improve the value we pro- duce. Every year, with practices which involve our all employees, we evaluate the current trends together and focus our efforts to the areas of opportunity that we identify. We follow the business operations we realize in this scope with short, medium and long-term objec- tives.6 In this framework, we worked on our new 3-years strategic plan in 2022. Our growth areas that we constructed on our strong infrastructure will still re- main as our growth areas for the next 3 years. The growth will stem from our focus and expansion in the areas of TV+, education, data center and cloud, cyber security, health etc. Meanwhile, another area that we will focus on in the next 3 years will be how we do that. As we provide all these services and digital solutions according to the needs of our customers, we will focus on maximizing company value through higher efficiency-orientation. As one of our strategies, we will continue to provide superior digital services for a better future by maximizing the care for the environment and the communi- ty through Sustainability, as well as for our colleagues and customers through Human Orientation. Thanks to higher data usage in the re- porting period, upsell efforts to car- ry our customers to packages which provide higher benefits, and our price updates based on the economic condi- tions, we have maintained our momen- tum and registered 40.3% ARPU7 growth in the mobile. We have also continued our focus for increasing the value pro- posal that we present to our customers, and gained 1.9 million net mobile sub- scribers. On the fixed broadband side, we had 220 thousand net additions, and the residential ARPU growth rose to 26.7%. As a result, we have attained both ARPU and subscriber-based growth, and registered a healthy and balanced in our revenues. While doing that, we continued focus- ing on solutions and campaigns that would respond to the telecommunica- tion needs of our customers in the dig- italizing consumption world. increase As Turkcell, we focus on further increas- ing our already high corporate segment market share and meeting the needs of our customers stemming from digitaliza- tion. In this context, we prepare various campaigns for merchants, SMEs and big companies. We stand by business- es with options that will enable them to meet their mobile and fixed communi- cation needs end-to-end. With our dig- ital business services, we offer a wide range of end-to-end solutions for our corporate customers’ digital transfor- mation processes, such as data center, cloud solutions, cyber security, internet of things and managed services. We continue to develop our analytical competencies in order to offer our cus- tomers the best offers at the most af- fordable prices in line with their needs. Thanks to our analytical and artificial intelligence supported models that work specifically for each Turkcell sub- scriber, we classify all our customers into groups based on their life cycles, usage habits and behaviors; we in- stantly identify their needs and estab- lish systems where they can use the appropriate offers for them. We bring our customers together with rich-con- tent offers through integrated channel communications, proactive actions and cross-communication setups. In this way, while increasing our revenue generation metrics and customer sat- isfaction scores positively, we managed to keep our mobile subscriber churn rate at 2.0% in 2022, and we continue to keep it below 2.0%, which we see as a healthy level for us. In 2022, we continued to enhance our digital competencies. With our Omnichannel Experience approach, we offer an integrated experience where the channels are managed in harmony during our customers’ interac- tions on Turkcell channels and their cus- tomer journeys. Moreover, we started to offer our customers an end-to-end digital activation experience by com- missioning our paperless process. Meanwhile, we have brought digitaliza- tion to the forefront of all our processes by offering additional benefits in digital channels and increasing the intensity of our communications. We aim to in- crease our competencies at every step in the new period in the name of digital transformation. learning models, we Using machine classify our customers into classes based on the applications and URLs they use. We contribute to increase the subscriber base by more accurately determining the target audience of the products in the Turkcell ecosystem for each class created. We aim to use these classes in order to give more accurate targets in digital channels. We are starting to present the right of- fers by using machine learning models for our customers using fixed internet and Superbox. We design upgrades to higher packages in fiber and ADSL, and we are building the “Proactive-Churn” model in in Superbox. In this way, we aim to keep customer loss at a minimum while increasing our revenue metrics by using the experience that we have gained in mobile customers also for fixed customers. 26.7% residential ARPU growth 40.3% Mobile ARPU (excluding M2M) growth 6 Turkcell’s short, medium and long-term goal periods are 0-1 years for the short-term, 1-3 years for the medium-term, and 3 or more years for the long-term. No guarantee can be given that the forward-looking expectations in the report would come true. For a discussion of the various factors that may affect the outcome of such forward-looking statements, see our annual report to the SEC (U.S. Securities and Exchange Commission) in form 20-F for 2021 and the risk factors section within this report. 7 Excluding M2M 60 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.6 GRI 2.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 61 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Digital Services The strong tendency in consumer behavior in recent years to meet numerous needs through digital services has become increasingly permanent with the pandemic. Initiatives and Opportunities • We are increasing our digital service revenues through a wide range of options towards both individual and corporate needs, as well as increasing our trans- action volume, advertisements, subscription and business part- nerships as a result of increasing number of active customers. • As remote and flexible work prac- tices have become permanent with a great momentum during the pandemic, the importance of mobile applications, communi- cation infrastructures, softwares used, and the cyber security of these systems for companies have increased. In this context, we provide services with our digital services such as BiP, Yaani Mail, lifebox, digital security, mobile signature and BiP Meet, and with our superior security standards. • With our Game+, next-generation gaming platform, we offer our us- ers the opportunity to experience the highest quality games from anywhere they want, without the need for significant hardware investments. • With our belief in dual transfor- invite everyone to mation, we save energy with digitalization and smart applications. In this direction, as Turkcell, we respond to these expectations of our customers with digital solutions we offer in various fields such as instant communication and online meeting platforms, e-mail, search engine, personal cloud storage, digital advertising, TV, digital music platform and game technologies. In the previous periods, we had trans- formed our digital services such as BiP, fizy, TV+ and lifebox into separate companies, focusing on their individ- ual performances as profit centers that are different from each other, into structures that can compete on a glob- al scale. Our services, which increased their performance also in the reporting period, continued to write new pages in their success stories by offering dig- ital experience to their customers on an international scale. In addition to the revenue generated by our digital services, their positive contribution to ARPU of our customers who receive telecommunication services, and in- creasing the loyalty of these customers to Turkcell have increased their impor- tance for the Turkcell ecosystem. In this scope, our efforts continue to expand the diversity of our digital services as well as increasing number of users and international footprint. By positioning our digital services and solutions as independent brands un- der the Turkcell roof, which plays a key role within the scope of our strategy to transform Turkcell from a telecom operator to a digital integrated eco- system brand, we reinforce their values in terms of intellectual property and assets. Initiatives and Opportunities • We achieved 40.3% ARPU growth in the mobile segment with our plans that meet customer expectations and offer high benefits, our process improvement projects that increase customer satisfaction and work pro- ductivity, and our consistent price adjustments throughout the year in line with economic developments. • As a result, we achieved mobile sub- scriber net additions of 1.9 million and maintained our healthy and sta- ble growth trend in terms of both the number of subscribers and ARPU. • We are designing various cam- paigns and plans in order to sup- port the digitalization needs of our corporate customers, particularly merchants and SMEs, and thus to further increase our high corporate customer share. The win & win set- up of our corporate customer plans focuses on helping our customers to increase their revenues by digitizing their business processes as well as reducing their expenses. The added value we create for our corporate customers also enables us to in- crease our business value. • We continue to listen to the expec- tations of our customers more effi- ciently, provide them with the most appropriate price and scope, and improve our analytical competen- cies to make our service processes more productive in a configuration increase satisfaction. that would The sales channel improvements and payment option diversifications, IVR process and content improve- ments, and the Chatbot application we realized during the period have both made our business processes more efficient and increased cus- tomer satisfaction and loyalty. While increasing our revenue metrics pos- itively in parallel with the increasing customer satisfaction, we managed to remain our mobile subscriber churn rate of 2.0% in 2021 unchanged in 2022 and reduced the fixed sub- scriber churn rate from 1.5% to 1.4%. mobile subscriber churn rate 2.0% 1.4% fixed subscriber churn rate 62 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.6 GRI 2.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 63 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Digital Business Services Digital business services play an important role in combining Turkcell’s traditional telecom service provider identity with its “Digital Transformation Business Partner” strategy for corporate customers. We aim to be the most reliable busi- ness partner in digitalization processes by providing end-to-end, value-add- ed services to the business world with numerous new generation technolo- gies covering cloud services, cyber se- curity, internet of things, big data ana- lytics, business applications, managed services and artificial intelligence solutions. Turkcell, the world’s first digital opera- tor, contributes to the transformation of business models with digital technolo- gies by putting its 29 years of commu- nication and information technology experience into the service of private enterprises of all sizes and public insti- tutions. Our value-added services help our customers to stay ahead of the competition and increase their pro- ductivity and business value. On the other hand, the consultancy services we offer enable us to provide end-to- end services in digitalization processes by improving the knowledge and skills of our customers. In addition to end-to-end fiber infra- structure of 59 thousand kilometres, we have a total of 8 data centers, 4 of them are new generation, hold- ing Tier-3 Design and Operation Sustainability certificates from the in- ternational certification body Uptime Institute. There is a total of approxi- mately 40 thousand m2 of white space in our data centers. With Turkcell Cloud services, we position the entire information infrastruc- technology ture of corporations in Turkcell data centers, thus reducing costs and pro- viding a more flexible infrastructure. The cloud service we provide from fully redundant infrastructures in our 8 different data centers has the ISO 27017 Cloud Information Security Certificate, which certifies our infor- mation security, and we are the first and only service provider in Turkey to have this certificate. We launched our Public Cloud service in order to serve our public institutions in accordance with the Presidential Information and Communication Security Measures Circular, which came into force re- garding the security of public data and its transfer to digital environments, and the guide published accordingly. Within the scope of our Cyber Security product portfolio, our vision of virtual- izing our network protection services for the network infrastructures of in- stitutions continues at full speed. We will continue our virtualization jour- ney, which we started with FW, DDoS+, Load Balancer and IPS, through all our data centers by increasing our manu- facturer diversity in the coming period. In addition to these services, we pro- vide proactive protection by ensur- ing early detection of cyber threats and taking quick action with our SOC, SOAR, BOZOK and Consulting ser- vices, thus becoming the end-to-end Cyber Security Service provider of our institutions. With the IoT Platform solutions, we pro- vide our corporate customers with the service of managing their devices and machines via cloud systems without bearing any cost of infrastructure. With energy efficiency scenarios, one of the IoT scenarios, companies can instant- ly measure their energy consumption. Through the solutions we offer, the data collected from the field is trans- formed into information that will facil- itate decision-making for users, and at the same time, management functions can provide significant savings in the costs of companies with our energy solutions. In addition to these solu- tions, we offer Digital Transformation to institutions with IoT-based solutions specific to a wide range of fields we have developed. We enable our cus- tomers to increase their profitability and productivity by facilitating their strategic decision-making processes, together with our big data services for many sectors, particularly retail, e-commerce, shopping malls, trans- portation, tourism, fuel and finance. Within the scope of our digital business services, together with our internal re- sources, products, processes and tech- nologies, as well as our partner ecosys- tem consisting of experienced experts in the field, we have implemented over 2,800 custom-made service and sys- tem integration projects designed ac- cording to the needs of our customers. We develop vertical solutions for our customers in our focus sectors such as health, education, production, re- tail, finance, logistics, energy, tourism, SMEs, central and local governments, with our consultants who are experts in the sector, that will address their own needs. With the analyses we carry out with a 360-degree perspective, we determine the current situation of our customers and create solution sets that cover their needs. In the health sector, which is one of the sectors where we ensure vertical ex- pansion, we implement projects with high value proposition. Digital Business Services is positioned as the market leader in terms of the number of hos- pitals in city hospital projects, which have become the locomotive of the success of our country, which is among the world’s leading healthcare service providers, especially in the countries in the region. We are the leader of the public-pri- vate partnership (PPP) market as an integrator that provides and operates all technologically needed solutions in city hospitals in the field of health. We continue to play an important role in the digital transformation of hospitals with our Hospital Information Management System (HIMS) software, which we de- veloped with Turkcell Digital Business Services resources. Currently, we have active operations in a total of 7 city hospitals including Yozgat, Adana, Eskişehir, Elazığ, Bursa, Başakşehir and Tekirdağ hospitals. The entire technol- ogy infrastructure of these hospitals, from hardware to software, and from system to business operations is man- aged by Digital Business Services. On the other hand, the infrastructure of 2 field hospitals, which were established in a short time during the pandemic period, was also established by Digital Business Services. Digital Business Services also develops the technolo- gy of strategic public projects such as the Specialization Training Tracking System (UETS), Electronic Case System (EVS) and Vaccine Tracking System, which are among the most important technology projects of the Ministry of Health. In addition to all these opera- tions, we continue our efforts to make the solution we developed for city hos- pitals applicable in the operational processes of private hospitals. In our business partnership ecosys- tem, there are three main categories that we manage end-to-end: our sub- contractors, those we develop prod- ucts/solutions together, and our sales partners. We launched the “Business Partnership Program” for business partners with different competencies in our ecosystem. We appreciate the success of our business partners with the earning models that emphasize success. With the Partner 360 model; we continue improvements to manage all business associates of our Digital Business Services company on a single system. With our business partnerships with global suppliers, we are expand- ing the solution sets we offer to our customers in terms of technical compe- tence and project diversity day by day. Initiatives and Opportunities • As Turkey’s largest data center oper- ator, we work with the aim of keep- ing Turkey’s data in Turkey in order to ensure data security and confidenti- ality of personal data. In this context, the regulations to keep the data pro- duced in Turkey here, increase the demand for our data centers and contribute to the development of our business and our revenues. • We use our experience and compe- tencies in big data, internet of things (IoT) and artificial intelligence (AI) in a wide array of areas such as the de- velopment of products and services. The absence of major players in AI solutions in the developing IoT and artificial intelligence solution market creates an advantage for Turkcell. We also consider the vision of the Republic of Turkey, which encourag- es the development of domestic and national technologies, as an oppor- tunity for Turkcell in this field. • The increasing need for remote solu- tions during the pandemic period, an increase was observed in the de- mand for products and services that we focus on and continue our work in the field of remote health, educa- tion and work solutions. Our Lifecare product, which we developed for the remote health segment, has passed the Registration and Subscription System control of the Ministry of Health and has become available to respond to opportunities in this field. Negotiations with leading health groups in Turkey were initiated, pav- ing the way for new business model opportunities. • Digitalization for private companies and public sector institutions of- fers many productivity and service improvement opportunities. quality As Turkcell, we offer customized, re- liable and sustainable solutions for the needs of companies and public institutions in Turkey with our end-to- end digital transformation services, and we make digitalization process- es more accessible with affordable costs. We are guiding our country’s digital transformation journey by col- laborating with our local business partners. 64 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.6 GRI 2.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 65 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Techfin Services Finance and information technologies are two different sectors that fuel each other’s development, while we observe that many financial services and transactions have rapidly digitalized with the transformation we have experienced in recent years. As a digital operator that closely mon- itors these developments, we believe in the high potential of techfin appli- cations, and we continue our efforts to develop services in this direction. We facilitate the financial transactions and lives of our customers with the in- novative solutions that we have devel- oped with this perspective and offered under Paycell, Financell and Güvencell brands. The main purpose of Paycell is to pro- vide consumers with easy access to financial services by providing fast, practical and secure payment solu- tions by combining digital technolo- gies and financial service categories. In addition, Paycell aims to make life easier and make Paycell Turkey’s larg- est payment platform by providing access to financial services for every- one, regardless of whether they have a bank account or not, with its vision of financial inclusion. A significant portion of Turkey’s young and dynamic population that is prone to using technology does not yet have access to banking services. The pres- ence of a population of more than 30 million and a high cash usage rate, as well as the growing e-commerce mar- ket and positive regulatory develop- ments significantly increase Paycell’s opportunity potential. We maintain our strong growth per- formance with the services and solu- tions we offer in different verticals such as billing, e-wallet, bill payment, money transfer, financial marketplace solutions and payment intermediation, and our application that we have po- sitioned as a Super App. Paycell differ- entiates itself from its competitors with its broad service portfolio, Turkcell’s technology, customer base and the advantage of access to sales chan- nels in the dispersed market structure where various players concentrate on different solutions. As part of its strat- egy to expand in the market, Paycell has focused on increasing the num- ber of contracted merchants with Paycell Android POS, QR, Virtual POS, Vitrin, and payment with link payment products that would support each other. Through our Paycell Mobile ap- plication and together with many of our partners, we offer our customers a broad range of services, mainly games. Providing digital finance solutions to our customers’ technological product and service needs, backed by the agili- ty of the mobile industry, Financell is the leader of the non-bank finance indus- try in Turkey with the highest number of customers. Financell, one of the ma- jor business partners of Turkcell digital services and digital business services, performs faster credit evaluation and manages credit risk effectively thanks to its credit risk infrastructure and dig- ital transformation capabilities. Serving under Güvencell brand, Turkcell Sigorta Aracılık Hizmetleri A.Ş., as an insurance agency, offers innovative solutions for the risk management of customers with fast and easy-to-ac- cess products. Initiatives and Opportunities • Techfin and mobile com- munication services provide convenient means for many people to access financial servi- ces, thanks to their practicality and ease of access. With the oppor- tunity to access financial services, which are important for individuals both for economic independence and social equality, we have the potential to reach approximately 30 million unbanked users in Turkey. • The pandemic process, which intro- duced many people to digital and contactless payment systems, and the subsequent increase in the use of these systems creates an impor- tant opportunity for Turkcell. The continuation of people’s tenden- cy towards contactless and digital payment methods in Turkey and in the world after the pandemic shows that the potential is growing. • E-commerce, which has grown ra- pidly after the pandemic, has inc- reased the demand for practical and advantageous payment soluti- ons for all parties. With the Paycell Virtual POS product, card payments are provided from a single platform without the need to make separate agreements with different banks, creating an advantage for both the workplace and Paycell. • With vehicle loan, digital holiday loan and shopping loan applicati- ons, it has proven its success not only in digital payment but also in facili- tating access to finance. • Users who want to utilize investment opportunities can convert their as- sets into different investments by trading gold, silver and platinum at Paycell. • As Turkcell, we know our customers closely with the customer data we have obtained through telecom bu- siness. In this way, we are able to of- fer our customers the most suitable loan options in financing business by using Credit Reference Bureau (KKB) and telecom data. one that individual • With Financell, of our Techfin services, we offer our and corporate customers fi- nancing opportunities meet their needs. With “Digital Transformation Financing” loans, we facilitate our customers to ac- cess funding in convenient conditi- ons. Companies using our ecosystem can acquire hardware and devices such as software, servers, smartp- hones and tablets that they need in their digital transformation journey with special prices, interest advan- tages and flexible payment plans. As a result, we can also support fi- nancing digital transformation of companies. • Thanks to the Digital Bank which we applied for its establishment in 2022 and foresee to start the activities in 2023, we aim to expand Financell so- lution portfolio to cover all services offered by a conventional bank. We believe that this transformation will create a multiplier in terms of attra- cting new customers to the Turkcell ecosystem. By focusing primarily on retail customers and SMEs, we aim to serve techfin and digital chan- nels that need bank products and infrastructure, expand the Turkcell ecosystem and offer the unique te- chfin experience that everyone can access, and become the most wi- despread and inclusive digital bank as the pioneer and leader in the transition to a cashless society. • Due to the lower share of digital channels in the insurance industry compared to other financial sectors, there is an important transformati- on opportunity in terms of directing customer demands to the digital consumer experience. We aim to be a part of this transformation with our Turkcell Dijital Sigorta company, which we established in 2022 which will provide end-to-end services by expanding the scope of our insuran- ce business with innovative solutions and digital processes based on big data. 66 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.9 GRI 2.6 SPK C1.9 GRI 2.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 67 to Our Business With Positive Imprint to our Business strategy, we aim to achieve four key corporate goals: To increase our business success with a responsible value chain, where superior corporate governance and business ethics principles are prevailed, growth in intellectual capital, sound financial performance and effective asset management are ensured. Strong Corporate Governance Financial Capital Trends TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Capitals Goals Actions Impacts Values to Our Business Value Proposal e c r u o s e R d n a l a t i p a C n o i t a c o l l A Corporate Governance Principles Risk Management Business Ethics and Human Rights Following Superior Corporate Governance and Business Ethics Principles Reducing risks with transparent accountable, responsible management Reducing the negative effect Increase in reputation and brand value Reduction in risk costs Increase in management quality Financial Performance and Effective Management of Assets Proactive Adaptation to Global Trends Effective Financial Management, Strong Performance and Revenue Model Digital Finance Transformation Transparent Investor Relations Strong financial performance Developing the market outlook Potential to attract investors and capital Integrated digital operator High profitability Capital efficiency High dividend yield Increase in share value Increase in reputation and brand value Integrated Value Creation (Financial Capital, Natural Capital, Manufactured Capital, Social Capital, Human Capital, Intellectual Capital) In line with the integrated value creation model of Positive Imprint to our Business strategy, we contribute directly to financial, manufactured and intellectual capital, and indirectly to human, social and natural capital. 70 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 71 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Strong Corporate Governance Maintaining a strong corporate govern- ance structure enables us to manage our business operations with high efficien- cy, and to demonstrate an exemplary corporate citizenship through ensuring compliance with legal obligations which we are subject to. Moreover, we differ- entiate as a company, trusted by our stakeholders, thanks to compliance with domestic and international business reg- ulations ensured by our Company’s com- pliance programs and our understand- ing of superior business ethics. As the only Turkish company both listed on the Borsa Istanbul (BIST) and the New York Stock Exchange (NYSE), through effective corporate processes and the internalization of internationally accept- ed corporate governance principles throughout the organizational structure that arise from our leading position in the capital markets, supports our cause to create long-term and sustainable value for our stakeholders. Shareholder Structure Since 2000, Turkcell İletişim Hizmetleri A.Ş. has been the only company, shares of which are traded both on Borsa Istanbul and the New York Stock Exchange as “ADS (American Depository Share)” Level III. With a high free float rate of 54%, we aim to provide long-term benefits not only to our customers, but also to all our Company’s stakeholders by imple- menting the highest standards of cor- porate governance practices. Our sus- tainability strategy and value creation model that we have developed in this context, as well as our goal to priori- tise to act in accordance with interna- tional standards in the fields of human rights, business ethics, anti-bribery and corruption, competition management, risk and crisis management allow us to be a good role-model for corporate citizenship. You can access further details on our shareholder structure in Footnote 1 of the CMB report. Board of Directors Structure into account Taking preferred stock rules defined in the Articles of Association, the Turkcell Board of Directors, consists of a total of 9 mem- bers, one of whom is a woman, who are elected by the General Assembly with simple majority vote. Three of the Board members meet the independence cri- terias specified in the CMB regulations. The Turkcell Board of Directors, whose duties and authorities are determined within the framework of the Turkish Commercial Code, has committees es- tablished at the Board of Directors level in accordance with the relevant legal provisions to ensure operational effi- ciency. These committees are the Early Detection of Risk Committee, Corporate Audit Governance Committee, Nomination Committee, Remuneration Committee and Strategy and Digitalization Committee which was established on February 17, 2022. While the duties of the Chairman of the Board of Directors and the CEO are carried out by different individuals, the CEO is not a member of the Board of Directors but is in charge of execution. The Chairman of the Board of Directors does not have an executive duty. Committee, You can find further infor- mation about the Board of Directors Committees, their duties and mem- bers on our Corporate Governance Principles Compliance Report or on our on our website. Members of the Board of Directors con- sist of experts in their fields who have significant work experience in many sectors such as energy, economy, tele- com, law, engineering, and sustainabil- ity. 5 out of 9 members are elected by Group A preferred stock owner, TVF Bilgi Teknolojileri İletişim Hizmetleri Yatırım Sanayi ve Ticaret A.Ş. (TVF) by using pre- ferred stock rights as per the Articles of Association. Four of those 5 members are also nominated by TVF. There are no privileges foreseen for the election of the remaining 4 members, including 3 independent board members. The term of membership for the Board of Directors is a maximum of 3 years and the Chairman of the Board of Directors is elected by TVF with a privilege among the 5 members, in accordance with the privileges set forth in the Articles of Association. The election of the Board of Directors in the articles of association and the term of office of the members are carried out within the framework of the Turkish Commercial Code. Accordingly, the members of the Board of Directors are elected by the General Assembly to serve for a maximum of three years. In the event that the membership of any Director of the Board becomes vacant for any reason, another member who meets the legal requirements for the vacant chair may be elected temporar- ily in accordance with Article 363 of the Turkish Commercial Code, and the elect- ed member is submitted to the approv- al of the first General Assembly to be held following his election. The member whom elected in this way serves until the General Assembly meeting, when it is submitted for approval, and if approved, completes the term of the predecessor. No classified or staggered Board struc- ture has been adopted in the Board of Directors. Since 2019, Turkcell has adopted spe- cific internal rules regarding possible conflicts of interest at the Board of Directors level. In this context, the code of conduct prepared for the members of the Board of Directors, who can be considered public officials, has been adopted and put into practice by our Board of Directors, considering the regulations binding for our company. In the management of the company, the principle of “1 share, 1 vote applies”, and there is no minimum share requirement or voting limit, except for preferred shares. Further to Turkish Commercial Code, all shareholders are entitled to suggest an agenda, obtaining information and ex- amination. In decision making, while the presence of the shareholders represent- ing at least 51% of the total capital and the majority of the votes is considered sufficient in general, there are cases where aggravated quorums are sought as per the articles of association and the relevant regulations. The annual performance evaluation by the Board of Directors based on certain criteria was implemented in- itially in 2021 as part of the improve- ment of corporate governance across our Company, and it was aimed to take the improvement areas identified as a result of the evaluation process as a basis for advanced corporate govern- ance practices. As a first step towards this goal, the improvement areas identified on the basis of the analyzes and evaluations made regarding the answers of the 2021 performance evaluation question sets were conveyed to the Board of Directors and evaluations were made regarding the actions that could be taken at the corporate level. In this scope; • A new platform was put into prac- tice in order to digitalize access to the Board of Directors meeting doc- umentation, to transfer the docu- mentation to a secure platform and to enable a constant access to the relevant documentation. As a result, information sharing with the mem- bers of the Board of Directors was increased both quantitatively and qualitatively. • Studies were carried out to in- crease the communication between the committees and the Board of Directors. • The external consultant support for the Board of Directors has been increased. • The Strategy and Digitalization Committee was established in February 2022 to contribute posi- tively for the increase of efficiency in the monitoring and improvement of Company performance, taking into account the evaluations, suggestions and recommendations from share- holders and investors. In this com- mittee, company’s strategies, invest- ments and digitalization processes are monitored effectively, all projects and actions that increase the value of the company relating to the posi- tion in the market, digitalization ef- forts, governance practices etc. are followed up by the Committee and are regularly brought to the agenda of the Board of Directors. The performance evaluation process of the Board of Directors was complet- ed also in 2022 in line with the method- ology below that Corporate Govern- ance & Capital Markets Compliance Directorate designed and submitted to the Corporate Governance Committee and the committee later proposed this performance evaluation process to the Board of Directors. Performance Evaluation Form and other evaluation process were designed in line with legislation and best practices. Each Board Member answered the set of questions composed of four sections in the Performance Evaluation Form. Answers of Board Members in the Peformance Evaluation Form were analyzed and improvement areas were identified. Analysis on feedbacks and identified improvement areas were presented to the Board and an action map was prepared. 1 2 3 4 Evaluation process was designed taking into account best practices. Performance Evaluation Form was filled by the Board Members. Feedbacks were reviewed. Action map determined. 72 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.9; GRI 2.10; GRI 2.11; GRI 2.15; GRI 2.18; GRI 2.19 GRI 2.9; GRI 2.10; GRI 2.11; GRI 2.15; GRI 2.18; GRI 2.19 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 73 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Board of Directors Performance Evaluation Method The set of questions as part of the Board of Directors Performance Evaluation methodology was determined under the fol- lowing four sections: The set of questions contained in this section addresses whether there was timely, clear and comprehensive information regarding the meeting agenda items, whether financial information highlights important issues and trends, and the effectiveness and impartiality of the meetings. The set of questions contained in this section addresses the main issues such as the effectiveness of the oversight, adequacy of annual business plan reviews and whether the company’s value, mission, strategy, business plans are reflected on important issues, and whether financial indicators are followed up properly. Information Provided to the Board Board Composition and Function The set of questions contained in this section addresses issues such as whether the members have the necessary qualifications, experience and skills, whether a sufficient number of meetings are held, and the functioning of the committees. Board Dynamics Standards of Conduct Human Rights, Business Ethics and Common Values Turkcell believes in the vital importance of having a responsible business mod- el that complies with ethical standards in the international ecosystem created with the Group companies and business associates in the overall value chain, for producing long-term sustainable val- ues, ensuring stakeholders’ confidence and enabling social license-to-operate. Accordingly, it implements the Human Rights Policy both to create a work en- vironment worthy of human dignity and to place human-oriented function in the ecosystem. Turkcell pays attention to the ethical and responsible development and use of the technologies that it uses and will develop in business processes. It aims to create a more viable world by contributing to UN Global Compact Principles and Sustainable Development Goals, respecting human dignity, funda- mental rights and freedoms in the tech- nologies it develops, especially artificial intelligence technology. In line with our Human Rights Policy, the provisions of the Universal Declaration of Human Rights, the International Convention on Civil and Political Rights, the International Convention on Economic, Social and Cultural Rights, the UN Convention on the Rights of Persons with Disabilities and the Convention on the Rights of the Child, the United Nations Business World and Human Rights Principles, the United Nations The Global Principles and OECD Principles for Multinational Companies, the provisions of the ILO Convention to which Turkey is a party, the “Rights and Freedoms of Assembly” for our employees and expressed in the Constitution of the Republic of Turkey, and the “Rights to Form Unions and Engage in Union Activities” are respected; in addition, our employees are supported to become members of professional groups in their field or NGOs that provide social benefits. You can access our Human Rights Policy on our website. In 2021, it was aimed to expand the com- pliance with the Turkcell Human Rights Policy to Turkcell subsidiaries, and the respective process started and pro- gressed with Superonline. Human Rights Policy preparations are also underway for our other subsidiaries in Turkey. With the Turkcell Common Values and Code of Business Ethics (TODİEK), which was developed in line with global best practices and adopted by the Board of Directors, we protect 74 | TURKCELL 2022 INTEGRATED ANNUAL REPORT The set of questions contained in this section addresses issues such as conflict of interest and adequacy of contribution. our employees and adopt exemplary ethical behavior across our ecosystem. In 2022, 28 cases were reported to our Company through Ethics Channels. The reviewed cases were handled under the 3 main categories of unethical and immoral behavior, information security and financial issues. In 1 out of 23 cases reviewed, it was decided to apply the “Termination of Employment” sanction. It was further decided that the cases re- viewed did not involve any actions that violate the Turkcell Group Anti-Bribery and Corruption Policy. Our employees, customers and suppliers can convey their reason- able doubts and information re- garding cases that violate, or may present a potential violation of business ethics to the Turkcell Ethics Committee anonymously through the Ethics Line (532 210 4444). Additionally, our employees can report cases of violations of reg- ulations or ethically inappropriate situations directly or indirectly by using internal forms, telephone and email to the Ethics Committee at etikbildirim@turkcell.com.tr or Audit Committee at auditcommittee@turkcell.com.tr. SPK C1.5; SPK C1.8 GRI 2.23 ; GRI 2.30 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 75 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 75 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Anti-Bribery and Corruption, Compliance with International Capital Markets and Economic & Trade Sanctions and Export Controls Anti-Bribery and Anti-Corruption In line with our aim of being a trusted company for all our stakeholders and being an exemplary corporate citi- zen, we oversee compliance with na- tional and international Anti-Bribery and Anti-Corruption (ABC) standards covering all our activities. The Board of Directors approved the AntiBribery and Corruption Policy (ABC) in 2016 to establish the basis of our fight against bribery and corruption. This document is a major indication of how the Board of Directors is committed to the “zero tolerance” principle on bribery and corruption. Our ABC Policy is publicly available, and we expect the entire Turkcell ecosystem to act in line with this document. Within the framework drawn up by the ABC Policy, the ABC Program has been carried out with the establishment of the Corporate Governance & ABC Program Office (ABC Office) as of April 2018, which takes necessary preventive meas- ures to ensure compliance with these rules and provides risk-based train- internal communications. ings and As of January 1, 2021, the Corporate Governance & ABC Program Office continues its activities under the name of Corporate Governance & Capital Markets Compliance Directorate with its autonomous structure, reporting di- rectly to the Board of Directors. Executing the anti-bribery and cor- ruption compliance program in 2022, our Corporate Governance & Capital Markets Compliance Directorate con- tinued the end-to-end designed ABC training program, organized specif- ic trainings with a risk-oriented ap- proach, involved in the merger and acquisition processes, and contin- ued cooperation with domestic and abroad group companies, and con- ducted studies to disseminate this pol- icy across the Turkcell ecosystem. Within this context; • The Second Generation ABC Training, which comparatively measures the knowledge level of the participant before and after the training, and ad- dresses many ethical dilemmas from actual daily professional life regarding bribery and corruption in a fictional flow, was assigned to all Turkcell group company employees in 2021 in Turkey. Also, in 2022, the aforementioned train- ing continues to be assigned to all new employees who join the company. • Coordination and awareness activities were held with domestic and inter- national group company compliance contacts within the scope of the fight against bribery and corruption. • Training and awareness activi- ties were carried out under the ti- tle of “Developments in the Field of Compliance in the Technology Sector”, with focused training groups for ana- lyzing the decision taken by the U.S. Securities and Exchange Commission (SEC) regarding FCPA violations that took place in Turkey in 2022 and the re- sults thereof. • Within the framework of a risk-oriented approach, a total of 12 hours 45 minutes of anti-bribery and anti-corruption training was provided to various teams. • The Corporate Governance & Capital Markets Compliance Directorate car- ried out studies to disseminate the zero-tolerance principle adopted by Turkcell within the framework of the ABC Policy, to the ecosystem by provid- ing compliance consultancy in various contracts, tenders and business setups. • “Anti-Corruption Week” activities were carried out for all Turkcell group com- pany employees between December 5th and 9th, 2022. In this context, the mes- sage of our CEO regarding the fight against corruption was sent both in Turkish and in English to our group com- pany employees. In every single day of this week, which is programmed as an awareness week, various information notes were sent to all employees and award-winning questions were asked. Compliance with International Capital Markets Due to its specific position in the cap- ital markets, Turkcell implements dual rule sets and good practices within the framework of both Turkish and U.S. capital markets, particularly on corpo- rate governance structures, financial reporting and internal control process- es. Among Turkcell’s prominent corpo- rate processes implemented as part of those requirements, the following can be named: Turkcell Board of Directors and its committees’ structure, oper- ating rules and independence of its members; the effective internal control environment regarding the financial reporting processes based on report- ing and disclosure obligations before the Capital Markets Board (CMB), U.S. Securities and Exchange Commission (SEC), BIST and NYSE; the ethical rules applicable to the company’s senior management as well as finance exec- utives in accordance with SEC; and the blackout period and the quiet period for the trading of shares. the Public Practices based on Companies Accounting Reform and Investor Protection Act, also known as Sarbanes-Oxley (SOX) Act and U.S. Foreign Corrupt Practices Act (FCPA), which aim to improve the control mech- anisms of companies’ financial report- ing while supporting effective corpo- rate management, particularly stand out as part of Turkcell’s short- and long- term and sustainable corporate DNA. Due to our dual listing in the capi- tal markets, SOX Coordination and Compliance Unit has been established within the ABAC Office as of January 2019 in order to carry out our obliga- tions to comply with capital markets regulations and corporate govern- ance practices that we are subject to under an autonomous structure that has direct access to the Board of Directors. The SOX Coordination and Compliance Unit has been continu- ing its operations under the name of SOX Compliance and Governance Unit since January 1, 2021. The SOX Compliance and Governance Unit, along with monitoring the regula- tions of SEC and Public Company Accounting Oversight Board, supports corporate transparency and contrib- utes to reliable information disclosure to the public by incorporating good practices within our Company. Training and awareness activities are carried out by the SOX Compliance and Governance Department under the title of SOX 404 practices that con- stitute an integral part of our employ- ees’ way of doing business. Regarding SOX 404-connected developments, a total of 11 hours training was given to 28 employees in 2022. Economic and Commercial Sanctions and Export Controls the coordination of The Turkcell Sanctions Compliance Program Procedure, which is con- stantly monitored and revised the under Corporate Governance & Capital Markets Compliance Directorate (“Directorate”), was adopted by the Board of Directors in 2020. The Sanctions Compliance Program Procedure plays an important role by following our company’s compliance program, which aims to observe eco- nomic and trade sanctions and ex- port control rules, both at the share- holders’ level and in our ecosystem for taking necessary actions. Within the scope of the Sanctions Compliance Program Procedure, a periodical review covering all busi- ness activities of the Turkcell group is carried out by the Directorate in line with the data received from the busi- ness owners. Business owners in the company are obliged to screen their counterparts using the consolidated sanctions list databases of the United Nations, European Union, USA and UK before initiating any business relation- ship. Where required, additional due diligence activities are being made by the Directorate, and additional meas- ures are being taken. Turkcell is also aware of the intensifying of sanctions imposed on Russia and Belarus by es- pecially the European Union, United Kingdom, United States, and closely monitors the impacts of sanctions on group companies with the coordina- tion of group companies’ compliance units. Updates and risk assessments regarding imposed the sanctions on Russia and Belarus are also con- veyed to the Early Detection of Risk Committee and, if necessary, to the Board of Directors. At the end of 2022, economic and trade sanction-related screenings began to be supplement- ed by an additional outsource service. In 2022, the Directorate continuously monitored the legislation and devel- opments regarding economic and trade sanctions and export controls and provided trainings and awaness activies in this regard. In this scope; various teams received a total of 9 hours and 45 minutes of training. Competition Management Turkcell believes that maintaining fair and strong competition conditions is critical for a health market structure. A competitive market also has positive ef- fects on the development and strength- ening of the parties. For this reason, it is of great importance for Turkcell and its Group Companies to effectively ensure and protect competition in all markets in which they operate. Turkcell strives to comply with compe- tition law legislation and regulations in all its business and transactions. One of the main objectives of competition law is to prevent dominant players in the market to abuse their power by es- tablishing agreements, decisions and practices, which avoids, distorts or re- stricts fair competition. Moreover, the competition law controls merger and acquisition transactions to preserve competition in the markets, and makes necessary regulations and conducts supervision to protect competition. In this context, certain processes are fol- lowed within Turkcell, including but not limited to the following: • It is ensured that the guides, informa- tion and trainings prepared within the scope of the competition com- pliance process are reviewed by all employees. • In line with our general principles, any verbal or written agreements and communications with competitors on the following issues are avoided; price determination, sharing of customer/ region, sharing of trade channels, re- striction of supply amount or initiating a boycott, and collusion in tenders. • Sensitive information is not shared among competitors. • Causing difficulties for the activities of competing companies, prevention of new entrance to the market, high sales prices and sales prices below cost are avoided. • Resale prices of third parties that resell Turkcell products and servic- es are not interfered in by Turkcell. Recommended sales price notifica- tion rules are precisely followed. Turkcell and Turkcell Group companies act in all their markets of operation in accordance with competition rules un- der the Turkish Commercial Code, the Law on the Protection of Competition, the Electronic Communications Law and secondary legislations. investigation process We disclose information on critical cas- es that Turkcell is a party to, as part of our disclosures to the BIST, SEC and oth- er related authorities in compliance with CMB and IFRS standards. In this context, critical cases arising from competition law are also included in those reports. initiated The with the decision of the Competition Board to determine whether Article 4 of the Law No. 4054 on the Protection of Competition has been violated through a gentleman’s agreement in the labor market, which was based on the al- legation that our company violated the competition regulations within the scope of the Law on the Protection of Competition, is still ongoing. 76 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A3.3 GRI 2.27 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 77 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Effective Risk and Crisis Management Turkcell manages the risks that may negatively impact realization of company strategies within the scope of the Corporate Risk Management System. In this process, an effective risk management study is implemented with a broad scope to cover the key risk indicators, technology-based opportunities, global trends and sectorial developments. Corporate Risk and Business Continuity Management Since the end of the financial year of 2012, the Early Detection of Risks Committee has been in operation to perform ac- tivities 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, and the committee re- ports to the Board of Directors every 2 months. These reports are also shared with the independent audit company. The Enterprise Risk Management team is responsible for assessing risks and re- porting risk prevention activities to the Early Detection of Risks Committee, as well as coordinating the risk prevention activities within Turkcell and its group companies through the Corporate Risk Management methodology. The Turkcell Enterprise Risk Management team, designed in compliance with Enterprise Risk Management frame- work and ISO 31000 standards, is real- ized with an approach where the risk management process is integrated with fundamental management processes. Within the model framework, risks are classified on the basis of Turkcell Group Companies, they are registered and managed in the “Risk Universe”. This al- lows for each company to have their own risk library and manage their risks in a more efficient and focused manner. Turkcell Group Business Continuity Management System has been struc- tured to ensure the continuity of the rel- evant critical products and services of our DSS companies BiP İletişim, Lifecell Bulut and Turktell Bilişim as well as voice, messaging, internet, server ser- vices, data centers, public security, tow- er installation, acceptance, testing and operation support services in accord- ance with the international ISO 22301, Security, Resilience Business Continuity Management System standard, and it was certified as a result of independent external audit. The external audit carried out on the revised version of ISO 22301 2019 was successfully completed in full compliance with the updated standard. Regular drills are conducted to test our in business continuity plans, drafted consideration of customer expectations, corporate policies and legal obligations, so as to guarantee their sustained oper- ation in case of emergencies or disasters. Our geographically dispersed technical infrastructure, extensive coverage, solu- tion partner network, mobile network, mobile base stations, additional capacity, emergency center and past experiences enable us to minimize risks as much as possible. Moreover, the experience of our Group companies in customer services, infrastruc- our high-speed fiber-optic ture, data storage services and our ex- perienced software development teams allow us to effectively manage any dis- asters from another center, thereby en- suring the continuity of our activities. In order to increase the effectiveness of the Turkcell Crisis Management Plan which covers operational disruptions, natural disasters (earthquakes, floods, etc.), cyber-attacks, terrorism, fire, pan- demic and epidemic and toxic events, regular drills are conducted, and trainings and awareness activities are held with the participation of Crisis Management Teams and related groups. Information Security Risks Data security risk: This includes the risks of theft, loss, leakage, deliberate or acci- dental disclosure, misregistration, altera- tion, deletion, destruction and inacces- sibility of any information stored both in physical and/or in electronic media via authorized/unauthorized access from within or outside of the organization. In response to risks associated with data security, Turkcell takes the necessary technical and administrative measures. Cyber security risk: This involves the risk of destruction of information systems and of damage to systems due to the malicious use of Turkcell’s internal and external computer and network sys- tems. In this context, Turkcell manages vulnerabilities by implementing end- to-end security controls and tests. The Security Operations Center monitors threats 24/7 and performs cyber-at- tack monitoring and defense. Financial Risks Macroeconomic risks: This includes the risk of worsening expectations and/or the current situation due to economic and political uncertainties. Turkcell al- ready diversifies its financing sources and keeps different resources and nec- essary agreements ready, for events of possible sanctions and regional inabil- ity to access certain resources. Currency, interest and inflation risk: This includes the risk of increasing costs and decreasing revenue due to fluctu- ations in inflation, and interest rate and exchange rates. In this context, market dynamics are closely monitored, and appropriate financial instruments are selected and implemented to minimize exchange and interest rate risks. Liquidity, financing risks: This involves the risk of disruptions to cash flow and inability to fulfill the obligations due to inaccessibility of financing resources utilized or intended to be utilized, or inability to pay-back loans. Turkcell’s forward-looking cash projection is sys- tematically monitored with the princi- ples of effective balance sheet and liquidity management. Cash generation and collection risks: This involves the risk of disruptions to cash flow due to the inability to collect existing receivables on time. In periods when collection risk increases for cer- tain reasons (economic crisis, pandem- ic, war, etc.), collection balances and trends, as well as cash flow are moni- tored and reported to senior manage- ment on a daily basis. Strategic Risks Risks of adaptation to investment and technological developments: These are the risks that can affect the Company’s position, reputation and image in the market and the sector in the short, medi- um, or long term, which can be induced from lack of investment in innovation, new businesses within the sector and other areas and/or missing opportunities due to not being able to get the expect- ed return on investment. In this context, sectoral, local and global trends and competitor activities in new business lines are closely monitored and neces- sary actions are taken. Technological developments are followed through col- laborations with important international sectoral organizations such as GSMA, as well as through competent R&D studies and projects at national and interna- tional levels. Legal Risks Risks regarding compliance: This involves the risk of encountering administrative sanctions as a result of failure to comply with the applicable regulations. Turkcell Legal and Regulatory Function aims to monitor and prevent any possibility of non-compliance by closely following de- veloping and changing regulations with a pro-active management approach. Within this scope, business teams are pro- vided with briefings and information with respect to changes in legislations as well as new regulations which are monitored by senior management through Personal Data Steering Committee, Compliance Committee, Sub-compliance Committee and Information Systems Compliance Committee; and relevant compliance ac- tivities are carried out in this respect, var- ious measures are taken via digitalized tools such as internal audit and automat- ed control systems, working continuously, to prevent the occurrence of any breach imposition of any administrative and sanctions. Lawsuits and legal conflict risks: This includes the risk of encountering sanc- tions against Turkcell due to the filing of a lawsuit related to the area of re- sponsibility. Legal activities are carried out regarding those conflicts that may arise against Turkcell regarding its op- erations, contracts and projects. 78 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 79 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Business Continuity Risks These are the risks which the Company may encounter as a result of events in- cluding operational interruptions, natural disasters, terrorism, etc. Crisis, business and service continuity plans within the Company have been prepared in detail. In order to evaluate their effectiveness and identify potential areas for improvement, plans are reviewed periodically, and regu- lar drills are carried out annually. The risks that could be related to business continu- ity and connected to earthquake and cli- mate change are defined, evaluated and necessary actions are taken in coordina- tion with the Corporate Risk Management in a manner that encompasses all func- tions of our Company. Corporate Risk and Business Continuity management enables increasing awareness around risk-based management and adopting a manner of risk management based on scenarios through a lens of effective and dynamic risk management. Operational Risks renewable energy Environmental, sustainability and eco- logical risks: Issues that may arise from climate change (such as temperature changes, increase in energy consump- tion, increase in energy prices, insufficient waste management, lack of protection of water resources, etc.) and risks relat- ed to environmental factors that may affect human health and biological di- versity are included in this risk category. In this context, as Turkey’s first ISO 50001 certified mobile operator, Turkcell tracks its energy consumption and makes invest- extensive ments through its subsidiaries. As an ISO 14064 (International Greenhouse Gas Calculation and Verification Standard) certified mobile operator, Turkcell calcu- lates and verifies its greenhouse gas emis- sions through an independent organi- zation. Through its CDP Climate Change reporting, Turkcell regularly shares in- formation with stakeholders on its ap- proach to climate change performance and its risks and opportunities posed by climate change. As a company that con- sumes and produces 100% renewable energy, Turkcell continues to work and invest around its goal to become carbon neutral by 2050. Additionally, Turkcell is a zero-waste certificated company with zero-waste recycling. Climate Crisis The risks induced by climate change business directly Turkcell’s affect operations. Measures are taken against extreme weather events and natural disaster risks caused by climate change and studies are made after foreseeing increases in average temperatures in the long term. The effects and results of risks created by climate change are moni- tored within the framework of Corporate Risk Management. As Turkcell, we conduct field risk anal- yses during the installation of base sta- tions, take measures against the risks of extreme weather events and natural disasters caused by climate change, and plan for the transfer of data centers to locations with cold climates, foreseeing a rise in average temperatures in the long term. Turkcell’s mobile base stations can be seen as examples of our agile and creative solutions which are mandatory in such circumstances of climate change. Mobile base stations that have solar panels on top of the vehicles are located to serve in places where there is a loss of service or a need for additional capacity; in addition, portable solar fields are parts of our agile energy solutions in the face of climate change. Furthermore, some base stations of Turkcell are integrated with solar panels so that they switch to solar energy in case of a network outage. This allows Turkcell’s control mechanisms to predict all risks in order to prevent in- terruptions in communication making Turkcell one of the exemplary companies around the globe. Global Energy Crisis The increase in energy demand and limitations of energy resources in 2021 have caused the energy commodity prices to reach record levels in the in- ternational market. The energy pric- es that directly impact Turkcell Group fluctuate depending on the prices of thermal resources such as natural gas and coal, and the capacity for renew- able production. Parallel to the simul- taneous USD-based price increases in energy commodities, and the domestic drought-induced decline in production of our hydroelectric power plants which is our country’s largest source of elec- tricity production, the electricity prices in Turkey are also increasing similar to the European markets. Another fac- tor that increases the prices in TRY just like commodity prices is the increase in exchange rate. During the past 1 year, natural gas prices for power genera- tion increased by approximately 171%, and spot market power prices, which constitute the biggest portion of our electric cost increased by 216%. Turkcell Group continues to take two main actions in response to rising energy pric- es. The first action is based on the target to meet the Group’s energy consumption needs mostly from its own power plants until 2030 as an investor in large-scale projects on renewable energy resourc- es. Acquisition of Karadağ Wind Energy Power Plant with an installed power of 18 MW has been completed in 2021 as a first step of this strategy. Turkcell Group will make a 300 MW Solar Power Plant investment in order to meet its own con- sumption in suitable lands across Turkey within the framework of the 3-year stra- tegic plan. In the Karadağ Wind Energy Power Plant, which was acquired in 2021, capacity will be increased by installing new turbines. The second action is to protect ourselves from temporary fluctu- ations in the market by signing long-term, fixed-price energy purchasing contracts whenever possible. Since 2018, when we starting sourcing energy supply servic- es through our company Turkcell Energy Solutions, we have made fixed priced purchases from producer companies for a certain percentage of our consumption every year. Risks related to managing relationships with third parties: This includes risks that arise from inefficient management of third parties, which may occur due to failure of third parties in fulfilling their responsibilities completely and accu- rately, their activities violating compa- ny procedures and legal regulations, or their fraudulent behavior. In order to minimize risk of potential impact on operations and targets, agreements are made with business partners which have obtained legal opinion. Within the scope of the supply chain dis- ruption risk, the related developments causing the scarcity of current supply are being closely monitored. Estimations for the future periods are being made and actions are being taken evaluating the order planning for impacted prod- ucts’ supply duration. To avoid employee mistakes and man- age processes and projects more effec- tively, Turkcell Academy analyzes train- ing needs, completes assignments and designs content, and then provide tech- nical, personal development and com- petency training in areas of employee development. Market Risks Macroeconomic and political uncer- tainty risks: This includes the risks of worsening expectations and/or the cur- rent situation due to economic effects such as the impact of exchange rate fluctuations and inflation on custom- ers’ consumption habits and of political and geopolitical uncertainties. Global trends, economic indicators, competi- tion, revenue and subscriber data are regularly monitored by Turkcell. Competition risks: This includes the risk of being put at a disadvantage in com- peting activities or technological and/ or sectoral developments. In this context, market and competitor activities are closely monitored and efforts are made to respond to such competing activities with timely actions. Customer risks: These risks include the risks of not being able to meet the cus- tomers’ demands/ expectations due to demographic changes (age, training, in- come, etc.) in the customer groups or not being able to understand the customers’ needs. Internal Control and Continuous Improvement Internal Control and Turkcell Group Continuous Improvement Directorate identifies internal risks and carries out 2nd level control activities and process improvement studies for the effective management of business processes in Turkcell İletişim Hizmetleri A.Ş. and Turkcell Group Companies within the scope of laws, regulations, commu- niqués and regulations within the frame- work of professional standards, further to the authority given by the CEO. The Internal Control and Continuous Improvement Directorate analyzes the risks and priorities of the processes of the functions that we are responsible for, plans a risk-based internal control study, and conducts routine controls during the period by means of manual or automation tools according to the control intervals determined with the approval of the CEO. The Continuous Improvement Center carries out studies by making use of the technology at the maximum level to design our business processes in a way that will provide lean, agile, efficient, usable, minimum risk and error criteria, construct mechanisms to ensure a per- manent transformation. During the internal control activities, in addition to evaluating the effectiveness of controls at the first level, business units are guided to improve processes by taking into account Turkcell’s sustain- able values. If there are any malfunc- tions detected as a result of the controls, they are shared with the relevant teams to take action and the relevant action plans are followed. During the control, if it is determined that the related de- fect is caused by a process deficiency, the related process is handled end-to- end and works in coordination with the Continuous Improvement Center within the directorate to redesign it. After the control study, the results are reported at managerial level. During the meetings held periodically between the Internal Control Department and the management, the internal control activities planned and realized during the year are evaluated, the findings are shared and the action plans and fol- low-up results that are decided to be obtained for the relevant findings are evaluated and the plans for the future are reviewed. In addition to evaluating the effective- ness of the controls of the processes of the business units, carrying out internal investigations on the obligations of the ISO certificates company regarding within the scope of the legal regula- tions and the follow-up of Turkcell in- ternal audit/external audit results are among the other areas of responsibility. ISO27001 and ISO27017 certificates pro- vide an international framework which helps companies to protect their finan- cial data, intellectual property and sen- sitive customer information. Information Technology Security Techniques stand- ards for ISO27001 Information security management system are the internation- al certificates possessed by our compa- nies Turkcell, Lifecell Bulut, Superonline, Turktell, BİP, Turkcell Teknoloji, and KULE A.Ş. ISO27017 Information Technology for Cloud Services Safety Techniques international cer- standards are the tificates possessed by our companies Turkcell and Superonline. These certificates provide a robust and systematic approach to information in protect- management, and assist ing information and mitigating risks at our companies. Thanks to ISO 27001, ISO27017 certificates, we define, man- age and mitigate our risks accord- ing to the standards for the security of our information. On the continuous improvement side, ISO9001 Quality Management System audits have been successfully completed and audit out- puts have been evaluated to create inputs for the continuous improvement cycle. Document Management System and governance improvement activities are implemented through an integrated quality management system approach as well as a continuous improvement fostered awareness and culture through process improvement sugges- tion platform and training activities. is Cutting-edge technologies that serve continuous improvement are being im- plemented and managed in our pro- cesses. We undertake process mining initiatives through data-driven process management and in-house deployment efforts for robotic process automation. All processes of Turkcell and its group companies are designed and modeled from end to end. Tracking and manage- ment structure is established by identi- fying process performance indicators based on KPIs and metrics. Efforts are being made to establish common pro- cess design principles and ensure their integration into the process develop- ment cycle, while creating, renewing, and maintaining corporate process and document architecture. Studies are conducted to create the risk and internal control inventory of all processes in the name of reinforcing our Internal Control and Continuous Improvement activities. Within the scope of detective and preventive Internal Control Activities, automated controls are designed using advanced data an- alytics and robotic automations. Thanks to these activities, more reliable control results cleared from human error are obtained. It has a positive contribution on the development of internal control activities. 80 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.1 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 81 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Program objective is to; 1 In March 2022, RPA Marathon program with the motto “Dream and produce, discover digital experience with Robotic Process Automation Marathon!” has been launched. As a result of the program: 3 Increase the number of employees with RPA qualification Create a digital transformation culture with RPA in all Turkcell technical and non-technical functions A total of 1,001 automated processes (currently 330 processes) 952 new RPA scenarios have been commissioned in 2022, while total number of RPA scenarios in Turkcell has reached 1,300. According to the statements in the scenarios put into live in 2022, a total of 11.5 million minutes per year has been transferred to the robots. More than 300 RPA developers have been redounded to Turkcell. Automation awareness has been created with RPA. During the program period 2 more than 2,300 Turkcell employees were con- tacted with the following activities. One Ideathon (idea contest) – 95 people Two Hackathons - 329 people 78 teams Two RPA experience sharing workshops - 877 people 50 function-specific workshops Online RPA training with 1000+ people In 26 classes, 420 hours in class training for 350+ people. Internal Audit In selecting an independent audit com- pany; the Audit Committee considers the competencies and impartiality of independent audit firms and submits its suggestion to the Board of Directors. During our Company’s Ordinary General Assembly Meeting held on June 16, 2022, PwC Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (PricewaterhouseCoopers) was appointed as the Company auditor for the auditing of our Company’s financial statements of 2022, as per the Turkish Commercial Code (TCC). The Internal Audit function within the Company directly reports to the Board of Directors and is responsi- ble for the auditing of Turkcell İletişim A.Ş. and all group companies, which are subsidiaries, and reporting the re- sults of audit activities carried out in step with International Standards for the Professional Practice of Internal Auditing to the Audit Committee. The auditing activities of the Internal Audit mainly comprise operational audits conducted pursuant to annual risk- based audit plans and audits in ac- cordance with compliance to Article 404 of the Sarbanes Oxley Act. Operational audit activities are carried out according to annual audit plans prepared in line with a risk-based au- dit approach. Through conducting operational audits, the Internal Audit department evaluates the effective- ness of risk management, control, and governance processes, providing as- surance to the Board of Directors and Audit Committee in this respect, and thereby assisting Turkcell in meeting its goals. As we are listed on the New York Stock Exchange in the United States, and as per the provisions of Article 404 of the Sarbanes Oxley Act, which all public- ly traded companies are required to comply with, audit activities are con- ducted within the framework of the an- nual plan to provide assurance in terms of the existence, adequacy and effec- tiveness of the internal control system adopted by Turkcell and Turkcell group companies, the financial statements of which are consolidated. All stages, covering the planning of audit activi- ties, identifying internal control insuffi- ciencies, and following up and closing related actions within the scope of compliance with the aforementioned article are regularly reported to the Audit Committee, CEO and CFO. The Internal Audit Directorate also provides consultancy services with respect to matters at hand, as well as matters raised by the management. The Internal Audit Directorate reports on compliance practices as per Article 404 of the Sarbanes Oxley Act to the Audit Committee, CEO and CFO. The Internal Audit mechanism operates with a risk-based audit approach. In line with this approach. We constant- ly evaluate the probable risks from a functional and corporate based per- spective. The main input of audit prac- tices is the risk analysis formed as a result of these practices. 82 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 83 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Financial Capital Outputs TRY 1.7 Billion Free Cash Flow Strong Financial Performance Our financial capital is the key eco- nomic input for all activities we carry out on our journey towards creating stakeholder value. Providing our customers innovative services through a widespread and strong tel- ecom infrastructure, developing do- mestic technologies, creating a service network that will create satisfaction, supporting the society through social projects, catering suitable employ- ment conditions for our employees and creating value for our shareholders re- quire a strong financial performance. In this respect, strong and sustainable financial performance is among our top priorities. While targeting generation of strong operational profit through revenues from our operations, we focus on effi- cient management of working capital requirement and realizing our capital expenditures based on demand, thus supporting long-term value creation. Risk management is one of our main agenda items as we operate in an emerging market. We follow a prudent risk management approach to protect our business model against macroeco- nomic and financial fluctuations with hedging practices. Accordingly, in or- der to realize real revenue growth and eventually minimize inflationary pres- sure over our operational profitability, we give importance to adjusting the prices of our products and services in line with the general level of prices in our country. We also promote growth through subscriber net additions as well as our focus areas such as con- sumer and corporate digital service revenues and techfin. Meanwhile, we ensure that our balance sheet is resil- ient to the currency movements by ac- tively utilizing hedging instruments. We aim to be prepared against finan- cial crisis and shocks by focusing on keeping our liquidity sources strong. On the other hand, we contribute to effi- cient use of capital through a well-bal- anced management of our leverage level. We focus on implementing an ef- fective financing approach by closely monitoring the credit and capital mar- kets and using a variety of financing instruments in right currency, cost and maturity terms. We contribute to work- ing capital management by effectively managing our collections. The efficient capital allocation is an- other important matter in terms of our financial capital. In this framework, while main- taining our efforts to direct our capital resources to more profitable areas that generate higher growth, we remain fo- cused on our objective of revealing the real value of our assets in our balance sheet. As part of our solid corporate govern- ance efforts, we disclose our finan- cial management approach to our stakeholders through our integrated annual reports, quarterly and annual results announcements, our website, and the physical/virtual investor meet- ings we attend and events we hold. Accordingly, we pursue our efforts to increase the market capitalization and trading volume of our Company, to di- versify and deepen the investor profile and increase the share and number of long-term investors on our institutional investor base. You may review the details of our audited annual financial perfor- mance in the consolidated financial statements section. TRY TRY TRY TRY 53.9 22.0 12.5 11.1 Billion Revenue Billion EBITDA Billion EBIT Billion Net Income Operational CAPEX / Sales Ratio 20.2% USD 25 Million Net Short FX Position Consolidated Leverage Ratio 0.9x 317 Meetings with Investors 84 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 85 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Revenues From Operations The revenue from our operations stands out as one of the essential input of all our activities that we conduct in terms of value creation. Consequently, we bring our innovative services to our cus- tomers, improve the conditions of our employees, contribute to the national economy and our people through the investments we make, distribute divi- dends to our investors, in summary cre- ate value for all our stakeholders. 2022 has been a year in which the in- flationary pressures have globally in- creased with the post-pandemic nor- malization, and the macro-economic and politic challenges were experi- enced throughout the world as a result of the Russian-Ukrainian War. In the light of these developments, Turkey has maintained its growth performance in 2022, however, the depreciation of the TRY led to an upward trend in inflation throughout the year. As Turkcell, we continued our strong op- erational and financial performance in 2022 in an environment where challeng- ing macroeconomic conditions were prevailing, thanks to our diversified business model with our strategic focus areas and our customer-oriented ap- proach. In 2022, our consolidated reve- nues increased by 50.0% year-on-year to TRY 53.9 billion. Our expanding sub- scriber base, our ARPU growth which has accelerated under the light of our sequential price adjustments, the pos- itive contribution of our international operations and strategic focus areas to the growth stood out as the main drivers behind this performance. With the positive impact of our strong revenue growth and disciplinary cost management implementations, we re- corded TRY 22.0 billion EBITDA with an increase of 46.5% in 2022. Increased en- ergy and employee expenses as result of the macroeconomic conditions, were offsetted by managing our marketing and sales expenses more efficiently. We bring our innovative services to our customers, improve the conditions of our employees, contribute to the national economy and our people through the investments we make, distribute dividends to our investors, in summary create value for all our stakeholders. In 2022, the Turkish Lira depreciated by 31% and 26% against the US Dollar and Euro, respectively. With our prudent fi- nancial risk management approach, we have kept the impact of currency movements on our financials at a lim- ited level in a period of quite challeng- ing macroeconomic developments. We have achieved TRY 11.1 billion net income in 2022. The deferred tax in- come impact resulting from the asset revaluation in accordance with Article 11 of the Law No. 7326 also positively im- pacted our net income performance in 2022. Please refer to our consolidated financial statements and footnotes for details. Please refer to our consol- idated financial statements and foot- notes for details. Turkcell Group Revenue (TRY million) Turkcell Group EBITDA (TRY million) 50.0% 2022 growth 46.5% 2022 growth 8 7 8 3 5 , 1 2 9 5 3 , 4 0 1 , 9 2 2020 2021 2022 4 9 9 , 1 2 4 1 0 5 1 . 0 7 2 2 1 . 2020 2021 2022 Turkcell Group Net Income (TRY Million) Operational Capital Expenditures (excluding licenses)/ Sales Ratio (Ratio) 119.7% 2022 growth -1.0 pp 2022 change 3 5 0 , 1 1 1 3 0 5 , 7 3 2 4 , 2020 2021 2022 % 2 . 1 2 % 2 0 2 . % 5 8 1 . 2020 2021 2022 Free Cash Flow (TRY Billion) -0.0 -0.7 3.4 2.4 1.7 1.1 -2.2 2016 2017 2018 2019 2020 2021 2022 Accordingly, while we created TRY 1.1 billion free cash flow in 2021, we achieved a free cash flow of TRY 1.7 billion in 2022 TRY 1.7 Billion With the awareness of the responsi- bility of having a strong infrastructure and with the aim of bringing our cus- tomers together with the latest tech- nologies, we continued our invest- ments in 2022 by following a controlled approach. In line with the increase in demand for quality fixed broadband connections, which also continued after the pandemic, we continued our fiber infrastructure investments with- out slowing down and added 887 thousand new homepasses. While the investment expenditures of our subsid- iary in Ukraine slowed down due to the war, the depreciation of TRY against foreign currencies caused our capital expenditures to increase. Accordingly, our operational capital expenditures (excluding license fee) amounted to 20.2% of our total revenues in 2022. You may access the details of our domestic network investments and 5G activities in the manufactured capital section of our report. We put emphasis on our free cash flow performance in order to sustain our strong financial performance and cre- ate value for our investors. While our free cash flow was at negative levels in 2014-2018 due to 4.5G investments, it turned positive as these investments were completed in the following pe- riod. Accordingly, while we created TRY 1.1 billion free cash flow in 2021, we achieved a free cash flow of TRY 1.7 billion in 2022. The expanding loan portfolio of our finance company con- tinued to pressure our cash flow gener- ation. On the other hand, our free cash flow was stronger than last year, as our front-loaded mobile investments and demand-driven capital expenditures on the fixed side, of which positive con- tribution we will continue to see in the upcoming periods, were less affected by the currency movements. 86 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 87 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell ARPU vs. CPI Trend Q120=100 Company and TÜİK announcements 100 100 0 2 1 Q 103 100 0 2 2 Q 112 105 0 2 3 Q 111 110 0 2 4 Q 116 107 1 2 1 Q 120 113 1 2 2 Q 126 124 1 2 3 Q 247 228 200 184 209 150 179 139 128 129 1 2 4 Q 2 2 1 Q 2 2 2 Q 2 2 3 Q 2 2 4 Q CPI Turkcell Mobil ARPU - Blended (excluding M2M) Business Model Hedging Practices In 2022, we continued to minimize the impact of challenging macroeconomic developments on our financials, thanks to our business model hedging prac- tices. Sequentially pricing our products and services according to the current price developments in the market, using hedging instruments against our foreign currency-denominated borrowings, keeping strong liquidity resources and collection performance management were the areas we focused on again this year. We continued adjusting the prices of our products and services with a sequential approach in line with the current eco- nomic conditions in 2022. Besides accu- rate pricing, we focused on increasing the postpaid subscriber base share and upselling to higher packages with rich- er value propositions to continue ARPU growth. Accordingly, Mobile ARPU (ex- cluding M2M) growth was 40.3% while fixed residential ARPU growth was 26.7% year-on-year. In 2022, where inflation was in an upward trend throughout the year, we followed a balanced growth strategy supported by subscriber addi- tions at the same time. Accordingly, we expanded our subscriber base with 2.3 million annual net additions. Additionally, our digital services and techfin solutions, which provide higher revenue growth compared to our telecom services, also supported our consolidated revenue growth. Our international businesses also continued to contribute to the total revenues. In this context, we minimized inflationary pressures on operational profitability in a year dominated by diffi- cult macroeconomic conditions. We continued our prudent risk mana- gement approach throughout 2022 with regard to our foreign currency debt in our balance sheet. We continu- ed to actively use the hedging instru- ments within the scope of our prudent risk management approach. After the rapid depreciation of TRY against fo- reign currencies in the last quarter of 2021, we supported the effectiveness of our portfolio in this period of volatile currency movements by using short- term hedging instruments. While 80% of our total debt before hedging tran- sactions was in foreign currency as of the end of 2022, the ratio declines to 50% when the effects of hedging inst- ruments are included. In order to redu- ce our risk by diversifying our foreign exchange transactions and position, we prioritized local currency-based trade with our suppliers. We signed Turkish Lira denominated payment ag- reements with our largest suppliers to protect our foreign exchange position. Accordingly, as of the end of 2022, we had a net FX short position of USD 25 million in line with our ambition of ke- eping an FX neutral position, which we define as a level between minus USD 200 million to plus USD 200 million. In this respect, we held TRY 26.0 billion in cash, mostly in foreign currency on our balance sheet as of the end of 2022. This amount is enough to cover our entire debt service until the end of 2024. Net FX Position (USD Million) 132 -191 -25 2020 2021 2022 these hedging Meanwhile, instru- ments also protect us against the in- terest risk in the market. Accordingly, approximately 33% of our total debt has a floating interest rate as of the end of 2022, while our fixed rate bor- rowing share is at around 67% inc- luding the impact of hedging instru- ments. Another important aspect of our risk management approach is the fact that the effectiveness of our entire derivative instrument portfolio is being closely monitored, and the principal and interest payments of the long-term foreign currency debts are being guaranteed. Additionally, while conducting these agreements, we work with reliable and reputable financial institutions recognized by in- ternational markets. As a telecom company that operates in emerging markets, we need to be prepared against volatility in financial markets, and sustain a strong liquidity position to ensure operational conti- nuity. Liquidity management is there- fore a crucial part for our financial ca- pital. In this respect, we held TRY 26.0 billion in cash, mostly in foreign cur- rency on our balance sheet as of the end of 2022. This amount is enough to cover our entire debt service until the end of 2024. Debt Service (Principal & Interest)* (USD Million) Local Currency FX *Data of Turkcell Group companies excluding TFC. 9 5 7 4 2 3 1 6 4 8 9 2 9 2 5 9 2 3 1 9 3 1 9 0 3 2 3 9 7 3 9 7 0 3 2 2023 2024 2025 2026 2027+ 88 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 89 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES In addition to our strong cash position, our committed credit lines of USD 311 million, as well as our strong free cash flow generation performance support our liquidity position. Another important focus area concerning liquidity is debt management. Despite the depreciation of the Turkish Lira against the USD and EUR in 2022, we managed to reduce our leverage level (net debt/EBITDA) to 0.9x thanks to cash generation. Until the next technology investment, our goal is to maintain our leverage level with cash flow generation and to prepare for fu- ture investments. Due to the timely actions we took and as our customers were also sensitive to their payments given that telecom services are an integral part of their lives, we managed to maintain our strong collection performance in 2022. We also sustained a robust collection performance in our financing business in 2022 when the challenging macro- economic conditions were influential, continuing to keep our cost of risk be- low sector averages. We followed a prudent approach in granting loans to customers, taking into account several metrics including the payment perfor- mance of our customers for their tele- com invoices, as well as credit bureau scores into consideration as part of our evaluation process. Consolidated Leverage Ratio x 1 . 1 x 9 0 . x 7 0 . 2020 2021 2022 We also sustained a robust collection performance in our financing business in 2022 when the challenging macroeconomic conditions were influential, continuing to keep our cost of risk below sector averages. Financell Cost of Risk (Rate) % 3 2 . % 0 . 1 % 4 0 . Q420 Q421 Q422 Efficient Capital Allocation Financing Diversity As Turkcell, we invest in areas with high demand and value creation potential, such as digital services, digital business services, techfin offers and fiber con- nection solutions within the framework of efficient capital management. In this context, we aim at creating value for our stakeholders by strengthening our financial and operational performance. We have adopted the approach of fi- nancing our investments in these areas through active portfolio management actions in addition to borrowing and cash flow. In the last quarter of 2021, we have man- dated J.P.Morgan Securities plc in order to evaluate options of partial stake sale at our subsidiary Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., which of- fers innovative payment solutions under the Paycell brand as a part of the strat- egy to expand its business volume by accelerating growth in existing and new markets to provide resources to the com- pany. At the end of 2022, it was decided to initiate the preparation process of the initial public offering of a certain amount of shares of our Tower company which is included in our balance sheet with its portfolio consisting of 10,910 towers in 4 countries, in Turkey and international markets when required, depending on the market conditions, and within the framework of the provisions of Capital Markets’ legislation and other related legislations. Meanwhile, Superonline stands out as one of the important as- sets in our balance sheet with its size, profitable operations and revenue growth profile. We may assess potential public offering, infrastructure sharing, or sale to strategic/minority shareholders regarding this asset. Our Digital Business Services business line, which offers many services that would provide competitive advantageto our corporate customers, also stands out as a valuable business partner for international players oper- ating in the Turkish market. We may also consider strategic actions related to this line of business in the coming period. Within this scope, we regularly monitor market conditions and investor interest, and we aim to unlock the real values of the assets in our balance sheet by per- forming various capital markets and strategictransactions, if appropriate conditions arise. We aim to create alternative funding methods and resources, and devel- op strong market relations in order to provide financing diversity to our strong equity position. Accordingly, we continue to utilize loans obtained from national and international banks, issue Eurobonds in international mar- kets, bonds, bills, lease certificates and Asset Backed Securities in local mar- kets and obtain ECA loans for financ- ing procurements from foreign suppli- ers. We also use sustainable financing (sustainability loan, green indexed loan) as part of our diversified funding resources. issue debt In 2022, Turkcell Board of Directors instru- has decided to ment at a nominal value of up to TRY 1,000,000,000, with various maturities up to one-year, in Turkish Lira terms, in the domestic market, in one or more tranches, without public offering, as private placement and/or to be sold to institutional investors.In this context, our application to the Capital Markets Board has been approved. Within the scope of this issue limit, our Company has issued a financial bond with a maturity date of 17.05.2023, an annual simple interest of 25.50%, and a nom- inal amount of TRY 500,000,000 in November 2022. Moreover, in 2022, a total of TRY 700,000,000 of financial bonds was issued through our subsid- iary Financell, and TRY 450,000,000 in of this 2022. In the same period, a total of TRY 1,250,000,000 sukuk issuance was completed through our subsidiaries Superonline and Paycell. issuance was redeemed While diversifying our sources of fi- nance, we aim to benefit from sus- tainability-themed loans. Accordingly, we had used a 3-year term EUR 50 million loan from BNP Paribas in May 2019. Based on the agreement we have made with the same bank, we had increased this loan to EUR 70 mil- lion in 2021 and extended its term to December 2026. The new sustainability objectives of the agreement were the share of renewable energy in electric- ity consumption, the share of renewa- ble energy produced within the group and the annual amount of electronic waste collected. In line with the company’s objectives, we pursue our efforts on sustainable/green financing transactions in 2022 without any slow-down, which would also include potential green issuances that can be made in the capital markets as well as domestic and international banks. Loans Utilized Under Sustainable/ Green Financing Loans (Million Euro) 0 5 0 5 0 2 2020 2021 2022 Strong and Transparent Financial Management Turkcell New Technologies Venture Capital Investment Fund Transparency and accountability of our financial management is as im- portant as our strong financials to our corporate structure. We plan, manage and analyze our budget effectively in line with this transparent and strong financial management approach. In the countries in which we operate, we manage our tax practices transparent- ly and accountably, directly and indi- rectly, and disclose them through our annual reports, material disclosures, and quarterly and annual results re- leases. Across the company, we share information in many different formats, including share performance report- ing, senior management reports and benchmarking analysis. In line with being an exemplary corpo- rate citizen, we carry out anti-bribery and anticorruption activities with ze- ro-tolerance, and act in accordance with legislation to maintain an effec- tive competitive market environment. We conduct all our financial transac- tions in accordance with CMB and SEC regulations. In March 2022, Turkcell established the Re-Pie Portföy Yönetimi A.Ş. Turkcell New Technologies Venture Capital Investment Fund to provide strategic and financial support to technolo- gy-focused startups with high growth potential in different sectors. Currently, the upper investment limit of Turkcell New Technologies VCIF is determined as TRY 500 million. Turkcell VCIF has in companies and venture invested capital including investment funds, EasyCep, a provider of renewed tele- phone and electronic devices, Barikat Cyber Security operating in the field of information security, and Procenne, which develops products in the field of digital security & encryption tech- nologies. Turkcell VCIF aims to invest in minority shares of startups operating in high technology sectors such as cyber security, fintech, artificial intelligence, etc. in the future. With the synergies to be created with the startups, it is aimed to create long-term value, as well as strategic and financial benefits for our company. You may access the details of our principles and reporting on anti-bri- bery and corruption, competition management and related issues in the strong corporate governance section, and the data on taxes in the consolidated finan- cial statements section. 90 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 91 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES As the Investor Relations Department, throughout2022: We held a total of 317 meetings with institutional investment funds. We attended 11 investor conferences, 5 of which were virtual. We organized 5 group investor meetings. We shared our financial results four times during the year via teleconferences. Approximately 100 analysts and investors attended each of these meetings, and the recordings of these meetings were made available on our website. We held regular one-on-one meetings with approximately 20 analysts to manage expectations. Over a thousand information requests were received throughout the year via phone and e-mail, to all of which we responded. We aim to proactively inform our in- vestors about the impact of current events on our processes. In March, we held an informative meeting with our investors to explain the impacts of Russia’s invasion and war on Ukraine on our subsidiaries. 85 analysts and in- vestors attended this teleconference. We strive to provide the maximum benefit and create value to Turkcell and our stakeholders The primary goal of Turkcell Investor Relations is to increase the market capitalization of our Company. Within this scope, our target is to diversify and deepen Turkcell’s in- vestor profile and increase the weight and number of long-term investors in the institutional investor base. Turkcell’s institutional investors account for 68% of the publicly traded shareholder base. 47% of these investors are lo- cated in North America, 26% in the United Kingdom and Ireland, and 21% in Europe (including Turkey). (Source: S&P Global, February 2023) Sustainability Indices and Performance Indicators Our successful activities in the sus- tainability area are confirmed by our achievements in local and global indi- ces. By revealing companies’ approach to sustainability issues such as global warming, depletion of natural resourc- es including water, health and safety, and employment, this index provides an independent assessment and regis- tration of companies by Borsa Istanbul. We have been included in the BIST Sustainability Index (BIST SI) since its launch in 2014. As of 2023, we started to be listed in the BIST Sustainability 25 Index, which was started to be calculat- ed for the first time by Borsa Istanbul in 2022. Our company’s ESG rating was eval- uated as BBB by Morgan Stanley Capital International (MSCI) in June 2022. Furthermore, Turkcell is the only Turkish telecommunications company to be listed in the FTSE4Good Emerging Markets Index which measures the ESG performance, calculated by FTSE, an in- dependent organization in partnership with the London Stock Exchange and Financial Times. Transparent Investor Communication – Investor Relations We manage our investor relations ac- tivities in parallel with the Corporate Governance Principles, and in accordance with the principles of accessibility, rapid re- sponse to stakeholders, transparency, consistency, and disclosure in line with the applicable legislation and regula- tory rules to which we are subject to. As part of our transparent and active communication, we provide access to documents such as audit reports, press releases, and investor presentations, which include quarterly financial and operational performance on our web- site in Turkish and English in order to address all stakeholders. Since 2020, we have been publishing an integrated annual report with an increasing focus on sustainability. We explain our approach to communication with our investors and other stakeholders in the interactions with our stakeholders section, and our com- munication channels in the stakeholder communication channels table. Capital Market Instruments Performance Turkcell shares are traded on the Borsa Istanbul and the New York Stock Exchange. trad- Turkcell shares commenced the Borsa ing simultaneously on Istanbul (BIST) and the New York Stock Exchange (NYSE) on July 11, 2000. The shares are traded under the TCELL ticker at the BIST and as American Depositary Shares (ADS) on the NYSE under the ticker TKC.8 Turkcell’s paid-in capital has a nomi- nal value of TRY 2.2 billion.9 Turkcell, the only Turkish company listed both on Borsa Istanbul and the New York Stock Exchange, is the 21st most valuable com- pany among those traded on the BIST with a market value of TRY 83.3 billion as of December 31, 2022. As of the end of 2022, the number of Turkcell’s American Depositary Shares were 78.7 million. Turkcell, which has a free float ratio of 54%, has a foreign ownership ra- tio10 of 74% as of December 31, 2022. In the same period, the share of foreign investors in Borsa Istanbul was 29%. The average daily trading volume of Turkcell shares in 2022 was 36.9 million. Turkcell has a bond with a nominal val- ue of USD 500 million, a maturity of 10 years and a coupon rate of 5.75% is- sued on October 15, 2015, and a bond with a nominal value of USD 500 million issued on April 11, 2018 with a 10-year maturity and a coupon rate of 5.80%. Share and Bond Buybacks In the previous years, the Turkcell Board of Directors authorized the Company management to buy back Company shares and bonds in an attempt to pro- tect our investors against any percep- tion of instability that may arise in the short and medium term; subsequent to the events on, and after July 15, 2016, and/or due to the potentially negative reflection of global macroeconomic vol- atility on Turkey in accordance with the announcements of the Capital Markets Board dated July 21, 2016 and July 25, 2016. On February 8, 2023, the Board of Directors determined the maximum fund amount as TRY 1,250,000,000. In this con- text, since 2016, 16.9 million shares (equiv- alent to TRY 180.2 million) and bonds to- taling a net of USD 37.2 million nominal amount (equivalent to TRY 521.8 million) have been purchased. In 2022, no share buyback was performed, and bonds with a nominal amount of USD 37.2 mil- lion (equivalent to TRY 521.8 million) were purchased. Our corporate governance principles are based on strong foundation We adopt Corporate Governance Principles. The key business principles adopt- ed by the Turkcell Investor Relations Department include accessibility, swift feedback to stakeholders, and inform- ing them transparently, consistently and on a timely manner. The Turkcell Investor Relations team consists of members with a deep understanding of both company itself and sector dynamics, and who can convey the strategy and focus areas of the Company comprehensively. Turkcell Investor Relations works to establish long lasting relationships with inves- tors. Information flow is provided to all stakeholders primarily through the Public Disclosure Platform, as well as Turkcell Investor Relations website both in Turkish and English. Turkcell is the 21st most valuable company among those traded on the BIST with a market value of TRY 83.3 billion 8 Two ADRs represent five shares. 9 Includes 2,200 million shares, each with a nominal value of 1 TL. 10 Source: Matriks 92 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C2.5 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 93 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Share Information and Dividend Yield Dividend Yield As the Investor Relations, we aim to increase the market capitalizati- on of Turkcell and achieve fair value. Accordingly, we evaluate the possibi- lities of creating strategic value and distribution of dividends to our sha- reholders in accordance with our di- vidend policy within the framework of financial discipline. % 2 7 . % 5 7 . % 6 3 . % 3 2 . % 2 3 . 2018 2019 2020* 2021 2022** * In 2020, dividend pay-out ratio to our shareholders was 25%, the highest rate permitted by the regulation. ** Our Board of Directors has decided to distribute dividends at a rate of 25% based on a comprehensive evaluation of macroeconomic and financial conditions, our investment plans, and our cash projections within the framework of our Company’s articles of association and Dividend Distribution Policy. TCELL (TRY)* Lowest Highest Closing TKC (USD)* Lowest Highest Closing 2018 8.24 13.21 10.28 2018 3.21 8.73 4.75 2019 9.46 12.76 12.08 2019 3.92 5.94 5.08 2020 10.56 15.09 14.44 2020 3.85 5.50 4.83 2021 12.80 22.55 17.87 2021 3.26 5.38 3.47 2022 15.68 38.62 37.88 2022 2.32 4.79 4.79 *Stock prices were adjusted for dividend distributions. Source: Bloomberg Stock Exchange Tickers Share ADR Bond Bond Stock Exchange Borsa İstanbul NYSE Ticker TCELL TKC Euronext Dublin ISIN: XS1298711729 Euronext Dublin ISIN: XS1803215869 Share Performance (Relative) (2022) January 22 April 22 July 22 October 22 BIST - 100 Turkcell Analyst Recommendations BUY HOLD SELL 55% 45% 0% Credit Rating Turkcell receives credit ratings from S&P, Fitch and JCR Eurasia Ratings. In addition, our company’s subsidiaries are rated by JCR Eurasia Ratings within the scope of relevant regulations. Precautions to avoid conflicts of interests with credit rating agencies, from which the services are procured, are laid down in both service agreements and code of conduct of the company. 20 brokerage houses actively monitor and analyze Turkcell shares. As of the end of 2022, there are 11 analysts giving “buy” advice, 9 analysts giving “hold” advice and no analysts giving “sell” advice. Long-term credit rating Outlook Rating date Review date S&P (FC&LC) Fitch (FC) B+ B Stable October 2022 October 2022 Negative July 2022 November 2022 Fitch National AAA (tur) JCR-ER (FC) BB JCR-ER National AAA (Trk) Stable Stable Stable March 2021 November 2022 May 2022 May 2022 - - Investor Relations Contact Information : +90 (212) 313 18 88 : +90 (216) 504 40 58 Phone Fax E-mail Web Address : Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No: 20 B Blok Küçükyalı Ofispark, 34854 - Maltepe / İSTANBUL : https://www.turkcell.com.tr/tr/hakkimizda/yatirimci-iliskileri : investor.relations@turkcell.com.tr 94 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 95 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Digital Finance Transformation Increasing the digital maturity of our strong finance function is among our top priority targets. Turkcell finance function has digitized its operation model in order to provide an environment where busi- ness processes are structured through systems, manual is mini- mized, operational excellence and pro- ductivity increase is achieved, internal control points are automatically sup- ported, and the working environment is brought to the level of best practices. intervention The efforts that started after the eval- uation of our current financial maturi- ty level with an aim to restructure the end-to-end finance operation model from process to technology, and from organization to data continue. In this framework, while continuing the inte- gration of new technological products into our existing systems in 2022, Master Data Management work was carried out for the first time in Turkcell’s history, and our data were harmonized in all source systems. Techfin’s shining stars: Paycell and Financell In 2022, we continued to improve the products and services we offer to our customers under Paycell. As Paycell, which offers a wide range of products and services to more than 51 thousand merchants, we continue to develop our competencies and include the Android POS and Paycell Virtual POS prod- uct for the virtual e-commerce world, in addition to the products we offer for commercial enterprises. Paycell Android POS, the first Android POS device to comply with applicable leg- islation, and approved by the Turkish Revenue Administration (GIB) in com- pliance with the Tax Law (TL) 507, pro- vides cost and efficiency advantages to member merchants, while offering standardized inventory tracking and e-invoice processes on a single platform. Android POS, which was developed based on the needs of Paycell customers, works with dif- ferent banks’ payment infrastructures, offering installment advantages and advantageous commissions under a collection, single device. This product also offers standardized collection management to enterprises which operates its own invoice processes. With our Virtual POS product, besides the cost sav- ings in card transactions in Turkcell e-commerce channels, a new reve- nue-generating product was created for Paycell. As key account management, we con- tinue to create an ever-expanding ecosystem by managing strategic re- lationships with institutions in line with our vision of making Paycell a cus- tomer and payment systems solution center for the leading retail brands of our country and the world. In this con- text, we are among the top payment providers in the market in which we operate, ensuring deepening with an average of 1.5 products per brand in more than 50 brands. With our existing and new business partnerships, we will continue to increase our penetration in both physical and online channels and contribute to the growth of Paycell, through our innovative products that differ from classical financial products in the market, such as E-money wal- let, payment by reflecting to Turkcell invoice, Paycell shopping limit, which would create added value by facilitat- ing the final payment experiences at retail points that touch the daily lives of individuals, and where our corpo- rate customers can expand their sales activities. Paycell enables customers to make purchases at member merchants with- out the need of a bank card or payment at the door, offering the opportunity to reflect the fee to their Turkcell bills with Pay Later feature. Paycell also provides bill payment both through the appli- cation and at Turkcell stores. With the rising number of contracted merchants each year, Paycell customers can shop quickly and securely using QR codes. Meanwhile, Paycell Card offers the opportunity of using a card to those under the age of 18, and therefore una- ble to be a bank customer. At the same time, Paycell Card users can manage their balance and mobile payment lim- its through a single account. Paycell set a first by adding a brand- new easy payment alternative. With “Ready to use limit” feature, users can spend their mobile payment limits via their Paycell Cards at any time, and repay through their Turkcell bill at the end of the month. Paycell, Turkey’s most inclusive dig- ital payment and financial services platform, continues to increase finan- cial inclusion and expand innovative payment services while leading the digital transformation of our country. Combining technology and financial services in line with the changing cus- tomer needs, Paycell offers fast and secure payment solutions, and aims to enable its users to benefit from finan- cial services easily with its vision of be- coming a financial marketplace. With the Paycell Shopping Limit, which was launched in 2022 in line with this pur- pose, Paycell offers its customers the opportunity to pay in installments up to 36 months with the shopping loan provided by Financell, for the products and services offered to its customers at the contracted workplaces, and to easily pay the loan installments with a Turkcell invoice for Turkcell postpaid line owners. Paycell, has cooperated with banks for the cash needs of its users, also offers the opportunity to use bank loans from the application. Paycell users can apply for the loan offered by contracted banks within the application, spend the loan they use with their Paycell Cards wherever they want, or withdraw them in cash. Paycell enriches the application with new services and solutions every day in order to offer its users all the finan- cial products they need on a single platform, with the goal of a superior customer experience. In this respect, Paycell users can instantly monitor the current prices of the commodities such as gold, silver and platinum while trading them through the collabo- rating company from the “Investment Transactions” menu in the application. The users can use the balance in their Paycell Cards for the commodity trans- actions, and they can invest even when they have zero balance in their cards, by reflecting the transaction on their Paycell increased its revenues by 87.2% this year, while its EBITDA margin was 44.2%. Paycell’s non-group revenues rose by 84.4% during the same period. The number of Paycell 3 month-active users has become 7.7 million. Turkcell invoices. In the last quarter of 2022, stock trading was also added to the Investment Transactions menu in addition to the commodity trans- actions. Paycell users can invest in American stock exchanges in Turkish Lira at any amount with a minimum of TRY 10 through a simple and un- interface. This service derstandable is also offered by a business partner authorized for this transaction, similar to that for other loan and commodity transactions. Apart from the lending brokerage and investment products, Paycell also offers its customers var- ious insurance products, that meet different needs varying from Travel Health Insurance to Personal Accident Insurance through the group company Turkcell Sigorta Aracılık Hizmetleri A.Ş.. Besides, in order to carry out interna- tional money transfer and payment services activities in European Union countries, the shares of Turkcell Europe GmbH, a subsidiary of our Company based in Germany, was transferred to Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., which operates un- der the Paycell brand, and the title of the company was changed to Paycell Europe GmbH. In 2022, with Financell, one of the key players in Turkey’s financing sector, we continued to offer financing solu- tions to retail and corporate custom- ers for their technological product and service purchases. We continue increasing our effectiveness in corpo- rate segment with the digital transfor- mation loan that was initiated in 2020. To date, 96 digital transformation fi- nancing loans have been extended. Meanwhile, credit risk infrastructure and digital transformation projects implemented in 2021 enabled us to conduct credit assessments at a faster pace and manage credit risk effec- tively. Our cost of risk remained below 1%. With the completion of projects in 2020, we had also started to pro- vide financing offers to our corporate segment and Superonline customers. Accordingly, as Turkcell, we contin- ue to provide financing solutions for all products and services we sell by growing. Additionally, we completed the system infrastructure transforma- tion, which is one of the most critical investments in terms of digital trans- formation, in 2021. With our reinforced infrastructure, we began to operate in non-Turkcell channels with new prod- ucts such as digital travel loan and car loan. We were already offerimg innovative solutions for customers’ risk management with fast and easy ac- cess products through Turkcell Sigorta Aracılık Hizmetleri A.Ş. In 2022, we ex- panded the scope of our current insur- ance business with innovative solutions based on big data and digital pro- cesses, and established Turkcell Dijital Sigorta A.Ş., which will provide end- to-end services. As of 2022 year-end the process of the license application we made to the Insurance and Private Pension Regulation and Supervision in October 2022 Agency continues. (SEDDK) Paycell 2020 2021 2022 Number of Paycell 3 month-active users (million) 4.7 Total transaction volume (TRY billion) Revenue (TRY million) EBITDA (TRY million) EBITDA margin (%) 9.1 285 147 52% 6.6 13.7 468 222 47% 7.7 37.1 877 388 44% Financell 2020 2021 2022 Number of customer acquisitions of Turkcell through Financell (thousand) Financell asset size (TRY billion) Number of credits granted by Financell (million) Number of customers who used credits annually (million people) Total customer loan portfolio (TRY billion) Revenue (TRY million) EBITDA (TRY million) EBITDA margin (%) Net income (TRY million) 129 2.5 2.0 1.4 1.9 567 367 65% 241 116 2.7 1.8 1.3 2.1 615 420 68% 334 123 4.2 1.9 1.3 3.4 980 523 53% 319 96 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 97 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES share as well as our pricing adjust- ments to reflect inflationary pressures, thanks to our brand perception, su- perior infrastructure, unique customer experience and analytical capabili- ties. In addition, our competitors fol- lowed the price adjustments we made as the leader, therefore we contin- ued to rationalize the market. On the fixed segment; with our ongoing fib- er focus, we continued to grow with the increase in the rate of upsell to high speeds and the number of IPTV customers. increasing de- While meeting the mands of our customers with inno- vative offers and options such as Esneyen (Flexible) and Yapboz (Puzzle) Packages, we continued to offer the right solutions to our customers by using our analytical competencies. We strengthened the usage habits of our customers, who head towards our digital channels, with smart offers and win & win setups. In addition to our strategy of always being there for our customers, our inno- vative and comprehensive tariffs and additional benefits; as a result of our brand perception, superior infrastruc- ture and unique customer experience, we achieved 2.3 million total net sub- scriber additions, 1.9 million of which were mobile. Our mobile ARPU11 grew by 40.3% year-on-year and continued to accelerate every quarter, driven by price increases, increased data usage, our upsell efforts, and the increase in the postpaid customer base. In 2021, we had accelerated our fiber infrastructure investments. By main- taining this focus in 2022, we have added 887 thousand homepasses and continued to contribute to our country’s digital transformation jour- ney. With the contribution of our ex- panding fiber infrastructure, we had 234 thousand net fiber subscriber ad- ditions in 2022. Due to the fact that the price adjustments in the fixed market were more limited compared to the mobile market and the contract struc- ture; our fixed residential fiber ARPU rose by 26.7% in 2022, driven by our renewed value propositions, upsell ef- forts higher IPTV subscriber rate and price adjsutments. Thus, we continued to grow in a balanced way in both customer addition and ARPU growth. Big Data In today’s telecommunications world, a large amount of data production takes place through social media net- works, connected devices, customer behavior, government service portals, call data records, billing information and similar sources. As a result, it is becoming increasingly difficult for mobile operators to cope with rapid fluctuations in data volumes. While leading to difficulties for the telecom- munications industry in terms of tech- nical infrastructure requirements, big data also offers to turn this challenge into an opportunity with big data an- alytics applications. This opportunity needs to be used by the entire com- pany, not just the technical staff. It also becomes more important for all organizations to enhance their deci- sion mechanisms through data-driven analysis. Since this situation requires people even without software experi- ence to work with data, it also drives us towards a structure where any- body can perform data analysis and analytics with low-code platforms. As Turkcell, we provide our corporate customers with big data analytics services; thus we enable them to differentiate in their own services. We are aware of the need to inter- pret the right customer data in order to reach the right target audience and make the right investment, and we continue growing our business by reaching the right customerwith big data. In an era of transparent com- petition, it is critical to track custom- er satisfaction instantly and act on it. Accordingly, we track experiences of our customers closely and try to drive maximum satisfaction. Digital Transformation and Inclusion By simplifying and accelerating access to information, mobile communication technologies provide a basis for digital transformation process for both individuals and organizations. The number of people with access to internet through mobile applications has reached 4 billion, proving that the telecom sector is one of the most ef- fective channels for digital services to reach people. Facilitating people’s access to information and growing in importance globally, the telecommu- nication industry stands out as one of the most critical industries to eliminate inequalities and enable equal access to information, services and financial services. In this context, the telecom- munication industry can bring social equality through digital solutions that cover a broad range of social groups and accelerate global development with smart applications. As Turkcell, since our establishment, we have placed technology’s power to provide equal opportunities at the center of all our activities, having im- plemented projects that aim to ensure equal opportunities in information ac- cess for all. Using our strong analytical competencies, we develop high quality innovative products, services and pro- jects, and offer services in many areas from education to finance. We continue our rapid improvement in the mobile payment field with our Paycell application, which has been positioned as a new generation super app, with over 19.9 million downloads to date. Within the scope of our digital services, we offer solutions that meet the needs of our customers with our products including TV+, fizy, BiP and lifebox. We support the digitalization journey of institutions by offering dig- ital business services. In areas where the infrastructure is insufficient to de- liver fiber internet, we can provide fast and secure internet access for every- one via our Superbox product offering fiber speed internet without the need of a cable connection. With the Whiz Kids project, we bring special, talented students together with technology and science. Trends Our Telecom Business 2022 was a year with crisis and chal- lenges that have affected the whole world. Particularly, the Russia-Ukraine War, which started in February, had a negative impact on factors such as inflation and supply chain disruptions globally. Prices increased throughout the year, particularly in areas such as energy, commodities and food. Those challenges particularly reflected on local price levels. Moreover, with the increased mobility after the pandem- ic, the number of foreign tourists visit- ing our country has reached the levels before the pandemic. Nevertheless, the digitalization trend increasing globally, has contributed to the increase of innovations such as 5G, industry 5.0, artificial intelligence, Internet of things and eSIM, in line with the different conditions brought by the changing life conditions after the COVID-19 pandemic. Regarding 5G, which is an important factor supporting digitalization, it has been announced that the 5G tender in our country will be held in 2023. In this direction, we contin- ued our preparations for the transition to 5G in 2022 as well. line with In these developments, Turkcell maintained its strong oper- ational structure by taking the nec- essary actions in an agile and rapid manner in our business. In our mobile business; we realized strong growth driven by our strong subscriber net additions, increased data usage, up- sell efforts, higher postpaid subscriber 11Excluding M2M 98 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 99 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES required for the mobility ecosystem to be created around the electric car which it defines as a “smart device”. In this context, in order to integrate innovative payment systems and di- gital financial solutions in the mobility ecosystem, a strategic cooperation agreement was signed with Paycell in 2022. On the other hand, the studies to include our Fizy platform in the Togg ecosystem continue to be planned. We keep the technological infrastru- cture available both as software and hardware for organizations which will require it in the future in connection with mobility solutions, with our local production approach and data cen- ters. We aim to create synergies that will add value to Turkcell by contribu- ting to the development of this ecosys- tem, which we will be involved in with new services in the future. Developed by “Turkey’s Automobile Joint Venture Group”, where Turkcell has 23% shareholding, production process of Togg has started flowing the completion of construction process of its factory in Bursa. It is planned to include Paycell and fizy platform in Togg ecosystem as a first step. In addition to a number of natural disasters taking place, changes in cli- mate policies, technology, consumer preferences and financial market ex- pectations have recently been cre- ating huge fluctuations in commod- ity prices and causing a rise in costs. Accordingly, spending on research and development in new and alterna- tive technologies are also increasing. In order for the business world and companies to manage these risks ef- fectively, they need to focus on imple- menting circular economy, renewable energy and pro-recycling strategies which will achieve net zero emissions rapidly. As per the goals of the Paris Agreement, 73 countries, including the EU members, committed to become carbon-neutral by 2050, and the number of committing countries is in- creasing. Turkey also signed the Paris Agreement in 2021, revealed its 2053 goal and joined other countries that declared a commitment. The risks induced by climate change have a direct effect on Turkcell’s busi- ness operations. As Turkcell, by con- ducting field risk analyses during the installation of base stations, we take measures against the risks of extreme weather events and natural disasters caused by climate change, and plan for the transfer of data centers to lo- cations with cold climates, foreseeing a rise in average temperatures in the long term. In our energy-focused activities, to environmen- we are directed tally friendly, green energy sourc- es within the scope of Sustainable Development Goals and we invest into them. in accordance with the Turkcell Sustainability Strategy we announced in 2020, we work to achieve our goal of going carbon-neutral by 2050, by becoming a company that consumes and generates renewable energy. 100% Accordingly, we acquired Izmir Karadağ Wind Power Plant in 2021, which reinforces our vision of being a company not only consuming renewable energy but also generating it. My Dream Companion With our My Dream Companion pro- ject, we work to provide the visually impaired with equal access to informa- tion and independent participation in the social life. My Dream Companion Service has been providing visually impaired peo- ple with access to up-to-date news, columns, audiobooks, and education since 2012; as well as indoor navigation technology at areas such as Turkcell stores, shopping malls, universities, and instant audio description technolo- gy for movies broadcasted in movie theaters and digital platforms. It is a free service for subscribers of all oper- ators via iOS and Android mobile ap- plication and the 8020 IVR line. In the project, with which 103 Turkcell stores, at least 1 in each city of Turkey and more than 1 in greater cities, were made accessible in May 2022, the vis- ually impaired people can easily find what they are searching for in the store with My Dream Companion indoor navigation technology. By expanding the scope of our au- dio description technology, where we have delivered the audio descriptions of 65 movies to the visually impaired throughout 2022, we have developed our live description technology to of- fer descriptions for performances such as theaters and musicals. With this technology, in 2022 we supported the equal access of the visually impaired to art by describing The Miser, which was staged at Turkcell Vadi, and When Nobody Was in the City and Peter Pan and the Neverland musicals at the Zorlu PSM Turkcell Platinum Stage. Climate Change 5 out of 10 risks that are most poten- tially damaging in the next 10 years according to the World Economic Forum (WEF) 2022 Global Risk Report include environmental and climate change-related risks. These are de- fined as failure of climate change ac- tions, extreme weather, biodiversity loss, environmental damage caused by human, and natural resource crises. Mobility The concept of mobility is developing on a daily basis with key trends such as autonomous driving technologies, connectivity, electrification and carpo- oling. The idea has gained momentum and become widespread that the developments in e-mobility field will affect different aspects ranging from the cities we live to the roads we use as well as the companies operating in this area. It is foreseen that the concept of mobility will trigger a disruption not only in automotive and transportation industry but also in technology. With the rapid development of mobi- lity and technology trends, our country has come to the edge of a new era. In this context, the transportation in- dustry works to devise the flexible and innovative solutions needed by focu- sing on the production of next gene- ration technologies. The Togg project, Turkey’s first domestic car designed as an electric vehicle, marks an important and powerful initiative in the mobility sector. Turkey’s ability to leverage its own resources in electric car compe- tition as part of its mobility efforts will provide a great advantage, contribu- ting to the development of the country on the electric car market. Our mobility solutions, offered as part of digital business services wit- hin Turkcell, provide the most advan- ced vehicle and fleet technologies for the safety of vehicles and employees. Developed by “Turkey’s Automobile Joint Venture Group”, where Turkcell has 23% shareholding, the mass pro- duction of Togg’s first innately ele- ctric, connected smart device, the C-segment SUV has started in Togg’s Gemlik Technology Campus as of October 29, 2022. Togg continues to finalize cooperation with entities as 100 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 101 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES In order to unlock the potential of elec- tronic communication technologies and develop innovative services meet- ing customer needs, it is fundamental that sectoral regulations support the development of the digital economy, and ensure fair competition and invest- ment environment. We position our comprehensive legal services requiring national and inter- national compliance at the center of our operations and assess the compli- ance of all activities carried out across Turkcell. As Turkcell, we create a perma- nent footprint in the global market and continue our expansion by managing disputes effectively and taking preven- tive legal actions, while building busi- ness strategies on a solid legal founda- tion. The digitalization of our processes helps us add value to our leadership journey and the reputation of Turkcell and our Group companies. We take public institutions and regula- tory authorities as an essential part of our ecosystem, and, with a focus on the continuity of the sustainable ecosystem and consumer welfare, contribute to all legislative efforts relating to our industry in a direct or indirect way as an active stakeholder of each and every stage. We are aware that regulatory develop- ments have the potential to directly im- pact our business model and strategies. We conduct our activities in accord- ance with our goal of creating value for our country and our industry by working in cooperation with regulatory authori- ties and relevant stakeholders. Furthermore, we work in both national and international arenas in connection with the legal dimension of evolving technologies such as AI, blockchain, space technologies, cybersecurity, smart cities, metaverse, creating value in this area for both our company and country. Regulatory Developments and Sector Regulations As a factor of freedom of communica- tion, which is defined as a constitution- al right, and as one of the most critical sectors in our country, the electronic communications industry activities are closely monitored and controlled by laws and regulations. Ensuring effective and competitive market dynamics and helping to configure the digital experi- ence environment that the customers desire requires the active participation of sector players, NGOs and regulatory authorities. Furthermore, we work in both national and international arenas in connection with the legal dimension of evolving technologies such as AI, blockchain, space technologies, cybersecurity, smart cities, metaverse, creating value in this area for both our company and country. The Development of Fintech Applications Expansion of digitalization, crypto- currency and blockchain use, as well as globally increasing penetration of smartphones provide a suitable envi- ronment for the development of finan- cila technologies (fintech). In 2022, fin- tech investments reached USD 79 billion. Smartphones, which have become the primary means to internet access for people, play a facilitating role for many technologies and services, including fintech. Fintech and mobile services have the potential to provide access to financial resources and services for the unbanked population. In the Turkcell ecosystem, fintech is re- ferred to as techfin in terms of our fo- cus on technology. Techfin activities are carried out through four subsidi- aries; Paycell, Financell, Turkcell Dijital Sigorta and Turkcell Sigorta Aracılık Hizmetleri. Leveraging our experience of over a quarter century, our superior digital services and advanced ana- lytical capabilities, we closely follow in the techfin field the and develop pioneering products and solutions. innovations Paycell, being Turkcell’s new gener- ation payment platform, is full of op- individual and portunities for both corporate customers in the mobile payment field. Paycell application has been downloaded over 19.9 million times, while services such as money transfers, cash and shopping loan bro- kerage, transportation card payment, commodity trading on financial mar- ketplace and payments can be readily realized through the Paycell applica- tion. We provide payment facilitation services to over 51 thousand contract- ed merchants with solutions including Paycell Android POS, QR, Virtual POS, Vitrin (Shopwindow) and Pay by Link. In 2022, we added a new service to our solutions with Paycell Vitrin and Pay by Link. Paycell Vitrin and Pay by Link, were created as an e-commerce and pay- ment solution where anyone who sells products, regardless of being an indi- vidual or institution, can register for free on the same day, create a special link for their products and share them with their customers, and receive payments with debit and credit cards. Thus, we offer our member merchants the experience of opening websites, making agree- ments with banks, starting e-commerce and receiving payments via a remote link without the need for a technical in- tegration and additional cost. Financell, our financing service that fa- cilitates individual and corporate cus- tomers’ access to technological prod- ucts, has extended loans in the amount of TRY 28,5 billion with a number of ap- proximately 15 million since its founda- tion. Turkcell Sigorta Aracılık Hizmetleri A.Ş., our approach in the insurance arena, provides customers convenient, simple and fast insurance services. Sustainable Financing Activities Unlike conventional financing, sustaina- ble financing refers to financing facilities where sources of funds are used based on various environmental, social or gov- ernance criteria. The current stage of climate crisis pushed investors to put more emphasis on non-financial risk factors, resulting in increased amount of reporting on these factors. Accordingly, companies have shifted to adapt their business strategies and corporate fi- nancing and investment activities to the Sustainable Development Goals promoted by the United Nations Global Compact. With increasing risks related to climate crisis, it is inevitable that sustainable debt instruments become widespread and unavoidable for banks to incorpo- rate more compelling criteria for the sus- tainability of the projects they finance. The ESG investments are expected to increase on a global scale in the future. Sustainable financing resources are critical for the investments in the scope of long-term plans with the “European Green Deal” which promotes these in- vestments, and for the financing of pro- jects to be realized. Focusing on sustainable financing op- tions, we diversify our financing instru- ments, promote our sustainability efforts, and keep looking for access to financing on more advantageous conditions. In this context, we are working towards our target of increasing our “Sustainability- Indexed Loan” and “Green Loan” trans- actions that we used in 2019 and 2020, respectively. We increased the amount of 3-year term Sustainability-Indexed loan from EUR 50 million to EUR 70 million which Turkcell İletişim borrowed from BNP Paribas in 2019, and extended its term to December 2026. Apart from bank loans, capital markets continue to be our focus as a point to access and diversify financing. We continue to monitor the market in order to meet our increased investments in the new period, espe- cially with green issuances in domestic markets. At the same time, we continue our efforts as one of the founding mem- bers of the UNGC CFO Task Force, which aims to create a market for investments in SDGs. 102 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 103 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Cybersecurity In line with the increase in data pro- duced in the digital age and the in- creasing demand for data centers, we are working with the vision of keeping Turkey’s data in Turkey, in order to ensure the security of data and the confidenti- ality of personal, critical and sensitive data as Turkey’s largest data center operator. The national efforts and reg- ulatory factors carried out to make our country a center for data hosting and transfer, undoubtedly contribute to the development of our cyber security ca- pabilities by increasing the demand and investments in data centers and cloud services in our country. Turkcell Legal and Regulatory Function aims to monitor and prevent any pos- sibility of non-compliance by closely following developing and changing regulations with a pro-active man- agement approach. Within this scope, internal briefings are provided with respect to changes in legislation and new regulations, the related process- es are monitored by senior manage- ment through Personal Data Steering Committee, Compliance Committee, Sub-compliance Committee and Information Systems Compliance Committee and relevant compliance activities are carried out in this respect, various measures are taken via digi- talized tools such as internal audit and Acting meticulously within the framework of the Personal Data Protection Law, Turkcell continues to work in artificial intelligence services without deviating from the principles it has declared. automated control systems that are working continuously, to prevent the occurrence of any breach and impo- sition of any administrative sanctions. Rapid spread of digital transformation in business world and increase in tech- nology use by individuals and enter- prises bring along some cybersecurity risks for organizations. Rise in cyberse- curity threats is a call to remember the importance of information security for companies and organizations. We identify threats which emerge in the cyber environment, develop meas- ures to mitigate and eliminate the ef- fects of possible attacks and incidents, and collaborate at the national and international scale to share those measures with identified bodies. We design secure system infrastructures by improving our processes with new experiences, raising awareness of in- formation security, cultivating compe- tent human resources, establishing lay- ered security controls and using next generation technologies. Through our Turkcell Security Operation Center, we monitor current threats and cyberat- tacks 24/7 and take necessary actions after conducting end-to-end security controls and tests. We offer our digital operator competence and integrated cybersecurity and information secu- rity experience to our corporate and individual customers. In this scope, we continue to meet the needs of our customers including companies, insti- tutions, organizations and individuals in the fields of cybersecurity, data pro- tection, and integrated infrastructure. Artificial Intelligence One of the top items on the agenda of decision-making mechanisms of institutions and organizations, the AI technology is reshaping company strategies as a technology tackling complex tasks and covering applica- tions and software. Many companies make significant investments in data science teams to benefit from the op- portunities and values offered by AI. The fact that institutions which incor- porate machine learning and cogni- tive interactions into their traditional business processes and application software can improve their user expe- rience substantially and increase their productivity demonstrates the value of AI. As Turkcell, we work in compliance with our company’s policies, proce- dures and internal controls created on the basis of international standards and the regulations which we are sub- ject to. Additionally, we comply with our AI principles consisting of “focus on people and environment, transpar- ency, professional responsibility, data privacy, security, justice, and sharing and cooperation for a better future” in January clause we announced 2020. We give priority to compliance with these seven principles in AI ef- forts, which is expected to be the fo- cus of technological developments. With this pioneering step, we joined other global players who work to de- vise solutions to ethical problems that could arise from the use of AI. In our country, we played a leading role at a turning point for artificial intelligence, which will be the most popular tech- nological concept over the next dec- ade and impact the global leadership claim of countries. Our AI principles guarantee that AI is for people and people-oriented and this technology will be used responsibly without dam- age to human value. In our offers and services provided through our AI technology, we inter- pret the big data and create offers through our analytic capabilities. Using machine learning techniques in areas of traffic density, capacity man- agement and anomaly detection in our network, we contribute to the ef- ficiency of our infrastructure. We offer our artificial intelligence solutions to institutions and organizations through our Digital Business Services company. Our strategic goals are frequently revised within the knowledge of the top management and in accordance with the business plans as AI activities are directly connected to the technol- ogy function as we work in a rapidly changing technological ecosystem, and regulations regarding AI could emerge very quickly with every pass- ing day in every industry from health- care to security, finance to education. Our Legal and Regulatory Team has long been collaborating with global organizations to eliminate concerns over artificial intelligence, and also to impact. As its positive Turkcell, we play an active role at in- ternational platforms where respon- sible and ethical use and future of AI are discussed. increase In this context, we contribute to the following activities: Fiber Infrastructure Children’s activities, rights and AI Activities regarding responsible use of face recognition systems, Standardization activities car- ried out across the IEEE and aiming to eliminate potential ethical problems and concerns to arise from AI, Activities as part of the “Planet Positive 2030” initiative across the IEEE, Activities carried out across the ITU regarding responsible and ethical use of AI technology in smart sustainable cities and AI and Healthcare activities. Acting responsibly as per the Law on the Protection of Personal Data, Turkcell carries out activities without violating the principles it announced and by making AI available for peo- ple to unleash and develop human potential. The COVID-19 pandemic and the af- termath underlined the importance of high-quality and high-speed broad- band connection. Demand for a strong Internet service has greatly increased due to various factors including online education and remote working be- coming widespread and permanent which led to a change in user behav- ior, and an increase in the number of devices concurrently connected to the internet at homes. In our country, limited access to fiber-to-the-home (FTTH) or fiber-to-the building (FTTB), which may best meet these needs, results in unmet requirements of users and hinders the digital transformation of our country. The growing need for broadband con- nection and low penetration of fiber in- frastructure in our country increase the importance of investments in this area. As Turkcell, we continue to accelerate our fiber infrastructure investments in 2022. While we had 653 thousand new homepasses in 2021, we brought the fiber quality of Turkcell to 887 thousand more homes in 2022. With the contri- bution of these investments, we had a record net of 234 thousand fiber sub- scribers in 2022. We believe that our fib- er investments will greatly contribute to the process of transition to 5G. In 2022, we have enabled 887 thousand households to reach Turkcell fiber quality. 887 thousand 104 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 105 Inclusive With the Inclusive Positive Imprint strategy, we aim to achieve three main corporate objectives with a wide area of impact: Providing our employees a safe, inclusive, fair and development-oriented work environment, supporting digital and social inclusiveness for large masses, ensuring digital security and wellbeing. Thus, in our workplace, our products and services, and our social impact area, we aim for equal opportunities, the inclusion of disadvantaged segments of society, and “leaving no one behind” in social, economic and cultural development. Human Capital Manufactured Capital Intellectual Capital Social Capital TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Capitals Goals Actions Impacts Values Inclusive Value Proposal e c r u o s e R d n a l a t i p a C n o i t a c o l l A Decent Workplace Equality of Digital and Social Opportunity Digital Security and Wellbeing Inclusive Workplace Occupational Health and Safety Development Oriented Human Resources Inclusivity in Access to Digital Technologies Facilitating Access of Youth and Women to Information Technologies and Business Life Cybersecurity Services Management of Cyber Security and Information Privacy Risks Improving employer brand and employee satisfaction Maintaining work peace and increasing work performance Strengthening the reliability and continuity of business processes Increase in cost efficiency Maintaining legal compliance Reducing business continuity risks Increasing talent diversity Increase in reputation and brand value Ensuring performance-oriented development Increase in ınvestment attracting potential and equity value performance Expanding customer base by increasing access to digital technology for various industries and social groups Contribution to economic development by expanding potential human talent pool Supporting to manage cybersecurity risks of customers Ensuring the security and continuity of turkcell’s digital ecosystem Ensuring the security of customer data Maintaining legal compliance Increase in customer satisfaction Deeper engagement with customers through service diversity Expanding the customer base Increase in reputation and brand value Revenue increase Increase in reputation and brand value Reducing business continuity risks Increase in customer satisfaction Revenue increase Increase in ınvestment attracting potential and equity value performance Integrated Value Creation (Financial Capital, Natural Capital, Manufactured Capital, Social Capital, Human Capital, Intellectual Capital) The Inclusive Positive Imprint strategy contributes directly to human, social and financial capitals and indirectly to manu- factured and intellectual capitals in accordance with the integrated value creation model. 108 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 109 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Capitals Goals Actions Impacts Values Inclusive Value Proposal e c r u o s e R d n a l a t i p a C n o i t a c o l l A Continuous Improvement of Intellectual Capital R&D and Innovation Brand Value Digital Service Portfolio Integrated digital operator Import service substitution with domestic technologies Revenue increase Variety of value-added services Increase in reputation and brand value Increase in intellectual property assets Increase in investment attracting potential and equity value performance Strong brand value Internalizing Responsible Value Chain Management Principles Responsible Procurement Reducing procurement risks Efficiency in purchasing Reduction in risk costs Integrated Value Creation (Financial Capital, Natural Capital, Manufactured Capital, Social Capital, Human Capital, Intellectual Capital) The Inclusive Positive Imprint strategy contributes directly to human, social and financial capitals and indirectly to manu- factured and intellectual capitals in accordance with the integrated value creation model. 110 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 111 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES benefits policies, and integrate execu- tion of performance and career man- agement by mobilizing the power of digitalization and our data-driven ap- proach. Hence, we break new grounds in the business world by putting all our processes at the center of our analyti- cal solutions. We listen to our employees and ensure that employee experience is managed in the best possible way in line with expectations, needs and international developments. We carry out HR plan- ning, define roles and responsibilities, and determine the company goals and risks with the cooperation of Turkcell teams. Turkcell has been experiencing flexible working since 2016. Over the years, the journey of shifting from being employ- ee-oriented to human-oriented, made it necessary to put the employee on the agenda of human resources with the well-being it created in the entire life of employees. This has allowed employees to balance their work and personal life through the flexibility cre- ated in their working hours and place. With the flexibility of time and place in work life, the welfare of employees has increased. Turkcell has increased the welfare of Turkcell employees through three programs launched in 2016. The first is the “mobile working” program, which allows employees to work 4 days a week in the office and 1 day from home. The second is the “ofista- syon” program, which allows employ- ees to work from different Turkcell lo- cations. The third is the “Plan Your Day” program, which allows employees to extend their workday start until 10:00 AM and the end until 07:00 PM. According to the Flexible Working Manifesto defining principles of flex- ible working, Turkcell employees can work from anywhere, are always ac- cessible, can use T.Life-Digital Office app if they wish to use company loca- tions that offer uninterrupted services, maintain a work and life balance, sup- port and enhance their work environ- ment with “Flexible Working Support”, and benefit from face-to-face com- munication by getting together during healthy days. Within the scope of this working manifesto, Turkcell employees whose job requirements are suitable for location-independent working can work either remotely or in the Turkcell office of their choice. Human Capital Outputs Ratio of female managers 24.9% Ratio of female employees 34.6% Occupational accident frequency rate 1.18 Rate of female employees returning to work after their maternity leave 96% Performance Indicator Increasing the ratio of female employees Increasing the number of female members on the Board of Directors (including independent members) Increasing the ratio of female managers Increasing the rate of female emp- loyees returning to work after their maternity leave Increasing the female employee’s retention rates following maternity leave Reducing the occupational accident frequency rates (Female) Reducing the occupational accident frequency rates (Male) Reducing the occupational accident frequency rates (Total) Short-term goal Mid-term goal - - Long-term goal 40% (by 2030) Performance in 2021 Performance in 2022 Current State by Goal 34% 34.6% 34% 34.6% 2 - - 28% (by 2030) 98% 98% 98% 88% 90% 90% 2 2 2 1 1 1 0 0 0 1 23% 97% 97% 0.48 0.47 0.48 1 24.9% 96% 96% 0.87 0.85 1.18 Positive development Negative development Ongoing Decent Workplace Our employees lay the foundation of the success we have achieved in Turkcell’s activities carried out with a focus on value creation. We consider it an invariable part of our human-oriented employee experi- ence approach to ensure that our em- ployees, whom we see as the brand ambassadors of our Company, feel valued, happy and safe, and benefit from equal development opportuni- ties, by providing them an exemplary work life in all employment processes starting from their recruitment. Human Capital Management We implement our human resources processes, which we have implement- ed in line with our human resources policies and strategies, in accordance with the legal requirements. We com- municate all operational changes that may arise in these processes and practices and that could significantly impact our employees within the le- gal notice period through our internal communication channels. In accordance with Turkcell Human Rights Policy, Turkcell oppose discrim- ination based on gender, age, belief, ethnicity, nationality, marital status, health status, and physical ability in all of our business activities. We continu- ously improve ourselves by implement- ing our human resources practices based on inclusion and diversity, and extending equal opportunities to all individuals in a manner that respects human rights. We adapt to the require- ments of the rapidly evolving digital age with an agile manner in order to better respond to customer needs, and we improve our skills with rich training programs. From the moment of entry to exit, we design all our human resources pro- cesses end-to-end with a focus on the employee experience. We design and manage our compensation and 112 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.2; SPK A2.2; SPK A2.3; SPK A3.1; SPK C1.5 SPK A2.2; SPK A3.1; SPK C1.5 GRI 2.20 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 113 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Flexible Working Model The expectations of employees to- wards working models that enable a work-life balance, have recently been increasing. Following the first Covid-19 case in Turkey, Turkcell prioritized the human experience by implementing a rigorous health sensitivity, transition- ing to fully remote work. With our pre- vious experience and robust techno- logical infrastructure, we were able to easily adapt without sacrificing work efficiency. As the pioneer of mobile work in Turkey, we have designed a new working model in collaboration with our employees, taking into consider- ation the changing needs brought by the new normal and the future of work. With the launch of our “Flexible Work Model” under the motto “ Wherever You Are, Turkcell is There,” we have eliminated boundaries. Since March 2021, our model enables all employees to work independently from their loca- tion, whether at the office or remotely, based on their work requirements. In the remote work process, we pri- oritize accessibility. Our employees are able to fulfill their internet needs at home with employee campaigns provided by Turkcell and benefit from additional opportunities through ad- ditional campaigns. Turkcell engineers developed the T.Life - Digital Office application as a digital hub for all business solutions that are required by our employees within the scope of the flexible work model. Thanks to the Digital Office module, Turkcell employees can re- serve working spaces, meeting rooms and parking spaces for their vehi- cles at any Turkcell office of their choice. Moreover, they can also make appointments for company’s hair dresser, fitness center, doctor, peda- gogue, dietitian or psychologist. With the Flexible Working Model, the employees can flex the start of the workday by 10:00 AM and the end of the work day by 07:00 PM. Thanks to the “Hours without Meetings” prac- tice, our employees can focus on their works which require individual atten- tion. Additionally, in order to remind the necessity of being offline, we make improvements such as sending an automatic warning message in or- der not to hold a meeting, not to send an e-mail outside the working hours and to increase meeting productivity. Within the scope of “Flexible Working Support”, employees are also offered a financial aid that is renewed each year so that they can improve their re- mote working environments. Diversity, Inclusion, and Equal Opportunity By positioning the protection of human rights and respect for human rights as one of our most fundamental duties, we implement our human resources practices that ensure equal opportuni- ties for all individuals, support inclusion and diversity, and improve ourselves each day in this sense. In line with the Human Rights Policy that we have is- sued, we carry out our activities to prevent discrimination, inequality, hu- man rights violations, forced labor and child labor, and continue our efforts for adoption of these values across the supply chain. Furthermore, we imple- ment practices and measures aimed at supporting gender equality in busi- ness life in line with the UN Women’s Empowerment Principles - WEPs, of which we are a signatory, and aiming to be the most admired employer for women, thanks to Turkcell’s gender equality approach. In line with the inclusive Positive Imprint strategy, efforts to increase the number of female managers and employees and the outcomes achieved are evaluated in terms of financial, operational, legal compliance and environmental dimensions, as well as being reviewed within the scope of internal audit activities. In 2022, no discriminaton case has been filed by our employees or any third parties against Turkcell İletişim Hizmetleri A.Ş. in all our business op- erations. There are no lawsuits filed against Turkcell about discrimination based on language, religion, race, be- lief, ethnic origin, political or ideolog- ical point of view, marital status, age, sexual orientation or gender. In accordance with our Human Rights Policy, which was published at the beginning of 2021, we are committed to maintaining an attitude based on fundamental rights and freedoms in our relationships with our employees, customers, business partners, and all stakeholders; following the Policy rules strictly in order to comply with applicable national and international regulations regarding work life; and Employee Demographics in 2022 Employee Distribution by Gender Employee Distribution by Education Level ensuring total commitment of entire organization to these principles. We respect the fundamental rights of our employees defined in our policy; and protect mutual rights regarding employee-employer relations through our human resources practices. In or- der to prevent the incidence of child labor and forced labor, we adopt the ILO (International Labor Organization) standards across our entire value chain, particularly for our suppliers. Turkcell aims to increase the rate of female employees to 40% by 2030. All Turkcell and Turkcell Group company employees, primarily senior execu- tives and managers, are responsible for achieving the goals for ensuring gender equality and female-male em- ployee balance. The ratio of female employees and female managers is reported to the senior management on a monthly basis. Starting from the level of Executive Vice President, the performance cards of the employees responsible for the process include the target of female employee ratio and female manager ratio within the scope of gender equality. We manage our remuneration poli- cy regarding all levels of employment based on knowledge, skills, and crit- ical experience in the most reliable manner. We keep remuneration pol- icies regarding Board Members and Senior Executives transparent to all Male Employees Female Employees 3,516 - 65.4% 1,864 - 34.6% Undergraduate Degree Graduate Degree 69.1% 27% Associate Degree 2% High School 1.9% Employee Distribution by Age Group Manager Distribution by Age Group Between 30-50 Years 30-Years and Under 50-Years and Over 74% 22% 4% Between 30-50 Years 30-Years and Under 50-Years and Over 93% 1% 6% Turkcell aims to increase the rate of female employees to 40% by 2030. 40% 114 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.1; SPK C1.2; SPK C1.3; SPK C1.4 SPK C1.1; SPK C1.2; SPK C1.3; SPK C1.4 GRI 2.7 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 115 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Within the scope of Turkcell’s remuneration policy, we adopt the principle of “equal pay for equal work” and do not apply any difference in basic salary of female and male employees. stakeholders. In determining and up- dating our Remuneration Policy, we take into consideration the roles where there is a talent loss and positions where tal- ent acquisition is desired, as well as peer companies in the market, and reference the wage market accordingly. Our sala- ry scales are updated based on needs, recruitment, talent loss data, as well as various market or industry-based job market studies conducted by consult- ing and research firms. To avoid any discriminatory remuneration between female and male employees perform- ing the same role and at equivalent job levels, we apply our remuneration policy throughout our entire operations within the relevant standards in an un- biased manner, covering all our opera- tions. While determining our remunera- tion polices, we pay attention to create competitive and motivating conditions in order to retain executives, employ- ees and talents performing critical roles within the company. Turkcell provides its employees with various fringe benefits in addition to their salary. Employees can flexibly cus- tomize their benefits through the Flex Menu. Turkcell sets a budget for its em- ployees from the start of the year to the end, enabling them to plan and select their fringe benefits. This gives employ- ees the ability to shape their menus to fit their lifestyle and unique needs, in- cluding options for various insurance plans, meal allowances, and gift cards. Furthermore, Turkcell employees also benefit from Turkcell Private Pension Plan. We are constantly expanding our fam- ily with all Turkcell employees and new joining us from all over teammates Turkey, and contributing to the increase of the effective workforce. We truly believe that gender discrimination in occupation and fields of expertise is a practice that should be left behind and as a leading digital operator company, we highlight the work of women es- pecially in STEM (Science, Technology, In Engineering, Mathematics) areas. order to empower women in business and their endeavors, we carry out var- ious activities and take crucial steps in increasing the employment of “female engineers” in Turkey. We aim to provide job opportunities for female engineers, who are at the beginning of their career or female professionals whose careers were interrupted for various reasons. As of 2022, female employees account for 30% of engineering positions and 35% of IT positions. *Demographic information presented in our human capital section covers data from the companies Turkcell İletişim Hizmetleri A.Ş., Kule Hizmet ve İşletmecilik A.Ş., Superonline İletişim Hizmetleri A.Ş., Turkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.Ş., Turkcell Finansman A.Ş., Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., Turkcell Satış ve Dijital İş Servisleri A.Ş., Turkcell Sigorta Aracılık Hizmetleri A.Ş., Turkcell Teknoloji Araştırma ve Geliştirme A.Ş., Lifecell Dijital Servisler ve Çözümler A.Ş., Lifecell TV Yayın ve İçerik Hizmetleri A.Ş., Lifecell Müzik Yayın ve İletim A.Ş., Lifecell Bulut Çözümleri A.Ş. and BiP İletişim Teknolojileri ve Dijital Servisler A.Ş. Demographics of employees does not change significantly during the year. Disabled Employee Approach Employee Loyalty and Happiness Turkcell is an equal opportunity em- ployer and considers all qualified ap- plicants for employment regardless of disability, race, color, religion, gender, national origin, ethnicity, age, physical appearance or status, marital status, and military service status. Turkcell, does not discriminate against disability in the recruitment processes, does not receive the disability infor- mation of the candidates during the application and makes the evaluations with the same equality approach. The entire process for the applications and beyond is based on an unhindered pro- cess for our disabled candidates. Other practices within the scope of barri- er-free process of recruiting disabled people inter- include remote/digital views, supplying all documents through digital channels, and ensuring suitable physical conditions after the start of employment. In 2022, 135 disabled em- ployees have worked in our Company. meetings and feedback surveys. The outputs of the research and one- on-one meetings are brought to the agenda at the senior executive meetings. improve We conduct practices to overall satisfaction of our employees and their families. In this scope, we offer health insurance policies to our employees to which they can include their spouse and children as well. As fringe benefit, we provide all employ- ees with a “life insurance with death and life support (critical illness)” policy for establishing an insurance support We are working to improve our em- ployees’ work life experience at Turkcell and to strengthen our exem- plary corporate identity with our em- ployer brand in Turkey. We monitor this development periodically through re- search conducted with a broad par- ticipation throughout Turkey. With the Turkcell Pulse Survey, , the tendencies of Turkcell employees, who can work from anywhere with the flexible working model, are mon- itored regularly through one-to-one Employee Turnover 2019 2020 2021 2022 Female Employee Turnover Male Employee Turnover 3% 8% Voluntary Employee Turnover 5.9% 2% 6% 6% Total Employee Turnover 11.4% 8.2% 6% 12% 12.1% 17.7% 13% 13% 15.1% 19.0% 116 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.1; SPK C1.2; SPK C1.3; SPK C1.4 SPK C1.5 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 117 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES in case of invalidity for work after an accident or disease. Thanks to Turkcell Pension Plan, we contribute to our em- ployees’ savings and investments in or- der to allow them to sustain their living standards after retirement. Although the legal provision for paternity leave in Turkey is 5 days, we provide 10 days of leave to new fathers, so that our male employees can contribute to the childcare and spend more time with their children. In order to support work- ing mothers, we provide day nursery aids for female employees who have preschooler children. We give mothers and fathers paid leaves on the school opening and report card days of their kids so that they share the excitement of their children by being with them on those days. In order to facilitate the lives of our female employees who have just returned to business life after giving birth, we have lactation rooms equipped with breast pumps, refrig- erators to store milk, wash basins and sinks for hygiene, and rocking chairs at our working locations. As of 2022, there are lactation rooms in 8 different Turkcell premises. Activities for Strengthening our Employer Brand and Employee Motivation In 2022, we established an inclusive strategy centered on the employer brand at Turkcell, focusing on being youthful, dynamic and without age discrimination. The employer brand strategy, launched under the T.Life brand, was defined based on research results as: “T. Generation is a technolo- gy-savvy, hands-on, assertive global citizen who stands out positively with their demeanor wherever they go.” In line with this strategy, we have im- plemented T.club, T.studio, T.labs, and T.stage events. T.club: Under the categories of art enthusiasts, adventure seekers, travel- ers and gourmets, we have organized a wide range of entertaining events, from outdoor cinemas to weekend camps, from cultural tours to gourmet events, catering to all tastes. We es- tablished the T.club volunteer network and organized events that encompass all Turkcell locations, reaching all our employees. T.stage: To cater to the music lovers, we organized acoustic concerts. T.labs: With T.labs, we opened access to personal development and healthy living videos in the T.Life app, which can be enjoyed during 1-2 minute breaks. T.studio: Through our own live broad- casts and podcasts, we effectively and attractively announced all promi- nent content. As Turkcell, we invest in the wellbeing of our employees and their families, and continue to adopt activities which could contribute to our corporate culture. Our most fundamental goal is to create strong company results both operation- ally and financially with highly efficient employees who are much more commit- ted to the values and culture of our or- ganization and who are physically and psychologically healthier. We offer many practices that could serve the psycho- logical and physical vitality of Turkcell employees and their relatives. We organized ‘Take Care of Yourself’ healthy living activities which could create positive impact on the souls, bodies and minds of our employees. Accordingly, we brought our employees together in online and offline courses such as fit brain, live exercises, healthy breathing, standing tall academy, pleas- ant information and yoga. We offer childcare support to our female employees who have pre-school age children. In 2022, 335 of our employees benefited from childcare support. We appreciate our employees: With “CXO awards”, our Executive Vice Presidents reward employees, who make a difference, throughout the year. Thanks to our Instant Awarding platform, all of our managers can financially reward the team members who have made a distinct contribution to the business through T.Life mobile application. Moreover, employees who complete their 5th, 10th, 15th, and 20th years of service, are awarded with a financial seniority reward and a seniority plaque. Starting in the pandemic, in order to increase employee motivation and communication, we organized ‘Online Workshops’ delivered by expert guid- ers on culture, arts, history and person- al development. Thanks to our ‘Digital Traveler’ events, we also visited different destinations in Turkey through live tour sessions conducted in the digital envi- ronment by our expert tour guides. We organized trivia quizzes, named “Lucky Knowers”, with various prizes every Friday throughout the year. With the objective of keeping our location-inde- pendent connections strong, we cele- brated special days such as Ramadan and Sacrifice Feast among our employ- ees through the “Turkcell Employees Holiday Greetings” campaign and with our elderly people living in nursing homes through the “Turkcell Employees Holiday Greetings with the Elderly” campaign. We conducted digital live tours to allow the kids of our employees to spend enjoyable moments at home and get to know different cultures on “Child Traveler”. With the project “Dream School” created completely in the digital environment, our employees and their kids were offered a two-week vacation school program. We have founded the largest corporate sport club in Turkey with 17 teams in 13 branches. We conducted ‘Coffee Breaks’ with surprise CXO visits in order to increase the synergy among our employees while working flexible and to bring them together with the senior man- agement just to have conversations outside meetings and business-re- lated agendas. During the previous period, we also continued bringing our employees together with our CEO Murat Erkan at “Breakfast at 8” events. Safe and Healthy Work Environment Turkcell considers protecting the em- ployees’ health and wellbeing as a high- est-priority responsibility. The Occupational Health and Safety Policy, which we creat- ed in compliance with Occupational Health and Safety Law No. 6331 and the ILO-OSH (ILO Occupational Safety and Health) 2001 standard regulates the principles and practices we follow in the management of occupational health and safety. We ensure the physical secu- rity standards of our buildings and facil- ities in accordance with Private Security Services Law No. 5188 and its respective regulations. In addition to their occupa- tional training, all of our security employ- ees are informed of Turkcell dynamics by their own companies before starting their work at Turkcell. Turkcell Group shows high sensitivi- ty to occupational health and safety. In 2022, 66 OHS board meetings were carried out throughout the company, and 4,071 OHS audits were performed in network operations field studies. At the base station site, equipment and facility revisions were carried out in terms of OHS. During the year, we held 64 different health seminars. In addition, we also focused on the psy- chological health of employees, and provided psychology and pedagogue services that employees can benefit for themselves and their children. In addi- tion, we offer services that enable our employees to receive consultancy ser- vices from experts for the care of their pets and the plants they grow. Accident Frequency Rate 1.38 0.68 2020 0.48 0.47 2021 Female Male 0.87 0.85 2022 Number of Occupational Accidents 2020 2021 2022 Female 5 Male 5 10 2 4 6 8 7 15 Total Number of Occupational Diseases 2020 2021 2022 Female 0 Male 0 0 Total OHS training hours (person*hour) 2020 Female 3,520 Male 4,992 0 0 0 2021 5,760 7,600 0 0 0 2022 12,804 13,296 Total 8,512 13,360 26,100 118 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 119 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Workdays Lost Due to Occupational Accidents 4 2020 2 2021 9 2022 Lost Day Ratio 0.39 0.26 2020 0.52 0 2021 Female Male Turkcell Group indicators are transpa- rently shared with our employees, such as accident frequency rate, details of the accidents and total lost days. With this system, the occupational health and safety performance of all registe- red businesses within the Turkcell Group is monitored and managed by the ma- nagement team on an annual basis, ba- sed on a score determined in accordan- ce with the criteria outlined in the legal regulations’ penalty score table. We communicate with all our emp- loyees about OHS-specific issues th- rough Turkcell OHS Portal. We expect the businesses we collaborate with to comply with our OHS Policy and ensu- re that they take measures within this framework through our business cont- racts. Thanks to our OHS experts, we analyze all occupational accidents and OHS data, present the statistical analysis based on accident reports to Senior Management on a monthly ba- sis, and determine occupational he- alth and safety goals and action plans for the future. 1.46 0 2022 Number of third-party OHS data 2020 2021 2022 Female Male Female Male Female Male Number of third-party occupational accidents 2 Third-party accident frequency rate Number of third-party occupational diseases Lost working hours due to third party occupational accidents (hours) 4.4 0 0 0 0 0 0 3 5.4 0 10 3 2.9 0 1 0 0 0 0 1 12.5 0 3 Number of recruitment health examinations Number of periodic health examinations 2020 2021 2022 2020 2021 2022 Female 127 Male 262 502 574 Total 389 1,076 402 452 854 Female 114 Male 194 635 714 480 600 Total 308 1,349 1,080 Our Productive Turkcell Family We are positioning our organization on a flexible and agile basis with our strong team that prepares the future by adopting the approach of “providing equal opportunity for all” in education, and we develop projects in many diffe- rent areas in order to grow our Turkcell family and always move it one step further. We provide all our employees with the opportunity of self-improve- ment, regardless of their duties and responsibilities within the Company. Flex Performance Management System helps employees follow their goals to reach the best bu- siness results and provides them with the opportunity to constant- ly improve their performance th- rough the regular feedbacks they receive. All Turkcell employees are included in the annual perfor- mance evaluation process. The performance process at Turkcell consists of five steps: 1 2 3 4 5 SMART Goal Setting Quarterly Interim Evaluation Continuous Feedback: ReFlex Behavior and Competency Assessment: ReFlex360 Year-end Performance Evaluation As a part of the Goal Setting process at Turkcell, each emp- loyee is expected to set their goals together with their ma- nager and keep those goals updated with the changing priorities throughout the year. With quarterly interim evalu- ations, Turkcell managers get together with their teams and clarify their goals and actions plans, give regular and frequ- ent feedback to enable emp- loyees to continuously improve their performance. Behavior and Competency Assessment: Reflex360 ReFlex360 aims to increase the employees’ awareness around their stren- gths and improvement areas through the evaluation of their managers and colleagues on expected competencies. ReFlex360 process provides extensive and objective feedback for Turkcell employees on their perso- nal development throughout their career journey. Continuous Feedback Mechanism: ReFlex We believe in the importance of feedback in the successful management of our business processes in flexible working. ReFlex, our mobile feedback mechanism, allow us to provide feedback instantly. Thanks to our ReFlex system that allows us to appreciate our employees and provide const- ructive feedback, we increase the self-awareness and work efficiency among them. Super Job With “Super Job”, we aim to increase our employees’ motivation by ma- king them feel appreciated. The employees who have carried out an in- novative, exemplary project or a job that creates value are appreciated by our directors through T.Life mobile app and the information that the employee has received “Super Job” is shared with the related directorate and function. 4,071 OHS audits were performed in network operations field studies. 4,071 Voice of Managers/ Directors/ Employees We rely on the power of communication and develop practices by including all our employees to the strategy-creation process through ensuring their commu- nication with each other. Accordingly, the Voice of Managers program provides our managers the opportunity to give direction to Turkcell strategies under the leadership of our Strategy Department. We bring our directors together at the Voice of Directors meetings we organize and provide them convenient settings where they can exchange ideas. The Voice of Employees survey enables our employees to express their opinions and suggestions transparently in the survey processes and during voluntary employee meetings. 120 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 121 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Backup Management that At Turkcell Group, our objective is to implement inclusive talent management is aligned with the nature of the business and work. In line with this, the approach adopted is to view all employees as talents, rather than selecting and developing talents through segregation, and to provide equal opportunities to everyone. A talent management process is run through Turkcell Academy to support the devel- opment of all employees, which is designed to meet functional needs. In order to contribute to the com- pany’s continuity and sustainable performance, and to bring the company’s strategies to life, we back up the employees serving in management positions with in- ternal and/or external resources to mitigate unexpected losses of managers and employees. Our Agile Teams At Turkcell, we consider our business units’ agility, strength and flexibility as the greatest source of our success and continue our activities in this field ac- cordingly. We work for our technical, commercial and support functions to have flexible and agile structures so that they can more effectively contrib- ute to the implementation of Turkcell’s strategic initiatives. In this scope, we offer training and coaching programs for our employees so that they can increase their person- al agility. With organizational agility practices, we aim to improve employ- ee loyalty, operational performance, and customer satisfaction rates. The organizational structures of new business areas are updated in a man- ner that can rapidly adapt to evolving market needs and dynamics. We ana- lyze the status quo by monitoring the performance of agile working prac- tices and we observe improvement areas and conduct pilot projects. The pilot applications which we find successful are implemented across Turkcell and we define ac- tion plans for the areas that need improvement. then Metaverse Employee Gathering As the world’s first digital operator, we continue to expand our portfolio of innovative applications that dif- ferentiate our business processes. We develop projects for young talents to experience technology trends and enhance their skills, and organized the largest Metaverse event with the aim of contributing to young people’s ex- perience of future work environments. We have designed the meeting and event areas as a blend of real and sur- real spaces suitable for the Metaverse world, resulting in the creation of the T.Verse Metaverse area for Turkcell employees. Young talents who joined Turkcell this year through GNÇYTNK program were also present in T.Verse. “Flex” Human Resources in the Digital Age At Turkcell, we take our human re- sources practices through a digi- tal evolution and handle them on a flexible platform we call “Flex”. In our journey to become a “Digital HR”, we enable our employees to shape im- and personalize almost every plementation we offer with the Flex HR system we have developed, ac- cording to their own needs. With FLEXSourcing, another Flex applica- tion, our productive Turkcell family can voluntarily spend 20% of their working time on innovative projects that require a variety of perspec- tives, expertise and competencies. Turkcell employees participated in 21 active FlexSourcing projects in 2022. According to the principles of val- ue creation and flexibility, with our FLEXSourcing application, which of- fers options in many different fields such as from artificial intelligence to gamification, from data analytics to crowdfunding, 512 Turkcell employ- ees took part in more than 90 volun- teer projects, aiming to add value to Turkcell in 2019-2022. Apprenticeship Program communication, With the objective of creat- ing opportunities to increase the internal Apprenticeship Program offers all Turkcell employees the oppor- tunity to improve their competen- cies by gaining new experiences in line with their career-related and self-improvement needs. The Apprenticeship Program is de- signed to provide opportuni- ties for all employees with more than 1 year of work experience at Turkcell to gain experience at a directorate of their choice for five days. My FlexCareer In order to build our new ca- reer architecture focused on technical know-how and com- petencies that provide the em- ployees with the opportunity to proactively manage both their personal development jour- ney and their career, to support Turkcell’s strategy and vision, and ensure rapid improvement; we try to enrich our organization with competencies of today and the future. Thanks to ‘My FlexCareer’ we have a pool of flexible, agile and specialized competencies in line with the requirements of VUCA (Volatility-Uncertainty- Complexity-Ambiguity) as well as the capacity to find and retain the talents that possess these com- petencies. This practice gives our managers a chance to offer con- crete and transparent feedback to employees and guide them on their career development. It also allows our employees to clearly see which business results they have contributed to and by using which competency. Instead of the methodology based on seniority and performance criteria which were used in traditional systems, we focus on occupational com- petencies which we believe are more relevant to today’s world and demographic structure. Training and Development Programs Turkcell Academy Trainings With Turkcell Academy, we continue standing by our employees on their journey of development. In order to create a sustainable learning culture for a better future, by providing the de- velopment of individuals whose lives we touch with the focus of “Human” and “Future”; we aim to offer innova- tive solutions that create value in or- der to train qualified labor force for the Turkcell Ecosystem, society and the industry. We have supported our ecosystem of 70 thousand people with training and development solutions that make difference. To develop and prepare Turkcell and the ecosystem for the fu- ture, we have implemented training programs equipped with rich content also in 2022; including our new gradu- ate employment program, the “Young Talent Program”, the leadership pro- grams we have prepared at 6 differ- ent levels, employment programs that will benefit the functions, society and Turkey, and education-development journeys prepared for university stu- dents and the field. The total budget of the trainings we carried out in 2022 is at the level of TRY 22 million. Total cost of training activities (TRY million) 13.7 2020 16.3 2021 22.0 2022 Turkcell Academy Total Training Hours (million people*hour) Turkcell Academy Total Training Participation Number (million people) 3 3 . 1.4 3 3 . 1.8 8 2 . 1.5 2020 2021 2022 Turkcell Academy Participants by Gender (%) Female 59% Male 41% Female 59% Male 41% 2021 2022 Turkcell Academy Participants by Age Group (%) 50-Years and Over 1% 30-Years and Under 57% Between 30-50 Years 42% 50-Years and Over 1% 30-Years and Under 59% Between 30-50 Years 40% 2021 2022 122 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.5 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 123 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Development Program for Academy Trainers We attach great importance to the development of our Academy trainers, who contribute to the training process- es of our colleagues with their exper- tise. In addition to their current respon- sibilities within the company, we offer a long-term development program for employees who are volunteer-trainers in order to improve their trainer skills. A total of 515 participants attended in the trainings (Copywriting for Digital Content, Digital Content Production 101, Digital Content Production 201 and Active Learning Techniques) organ- ized within the scope of the Academy Trainer Development Program, which was prepared to improve the teach- ing skills of our Academy Trainers in the Turkcell Group. Number of Turkcell Academy Trainers 676 687 764 2020 2021 2022 The total budget of the trainings we conducted in 2022 amounted to TRY 22 million. Legally Required Trainings Turkcell Ecosystem Leadership In addition, the Educator’s Education Certificate Program was implemented with the Department of Educational Sciences of Middle East Technical University, one of the best universities in Turkey, in order for the current train- ers to learn the educational formations closely and gain deep expertise in their fields. During the 60-hour, 6-mod- ule online program; participants who successfully completed assignments, project presentations and oral exams were entitled to receive a certificate. In Turkcell ecosystem, our legal- ly required trainings consist of Basic Occupational Health and Safety and Information Security Trainings. In ad- dition, within the scope of raising awareness and consciousness, train- ings are carried out on “Sustainability”, “Business Continuity”, “Bribery and Corruption”, “Competition Law” and “Turkcell Common Values and Business Ethics Rules” with the participation of all our employees in parallel to compa- ny strategies and regulations. Turkcell Basic Mandatory Training Hours (hours) 21,792 26,532 40,917 2021 2020 2022 Ratio of internet- based trainings to all training 91% 2020 93% 2021 95% 2022 “future” The approach of Turkcell’s Ecosystem Leadership is composed of eight fun- damental competencies that bring our employees and our strong ecosys- tem together in a way that is based on “human” (Aware, Flexible, Trustworthy, (Visionary, Sharing) and Innovative, Aware of Sustainability, Inclusive to Diversity). The aim is to cre- ate common behaviors and expand the corporate culture through these competencies. Turkcell Academy puts this strong approach into the heart of its learning and development activities. Parallel to Turkcell’s vision and initia- tives based on offering superior digital services for a better future, we aim to create global employees and leaders who make a difference with our “hu- man” and “future” focus. Distributor Development Program leveraging Turkcell Academy, its 16 years of experience, contributes to the development of distributor company employees and guides the industry by converting the potential of qualified employees into performance. Training programs have been implemented with participation from KVK and Genpa employees from sales, HR, finance, marketing, technology, legal, and cus- tomer service teams covering 36 dif- ferent topics focusing on Leadership, Functional Expertise, and Technology & People. 2,169 employees participated in the training programs, leading to im- provements in the recruitment process, an increase in the financial analysis skills of employees, and positive out- comes in customer satisfaction. In partnership with Koç University, “Preparing for Future Leadership” pro- gram was carried out for 43 managers in leadership positions. The programs have been observed to have resulted in effective team management by the executives, enabling the potential of employees to be fulfilled, and the em- ployees performing their duties as con- fident and dedicated to the company. Developers of the Future - Investment for Youth, Software for the Future The Ministry of National Education in collaboration with the “Investment for Youth, Software for the Future” program was launched to increase Turkey’s technological capabilities and the quality of software developer workforce. This program aims to pre- pare young people for the software world, to acquire high proficiency in coding, and to capture career oppor- tunities in this field. The program in- cluded a total of 700 hours of training, 3,000 hours of one-on-one mentorship support, and 15 different experience sharing sessions. 70 participants who successfully completed the 6-month program, out of 27,000 applications, in 6 different technological focus points (Java, .Net, Swift, Kotlin, Data Science, Application Operations) were em- ployed in Turkcell Group Companies, while 90 participants were given em- ployment opportunities in different companies in the software ecosystem. Super Women of Cyber Security The “Super Women of Cyber Security” program was launched to increase employment in the field of cyber secu- rity, ensure the presence of more wom- en in the industry, and raise awareness in this area. from various Candidates locations of Turkey, regardless of age, who are interested in cyber security, applied and participated in the program by completing the 22-hour asynchronous training found on the Writers of Future platform and passing a general apti- tude and technical test. A 48-hour ex- perience-focused bootcamp program was launched with 100 selected female participants. The Cyber Security Pocket Book, with each participant positioned as an author, was prepared under the guidance of 13 female mentors from the Cyber Security team. The Pocket Book includes topics that touch individuals’ lives such as Wireless Network Security, Social Media Security, Safe Internet, Password Attacks, Device Security, Mail Security, and Hardware Security. Cloud Technologies Program In June, Cloud Technologies Bootcamp Program was launched to develop hu- man resources in the field of cloud tech- nologies and meet both our company’s and the ecosystem’s employment needs in this area. From thousands of applications, selected participants completed a 96- hour intensive, practice-oriented training program. The program was held with a focus on CCNA, Linux, and VmWare and resulted in the successful employment of 12 participants in Turkcell Cloud teams. Hackathon Programs Regarding University Students In an effort to support the software in- novation in the legal world, a cross-dis- ciplinary “Lexathon” initiative was exe- cuted by bringing together law and technology with the participation of university students. Participants of our Lexathon project took part in a 2-week development program covering topics such as visualization in law, innovation, digital transformation, and new-gen- eration technologies. With an appli- cation of 2,270 university students, the Lexathon program consisted of 36 hours of hackathon, 13 hours of train- ing, and 170 hours of mentorship. As the damages caused by cyber-at- tacks continue to increase, targeting businesses of all scales and individuals, these attacks result in both financial and data losses. With the participation of university students, a “Unibounty” project was organized by Turkcell to hold a cyber security vulnerability dis- covery program in Turkcell applica- tions. The program was participated by students from 11 different universities and resulted in over 1,000 interactions. Turkcell Functional Trainings At Turkcell Group, we offer Functional Development Programs that are syn- chronized with Turkcell’s main strat- egies and initiatives and support the end-to-end development of relevant teams throughout the year. The aim of these programs is to prepare our teams for the future of Turkcell, while also giving them new perspectives that add value to their current work, supporting collaboration, creating a future vision, and achieving common goals. Working with ecosystem part- ners, Academy trainers, and develop- ment partners with expert personnel, we use experiential learning methods to implement development programs and utilize different learning methods and tools such as online live virtual classes, face-to-face, and lab environ- ments. These programs are designed as a flexible model that can adapt to the changing needs and priorities of relevant functions throughout the year and be reshaped by instant requests. 124 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 125 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Leadership Programs Turkcell Academy designs Leadership Development Programs taking into consideration the specific needs and impact area of each level of leader with a focus on human and the future. It supports Turkcell Leaders in every area they need as they fulfil their very important responsibilities: to make de- cisions that carry Turkcell into the fu- ture, realize new opportunities, create the right strategies with a holistic per- spective, convey these in a way that will establish the strategy and business context, inspire employees at all levels to identify relevance and be excited, lead change, lead the team, and keep the team spirit and awareness of ‘be- ing us’ alive. Leadership Development Programs, created at six different lev- els, are constantly updated with in- novative development solutions that offer flexibility along with a holistic ap- proach, considering individual needs. Future of Leadership Masters The Future of Leadership Masters Program, designed by combining the philosophy that all our employees are the leaders of their jobs, and different focuses in their vision, is a develop- ment journey prepared to improve the leadership competencies of all Turkcell employees by focusing on Turkcell Ecosystem Leadership values. This program prepares all Turkcell em- ployees who apply for the future as leaders of themselves and their busi- ness. The development journey that will last for 1 year consists of 3 phases and brings different disciplines togeth- er with the collaborations of Yeditepe University, Bilgi University, Boğaziçi University and Istanbul University. The program was designed by systemat- ically constructing different learning methods such as online education, live virtual classroom, case study, experi- ence workshop and exam practice. 1,600 people of Turkcell started the first phase of the program by completing the case study step. In the first phase of the program, which was designed in cooperation with Yeditepe University and aims to provide 12 different basic leadership competencies, 1,055 partic- ipants received certificates of achieve- ment and were entitled to move on to the second phase. 1,600 people of Turkcell started the first phase of the program by completing the case study step. In the first phase of the program, which was designed in cooperation with Yeditepe University and aims to provide 12 different basic leadership competencies, 1,055 participants received certificates of achievement and were entitled to move on to the second phase. Küp (Turkcell Academy Digital Library) In line with the learning orga- nization and self-learning ap- proaches, the Turkcell Academy Digital Library (KÜP) was ope- ned to the use of all Turkcell employees in March 2022 with over 2,500 contents. With the- se prepared contents, Turkcell employees personalize and de- sign their own learning journeys according to their preferred learning method in KÜP, with e-learning, reading material, video, podcast and interactive video options. In the second phase of the program which was realized in cooperation with Bilgi University, the participants expanded their specialization under the headlines they chose, and met the specialists who worked in those fields in the industry. At the end of the second phase, 497 participants received certif- icates of success and were entitled to move on to the third phase. In the 3rd phase of the program which will be carried out in cooperation with Boğaziçi University, the participants will be given the opportunity to realize and experience the competencies they acquired. Phase experience work- shops, simulation and online trainings have been designed for this purpose. At the end of the program, participants who complete all phases successfully will be entitled to have a master’s de- gree in Istanbul University in 2023. RPA Marathon Our colleagues were included in our long-term training program within the scope of RPA Marathon, which was implemented in line with our digitali- zation strategy and aims to save time and increase efficiency in business processes by automating routine op- erational processes across Turkcell. After our online training that lasted for 4 hours with more than 700 par- ticipants, our in-class trainings that lasted 2 days with more than 400 participants were completed. At the end of the trainings, our participants, who attended the RPA Marathon and wrote their own RPA scenarios, con- tributed to our operational excellence and digitalization strategy by digitiz- ing their processes. Future Talks KEY – Personal Training Journey is Personal Training Journey a program that supports the development of Turkcell emp- loyees on technical and soft skills. Within the scope of the KEY Program, a development journey was presented to 3,801 people with a total of 16 topics in the first half of 2022. Training topics were determined in line with future competencies and Turkcell strategies. The training programs include topics such as data science, python, project management, agile approach, time management, human-o- riented design, commercial perspective, durability, and stress tolerance. In the second half of 2022, 820 people recei- ved training on communication, cooperation, presentation te- chniques and conflict manage- ment. The participants had the opportunity to choose the trai- nings they needed, and develop their competencies that would contribute to them in their busi- ness and private lives. is the relevant Future Talks, a seminar series where Turkcell employees gather with re- searchers and practitioners who exemplify strategy focused on Turkcell’s globally, initiatives. This se- strategies and ries was conducted in areas such as Artificial Intelligence Technologies, 5G, Cybersecurity, Fintech, Metaverse, Digital Broadcasting and OTT, Digital Transformation, and RPA. The goal of these seminars is to improve the understanding of strategies and ini- tiatives among all employees and to synchronize the efforts of different teams. The Future Talks series, aimed at creating a growing and continu- ously evolving ecosystem, will contin- ue to take place in the future, focus- ing on areas such as Blockchain, NFT, Digital Art, Digital Banking, Big Data, and Change Management. Turkcell Pasaj Vendors Development Program Pasaj Turkcell The Vendor Development Program aims to provide basic e-commerce training, finan- cial transactions, legal dimensions of e-commerce, customer service man- agement, and other related topics to our Pasaj vendors, in order to cre- ate satisfied customers and increase sales. This program has two separate Digital Transformation Consultant Program The development program we started in order to become the preferred operator in the digital transformation projects of our corporate customers has aimed to maintain the sales compe- tencies of our sales teams and provide them with the compe- tencies of acting as consultants. During the design phase of the program, the focus was on 8 competencies, which were determined as the main con- sultancy competency by the world’s leading consulting firms. By using different learning met- hods within the program, active participation of the participants in the educational journey was ensured at every stage of the training program. In this context, traditional experience-oriented learning sessions, sectoral artic- le reviews, vision seminars, and practice workshops for peer le- arning were held. At the end of the first phase of the “Digital Transformation Consultancy Program”, an im- pact analysis was made on the business results of the corpora- te sales teams of the program. In the analysis, it was measured that our sales managers who participated in the program increased their sales by 2 times compared to the previous year. training packages, consisting of 8 modules and 55 videos for Pasaj ven- dors. Turkcell Academy has also pro- vided an open training on 11 related topics on its Youtube channel for the development of all entrepreneurs in Turkey. The training covers topics such as basic e-commerce training, finan- cial transactions, legal dimensions of e-commerce, operations, and custom- er service management. 126 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 127 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Bosses’ Club Training Program The “Bosses’ Club” program has been launched by Turkcell Academy on be- half of our corporate and individual business partners who have made significant efforts in Turkcell’s technol- ogy retail leadership. The program, which began with the contributions of Istanbul Bilgi University and valu- able academic staff, has organized trainings on topics including changing consumer behaviors in the technolo- gy retail sector, digital transformation, leadership, economy, and government incentives. Advanced Certificate Program Advanced certificate program is a de- velopment program which was organ- ized to train our dealer employees as prospective dealer managers if they succeed in the Technology Retailer Certificate Program renewal process. The program is carried out as the sec- ond phase after the Basic Certificate Program organized for Turkcell Retail and Corporate Sales field employees. Our 400 employees who achieved the best results in the Advanced Certificate Exam after obtaining the Basic Certificate were included in the program. In the 42-hour program at Istanbul University; the topics of con- sumer behavior, technology, marketing, communication, finance and sustaina- bility were delivered. University Collaborations Turkcell Academy works on projects which will bring value to Turkey and we place great importance on cooper- ating with universities in order to bring qualified workforce to the industry. We brought together our students who have studied in our universities to shape the technologies of the future, with our experts in Turkcell’s mobile access technologies, software development, In these security technologies and cloud tech- nologies. industry-university collaborations, we conveyed our ex- perience in current technology and business fields and our future vision to university students. While contributing to the brand value of our company, we tried to help our university students in their future career choices, , where our employees who have experience and knowledge in the field come togeth- er for students who want to steer their careers. In order to support Turkcell em- ployees in their career journeys and academic development, graduate and doctorate programs were held with 6 different universities. In addi- tion to 11 different master’s programs in Business Administration, Cyber Security, Management Information Systems, Engineering Management, Managerial Economics and Electronic Communication Engineering, 163 em- ployees participated in 2 doctoral programs. This program has aimed to develop our company and our country by enriching the academic theoretical knowledge in universities with up-to- date practical knowledge in the world of technology. Making a Difference in Employment As one of the largest employers in Turkey, despite all challenges, we were able to create additional employment in 2022, as well, continued our activ- ities in line with our strategic human resources planning. As the leading digital operator of Turkey, we continue to contribute to employment through our programs specifically prepared for hiring different talents ranging from especially information technology, and communication technologies to finance and from marketing & sales to human resources. New Hires New Hires 2020 Full-time 723 Part-time 0 2020 Female 262 Male 461 2021 885 0 2021 329 556 2022 706 0 2022 277 429 Turkcell Group Orientation Program Young Talent Program In line with the needs of the changing business world, the orientation pro- gram was redesigned by focusing on our flexible working model and learn- ing styles. The learning design was carried out with an orientation pro- gram that meets the needs of the new period, and a perspective that covers the diversity in which we bring differ- ent disciplines and different perspec- tives together. In our new design; a structure was es- tablished where employees are greet- ed on the day they start work and their training is followed through the system. Accordingly, trainings are automati- cally assigned to each newly recruited employee, and the employee is provid- ed with access to different trainings through frequent contact points. As a result, the orientation program has be- come a program that we experience together and accompany the employ- ees on their journey to adapt to their job and the company. In our program, in which synchronous and asynchronous training methods are used together, we guide our newly recruited employees through experi- ence and learning sessions from each other, while enabling them to establish networks with each other. Talent Young The Program “GNÇYTNK”, which has been imple- mented to recruit talented young people, has been successfully going on since 2016. The need to “quickly master difficult jobs” that comes with digitalization, increases the impor- tance of flexible and agile teams. We are implementing our policy of incor- porating high-tech proficient individ- uals who are able to quickly adapt to new conditions and have the deter- mination to reach their goals without giving up, into the Turkcell organiza- tion. This includes not only seasoned professionals in the field, but also young people starting their careers in the business world. The program that was implemented in 2016 has been continuously im- proved by taking into account current conditions and trends. As a result, the online application and evaluation processes have been updated to pro- vide 100% equal opportunity for dis- abled candidates, creating a signif- icant improvement opportunity. The Young Talent Program is seen as not only promoting youth employment, but also investing in the new human resources necessary for digital trans- formation that will drive the country’s future. 128 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 129 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES In 2022, 71 young talents who success- fully completed the talent program, which received more than 50,000 applications, started their careers at Turkcell. The video interview stage of the program used an artificial in- telligence algorithm to evaluate ap- proximately 2,000 candidates. The successful candidates received job offers through the AI, which made the first selection based solely on the suitability of their abilities without any discrimination based on factors such as appearance or gender. In ac- cordance with Turkcell’s equal oppor- tunity policy, 38% of the young people hired are women. Additionally, 47 out of the 71 participants in the pro- gram are graduates of engineering departments. Young Talent Orientation Program Young people recruited through the GNÇYTNK program were welcomed with a dynamic orientation program prepared by Turkcell Academy for rapid adaptation to Turkcell corporate culture and technology. By listening to Turkcell’s vision and strategies from the senior manage- ment, they had the opportunity to get to know each other better, build networks, adopt team spirit, and act together in different workshops. In accordance with Turkcell’s equal opportunity policy, 38% of the young people hired are women. Additionally, 47 out of the 71 participants in the program are graduates of engineering departments Number of candidates applying to the Young Talent Program 63,000 66,000 50,725 2021 2020 2022 Employment provided with the Young Talent Program 150 2020 132 2021 71 2022 the training workshops, Through GNÇYTNKs learned about Turkcell’s Digital Services and products, Turkcell’s Sustainability Strategies, corporate culture and values. Having successfully completed the first step of the orienta- tion program, the GNÇYTNK Program is planned to continue for 1 year with the Turkcell Academy’s motto of lifelong learning. Within the program, in order to deve- lop the technology visions of Young Talents, trainings were realized on ar- tificial intelligence, cyber security, data center, data analysis and blockchain by Turkcell Technology teams primarily and through continuing the strategic cooperation with business partners such as Huawei, Cisco, Ericsson, Nokia, HPE, and Mavenir. In the last module of the orientation program, our Young Talents will receive training on customer focus, innovati- on, digital trends, leadership, strategic thinking and experience leadership th- rough simulations. StajcellPlus With Stajcell Plus program, we enable part-time employment of young talents who have successfully completed the Stajcell Program. Within the scope of the Stajcell Plus Orientation program, 60 of our interns had the opportunity to get to know themselves and Turkcell’s technologies by completing their personal development and technical competency training. With the development program focusing on Turkcell Ecosystem Leadership values, our colleagues were able to internalize the corporate culture and values by combining them with personal awareness. “Tell your Candidate, Create Benefit” In order to bring different talents to Turkcell family, our employees can recommend talented exter- nal candidates for vacant posi- tions. If the candidate proposed by our employees successfully completes all processes and jo- ins us, we offer our employee a thank you gift through Paycell. Within the scope of this practi- ce, 62 candidates were hired. Mentorship Our aim in the internal mento- ring program is to ensure the development of the managerial skills of the volunteer mentees and to support the creation of a common management culture so that the volunteer mentors in Turkcell group companies can share their experiences in an en- vironment of trust and indepen- dence from hierarchy. In 2022, 150 of our employees were mentors and 150 of them were mente- es, taking part in the process as companions to each other. In addition, Turkcell employe- es provide mentorship support in projects that will support not only Turkcell Group employe- es, but also young people in the entire ecosystem, especially uni- versity students, those who want to work in the STEM field or who are relatively disadvantaged, and this number is increasing day by day. Stajcell Within the scope of the 2022 Stajcell Programme, a total of 112 interns from va- rious universities and departments of Turkey joined Turkcell. Working in accor- dance with our flexible working model, our interns completed a comprehensive orientation program where they had the opportunity to get to know the world of Turkcell, the difference of being a Turkcell member and life at Turkcell. During their internships, their development journey was completed with online trai- nings in order to be ready for the competencies of the future and to internalize company strategies. 130 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 131 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Manufactured Capital Outputs Up to 1.6 Gbps 4.5G speed 99.832% Data accessibility rate 10,910 Tower portfolio 65% Network virtualization rate Up to 10 Gbps fiber internet speed 27% Network traffic (Internet) increase rate 11,341 Base station sites with risk assessment Performance Indicator Increasing the number of base station sites with risk assessment Increasing the number of processes improved as a result of risk assessments at base station sites Increasing the network virtualization rate (%) Short Term Target Middle Term Target Long Term Target 2021 Performance 2022 Performance Current Status Towards Target 10,800 14,800 28,000 10,920 11,341 14,000 16,000 23,200 13,083 13,208 67% 70% 75% 60% 65% Strong infrastructure and superior service quality With 29 years of experience in the telecom sector, we ensure the delivery of reliable and high speed services to our customers leveraging superior digi- tal competencies, strong financial management. We closely follow technological trends and develop world-class applica- tions to maintain a strong infrastructure and provide superior service quali- ty, which are among the material topics for Turkcell and our stakeholders. In this respect, in addition to our contribution to domestic technological devel- opments, we take our brand beyond the country borders by taking part in international projects. As Turkey’s largest data center operator, we are proud to offer our data centers with world-class modern technology, which we manage with a fo- cus on supporting domestic technology development, to the neighboring countries as well as Turkey. We operate our base stations, the endpoint of our network infrastructure in terms of customer service, based on complying with values which go be- yond local and global standards, in line with our emphasis on environmental and public health. We know that a reliable and fast net- work with a large coverage is of great importance in delivering a successful customer experience. In this regard, we continuously improve our infrastructure through investments, R&D activities and with our technological solutions. Today’s rapid technological develop- ments require organizations to actively follow the latest technological inno- vations. As Turkcell, we also support our country’s digital development by implementing the latest infrastructure solutions and developing domestic technologies. In addition, we increase our revenues with our ever-improving service quality. With the evolving user needs during and after the pandemic, the demand for quality and fast internet access has increased. We have accelerated our infrastructure investments in order to meet this demand with Turkcell quali- ty and to bring fiber internet access to everywhere in our country. In 2022, we made a significant contribution to the infrastructure of our country by adding 887 thousand homepasses. With our expanding fiber infrastructure, we are increasing the number of fiber-con- nected base stations and strengthen- ing our mobile network. Network traffic (Internet) increase (Rate in bandwidth)12 38% 2019 76% 2020 8% 27% 2021 2022 Positive development Negative development Ongoing 12Total data volume: mobile and fixed Strong Infrastructure As part of our manufactured capital, we continue to invest in our infrastructure to add value to the digital journey of our cus- tomers and maintain offering one of the fastest 4.5G services in the world by building a strong access network over our rich frequency resources. As the largest data center oper- ator in Turkey, we operate with vision of “Turkey’s data should remain in Turkey,” and support creation of added value for the national economy by prioritiz- ing domestic products primar- in procuring our network ily equipment. We have increased focus on our fiber infrastructure investments to deliver fast internet and high service quality to more house- holds. Meanwhile, we comply with regulations and ensure high service quality as an exemplary corporate citizen. In order to better manage the traffic on our network, which grew significantly due to increasing digital needs of our customers, we take measures to in- crease the efficiency of our network by implementing new technologies and making additional investments. Hence, we ensure the high efficiency without compromising on service quality even during busy periods by maintaining ef- ficient use of network resources. Mobile Network Infrastructure Our mobile network infrastructure con- sists of technological hardware, of which the coverage and capacity manage- ment is designed with a smart and flex- ible architecture, comprising our base stations. Thanks to the coverage and capacity solutions we provide with our base stations, which form the basis of our telecom business, we make contin- uous improvements to increase the ac- cessibility and durability of our services. 132 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.2; SPK A2.2; SPK A2.3; SPK A3.1 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 133 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Base Stations We conduct risk assessment tests to ensure the safety of our base stations and our teams working in the field. We aim to minimize risk factors by making improvement actions for areas identified as a result of these assessments. Having adopted an approach that prioritizes public health, we operate our base stations utilizing the latest technologies and with a focus on com- plying with national regulations and international standards, and we also prioritize preventing visual pollution in the environment where they are installed. The base stations in our network are well equipped to demonstrate all ca- pabilities of the technology that we provide to our customers. Meanwhile, we manage environmental impacts of our base stations, which can offer mul- tiple technology support (singleRAN), thanks to their more compact size and lower energy consumption. During our activities carried out at base station sites for installations, it is possible to encounter occupational health and safety risks in relation to is- sues including working at height, elec- trical works, excavation works, and ve- hicle use. We have working principles and action plans prepared to prevent these risks. In this context, until the end of 2022, 4,839 sites were inspected, risk analysis forms were prepared for 377 sites, and 93 sites were repaired and renewed for a safer working environment. “Network Moreover, by preparing Technologies Geographical Risk Analysis Reports” on a regular basis, we aim to ensure that our base sta- tions operate efficiently, in an envi- ronmentally friendly manner and in accordance with health and safety regulations considering the interac- tion between human, environment and telecommunications. Towers Global Tower, the leading tower company in Turkey and one of our subsidiaries, operates in four countries. Global Tower provides tower rental, tower build & sell, tower maintenance and contract management services to tel- ecom operators, radio and TV broadcasters, internet ser- vice providers, energy companies and public institutions. Global Tower has also started to provide solutions in the field of satellite services to its customers in accordance with its end-to-end services approach. The company cur- rently offers closed circuit satellite services over two thou- sand points from its own infrastructure with geographic redundancy. The company aims to enrich its product and service diversity by following industry trends. Global Tower has a portfolio of 10,910 towers as of end of 2022, distributed as follows; 1 2 3 4 Turkey: 8,975 (owned: 4,560, right of use: 2,220, contract management: 2,195) Ukraine: 985 (owned) Belarus: 835 (right of use) TRNC: 115 (right of use) Base Stations and Public Health In order to prevent negative impact on public health, we operate our base stations below the electromagnetic field inten- sity threshold levels as determined by the Information and Communication Technologies Authority (ICTA), the regulatory body. These thresholds were determined by the ICTA with a prudent approach at lower and safer levels compared to the exposure limits determined by the International Non-Ionizing Radiation Protection Board (ICNIRP) and accepted by the World Health Organization (WHO). As per research in this field, no harm to human health has been identified from radio signals below ICNIRP limits. The threshold levels defined for Turkey by regulation are at 70% of the limits determined by ICNIRP, and at 20% per device. The maximum limits that a base station can be operated at in our country are much lower (approximately 20%) compared to limits set for European Union countries. As we are subject to ICTA and its regulations in terms of installation and inspection of base stations, information regarding the power specifications, antenna type, location of the station and its surrounding is reported in detail to the ICTA, and base stations can be installed in approved locations. Once a base station is activated, EMR (Electromagnetic Field) meas- urement is conducted by independent institutions accredited by the ICTA within one week, with the results submitted to the ICTA. Moreover, the ICTA also conducts inspections and measurements on the base stations. As part of the two ICTA criteria that stand out with respect to public health, there should be no living space within the “Safety Distance” deter- mined based on the power output of the base station, while its electromagnetic field intensity, having been configured accordingly, should be within the legal limits. Should any failure to comply with the relevant ICTA criteria be detected, the base stations are dismantled, with significant sanctions or penalties imposed. As Turkcell, we care about the impact of our network management operations on public health and implement much stricter limits than the limits set by the relevant legal authorities. In 2022, there were no cases that resulted in legal penalties against our Company with regards to the impact on health of our products and services. Telco Cloud We have grown 65% of our mobile and fixed core network functions with our Telco Cloud infrastructure through the activities we have carried out to date. On the back of transition to vir- tualization, we achieve CAPEX and OPEX efficiency with a shared cloud infrastructure for network applica- tions . Thus, we can better implement the opportunities provided by devel- oping cloud technologies to our net- work. In 2022, we have also taken the first step for the Container Platform infrastructure in addition to our VM (Virtual Machine) based Telco Cloud infrastructure. With this infrastructure, we have been able to integrate new generation network functions into our network easier and more flexibly, and we have started 5G technology-com- patible Telco Cloud transition. Network virtualization rate (%) 75% Long Term Target % 1 4 % 8 1 % 0 6 % 1 5 % 5 6 2018 2019 2020 2021 2022 Multi Device Services One Number and Multi-Device tech- nologies, completed and put into practice by Turkcell for the first time in Turkey, enable integration between mobile devices other than mobile phones. Thanks technolo- to gy, which has started to be used by Turkcell customers, One Number and this Multiple Device services make daily life even easier. Having only one num- ber, our customers can now leave their phones at home and continue to make voice and data communications with other smart devices. As the first appli- cation of this infrastructure, we started to provide our customers with the use of Apple-branded smart watches with a Single Number. 134 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 135 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES International Roaming with 4G Abroad We started to provide the in- ternational voice (VoLTE roa- ming) experience over the 4.5G network, which allows making in high-quality calls abroad, cooperation with the US mobile operator AT&T. Turkcell beca- me the first operator in Turkey to make this service available to its customers in a short time. Ipv6 Transformation The number of devices requiring internet connection is increasing continuously in today’s world, and such devices are get- ting highly diverse. Accordingly, the quan- tity of IPv4 addresses required by such devices to communicate on the internet is also rising. In this case, it is foreseen that the existing IPv4 address repository will fail to meet newly emerging needs. In order to solve this global issue, we have completed IPv6 transformation efforts in Turkcell network as part of our powerful and sustainable network initiative and started to move some of our traffic as IPv6. With the IPv6 service, we aim to fur- ther increase customer experience with enhanced security and service quality features. Service Operations Center (SOC) Turkcell’s Service Operations Center ac- tively conducts analysis and carries out operational activities 24/7 to keep in- frastructure and service continuity at the highest level. In order to maintain the highest level of service quality for the cus- tomer, we consider it critically important to detect potential failures in the network and services before they occur, take pro- active steps, and provide permanent solutions by taking preventive actions. While the significance of instant responses and fail-safe operations increases on a dai- ly basis to ensure service continuity, the need for human resources also intensifies across our rapidly growing and complex network, which accommodates an increasing num- ber of managed equipment and services. Zero Touch transformation, which will ena- ble the full and end-to-end automation of the network and service management, has turned into a critical requirement to provide services rapidly and ensure the economic sustainability of diverse services delivered by digital services providers. As a result of the digitalization efforts, we initiated in the past years, we substantially automated service monitoring and failure notification activities carried out for the access network. In 2022, we continued our activities as part of Zero Touch transforma- tion with an increasing momentum, which is among the focus areas of Network Technologies. We organized hackathon events to spread the use of automation technologies in network operation, and we contributed to the development of the specialization of network engineers in the field of digitalization through the internal trainings we conducted. We aimed to in- crease service continuity and efficiency by adding mobile application solutions to our network that will enable many operation- al activities to be carried out much faster and error-free. In addition to the benefits they provide, these solutions also play an important role in the spread of digitaliza- tion culture. Additionally, we are progressing con- fidently in our aim to contribute to the process of establishing the standards by taking part in international platforms and be one of the first operators achieving the “Zero Touch” transformation across the network. With this aim, we came to- gether with many technology companies around the world, which are in the posi- tion of solution providers in this field, and exchanged ideas in order to determine the path to be followed and the methods to be applied. We continued our activities in ETSI (European Telecommunications Standards Institute) ZSM (Zero Touch Network and Service Management) study group also in 2022. After these stud- ies, which allowed us to see our needs more clearly, our process of evaluating the returns to the proposal request we published on a global scale in order to re- ceive the most appropriate transforma- tion consultancy service continues. Investing In Domestic Equipment In line with our mission to create value for our country, we support the technological development and digitalization process of Turkey with our efforts on developing domestic technology and equipment. By implementing innovative and latest tech- nologies in our infrastructure, which pro- vide efficiency and which have not been implemented in Turkey before, we make a difference in the market. With our approach of localization, we carry out development projects in coop- eration for the development of domestic products that can provide uninterrupted and high-quality service throughout the country at the level reached by today’s 4.5G technology and continue our sup- port. On the other hand, the fact that the domestic product ecosystem has not been fully developed in our country to respond to the current 4.5G technology qualifications and operational require- ments yet, results in operators failing to fulfill the obligations set in concession agreements and therefore may result in certain penalties from time to time. For the development of the domestic product ecosystem; we have started using domestic 4.5G base stations and domestic 4.5G antenna products engi- neered by Aselsan and ULAK in our net- work on a broad geographical area, for which we provided specialized support from the design phase to site tests. Thus, we aim to spread the domestic prod- uct experience to the overall country. Moreover, as Turkcell, we took part in the End-to-End Domestic and National Communications Network (UUYM 5G) Project, which was completed within the scope of the development of domestic and national 5G technologies, with a large and well-equipped project team. As part of the project, we provided sup- port to HTK (Communication Technology Cluster) companies that develop 5G New Radio, Core Network, OSS, NFV, Radiolink products, and ULAK Haberleşme A.Ş., with our knowhow and expertise on 5G, as well as our laboratory and test equip- ment facilities. We are currently running 5G Domestic Data, 5G Domestic Voice, MANO and EMS Projects within the scope of the 5G Core Domestic Products Program, and in this context, we provide knowhow and laboratory/test support to domestic manufacturers in their de- velopment processes. With these pro- jects, we are the operator that provides the most support to domestic and na- tional studies in this field in Turkey. the number of our customers who are subscribed to 100 Mbps and over fiber packages has increased 2 folds com- pared to the previous year. As the first operator to launch the SD- WAN service, we offered it to our cor- porate customers. We provided securi- ty and access services simultaneously as a single service. We created solu- tions to reduce costs, while increasing production capacities. We leverage our services such as Enterprise Wi-Fi as part of managed services to address the changing needs of corporate and wholesale customers. We continue to offer new- est technologies such as our Wi-Fi service, SMS integration, logging, and Wi-Fi 6. While we continue to expand our fiber infrastructure, we also offer high quali- ty internet service over our mobile net- work with our Superbox solution which was developed to bring fiber speed in- ternet access with the Turkcell quality to locations without fiber access. We serve more than 650 thousand users with our Superbox product, which pro- vides same day installation service to our customers. In 2022, the number of our customers who are subscribed to 100 Mbps and over fiber packages has increased 2 folds compared to the previous year. Strong Fiber Infrastructure In 2022, the number of our customers who are subscribed to 100 Mbps and over fiber packages has increased 2 folds compared to the previous year. By delivering rapid, high quality and comprehensive services to our cus- tomers, we maintain efforts to facili- tate access to the internet, which has become one of basic needs. Turkcell’s fiber backbone is now available in all 81 cities of Turkey, however, it is our aim to take real fiber internet to the homes of our customers having initiated a fib- er initiative. Accordingly, we expanded our fiber infrastructure by adding 887 thousand homepasses with our invest- ments in 2022. We managed to deliver fiber internet service to the homes in 28 cities with our investments and carry on with efforts to expand our coverage. We are aware of the substantially increasing need for internet and access to information due to the pandemic and our responsibility in this area and we continue our invest- ments at a great pace. We develop our fiber internet infrastructure, high speed internet offerings and new technolog- ical solutions. As Turkcell, we provide fiber to the home access to households at speeds of up to 10 Gbps via globally accepted G-PON/XGS-PON technolo- gy. This value is an upper limit and may vary depending on variables such as tariff type, fiber Internet usage den- sity, and the maximum speed the mo- dem can support. The average fixed internet speed in Turkey is around 31.70 Mbps according to Speedtest Median Country Speeds December 2022 data. We provide faster internet connec- tion to our customers with our strong and expanding infrastructure. In 2022, 13 This value is an upper limit and represents theoretical peak values. The speed that the customer can receive may vary depending on the maximum speed that the terminal can support, its location and distance from the base station, the configuration of the base station, the instant traffic density in the network and the number of subscribers currently receiving service from the field. Strong Spectrum With the frequency usage that has the largest spectrum, Turkcell has the larg- est license allocation that can be used in mobile communications services in Turkey. With this spectrum of frequen- cies, which is 34% and 68% broader than that of other operators, our customers take the advantage of the highest qual- ity of services. Transformation of tech- nologies used in the telecom industry as a result of rapid technological growth, high cost of infrastructure investments, and the need to make maximum use of long economic lives require us to build a technology agnostic spectrum infra- structure which could be adapted to de- velopments in the technology. Leveraging our broad spectrum, we aim to maintain the high service quality, as proven by our maximum 1.6 Gbps13 speed that we offer with 4.5G technology, with 5G technology which is expected to be introduced in the upcoming periods. With the authorization of the Ministry of Transport and Infrastructure, we started commercial 5G transmission at Istanbul Airport as part of our 5G efforts. We led the establishment of the network that the 3 operators provide service over the common 5G infrastructure. In order to experience high-speed internet using the 5G service at Istanbul Airport, it is necessary to have a 5G-enabled mo- bile phone with 5G support and a 4.5G compatible SIM card, and to initiate a 5G subscription by requesting 5G use via SMS. Turkcell customers do not pay any additional charge to experience the 5G service. Our guests from abroad can also use the 5G service at Istanbul Airport. For this, all they need is to have an operator with a 5G Roaming agree- ment with Turkcell. Apart from Istanbul Airport, Turkcell sub- scribers have the privilege to experience 5G technology in more than 40 countries. In order to experience 5G abroad, it is necessary to be a 5G subscriber. Turkcell customers do not pay an additional charge to experience the 5G service, they continue to be charged according to their roaming packages and tariffs. 136 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 137 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Data Centers As Turkey’s largest data center opera- tor, we sustain our leading position in accordance with our vision that Turkey’s data should remain in Turkey. In 2022, we started the construction of new modules in both our Gebze and Temelli data centers. We aim to strengthen our leadership by launching both mod- ules in 2023. We have approximately 40 thousand square meters of white space in our 8 data centers, 4 of which are new generation. As the pioneer of digital transformation in Turkey, we pro- vide data storage and cloud services to more than 3.000 corporate customers, providing cost advantages and helping them increase their operational effi- ciency. By providing 24/7 uninterrupted service we enable business continuity and expert Turkcell engineers provide remote assistance and solve problems swiftly in extraordinary circumstances. Our data center in Ankara, the largest in Turkey with 12 thousand m2 of white space, and our data centers in Izmir, Gebze, and Çorlu, which became op- erational in 2021, have been built with resistance to earthquakes up to mag- nitude of 9 and have systems rooms that can withstand fire for 120 minutes. In our data centers, we carry out var- ious activities to establish and spread environment friendly practices. Roof type solar panels are installed at the Ankara and Çorlu Data Center to pro- duce approximately 700 thousand kWh of electricity annually and to meet our data centers energy consumption. We prioritize cybersecurity in our data centers and offer solutions through locally developed technologies. Our Ankara and Gebze data centers were awarded the Operational Sustainability Gold certificate, valid for 3 years, by the Uptime Institute, which inspects data centers at the international level. With our LEED (Leadership in Energy and Environmental Design) Gold cer- tified data centers, we aim to set a pi- oneering example not only in terms of the technology itself, but also of our impact on the environment. Furthermore, we attach utmost impor- tance to the use of domestically man- ufactured products in the construction process of our data centers and in- crease our domestic product rate with data centers we have built. Data Center Data center domestic product usage rate Gebze Data Center 35% Izmir Data Center 50% Ankara Data Center 65% Europe Data Center 75% Refarming With the increasing 4.5G data traffic, the need to increase the spectrum resource to be used in 4.5G technology has arisen. In this direction, inter-technol- ogy refarming studies are be- ing planned and implemented. With the city-based applica- tions we have realized by pri- oritizing the metropolises, we have significantly increased the resources allocated to 4.5G technology. In this way, besides improving the customer expe- rience, we provided additional network capacity to meet the increasing data usage needs. High speed, high quality, inclusive services and access to information and Internet for everyone We continue to make invest- ments and improvements on our network and infrastructure in line with the aim of providing faster, more inclusive and qual- ity services to our customers. We maintain our high network availability with our data ac- cessibilityrate of 99.832%, which we calculated based on traffic loss in our mobile network, and our low interruption rate of 0.285% in mobile voice calls. In 2022, we reduced our carbon emissions by installing 507 solar panels on 15 portable solar stations that we established under our Portable Solar Field project in 2019, 2020, and 2021. These panels generated 125 MWh of electricity. We have increased the number of pro- jects that received grants from Horizon 2020 and Horizon Europe R&D pro- grams, funded by the European Union, to 9, by signing different projects in the international arena within the scope of R&D studies, and we continued to pursue these projects in 2022. With these projects, we aim to implement new generation network technologies and innovative applications for verti- cal sectors. Thus, we contribute to the awareness of Turkcell and Turkey in the field of 5G and pave the way for differ- ent cooperation opportunities. In addition to our R&D projects, our ac- tivities on the creation and testing of 5G standards on international platforms continue. As Turkcell, our 5G studies continue at NGMN (Next Generation Mobile Networks), the members of which consist of operators serving more than 60% of mobile phone users all over the world with more than 200 networks. The white paper that we issued in collaboration with NGMN- GTI in this context has been published with the title “5G NETWORK SLICING MAJOR CONCLUSIONS”. In this study, we focused on the requirements and related test results for end-to-end 5G Network Slicing, especially for phone operating systems (such as Android, IOS…), as well as how the network can prioritize them. As Turkcell, we are one of the 3 operators that can provide test results on 5G Network Slicing, together with China Mobile and SK Telecom. 138 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 139 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Intellectual Capital Outputs 61% Digital OTT services revenue growth and 30% digital services total revenue growth 7Incubated company partnerships 325 Patent applications 965 R&D employees 117 Billion messages sent through BiP 7Hospitals provided with technological infrastructure 12.5 Million customers using the chatbot Performance Indicator ISO 27001 Certification Short Term Target Middle Term Target Long Term Target Annual Target Certification Renewal Certification Renewal 2021 Performance ISO 27001 Certification Renewed 2022 Performance ISO 27001 Certification Renewed Current Status Towards Target Positive development Negative development Ongoing Ever-growing Intellectual Capital Innovation and Entrepreneurship We transform our corporate culture with value creating and innovative solutions developed by our R&D workforce of 965 employees and aim for adoption of these solutions by our stakeholders. We believe that an innovative business culture based on strong performance in systems, processes and technology is essential for our strategic initiatives and business model to achieve the most ef- ficient and effective results. Our intellectual capital is based on various fields such as innovation, en- trepreneurship, brand power, respon- sibility, products and services, which reflect Turkcell’s unique expertise and knowledge. It also is one of the driv- ing forces of sustainable growth that differentiates Turkcell. Combining our superior digital competencies and analytical capabilities with new tech- nological developments such as IoT, artificial intelligence and blockchain, we improve our products and services. Thanks to our services developed and improved by Turkcell engineers, we produce solutions that meet the needs and demands of our customers. We of- fer our products to the right customer at the right time and at the right price, leveraging both our strong bond with them and our advanced analytical skills, which are among our core com- petencies. On the back of our big data analytics applications, we are able to provide customized offers to around 42 million customers. As Turkcell, while maintaining our commitment to the principles of sus- tainability, creativity and efficien- cy in our research and development activities, we aim to develop sus- tainable production technologies by moving forward in order to develop products and production processes that take into account the econom- ic, environmental and social impacts we cause as a result of these studies. Accordingly, we are engaged in ac- tivities aimed at reducing our carbon footprint. We continue to move forward by in- creasing our competitive power with all our human-oriented activities and by taking a more active role in na- tional and international markets with our high value-added products and services. While maintaining our image of being the leading company in the telecommunications industry, we also contribute to society and the econo- my. We continue our activities based on the principle of creativity with our 965 R&D employees who aim to inte- grate the innovative approach into our corporate culture. We attach im- portance to the opinions and sugges- tions of all our stakeholders, support their initiatives and show an encour- aging approach so that they can im- plement the ideas they create. Our intellectual capital is based on innovation, various fields such as entrepreneurship, brand power, re- sponsibility, and our products and ser- vices mainly, which reflect Turkcell’s unique expertise and knowledge. Owing to the value created by our technological breakthroughs, we pro- duce qualified solutions in both na- tional and global markets. With the strength of being Turkey’s Turkcell, we are making expansions for many sectors in line with our vision of “ser- vice-oriented experience provider”. In this context, we carry out joint R&D programs and academic publications with universities, incubation collabo- rations with technopark companies, national and international supported projects and technical publications, training and conference activities that provide knowledge transfer. It is of utmost importance to share the know how about innovative technol- ogy products and their usage areas and know how gained in order to sup- port research and technological de- velopments in our country developed with the innovation culture within Turkcell Teknoloji with the ecosystem. In this respect, intensive mentoring and training support is provided within the scope of the production and use of new technologies, the methodologies and methods used in the production process, R&D Center Management, Intellectual and Industrial Property Rights, University, Incubation collabo- rations and R&D studies with National and International partnerships. Number of R&D employees 2019 956 2020 1,153 2021 1,216 2022 965 140 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.2; SPK A2.2; SPK A2.3; SPK A3.1 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 141 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES In various R&D projects carried out within Turkcell Teknoloji, we coop- erate with universities and research institutions. Project ideas and needs are evaluated, and a common project development target is set for those that are compatible with the strate- gic focus areas. For example, in 2022 studies on the energy efficiency of Data Centers were conducted with Özyeğin University. Currently, Turkcell has multiple data centers and these data centers have large-scale cooling systems. Cooling systems are the most critical component for continuity and cause a significant amount of electric- ity consumption. In this direction, we have carried out studies to operate the cooling systems more efficiently with the support of our academicians. Tests were carried out on data such as air conditioning usage and temperature decisions. As a result of this study, we predict a 7% to 10% saving. As Turkcell, in line with our strategy of expanding the presence and scope of our products and services in interna- tional markets, we aim to develop our new digital and ICT services on a glob- al scale based on the latest technolo- gies, market needs, and expand foot- print to different regions. The information and communication sector has a dynamic and competitive structure that requires widespread infrastructure and technology invest- ments. In Turkey, this sector has had to finance the R&D investments of foreign companies with the purchases made from abroad over the years. its establishment, Turkcell Since Teknoloji has provided import substi- tution for a license fee of nearly TRY 2 billion. With strategic collaborations and joint projects with our business partners, foreign currency, much higher than our own technology production volume, remained in Turkey and Turkish engineers were able to produce with high added value. As we prepare our patent applica- tions to determine the areas where we will make a difference in the prod- ucts and services we have developed, we examine the patent applications and registered patents by technology companies in the field we work, and get information about competition and trends. We continue to share our expe- riences with universities, incubators, SMEs, business partners and the entire ecosystem in our patent application processes. Number of Cumulative National Patent registrations 2019 2020 2021 2022 521 699 813 966 Number of National Patent applications 2019 2020 2021 2022 511 557 565 325 Turkcell Teknoloji has a leading posi- tion in its sector in Turkey with 3,564 national patent applications, 216 inter- national patent applications and 966 registered patents completed since 2007. As Turkcell, we applied for 325 national patents in 2022. Within the scope of our technologi- cal transformation goal, we take an active role in the TÜSİAD Technology Standards Standard-Based Patents Task Force group to support the initiative to produce Standard- Based Patents. and ITEA- In order to enable the firms and in our ecosystem to partici- SMEs pate international platforms, we in take part in the Steering Committees (Technology for European of Advancement) ve CELTIC- (EUREKA Cluster for next-generation communica- tions) communities within EUREKA (The European Audiovisual Observatory). In projects that we participate under the EUREKA umbrella, funding support is assessed by authorities of TÜBİTAK- TEYDEB (the Scientific and Technological Research Council of Turkey – Directorate of Technology and Innovation Support Programs). In recent years, we have suc- cessfully increased the number of pro- ject applications as part of the Horizon EUROPE main program and subprogram that derive direct and large grant sup- port from the European Commission, on platforms offering a more competitive and selective environment for proposing project ideas. For example in I2PANEMA: Smart Equipment Communication, Management and Maintenance project that we have been IoT-Based Port Number of applications to projects sponsored by TÜBİTAK 17 2019 13 2020 10 2021 8 2022 Number of applications to HORIZON projects 10 2019 15 2020 9 2021 10 2022 a stakeholder between 2018-2022, sus- tainability and efficiency issues were discussed to overcome the regional and technical constraints of port areas. Studies to supporting and ensure effi- ciency of ports with the Internet of things have been covered in terms of energy, human resources and environmental sustainability, technologies. With the guidance of the Ministry of Industry and Technology, we follow uni- versity and startup company collabo- ration opportunities to expand Turkey’s R&D ecosystem, support startups and eventually increase the weight of do- mestic products and services. We pro- vide technological support to startup companies and increase their commu- nication and recognition by including them in the European Union projects that we are involved in. As an example of our collaboration with startup companies, in 2022, we have continued to work with a technopark company to transfer real-time water analysis over NB-IoT based commu- nication modules which we started in 2020. This project enables remote analysis of drinking water resources in the event of a disaster or refugee influx. By integrating our 5G competencies to the hardware production capabilities of the startup company, we started to obtain prototypes of the work for this innovative and national product. We carry on our efforts around measuring the rate of sulphate in soil, a key param- eter for soil fertility in particular. Number of TÜBİTAK- sponsored university collaborations 4 2019 5 2020 5 2021 7 2022 Number of startup company collaborations 9 2019 10 2020 11 2021 7 2022 Furthermore, we carried out energy saving and predictive maintenance studies. We are developing our own au- toml platform, which is the most impor- tant development point we have deter- mined for our IOT analytics product. Our human capital lies at the heart of our R&D and innovation strategies. In this respect, we provide academic development opportunities to Turkcell Technology researchers. Our post- graduate and doctorate programs, improve the technical designed to knowledge of our employees in accord- ance with the qualifications required by our sector, have been ongoing since 2014 with a rapidly growing curriculum. In the meantime, in accordance with our vision of leading the production of new technologies, we contributed to the ex- pansion of technology studies by issuing 24 academic and 110 technical publica- tions on national and international plat- forms and 110 National/International Presentations, Product Demonstrations, and Lecturer Participations in 2022. Value Created Through the Use of Open-Source Code One of the most important issues we pay attention at Turkcell, both as users and developers, is open-source code software. Open-source software is used to solve many different problems in terms of software architecture. We pre- fer open-source code software as the building stone of high-volume infrastructural applications such as ONEDESK, ULTIA, ONENT, YAP, and PARS, developed under the guidance of Turkcell GENS. In this way, besides creating value in terms of license management and cost advantage, we contribute to the future of the software world by supporting the development of high-quality secure software without provider restrictions. In addition, thanks to the “Open- Source Code Guild” we established within Turkcell, the transfer of open-source software used in Turkcell between teams, the sharing of “know-how” transfer is enabled. Moreover, with the “Jedi-Contributors” page we have estab- lished on “Github”, some value-added codes developed inside Turkcell can also be opened to developers of the outside world. This allows us to improve the motivation and market recognition of developers in Turkcell and help Turkcell become one of the leading companies in the realm of technology. Also, in order to support and disseminate open-source code sharing, we have created our Turkcell publication account, especially in the field of technology and software, under the article publishing platform medium, and under this account, we share articles and support in terms of code, text, and pictures of open-source code developments made under Turkcell. 142 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 143 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Digital Service Portfolio Digital services and solutions While offering a richer value prop- osition to the lives of our users with our digital services and solutions, we keep on developing our portfolio by consistently and dynamically updat- ing our products to address changing user needs. All services we create call infrastructures, for diverse technical capabilities and specializations. We are in the life not only with our com- munication services, but also with the digital services we produce and de- velop. Based on this strategy, we have developed a wide range of digital ser- vices domestically thanks to the more than 1,000 engineers working for our Company, and by establishing sep- arate companies for some of these services, we have taken an important step towards our global competitive positioning. BiP, lifebox, TV + and fizy brands, which aim to stand out in the global competitive arena, are posi- tioned as separate companies, and as part of this structure, these brands con- duct their activities faster, stronger, and with a greater focus within their own organizational structures. We continue to lead the digital trans- formation need of society thanks to dozens of services including video conferencing, email services, instant messaging, TV, digital broadcasting, cloud storage, ID solution, digital ad- vertisement, game services, and music platform, which have been completely developed by Turkish engineers and software developers. To make this digital transformation accessible, we use our advanced analytical capabil- ities, and position the right service for the right customer, thereby enhanc- ing customer experience. Furthermore, we aim to contribute to localization in In 2022, we increased total revenues of Digital Services by OTT service revenues 30%, and digital by 61%. Secure and Uninterrupted Communication: BiP BiP has approximately been down- loaded over 100 million times and used in 192 countries in the world since its launch. Due to the personal data secu- rity concerns in 2021, many users start- ed to use more than one communica- tion application. In this context, BiP has become the choice of millions of users with its fast and secure messaging, quality voice and video calls. With a satisfaction score of 4.5 in the AppStore and 4.4 in the Google Play, it has ranked far ahead of its competitors and received almost full points from the users. has company successfully Our reached millions of users in the interna- tional market, particularly in countries such as Iran, Indonesia, Bangladesh, India, Pakistan, Malaysia, Jamaica, Haiti, Caribbean, Central America, and Asia Pacific. Our collaboration with global operators such as Digicel has expanded in Pakistan with Jazz and continues to grow. In Turkey, BiP, our communication platform that enables Turkcell, Turk Telekom, and Vodafone Pass users to communicate seamless- ly without incurring charges on their internet, is delivering superior technol- ogy to allow its users to communicate uninterruptedly globally. BiP differentiates itself from the global competition with features such as un- saved messaging, voice and video call up to 15 people, status, group and chat transfer, emergency button, fast and secure money transfer as fast as send- ing a message, and instant translation. In addition to its basic communication capabilities, it also offers access to many services that facilitate users’ lives under the Discover tab. technology by developing these solu- tions. We design global brands and technologies, which we digitally ex- port to the world while contributing to our country’s economy with self-suf- ficient technology solutions. Making these services, which create consider- able employment for Turkish engineers, world-class brands and thus generat- ing globally beneficial outputs through this achievement are among our major priorities. We consider it our primary goal to make a positive contribution to the national economy and reputation of our country by creating economic value through national security, data ownership, and by making use of our own data. Secure and Uninterrupted Video Conference Experience: BiP Meet With its powerful infrastructure and easy-to-use video conferencing ser- vice operating through our data- centers in Turkey, BiP Meet allows users to communicate with anywhere in the world at any time. With BiP Meet, meet- ings can be organized through web browsers or easily with the desktop and BiP Meet mobile application. In addition to its easy-to-use and plain design, BiP Meet offers a suitable solu- tion for institutions with its features such as operating in data centers in Turkey and registering domain names specific to corporations. Developed especially according to the needs of the sectors such as education, public and health, BiP Meet can meet remote call needs of enterprises of all sizes. Open Room for Life with lifebox! lifebox, which allows users to securely store and share photos, videos, music and documents, offers a secure and easy platform to store memories, while also offering a social experience. lifebox appeals to users not only in Turkey but all around the world. Having functions beyond storage, life- box stands out with its face and object recognition, as well as the ability to create automatic stories from the pho- tos it chooses, and also ensures that contact information is not lost in any adverse situation by making a secure backup of contacts. It is possible to securely access documents archived in various categories using fingerprint, face recognition or password, and at the same time, photos in lifebox can be classified separately according to per- son, object, date and location. Offering experiences that make the lives of our users easier, lifebox has reached more than 1.8 million paid subscribers, and more than 7.8 million total users with its successful performance in 2022. The enterprise storage solution lifebox Business covers the required storage needs for businesses of all sizes in a secure and stable manner. Affordable and all-purpose package structure puts lifebox Business ahead of its local and global competitors. Internal and external file sharing, access from all mobile and desktop devices, real-time collaboration with the online office feature, file versioning, person and file- based reporting, and personal disk and corporate common space usage are just a few of the features that dif- ferentiate lifebox Business as a cloud storage solution for the business world. lifebox With Transfer, operating through data centers located in Turkey, aims to provide an easy experience to cover the fast file sharing needs with- out requiring any subscription or fee. You may check lifebox products, ser- vices and more detailed information at www.mylifebox.com, www.lifebox.biz and www.lifeboxtransfer.com. TV joy is everywhere: TV+ TV+, a first and unique service in terms of TV watching experience in Turkey, is a groundbreaking television platform changing the dynamics of the TV world. TV+ continues to play an important role in the digitalization of user experience by enabling its users to access any con- tent, whenever and wherever they like. In addition to TV+’s rich premium tech- nical features providing ease of use, has reinforced its archive with sports, series, movies, documentaries, sports, children’s programs and other content, thus reinforcing loyalty of its users. La Liga, Formula 1 and EuroLeague, that are followed with a high interest of sports fans, have also met with TV+ fans in 2022. You may check TV+ prod- ucts, services and more detailed infor- mation at www.tvplus.com.tr Number of Number of Paid Subscribers of lifebox (thousands) Number of New Users who backed up their contacts with lifebox (million) 2020 910 2021 1,331 2022 1,836 2020 3.3 2021 4.3 2022 4.2 Number of IPTV users (thousand) 720 871 1,082 1,282 2019 2022 2020 2021 144 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 145 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Number of fizy contents (million) 32.6 33.5 35.4 43.0 2019 2022 2020 2021 In addition to our 4 brands, for which separate companies were established, Yaani, YaaniMail and Dergilik have also been among our users’ favorite applications. Made available for corporate use at the beginning of 2021, YaaniMail today caters to over 1,500 organizations, and as to individual users, it serves for 1.5 million users. GAME+ Dijital Servisler A.Ş.’s new gaming brand, GAME+, started in 2021 to offer a brand-new experience via servers located in Turkey through its partner- ship with NVIDIA GEFORCE NOW, the world’s most popular and technolog- ically advanced cloud gaming plat- form. The cloud gaming technology, which allows for playing advanced computer games without download- ing, eliminates the need for powerful hardware required for gaming. With GAME+, playing the latest games is now as easy and accessible as watch- ing movies online. The requirements such as expensive hardware and ad- equate storage space are now avoid- ed. GeForce NOW powered by GAME, which has been widely appreciated in Turkey, has the second highest user base after the United States. GAME+ is expanding its gaming library and rap- idly increasing its subscriber base and continues its growth. Turkey’s digital music platform: fizy fizy, one of the most popular and preferred music platforms in Turkey, now delivers a more customized music experience to its customers with recommendation lists along with a richer content archive. In addition to enjoying an ad-free and un- interrupted music experience as well as listening to the songs with a high-quality sound, fizy Premium users can also view song lyrics and access their content of- fline even without the Internet. Apart from Premium, our customers can enjoy music free of charge with our model with advertising. As a differen- tiation from competitor applications, users can benefit from advantageous discount offers thanks to brand col- laborations and customer campaigns exclusive to fizy. In 2022, couples and families continued to enjoy fizy with Duo and Family subscriptions launched specifically for them in 2021. Local E-Mail Service: YaaniMail Launched for individual use in 2020 and developed by Turkcell R&D engineers, the local e-mail service YaaniMail has been providing the most secure mail service for organizations as well as in- dividuals since early 2021. Offering free service for individual subscribers with the extension “@yaani.com”, the plat- form provides a powerful alternative to global competitors. YaaniMail Business delivers setup services via cloud or onsite as demanded by organizations. Corporate customers of the platform, which serves users with advanced se- curity measures, can use their own do- main names. Thanks to this service available through iOS, Android, Web and Corporate Management Panel applications and individual suitable for corporate or needs, features including calendar, contacts, and tasks can be easily used. Standing out with its user-friendly ac- cess offering and lean design, YaaniMail delivers tools most needed by corpo- rate customers such as filtering, legal text, waiver, signature in a reliable, sim- ple way and free of charge. As it oper- ates compatibly with many e-mail plat- forms, users can easily shift to YaaniMail service. İşte Suit Chatbot İşte Suit, a solution developed by Turkcell engineers that provides users with e-mail, file management, office applications, and video conferencing solutions that corporate firms need from a single point of service. By merging our existing YaaniMail Corporate, Lifebox Business, and BiPMeet services, we have launched the İşte Suit product for sale with a sin- gle invoice to be issued to our custom- ers in July 2022. Environment-friendly and practical solutions through digitalization Digital signature at home This innovative solution devel- oped by Turkcell engineers ena- bles customers to accelerate the work of installation teams by 30% through the use of digital signa- ture in their subscription process- es of fiber, DSL, Superbox and TV+. This has also led to 1,400 tons of documents being digitalized annually, thereby protecting the environment. With the application with a Turkey-wide coverage, 70 million digital signature is expect- ed to be appended. Smart Legal Documentation Automation In addition to the solutions we offer to customers, we also employ a smart documentation solution for our own legal function which has an intensive paper usage. With this project, we have reduced manual transactions by digitizing (automatic assignment of 170,000 documents) the responses to legal document requests from the au- thorities and saved on paper usage. Thus, labor efficiency was achieved through prevention of errors while conducting tasks, and the automation of manually implemented assignments (25% speed/time saving) and que- ry functions via robotic processes (IP queries 15% speed/time). Better customer experience through artificial intelligence We are enhancing and deve- loping our products and servi- ces with our AI applications. By utilizing AI, which facilitates the personalization of user expe- riences and makes them more effective, we provide services both in our applications and customer services. In 2020, we committed to using AI, as a powerful tool, in a responsible and ethical man- ner, and established seven key principles that we will adhere to. As such, we became the first company in Turkey to publish AI Principles. Furthermore, our Human Rights Policy published at the beginning of 2021 aims to contribute to the SDGs by ac- ting based on human dignity, fundamental rights and free- doms in the technologies, inclu- ding AI technology, that we de- velop. You can find information about our AI Principles on our “digital responsibility” page on our website. Our Analytics Solutions team performs post-analyses and provides internal insights for Turkcell products, services, tariffs, and campaigns, and conducts predictive modeling and segmentation studies to generate target audiences for action by business units. By supporting our business units with analytical trend models to match the tariffs, products, and services we offer to the right customers, we contribute to the growth of our company’s revenue and play a role in increasing customer satisfaction by connecting customers with the right offers. Celly (chatbot) is an artificial intelligence engined self-service help bot embed- ded in the “Turkcell Application”, the gateway to digital of our company and developed 100% by Turkcell engineers. Celly is a valuable “Mobile Asset” for Turkcell. The Turkcell Celly name was registered within the scope of brand studies and was offered to our customers by being carried to advertising communications in written and visual channels. Turkcell Celly, the AI assistant, continues to support our customers in the Turkcell Application to provide services on more than 180 different topics, from billing transactions to international settings, from package information to gifts. Using our analytical competencies, we provide proactive information on issues that our customers may need. For example, we provide information when their package is about to expire or when the contract expiry, and we provide guidance on the chatbot to complete the transactions. In 2022, 12.5 million of our customers car- ried out 60.1 million chats with Celly, with an average of 97% of these transac- tions being completed on the first con- tact. Utilizing our analytics capabilities, we facilitated 701,000 package sales through proactive communications, re- sulting from Turkcell Celly’s direction. As Turkcell, we will continue to bring speed and ease to our customers’ lives by transforming the capabilities of Turkcell Celly through the power of technology, both now and in the future. 146 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 147 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES In the last period, we integrated our chatbot solution into our applications such as TV+ and Platinum in addition to the previous integrations with our other digital applications such as Turkcell, Bip, Game+, lifebox, Dergilik, and fizy. In addition, we started to support our Superonline customers with scenarios specific to the fixed world through the Turkcell application. In 2022, we turned our chatbot solution, whi- ch we developed internally, into an end-to-end platform and a product that will also provide external services. We also realized our first sale and integration outside of Turkcell on Arnavutköy Municipality website. We aim to expand our solution in different industries with our sectoral bot studies. Trained through “UNDP Gender-Responsive Communication Guide”, our chatbot avoids using gen- der-biased language. Voice analytics - Turkcell AI voice We continue to integrate our artificial intelligence voice, de- veloped internally by Turkcell engineers, into Turkcell’s digital products. In the Dergilik produ- ct, we voice the daily articles and online trainings prepared by our Academy team using our artificial intelligence voice. We also use our artificial intelligen- ce voice effectively to establish personalized communication with our employees, such as celebrating Mother’s Day and birthday greetings. In our call center, our artificial intelligence voice serves our customers at many points as the voice of the digital assistant. We contribute to the action of bringing our customers toget- her with the right package at the right time, by automatically vocalizing the package readin- gs with our artificial intelligence voice in the sections where we offer packages to the custo- mers through the call center. We improve the experience of our customers by responding to a daily average of 120 thou- sand call center voice requests. Image Processing Services & Solutions The FOYA Digital Verification application, another excellent example deve- loped by Turkcell engineers as part of their artificial intelligence research, provides services such as fraud detection in identity documents and digital verification through image processing, audio processing, and machine le- arning methods. In the digital world, many organizations now require remote video commu- nication with their customers, making digital platform customer identity ve- rification an inevitable control. In FOYA digital verification processes, Turkcell engineers use SIMA face recognition services, STT (speech to text) services that allow for voice approval from the customer, and OPTIC OCR (Optical Character Recognition) services that accurately read identity card infor- mation. The FOYA Digital Verification application, with its different services and capabilities, can be quickly integrated into IOS and Android platforms through SDK software. The OPTIC OCR solution, actively used in Turkcell’s digital verification proces- ses, has been integrated into the Lifebox application, allowing our customers to easily copy all text in their photos stored in their Lifebox storage area. In addition to cloud-based services, there are also pilot projects utilizing our image processing solutions on edge devices. At the Elazığ Fethi Sekin City Hospital, the SIMA face verification solution was integrated to operate on edge devices in order to prevent different individuals from giving blood in pla- ce of others in the process of obtaining consent forms. This enables face verifi- cation controls to be carried out without opening hospital data to the internet. AI based recommendation engine In order to understand and meet our customers’ needs, we make use of the recommendation engine infrastructure developed by Turkcell engineers whi- ch targets to increase customized user experience in our applications and communication channels. We provide our customers with content such as su- ggestions, product similarities and personalized product lists in fizy, TV+ and Dergilik applications customized with the support of artificial intelligence. Standard. We retain our certification by constantly improving our information security maturity and by being audited annually by independent auditors. While designing and implementing cyber security processes and applica- tions, reference is made to compliance with relevant legal regulations, govern- ance principles such as ITIL and COBIT, and good practice practices such as NIST, CIS, OWASP and MITER. Legal reg- ulations such as the Presidency’s Digital Transformation Office Information and Communication Security Guide (BIGR), KVKK Personal Data Protection Law, Global Data Protection Regulation (GDPR), ICTA and CMB regulations are included in the legal compliance port- folio followed in the cybersecurity pro- cesses. While the implemented works are subject to internal audit processes for service and process control, they are also subject to ISO 9001, ISO 20000, ISO 22301, ISO 27001 system standards, PCI-DSS Payment Card Industry Data Security Standard and SOX New York Stock Exchange Sarbanes – Oxley ex- ternal audits. Digital Security and Wellbeing RESK Committees according to their priorities. including: Cyber security processes through- out the operations are managed in accordance with the principles regulated by 10 different corporate policies, in particular the Information Security Policy, which came into force with the approval of our Board of Directors, Information Security Management Systems Policy, Information Security Organization Policy, Information Security Incident and Vulnerability Management Policy, Information Security Cryptology Policy, Information Security Access Policy, Information Security Operation Policy, Information Security Communication Information Security System Policy, Security Policy and Business Management Policy. In order to ensure the reliability of these pro- cesses, Turkcell received the ISO 27001 Information Security System Standard certificate in 2008, becoming the first telecom operator in Turkey to hold this certificate. Turkcell also holds ISO 27017 Information Security System Cloud Information We aim to create a unique experience for our customers with the technologies and products that we continuously increase the diversity of in parallel with the developing technologies and stakeholder expectations. Digital security and wellbeing are the two important components of this ex- perience, which are manifested in two main areas of work in our operations. The first is the management of cyber security and information privacy risks in our infrastructure, technology, prod- ucts and services, and the second is the cyber security and digital wellbe- ing services we offer to our customers. With the expansion of information technologies and digital services, cy- ber security risks have started to take an important place in our lives. With the pandemic process, remote work and distance education became widespread in our country similar to all over the world, IoT services and devic- es have started to be widely used, ran- somware attacks, cloud services and customers have increased, hence the importance of cybersecurity efforts has increased even more. Cybersecurity has taken its place as an important component in Turkcell’s business strategies. Cybersecurity and data privacy risks, which are evaluated in 11 different profiles within the scope of corporate risk management, are mon- itored during the activities and oper- ations regarding all strategic business focuses. Each developed service also considers cybersecurity as a compo- nent among its outputs. Cybersecurity- related risks are managed by RISK or 148 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4; SPK C1.7 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 149 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Digital Business Services The Digital Business Services combines Turkcell’s telecom service provider strategy with the “Digital Transformation Business Partner” strategy for corporate customers. With the digital business services, we develop our business model to address the needs of all industries, including health, education, produc- tion, retail, transportation, logistics, finance, energy and other similar fields to implement value adding projects through horizontal and vertical solutions. We contribute to Turkey’s digital economy by providing one- stop end-to-end digital solutions to organizations. As a result, we realize projects with high value proposition that provide cost savings and revenue increase. In line with our vision, we have imple- mented over 2,800 tailor-made man- aged services and system integration projects, and we continue to manage them. In these projects, we analyze the needs of our customers from every sector and provide the right solution, and with our project management team, we implement many solutions and services in accordance with our customers’ business processes, in- cluding new generation technologies such as fixed access, network, cyber security, data center and cloud servic- es, system integration and managed services, IoT, big data, business appli- cations, artificial intelligence etc. In implementing our projects, we benefit from both our internal resources, prod- ucts, processes and technologies, and the power of our business partners in the ecosystem, who we have identified as experts in their fields, and we man- age projects with high value proposi- tion end-to-end from one source. In addition to a strong mobile network, and end-to-end fiber infrastructure of up to 59 thousand kilometers that enables us to provide high-quality service, we have a total of 8 data centers, 4 of which are new genera- tion, with Tier-3 Design and Operation Sustainability certificates obtained from the international certification body Uptime Institute. With Turkcell During the reporting period, no data breach or personal data (PII) privacy breach occurred due to cyber security vulnerability, and accordingly, no legal sanctions or fines were imposed on the company. Privacy and Security line with identity as the its In responsible operator, digital Turkcell pays utmost attention to the protection of customer infor- infor- mation privacy. Customer mation privacy studies, which are carried out in compliance with the relevant regulations in addition to laws such as KVKK and GDPR, are managed within this scope when they include physical business pro- cesses where personal information is processed beyond cyber secu- rity. Our third-party business part- ners are also requested to manage personal data in line with the same principles as Turkcell. Our customers are informed about our privacy and security policies of their personal information, and they reach us through our compla- int channels when they have dou- bts or problems. Turkcell data privacy and security policies are availab- le on our corporate website. Cybersecurity Directorate is respon- sible for cybersecurity management throughout the company. The directo- rate is one of the largest cybersecurity teams of Turkey with more than 150 spe- cialized team members. The conducted studies and obtained results are pre- sented to the senior management and relevant units during periodical meet- ings held by various committees and teams. The monthly CXO security man- agers meeting, the annual ISO 27001 re- vision meeting, the cybersecurity meet- ing which brings together Technology Executive Vice Presidents and Directors every two months and quarterly, and the Information Security Committee meetings which bring together NT CXO and cybersecurity Directors and execu- tives, are among the meetings to share information in this field. The Security Operations Center, which operates 24/7 within the Cyber Security Directorate, monitors the attacks 24/7 together with the IoT and forensic labo- ratories, and takes precautions against possible threats. Our Bozok Threat Intelligence platform, which is integrat- ed with the Security Operations Center, provides our customers with information about threats and risks as a cyber secu- rity protection layer. We provide pene- tration testing and vulnerability analysis services to our customers with new tools and methods so that organizations can identify their cyber security needs, while we conduct security vulnerability scans and penetration tests of important insti- tutions. We also enrich Turkcell’s Cyber Security product and service portfolio Three key strategic focuses are followed in cybersecurity activities: 1 2 3 Developing cyber resilience through innovative new technology investments, existing technology improvements, processes, standards, digitalization, communication, awareness, training, competence development activities within the scope of services provided by Turkcell and Group companies Developing domestic ecosystem and integration with the localization of existing and new products Increasing revenues of cybersecurity products and services in individual, corporate and wholesale customer portfolios with cloud-based security solutions run- ning in Turkcell Data Centers. As Turkcell, we contribute to the provision of security with the investments we make in the field of cyber security and data privacy, and the services we provide for mobile ser- vice providers and institutions and indi- viduals benefiting from mobility services. With our digital security service, to pro- tect thousands of our active customers from phishing, malware, etc., we prevent their access to any malicious addresses so that they can be protected against threats, as well as inform the users of past password leaks and warn them about new phishing attempts by SMS and e-mail. All our corporate and in- dividual mobile customers can benefit from this service, which we offer to pre- vent fraud or to protect the device and personal data used. Digital Wellbeing The pre-condition for protecting oneself from the security risks and actions of malicious indivi- duals when using the internet is to possess a certain level of digital literacy, privacy perception, and confidentiality. However, some users who do not possess digi- tal literacy or those in vulnerable situations (such as children and elderly users) may be more sus- ceptible in this regard. In this re- gard, we first create various secu- rity and content filters under the control of parents to ensure that children and young people stay away from inappropriate con- tent on our services. In addition, we aim to increase safe internet experiences by conducting infor- mative campaigns to increase the knowledge and awareness of our stakeholders. In this context, we created a game content aimed at increasing children’s aware- ness during the reporting period. We aim for our educational game content to be a guide for children on the risks of the digital world and awareness of digital footp- rints, which will be launched in the first months of 2023. As a member of the Turkish Cybersecurity Cluster community, we continue bringing together the public, private sector and the academy, and working for contribut- ing to the development of the domestic and national cyber security ecosystem, by increasing cyber security awareness and cooperation. Several practices have been realized to improve cyber security awareness, ex- perience and knowledge of employees. For example, cyber security trainings are provided to all Group employees in tech- nical and non-technical areas, custom- ized for different employee groups every year. The cybersecurity performance in- centive practices include TLife Cyber Star Application, Security Reflex feedbacks, Security Champion scorecard scoring of technology teams that make a positive contribution in the field of security, and the Security Scorecard based on cy- ber security performance of employees. Meanwhile, award-winning cyber secu- rity studies such as Unibounty, Bugbounty, Openbounty and CTF have been carried out with the participation of various com- munities including Turkcell employees, security experts and university students. Turkcell security experts take part as lec- turers and trainers in many national and international conferences and events in accordance with their specializations. Unibounty While the damage caused by cyber at- tacks is increasing day by day, the attacks targeting businesses and individuals of all sizes cause both financial and data losses. In the “Unibounty” project, with the partic- ipation of university students, we organ- ized a vulnerability detection program in the field of cyber security in Turkcell appli- cations. Over 1,000 interactions were car- ried out in the program with the participa- tion of students from 11 different universities. On the other hand, our company has actively participated in stan- dardization (IEEE SA P2089) deve- loped within the IEEE SA regarding age-appropriate digital services and has also started to work on the suitability of its products and services in this regard. 150 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4; SPK C1.7 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 151 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Cloud services, we position the entire information technology infrastructure of institutions in Turkcell data centers, thus reducing costs and providing a more flexible infrastructure. In the field of cyber security, thanks to the 3 key components of cyber security against constantly changing, develop- ing and increasing cyber threats, we become an end-to-end Cyber Security Service provider of institutions: our expert staff, up-to-date technology creations, and the diplomacy and pro- cesses we have established with the defense groups we are members of at home and abroad. Through meaningful analyzes on the dynamic and real data we have ob- tained with our big data services; we support our customers’ strategic deci- sion-making processes and increase their profitability and productivity. In the digital transformation journey of organizations, we deliver all needs for the digitalization of the business processes of corporations with Turkcell digital business applications. As an integrator that provides and operates all technologically need- ed solutions in city hospitals in the field of health, we are the leader in the public-private partnership (PPP) market in terms of the number of hospitals we undertake. We actively operate at 7 city hospitals including Yozgat, Adana, Eskişehir, Elâzığ, Bursa, Başakşehir and Tekirdağ hospitals. The entire technology infrastructure of these hospitals from hardware to software, systems to operations are managed by Turkcell. Moreover, Turkcell set up the infrastructure of 2 field hospitals which were established in a short period during the pandem- ic. Our Lifecare product, which we developed in the remote health field, has passed the KTS accreditation of the Ministry of Health and has become able to respond to opportunities in this field. Negotiations with leading health groups in Turkey were initiated, paving the way for new opportunities. In addition to all these operations, we are continuing our preparations to put forward the Turkcell difference in the private hospital market as well as in the City Hospitals, by accelerating our work on a Hospital Information Management System (HIMS) soft- ware that can serve Private hospital processes. Moreover, in our business partnership ecosystem, we continue to grow our ecosystem qualitatively by working with our subcontractors, business/ product development partners and sales partners with a win & win focus. We are also expanding the solution sets we offer to our customers in terms of technical competence and project diversity day by day through our busi- ness partnerships with global suppliers. We developed the Turkcell ML (Machine Learning) platform in order to adapt to technological developments and to make scenario models of high-volume data and machine learning compe- tencies with high performance and high accuracy. Thanks to this platform, we have saved over TRY 20 million. Moreover, we can share the list of customers with overdue debts over a certain amount by activating the block- chain-based “Inter-Operator Blacklist” system. With this system, which is used jointly by the operators, we help the op- erators reduce their customer-related risks through information sharing. Within the scope of RPA (Robotic Process Automation) technology, installation and infrastructure works were carried out within Turkcell, and 145 processes were carried out using RPA in order to automate manual processes. Turkey’s New Generation Payment Platform: Paycell Paycell continues to increase its pene- tration on the back of its easy-to-use and secure payment solutions, and stands out as a technology-oriented techfin that manages all its processes with end-to-end automatized struc- tures thanks to its up-to-date and ro- bust technological infrastructure. Having adopted an agile working model to dif- ferentiate itself within the rapidly chang- ing dynamics of the techfin ecosystem, Paycell manages its business processes more efficiently, while increasing the val- ue of the products and services offered. This approach also allows fast and easy adoption of advanced technologies. Paycell provides value-added data an- alytics models not only with respect to its infrastructure, but also with respect to analytical solutions in order to provide better and more sustainable services both to the consumer segment and the business partners. Turkcell and Mobility As of 29 October 2022, Togg started the mass production of the C-segment SUV, the first innately electric, connected smart device at the Gemlik Togg Technology Campus. Togg defines the products it will offer to the market as “smart devices” rather than automobiles. In line with this approach, Togg is cre- ating an ecosystem shaped around electric vehicles, which will provide the mo- bility experience of the future with cooperation agreements made in different fields, particularly in technology, e-commerce and software. The services deve- loped by Turkcell are also aimed to enrich the user experience in this ecosystem. For this purpose, a strategic cooperation agreement was signed with Paycell in 2022 in order to integrate innovative payment systems and digital financial solutions in the mobility ecosystem. With our Turkcell Artificial Intelligence team, we are conducting the development of In-Vehicle Face Detection, Recognition and Analysis System of the TOGG domestic automobile initiative. In this context, the integration of the artificial intelligence solutions we have developed on the devices that will work in the vehicle, and the development of car-specific arti- ficial intelligence models are ongoing. Through Turkcell ML (Machine Learning), we saved TRY 20 million. We make sense of big data with our artificial intelligence-based analytical capabilities and strengthen the products and services we offer. 152 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 153 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Social Capital Outputs 37.5 Million Mobile Customers 2.9 Million Fixed Customers 12 min. Response Time Performance Indicator Increasing the number of students reached through the Turkcell Whiz Kids Project Increasing the number of start-ups worked with through a collaborative business model Short Term Target Middle Term Target Long Term Target 2021 Performance 2022 Performance Current Status Towards Target 150,000 250,000 500,000 100,000 110,000 30 40 - 35 36 Positive development Negative development Ongoing Brand and Responsibility We increase the capacity and strength of our superior digital services by con- stantly researching the latest hard- ware and software technology trends and equivalents at the global level. This allows us to advance the Turkcell brand through new features that fa- cilitate our customers’ lives. In every field we work in, we strive towards re- moving digital barriers and increasing access at every point where we touch society, and we continue to support the development of technology and communication. We are glad to note that our products and services across diverse fields have grown the Turkcell brand without losing technology focus. The basis of this understanding that Turkcell acts on is the responsibility towards all our stakeholders includ- ing customers, employees, suppliers, shareholders, public, dealers, non- governmental organizations, universi- ties, and the media. In this context, our policies that we share publicly are as follows: HUMAN RIGHTS POLICY ENVIRONMENTAL POLICY We are committed to fulfill our du- ties by adopting an attitude emb- racing fundamental rights and fre- edoms, contributing to the creation of a decent work environment ho- noring human dignity, and ensuring compliance with national and in- ternational legislation on work life. Turkcell aims to contribute to the long-term economy and ensure environmental sustainability, with an awareness of environmental impact throughout the value chain, by improving awareness of circular economy. QUALITY POLICY CUSTOMER SATISFACTION POLICY We continuously improve our pro- cesses and implement an effective quality management system. We solve customer requests with an open, transparent, swift, and customer-oriented approach. INFORMATION SECURITY POLICY ANTI-BRIBERY AND CORRUPTİON POLICY You may access the policies that we implement to set the highest standards as Turkey’s leading telecom- munication company on turkcell.com.tr. At Turkcell, we ensure the security of information in accordance with business needs, laws, and legal regulations. We consider that carrying out our activities fairly, honestly and in ac- cordance with legal and ethical co- des a necessity. DONATIONS POLICY Through our Company and its subsidiaries, by authorization from the Board of Directors and within the annual donation limit determined in the General Assembly meeting; donations are made to organizations, associations and foundations which undertake projects related to education, sports, culture and arts, environment, health, restoration of historical buildings and arti- facts, humanitarian aid, involving the disabled in society, entrepreneurship, technology and similar studies for public benefit. 154 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.2; SPK A2.2; SPK A2.3; SPK A3.1 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 155 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Our brand Turkcell in Communication Turkcell continues to empower its presence by transforming into an ecosystem brand as part of its digital operator journey on which Turkcell embarked as one of the strongest brands of Turkey, by always putting the customers at the center and investing in technology. its Befitting leadership of the new world, Turkcell aims to touch every part of its customers’ lives by bringing together its superior technological in- frastructure and quality with the prod- ucts and services it offers that make a difference. While offering an easier, more entertaining, more secure and more privileged lifestyle focused on human and environment to our cus- tomers, Turkcell also allows them to enjoy the difference of “excellent ser- vice” through customized, consistent and simple experiences delivered by Turkcell’s technological superiority. Acting with the responsibility of being a leading brand, we set an example to all other companies working to- wards helping our country achieve its economic goals. We also offer various solutions to companies and small en- terprises with our corporate business. Turkcell transformed into an ecosys- tem brand with steps taken long ago in the changing and digitalizing world, and on this digital journey we lead, we place both our individual and corpo- rate customers in our focus and con- tinue to serve with our products and services to provide an easy and com- fortable experience. As an ecosystem brand, our campaign motto “Make the World Yours” con- tinues to emphasize the fact that we can touch different aspects of our cus- tomers’ lives and offer solutions with a wide range of digital brands. With our ecosystem platform videos, we contin- ue to describe our services such as the electronic shopping platform “Pasaj” and the world of privileges “Platinum”, “Paycell” and work with our technology to facilitate the lives of our customers. Turkcell is a brand that always places its customer at the center and under- stands their insight, develops innovative setups, and implements them without compromising on quality, through a well-thought and detailed customer experience. In this period of rapid soci- etal change and changing needs, we continue to connect our customers to life with our strong reception. As one of the most loved brands of Turkey, we celebrated special days with successful advert films to join the enthusiasm of our country. Finally, we launched our new commu- nication platform which we call “Digital Stories of Turkey” where we will tell our customers’ stories with our wide cover- age and high internet speed. We will continue to tell these stories with dear Doğu Demirkol, our brand ambassador, the new generation co- median of Turkey who is candid, real and “one of us”. Strong Sales Channels and Our Services Our Sales Channel Structure As Turkey’s leading communication and technology company, we continue to offer all tariffs, campaigns, devic- es, and services to our customers. We continue to provide customer-focused services and develop solutions through Turkcell stores, alternative sales chan- nels, online channel, Turkcell mobile application, Pasaj application, Fiber and DSL solution centers, and corpo- rate sales channels. We make our integrated Turkcell solutions available to our customers through all our sales channels, and work to deliver premium quality servic- es at all points consistently. Our Retail Channel With 1,108 Turkcell Stores, which we have transformed into a chain of digital expe- rience, and 4,144 digital sales points, we make our products and services availa- ble wherever needed by the customers with superior Turkcell service quality. In order to increase our market share and customer loyalty with our smart offer management model targeting existing customers and new customer acquisi- tion, we make offers that are rich in con- tent. These offers address the needs of our customers at different price levels. We consistently ensure that our custom- ers can access the same offers across all channels. We continue organizing our customer campaigns such as “Yellow Days, Flexing Limits, and Product of the Month” an- nually. This way, we aim to maintain our customer traffic at the highest level by making advantageous offers to our cus- tomers on a large number of product groups at different times. In line with our retail channel deepening strategy, we focus on communication, traffic, sales, procurement, loyalty, digital and delivery concepts and keep shaping our investments accordingly. Continuing technology the and experience transforma- tion in our stores, as of May 2022 we have transformed at least 1 store in every city of Turkey, and more than 1 in large cities, 103 stores in total, to the Disabled-Friendly Store concept. We provided all our hearing, visual, and bodily handicapped customers with equal and accessible service with our in-store applications. “Refurbished Device Sales”, which we had started as of July 2021 to bring devices with unexpired useful life back to the economy as per our sustainable environment approach, is continuing at full speed. We have been helping to decrease unregistered device sales and device im- ports by making refurbished devices available to our customers through cash and contracted offers via all Turkcell stores and the online channel, as well as mitigating the environmental impacts of device trade. In the year 2022, through Turkcell Stores and cash collection over Pasaj, 23.7 thousand old devices were collected from customers, and 5.7 thousand through EGYG replacement pro- gram, for a total of 29.4 thousand. 2.2 thousand refurbished devices were sold. We expect this business, which we have currently only started in the catego- ry of smart phones, to grow in different categories with support from related organizations and regulations and therefore contribute to sustainability in the technology world in all categories. Trainings with the support of Turkcell Academy were designed to be held in Turkcell Stores in the fields of energy ef- ficiency, savings and sustainability, and shared with all ambassadors. Actions to reduce energy consumption were taken at the stores: Backlights of LCD dis- plays in stores were dimmed by 30% to achieve ~25% energy savings. Besides, air conditioning methods were revised to determine actions such as correct placement, suitable temperature setting etc. Our efforts to reduce the ecolog- ical footprint and implement alternative energy solutions will continue in 2023. As an ecosystem brand, we continue to launch new categories to address all electronic needs of our customers by transforming our Turkcell Stores into technology store. Providing advantageous offers with installments up to 36 months at Turkcell stores, we make small appliances, personal care products, accessory products, food preparation appliances and gaming products available to our customers with Turkcell guarantee. Also, we can now provide our advantageous cash pay- ment offers, which only post-paid Turkcell customers could use before, and also to our prepaid Turkcell customers and non-Turkcell customers. In 2021, we launched our new “catalog sales model” with air conditioning and TV products, through which we can make sale of large products without keeping inventory. Products can be picked from digital catalogs of Turkcell stores by our customers, and se- lected products are delivered directly to the customer and installed. This model continues to grow without losing pace by the addition of new product categories such as PC category in November 2022 and white appliances and small home ap- pliances as of January 2023. “Digital B2B Supply Through our Platform”, which can supply multiple channels with its wider product and category portfolio and multiple buyer and seller structure, we are improv- ing the procurement processes of all Turkcell channels. With our content management team, we are increas- ing the speed of our processes and improving the experience, continuing to provide our dealers with directions customized according to their orders and sales. At present, we are provid- ing 85,389 products in 1,409 brands with 188 suppliers to Turkcell dealers through Turkcell Portal. 156 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 157 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Extending the scope of the “Bi tıkla Mağazada (In-Store Delivery with a Click)” application launched in 2019 al- lowing delivery of devices purchased over turkcell.com.tr in the physical channel, we enabled this service for new acquisition and port-in activa- tion transactions. This application en- ables our customers to conveniently pick up the products that they reserve on turkcell.com.tr or through telesales channels from the Turkcell stores. For a unique and uninterrupted Turkcell ex- perience, we leave the choice of chan- nel to our customers. We put in place our “Delivery Point” process enabling our customers, who have placed their orders through our Turkcell Pasaj and turkcell.com.tr on- line channel, to pick their ordered goods from Turkcell Stores in all of our qualifying stores across Turkey as of September 2021. The “Delivery Point” service is now available for customers at over 1,108 stores across Turkey. Our customers don’t need to wait for their packages at home thanks to our One- Click In-Store Delivery Point” service. Having faster access to their packages at our stores, our customers can also meet their other related product or ser- vice needs at our stores. Our Alternative Sales Channel As part of our alternative sales chan- nel that has reached a sales volume of 26 million products, we have trans- formed each channel that contacts the customer into a sales channel, while continuing to serve through telesales, market chains, bank channels, and hypermarkets. Our alternative sales channels have also become the major sales channels for our digital services with 3.5 million sales of TV+, lifebox and fizy products, making use of our ana- lytical models, artificial intelligence and big data. Through TV+, lifebox, and fizy collaborations in alternative channels, we ensured the brand recognition of our DSS products and increased our sales by directing customers to our dig- ital channels. We continued to increase our product awareness and sales by offering our customers DSS products as Scratch cards through market chains. With bundle campaign setups, we real- ized mass DSS product sales. We work to deliver superior quality services to our customers consistently across all our channels and continue to make a difference throughout our service and sales processes with our integrated channel experience solutions. started the In 2021, we “Customer contact journey” platform, which allows store and call center employees to view the transaction history of customers in all channels and offer an integrated experience in service. As all of our channel employees can see this jour- ney before serving the cus- tomers, they get familiar with customers’ past experiences, which improves the customer satisfaction. At present, we are providing 85,389 products in 1,409 brands with 188 suppliers to Turkcell dealers through Turkcell Portal. Our Digital Sales Channels and Services As part of our digitalization focus, our online sales channel took steps which gave direction to Turkey’s e-commerce sector in 2022 as well. The number of visitors to our website was 23 million in average per month in 2022, the 3-month active users of Turkcell mobile app was 24 million users. Today, the share of digital channel in total consumer de- vice sales income has increased to 1.4 times compared to the previous year, while total TRY/package top-ups have grown by 25%. Accordingly, the share of digital sales channels in Turkcell Turkey consumer revenues (excluding our fixed business) reached 23%* in the third quarter of 2022. Total top-ups from our digital channels increased by 80% over an annual growth of 150% last year. The rate of post-paid subscribers who changed their tariff through digi- tal channels has exceeded last year by 3 points to reach 23%, the rate of TRY/ Package top-up pre-paid subscribers has increased by 8 points to 40% in the last year. At the same time, changes in payment type over digital channels has increased by 2 points to 12%. Together with these, new customer acquisition has increased by more than 11%. In line with our channel growth strategy, we keep shaping our investments with a focus in communication, traffic, sales, delivery and loyalty. We implement- ed various technical improvements to improve the processes in this scope by working with Turkcell’s professional ICT team. Under the leadership of our AI and Data Analytics teams, we im- plemented numerous sales concepts where we emphasized the importance of personalization. Adopting a creative, everyday, genuine, benefit-based and familiar approach, we sustained our fo- cus on hourly and nighttime campaigns to encourage our customers to spend more time on turkcell.com.tr. To better cater for the needs of our customers, we began to design campaigns involving both postpaid and prepaid segments for providing services with more data and more advantageous prices as well as new customer acquisition and cus- tomer number portability categories. *Share of all sales from digital channels (including voice, data, services & smart devices) in Turkcell Turkey consumer sales (excluding fixed business) and equipment related revenues in other segment. 158 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 159 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Setting out with the target of “se- cure online shopping”, Turkcell launched Turkcell Pasaj, the first online marketplace of Turkey, in December 2020 by collabora- ting with the largest and most reliable suppliers of the country. Featuring thousands of produ- cts from phones to vacuum cle- aners, TV sets to computers, whi- te goods to maternity & baby care products, Turkcell Pasaj offers users swift delivery and flexible payment options with easy cancellation and return rights. Turkcell Pasaj uses 100% environmentally friendly and re- newable boxes in delivery. At the same time by offering a combi- nation of real online and offline shopping experience, Turkcell Pasaj enables customers to pick up the products they have pur- chased through this platform from a Turkcell store. Discount options and different payment alternatives that fit everyone are offered on ‘Turkcell Pasaj” and the customers of all opera- tors can also benefit from tho- se. We continue to take steps to lift our services to the next level with Pasaj Blog and Pasaj Gaming which were launched in December 2021. In order to increase the network of Turkcell Pasaj in global markets, we have launched Pasaj, the marketplace of Turkey, in Azerbaijan. To become the prioritized address in electronic shopping in Azerbaijan as well, we are making local cooperations and elaborate investments which will cover our customers’ needs. In Pasaj, we have started to support the From Women’s Hand social initiati- ve, the largest platform of producing women in Turkey which takes inspira- tion from Anatolian women’s life struggle. As Turkcell Pasaj, by incorpora- ting this initiative, we are becoming a platform between the producer and the consumer. With the space we provide, we bring numerous delicious products manufactured by women from all around Anatolia to our cus- tomers without aiming for profits, and bring them to your homes in boxes carefully packaged by women with Turkcell’s assurance. At the same time, to support sick animals in need of care, we hold donation campaigns to Ankara Patili Köy Animal Protection Association for Pet Shop purchases on Pasaj. Also, with our project which allows used devices to be revalued on online platform and turned to cash within 3 business days, carried out with our business partners which contribute to our sustainability target, 2,000 secondhand devices have been revalued on Pasaj. In addition to receiving secondhand devices from our customers by package delivery and cou- rier, we have provided “appraisal at the door” services in certain regions to further facilitate the process for our customers. In the upcoming periods of competi- tion in the e-trade world, a rich prod- uct portfolio, logistics services, dif- ferent payment alternatives, brand guarantees and innovative approach- es are expected to be valuable, and we will continue to bring Paycell and Financell solutions exclusive to our sales channels to our customers to provide a perfect experience. Our Turkcell mobile application, devel- oped to provide the fastest and most appropriate response to our custom- ers’ needs, which transformed into the Approximately 2.5 million transactions performed per month through the Turkcell mobile application Total top-ups from our digital channels increased by 80% service and sales channel most pre- ferred by our customers, was down- loaded 29 million times in 2022 in the last year our customers logged in the Turkcell mobile application 190 million times per month on average to per- form their transactions through the app. We have updated the design of our application in 2021 to be more user friendly. We separated the applica- tion world in two parts, as Pasaj and operator transactions, enabling cus- tomers to reach the transactions they are aiming to make much faster and easier. We have formed a much more sales-focused experience in the Pasaj part with a category structure and new areas such as recommendations for you and the sale of the day. On the op- erator transactions part, our customers can inspect and pay their bills, access packages, services and campaigns suitable for their usage and instantly transfer between tariffs in addition to viewing their remaining usages through the application. Our customers can manage their fixed internet and all other Turkcell lines through a single application by adding them through the “Add Account” step. Apart from this, close to 272 thousand Superonline customers per month per- form approximately 2.5 million trans- actions per month through the Turkcell mobile application. Our Tariffs and Packages Our Postpaid Packages Our AI-based, smart offer manage- ment model enables us to present offers at different price and content levels which suit our customers’ needs, and which are rich in content. We also ensure that our customers see the same offers in all our channels and easily benefit from these offers. Digital channels provide advantages in both cost and customer experience since customers can perform many opera- tions such as renewing contracts, up- grading, and purchasing additional packages without any intermediar- ies. This is why we also maintain our target of making digital channels the primary channel, as cost optimization becomes more important for compa- nies day by day. With the support of our analytic models, we take actions to increase our digital channel share by offering personalized campaigns, discounts and gifts exclusive to digital chan- nel. While bringing these actions to life, we contact our customers at the right time and continue to develop us- er-friendly designs that allow them to perform their operations via the digi- tal channel much faster and easier. Aligning with rapidly changing mar- ket conditions and customer usage habits, we renewed all of our offers in 2022. During the year, we simplified our offers so that our customers can easily find the packages suitable for their needs. For new customer acquisitions, we launched our new term Yapboz tariffs, which are shaped on user basis. We also enriched the contents of our existing offers and worked on providing added value through YouTube Premium collaboration. In this period, we launched the brand new GNÇ Platinum package in both GNÇ and Platinum segments, and re- alized an increase in total Platinum new subscriber acquisitions. Our Prepaid Packages We constantly monitor our prepaid users’ usage habits and needs with big data and market analyses; ex- pand and regularly update our pre- paid package alternatives accord- ingly. In addition to monthly packages, we address the short and long term needs of our customers with our dai- ly, weekly and 3-6-12-month solutions. Meanwhile, using our AI-powered analytical models, we introduce our packages tailored to address the changing needs of our customers through the right channel and at the right time. Our other focus area was provid- ing solutions and campaigns that would solve our customers’ telecom- munication needs in the digitalizing consumption world. We ensured the channel loyalty of our customers who use the Turkcell app by offering pack- ages exclusive to digital channel, the ability to compare all packages, a world of gifts and continuous renewal. Our segmentation structure that we established based on our digital users’ habits, enables us to conduct custom- er-specific campaigns, thereby assist- ing us in increasing both the number of customers who have recently start- ed using the channel and the number of customers who regularly use the channel. With digital footprint track- ing and customized campaigns, we also increase the top-up amounts of our customers. Our Corporate Packages With our innovative offers, we gener- ated solutions tailored to the increas- ing internet needs of our corporate customers. We multiplied advantages of being a Turkcell customer, through campaign designs ranging from so- cial media package give-aways to car wash gifts, from fuel gifts to free intra-company voice call minutes. For new customers, we provided diverse offers focusing on merchants and SMEs. We launched exclusive cam- paigns to specific cities identified with a regional focus. Furthermore, with our enriched additional package world, we have enabled our customers to fully experience the difference of lim- itless internet usage. Through our im- plementations with the focus on our existing customers’ contract experi- ence, we targeted a higher customer satisfaction rate. Focusing on their life- cycle in Turkcell, we offered the most suitable packages to our customers at the time of their needs by tapping on the power of analytical modelling. Thus, we further strengthened the val- ue-for-price perception among both new and existing customers. 160 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 161 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Innovation Flex Package With Flex Package, we adapt to our customers’ usage habits. Our customers’ internet usage needs can change over time. In this regard, for our customers whose package becomes insufficient but who do not prefer to change their packages or purchase additional pack- ages, we introduced our Flex Package. With Flex Package, if the package runs out, our customers are automatically upgraded to the higher level and con- tinue their usage at an affordable price. Moreover, thanks to its contract-free structure, our customers can change packages as they wish. Thinking Out of the Box with Turkcell Yapboz As a first in the telecommunication world, we introduced Turkcell Yapboz, the flexible tariff system which allows our customers to shape their package as they wish, across entire Turkey and the digital channel. Thinking out of the box, we introduced a setup where our customers can increase or reduce GB/ SMS/MIN content within the month with a unit price invoicing system. In our digi- tal-based project, through a simulation where customers can experience both on mobile and on PC, we helped their adaptation to the digital world. We Brought the Newest Technologies to Our Customers with Superbox GO While maintaining our leadership at mobile broadband, we posi- tioned the Turkcell brand also in our devices and launched the Superbox Go for both prepaid and post- paid customers in June. We made Superbox Go special with features not found in its peers such as high quality, up to 32 device connection capacity and automatic power on. Two New Features for Prepaid Customers: Doubling and Extending İhtiyaç Anı (In Time of Need) Campaign Taking customer insight into our focus, we introduced two new features to- wards preventing lavish spending and providing ease of use to our customers. Prepaid customers may purchase the feature of doubling the internet quo- ta in their package, or extending their package duration by one week, upon their wish. This way, we offer a GB solution to the customers whose GBs are not enough, and additional time to customers who think their package contents will be wasted, by providing a more flexible world to our customers. We launched our “İhtiyaç Anı” cam- paign to enable our prepaid custom- ers to meet their communication needs with the ease of “first use - then pay” when they have used up their pack- age content and they don’t have the sufficient amount in their balances re- quired to buy a new package. “İhtiyaç Anı” package that we offer with an AI-powered analytical model, enables our customers to continue uninterrupt- ed communication by using first and paying for their usage later. International Sale and Wholesale We lead the transformation of the telecommunications sector in Turkey and support its development through the business partnerships we establish with international and national operators in international roaming, interconnection, wholesale voice, wholesale data, tower and digital services. The main internet route of Turkey We have been working to position Turkey as the main internet route and Istanbul as the regional center of the internet with our vision to make the Silk Road a fiber path since 2008. As a result of these efforts, we have become the most important capacity and internet provider for many neighboring countries. Through collaborations with leading global operators, we have served as a bridge to provide our wholesale customers with uninterrupted internet access from East to West, at the speed of light. Istanbul: the traffic exchange hub of the region As part of our wholesale data servic- es, our international carrying capacity exceeded 15 Tbps. We have cooper- ated with the world’s largest global traffic exchange platforms and played a major role in their decision to enter the Turkish market. Thus, we have tak- en another crucial step in transforming Istanbul into the traffic exchange hub of the region. We have also played a significant role in encouraging content providers to offer their services from Istanbul. Digital export Through our global business partner- ships and the opportunities we fol- lowed up closely in 2022, we aimed to increase the international spread of our digital services and technologies. In 2023, we will continue to expand the spread of our solutions by increasing our footprint in new markets where we will offer our international services. Our Fixed Services We continue meeting our customers’ needs with our broad range of “Turkcell Home Internet” offers including high- speed internet options, setup service at home and suitable contracts. In 2022, we increased our new homepass investments in Turkcell Fiber to bring internet at the speed of light to more houses. We continue to improve our analytic competencies in order to provide of- fers in line with our customers’ usage habits and our marketing strategies. Integrating customer retention and into higher speed upselling models the Turkcell app, we present our offers to customers via digital channels. We use our analytic competencies also in acquiring new fiber customers through location-based analyses and convert- ing our existing customers to fiber. We Focused on Valuable Customer Acquisition with Turkcell Fiber and VDSL Speed Festival In light of the increased need for a fast internet connection after the pandem- ic, we highlighted our At the Speed of Light with Turkcell Fiber campaigns to bring the speed and quality of Turkcell Fiber to more homes. Leading the mar- ket also in high-speed campaigns, we brought 500 Mbps and 1000 Mbps speeds to our customers. We doubled the number of customers using the internet at 100 Mbps or higher com- pared to last year, through the support of our most up-to-date 1000 Mbps campaigns. Turkcell WiFi 6 Technology We bring the most advanced technol- ogies to our customers also in residen- tial internet. Wi-Fi 6 technology, which increases the coverage in the house, was brought to Turkcell Superonline customers for the first time in Turkey. We aim to provide this technology to all fiber homes in the upcoming period. We are already performing the tests of the newest technologies such as Wi-Fi 6E, the more advanced version of Wi- Fi 6 which we call the technology that breaks the walls. By this way, we are striving to make Turkey one of the lead- ing countries in digital transformation and access to information. 162 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 163 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Our Segments The Place for Youngsters to Have Fun and Win: GNÇ Shake and Win Continued to Put a Smile on the Faces of Our Customers Turkcell’s World of Privileges: Platinum We started 2022 with the launch of the Platinum application, renewed both in design and infrastructure. The contents and the UI of the application were re- newed to suit the new trends and our audience which increasingly grows younger. We added new features such as advanced voice search and contacting customer service through the app with a chatbot. Also, with the “Surprise of the Week” we increased our online benefits valid on the leading electronic trade platforms of Turkey, and started offering thousands of gifts from multiple brands every week. We continued to gift our customers the newest devices and accessories through our regular “Dream Gifts” raf- fles. Free YouTube Premium member- ship, was added to our privileges for the first time this year, has been one of our most frequently chosen campaigns. The Platinum Privilege Program, contin- uing with many privileges such as cof- fee gifts, car rentals, discounts in premi- um brands and Havaş, has been visited approximately 21 million times this year. Our brand has continued to enrich the lives of our customers this year with sponsorships such as Turkcell Platinum Park, Zorlu PSM, Turkcell Valley and the You can privileges offered. check the “Turkcell Platinum applica- tion” to discover the Turkcell Platinum privileged world of opportunities. On GNÇ, the favorite application of young people, we pleased youngsters with the abundant offers we have pro- vided in 2022, and provided them an enjoyable time with our new entertain- ment platforms. The GNÇ application became one of the top 5 applications in Turkey in the entertainment catego- ry again, by surpassing 16 million active downloads. In 2022, we reached an activity of 4.3 million in GNÇ and in- creased our application revenues. On “Çatlat”, the favorite internet cam- paign of young people, we had more than 100 million participations this year, and with our new campaign GNÇ Galaxy, youngsters won gift cer- tificates from their favorite brands with the stars they collected in the application. We improved our game contents in 2022, as 15 new free games were of- fered to youngsters. In the upcoming year, we will continue to bring novel- ties to the youth with our AI-supported game platform; and continue to be their favorite application with the us- er-friendly experience, abundance of offers and fun content with our wholly new application. We kept delighting our customers with a wide range of gifts from Shake and Win, one of the most popular and most-participated campaigns of Turkcell. In the year of 2022 we deliv- ered millions of gifts every week. In ac- cordance with the changing needs of our customers over time, we will con- tinue to make additions to our Shake and Win campaign and the gifts we offer here. We have continued our Shake and Win setups for special days. In the upcom- ing years, we will continue to provide our customers with the abundance of Turkcell with new additions to Shake and Win, and contribute to our com- pany KPI’s. Turkcell BiZ Turkcell Biz has been in our lives since September 2020 and has created a difference with offering features like free of charge GB transfers, which our customers had been expecting. It has been successful in terms of originali- ty and has met a large audience as a value in line with Turkcell’s innovative image. The Platinum Privilege Program was visited approximately 21 million times this year. GNÇ has once again succeeded in being one of Turkey’s top 5 entertainment applications, surpassing 16 million downloads this year. The platform where women support each other “Turkcell Bizce” We continued to offer totally new fea- tures and content with Turkcell Bizce, which we aim to become the favorite application of women. The raffles and Collect Coupons campaign we held through the year continued to receive attention, and millions of our users par- ticipated in our campaigns. We added new games to the existing ones. With games such as “Words that Win” and “4 Operations, Lots of GB” which earn new GB for users, the games were played 10.7 million times in total. Brand new “Our Forum” feature enabled them to share their comments and ex- periences under experts’ videos. We facilitated their lives with our users’ vid- eos in the “Do It Yourself” category and “Share Discount”. We started offering important and practical information and recipes in the digital calendar “Today at Bizce”, where we digitalize nostalgic habits with innovation. We launched the “Ask Yourself” platform to create little breaks for women. We collaborated with different brands to offer various discounts and benefits. Turkcell Kid With the rich in content and advan- tageous offers specific to children aged 7-15, Turkcell Kid packages are innovative plans for the children’s segment providing umbrella solutions to address security concerns of par- ents with features allowing them to manage their children’s mobile usage. These packages have been offered to parents first by Turkcell, after ana- lyzing their needs and bringing to- gether the solutions suitable for them. Turkcell has owned the children’s seg- ment with its children’s packages and supported its innovative image. The children’s segment continues to grow with communications from our side where we reach parents in all kinds of media. Our Customer Relations Customer-Oriented Cultural Transformation Customer satisfaction and loyalty in As the Turkcell family, line with “Our Brand and Connection with the Customer” initiative, we strive to make our customers feel “Safe, Valuable and Happy” in every step we take and with every product or service we design, and we aim to provide our customers with an “easy, personalized and con- sistent” experience. We expect all Turkcell employees to make decisions keeping the motto “I’m Here for My Customer” in mind and consider Turkcell Experience Principles when making such decisions. As part of our people-oriented communica- tion approach, we listen to the ideas, needs, recommendations and requests of our customers. We aim to help elim- inate social inequalities by making all products and services, which we de- sign to add value to people primarily, accessible by everyone. We consider our high customer satisfaction result- ing from these efforts as one of the most important criteria of our success. In order to manage Turkcell’s rich chan- nel diversity offered to our customers with a “One Turkcell” approach, we keep “Omnichannel Experience” in our customer relations management pri- orities. With our Omnichannel project, we aim to provide an integrated expe- rience in Turkcell customers’ interaction with our channels, where our custom- ers do not need to provide the same in- formation repeatedly, are surprised by our technology, and all channels are managed harmoniously during their customer journey. the With “Customer Movement Initiative” which we started to prop- agate the customer-oriented corpo- rate culture, we have ensured that all Turkcell employees have embraced the idea that the design and mainte- nance of customer experience is the responsibility of Turkcell employees regardless of their job definition and that all employees are the pioneers of such cultural transformation. It is among our primary objectives to make our customers feel safe, valua- ble and happy with our robust tech- nological infrastructure, which is our core experience strategy. Looking at the point we have reached, we ob- serve the successful results of this movement, which we crowned with positive feedback from our custom- ers and awards in the international arena. More than 1,000 of our employ- ees from different business units and levels volunteered to become part of various customer experience projects which target customer-oriented cul- tural transformation. We included our customers in this cultural transforma- tion through the hackathons we or- ganized under the name “Hacxathon” with a focus on customer experience and developed various projects with university students. Through the Hacxathons, we reached over 1.6 mil- lion university students in Turkey and Northern Cyprus. We worked with over 500 university students to im- prove Turkcell products and process- es. Driven by our customer-oriented approach, in 2022, we received the third prize of the “Customer-Centric Culture” category of the Customer Centricity World Series, among the most prestigious organizations relat- ed to customer experience. 164 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4 SPK A2.4 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 165 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Knowing that a better solution is al- ways possible for our customers, as Turkcell, we will continue to listen to our customers and stand by them with the solutions designed to address their needs. customers. Accordingly, in order to improve our customer services, we in- stantly recognize customers by voice thanks to our artificial intelligence integrated text and audio analytics capabilities. Customer Satisfaction Management As part of our people oriented ap- proach, we commit to addressing our customers’ requests clearly, transpar- ently, rapidly and reliably with our “Customer Satisfaction Policy”. We consistently carry out ac- tivities to track customer emotions closely and provide the products and services that best meet customer needs by consolidating the connec- tion established with our customers across our channels. We aspire to en- sure that the unique experience we deliver to our customers through our video call center service for our hear- ing-impaired customers and our dig- ital and face-to-face service chan- nels will be owned by all functions of Turkcell and improve our service quality continuously by monitoring them throughout the year. In line with the strategies we defined to improve customer experience, we annually es- tablish, target and track our customer experience performance metrics. identified We listening to, under- standing and empathizing with our customers as our basic principles for delivering a better experience to our 701 thousand packages were sold under the guidance of Turkcell Celly. We will continue to add speed and convenience to our customers’ lives also in the future, and to transform Turkcell Celly’s competencies by using the strength of our technology. We respond 24/7 to our customers on Facebook, Twitter, Instagram, YouTube, and LinkedIn with a total of 65 accounts. We address an aver- age of 890 thousand of social media content monthly. We provide support to our users regarding our digital ap- plications by initiating dialogue re- flecting the nature of the respective platforms and our brand positioning. Meanwhile, we index 10.7 million so- cial data annually by using our anal- ysis models empowered with arti- ficial intelligence systems and take various actions to improve both rep- utation management and customer experience. intelligence (chatbot) with arti- Turkcell Celly ficial is a self-service help bot located within the “Turkcell Application”, the gateway of our company to digital, and developed 100% by Turkcell engineers. Turkcell Celly provides services to our custom- ers 24 hours a day, 7 days a week, in more than 180 different subjects, from invoice transactions to international settings, from package information to gifts. In 2022, 12.5 million of our custom- ers have conducted 60.1 million con- versations with Celly, and an average of 97% of these inquries were com- pleted at the first contact. Thanks to the proactive information we provid- ed using our analytical competencies, Average response time of all platforms and accounts (minutes) 20 2019 18 2020 17 2021 12 2022 Improvement rate of average response time of all platforms and accounts, compared to the previous reporting year 42% 10% 5.5% 29% 2019 2022 2020 2021 166 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.4; SPK C2.1 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 167 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 167 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Value-Driven, Responsible Supply Chain Management We sign a framework agree- ment with every firm we work with in our supply chain and ensure the seamless delivery of our ethical, fair, and honest business practices through our policies and contracts. In this agreement, we are committed to compliance with our principles, including avoiding child labor and employment for collection of employee debts. Within the scope of the child labor clause in our framework agreement, there is a rule stating that “The company should not use child labor”. To this end, we par- ticipated in Action Pledges to eliminate child labor as per Alliance 8.7. Unless a higher age limit is specified in local laws, we ensure that our suppliers implement the rule “No one under the age of 15 who has not completed compulsory educa- tion (within the scope of International Labor Organization (ILO) convention No. 138) ought to be employed. Employees below the age of 18 should not be em- ployed in jobs that pose danger, or in night shift jobs in order to meet their ed- ucational needs”. Apart from this, to pre- vent employment by force, we include the article “The company should not employ any kind of forced labor. We also ensure the ethical management of our business processes in line with the rule that “No employees ought to be forced to work in any situation. This requirement includes the forced prison labor, labor in exchange of debt with high interest, or other forms of forced labor” clause to prevent forced labor. Should any supplier violate the framework agreement and fail to comply with the requirements of the clauses, we act according to the rel- evant legal clause. We expect our supplier ecosystem to maintain all their employer-employee relations by respecting employee rights with a management approach sensi- tive to environment and people as part of our Code of Ethics and our Policy of Combating Bribery and Corruption As sustainable supply chain increases competitiveness of corporations and enables effective management of business models, the number of or- ganizations adopting this way of working is rapidly increasing. Within the framework of our value creation principle, as Turkcell, we evaluate each stage in our supply chain management starting from the materials we use, including the activities and practices of each company in our supply cha- in. In our operations in Turkey and abroad, to make our supply network as agile, flexible, and sustainable as our direct operations, we restructure our main business processes, logistics and technologies with a holistic appro- ach, supported by our suppliers. as published on the Turkcell Supplier Portal. In addition, we have all of the suppliers we cooperate approve the Human Environmental and Rights policies when registering to our Supplier Management System. As Turkcell, we offer services touching every moment of human life directly. Partnering with suppliers that will avoid potential service disruptions likely to af- fect the vital needs of the society such as communication, healthcare and se- curity is paramount in delivering our products and services to our custom- ers. We determine all the suppliers we work with on the basis of mutual trust, along with distinctive features such as quality-price balance, past perfor- mance, market conditions, and refer- ences. While we carry out our evalua- tion, we prioritize supplier candidates with quality management and informa- tion security management certification, who are sensitive to the ecological bal- ance, and who work within the scope of social responsibility principles, together with other basic criteria. As of 2022, we have started the supplier sustainability evaluation process. Within this scope, with the survey we have held through our Supplier Management System, we are evaluating the process maturities of our suppliers in the topics of management systems, human rights, Sarbanes-Oxley Act (SOX) Security Exchange Commission (SEC) Regulations Foreign Corrupt Practices Act (FCPA) Capital Markets Board (CMB) Regulations Information and Communication Technologies Authority (ICTA) Regulations Liabilities regarding the Turkish Code of Commerce (TTK) Liabilities regarding the Turkish Penal Code (TCK) Liabilities regarding the Turkish Tax Legislation ISO 9001 Quality Management System and ISO 27001 Information Security Management System Customs Law No. 4458 and Free Zones Legislation Liabilities regarding other countries that we operate in (Ukraine, Belarus, TRNC) In managing our purchasing pro- cesses, we embrace cost analysis and dynamic working principles and prioritize practices that will deliver savings through the integrating pow- er of technology in evaluating the processes. By creating material requirement plans of our network for the entire year, we ship the right amount of ma- terial at the right time to our regions based on the needs of the site lever- aging our regional store organization and the “push” principle. This allows us to avoid redundant and surplus de- mand, minimizing purchasing, logistic and stocking costs. Additionally, by defining product width, length and height measurements for our e-com- merce products at the time of the ac- ceptance of goods, we ensure that the system picks the box that best fits the product dimensions at the time of packaging. While our smallest box used to be SIZE 3 beforehand, we now have smaller SIZE 1 boxes to be used to ship our mobile phones, wired and wireless headsets, etc. This allows us to use smaller-volume boxes for our shipments, cutting down the amount of paper used and increasing the vol- ume of products that can be shipped in one go, consequently reducing logistic efforts. Our boxes are pro- duced from 100% recyclable material. environment, sustainable supply chain, legal compliance and occupational health and safety. At the first phase, we have made this study for suppliers which account for 65% of our purchas- ing volume. After the evaluation, we shared their points, areas of develop- ment and our supplier sustainability roadmap, which we expect all of our suppliers to follow, with our suppliers. And with our suppliers who scored be- low 70 points, we assigned a training prepared by Turkcell Academy on gen- eral sustainability and the sustainability journey in the supply chain. We classify our purchase categories based on the Kraljic Matrix. Based on this classification, we evaluate our suppliers, who have a purchase volume above a certain threshold, with respect to com- mercial issues, service quality, deliveries, process management and communi- cation, innovation and business conti- nuity. In line with our value-driven and responsible supply chain practices, we execute complaint processes and en- sure remedial actions are immediately taken according to the framework of the agreement and considering feedback from general customer communication channels or business functions and re- sults from surveys of business owners and purchasing departments. Through regular assessments and audits we car- ry out, we evaluate the compliance of our suppliers and report them to our sen- ior management. We proudly announce that in 2022 there were no cases indicat- ing that our supply chain and suppliers had caused a negative environmental or social impact, or else could have a po- tentially negative one. As Turkcell Group, we keep in mind eth- ical principles, fight against corruption and social contribution, and do busi- ness with a transparent attitude to- wards our stakeholders, in all processes of our purchasing management struc- ture, evaluated under four categories of strategy, people, process and imple- mentation. National and international standards are our compass in making our purchasing processes completely transparent. We conduct our purchas- ing processes in accordance with the following rules and standards: 168 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK B7; SPK C1.2; SPK C1.4 GRI 2.6 SPK B7; SPK C1.2; SPK C1.4 GRI 2.6 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 169 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES launch. As a result of our collaboration with BOREAS, we enable local produc- tion of data center cooling systems with precision control, which we imported, with lower cost. We continuously work to increase the percentage of domesti- cally-produced goods, which reached 75% in the European Data Center project. Our localization framework ensures that purchased products are produced in Turkey and purchased services are delivered by a local workforce. The lo- calization rate of our main suppliers, which corresponds to approximately 90% of our total purchase volume, has been realized at 56% in 2022. technoparks We continue supporting the promotion of startups by vis- iting following our new procurement model developed in 2020 for assist- ing startups. With My Principal Partner Program developed with this purpose in mind, we made 47 business agreements in total with 36 companies af- filiated with 20 technoparks in 12 cities and generated a trade volume of TRY 26.3 million by the end of 2022. Supplier-Oriented Innovation Projects With contribution from relevant business functions and procurement managers, we turn innovative ideas submitted by our suppliers into projects as part of the Supplier-Oriented Innovation Program we launched in 2020 to encourage inno- vations across the supplier ecosystem. Projects are submitted to the “Supplier- Oriented Innovation and Localization” jury of committee consisting of the Turkcell executive vice presidents, with a presentation including potential contri- butions of the project like extra savings, process and quality improvement, rev- enue potential and sustainability, and successful projects are implemented. By partnering with suppliers that sub- mit innovative ideas in this program, we create advantages for the industry as well as suppliers and Turkcell. Examples to projects approved by the committee are as follows: use of solar panels for the energy requirement of field equip- ment, production of lower-cost com- posite manholes with a reduced oc- cupational safety risk for optical fiber boxes, development of nano-trenchers increasing operational efficiency with shorter excavation sections and causing less inconvenience, use of mobile cara- vans instead of mobile vehicles for sup- porting regions for uninterrupted com- munication, and installation of mobile visit systems in hospitals to facilitate the communication of patients and patient relatives. These projects allow for labor safety and efficiency, additional reve- nue stream opportunities, and the devel- opment of processes sensitive to the en- vironment and people. Within the scope of the program, as of the end of 2022, 100 ideas were evaluated, 14 were escalated to the committee, and 11 were approved and implemented. With the savings and additional income from these projects, TRY 55 Million in total has been gained so far. Projects are expected to to make a potential contribution of TRY 164 million in a 5 years perspective. As part of the Supplier-Oriented Innovation Project, we developed nano trenchers which can carry out short- er-section excavations to be able to serve at high-cost locations such as villa complexes, industrial zones and internal areas of housing estates. Using these ve- hicles, we aim to carry out excavations with higher operational efficiency with 67% lower cost and cause the least harm possible to the environment through the system collecting excavated soil in the vehicle storage area. After organizations and events, our con- tracted stand construction company stores the stands they have produces, and we utilize them on many other activ- ities later. This way, we prevent produc- tion from scratch for every event. As of the end of 2022, 100 ideas were evaluated, 14 were escalated to the committee, and 11 were approved and implemented. Supplier Ecosystem Management Localization Efforts We support domestic and national technological transformation to pro- mote entrepreneurship activities in Turkey so that they will contribute to sustainability. Accordingly, we carry out category localization activities, supplier relations, technopark relations and en- trepreneurship support programs (My Principal Partner Program), activities to attract global investment to Turkey, Commercial Attaché affairs, and co- ordination of all internal stakeholders. We believe localization efforts are crit- ical for Turkcell as it is directly related to our relations with the local ecosystem and the ICTA. As part of the “Turkcell Localization identified the main categories with a localization potential to be tracked in short, medium and long term, and started designing localization methodologies for these categories together with teams con- sisting of request owners and purchas- ing experts. Initiative”, we We are engaged in project develop- ment activities with manufacturers to support our producers in our localiza- tion efforts. As an example, we have provided technical support in the works to locally produce the lithium batteries by Aspilsan, which we used to import. With the readiness for production in 2022, we have signed a supply agree- ment. As Türk Telekom also made a pur- chase agreement, we organized a joint We position the value-driven process- es we operate with our suppliers under a single team for rapid implementa- tion. With our Innovation and Ecosystem Relations Process Management team po- sitioned under the Supply Chain Process Development team, we carry out localiza- tion efforts, SME and startup support pro- grams, collaborations through internation- al and local sector-specific organizations, supplier-driven innovation efforts, supplier diversity and development, and risk and sustainability analysis efforts. In June 2022 we brought our supplier eco- system together in two different events. First, we organized the “Local Production with Innovation and the Power of SME’s” event with the partnership of TOBB and participation from the Ministry, where we addressed local producers and informed them about our efforts for their develop- ment. Afterwards, we held the “Supplier- Oriented Innovation Day”. We physically met 100 principal suppliers from catego- ries where we expect innovation. We also provided online connections for our other suppliers. We informed them about the program where we turn innovative ideas from our Suppliers into projects. We intro- duced the projects that have so far been realized. We presented their awards to the Turkcell employees and suppliers who participated in the project. We informed the companies about application chan- nels for new ideas. We held panels for digital transformation and sustainability and energy efficiency. We communicat- ed our expectations for ideas from the companies. We created an open innova- tion environment. With these events, we have described our Supplier-Oriented Innovation, Local Production and Startup Support programs to the companies in the ecosystem. The localization rate of our main suppliers, which corresponds to approximately 90% of our total purchase volume, has been realized at 56% in 2022. 170 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 171 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Women Developers of the Future The purpose of Women Developers of the Future project, brought to life by Turkcell in collaboration with TOBB and TOBB Female Entrepreneurs Assembly, increase female entrepreneur- is to ship and employment in the field of technology. The target audience in our project is women over the age of 18 that are high school graduates, university students or university graduates who wish to work in the mobile technology industry or realize their business idea using mobile technologies. To date, around 3,200 women have been involved in the Women Developers of the Future project, which consists of various trainings, seminars and contests in order to develop their capacities in the field of technology and entrepre- neurship. Close to 200 women have been employed in the field of technol- ogy in the first two years of the project. Since 2021, the project has progressed with a new version where women can utilize their capacities in technological entrepreneurship to search for solutions to climate change as well. Research shows that women are affected the most by climate disasters, however, they are underrepresented in the pro- cess of developing solutions. For this reason, while Women Developers of the Future supports the equal existence of women in the field of technology, it has transformed into “Women Developers of the Future Climate Ideathon”, to also support the equal existence of women in the climate change solution process. The women have received technology, entrepreneurship, assessment, business model establishment training and men- torship support, have competed with their technology-based solution ideas in the themes of “Efficient and Renewable Use of Energy”, “Waste Management”, “Carbon Footprint Management and Sustainable Agriculture”. At the event held, the prizes were presented to the women by Mrs. Emine Erdoğan, the wife of President Recep Tayyip Erdoğan. Whiz Kids-ZEKATHON Zekathon is an event organized as part of the Turkcell Intelligence Power pro- ject in collaboration with the Ministry of Education, with the purpose of the students in more than 150 Centers of Science and Arts (BİLSEM) in Turkey finding solutions to problems in environ- ment and sustainability, and developing project ideas. The Zekathon process was designed to allow all teams to work online. Throughout the tournament, teams re- ceived online training in topics such as 3D design and coding, met weekly with their mentors, and developed their projects. Turkcell Zekathon received 163 team applications in total. The jury, comprised of executives from the busi- ness world, the Ministry of National Education, and Turkcell, evaluated the projects and awarded eight of them. Digital Literacy Program training We work to disseminate our “Digital through various Literacy” channels in order to address the grow- ing need for digitalization after the pandemic period, as well as the grow- ing needs of women and those over the age of middle age who have yet to experience these applications. With our Digital Spring project, we provide these trainings to our elders in nursing homes and allow them to meet the on- line world in a safe way. Equality of Digital and Social Opportunity Utilizing the healing and equalizing power of technology, we provide equal opportunity to access information for children, women, refugees, people with disabilities, the elderly, and low-income people leaving no one behind. We are inspired to allow their potential to shine and we try to provide inspiration our- selves. With the projects, sponsorships and events that we work in many are- as, we transform the propelling power of technology to benefit for every- one with an inclusive and sustainable approach. Accessibility in Service Processes We have created sign language and voiceover versions of information packages such as payment service agreements, resolving of certain dis- agreements, use of products and others which directly affect customers but are hard to access for our vision and hearing-impaired customers, and made them available on our corporate website. Our customers can now reach Face-to-Face Customer Service from Turkcell Digital Operator, Sign Language and BiP applications, Turkcell and Superonline stores, and receive visual service in sign language from 10:00 to 01:45. every day of the week. This service model, free of charge for our hear- ing-impaired customers, includes external calls and callbacks. Customers can contact the call center by clicking the link in the message that is sent when an SMS is sent. We serve approximately 3,000 hearing-impaired cus- tomers through our video-enabled call center per month. Whiz Kids Robotic Hand Training Program After two people invented a robotic hand (mechanical hand) for a child born without fingers and shared their invention with those in need, robotic hand movement evolved gradually with contributions from many people around the world. It is a platform where affordable and usable robotic hand applications are shared after being created with 3D printers in dimensions and properties suitable for people who require a prosthetic hand. Our students aimed to create pros- thetic hands using the 3D printers in Turkcell Whiz Kids classrooms to assist their friends who were born without hands. As part of the project, a Robotic Hand training program for Whiz Kids students is carried out in col- laboration with the Robotic Hand Association and is overseen by the Ministry of National Education. At the end of the training, our students from all over Turkey give the hands they have made to other students without hands. In 2022, through the Robotic Hand cooperation, we provided this support to 120 chil- dren waiting for hands. Whiz Kids Project As part of Whiz Kids Project con- ducted by Turkcell in partnership with the Ministry of National Education, we intend to intro- duce gifted children in Turkey to technology and discover and develop their talents at an early age. In our Whiz Kids Technology Labs, we make facilities avail- able to students including lap- tops, 3D printers, electronic and robotic coding kits and toolsets, provide training in artificial intel- ligence, coding, space sciences, robotics, smart home and cloud technologies for children, and support in developing projects in these areas. As part of the Whiz Kids Project, we reached 80 laboratories in total in 45 cities by establishing 5 new classes in 2022. them To date, over 7 million pieces of educational content have been viewed on the Whiz Kids training portal, carrying our Whiz Kids Project to the digital environ- ment, and our public mobile ap- plication. 80 thousand students across Turkey took the advan- tage of free educational content on topics including Arduino, mBot Robot Programming, Robotics, Space Sciences, Mobile Game Development, AI, Smart Home, Deep Learning, etc. through the digital portal and mobile appli- cation of the Whiz Kids Project. 172 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 173 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Foundation brand With the power and reliability of Turkcell Turkcell Foundation works to execute projects intended to serve both our country and the entire humankind. behind, Turkcell Volunteers Turkcell Volunteers, consisting of Turkcell employees who have come together to deliver social benefits and raise social awareness, kept on cre- ating value in 2022. Through Turkcell Volunteers, fully relying on grants from Turkcell Group employees, we conduct voluntary social benefit projects with participants who are eager to devel- op social and environmental projects, have strong communication skills and are able to use technology. As part of this initiative, we reached 250 volun- teers with the activities and events we organized in 2022. The Digital Spring Project We remembered our elderly people living in nursing homes, and to con- nect them to life stronger with our technology, we created the “Digital Spring” technology rooms where they will experience technology. Thanks to Turkcell’s digital services, elderly people can watch TV, listen to music, video-call their relatives, and access Social Investment and Sponsorship Projects Believing in the power of technology to bring equality in opportunities since the day of our foundation, we have been targeting equal participation in life by everybody without leaving anybody behind in accessing information and carrying out social inclusion projects in this respect. Allocating up to 1% of our annual rev- enues to social investment projects, we have been creating a positive dif- ference in society with our ambition to help create a more livable world, and striving for social development and environmental sustainability in all our activities. We work to make sports, cultural and art events equally accessible to every- body. We undertake sponsorships to provide access to all sports, cultural and art activities for everyone includ- ing men, women, children, and disa- bled people. We have been continuing our pioneering efforts for the devel- opment of culture, the arts and sports in Turkey so that our artists and sports people can be acclaimed in nation- al and international arenas for many years. Beside sports and culture, arts, we support congresses, conferences and events in many fields such as technol- ogy, health, environment, energy, econ- omy, marketing and information tech- nology to continue our contribution to our country in every field. to e-state service, play digital games and experience different beauties of our country with VR sets in these rooms. As part of the project, which we launched in 2021 with a press meeting with the participation of the Minister of Family and Social Services, we put our Digital Spring Halls in into operation in Osmaniye, Adana, Aydın, Samsun and Erzincan in 2022. This way, we reached 5 nursing homes in 2022, and let our el- ders connect with technology. Close to Life Project To support children with autism and their families across Turkey, we brought the Close to Life Project with Tohum Autism Foundation to cover the guid- ance and psychological needs of chil- dren with autism and their families. With BiP, the communication and life platform which transcends barriers with technology, we created a profes- sional communications channel where families of children with autism can find answers to their question on autism and special education from specialist doctors and teachers. With the “Close to Life” project, which commenced on April 2, World Autism Awareness Day in 2022, we aim to provide company to families in this situation and provide them with a comprehensive, fast and reliable channel in case of need. Turkish Sports Federation for the Physically Disabled We have deepened our collabora- tion with the Sports Federation for the Physically Disabled, which started with football back in 2016, by expanding to 18 disabled sports branches (amputee foot- ball, basketball, shooting, arm wrestling, archery, swimming, sailing, tennis, bad- minton, athletics, sitting volleyball, table tennis, weightlifting, boccia, skiing, danc- ing, curling, and fencing). With this spon- sorship, we supported more than 10,000 registered men and women athletes in all branches. Our Amputee Football National Team, which had two consec- utive European Championships, be- came the World Champion in the World Championships organized in our country. Turkish Federation of Traditional Sport Branches As the main sponsor of the Turkish Federation of Traditional Sport Branches, we aspire to promote, nationally and in- ternationally, and make a success in our ancestral sports consisting of 247 clubs in 64 provinces, and over 20 thousand athletes, 351 trainers, 1,700 referees in 9 sports branches including jereed, am- bling gait, horseback archery, aba wres- tling, salwar wrestling, belt wrestling, traditional sleigh, sleigh and kokboru. We aim to raise healthier, more active and more successful young people in our society by creating opportunities to disseminate these sports branches spe- cific to our culture so that the reputation of our ancestral sports will be fortified, and their future success will be secured. Sports Sponsorships e-National Teams Sponsorship By expanding the coverage of our agree- ment with the Turkish Football Federation in 2021, we became the title sponsor of the player selection process of the new- ly-established e-National Teams in the FIFA and PES games. We also became the main sponsor of e-National Teams whose players were selected under the title Turkcell e-National Team Draft. We believe our National Teams competing in these newly-created branches will make us proud in the years to come. National Athletics Team Sponsorship As Turkcell, we take all branches of sports seriously and do our best to im- prove them. We continue the Athletics and Swimming Performance Projects we kicked off in 2013 at full steam in collaboration with the Turkish Athletics Federation and provide the greatest and longest support for amateur sports ever in Turkey. We work together with the federations in many areas such as applying innovative and modern man- agement models, expanding the young athlete pool, sustainability of the devel- opment of elite athletes, and corporate and technological development. With the main sponsorship of Turkcell, Turkish athletics continued registering successes in the 2022 season. Our na- tional athletes brought home 262 medals in total in 38 different tournaments in the international arena. Additionally, while the number of active athletes reached 36 thousand in 2022, the number of licensed athletes added up to 187 thousand. National Football A Team Sponsorship Turkcell has been the main sponsor of the Men’s and Women’s A National Football Teams since 2005 and the “Official Communication Sponsor” since 2002. Proudly supported by Turkcell for 20 years, our Men’s National Football A Team is competing in the Football Championship European Germany 2024 qualifiers and Women’s National Football A Team the Women’s World Cup Australia & New Zealand 2023 qualifiers. We contin- ue to support our Men’s and Women’s National Teams, which will represent our country in international tourna- ments, for the development of Turkish football and expect them to make our country proud again with fresh suc- cesses in these tournaments. in Turkcell Women’s Football Super League We kicked off a new era in women’s football by becoming the title sponsor of the Turkish Women’s Football Super League, which didn’t have any spon- sors in previous years. We take steps to promote women’s football in Turkey as this branch rapidly develops and grows around the world. We are continuing our efforts and events in order to ex- tend Turkcell Women’s Football League to larger masses and increase aware- ness of women’s football. In the last two seasons, we carried the league’s play- off and final matches to TV channels and digital media for the first time. With our communication efforts, we have won the Gold Prize from International Public Relations Association. Turkcell Super Cup We included Turkcell Super Cup, which brings the champions of Super League and the Turkish Cup together, and which we had already supported in past years, in our agreement with the Turkish Football Federation. We con- tinue to meet football enthusiasts in our communication efforts and events in this scope. “The Cup of Cups” Super Cup was won by Beşiktaş in 2021 and Trabzonspor in 2022. 174 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.9; SPK D2 SPK C1.9; SPK D2 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 175 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkey Athletic Talent Screening and Orientation to Sports Project Since 2018, we have been the official sponsor of the Turkey Athletic Talent Screening and Orientation to Sports Project, carried out in collaboration with the Ministry of Youth and Sports and the Ministry of National Education. We aim for the participation of 1 million primary school students at 3rd grade in our project each year. While we ensure the access of 4 thousand students to the profession- al athletes’ pool annually through the project, we encourage children unable to enter the athletes pool, to continue their sports activities by directing them to Provincial Sports Center activities. Turkcell Granfondo Cycling Race Turkcell Granfondo road bicycle race series was started to raise awareness of cycling for a sustainable environ- ment and to support cycling in Turkey. The races took place in Istanbul in June, in Ankara in August and in İzmir in September, 2022. More than 4,000 amateur and professional cyclists from 38 different countries participated in the races. Cyclists brought electronic waste to the racing area to be recy- cled for contribution to the Recycle into Education project. They attached stick- ers with SDG symbols on their jerseys to raise awareness for the Sustainable Development Goals. We took part in the event area with our Paycell, TV+, Pasaj, fizy, BiP and Lifebox brands. Turkish University Sports Federation In 2022, we have become the main sponsor of Turkish University Sports Federation, which provides 30 thou- sand university students from 210 uni- versities the chance to do sports in 70 different branches. With this coopera- tion, we are supporting TÜSF to create sports awareness among the univer- sity youth and allow more university students to be able to participate in the activities. In Turkcell Winter Sports Games, held in Erzurum, hundreds of young athletes from 80 universities competed in races organized in 11 dis- ciplines. But the biggest organization of 2022 was GNÇ SporFest organized in May. With the title sponsorship of GNÇ, thousands of young athletes Received with the sponsorship of Turkcell in 2022; athletics medals Gold 99 Silver 89 Bronze 74 Received with the sponsorship of Turkcell in 2022; number of medals for physical disability sports Gold 119 Silver 105 Bronze 81 Received with the sponsorship of Turkcell in 2022; university sports medals Gold 62 Silver 57 Bronze 76 from more than 100 universities com- peted. Another important event from Turkish University Sports Federation, ÜniLig, was organized again this year with Turkcell’s communication spon- sorship. Inter-University World Cup 3x3 Basketball Championship, organized by TUSF and FISU with Turkcell as the main sponsor, hosted the matches of 12 men’s and 12 women’s teams. Our na- tional athletes brought home 195 med- als in total in the international arena. Culture – Arts Sponsorships Turkcell Vadi Designed to promote the culture an- dart industry, one of the industries most impacted by the pandemic, Turkey’s new open-air stage Turkcell Vadi was opened to art enthusiasts on April 16. In our open-air stage Turkcell Vadi, which won 3 gold prizes at once in the IPRA Golden World Awards this year, many international local and artists took to the stage, and more than 150,000 attendees visited the location which hosted 45 events, from concerts to theater plays. As a sustainable and accessible fa- cility, Turkcell Vadi stood out with a number of activities such as recycling, sapling donation, recycling of collect- ed techno waste for education, prior- itizing visitors with disabilities on en- trance to the facility and creation of a special viewing area for them. With the live audio description technology in the My Dream Partner application, our visually-impaired guests experienced Turkcell Vadi Theater Days. Turkcell customers enjoyed the privileges of Platinum Black entry gate, VIP lounge and discounted tickets at the events. Turkcell Starry Nights Music lovers enjoyed a series of magnificent summer concerts with the Turkcell Starry Nights event. The Turkcell Starry Nights event, consisting of 10 concerts at Turkcell Vadi, attract- ed 30 thousand people this year. As in last year, a concert was translated to sign language on stage during the Turkcell Starry Nights event, enabling hearing-impaired audience to enjoy the concert as well. Zorlu Performance Arts Center As part of our venue sponsorship un- der the name of “Turkcell Stage” since 2018, the main theater stage at Zorlu PSM hosts world-famous performanc- es and shows. In addition, the theater stage at the center still welcomes art lovers as the “Turkcell Platinum Stage”. All cultural and arts events such as musicals, concerts and theater plays are performed on stages hosted by Turkcell. Our Other Sponsorship Projects Summer and Winter Locations Turkcell Platinum Park As part of the project realized in line with our goal of creating happy cus- tomers, we have been providing an opportunity for escaping the monoto- ny of city life to our customers and so- ciety with Turkcell Platinum Park since 2018, on 200 acres of land. Turkcell Platinum Park brings off-road enthu- siasts together in nature in the center of Istanbul. It also offers multiple ex- periences with special advantages to customers. Platinum customers can experience many outdoor activities such as off-road, archery, jungle run, and summer outdoors cinema here. Outdoor activities in Turkcell Platinum Park, where families can come with their children and spend fun time to- gether, teach kids about life in nature at a young age, in a fun way. Turkcell Dialogue Museum With our sponsorship of Turkcell Dialogue Museum, as part of our pro- ject to take visitors to another world with visual and hearing-impaired guides, we have employed more than 70 visual and hearing-impaired people in Istanbul and hosted more than 500 thousand visitors up to now. At Kartalkaya, one of our country’s most important skiing centers visited by more than 500,000 people in the sea- son, as Turkcell, we have been offering our customers Platinum benefits since 2014. Also, at distinguished beaches in Çeşme and Bodrum, we integrate our different brands in summer to provide exclusive privileges and advantages to our subscribers. Sectoral Supports As Turkcell, we aim to carry our lead- ing position in telecommunications also to other sectors, follow innovative ap- proaches and contribute to the develop- ment of the related sector. Accordingly, we are sponsoring congresses and con- ferences in many fields, from HR appli- cations to digital marketing, from supply chain management to aerospace, from cyber security to techfin solutions. With our sponsorships, we come together with various target audiences, such as startups, students, investors, NGO and public representatives, academicians, white collar employees and middle and high-level managers of corporations. We had the opportunity to meet hundreds of thousands of people and communicate our messages in more than 50 congress- es and conferences throughout the year. More than 4,000 amateur and professional cycling enthusiasts from 38 different countries participated in the Granfondo Cycling Races. At Zorlu PSM, which we renewed our collaboration contract for 5 years in October, we have hosted over 1.5 mil- lion visitors at over 1,500 events since 2018. In line with our sustainability-ori- ented approach, we hosted visual- ly-impaired guests with My Dream Partner live description technology in theater, musical and similar events at Zorlu PSM Platinum Stage. Smiling Fairy Tales from Turkcell On May, as part of Disabled Persons’ Week, we brought the “Smiling Fairy Tales” project to life, in collaboration with Content for Children (ÇİÇEK) Association. As part of the project, physical and mental diversities, which are not encountered in the magical world of fairy tales, found their place in Smiling Fairy tales. Characters in 6 different tales, which met the chil- dren and parents, are played as they should be in life, not specifically men- tioning their diversities and without discrimination. We believe every indi- vidual has a special role in society. The fairy tales are on Turkcell’s My Dream Partner application, Dergilik and fizy. Circular Electronics Digital Children’s Book In the week of April 23, as part of our activities to extend environmen- tal awareness to all of society, and with support from Turkish Informatics Industry Association (TÜBİSAD) and the Education Volunteers Foundation of Turkey (TEGV) in a digital collabo- ration, we brought the “Ant Leg and the Giant Leaf” circular electronics digital children’s book to life. The book, formed with the intent to create envi- ronmentally friendliness in children, was voiced by Turkcell’s brand face, famous artist Melis Sezen. The digi- tal children’s book is on Turkcell’s My Dream Partner application, Dergilik and fizy. As part of the project, when children who have read the book bring their technological waste to Turkcell Stores, they receive a “Circular Electronics Certificate”. 176 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C1.9; SPK D2 SPK C1.9; SPK D2 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 177 to the Environment With the Positive Imprint to the Environment strategy, we aim three main corporate objectives: Reducing the impacts arising from Turkcell operations, supporting the reduction of customers’ environmental effects through digital technology applications and services, and becoming the pioneer in addressing environmental issues, the leading digital operator with its environmental performance. For Turkcell, reaching these objectives is not only required for being a responsible corporate citizen, but also the prerequisite for creating sustainable business value tomorrow same as today. Natural Capital TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Capitals Goals Actions Impacts Values to the Environment Value Proposal e c r u o s e R d n a l a t i p a C n o i t a c o l l A Reducing environ- mental impacts of the operations Supporting the re- duction of custom- ers’ environmental effects through digital technology applications and services Becoming the pioneer in add- ressing environ- mental issues, the leading digital operator with its environmental performance. Renewable energy investments Resource efficiency Environmental Impact Management Infrastructure with low emission intensity Processes and services with low en- vironmental impact Success in international climate and environmental evaluation initiatives Engaging with NGOs and inter- nationa initiati- ves; Supporting environmentally freindly policies and practices Cost reduction through resource efficiency Reducing negative impacts Capital efficiency Becoming a preferred business partner for customers Reducing negative impacts Increasing customer satisfaction Deeper engagement with customers through service diversity Revenue increase Receiving high performance from evaluations made through interntional methodologies Leading corporate citizen identity in environ- mental advocacy through corporate commit- ments, joint projects and ngo partnerships Generating positive impact Increase in reputation and brand value Increase in investment attracting potential and equity value performance Integrated Value Creation (Financial Capital, Natural Capital, Manufactured Capital, Social Capital, Human Capital, Intellectual Capital) With the activities conducted in line with Positive Imprint to the Environment strategy, direct and indirect contributions are made to performance production in fields identified in the scope of integrated value generation model. Outputs of these efforts contribute directly to the development of natural, financial and manufactured capital, and indirectly to social, human and intellectual capital. 180 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK B5; SPK B7; SPK B13 SPK B5; SPK B7; SPK B13 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 181 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Natural Capital Outputs 414,911 Ton CO2e Emission Reduction 12.6 Tons e-Wastes Recovered Through Recycle into Education Project 145,832 m3 Total Water Consumption 125 MWh Renwable Energy Production 227,592 Gj Energy Saving 100% Rate of Renwables in Electricity Consumption Main Targets Short Term Target Mid-Term Target Meeting electricity need from renewable sources - - Renewable energy investments Reaching Net Zero operating level Reducing GHG emissions Recycling all wastes 0.8 MW Installed Power Investment (2022) 300 MW SPP, 9.6 MW WPP Installed Power Investment (2023-2025) - - 100% (2022) - - - Long Term Target 100% (by 2030) 300 MW SPP, 27.6 MW WPP Installed Power Investment (2026) 100% (by 2050) 55% (by 2030) 2021 Performance 2022 Performance Current Status Towards Target 100% 100% 18.7 MW Installed Power 19.5 MW Installed Power - - - 414,911 ton CO2e emission reduction - Completed Completed Positive development Negative development Ongoing Environmental Management Due to the responsibility on the overall sustainability strategy, Turkcell Board of Directors is the highest body also responsible for the Company’s envi- ronmental management processes. Similarly, the Integrated Value Creation Committee and the Sustainability Committee are also responsible for the strategic and planning level manage- ment of environmental sustainability processes. The committees are respon- sible for evaluating the gathered per- formance results and reporting both to the Board of Directors and all our stakeholders via the Integrated Annual Reports. Corporate Communication and Sustainability Directorate is re- sponsible for the coordination and planning activities in the management of our environmental impacts, primar- ily the climate change. Besides, all our units responsible for the management of business processes and assets where the impact occurs, are also re- sponsible for carrying out activities for increasing the performance and reducing the environmental impact. All senior executives have individual objectives in the fields of environment and climate, and these objectives are monitored on the basis of KPIs. Environmental management across the company is carried out according to the principles stated in the Turkcell Environmental Policy. The ne- cessity to comply with all legal regu- lations binding Turkcell is the minimum norms of operation. In this scope, in 2022, no events violating environmen- tal regulations have occurred due to Company activities and decisions, no complaints have been directed at the Company management in this regard, and no monetary or non-monetary fines have been issued for non-compliance. Various international system stand- ards are being followed for the effec- tive management of environmental management processes. In this scope, ISO 14001 Environmental Management System Standard, ISO 50001 Energy Management System Standard and ISO 14064 Greenhouse Gas Calculation, Reporting and Verification System Standards are the internationally ac- cepted management systems that we adhere to. The validity of the system standards is certified with independent audits performed periodically to ensure system reliability and continuity. You can access the certificates for the standards we follow from the cor- porate web site. Board of Directors Final decision making body for climate change related issues Periodic information provisions INTEGRATED VALUE CREATION COMMITTEE EARLY DETECTION OF RISK COMMITTEE Periodically reports ESG activities to the Board of Directors; and inform relevant Baord Committees Executive Officers Identifies environmental and climate risks that could impact the existence, development and continuation of the company; conducts risk mitigation studies SUSTAINABILITY COMMITTEE CORPORATE RISK MANAGEMENT Defines and implements policies, short, medium and long term actions inline with ESG priorities, risks and opportunities Assesses risks and reports mitigation measures to the Early Detection of Risk Committee Preparation of bimonthly risk reports CORPORATE COMMUNICATIONS AND SUSTAINABILITY DIRECTORATE RISK DIRECTORATE Conducts environmental and climate related corporate engagements Conducts environmental and climate risks and opportunities 182 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A1.2; SPK A2.2; SPK A2.4; SPK A2.3; SPK A3.1; SPK B5; SPK B7; SPK B11; SPK B12 SPK A2.2; SPK A2.4; SPK A3.1; SPK B1; SPK B4; SPK B5; SPK B7; SPK B10 GRI 2.24 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 183 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Environmental management processes are carried out with a risk and oppor- tunity-based approach. Environmental risks identified through corporate risk management activities include the risk components, primarily climate change, which may be caused by our operations or may negatively affect our business performance. Identified risks and op- portunities are managed by convert- ing them into specific performance and time-based SMART targets within scope of the integrated value creation mod- el and the sustainability strategy. In this regard, during the last reporting period, KPIs were set and assigned to all compa- ny employees including our CEO, and are periodically monitored at least on an- nual basis depending on their subjects. The studies carried out and the outputs gathered in scope of the environmental strategy are evaluated on their financial, operational, legal compliance and en- vironmental aspects and also reviewed during internal auditing activities. You can find the list of environmental performance indicators and performance values from the APPENDIX4- Performance Indicators list. In the Turkcell value chain, which has a wide operational structure, many assets and business processes with environ- mental impact are present. Across these processes and assets, the management of environmental impacts and carrying improvements and out performance control activities require a significant fi- nancial resource allocation. In this con- text, the amount of our renewable ener- gy investments is 97.8 million TL in 2022. Various training activities are held for improving the knowledge, experience and awareness of company employ- ees in environmental effect manage- ment. In this scope, all Turkcell employ- ees participated in environmental and sustainability training in 2022. In prize contests we hold, we encour- age our employees to adopt environ- mental sustainability as a business val- ue, and provide their participation and support. We recognize our employees’ activities that support performance in- creases in line with our environmental objectives with incentives and rewards. In this scope, the first 3 employees who completed their sustainability training in 2022 were gifted electric scooters, the employee who brought in the most electronic waste was gifted an electric bicycle, the second employee was gift- ed a smart watch and the third a blue- tooth headset. Environmental Investment Spendings (TRY million) . 5 0 6 2 Investment Costs . 8 7 9 2021 2022 Climate Change Climate change is currently consid- ered as one of the most material issues which creates many acute and chronic risks on the physical, social and eco- nomic environment worldwide and on global business life. Since it accounts for the most significant part of impacts emerging from Turkcell’s activities, it is the most fundamental element of the Positive Imprint to the Environment strategy. Almost all of our environmen- tal management activities are direct- ly or indirectly related to the climate change. Participation in international initiatives forms an important part of the efforts against climate change. In this scope, Turkcell was among the first 8 opera- tors worldwide and the first GSM op- erator in Turkey that joined the GSMA Mobile Net Zero initiative formed to reach the net zero objective in the tel- ecommunications sector. On the oth- er hand, another effort that supports our net zero objective is our study to convert our emission targets into sci- ence-based target systematics. We have made our application with our net zero objective plan formed in scope of the SBTi initiative. In the upcoming peri- od, we expect our objective plan to be approved by SBTi after the necessary evaluation processes. On the other hand, we participate every year in the international investor initiative Carbon Disclosure Project, where our efforts against climate change are evaluat- ed in a wide scope from governance structure to the risk-opportunity sys- tematic, from the improvement activi- ties we perform to the performance we achieve. According to study results de- clared in 2022, Turkcell’s CDP Score was assessed as A- and Turkcell was the industry leader in Turkey. Apart from these, our environmental and climate performance is evaluated with various aspects within the scope of the Borsa Istanbul Sustainability Index and the MSCI ESG Index. Management of Climate Risks and Opportunities Climate change risks directly in- fluence Turkcell’s business opera- tions. Measures are taken against extreme weather events and natu- ral disaster risks caused by climate change and studies are carried out by foreseeing the increase in average temperatures in the long term. In our company, the impacts and results of opportunities and risks caused by climate change are evaluated and tracked in the Corporate Risk Management framework. Our energy-focused activities are focused on environ- mentally friendly, green energy sources inline with the Sustainable Development Goals. In order to manage our energy dependence, we aim to cover 100% of our en- ergy requirement with renewable sources by 2030. 184 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.2; SPK A2.4; SPK A3.1; SPK B4; SPK B5; SPK B7; SPK C1.10 GRI 2.24 SPK A2.2; SPK A2.4; SPK B8; SPK B13 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 185 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Greenhouse Gas Emissions Greenhouse gas emissions caused by our operations are comprehensive- ly mapped and calculated inline with ISO 14064 standard. Calculations per- formed in Scope 1 and Scope 2 levels in the previous periods were expanded in 2021 with the addition of indirect emis- sions at Scope 3 levels. In the reporting period, mapping studies were repeat- ed by adopting the updated ISO 14064 standard, and all 6 emission categories were included in the calculation stud- ies. The calculations performed are in- dependently audited. In the reporting period, total green- house gas emissions were 1,349,268 Tons CO2e. 16,178 Tons CO2e of this amount were fuel-related direct emis- sions (Category 1), 0 Tons CO2e were electricity consumption-related indi- rect emissions (Category 2), 1.333.090 Tons CO2e were other indirect emis- sions (Categories 3-6). On the other hand, according to rel- ative emission amount evaluation including Category 1 performed by and Category 2 emissions, emission per data usage in 2022 were 3.6 tons CO2e/Petabytes and emissions per net income were 0.025 tons CO2e/ Thousand TRY. In the reporting period, 414,911 tons CO2e of carbon emissions caused by our activities were offset by carbon certificates formed in YEK-G Standard. Greenhouse Gas Emissions (Tons CO2e) 5 2 0 8 0 1 , 8 8 9 3 8 3 , 7 2 6 0 8 , , 9 3 9 0 4 4 0 0 7 3 6 , 9 0 4 9 1 , 6 9 9 4 , 1 4 9 2 1 , 5 2 2 2 2 1 , 8 7 1 , 6 1 0 9 0 3 3 3 0 1 , . Category 1 Category 2 Category 3-6 2019 2020 2021 2022 Relative Greenhouse Gas Emission 239.8 143.6 0.018 0.011 2020 110.6 0.004 0.003 2021 3.6 0.025 0.025 2022 0.023 0.016 2019 Greenhouse emissions per net income (tons CO2e/TRY Million) Greenhouse emissions per data usage (tons CO2e/Petabytes) Greenhouse emissions per subscriber (tons CO2e/subscriber) 414,911 tons CO2e GHG emissions offset Energy Management We are carefully managing our energy consumption, which forms the most sig- nificant part of our environmental im- pact portfolio, especially greenhouse gas emissions, according to ISO 50001 Energy Management System Standard. The two main focuses of our energy management studies are efficiency studies to reduce total and relative consumption and electricity produc- tion activities from renewable sources. In the reporting period, total energy consumption was 3,556,334 GJ. 202,865 GJ of this amount was from fuel con- sumption, 3,086,114 GJ was from pur- chased electrical energy consumption, and 267,355 GJ was from produced renewable energy. Since 2021, all pur- chased electrical energy was procured from iREC/YEK-G certified renewable energy producers. The share of renew- able energy in energy consumption has risen from 2.67% in 2021 to 7.52% in 2022. On the other hand, according to rela- tive energy consumption amount eval- uation, energy consumption per data usage was 791.9 GJ/Petabytes, ener- gy consumption per net income was 0.066GJ/Thousand TRY in 2022. Relative Energy Consumption 225.2 0.017 0.012 2020 165.9 0.018 0.011 2021 964.0 0.104 0.072 2021 791.9 0.066 0.066 2022 Energy usage per net income (tons CO2e/ TRY Million Energy usage per data usage (tons CO2e/Petabytes) Greenhouse emissions per subscriber (tons CO2e/subscriber) Total Energy Consumption by Source (GJ) Fuel Consumption 2019 425,078 Natural Gas 231,481 Gasoline 895 Diesel 192,702 Renewable Energy Produced 3,924 Solar Power 3,924 Wind Power 0 Renewable Energy Purchased - Electricity 0 2020 379,049 204,163 985 173,901 5,760 5,760 0 2021 281,811 66,365 1,053 214,393 99,265 2,351 96,914 2022 202,865 27,780 47,958 127,127 267,355 3,014 264,341 144,000 3,342,897 3,086,114 Total 429,002 528,809 3,723,973 3,556,334 186 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.2; SPK A2.4; SPK A4.1; SPK B9; SPK B11; SPK B16; SPK B17; SPK B23 SPK A2.2; SPK A2.4; SPK B9; SPK B11; SPK B16; SPK B17 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 187 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Energy Solutions We established our subsidiary Turkcell Energy Solutions in 2017 to reduce en- ergy procurement costs, ensure pro- curement security and reduce climate impacts. Since the day it was estab- lished, our subsidiary has increased its renewable energy investments to in- crease its installed power every year, and reached an installed power of 1.5 MW with a solar energy investment of TRY 11.3 million in 2022. With these investments, we have reached an im- portant development in our transfor- mation strategy from a 100% renewa- ble electricity user to a digital operator which produces its own electrical en- ergy during the reporting period. The renewable energy we produced in 2022 reached an amount equivalent to annual electricity consumption of 41 thousand houses. With this production, we covered the energy requirement of 2,750 base stations. Our Group’s first solar power plant located in the Turkish Republic of Northern Cyprus (Vadili region) gener- ates 1.7 million kWh of electricity annu- ally. It also reduces the demand load on the Turkish Electricity Authority in Cyprus (KIB-TEK) network and contrib- utes to the electricity grid’s digital infra- structure. Apart from this, thanks to this power plant, we prevent the release of 943.5 tons of CO2e emissions to the atmosphere. Our Ankara Data Center is the first data center in Turkey to produce its own electricity with solar panels. With the new generation solar energy pan- els lot installed above the parking area of our data center building, we can cover some part of the electricity we consume with renewable sourc- es. Our data center building produces 408 thousand kWh electricity annual- ly, which also prevents 226 tons CO2e of greenhouse gas emissions per year. Our Gebze Data Center received the Uptime OS Operational Sustainability Gold certificate for the first time in Turkey in 2018, which was followed by our Ankara Data Center, making us the only operator in Turkey with two data centers fulfilling these standards. The solar power plant, which became op- erational in January 2023 in Ankara Data Center uses sun-tracking and double-faced panel technologies. This enables the solar panels to position themselves to receive the sun rays at the steepest angle throughout the day, as well as utilize the light reflected from the surface for power generation. This system operating under the self-con- sumption model, is a rare example in Turkey in terms of the technology used. We generate electricity from renewa- ble energy with the solar energy pro- ject installed on the roof of Turkcell Adana Plaza building. This self-con- sumption model enables us to use the energy produced for covering the electricity requirement of Adana Plaza building. We save approximately 31.7 tons of CO2e greenhouse gas emis- sions per year with 86.3 thousand kWh electricity produced annually. In 2022, we installed solar panels on 507 base stations to cover their energy re- quirement. With these applications, in December 2022, we have generated 125 MWh of energy. 15 Portable Solar Field solutions, which are a result of our in- novative studies, enable us to cover the demand occurring in regions where the population increases periodically and the access to energy sources is limited. We contribute to our sustainability ob- jectives with the environment-friendly features of these communication sta- tions installed in various locations. By continuing our investments in the up- coming periods, we aim to reach 300 MW of additional installed power by 2025. When these investments are com- pleted, we aim to provide 65% of the total electricity consumption of Turkcell Group through self-generation. In this way, on the one hand, the energy need will be met mostly from renewable resources, and on the other hand, protection against cost and supply risks that arise from the ener- gy market will be ensured. Energy Efficiency We strive to reduce our environmental impact and our energy costs by reduc- ing our energy consumption to the low- est level possible. The efficiency studies we perform for this purpose include the use of energy efficient equipment and behavioral efficiency implementations regarding consumption patterns. Personal consumption habits changed by the nature of the pandemic period underwent another profound change with the new working models emerged after the pandemic. During the reporting period, we resarched the consumption habits of this new normal and tried to determine the efficiency potentials. On the other hand, we continued replac- ing equipment with energy efficient ones and making efficiency improvements in network equipment, which forms a sig- nificant portion of our efficiency efforts, in the reporting period as well. Through the analysis and implementa- tion of energy efficiency and savings ini- tiatives within our network, we achieved 63.22 GWh of savings. As part of our energy focus, the value of our savings efforts, which were carried out under 6 main focuses and 93 subtitles, such as Field Active Equipment - 31.37 GWh, Unson & Feature & Vendor - 11.42 GWh, CNX - 8.06 GWh, Energy Climate Control - 7.6 GWh, Transport Network - 3.18 GWh, and Ran Modernization - 1.59 GWh, ex- ceeded over TRY 200 million. Even though it is not a requirement in Turkey yet, we already stipulate the Eco- Design criteria in the air conditioning equipment we use and the current reg- ulations specific to the device. This way, by providing the use of A energy class products, we aim to increase energy efficiency. With energy efficient network equipment, climate control devices in data center system rooms and our latest technology products, we are working on creating a more efficient energy in- frastructure, therefore using our existing energy resources with more awareness and providing energy savings. We de- sign our buildings for maximum benefit from the sunlight, and we use less ener- gy for heating and cooling our buildings with heat insulation details such as insu- lated wall materials and outdoor facade coatings. Energy Savings (GJ) 151,143 110,304 193,414 227,592 2019 2020 2021 2022 By prefering hybrid vehicles in our company fleet, we lower our emissions per kilo- meter. In 2021, we replaced 677 vehicles with hybrid engine vehicles. This way, we reduced the emissions level of 12.7 gr/km to 9.1 gr/km. Therefore, we achieved 25% CO2e emission savings in our total fuel consumption in 2022. With our Turkcell Kopilot app, which adds a new dimension to the au- tomobile driving experience with its superior features, we perform fuel usage, travel and user analyses to indirectly provide reductions in fuel consumption. With this app, we contribute towards transformingcom- panies’ fleet management to a model with fewer emissions. Thanks to our solar power plant, we avoid 676 tons CO2e of GHG emissions By producing 86.3 thousand kWh electricity annually We save approximately 31.7 tons CO2e greenhouse gas emissions per year 188 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.2; SPK A2.4; SPK B14; SPK B18; SPK B19, SPK B20 SPK A2.2; SPK A2.4; SPK B15; SPK B20 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 189 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES We are working on performing a second reverse osmosis on the wastewater of the reverse osmosis system in our Ankara Data Center and re- using this water in the building. With this implementation, we aim to reduce in the building’s wastewater rate from 40% to 16%. Efficiency in Data Centers We prioritize energy and water efficiency in the design of Turkcell Data Centers. In this scope, we work for reducing the PUE value, which reflects energy efficiency, and the WUE value, which reflects the efficiency of water usage. With design PUE values of 1.3, Turkcell data centers are noticeably lower than the world average of 1.55. The current WUE value is 1.81, and it is targeted to be reduced below 1.8 in the upcoming periods. As we meet electricity consumption, which is the most prominent impact component of data centers, with either self-generated renewable energy or with purchased renewable energy with iREC certificate, the emission values of our data center operations are quite lower than their peers. In our data centers, we utilize rainwater as gray water after various filtering processes for household consumption and continue our efforts for recycling wastewater and its utilization in different areas. All these environmental impact management implementations in our data centers generate two different positive values. Firstly, with these efforts, the environmental impacts caused by Turkcell operations are significantly re- duced, and we also receive a cost advantage with the savings we achieve. On the other hand, we allow the customers we serve to significantly reduce their indirect environmental impacts, especially the greenhouse emissions. Therefore, we provide a local and environmentally friendly alternative to our customers who have high awareness on environmental impact man- agement and who adopt sustainable business models. Water Management The efficient use of water, a vital natural resource, is among the impact areas we track as part of our environmental strat- egy. We do not use water resources di- rectly in developing our products and services. Nevertheless, since we are a responsible company in the use of resources, we announce our water consumption in our annual reports. Our fundamental water consumption is comprised of the consumptions caused by the daily needs of our employees and covered by utility water. During the peri- od, a total of 145,832 m3 water was con- sumed, and our water consumption per employee was 4.5 m3. With efficient fix- ture and consumption implementations, we are working on reducing this amount as well. Through the modifications in cooling equipments within the scope of the GEM4 Project that we conducted in the past period, we had achieved savings of 40% in water consumption per mod- ule. We used to purify utility water with reverse osmosis process and use this purified water in the devices. However, after this process, 40% of drawn utility water was discharged as waste. With the modifications made on the device during the reporting period, the reverse osmosis process is no longer necessary and wastewater formation is prevent- ed. The same system was utilized in the GEM5 project that we developed, and the forming of wastewater was avoided. Total Water Consumption (m3) 236,357 154,057 134,634 145,832 2019 2020 2021 2022 Water Consumption per Employee (m3/employee) 4.3 2020 2.5 2021 4.5 3.5 2021 2022 While striving to reduce water consumption and increase recy- cling as part of our activities, we also provide support for our customers to improve their water consumption with the servic- es we provide. With our Smart Water Meter application, lever- aging IoT technologies, the meters can be read and valves can be opened/closed remotely, consumptions can be monitored in- stantly, enabling the water consumption to be controlled and the natural resources to be preserved. We offer our “Filiz” application to farmers in order to protect scarce water re- sources and support sustainable agricultural activities which is a field where water consumption is high. Turkcell Filiz communicates critical information such as requirements for plant development, water need and disease risk to farmers, enabling them to take necessary measures. Turkcell Filiz collects this data by monitoring various soil and air parameters through sensors and in- corporating them into algorithms created with artificial intelligence. Most of the farmers in Turkey lack access to technical support and “Filiz” is also note- worthy for its ability to reach agricultural engineers through digital channels. In this regard, we enable access to technical information for those who need it, through digital channels. Integrating these capabilities with technology, we support sustainable agriculture. 190 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.2; SPK A2.4; SPK B9; SPK B11; SPK B21 SPK A2.2; SPK A2.4; SPK B5; SPK B7 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 191 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Waste Management We adopt the approach of generat- ing minimum waste and maximum re- cycling in the management of waste caused by our operations. We per- form waste management activities with the methods and implementa- tions specified in legal regulations. In this regard, we first provide the efficient use of materials such as pa- per, toner and plastic to reduce the production of waste, and we sepa- rate the produced waste and recycle them through licensed companies. We collect used batteries separate- ly, and depending on the location, we recycle them via municipalities or Portable Battery Manufacturers and Importers Association. Through the works we carried in the previous period, we have received the Basic Level Zero Waste Certificate, as the first non-manufacturing company. In 2022 we continued our efforts in this area. With the Waste Management Center we set up, we provide in-site transformation of solid food wastes collected in the mess hall and office floors to produce soil-improving or- ganic fertilizer. We dispose of dangerous waste caused by our activities such as bat- teries, toners, electronics, cables and consumables resulting from our op- erations through licensed recycling companies which have the required competency within the respective reg- ulatory framework. Thus, we prevent hazardous waste from interacting with the environment. On the other hand, in order to prevent waste oil generated in our offices from mixing with domestic wastewater, we use oil trap systems. By selling second hand and other dis- carded items to companies utilizing older technologies, we achieve reuse of products. We aim to utilize 100% of network infrastructure devices with- in these sales. Hence, we contribute to the circular economic system where resources are not needlessly discard- ed or wasted but recycled. As part of the Modem Renewal Project launched in 2019, we refurbish or repair our mo- dems no longer used by our customers and offer them to customers in need of these products. Within the scope of this project, we replaced 90 thousand set-top boxes, 150 thousand Superbox products, 83 thousand ONTs (optical network terminals) and 222 thousand modems. 25% of fiber modems used in 2022 (approximately 162 thousand), and 28% of ADSL modems (approximately 60 thousand) were covered with mo- dems refurbished in 2022. Additionally, 28% of refurbished STBs, 41% of ONTs and 68% of Superboxes were used in the same year and put to service of our customers. We are well aware of the negative ef- fect of electronic products, that have completed their lifespan due to improp- er management, as electronic waste on the environment, and we are conduct- ing our activities in this field with utmost care. In order to turn this situation into an opportunity, we utilize products in electronic waste class which are rich in recyclable material content as part of the circular economy and provide both financial savings and also the efficient use of limited resources. In this context, 83.5 tons of e-waste generated in 2022 was recycled at a rate of 98.2%. With these efforts, 63.4 raw materials were saved and 5.7 tons of CO2e greenhouse gas emissions were prevented. Total Waste Amount (tons) Dangerous Wastes Non-Dangerous Wastes Total 2019 Disposal 0 Recycled 3,567 Disposal 0 Recycled 1,518 5,085 2020 0 2,745 0 953 3,698 2021 0 2,158 0 1,342 3,500 2022 0 1,609 0 1,042 2,651 Recycle into Education As part of the Recycle into Education project, technological wastes brought to recycling boxes in Turkcell stores (unusable mobile phones, computers, tablets and accessories etc.) are sent to recycling in partnership with the authorized organization Informatics Industry Association (TÜBİSAD). All proceeds from recycling are donated to TEGV (Education Volunteers Foundation of Turkey) to be used for children’s qualified education. Turkcell provided 29.4 tons of electronic waste for recycling in scope of this project since its inception in November 2019, 12.7 tons of this amount was in 2022. All income generated was donated to TEGV for children’s qualified education and contributed to the education of 382 children. In its prize-awarding techno-waste collecting campaign among its employees on 27 December, at the end of 2022, Turkcell collected approximately half a ton of wastes and contributed to the recycling of wastes, while raising awareness among its employees on the efficient use of resources and re- cycling, and contributed to education at the same time. Turkcell’s General Manager and the President of the Board of Directors also took part in the contest, and by putting techno-wastes from their households into the re- cycling box, showed their sensitivity in this topic. Since November 2019 a total of 29.4 tons of electronic waste has been recycled through this project. 10,000 saplings On behalf of our customers who prefer environmentally friendly invoices, we have planted 10,000 saplings in the Turkcell Invoice Forest. 2019 2020 2021 2022 5,599.89 4,220.18 3,691.52 3,088.27 Secondhand sales and discarded units sale amount* (tons) * We are aiming to utilize 100% of network related wastes as discards or with secondhand sales. As part of the environmentally friendly invoice campaign, we send invoices to customers by SMS or e-mail instead of a prin- ted invoice. This way we achieve both efficiency in paper use and reduce our posting expenses. In 2022, through the environmental- ly friendly invoice we saved 2,216 tons of paper and 2,037 tons of CO2e emissions, apart from dis- patch effects. On the other hand, we continued planting saplings on behalf of customers who pre- fer the environmentally friendly invoice. With this practice, we planted 10,000 saplings at the Turkcell invoices forest. We carry out all transactions from new subscription to tariff changes, and from buying a new SIM card to settling invoices at Turkcell stores with a digital sig- nature on a tablet in just secon- ds. Digital signature also makes it possible to subscribe to services that require at-home installation for our customers such as DSL, Superbox and TV+. We expect to reduce paper consumption by 30% while digitizing approxima- tely 11 million pages of documents annually with digital signature. Meanwhile, we enable compa- nies from all industries to use the digital signature service. The smart legal document auto- mation solution, which we deve- loped for our legal department that traditionally sees high paper consumption, helps reduce paper use and manual processes throu- gh robotic process automation. Accordingly, we reduce error risk, while becoming more environ- mentally friendly and operating a more effective system. 192 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK A2.2; SPK A2.4; SPK B9; SPK B11 SPK A2.2; SPK A2.4; SPK B9; SPK B11 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 193 Appendices APPENDIX-1: Awards Received by Turkcell in 2022 APPENDIX-2: Turkcell ISO Certificates APPENDIX-3: Cooperated National, International and Non-Governmental Organizations APPENDIX-4: GRI Content Index APPENDIX-5: UNGC Progress Chart APPENDIX-6: Sustainability Principles Compliance Framework Table APPENDIX-7: Greenhouse Gas Verification Statement TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES APPENDIX-1: Awards Received by Turkcell in 2022 Our works in 2022 have also received the appreciation of our stakeholders. The projects and applications we have ac- complished within the year were deemed worthy of reward by many organizations. PSM Awards In PSM Awards, organized by Payment Systems Magazine, Paycell Forest Project was awarded the Silver PSM prize in Social Responsibility category, and Financell Credit Process project won the Silver PSM Prize in the Innovative Customer Interaction and Experience category. Media Excellence Awards With Gift Assistant Page, which facilitates customers’ shopping journey, Turkcell Pasaj was awarded first place in Utility / Productivity Apps category, which awards in the technology ecosystem and applications that add value to life. innovation Customer Centricity World Series With the Customer Movement Program, started in September 2019 to integrate customer-centric view in all disciplines of the company, Turkcell won third place award in its category at the Customer Centricity World Series. At the same com- petition, with its Network Experience pro- ject, Turkcell also won the second place prize in the “Complaint Management” category. Turkey CXA’22 Customer Experience Awards As part of the Turkey CXA’22 Customer Experience Awards, organized in 2022 by Awards International based in England; Turkcell has been awarded; Golden Prize for Best Customer Feedback and Insight category, with the Billing Process Redesign with Customer Feedback Project, where we redesigned the billing experience from beginning to end according to customer feedback, ex- pectations and needs Silver Prize for Best Innovation in Customer Experience (Large Companies) category, with the RPA project “Let the Robot Do It” commenced to improve digitalization at the corporate mobile call center to Silver Price for the Best Customer Service (Up 10,000 Employees) category, with the “Outbound Excellence” pro- ject actualized with a focus to improve the channel experience with analytic qualifications Bronze Prize for Best Use of Technology category, with the sum of 8 different pro- jects realized to improve the mobile net- work experience from end to end Dubai Gitex Global event “Next Generation Data Centers” prize Turkcell’s SDN and Automation focused next generation Turkcell Data Centers, which provide geographically backed- flexible and easy service with up, up-to-date technology to its ICT, DSS and Corporate customers, have been deemed worthy of price in Dubai Gitex Global event. have Brandon Hall Group Excellence Awards We Best Technological Advancement Category bronze award with Turkcell CaseLab project, in Brandon Hall Group Excellence Awards Testing and Learning Evaluation. awarded been Crystal Apple Awards In 2022, Turkcell was awarded 5 sepa- rate awards in the Crystal Apple Awards, named the most prestigious award of the advertising world. Turkcell won the - Crystal Prize in TV & Cinema / Telecommunication Brands and Services category with #ÇokÇekici Come to Çaykara communication; 2 Bronze prizes in Digital, Social Media and Activation / Real Time Action and Influencer & Celebrity Communication with Turkcell Pasaj - Melis Sezen / In My Hand This Moment communication; Bronze prize in Press - Sectoral Categories / Service category with TV+ - Better Stories - Joker communication; Bronze prize in Radio and Audio / Best Radio and Audio Campaign category with Fizy - Listen to Your Music communication. Achievement in Customer Excellence Awards With its efforts and studies to keep its customers always feeling safe, valua- ble and happy, Turkcell was awarded 4 separate awards in Achievement in Customer Excellence Awards organized in 2022 by şikayetvar.com. Turkcell was awarded Diamond Award in Communication (GSM) category, while TV+ won Digital Platform Category Golden Price, and Superonline in Internet Service Suppliers Category and Paycell in Electronic Cash Applications Category won Silver Awards. Stevie Awards for Sales & Customer Service With its Retail Channel Delivery Project, Turkcell was awarded the Bronze Stevie Prize in the Technology Sectors Business Development Success of the Year Category in the Stevie Awards for Sales & Customer Service organized in 2022. Stevie Awards for Women in Business Awards Turkcell’s Women Developers of the Future Climate Ideathon project, where women develop solutions for the cli- mate crisis using technology, won the prize in “Achievement in Women-related Corporate Social Responsibility” in the Stevie Awards for Women in Business contest. Ipra Golden World Awards Turkcell Vadi won 3 golden prizes at once from IPRA Golden World Awards, the world’s most respected public relations award. Many projects from across the world competed in the prize program, or- ganized by International Public Relations Association, and Turkcell Vadi project won the prizes in Art Communication, Event and Sponsorship categories. APPENDIX-2: Turkcell ISO Certificates ISO 9001 Quality Management System ISO 14001 Environmental Management System ISO 14064 Greenhouse Gas Calculation and Verification Management System ISO 22301 Business Continuity Management System ISO 27001 Information Security Management System ISO 45001 Occupational Health and Safety Management System ISO 50001 Energy Management System and encompassing the most important brands of the digital world. Felis Awards In scope of the Felis Awards, one of the most prestigious awards of the adver- tising world, Turkcell was awarded 10 awards in total, five of them being Felis Awards and four of them Success Awards. Digital Transformation of the Year in Telecommunications Sector Award In the SAP Transformation Awards of the Year Ceremony, where the world’s lead- ing technology supplier in corporate applications and software SAP evaluat- ed the most successful innovation and digital transformation projects, Turkcell Finans+ won the Digital Transformation of the Year Award in Telecommunications the Central Sector Award with Finance project, actualized in scope of its Next Generation Finance Digital Transformation works. Central Finance Project was also awarded the Finance Digital Transformation of the Year Award. International Customer Experience Awards (ICXA) Turkcell Global Bilgi was awarded first prize in the world in the Best B2B Customer Experience category at the International Customer Experience Awards with its Telsell Project actualized with Coca-Cola Beverages. Europe’s Best Workplaces 2022 Turkcell Global Bilgi was chosen “Best Employer of Europe” among companies with 500+ employees in the Europe’s Best Workplaces 2022 Awards by Great Place to Work Institute. Deloitte Technology Fast 50 Paycell was awarded “Deloitte the Technology Big Star” award organized by Deloitte the 5th time in a row, which determines the 50 fastest growing tech- nology companies of Turkey and allows them to expand to the global market. Digital Impact Awards Turkcell, with Digital Construction Management software that allows for end-to-end tracking and archiving of documentation in construction projects in digital form, won the Bronze award in the Digital Impact Award organized in 2022 in London. SMARTIES MMA Awards Fizy won the Experimental-Innovative Technology Category Bronze award in SMARTIES 2022 MMA Awards. IDC Turkey Future Enterprise Awards Turkcell’s Let the Robot Do It RPA Project was awarded first place in IDC Turkey Future Enterprise Awards Best in Future of Work Category. Supply Chain Excellence Awards Turkcell My Main Partner Program, ac- tualized to support Startups in purchas- ing processes and to create a Startup ecosystem, was awarded a prize at the Supply Chain Excellence contest, organ- ized for the 26th time in 2022 in London. Study to Determine Special Achievement in GIS Award Fixed GEDI, Infrastructure Areas of Investment and Sales Potential, was awarded Special Achievement in GIS Award by the world’s largest geographical software company ESRI in the contest organized to award in- novative studies in the field of geograph- ical information systems and applied by more than 100,000 projects. Youth Award Turkcell was among the Most Desired Technology Companies to Work In de- termined in Youthall’s survey among 85 thousand university students. Insider Lift Awards 2022 Successful personalization and A/B Testing scenarios applied in the Turkcell Application was awarded an award in the Most Successful In-App Use Category Insider in Lift Awards, organized by 196 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 197 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES APPENDIX-3: Cooperated National, International and Non-Governmental Organizations APPENDIX-4: GRI Content Index Organization Name Level of Engagement 3GPP AUSDER BCTR BGD The 3rd Generation Partnership Project Intelligent Transportation Systems Association of Turkey Blockchain Turkey Platform Membership Membership Membership Information Security Association (ISA) Board of Directors Membership (Tümay Ünal) BUSİAD Bursa Industry and Businessmen Association DEİK ECTA Foreign Economic Relations Board of Turkey European Competitive Telecommunications Association EDİDER Digitalization in Energy Association ENDEAVOR Association for Supporting Active Entrepreneurs Membership Membership Membership Membership Membership ESB ETİD ETSI FKB GSMA GTI IAPP IIC Access Providers Association Electronic Commerce Operators Association European Telecommunications Standards Institute Financial Institutions Union Global System for Mobile Communications Association Global TD-LTE Initiative International Association of Privacy Professionals International Institute of Communication Board of Directors Membership (Mutlu Korkmazer, Yılmaz Küçük) Membership Membership Membership Membership Membership Membership Membership IPTV ASSOCIATION Internet Based Television Technologies Association Membership ITU International Telecommunication Union Membership M-TOD Mobile Telecommunication Operators Association MMA Turkey Mobile Marketing Association MOBİSAD Mobile Communication Tools and Information Technologies Businessmen Association Independent Industrialists and Businessmen Association Next Generation Mobile Networks Payment and Electronic Money Association Turkey People Management Association Board of Directors Membership (Murat Erkan, Serhat Demir, Gediz Sezgin) Membership Membership Membership Membership Membership Membership GRI 2: General Disclosures 2021 MÜSİAD NGMN ÖDED PERYÖN SKD TÜSİAD TÜYİD UN Global Compact WTECH YASED Business World and Sustainable Development Association Membership TELKODER Turkish Competitive Telco Operators’ Association Membership TOBB TUYAD The Union of Chambers and Commodity Exchanges of Turkey Membership Telecommunications Satellite and Broadcasting Business People Association Board of Directors Membership (Gülçin Alıcı Gökçe) TÜBİSAD Informatics Industry Association Turkish Industry and Business Association Membership Membership Turkish Investor Relations Society Board of Directors Membership (Ali Serdar Yağcı) United Nations Global Compact Women’s Association in Technology International Investors Association Membership Membership Membership Statement of use Standards for the period 01 January 2022-31 December 2022. : Turkcell İletişim Hizmetleri A.Ş. has reported in accordance with the GRI 1 used : GRI 1: Foundation 2021 Applicable GRI Sector Standard(s) :N/A GRI STANDARD DISCLOSURE LOCATION General Disclosures OMISSION REQUIREMENT(S) OMITTED REASON EXPLANATION 2-1 Organizational details About the Report (p.28) Our Offices (p.360) ; Turkcell at a Glance (p.29) 2-2 Entities included in the organization's sustainability reporting 2-3 Reporting period, frequency and contact point About the Report (p.28) About the Report (p.28) 2-4 Restatements of information No such restatement has been made - - - - 2-5 External assurance GHG Independent Assurance Report (p.208-209) - 2-6 Activities, value chain and other business relationships 2-7 Employees 2-8 Workers who are not employees Our Strategic Focuses, Initiatives and Opportunities (p.60-67) Value-Driven, Responsible Supply Chain Management (p.168-169) Employee Demographics in 2022 (p.115) Turkcell may obtain external service support as needed for auxiliary tasks related to the nature of the job, technical reasons, or for roles requiring expertise such as cleaning, security, call center, and field support personnel. 2-9 Governance structure and composition Board of Directors Structure (p.72-73) 2-10 Nomination and selection of the highest governance body Board of Directors Structure (p.72-73) 2-11 Chair of the highest governance body Board of Directors Structure (p.72-73) 2-12 Role of the highest governance body in overseeing the management of impacts Turkcell Sustainability Management and Involvement of Senior Management (p.45) 2-13 Delegation of responsibility for managing impacts Turkcell Sustainability Management and Involvement of Senior Management (p.45) 2-14 Role of the highest governance body in sustainability reporting Turkcell Sustainability Management and Involvement of Senior Management (p.45) 2-15 Conflicts of interest 2-16 Communication of critical concerns "2-17 Collective knowledge of the highest governance body" 2-18 Evaluation of the performance of the highest governance body Board of Directors Structure (p.72-73) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Board of Directors (p.10-14) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Board of Directors Structure (p.72-74) Turkcell Sustainability Management and Involvement of Senior Management (p.45) 2-19 Remuneration policies Board of Directors Structure (p.72-73) 2-20 Process to determine remuneration Human Capital (p.113) 2-21 Annual total compensation ratio - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Con- fiden- tiality Const- raints Data regarding remunera- tion is con- sidered as confidential. 198 | TURKCELL 2022 INTEGRATED ANNUAL REPORT SPK C2.4 GRI 2.28 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 199 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES GRI STANDARD DISCLOSURE LOCATION OMISSION REQUIREMENT(S) OMITTED REASON EXPLANATION GRI 2: General Disclosures 2021 2-22 Statement on sustainable development strategy Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.48-49) 2-23 Policy commitments 2-24 Embedding policy commitments 2-25 Processes to remediate negative impacts Human Rights, Business Ethics and Common Values (p.74) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Environmental Management (p.183-184) Turkcell Value Creation Process (p.56-57) 2-26 Mechanisms for seeking advice and raising concerns Turkcell Sustainability Priorities (p.46-47); Interactions with Our Stakeholders (p.52-53) 2-27 Compliance with laws and regulations Competition Management (p.77) 2-28 Membership associations Turkcell’s Sustainability Initiative Memberships (p.54-55); Cooperated National, International and Non-Governmental Organizations (p.198) 2-29 Approach to stakeholder engagement Interactions with Our Stakeholders (p.52-53) 2-30 Collective bargaining agreements Human Rights, Business Ethics and Common Values (p.74) Material Topics GRI 3: Material Topics 2021 3-1 Process to determine material topics Turkcell Sustainability Priorities (p.46-47) 3-2 List of material topics Turkcell Sustainability Priorities (p.46-47) Managing Climate Impacts GRI 3: Material Topics 2021 3-3 Management of material topics GRI 201: Economic Performance 2016 201-2 Financial implications and other risks and opportunities due to climate change 302-1 Energy consumption within the organization Climate Crisis (p.80); Climate Change (p.100); Positive Imprint to the Environment (p.180-193) Climate Crisis (p.80); Climate Change (p.100); Positive Imprint to the Environment (p.180-193) CDP Report 2022 Positive Imprint to the Environment (p.187) 302-3 Energy intensity Positive Imprint to the Environment (p.187) 302-4 Reduction of energy consumption Positive Imprint to the Environment (p.189) 303-3 Water withdrawal Positive Imprint to the Environment (p.190) GRI 302: Energy 2016 GRI 303: Water and Effluents 2018 305-1 Direct (Scope 1) GHG emissions Positive Imprint to the Environment (p.186) GRI 305: Emissions 2016 305-2 Energy indirect (Scope 2) GHG emissions 305-3 Other indirect (Scope 3) GHG emissions Positive Imprint to the Environment (p.186) Positive Imprint to the Environment (p.186) 305-4 GHG emissions intensity Positive Imprint to the Environment (p.186) 305-5 Reduction of GHG emissions Positive Imprint to the Environment (p.186) 306-1 Waste generation and significant waste-related impacts Positive Imprint to the Environment (p.180-183; 192-193) 306-2 Management of significant wasterelated impacts Positive Imprint to the Environment (p.180-183; 192-193) 306-3 Waste generated Positive Imprint to the Environment (p.180-183; 192) 306-4 Waste diverted from disposal Positive Imprint to the Environment (p.180-183; 192) 306-5 Waste directed to disposal Positive Imprint to the Environment (p.180-183; 192) GRI 306: Waste 2020 Pioneering Digital Technologies and Innovation GRI 3: Material Topics 2021 GRI 203: Indirect Economic Impacts 2016 3-3 Management of material topics Intellectual Capital (p.140-153) Social Capital (p.172-177) 203-2 Significant indirect economic impacts Intellectual Capital (p.140-153) GRI 413: Local Communities 2016 413-1 Operations with local community engagement, impact assessments, and development programs Social Capital (p.172-177) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - To be an Integrated Telecommunications Operator Active in a Value Chain Ranging from Fiber Infrastructure to Digital Business Services GRI 3: Material Topics 2021 GRI 203: Indirect Economic Impacts 2016 3-3 Management of material topics Manufactured Capital (p.132-139) 203-1 Infrastructure investments and services supported Manufactured Capital (p. 132-139) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - GRI STANDARD DISCLOSURE LOCATION Enhancing Digital Customer Experience and Satisfaction GRI 3: Material Topics 2021 GRI 416: Customer Health and Safety 2016 3-3 Management of material topics Manufactured Capital (p.132-134) 416-1 Assessment of the health and safety impacts of product and service categories 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services Manufactured Capital (p.132-134) Manufactured Capital (p.132-134) Cyber Security and Data Privacy Protection GRI 3: Material Topics 2021 GRI 203: Indirect Economic Impacts 2016 3-3 Management of material topics Manufactured Capital (p.134); Digital Security and Wellbeing (p.149-151) 203-2 Significant indirect economic impacts Digital Security and Wellbeing (p.149-151) GRI 413: Local Communities 2016 413-2 Operations with significant actual and potential negative impacts on local communities Manufactured Capital (p.134) Decent Workplace GRI 3: Material Topics 2021 GRI 401: Employment 2016 GRI 402: Labor/ Management Relations 2016 GRI 403: Occupational Health and Safety 2018 GRI 404: Training and Education 2016 GRI 405: Diversity and Equal Opportunity 2016 GRI 406: Non- discrimination 2016 GRI 407: Freedom of Association and Collective Bargaining 2016 3-3 Management of material topics Human Rights, Business Ethics and Common Values (p.74); Human Capital (p.112-137); Equality of Digital and Social Opportunity (p.172-173) 401-1 New employee hires and employee turnover Human Capital (p.117, 129) 401-3 Parental Leave Human Capital (p.112) 402-1 Minimum notice periods regarding operational changes Human Capital (p.113) 403-1 Occupational health and safety management system 403-2 Hazard identification, risk assessment, and incident investigation Human Capital (p.119-120) Human Capital (p.119-120) 403-3 Occupational health services Human Capital (p.119-120) 403-4 Worker participation, consultation, and communication on occupational health and safety Human Capital (p.119-120) 403-5 Worker training on occupational health and safety Human Capital (p.119-120) 403-6 Promotion of worker health Human Capital (p.119-120) 403-8 Workers covered by an occupational health and safety management system 403-9 Work-related injuries 403-10 Work-related ill health 404-1 Average hours of training per year per employee 404-2 Programs for upgrading employee skills and transition assistance programs Human Capital (p.119-120) Human Capital (p.119-120) Human Capital (p.119-120) Human Capital (p.123) Human Capital (p.123-131) 404-3 Percentage of employees receiving regular performance and career development reviews Human Capital (p.121) 405-1 Diversity of governance bodies and employees Human Capital (p.115) 405-2 Ratio of basic salary and remuneration of women to men Human Capital (p.114-116) 406-1 Incidents of discrimination and corrective actions taken Human Capital (p.114-116) 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk Human Rights, Business Ethics and Common Values (p.74) GRI 408: Child Labor 2016 408-1 Operations and suppliers at significant risk for incidents of child labor Human Rights, Business Ethics and Common Values (p.74); Value-Driven, Responsible Supply Chain Management (p.168) GRI 409: Forced or Compulsory Labor 2016 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor Human Rights, Business Ethics and Common Values (p.74); Value-Driven, Responsible Supply Chain Management (p.168) OMISSION REQUIREMENT(S) OMITTED REASON EXPLANATION - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 200 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 201 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES GRI STANDARD DISCLOSURE LOCATION Business Ethics and Legal Compliance OMISSION REQUIREMENT(S) OMITTED REASON EXPLANATION APPENDIX-5: UNGC Progress Chart GRI 3: Material Topics 2021 3-3 Management of material topics Turkcell Sustainability Management and Involvement of Senior Management (p.45); Human Rights, Business Ethics and Common Values (p.74-75); Anti-Bribery and Corruption, Compliance with International Capital Markets and Economic & Trade Sanctions and Export Controls (p.76-77); Competition Management (p.77); Artificial Intelligence (p.104); Value-Driven, Responsible Supply Chain Management (p.168) Anti-Bribery and Corruption, Compliance with International Capital Markets and Economic & Trade Sanctions and Export Controls (p.76-77) - - - - - - - - - - - - GRI 205: Anti- corruption 2016 GRI 206 Anti- competitive Behavior 2016 205-2 Communication and training about anti-corruption policies and procedures 205-3 Confirmed incidents of corruption and actions taken Human Rights, Business Ethics and Common Values (p.74) 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices Competition Management (p.77) Pioneering Use of Innovative Digital Technologies in Fundemental Sectors Such as Education, Health, Agriculture, Transportation and Finance GRI 3: Material Topics 2021 3-3 Management of material topics 203-1 Infrastructure investments and services supported GRI 203: Indirect Economic Impacts 2016 203-2 Significant indirect economic impacts Our Strategic Focuses, Initiatives and Opportunities (p.60-67); The Development of Fintech Applications (p.103); Image Processing Services & Solutions (p.148); Digital Business Services (p.151-152); Equality of Digital and Social Opportunity (p.172-173); Water Management (p.190) Our Strategic Focuses, Initiatives and Opportunities (p.60-67); The Development of Fintech Applications (p.103); Image Processing Services & Solutions (p.148); Digital Business Services (p.151-152); Equality of Digital and Social Opportunity (p.172-173); Water Management (p.190) Our Strategic Focuses, Initiatives and Opportunities (p.60-67); The Development of Fintech Applications (p.103); Image Processing Services & Solutions (p.148); Digital Business Services (p.151-152); Equality of Digital and Social Opportunity (p.172-173); Water Management (p.190) Supporting Local Technology Development GRI 3: Material Topics 2021 GRI 203: Indirect Economic Impacts 2016 GRI 204: Procurement Practices 2016 3-3 Management of material topics 203-2 Significant indirect economic impacts Intellectual Capital (p.140-153); Localization Efforts (p.170-171) Intellectual Capital (p.140-153); Localization Efforts (p.170-171) 204-1 Proportion of spending on local suppliers Localization Efforts (p.170-171) - - - - - - - - - - - - - - - - - - Subject UNGC Principles Report Section Human Rights Labour Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights Principle 2: make sure that they are not complicit in human rights abuses Strong Corporate Governance Our Human Capital Value-Driven, Responsible Supply Chain Management Strong Corporate Governance Our Human Capital Value-Driven, Responsible Supply Chain Management Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining Strong Corporate Governance Principle 4: the elimination of all forms of forced and compulsory labour Principle 5: the effective abolition of child labour Our Human Capital Value-Driven, Responsible Supply Chain Management Our Human Capital Value-Driven, Responsible Supply Chain Management Principle 6: the elimination of discrimination in respect of emp- loyment and occupation Our Human Capital Principle 7: Businesses should support a precautionary approa- ch to environmental challenges Our Natural Capital Environment Principle 8: undertake initiatives to promote greater environmen- tal responsibility Our Natural Capital Principle 9: encourage the development and diffusion of envi- ronmentally friendly technologies Our Natural Capital Anti- Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery Strong Corporate Governance 202 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 203 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES APPENDIX-6: Sustainability Principles Compliance Framework Table COMPLIANCE STATUS YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK COMPLIANCE STATUS YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK A. General Principles A1. Strategies, Policies and Goals The Board of Directors determines environ- mental, social and governance (ESG) material issues, risks and opportunities. A1.1 The Board of Directors determines and pub- licly disclose ESG Policies (Ex: Environmental Policy, Energy Policy, Human Rights Policy and HR Policy). A1.2 It determines and publicly discloses its Short and long-term goals regarding ESG policies were determined and publicly disclosed. A2. Implementation/Monitoring The Partnership determines and publicly disc- loses the committees/units responsible for the implementation of ESG policies, Partnership’s the most senior responsibles regarding ESG issues and their duties. Responsible committees and/or units report activities conducted in line with policies to the Board of Directors at least once during the year. A2.1 A2.2 The Partnership develops and publicly disc- loses implementation and action plans in line with the short- and long-term ESG goals. A2.3 Partnership publicly discloses ESG Key Performance Indicators (KPI) and their degree of achievement on a yearly basis. A2.4 The partnership publicly discloses sustaina- bility performance improvement activities regarding business processes or products and services. A3. Reporting A3.1 A3.2 A3.3 The Partnership discloses information on sustainability performance, goals and actions within the annual report in a clear, accurate and complete manner. Partnership publicly discloses information on which of the United Nations (UN) 2030 Sustainable Development Goals its activities are related to. Partnership publicly discloses lawsuits filed and/or concluded against and which are significant in terms of ESG policies and/or can significantly impact company’s activities. A4. Verification A4.1 Partnership’s ESG Key Performance measu- rements are verified by an independent third party and publicly disclosed. Turkcell Sustainability Management and Involvement of Senior Management (p.45) Operational Risks (p.80) Turkcell Sustainability Management and Involvement of Senior Management (p.45) www.turkcell.com.tr/en/aboutus/ corporate-social-responsibility/ sustainability Inclusive Positive Imprint (p.108, 132, 140, 154) Positive Imprint to the Environment (p.182) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Turkcell Sustainability Management and Involvement of Senior Management (p.45) Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.48-49) Human Capital (p.112-113) Intellectual Capital (p.140) Social Capital (p.154) Natural Capital (p.182-193) Inclusive Positive Imprint (p.108, 132, 140, 154) Manufactured Capital (p.132) Intellectual Capital (p.140) Social Capital (p.154) Positive Imprint to the Environment (p.182) Manufactured Capital (p.133-139) Intellectual Capital (p.141-153) Social Capital (p.155-166) Natural Capital (p.182-193) Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.48-49) Turkcell Value Creation Process (p.56-57) Human Capital (p.112-113) Manufactured Capital (p.132) Intellectual Capital (p.140) Social Capital (p.154) Positive Imprint to the Environment (p.182-184) Supported Sustainable Development Goals (p.50-51) Competition Management (p.77) Consolidated Financial Statement Footnotes (p.313-325) GHG emissions data disclosed in the report have been verified by an independent audit firm. Greenhouse Gas Emissions (p.186) B1 B2 B3 B4 B5 B6 B7 B8 B9 B10 B11 B12 B13 B14 B. Environmental Principles The partnership publicly discloses policies and practices, action plans regarding environmen- tal management and environmental manage- ment systems (known as ISO 14001 standard) and programs. The Partnership publicly discloses limitations for reporting scope, reporting term, reporting date and conditions regarding environmental reports prepared for sharing information on environmental management. Disclosed in A2.1. The environmental targets that are included in the performance incentive systems on a stakeholder basis (such as board members, executives, and employees) have been publicly disclosed. The partnership publicly discloses how the prio- ritized environmental issues have been integra- ted into business objectives and strategies. Disclosed in A2.4. The Partnership publicly discloses how environmental issues are managed and integ- rated into business objectives and strategies throughout the partnership value chain, including suppliers and customers as well as the operational process. The Partnership publicly discloses its involve- ment in policy-making processes of environmental organizations and NGOs and cooperation established with these institutions. The Partnership publicly discloses periodically comparable data on environmental impacts in the light of environmental indicators (GHG emis- sions (Scope-1 (Direct), Scope-2 (Energy indirect), Scope-3 (Other indirect) ), air quality, energy ma- nagement, water and wastewater management, waste management, biodiversity impacts). The Partnership publicly discloses standard, protocol, methodology, and base year details used to collect and calculate its data. The Partnership publicly discloses increase or decrease in environmental indicators for the re- porting year in comparison with previous years. The Partnership sets short and long-term goals for reducing its environmental impacts and publicly discloses progress in these goals in com- parison with goals set for the previous years. The partnership set a strategy for fighting with cli- mate crisis and publicly discloses actions planned. The Partnership establishes and publicly disc- loses programs or procedures in order to avoid or to minimize potential negative impacts of products and/or services. The Partnership takes and publicly discloses actions to enable third parties (ex: suppliers, cont- ractors, dealers, etc) decrease their GHG emissions. Environmental Management (p.183) About the Report (p.28) Environmental Management (p.183-184) Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.48-49) Natural Capital (p.180-184) Value-Driven, Responsible Supply Chain Management (p.168-169) Natural Capital (p.180-184, 191) Climate Change (p.185) Natural Capital (p.186, 187, 190, 192, 193) Natural Capital (p.183) Natural Capital (p.182, 186, 187, 190, 192, 193) Positive Imprint to the Environment (p.182) Climate Change (p.180-181, 185) Turkcell Energy Solutions (p.188) Turkcell Energy Solutions (p.188) 204 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 205 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES B15 B16 B17 B18 B19 B20 B21 B22 B23 B24 B25 C1.1 C1.2 C1.3 The Partnership publicly discloses environmental benefits/profits or cost savings achieved through initiatives and projects carried out to reduce its environmental impacts. The Partnership publicly discloses Scope-1 and Scope-2 energy consumption data (natural gas, diesel, gasoline, LPG, coal, electricity, heating, cooling, etc.). The Partnership publicly discloses information on electricity, heat, steam and cooling genera- ted in the reporting year. The partnership carries out and publicly discloses studies on increasing the use of renewable energy, transition to zero or low carbon electricity. The Partnership publicly discloses renewable energy production and usage data. The Partnership conducts energy efficien- cy projects and publicly discloses energy consumption and emission reductions due to energy efficiency projects. The Partnership publicly discloses water consumption, amount of underground or surface water withdrawn if any, recycled or discharged, its sources and procedures. The Partnership publicly discloses whether operations or activities are included in any carbon pricing system (Emission Trading System, Cap & Trade, or Carbon Tax). The Partnership publicly discloses the carbon credit information accumulated or purchased during the reporting period. The Partnership publicly discloses details on carbon pricing if applied within the partnership. The Partnership publicly discloses the platfor- ms where environmental information of the Partnership published. C. Social Principles C1. Human Rights and Labour Rights The Partnership develops a Corporate Human Rights and Employee Rights Policy in compliance with the Universal Declaration of Human Rights, the ILO Conventions which Turkiye has appro- ved, and other relevant legal regulations; deter- mines individuals responsible for applica-tion of the policy, and publicly discloses policy and people responsible for its practice. The Partnership includes subjects such as fair workforce, improvement of working standar- ds, female employment and inclusivity (such as no dis-crimination based on gender, race, religion, language, marital status, ethnic iden- tity, sexual orientation, gender identity, family responsibilities, trade union activities, political views, disabilities, social and cultural differen- ces, etc.) in its Labour Rights Policy considering also supply and value chain impacts. The Partnership publicly discloses measu- res taken to respect the rights of specific economically, environmentally, and socially vulnerable groups (such as low-income groups, women, etc.) or minority rights/equal op-portunities along the value chain. COMPLIANCE STATUS YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK COMPLIANCE STATUS YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK Energy Efficiency (p.189) Energy Management (p.187) Energy Management (p.187) Turkcell Energy Solutions (p.188) Turkcell Energy Solutions (p.188) Energy Efficiency (p.189) Water Management (p.170) 2022 CDP Report Greenhouse Gas Emissions (p.186) 2022 CDP Report 2022 CDP Report Human Rights, Business Ethics and Common Values (p.74-75) Human Rights, Business Ethics and Common Values (p.74-75) Value-Driven, Responsible Supply Chain Management (p.168) Diversity, Inclusion, and Equal Opportunity (p.114-116) C1.4 The Partnership publicly discloses develop- ments on preventive and corrective practices regarding discrimination, inequality, human rights violations, forced labor, and child labour. The Labour Rights Policy includes subjects such as investments in employees (such as training, development policies), compensation, fringe benefits, the right to unionize, work/life balance solutions, and talent management. C1.5 The Partnership establishes mechanisms for resolving employee com-plaints and disputes have been established, and processes for resolving disputes. The Partnership publicly discloses activities conducted during the report-ing year in order to ensure employee satisfaction. The Partnership establishes and publicly disc- loses its OHS Policy. The Partnership publicly discloses precautions taken to prevent occupa-tional accidents and to protect health and accident statistics. The Partnership establishes and publicly disc- loses its policies on protec-tion of personal data and data security. C1.6 C1.7 C1.8 The Partnership establishes and publicly disc- loses its Code of Ethics. C1.9 C1.10 C2.1 C2.2 The Partnership discloses its activities on community investments, social responsibility, financial inclusion and access to financing. The Partnership organizes briefings and trai- nings programs on ESG policies and practices for employees. C2. Stakeholders, International Standards and Initiatives The Partnership establishes and publicly discloses a customer satisfaction policy regarding manage- ment and resolution of customer complaints. The Partnership publicly discloses information regarding communication with stakeholders (including who the stakeholders are, the topics and the frequency of communication) C2.3 The international reporting standards adop- ted in reporting have been disclosed. C2.4 C2.5 D1 D2 The Partnership publicly discloses sustai- nability principles adopted, as well as the international organizations, committees, and principles signed or joined. The Partnership makes improvement efforts to be included in Borsa Istanbul’s and/or interna- tional index providers’ sustainability indices. D. Corporate Governance Principles The Partnership received stakeholder opinions in determining measures and strategies in the field of sustainability. The Partnership works on increasing aware- ness about the subject of sustainability and its importance through social responsibility projects, awareness events, and trainings. Diversity, Inclusion, and Equal Opportunity (p.114-116) Value-Driven, Responsible Supply Chain Management (p.168-169) Human Rights, Business Ethics and Common Values (p.74) Human Capital (p.112-113) Training and Development Programs (p.123) Human Rights, Business Ethics and Common Values (p.74) Employee Loyalty and Happiness (p.117) Safe and Healthy Work Environment (p.119-120) Safe and Healthy Work Environment (p.119-120) Digital Security and Wellbeing (p.149-150) www.turkcell.com.tr/tr/gizlilik-ve-gu- venlik?page=kisisel-verilerin-korunmasi Human Rights, Business Ethics and Common Values (p.74) www.turkcell.com.tr/todiek Techfin Services (p.66-67) Social Investment and Sponsorship Projects (p.174-177) Environmental Management (p.184) Customer Satisfaction Management (p.166) Interactions with Our Stakeholders (p.52-53) About the Report (p.28) Turkcell’s Sustainability Initiative Memberships (p.54-55) Sustainability Indices and Performance Indicators (p.93) Turkcell Sustainability Priorities (p.46-47) Interactions with Our Stakeholders (p.52-53) Equality of Digital and Social Opportunity (p.172-173) Social Investment and Sponsorship Projects (p.174-177) 206 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 207 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES APPENDIX-7: Greenhouse Gas Verification Statement TURKCELL İLETİŞİM HİZMETLERİ A.Ş. Aydınevler Mah. İnönü Cad. No:20 Maltepe/İstanbul To whom it may concern, This letter is presented to TURKCELL İLETİŞİM HİZMETLERİ A.Ş. to present opinion of the Bureau Veritas Certification Turkey on the Greenhouse Gases Verification for the period 1 January 2022 to 31 December 2022. Bureau Veritas Turkey consent to release of this letter by you to the Carbon Disclosure Project in order to satisfy the terms of CDP disclosure requirements. Bureau Veritas Turkey not accepts or assumes any responsibility or liability on our part to CDP or to any other party who may Access to this letter or assurance report. TURKCELL İLETİŞİM HİZMETLERİ A.Ş. commissioned Bureau Veritas to perform a verification of its 2022 GHG Inventory. The verification was performed on March 2023. The GHG assertions verified were the following: 1. That the 2022 GHG Inventory for TURKCELL İLETİŞİM HİZMETLERİ A.Ş. has been developed in accordance with common industry practice, including ISO 14064-1:2018 Standard. 2. That the calculated total GHG emissions for the 2022 are 1,349,268 tons of CO2e (Direct Emissions: 16,178 tCO2e, Indirect emissions from imported energy: 0 tCO2e (emission is 414,911 tCO2e but 1.000.000 kwh YEK-G certificate retired), Indirect emissions from transportation: 19,092 tCO2e, Indirect emissions from products used by organization: 443,235 tCO2e, Indirect GHG emissions associated with the use of products from the organization: 870,763 tCO2e, Emissions Due to Biomass combustion: Nill) (the emission sources included for each source has been given in verification report) The verification task was to form an opinion at a reasonable level of assurance about the above GHG assertions, regarding: 1. Conformance with the general requirements of ISO 14064-1:2018. 2. Reasonableness of the calculated emissions for the 01.01.2022-31.12.2022. The verification performed by Bureau Veritas applied ISO 14064-3 International Standard for GHG verifications. The following verification activities were conducted: 1. Review of documentation, controls and methodologies, including other verification reports, 2. Assessment of risks and verification planning, 3. Assessment of documentation, controls and methodologies, including the facility quality management systems, 4. Documentation of verification findings and outstanding issues in verification report, 5. Assessment and documentation of resolutions to outstanding issues in verification report, 6. Issuance of verification statement and completion of verification. GHG Assertion #1: The GHG inventory conforms to the general requirements of ISO 14064-1 Standard. GHG Assertion #2: That the calculated total GHG emissions for the 2022 are 1,349,268 tons of CO2e (Direct Emissions: 16,178 tCO2e, Indirect emissions from imported energy: 0 tCO2e (emission is 414,911 tCO2e but 1.000.000 kwh YEK-G certificate retired), Indirect emissions from transportation: 19,092 tCO2e, Indirect emissions from products used by organization: 443,235 tCO2e, Indirect GHG emissions associated with the use of products from the organization: 870,763 tCO2e, Emissions Due to Biomass combustion: Nill) (the emission sources included for each source has been given in verification report) View Declaration The greenhouse gas emission data for 2022 has been verified as a result of verification audit held on the basis of international standards has been verified with reasonable assurance. Verifier Opinion and Qualifications Based on the process and procedures conducted, the GHG assertion is prepared in accordance with the requirements of ISO 14064-1:2018. Based on the process and procedures conducted, the GHG assertion is materially correct and is a fair representation of the GHG data and information. Date: 10 March 2023 Egemen Belet Lead Verifier İbrahim TAGAY Certification Manager 208 | TURKCELL 2022 INTEGRATED ANNUAL REPORT MERKEZ : Esas Maltepe Ofispark Altayçeşme Mah. Çamlı Sok. No: 21 Kat: 8 Karşıyaka 34843 Maltepe– İstanbul Tel:+90 (216) 518 40 50 Fax:+90 (216) 518 39 00 İzmir Tel:+90 (232) 330 60 40 Fax:+90 (232) 330 60 18 İZMİR: 6471 Sok. No:27 Kat:4 Daire:8 ANKARA : BURSA : Umi Plaza Yeni Karaman Mah. Mustafa Kemal Mah. 2127 Sok. Sanayi Cad. No: 150/23 Osmangazi - Bursa Tel:+90 (0224) 453 25 70 Fax:+90 (0224) 453 25 76 Tel:+90 (0 312) 219 65 69 Fax:+90 (0312) 219 64 49 No: 26/2 Çankaya – Ankara ANTALYA : Etiler Mah. Adnan Menderes Bulvarı Sami Kaya İş Merkezi No: 47 K: 2 D: 12 Antalya Tel:+90 (0 242) 243 30 82 Fax:+90 (0 242) 243 30 GRI 2.5 GRI 2.5 MERKEZ : Esas Maltepe Ofispark Altayçeşme Mah. Çamlı Sok. No: 21 Kat: 8 Karşıyaka 34843 Maltepe– İstanbul Tel:+90 (216) 518 40 50 Fax:+90 (216) 518 39 00 İzmir Tel:+90 (232) 330 60 40 Fax:+90 (232) 330 60 18 İZMİR: 6471 Sok. No:27 Kat:4 Daire:8 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 209 ANKARA : BURSA : Umi Plaza Yeni Karaman Mah. Mustafa Kemal Mah. 2127 Sok. Sanayi Cad. No: 150/23 Osmangazi - Bursa Tel:+90 (0224) 453 25 70 Fax:+90 (0224) 453 25 76 Tel:+90 (0 312) 219 65 69 Fax:+90 (0312) 219 64 49 No: 26/2 Çankaya – Ankara ANTALYA : Etiler Mah. Adnan Menderes Bulvarı Sami Kaya İş Merkezi No: 47 K: 2 D: 12 Antalya Tel:+90 (0 242) 243 30 82 Fax:+90 (0 242) 243 30 Group Companies and Other Information on Corporate Governance Our Subsidiaries Subsequent Events After the Reporting Period Statement of Compliance with Corporate Governance Principles Corporate Governance Principles Compliance Report Corporate Governance Information Form Roles of Turkcell Board Members at Other Companies Conclusion of the Subsidiary Report TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Our Subsidiaries14 lifecell started its operations lifecell in Ukraine in February 2005. In 2022, life- cell’s 3-month active subscriber base decreased by 0.7 million to 8.5 million. lifecell sustained its leadership in the Ukrainian market in smartphone pen- etration, which had reached 84.3% by 2022 year-end. the first operator lifecell was in Ukraine to launch 4.5G services for its customers in the 2,600 MHz frequency band in 2018, followed by a success- ful launch in the 1,800 MHz frequency band within the same year. As of the end of 2022, lifecell 4G coverage is available in 16,592 settlements with 30.7 million of Ukrainians. lifecell’s 3G and 4.5G networks have a geographi- cal coverage of 60.4% and population coverage of 77.7% in Ukraine. In 2022, the number of three-month active subscribers using 3G and 4.5G remained unchanged at 5.8 million, while mobile data usage per user grew by 15%. The company achieved in strong operational performance 2022, with revenue and EBITDA growth of 11.0% and 14.6%, respectively (in UAH terms). lifecell registered positive net income in 2022, which was a result of this strong performance. lifecell’s rev- enues in TRY terms rose 70.1% to TRY 4,774 million. Since Russia attacked Ukraine on February 24 the main task of lifecell team was to ensure continuous mo- bile network operation and to keep Ukrainian people connected. During the full-scale war, lifecell supported its subscribers in Ukraine and abroad providing many basic services at no extra charge so that subscribers can stay in touch with their families and friends. Starting from May 2022, life- cell subscribers can use tariff plans’ gigabytes in the service package, not only in Ukraine but also abroad in more than 30 countries at no extra charge. included Since the beginning of hostilities in Ukraine, lifecell engineers have been doing their best to ensure the conti- nuity of the mobile network opera- tion. The team promptly optimized the network operation in different regions to maximize the capacity of both 2G connection and 3/4G high-speed mobile Internet access services in the regions where Ukrainians from com- bat zones were evacuated. To enable the mobile network to meet the grow- ing demand for data services and avoid congestion, lifecell turned on LTE coverage in the 2100 MHz band. Also, more than 670 new base stations mostly in the Central and Western re- gions were built. In March lifecell together with other mobile operators launched national roaming in Ukraine. It gave Ukrainians an opportunity to switch to the net- work of other operators if the network of their operator is unavailable at the moment. In April lifecell began to use the Starlink satellite system for quick restoration of the mobile network in the unoccupied territories. In June lifecell launched the regis- tration of subscribers’ numbers via My lifecell application using digital documents in DIIA. It helps the sub- scribers easily and quickly go through the procedure of registration without visiting the operator’s store. Also, the service of transferring phone numbers from SIM to eSIM in the monobank ap- plication was launched. lifecell was the first Ukrainian mobile operator who launched VoLTE and VoWiFi technologies for calls VoLTE і VoWiFi in 2022. In September lifecell launched RCS messages for the first time on the Ukrainian telecom market. In October lifecell started testing a pi- lot project of powering base stations with solar panels. It is expected to be a good solution in areas where access to electricity grids may be difficult or damaged due to military actions. lifecell has made it possible for sub- scribers who want to change their mo- bile operator using MNP to do it online without visiting an operator’s store. The procedure for transferring a number to lifecell can be carried out with the help of eSIM or using a new operator’s start- er package. During 2022 lifecell has been holding its leading position on the Ukrainian telecom market by the num- ber of ported subscribers. Several times during the year 2022 lifecell provided doctors, military personnel and critical infrastructure workers with packages of 10,000 minutes for calls, 10,000 GB of Internet and 10,000 SMS. In December 2022, lifecell launched an NFT marketplace, a platform for the exchange of non-fungible tokens, where it publishes its charity collec- tion. The NFT Talkers project aims to raise funds to support Ukraine and the artists during the war. Despite the losses and damages af- fected by the war to lifecell’s infra- structure and operations, the com- pany signed Memorandum with the Ministry of Digitalization about trans- ferring UAH 40 million to United24 - the national platform for collecting do- nations in support of Ukraine, creat- ed at the initiative of the President of Ukraine Volodymyr Zelensky. BeST BeST (Belarusian Telecommunications Network), which joined the Turkcell Group in July 2008, became the first mobile operator to offer 3G servic- es in Belarus in November 2009. As of December 31, 2022, BeST operated 2G and 3G services in all cities with a population of more than 10,000, and provided 2G services on all princi- pal intercity highways and roads of the Republic of Belarus, which cor- responds to a coverage of approxi- mately 99.8% of the entire population of Belarus, or 93.1% geographical coverage. BeST, in which our Company has 80% shareholding, remaining 20% shares of BeST, owned by the Republic of Belarus were purchased in December, 2022. The share transfer has been completed on December 9, 2022. BeST became one of the first two op- erators to offer 4G services in August 2016 through LTE infrastructure es- tablished by beCloud. BeST provides 4G LTE services across all regions and major cities of Belarus with 89.2% 4G geographical coverage. The share of 4G subscribers reached 78% of the 3-month active subscriber base in 2022. Increasing 4G services pene- tration has led to an average monthly data consumption per user to 16.2 GB. The 4G network serves 81% of the total data traffic as of 2022. While converting subscribers to 4G users, BeST continues to transform itself from a communication ser- vices provider to a digital operator. Accelerating digital subscriptions and increasing its share in subscriber acquisition, enhancing self-service capabilities via mobile application and web channels, extending digi- tal services portfolio and penetra- tion are the main initiatives in 2022 to drive the digitalization journey. BeST enriches customers’ digital experienc- es by bringing together connectivity and content, enables the growth of ARPU driven by data services and diversified digital services portfolio in accordance with Turkcell’s strat- egy. Accordingly, BeST has included BiP, fizy, lifebox, Magazines, TV+, and Games and Digital Book Platforms to its digital services portfolio. As of 2022 year-end, 38% of the 3-month active subscribers use at least one digital service and solution. BeST has launched a payment service in 2022 through its self-service mobile application, which enables customers to make payments and money trans- fers by using their mobile balances. The payment service enhances the seamless digital experience of the customers, and increases customer engagement and loyalty. BeST is the first mobile operator in Belarus to launch a digital SIM card activation service via a mobile appli- cation using facial recognition tech- nology based on a machine-learning algorithm in 2020. This service is de- veloped successfully by lifetech. lifetech, in which BeST has 100% in shareholding, provides services the fields of telecommunication and information infrastructure solutions, and communication technologies, software development and security systems. lifetech successfully provides IT-based solutions to Turkcell Group and other customers and carries out software development projects both in Belarus and other countries. Kuzey Kıbrıs Turkcell Kuzey Kıbrıs Turkcell was established in 1999 as a 100% subsidiary of Turkcell and commenced operations. Kuzey Kıbrıs Turkcell continues its ac- tivities as the leading operator of the TRNC with its infrastructure cover- ing almost the entire population, and an active subscriber market share of 65%15 excluding telemetry accord- ing to Information Technologies and Communications Authority data for third quarter of 2022. Getting in the fixed broadband mar- ket in TRNC with Lifecell Digital Ltd. in 2018, it continues to serve in this field, reaching second place with the mo- mentum it has gained in a short period of time. Kuzey Kıbrıs Turkcell participated in the 4G/5G authorization tender held in the Turkish Republic of North Cyprus, and with a tender value of 19,096,824 USD including V.A.T. for the 247 MHz frequency band, holds the 4G/5G authorization document as of November 8th, 2022. Thanks to the 4.5G infrastructure, which will com- mence operation within 10 months, mobile broadband speed will have increased by 10 times on average. In 2022, Kuzey Kıbrıs Turkcell regis- tered revenue of TRY 473 million on 54.3% annual growth. 14 Not all our subsidiaries are included in our Subsidiaries section. You can find the list of all subsidiaries in the integrated annual report appendix Capital Markets Board Report, under footnote 1. 15 Active subscriber market share excluding telemetry 212 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 213 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Global Bilgi Turkcell Global Bilgi offers new gen- eration services closely following the digitalization trends and leveraging 23 years of experience in customer expe- rience. Turkcell Global Bilgi acts as the strategic business partner of brands, and aims to enhance customer sat- isfaction and consequently its reve- nues creating customized solutions for more than 100 companies including Turkcell itself. Operating in Turkey and Ukraine, Turkcell Global Bilgi is the first and still the only Turkish customer experience center which provides service abroad with its Ukraine investment. Employing 15,000 people, Turkcell Global Bilgi leads the sector and creates value with 10,878 women employees, which make up 69% of the total workforce. Turkcell Global Bilgi is among Turkey’s top 500 IT companies and provides call center services and also research management, customer experience design, social media management and technological support services. Turkcell Global Bilgi, which has imple- mented its own digital platforms in its R&D center, also provides robotic pro- cess automation (RPA), cloud-based switchboard infrastructure, digital assistant and self-service information technologies technical services to companies. Global Tower Global Tower, Turkey’s leading tower company, today operates in four coun- tries. Global Tower provides tower leasing, tower build & sell, tower main- tenance and contract management services to mobile operators, radio and TV broadcasters, internet service pro- viders, energy companies and public institutions. Global Tower also pro- vides satellite services and solutions to its customers in accordance with its end-to-end services approach. The company currently offers closed circuit satellite services over two thousand points from its own infrastructure with geographic redundancy. The compa- ny aims to enrich product and service diversity by following industry trends. Global Tower has a portfolio of 10,910 towers as of end of 2022, distributed as follows; • Turkey: 8,975 (owned: 4,560, right of use: 2,220, contract management: 2,195) • Ukraine: 985 (owned) • Belarus: 835 (right of use) • TRNC: 115 (right of use) Superonline İletişim Hizmetleri A.Ş. Turkcell Superonline was established in 2009 with the merger of our subsid- iary Tellcom (established in 2004 as Bilişim Telekomunikasyon and became Tellcom in 2006) and Superonline pur- chased from Çukurova Group. The company provides telecommunication services to individual, corporate and operator customers with the brand Turkcell Superonline. It has been au- thorized by ICTA to provide Internet Providing Service, Fixed Telephone Infrastructure Management Service, Satellite Communication Service, Service, Cable Broadcast Service and Virtual Mobile Network Service. Turkcell Superonline has invested a total of TRY 6.1 billion as of 2022 within the scope of these authorizations. Superonline re- corded revenues of TRY 10.0 billion and EBITDA of TRY 4.5 billion in 2022. As of the end of 2022, Turkcell Superonline has 2.9 million broadband internet customers, 2.1 million of which is over its own fiber infrastructure, and 1.3 million IPTV customers under the TV+ brand. As of the same date, Turkcell Superonline provides fiber access on 5.4 million households in 28 cities with 59 thousand km roll-out at speeds up to 10 Gbps over its own infrastructure. Moreover, while Turkcell Superonline provides fixed broadband service to more households through agreements signed with other network owner oper- ator within the sector, it enables related operators to offer broadband internet services to their customers through the Turkcell Superonline infrastructure, as well. Turkcell Superonline offers voice transmission and termination, internet, point-to-point data connections, net- work security solutions, server hosting in 8 data centers, 4 of which are new gen- eration, and cloud services to its corpo- rate and operator customers. In accord- ance with its visions of transforming the Silk Road into a Fiber Road and making Turkey an internet hub, which it has been following since 2008, it has carried more than 15 TB capacity with 13 border connection points in 2022. Turkcell Finansman - Financell Turkcell Finansman A.Ş., one of the key players in the Turkish financing sector, provides financing solutions to cor- porate and individual customers for their purchases of technology-based services and products under the “Financell” brand. Providing services in around 1,100 Turkcell stores, 2,318 DSN+ (Digital sales point) stores and digital sales channels all over Turkey, Financell has main- tained its leading position in the non- bank financial sector with the highest number of customers for years. As of the end of 2022, Turkcell Finansman A.Ş., with an asset size of TRY 4.2 billion, has extended approx- imately 15 million loans amounting TRY 28.5 billion to date; in 2021, it be- came active in corporate loans with its digital transformation loan. On the other hand, thanks to the credit risk infrastructure and digital transforma- tion projects carried out in 2021, the Company continues to manage its credit risk successfully, making effec- tive credit evaluation. Financell, which started to provide financing services to Corporate and Superonline cus- tomers with the projects completed in 2021, continues to provide financ- ing solutions in all products and ser- vices sold by the Turkcell Group. With its improving infrastructure, Financell started to operate in channels other than Turkcell in 2022 with new prod- ucts such as digital holiday loans and vehicle loans. Turkcell Sigorta Aracılık Hizmetleri A.Ş. techfin Another initiative, Turkcell Sigorta Aracılık Hizmetleri A.Ş., aims to offer innovative solutions in the risk management of customers with fast and easy-to-access products under the Güvencell brand. Turkcell Sigorta Aracılık Hizmetleri A.Ş. meets its customers’ insurance needs by offering device insurance, bill protection, supplemental health and personal ac- cident insurance as its main products. In addition to these, in 2022, it started to sell TCIP compulsory earthquake and travel health insurance. Turkcell Dijital Sigorta A.Ş. Turkcell Digital Dijital Sigorta A.Ş. which will carry out innovative end- to-end insurance activities focused on digital experience was estab- lished on 21.06.2022. On 17.10.2022, an application for an insurance license was made before the Insurance and Private Pension Regulation and Supervision Agency (SEDDK). As of the end of 2022, the licensing process continues. Turkcell Ödeme Hizmetleri ve Elektronik Para Hizmetleri - Paycell Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. (TÖHAŞ), added the E-Money license in 2017 to the pay- ment services license it obtained from the BRSA in 2016. While a rapid techfin transformation has taken place in the world in the past 10 years, the Turkish market also shows a high potential for the expansion of techfin services with its attractive internal dynamics. In particular, the high share of young population, high rate of smart device penetration, approximately 30 million potential unbanked users, current high rate of cash usage in shopping and rising e-commerce volume stand out as the factors that will support the rapid rise in the penetration of techfin solutions. The COVID-19 pandemic that has impacted the world since the start of 2020 has also accelerated this transformation. Particularly, chang- ing living conditions and needs led to increased customer focus on digital platforms. As such, e-commerce was one of the sectors most positively impacted. In accordance with these needs and changing customer habits, our vision with Paycell is to enable more users to benefit from financial services through fast and secure payment solutions that we created by combining technology with financial services. We continue to lead the techfin industry by achieving record transac- tion volumes in many products. While the number of Paycell customers reached 7.7 million in 2022, the num- ber of Paycell application downloads exceeded 19.9 million with the new features included. The total transac- tion volume through Paycell reached TL 37.1 billion by the end of 2022. Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş.* Sofra Kurumsal ve Ödüllendirme Hizmetleri A.S. is a meal card com- pany established in 2018 in partner- ship with Turkcell, Belbim and PTT. It serves under the Paye Kart brand. It has reached more than 16 thousand merchants across Turkey. * We have 33% shareholding. The Paye meal card is the first one that can be used on transportation. Paye Card, which is a contactless card, can be used at all points where the Istanbul Card is valid, in addition to its meal card feature. Paye offers an easy payment service that allows users to save time while paying for their meals through its contactless payment feature.Paye Kart offers fast and easy payment with the QR method at contracted stores and market chains with Paycell QR payment infrastructure. At the same time, the Paye Card Online payment option provides conveni- ence and time saving through online shopping from contracted stores with home delivery. Turkcell Teknoloji Turkcell Teknoloji has been contribut- ing to the development of the techno- logical infrastructure of Turkcell, the leading company in Turkey’s telecom- munication sector since 2006, with the strategy of expanding its products and services in international markets, and offers its unique solutions to the use of operators abroad. In this direc- tion, Turkcell Teknoloji aims to develop new digital and ICT services around the world according to the latest tech- nology and market requirements, and to expand the regions that Turkcell Group operates. Products and servic- es developed by Turkcell Teknoloji to- day serve more than 100 million users in 15 countries. Turkcell continues to rapidly increase its position in technological studies. With the motivation of breaking new ground in Turkey and worldwide, Turkcell Teknoloji continues to devel- op by having the largest and most competitive R&D structure in Turkey, employing 965 research engineers as of 2022. Turkcell Teknoloji aims to 214 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 215 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES “innovative develop technologies in communications and in the areas where it has an impact”. The company also targets to be a “leader, pioneer, and role model in Turkey by employ- ing the most talented human capital in the R&D industry”. It expands its scope from being a technology-oriented network provider to a service-orient- ed experience provider, and becomes an R&D center in national and inter- national markets with the innovative solutions it develops. 966 registered patents since 2007. Pioneering the generation of new technologies, Turkcell Teknoloji has played an important role in the dis- semination of technology by pub- lishing 24 academic and 110 technical publications on national and interna- tional platforms in 2022. Additionally, the technology experience of the ecosystem was increased by inten- sively continuing product promotion, conference participation and training activities in various channels. information Turkcell Teknoloji’s focus areas are roaming solutions, big data process- ing, business intelligence applications, smart cloud platform and solutions developed on the platform, loca- tion-based services and platforms, systems, geographic customer relationship management and solutions, network management solutions, new generation value add- ed services, mobile financial systems, music and entertainment services, IPTV services, mobile marketing solu- tions, Internet of Things (IoT), AR/VR, 5G infrastructure projects, mobile communication solutions, campaign management systems, smart SIM card solutions, digital identity technolo- gies; image and video processing, text and natural language analysis (NLP), recommendation engines, voice an- alytics, robot assistants, robotic pro- cess automation, mobile analytical platforms within the scope of artificial intelligence developments; artificial intelligence in health, business appli- cation solutions, learning and edu- cation application solutions, e-mail and search engine solutions, digital broadcasting solutions, CDN (Content Delivery Network) Solutions, Over- the-Top (OTT), AIOPS/devops and blockchain solutions. Turkcell Teknoloji has reached the leading position in its sector in Turkey with 3,564 national and 216 inter- national patent applications and Lifecell Ventures Established as a 100% Turkcell sub- sidiary in the Netherlands, Lifecell Ventures’ mission is to offer digital communication, content-based entertainment, music, TV applica- tions and technology solutions such as performance and network follow up/viewing tools, customer value management platform developed by Turkcell Group companies and technology partners to the global market. The company realized its first overseas digital solution partnership in 2017 with the revenue sharing model at the Eastern European operator Moldcell, with the “BiP” and “lifebox” products. With the agreement signed with Lifecell Ventures in January 2019, Digicel, headquartered in Jamaica, launched BiP, Billo (lifebox) and PlayGo (TV+) products in 32 countries in the Caribbean, Central America, and Asia Pacific regions last year, adding them to its digital services portfolio. Digicel is also able to follow trends instantly with RTM (Real Time Monitoring Solution) and RTA (Real Time Action Solution) technology solu- tions, and has gained the competence to make the best offer to its customers. Lifecell Ventures makes a significant contribution to digital export targets by increasing the penetration of digital services and technology solutions, and by providing strong business part- nerships all over the world. Turkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.S. (Turkcell Energy Solutions). In addition to the telecommuni- cation sector, with Turkcell Enerji Cözümleri ve Elektrik Satıs Ticaret A.S. which started its services in 2018 with the “Enerjicell” brand, Turkcell has become one of the significant free market electrici- ty suppliers in Turkey in terms of the number of registered meters. Turkcell Enerji Çözümleri expands its portfolio in the energy sector with its investments and projects in the field of renewable generation and aims to increase its share in the sec- tor both in production and supply. The company pioneered renewable energy investments in Turkcell’s buildings with self-generated electricity consumption model and completed rooftop solar panel pro- jects, including the one in the newly established Ankara Data Center. Turkcell Enerji Çözümleri, which recently included an 18 MW wind power plant in its portfolio in 2021, aims to continue its investments in renewable energy in the upcom- ing periods and to turn Turkcell into a company that produces and supplies electricity from environ- mentally friendly sources with zero carbon emissions. In addition, it has increased the practices and incen- tives of its business partners in this field by realizing the I-REC certified sale of the renewable energy it has provided since 2021. Digital Business Services A.S. As one of the companies invested the most in Turkey’s human resourc- es and technologies, our main goal is to be a reliable technology part- ner that provides end-to-end, key solutions to our customers. Turkcell Dijital İş Servisleri A.Ş., which was established to be a part of our customers’ digital transformation journey and lead them as a strate- gic technology partner in this field, provides our customers with servic- es in many different areas such as business applications, next gener- ation technologies and providing required hardware. This allows our customers to advance with the most appropriate financial model in their new technology investment plans, enabling them to focus more on their own business. Turkey’s Automobile Joint Venture Group Inc. – Togg Our e-mobility solutions, offered in scope of digital business servic- es within Turkcell, provide the most advanced vehicle and fleet technol- ogies for the safety or vehicles and employees. As of October 29, 2022, Togg which is developed by “Turkey’s Automobile Joint Venture Group”, where Turkcell has 23% sharehold- ing, has started mass production of the C-class SUV, the first connected, smart and fully electric powered at Gemlik Togg Technology Campus. As part of the ecosystem which will be created on the smart and con- nected vehicle, new services, new user experiences and new business models in mobility are being devel- oped. As part of this effort, a strate- gic cooperation agreement signed with Paycell in order to integrate in- novative payment systems and dig- ital financial solution in the mobility ecosystem, in 2022. The C-SUV model, which will be pro- duced as Turkey’s first fully electric powered, zero emission and smart automobile, will be ahead of its com- petitors with the largest wheelbase, largest interior volume and best ac- celeration of its class and a low to- tal price. The first smart device of Togg, starting its journey to answer transportation tomorrow’s smart demands from today and provide mobility solutions beyond standard, is planned to be on the road in the first quarter of 2023 in Turkey, and approximately 18 months in Europe. later We provide municipalities and airline companies with meaning- ful insight aimed at transportation planning. Through transportation matrices we provide to municipali- ties, we contribute to accurate plan- ning, enabling people to use public transportation more conveniently. In addition, we help cut carbon emis- sions by reducing traffic density. The data we make available to airway companies help them analyze mass- es travelling between cities and see seasonal impacts. We help achieve energy savings through efficient transportation planning. Atmosware Teknoloji Eğitim ve Danışmanlık A.Ş. Atmosware was incorporated last year to carry out activities to devel- op software products and services, to train software developers for this purpose, to provide services to our Company, its subsidiaries and other parties both in Turkey and in other countries and/or to operate in other areas allowed within the framework of the legislation. Since its incorporation, it has been one of the most important process stakeholders of the “Investment in Youth, Software for Future” pro- ject, organized in cooperation with Turkcell Academy and the Ministry of National Education. With this pro- ject, it has integrated nearly 100 soft- ware developers among the par- ticipants who undertook 6 months of vocational training and field ex- perience. Closely monitoring the master and apprentice relationship and balance, it has also employed experienced software developers and increased its total information technologies staff to more than 150. The employed information technol- ogy staff provide software products development both for our Company and for other companies in the eco- system. In Atmosware, which follows a remote work principle, the employ- ees reside in 32 different cities. With the motto “81 Employees in 81 Cities”, the employment is planned to be spread across the country. Dijital Eğitim Teknolojileri A.Ş. Turkcell, which generates business with the vision of contributing to the future of Turkey and presenting qual- ity value propositions; has found- ed Dijital Eğitim Teknolojileri A.Ş. (DETEK) in 2022, with the joint ven- ture of Turkcell with 51% sharehold- ing and Şahinkaya Private Education Institutions with 49% shareholding, in order to create value and ensure equality of opportunity through new generation digital technologies for a better future, in 2022, to operate in the field of educational technologies. DETEK, which will make a difference technologies, will in educational bring new digital education products to our customers. We aim to provide a personalized learning experience with the support of artificial intelli- gence by accompanying the learn- ing journeys of our stakeholders in Turkey and around the world. With our continuously developed compe- tencies and strong ecosystem, we will lead the digital transformation of the education market, contribute to the sustainability vision by changing the habits of the large user base with the high number of users, and seize the opportunities in the foreign market in this field. 216 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 217 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Subsequent Events After the Reporting Period January 31, 2023 Announcement Regarding the Capital Increase in Kıbrıs Telekom The capital of our Company’s subsid- iary Kıbrıs Mobile Telekomünikasyon Limited (“Kıbrıs Telekom”) is increased by TRY 30,000,000 to TRY 92,071,775 from TRY 62,071,775. Our Company’s pre-emption rights with respect to the capital increase is fully paid. January 31, 2023 Announcement Regarding the Dispute in Relation to the Act on the Protection of Competition In our material event disclosure dat- ed June 23, 2022, we have announced that Doğan Dağıtım Satış Pazarlama Matbaacılık Ödeme Aracılık ve Tahsilat Sistemleri A.Ş. (title of which subsequently changed to Demirören Dağıtım Satış Pazarlama Matbaacılık ve Tahsilat Sistemleri A.Ş.) filed a law- suit against our Company; the court partially accepted the case and, ruled reimbursement of TRY 215.6 million (three times of the actual damage of TRY 71.9 million pursuant to the Act on Protection of Competition) together with the discount interest applicable from the date of the case to the plaintiff and partially rejected the case for the remaining part and our Company shall apply necessary legal remedies with respect to the decision. On the request of appeal made by our Company, the Istanbul Regional Court decided to revoke the decision of the first instance court, following the ac- ceptance of our appeal application; on the grounds of clear contradictions to law. The Court decided to remand the files to the first instance court to be re- decided following a trial in accordance with the revocation decision. February 2, 2023 Announcement Regarding the Incorporation of Turkcell Dijital Teknolojileri Ltd. Turkcell Dijital Teknolojileri Ltd., in which our Company’s subsidiaries Lifecell Digital Ltd. has 99.9998% and Kıbrıs Mobile Telekomünikasyon Limited has 0.0002% shareholding, respectively, has been incorporated. Registration and announcement of the respective company have been completed. The company, which will operate in elec- tronic payment services in the Turkish Republic of Northern Cyprus, has a paid-in capital of TRY500,000. The announcement regarding the in- corporation process was postponed by the Board of Directors’ decision as per the Article-6 of the Capital Market Board’s Communiqué on Material Events Disclosure, as it could have an impact on the investment decision of investors, as well as the stock price. February 8, 2023 Announcement Regarding the Board of Directors Resolution on Buy-Back of Securities Our Company’s Board of Directors, pursuant to their meeting on August 18, 2022, resolved to determine the maximum fund amount to buy-back our shares trading at Borsa İstanbul A.Ş., our American Depository Receipts (ADR) trading at New York Stock Exchange (NYSE) and bonds of our Company as TRY1,000,000,000 within the scope of the announcements of the Capital Markets Board dated July 21, 2016, July 25, 2016, and March 23, 2020. Our Company’s Board of Directors has resolved now to increase the maximum fund amount as TRY1,250,000,000. February 8, 2023 Announcement Regarding the Change in Management (Finance) Osman Yılmaz, who has been serv- ing as the Executive Vice President of Finance of our Company, has decided to resign from his position, effective as of February 28, 2023. Murat Erkan, CEO of Turkcell, said: “In addition to his groundbreaking achievements and leadership role in fi- nance, Osman Yılmaz has made invalu- able contributions to the transformation of both our country and Turkcell in the field of financial technologies with the vision he set out in our TechFin compa- nies. I thank Mr. Yılmaz for his valuable contributions to our Company, and wish him every success in his future career.” February 16, 2023 Announcement Regarding the Establishment of a Cyber Security Company Our Company’s Board of Directors has taken the decision to establish a company in order to develop cyber security products and services for our Company and its subsidiaries and third parties both in Türkiye and abroad, by our Company or its subsidiaries. February 16, 2023 Announcement Regarding the Donation for the Earthquake Relief In accordance with the option pro- vided by the Capital Markets Board’s decision dated February 9, 2023, due to the earthquake disaster on February 6, 2023, epicenter of which was Kahramanmaraş, that caused a devastation and loss of lives, Board of Directors of Turkcell has resolved to make in-kind and/or cash donation and provide all the appropriate ben- efits and aid up to TRY3,500,000,000 to the earthquake victims directly and/or through the Ministry of Interior Disaster and Emergency Management Presidency (“AFAD”), the Turkish Red Crescent (“Kızılay”) and/or other institu- tions and organizations announced by mentioned agencies. The donation and contributions will be presented to shareholders for approval at the first General Assembly meeting to be held where shareholders will be com- prehensively informed about the details. We sincerely share the pain of our country and express our deepest con- dolences to the individuals who lost their lives in the earthquakes and we wish a quick recovery to those who were affected and injured by the earthquake. February 17, 2023 Announcement Regarding the Transfer of Ultia It has been resolved to transfer all kinds of intellectual property rights, including but not limited to, all soft- ware, domain names, brands and pat- ents of Ultia Platform (“Ultia”), which is held by Turkcell Teknoloji Araştırma ve Geliştirme A.Ş., a 100% subsidiary of our Company, to Ultia Teknoloji Yazılım ve Uygulama Geliştirme Ticaret A.Ş., a technology-oriented company es- tablished by Re-Pie Portföy Yönetimi A.Ş. Turkcell New Technologies Venture Capital Investment Fund, which was established to invest in ventures that can create synergies with our Group’s strategic focus areas, as a result of the valuation to be made by a valua- tion company licensed by the Capital Markets Board, at a value not less than the value to be determined in the val- uation report. With this transfer, it is aimed for Ultia to become an effective player in the market by being support- ed through a more focused structure, and to provide strategic and financial benefits to our Company and create long-term value with the synergy to be created. Developments regarding this subject will be announced to the public fully and in a timely manner. *Ultia: It is an application develop- ment platform that offers ready mod- ules to digitalize business processes of companies such as HR, CRM, etc., or an infrastructure that can be used for design. February 17, 2023 Announcement Regarding the Share Buy-back Transactions Within the scope of our Board of Directors’ share buy-back decisions on July 27, 2016 and the following dates, our Company purchased a total of 1,000,000 shares at a price range of TRY 33.46 - 34.00 with an average of TRY 33.88 totaling TRY 33,884,140 on February 17, 2023. Within the scope of the relevant de- cisions, Company repurchased a to- tal of 17,893,807 shares amounting to TRY214,096,922 from August 24, 2016 until the date of this announce- ment. With these transactions, the ratio of our shares in Company’s cap- ital has reached 0.81%. In addition, our Company’s Eurobonds with maturities of 2025 and 2028 were purchased at a nominal value of USD37,239,000 for USD35,293,480 (TRY521,752,184) at vari- ous time periods. February 21, 2023 Announcement Regarding the Change in Management (Finance) Mr. Kamil Kalyon, Financial Planning and Analysis Director at our Company, will also serve as the acting Executive Vice President of Finance in addition to his current role effective as of March 1, 2023. Kamil Kalyon began his profession- al career at the Ernst & Young Turkey (EY) Tax department in 1996. During his twelve-year career at EY, he took part in many strategic projects, ultimately holding the position of Senior Manager. Between 2008 and 2012, he worked as the Finance Director in Kont Bilişim Group operating information technologies sector. He entered OMV Petrol Ofisi A.Ş. as Tax Director in 2012 where he remained for four years. Kamil Kalyon joined Turkcell İletişim Hizmetleri A.Ş. as Tax and Group Reporting Director in December 2016 and has been working as the Financial Planning and Analysis Director at our Company since February 2021. in the from Kamil Kalyon graduated the Marmara University Department of Business Administration, and holds the titles of Sworn-in Certified Financial Advisor and Independent Auditor. March 7, 2023 Announcement Regarding the Renewal of Directors & Officers Liability Insurance Pursuant to Article 4.2.8 of the annex of the Capital Markets Board’s Corporate Governance Communiqué; the existing “Directors & Officers Liability Insurance” for the members of our Company’s Board of Directors, senior executives and senior executives of group compa- nies has been renewed to be valid until October 1, 2023, and the total liability limit of the insurance has been updat- ed to exceed 25% of the Company’s capital. March 9, 2023 Announcement Regarding the Decisions to Issue Lease Certificates Our Company’s Board of Directors re- solved that our wholly owned subsid- iary Superonline İletişim Hizmetleri A.Ş. shall issue management agreement based lease certificates (sukuk) in ac- cordance with capital markets legisla- tion through an asset leasing company based in Turkey at an amount of up to TRY3 billion, in Turkish Lira terms, with maturities up to 12 months, in the do- mestic market, in one or more tranch- es, without public offering, as private placement and/or to be sold to institu- tional investors. Our Company’s Board of Directors also resolved that our wholly owned sub- sidiary Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. shall issue man- agement agreement based lease cer- tificates (sukuk) in accordance with capital markets legislation through an asset leasing company based in Turkey at an amount of up to TRY1 billion, in Turkish Lira terms, with maturities up to 12 months, in the domestic market, in one or more tranches, without public offering, as private placement and/or to be sold to institutional investors. The respective issuances are subject to approval of Capital Markets Board. 218 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 219 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Statement of Compliance with Corporate Governance Principles Corporate Governance Principles Compliance Report Turkcell İletişim Hizmetleri A.Ş. (“Turkcell” or the “Company”) is aware of its responsi- bilities towards its stakeholders, with the belief that high standards of corporate governance are key to maintain succes- sful business practices and to provide long-term economic value to the compan- y’s shareholders. Within this framework, having adopted the principles of “equa- lity,” “transparency,” “accountability” and “responsibility” that constitute the basis of corporate governance in its activities, the Company exercises due diligence with regard to compliance with the Capital Markets Law (“CML”) and the secondary regulations and resolutions of the Capital Markets Board (“CMB”). In parallel with corporate governance ef- forts established with the creation of the Investor Relations Department at the time of the IPO, and gained momentum in 2003, corporate governance mechanisms are being implemented in line with the corpo- rate governance principles. Turkcell İletişim Hizmetleri A.Ş. places a great importance on the full compliance with Corporate Governance Principles. Although full compliance with non-man- datory corporate governance principles provided in the relevant legislation is ai- med, it has yet to be achieved due to the challenges in the implementation of certa- in principles, the incompatibilities between some principles and the current structure of the Company and the market. Besides, an utmost care is given to compliance with mandatory corporate governance principles. In the activity period that ended as of 31 December 2022, in the annual report’s fol- lowing sections, compliance to the corpo- rate governance principles annexed to the Communiqué on Corporate Governance is disclosed along with the necessary explanations given for the principles that are yet to complied with: (i) the Corporate Governance Compliance Report (“CGCR”) and (ii) the Corporate Governance Fact Sheet (“CGFS”) and (iii) other relevant sec- tions. Within this framework: Considering the regulation and global best practices, board of directors’ performance evaluation forms were created as a result of the below process and implementation designed by the Corporate Governance and Capital Markets Compliance in December 2021, which Directorate directly reports to the Turkcell’s Board with an autonomous structure, and within the recommendation of the Corporate Governance Committee and guidance of Board of Directors. Accordingly, each Board member had completed “the Board of Directors Performance Evaluation”. 1- The scope of the evaluation process consists of the below set of questions in which the answers are measured within a certain scale. a. Information provided to the Board before and during the meetings: The set of question contained in this section addresses issues such as whether there was timely, clear and comprehensive in- formation regarding the meeting agen- da items, whether financial information highlights important issues and trends, and the effectiveness and impartiality of the meetings. b. Board Composition and Function: The set of question contained in this section addresses issues such as whether the members have the necessary qualifi- cations, experience and skills, whether a sufficient number of meetings are held, and the functioning of the committees. c. Board Dynamics: The set of question contained in this section addresses the main issues such as the effectiveness of the oversight, adequacy of annual business plan reviews and whether the Company’s value, mission, strategy, bu- siness plans are reflected on important issues, and whether financial indicators are followed up properly. d. Board Members’ standards of con- duct: The set of question contained in this section addresses issues such as conflict of interest and adequacy of contribution. 2- Within the above methodology, each Board Member have made separate evaluations. 3- Feedbacks of the Board Members have been reviewed. 4- Actions to improve the processes have been identified as a result of the reviewed and analyzed feedback. Within the scope of the feedbacks of the Board Members identified in the 2021 per- formance evaluation, the following impro- vement actions are taken: • A new platform was put into practice in order to digitalize access to the Board of Directors meeting documentation, to transfer the documentation to a secure platform and to enable a permanent ac- cess to the relevant documentation. As a result, information sharing with the mem- bers of the Board of Directors was increa- sed both quantitatively and qualitatively. • Studies were carried out to increase com- munication between the committees and the Board of Directors. • The external consultant support for the Board of Directors has been increased. • Considering the evaluations, suggesti- ons and recommendations from sha- reholders and investors, the Strategy and Digitalization Committee was established in February 2022 to contribute positively on the increase of efficiency in the mo- nitoring and improvement of Company performance. In this committee, compan- y’s strategies, investments and digitalizati- on processes are monitored effectively, all projects and actions that increase the va- lue of the company relating to the position in the market, digitalization efforts, gover- nance practices etc. are followed up by the Committee and are regularly brought to the agenda of the Board of Directors. The performance evaluation process of the Board of Directors was completed also in 2022 within the scope of the above methodology. Mr. Nail Olpak, have resigned from Independent Board Membership as of 9 June 2022 and on the same date, our Company’s Board of Directors elected Mr. Nail Olpak for the position of Board Member, which was vacant due to the resignation of Mr. Hüseyin Aydın and such appointment was later approved in the ordinary general assembly dated 16 June 2022. Considering the developments and best practices, studies will be carried out to im- prove our corporate governance practices and ensure better operation of the mec- hanisms designed for the implementation of corporate governance principles. Should the CGCR or CGFS be amended within the activity period, a material event disclosure will be made, and such amend- ments will be included in the interim activity reports. COMPLIANCE STATUS Yes Partial No Exempted Not Applicable Explanation Corporate Governance Compliance Report 1.1. FACILITATING THE EXERCISE OF SHAREHOLDER RIGHTS 1.1.2 Up to date information and disclosures which may affect the exercise of shareholder rights are available to investors at the corporate website. 1.2. RIGHT TO OBTAIN AND REVIEW INFORMATION 1.2.1 Management did not enter into any transaction that would complicate the conduct of special audit. 1.3. GENEL KURUL 1.3.2 The company ensures the clarity of the General Assembly agenda, and that an item on the agenda does not cover multiple topics. 1.3.7 Insiders with privileged information have informed the board of directors about transactions conducted on their behalf within the scope of the company's activities in order for these transactions to be presented at the General Shareholders' Meeting. 1.3.8 Members of the board of directors who are concerned with specific agenda items, auditors, and other related persons, as well as the officers who are responsible for the preparation of the financial statements were present at the General Shareholders' Meeting. 1.3.10 The agenda of the General Shareholders' Meeting included a separate item detailing the amounts and beneficiaries of all donations and contributions. 1.3.11 The General Shareholders' Meeting was held open to the public, including the stakeholders, wit- hout having the right to speak. 1.4. VOTING RIGHTS 1.4.1 There is no restriction preventing shareholders from exercising their shareholder rights. 1.4.2 The company does not have shares that carry privileged voting rights. 1.4.3 The company withholds from exercising its voting rights at the General Shareholders' Meeting of any company with which it has cross ownership, in case such cross ownership provides management control. 1.5. MINORITY RIGHTS 1.5.1 The company pays maximum diligence to the exercise of minority rights. 1.5.2 The Articles of Association extend the use of minority rights to those who own less than one twent- hieth of the outstanding shares, and expand the scope of the minority rights. 1.6. DIVIDEND RIGHT 1.6.1 The dividend policy approved by the General Shareholders' Meeting is posted on the company website. 1.6.2 The dividend distribution policy comprises the minimum information to ensure that the shareholders can have an opinion on the procedure and principles of dividend distributions in the future. 1.6.3 The reasons for retaining earnings, and their allo- cations, are stated in the relevant agenda item. 1.6.4 The board reviewed whether the dividend policy balances the benefits of the shareholders and those of the company. No information regarding this kind of activities were received from such person following the routine infor- mation requests made before the general assembly meetings. Donations and charities are included seperately on the general assembly agenda; but information regar- ding the amount and beneficiaries of these donations and charities are given seperately in the general assembly meeting within the scope of shareholders' right to obtain information. Results of general assembly meeting has been shared with the media through press release. Please see AoA: Article 7.2. and 7.3. https://s.turkcell.com.tr/SiteAssets/Hakkimizda/yatirimci-i- liskileri/documents/pdf/Anasozlesme21102020_ENG.pdf Tresholds determined by the respective legislation are in effect. Turkcell distributed dividend in 2022. 220 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 221 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES COMPLIANCE STATUS Yes Partial No Exempted Not Applicable Explanation COMPLIANCE STATUS Yes Partial No Exempted Not Applicable Explanation 1.7. TRANSFER OF SHARES 1.7.1 There are no restrictions preventing shares from being transferred. 2.1. CORPORATE WEBSITE 2.1.1. The company website includes all elements listed in Corporate Governance Principle 2.1.1. 2.1.2 The shareholding structure (names, privileges, number and ratio of shares, and beneficial owners of more than 5% of the issued share capital) is updated on the website at least every 6 months. 2.1.4 The company website is prepared in other selec- ted foreign languages, in a way to present exactly the same information with the Turkish content. 2.2. ANNUAL REPORT 2.2.1 The board of directors ensures that the annual report represents a true and complete view of the company's activities. 2.2.2 The annual report includes all elements listed in Corporate Governance Principle 2.2.2. 3.1. CORPORATION'S POLICY ON STAKEHOLDERS 3.1.1 The rights of the stakeholders are protected pur- suant to the relevant regulations, contracts and within the framework of bona fides principles. 3.1.3 Policies or procedures addressing stakeholders' rights are published on the company's website. 3.1.4 A whistleblowing programme is in place for repor- ting legal and ethical issues. 3.1.5 The company addresses conflicts of interest among stakeholders in a balanced manner. 3.2. SUPPORTING THE PARTICIPATION OF THE STAKEHOLDERS IN THE CORPORATION'S MANAGEMENT 3.2.1 The Articles of Association, or the internal regu- lations (terms of reference/manuals), regulate the participation of employees in management. 3.2.2 Surveys/other research techniques, consultation, interviews, observation method etc. were conducted to obtain opinions from stakeholders on decisions that significantly affect them. 3.3. HUMAN RESOURCES POLICY 3.3.1 The company has adopted an employment policy ensuring equal opportunities, and a succession plan for all key managerial positions. 3.3.2 Recruitment criteria are documented. 3.3.3 The company has a policy on human resources development, and organises trainings for employees. 3.3.4 Meetings have been organised to inform emplo- yees on the financial status of the company, remunera- tion, career planning, education and health. 3.3.5 Employees, or their representatives, were notified of decisions impacting them. The opinion of the related trade unions was also taken. 3.3.6 Job descriptions and performance criteria have been prepared for all employees, announced to them and taken into account to determine employee remuneration. Without prejudice to 137/3, due to Article 7.5 of the AoA we ticked the "Partial" box. As per the Communique on Material Events Disclosure Article-16/2, Central Securities Depository is updating the respective information available in PDP under the General Information heading. We also disclose these information as sourced by CSD on our website. Corporate web site related to public is available in English, Arabic and Russian language in addition to that Investor Relations page is provided both in Turkish and in English. Employees' participation to the management is faci- litated through internal regulations of the company and various company practices. We do not have a syndicate. 3.3.7 Measures (procedures, trainings, raising aware- ness, goals, monitoring, complaint mechanisms) have been taken to prevent discrimination, and to protect employees against any physical, mental, and emotio- nal mistreatment. 3.3.8 The company ensures freedom of association and supports the right for collective bargaining. 3.3.9 A safe working environment for employees is maintained. 3.4. RELATIONS WITH CUSTOMERS AND SUPPLIERS 3.4.1 The company measured its customer satisfaction, and operated to ensure full customer satisfaction. 3.4.2 Customers are notified of any delays in handling their requests. 3.4.3 The company complied with the quality standar- ds with respect to its products and services. 3.4.4 The company has in place adequate controls to protect the confidentiality of sensitive information and business secrets of its customers and suppliers. 3.5. ETHICAL RULES AND SOCIAL RESPONSIBILITY 3.5.1 The board of the corporation has adopted a code of ethics, disclosed on the corporate website. 3.5.2 The company has been mindful of its social responsibility and has adopted measures to prevent corruption and bribery. 4.1. ROLE OF THE BOARD OF DIRECTORS 4.1.1 The board of directors has ensured strategy and risks do not threaten the long term interests of the company, and that effective risk management is in place. 4.1.2 The agenda and minutes of board meetings indicate that the board of directors discussed and ap- proved strategy, ensured resources were adequately allocated, and monitored company and management performance. 4.2. ACTIVITIES OF THE BOARD OF DIRECTORS 4.2.1 The board of directors documented its meetings and reported its activities to the shareholders. 4.2.2 Duties and authorities of the members of the board of directors are disclosed in the annual report. 4.2.3 The board has ensured the company has an internal control framework adequate for its activities, size and complexity. 4.2.4 Information on the functioning and effectiveness of the internal control system is provided in the annual report. 4.2.5 The roles of the Chairman and Chief Executive Officer are separated and defined. 4.2.7 The board of directors ensures that the Investor Relations department and the corporate governance committee work effectively. The board works closely with them when communicating and settling disputes with shareholders. 4.2.8 The company has subscribed to a Directors and Officers liability insurance covering more than 25% of the capital. This year's policy limit for Directors and Officers lia- bilty did not exceed 25% of the company capital. 222 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 223 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES COMPLIANCE STATUS Yes Partial No Exempted Not Applicable Explanation 1. SHAREHOLDERS 1.1. Facilitating the Exercise of Shareholders Rights Corporate Governance Information Form 4.3. STRUCTURE OF THE BOARD OF DIRECTORS 4.3.9 The board of directors has approved the policy on its own composition, setting a minimal target of 25% for female directors. The board annually evaluates its composition and nominates directors so as to be compliant with the policy. 4.3.10 At least one member of the audit committee has 5 years of experience in audit/accounting and finance. 4.4. BOARD MEETING PROCEDURES 4.4.1 Each board member attend the majority of the board meetings in person or via an electronic board meeting system 4.4.2 The board has formally approved a minimum time by which information and documents relevant to the agenda items should be supplied to all board members. 4.4.3 The opinions of board members that could not attend the meeting, but did submit their opinion in writ- ten format, were presented to other members. 4.4.4 Each member of the board has one vote. 4.4.5 The board has a charter/written internal rules defining the meeting procedures of the board. 4.4.6 Board minutes document that all items on the agenda are discussed, and board resolutions include director's dissenting opinions if any. 4.4.7 There are limits to external commitments of board members. Shareholders are informed of board members' external commitments at the General Shareholders' Meeting. 4.5. BOARD COMMITTEES 4.5.5 Board members serve in only one of the Board's committees. 4.5.6 Committees have invited persons to the meetings as deemed necessary to obtain their views. 4.5.7 If external consultancy services are used, the independence of the provider is stated in the annual report. 4.5.8 Minutes of all committee meetings are kept and reported to board members. 4.6. FINANCIAL RIGHTS 4.6.1 The board of directors has conducted a board performance evaluation to review whether it has discharged all its responsibilities effectively. 4.6.4 The company did not extend any loans to its bo- ard directors or executives, nor extended their lending period or enhanced the amount of those loans, or improve conditions thereon, and did not extend loans under a personal credit title by third parties or provi- ded guarantees such as surety in favour of them. 4.6.5 The individual remuneration of board members and executives is disclosed in the annual report. Board of Directors Diversity Policy is adopted. Within this scope, it is anticipated to have at least 2 women board members until the year 2030. There is no rule which restricts board member to serve outside the company. Due to the number of the board of members, they are serving as a committee member in more than one comittee. No service has been received from an outside counsel in 2022. Information regarding Board of Directors' performance evaluation can be found in the annual report. In the Ordinary General Assembly Dated 16 June 2022, it was decided that the Chairman and each member of the Board of Directors have a monthly compensati- on of TRY 56.0 thousand. In parallel with the common practice, aggregate amount of the executive remune- ration is disclosed in the annual report. The number of investor meetings (conference, seminar/etc.) organised by the com- pany during the year In 2022, Investor Relations Department attended 11 investor confe- rences, 5 of which was held virtually and the remaining 6 was held physically held held 5 group investor meetings and eventualized 373 discussions in total, with analysts and corporate investment funds. 1.2. Right to Obtain and Examine Information The number of special audit request(s) 0 The number of special audit requests that were accepted at the General Shareholders' Meeting 0 1.3. General Assembly Link to the PDP announcement that demonstrates the information requested by Principle 1.3.1. (a-d) https://www.kap.org.tr/en/Bildirim/1026055 Whether the company provides materials for the General Shareholders' Meeting in English and Turkish at the same time Provided in English as well. The links to the PDP announcements associated with the transactions that are not approved by the majority of independent directors or by unanimous votes of present board members in the context of Principle 1.3.9 No transaction has been executed in the context of Principle 1.3.9 The links to the PDP announcements associated with related party transactions in the context of Article 9 of the Communique on Corporate Governance (II-17.1) No related party transactions has been executed above the tresholds. The links to the PDP announcements associated with common and continuous transac- tions in the context of Article 10 of the Communique on Corporate Governance (II-17.1) No related party transactions has been executed above the treshold. The name of the section on the corporate website that demonstrates the donation policy of the company https://www.turkcell.com.tr/en/aboutus/investor-relations/ corporate-governance/donation-policy The relevant link to the PDP with minute of the General Shareholders' Meeting where the donation policy has been approved https://www.kap.org.tr/en/Bildirim/517918 The number of the provisions of the articles of association that discuss the participation of stakeholders to the General Shareholders' Meeting Not available. Identified stakeholder groups that participated in the General Shareholders' Meeting, if any Not available. 1.4. Voting Rights Whether the shares of the company have differential voting rights There are voting privileges In case that there are voting privileges, indicate the owner and percentage of the voting majority of shares. Please see AoA: Article 7.2 and 7.3 https://ffo3gv1cf3ir.merlincdn. net/SiteAssets/Hakkimizda/yatirimci-iliskileri/documents/pdf/ AnaSozlesme16062022ENG.pdf The percentage of ownership of the largest shareholder 26.2% 1.5. Minority Rights Whether the scope of minority rights enlarged (in terms of content or the ratio) in the articles of the association No If yes, specify the relevant provision of the articles of association Not available. 1.6. Dividend Right The name of the section on the corporate website that describes the dividend distri- bution policy https://www.turkcell.com.tr/en/aboutus/investor-relations/ corporate-governance/dividend-policy Minutes of the relevant agenda item in case the board of directors proposed to the general assembly not to distribute dividends, the reason for such proposal and infor- mation as to use of the dividend Dividends are distributed in 2022. PDP link to the related general shareholder meeting minutes in case the board of direc- tors proposed to the general assembly not to distribute dividends Dividends are distributed in 2022. General Assembly Meetings General Meeting Date 16.06.2022 The number of information requests received by the company regarding the clarificati- on of the agenda of the General Shareholders' Meeting 0 Shareholder participation rate to the General Shareholders' Meeting Percentage of shares directly present at the GSM Percentage of shares represented by proxy 76.54% 0.53% 76.01% Specify the name of the page of the corporate website that contains the General Shareholders' Meeting minutes, and also indicates for each resolution the voting levels for or against https://ffo3gv1cf3ir.merlincdn.net/SiteAssets/Hakkimizda/yatirimci-i- liskileri/documents/pdf/2021-GK-minutes.pdf Specify the name of the page of the corporate website that contains all questions asked in the general assembly meeting and all responses to them https://ffo3gv1cf3ir.merlincdn.net/SiteAssets/Hakkimizda/yatirimci-i- liskileri/documents/pdf/2021-GK-minutes.pdf The number of the relevant item or paragraph of General Shareholders' Meeting minu- tes in relation to related party transactions As the capital markets legislation imposes liability to report the related party transactions depending on the specified thresholds, this obligation is observed. The number of declarations by insiders received by the board of directors 0 The link to the related PDP general shareholder meeting notification https://www.kap.org.tr/en/Bildirim/1037823 224 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 225 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES 2. DISCLOSURE AND TRANSPARENCY 2.1. Corporate Website Specify the name of the sections of the website providing the information requested by the Principle 2.1.1. https://www.turkcell.com.tr/en/aboutus/investor-relations If applicable, specify the name of the sections of the website providing the list of sharehol- ders (ultimate beneficiaries) who directly or indirectly own more than 5% of the shares. https://www.turkcell.com.tr/en/aboutus/investor-relations/ corporate-governance/shareholder-structure List of languages for which the website is available Turkish, English, Arabic (Partial) and Russian (Partial) 2.2. Annual Report The page numbers and/or name of the sections in the Annual Report that demonstrate the information requested by principle 2.2.2. a) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on the duties of the members of the board of directors and executives conducted out of the company and declarations on independence of board members Information provided in the Annual Report under Roles of Turkcell Board Members at Other Companies section. With respect to the independency declarations, relevent PDP notifications were made and it was not separately addressed in the annual report. b) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on committees formed within the board structure c) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on the number of board meetings in a year and the attendance of the members to these meetings ç) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on amendments in the legislation which may significantly affect the activities of the corporation d) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on significant lawsuits filed against the corporation and the possible results thereof e) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on the conflicts of interest of the corporation among the institu- tions that it purchases services on matters such as investment consulting and rating and the measures taken by the corporation in order to avoid from these conflicts of interest f) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on the cross ownership subsidiaries that the direct contribution to the capital exceeds 5% g) The page numbers and/or name of the sections in the Annual Report that demons- trate the information on social rights and professional training of the employees and activities of corporate social responsibility in respect of the corporate activities that arises social and environmental results 3. STAKEHOLDERS 3.1. Corporation’s Policy on Stakeholders Information provided in our website under "Investor Relations>Corporate Governance>Board Committees" heading and in the Corporate Governance Information Filings under section 4 which is attached to our annual report. Information provided in the Corporate Governance Information Filings, which is attached to our annual report, under Section 4. Information provided in the Annual Report under Our Companies and Sector Developments. Information provided under note 20 of CMB report which is attached to our Annual Report. Invesment consultancy services are not received. Measures taken for conflicts of interest in rating services are included in Financial Capital section. Information provided under note 1 of CMB report which is attached to our Annual Report. Information provided in the Annual Report under section Social Capital. The name of the section on the corporate website that demonstrates the employee remedy or severance policy It is not disclosed in the website of the Company. The number of definitive convictions the company was subject to in relation to breach of employee rights 19 The position of the person responsible for the alert mechanism (i.e. whistleblowing mechanism) Ethics Committee The contact detail of the company alert mechanism. E-mail : ethicscommittee@turkcell.com.tr Address : Turkcell İletişim Hizmetleri A.Ş. Etik Kurulu Aydınevler Mah. İnönü Cad. No.20, Küçükyalı / İstanbul 3.2. Supporting the Participation of the Stakeholders in the Corporation’s Management Name of the section on the corporate website that demonstrates the internal regula- tion addressing the participation of employees on management bodies. Corporate bodies where employees are actually represented Not available. Not available. 3.3. Human Resources Policy The role of the board on developing and ensuring that the company has a succession plan for the key management positions The name of the section on the corporate website that demonstrates the human resource policy covering equal opportunities and hiring principles. Also provide a sum- mary of relevant parts of the human resource policy. Board of Directors, when necessary, get involved in the proce- es through Nomination Committee within the framework of the Committee's roles&responsibilities. Turkcell is an equal opportunity employer and considers all qualified applicants for employment regardless of disability, race, color, reli- gion, gender, national origin, ethnicity, age, physical appearance or status, marital status, military service status. Hiring process is carried out by taking Equal Opportunities Policy into consideration under the responsibility of the HR Department. During the hiring process objective criteria such as; a.Being Turkish citizen or having work permit in Turkey b.Termination of military service c.Not to be deprived from civil rights d.Not to have a disease that will prevent him/her from working or pose a threat to the environment e.Not to be sentenced for an infamous crime f.Not under obligation of an involuntary servitude g.To have a graduate degree h.To have required skills determined specifically to the title and role (such as experience, field of graduation, certificate etc.) ı.”Close Relatives” (Spouses, brothers/sisters, children, father, mother, uncle, maternal aunt, paternal aunt) of people working in Turkcell Group companies may not be employed in Turkcell Group Companies. Employees with no past experience are assessed within the special hiring programs such as GnçYtnk. External candidate applications are made through My Career www.turkcell.com.tr Whether the company provides an employee stock ownership programme There isn't any employee stock ownership programme. The name of the section on the corporate website that demonstrates the human resource policy covering discrimination and mistreatments and the measures to prevent them. Also provide a summary of relevant parts of the human resource policy. https://www.turkcell.com.tr/todiek/english.html The number of definitive convictions the company is subject to in relation to health and safety measures Not available. 3.5. Ethical Rules and Social Responsibility The name of the section on the corporate website that demonstrates the code of ethics https://www.turkcell.com.tr/todiek/english.html The name of the section on the company website that demonstrates the corporate social responsibility report. If such a report does not exist, provide the information about any measures taken on environmental, social and corporate governance issues. You can access our reports from the link below. https://www.turkcell.com.tr/en/aboutus/ corporate-social-responsibility/sustainability Any measures combating any kind of corruption including embezzlement and bribery For our Company it is essential to carry out its activities in a fair, honest, legal and ethical manner. Turkcell Group Anti-Bribery and Corruption (“ABC”) Policy demonstrates and reflects our Company’s Board of Director’s commitment to the highest prevailing national and internati- onal anti-corruption and bribery standards. Turkcell expects the same degree of commitment from group companies as well. Within the main framework of the ABC Policy; in April 2018 Corporate Governance & ABC Program Office has been established and an ABC program which provides necessary risk based trainings and establishes internal communication, and takes necessary preventive measures to ensure compliance with the rules has been initiated. With the establishment of the ABC Office, direct and efficient channels have been designed to access the Board of Directors, its committees and Senior Management with respect to ABC compliance related matters. ABC Office is the first contact point so that values and processes set by the ABC Program to be understood well and set these in motion along with Company’s dynamics. (Please see https://www.turkcell.com.tr/en/aboutus/investor-relati- ons/corporate-governance/anti-bribery-and-corruption-policy to obtain more information on our ABC Policy). Starting from 1 January 2021, Corporate Governance & ABC Program Office continues its activities under the title of ""Corporate Governance & Capital Markets Compliance Directorate"" with the same direct reporting to board and autonomous structure. 226 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 227 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES 4. BOARD OF DIRECTORS-I 4.2. Activity of the Board of Directors Date of the last board evaluation conducted The performance evaluation made with the coordination of Corporate Governance & Capital Markets Compliance unit is concluded in December 2022 upon Board Members' fulfillment of the evaluation forms. Whether the board evaluation was externally facilitated Whether all board members released from their duties at the GSM No Yes Name(s) of the board member(s) with specific delegated duties and authorities, and descriptions of such duties There is no executive member within the Board of Directors. Number of reports presented by internal auditors to the audit committee or any relevant committee to the board 18 Specify the name of the section or page number of the annual report that provides the summary of the review of the effectiveness of internal controls Information provided in the Annual Report under Efficient Risk and Crisis Management section. Name of the Chairman Name of the CEO Bülent Aksu Murat Erkan 4. BOARD OF DIRECTORS-II 4.4. Meeting Procedures of the Board of Directors Number of physical or electronic board meetings in the reporting period Director average attendance rate at board meetings Whether the board uses an electronic portal to support its work or not 9 100.00% Yes Number of minimum days ahead of the board meeting to provide information to direc- tors, as per the board charter 5 days before the meeting. The name of the section on the corporate website that demonstrates information about the board charter We do not disclose the charter in the company's website. Number of maximum external commitments for board members as per the policy cove- ring the number of external duties held by directors We do not have such policy. 4.5. Board Committees Page numbers or section names of the annual report where information about the board committees are presented. Information provided in our website under "Investor Relations>Corporate Governance>Board Committees" heading and in the Corporate Governance Information Filings under section 4 which is attached to our annual report. https://www.turkcell.com.tr/en/aboutus/investor-relations/ corporate-governance/board-committees If the CEO and Chair functions are combined: provide the link to the relevant PDP announcement providing the rationale for such combined roles Link to the PDP notification stating that any damage that may be caused by the members of the board of directors during the discharge of their duties is insured for an amount exceeding 25% of the company's capital The name of the section on the corporate website that demonstrates current diversity policy targeting women directors CEO and Chair functions are not combined. Link(s) to the PDP announcement(s) with the board committee charters No disclosures have been made since the policy limit for Directors and Officers liability did not exceed 25% of company capital. Board of Directors Diversity Policy is adopted. Within this scope, it is anticipated to have at least 2 women board members until the year 2030. Composition of Board Committees-I Names Of The Board Committees Name-Surname of Committee Members Whether Committee Chair Or Not Whether Board Member Or Not The number and ratio of female directors within the Board of Directors 1 - 11% Composition of Board of Directors Name, Surname of Board Member Whether Executive Director Or Not Whether Independent Director Or Not The First Election Date To Board Link to PDP Notification That Includes The Independency Declaration Whether the Independent Director Considered By The Nomination Committee Whether She/He is the Director Who Ceased to Satisfy The Independence or Not Whether The Director Has At Least 5 Years’ Experience On Audit, Accounting And/Or Finance Or Not Bülent Aksu Serdar Çetin Tahsin Yazar Non-Executive Board Member Not An Independent Board Member 7.03.2019 Not considered Non-Executive Board Member Independent Board Member 16.06.2022 https://www.kap.org. tr/en/Bildirim/1037312 Considered Non-Executive Board Member Not An Independent Board Member 6.03.2020 Not considered Afif Demirkıran Non-Executive Board Member Independent Board Member 6.03.2020 https://www.kap.org. tr/en/Bildirim/928569 Considered Non-Executive Board Member Independent Board Member 6.03.2020 https://www.kap.org. tr/en/Bildirim/928569 Considered Non-Executive Board Member Independent Board Member 15.04.2021 https://www.kap.org. tr/en/Bildirim/928569 Considered Non-Executive Board Member Not An Independent Board Member 15.04.2021 Non-Executive Board Member Not An Independent Board Member 29.01.2021 Julian Horn-Smith Non-Executive Board Member Not An Independent Board Member 15.04.2021 Not considered Not considered Not considered Nail Olpak Hüseyin Arslan Şenol Kazancı Figen Kılıç No No No No Yes No No No No Yes Yes No No Yes Yes No No Yes Audit Committee Audit Committee Audit Committee Serdar Çetin Afif Demirkıran Hüseyin Arslan Corporate Governance Committee Serdar Çetin Corporate Governance Committee Şenol Kazancı Corporate Governance Committee Ali Serdar Yağcı Corporate Governance Committee Emre Alpman Nomination Committee Nomination Committee Nomination Committee Hüseyin Arslan Bülent Aksu Figen Kılıç Early Detection of Risk Committee Afif Demirkıran Early Detection of Risk Committee Figen Kılıç Early Detection of Risk Committee Tahsin Yazar Remuneration Committee Hüseyin Arslan Remuneration Committee Remuneration Committee Bülent Aksu Nail Olpak Strategy and Digitalization Committee Afif Demirkıran Strategy and Digitalization Committee Bülent Aksu Strategy and Digitalization Committee Serdar Çetin Strategy and Digitalization Committee Mehmet Akif Konar Strategy and Digitalization Committee Serkan Öztürk No No Yes Yes No No No Yes No No Yes No No Yes No No Yes No No No No Board Member Board Member Board Member Board Member Board Member Not Board Member Not Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Not Board Member Not Board Member 228 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 229 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES 4. BOARD OF DIRECTORS-III 4.5. Board Committees-II Specify where the activities of the audit committee are presented in your annual report or website (Page number or section name in the annual report/website) Not available in the annual report. Please see: https://www.turkcell. com.tr/en/aboutus/investor-relations/corporate-governance/ board-committees Specify where the activities of the corporate governance committee are presented in your annual report or website (Page number or section name in the annual report/ website) Not available in the annual report. Please see: https://www.turkcell. com.tr/en/aboutus/investor-relations/corporate-governance/ board-committees Specify where the activities of the nomination committee are presented in your annual report or website (Page number or section name in the annual report/website) Not available in the annual report. Please see: https://www.turkcell. com.tr/en/aboutus/investor-relations/corporate-governance/ board-committees Specify where the activities of the early detection of risk committee are presented in your annual report or website (Page number or section name in the annual report/ website) Not available in the annual report. Please see: https://www.turkcell. com.tr/en/aboutus/investor-relations/corporate-governance/ board-committees Specify where the activities of the remuneration committee are presented in your annual report or website (Page number or section name in the annual report/website) Not available in the annual report. Please see: https://www.turkcell. com.tr/en/aboutus/investor-relations/corporate-governance/ board-committees 4.6. Financial Rights Specify where the operational and financial targets and their achievement are presen- ted in your annual report (Page number or section name in the annual report) Information provided in the Annual Report under Turkcell Group: 2022 Operational and Financial Review section Specify the section of website where remuneration policy for executive and non-exe- cutive directors are presented. https://www.turkcell.com.tr/en/aboutus/investor-relations/ corporate-governance/compensation-policy Specify where the individual remuneration for board members and senior executives are presented in your annual report (Page number or section name in the annual report) Information provided under note 37 of CMB report which is attached to our Annual Report. Composition of Board Committees-II Names Of The Board Committees The Percentage Of Non- executive Directors The Percentage Of Independent Directors In The Committee The Number Of Meetings Held In Person The Number of Reports on its Activities Submitted to the Board Serdar Çetin Audit Committee Corporate Governance Committee Nomination Committee Early Detection of Risk Committee Remuneration Committee Strategy and Digitization Committee 100% 50% 100% 100% 100% 60% 100% 25% 33% 33% 33% 40% 9 3 1 6 5 4 8 3 1 6 3 - Roles of Turkcell Board Members at Other Companies Board Member Name-Surname Duties Outside The Group: Company Name Bülent Aksu - Duties Outside The Group: Title/ Position Still Working in the Related Company? - - PAK YATIRIM İnşaat Sanayi ve Ticaret A.Ş. Chairman of the Board of Directors Yes NORA Elektrik Malzemeleri Sanayi ve Ticaret A.Ş. Chairman of the Board of Directors Yes PAK YATIRIM Ventures Teknoloji Yatırımları San ve Tic A.Ş. PAK YATIRIM Enerji San ve Tic A.Ş. PAK YATIRIM Tarım Hayvancılık San ve Tic A.Ş. HMN İnşaat Enerji Sanayi ve Ticaret A.Ş. AVRUPA OTOYOLU Yatirim ve İşletme A.Ş. Nail Olpak KMO Anadolu Otoyol İşletmesi A.Ş. MARMARA OTOYOLU Yatirim ve İşletme A.Ş. No No No No Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors MARMARA OTOYOL INSAATI Adi Ortakliği Ticari İşletmesi Member of the Board of Directors KRP Otoyol Inşaati Adi Ortakliği Ticari İşletmesi Member of the Board of Directors ANDEVA Özel Eğitim Inşaat ve Özel Sağlik Hizmetleri A.Ş. No TURK EXIMBANK A.Ş. Member of the Board of Directors NARKARA Elektrik Üretim Sanayi ve Ticaret Anonim Şirketi Member of the Board of Directors GIRISIM KITLE FONLAMA Platformu A.Ş. Tahsin Yazar Afif Demirkıran - - Figen Kılıç TÜBİTAK TEYDEB Hüseyin Arslan Istanbul Medipol University Şenol Kazancı - Novator Partners LLP WOM S.A. Purple Crest Investments LLP Partners Telecom Colombia S.A.S. AlixPartners, London Digicel Group No - - Member of the Advisory Board (BİLTEG) Professor / Dean - Partner Board Member Partner Legal Representative Senior Advisor Independent Director Sir Julian Horn-Smith eBuilder (Swedish Tech/Software Company based in Stockholm, Sweden) Chairman Viasat Advisory Board Membership No No No No Yes Yes Yes Yes Yes No Yes Yes No - - Yes Yes - Yes Yes Yes Yes Yes Yes Yes Yes Conclusion of the Subsidiary Report 01.01.2022 - 31.12.2022 Fiscal Year Conclusion of the Report on the relationship among the Parent Company and the subsi- diaries as per Article 199 of the Turkish Commercial Code: Details of the legal transactions of our Company with TVF Bilgi Teknolojileri İletişim Hizmetleri Yat. San. ve Tic. A.Ş. and its subsidiaries during the fiscal year 2022 are given in the above tables. There is neither any legal transaction made in favor of TVF Bilgi Teknolojileri İletişim Hizmetleri Yat. San. ve Tic. A.Ş or one of its subsidiaries nor any action taken or avoided in favor of TVF Bilgi Teknolojileri İletişim Hizmetleri Yat. San. ve Tic. A.Ş. or one of its subsidiaries upon directive by TVF Bilgi Teknolojileri İletişim Hizmetleri Yat. San. ve Tic. A.Ş. Details of services provided and/or fixed asset purchases/sales performed under operational activities carried out between our Company and TVF Bilgi Teknolojileri İletişim Hizmetleri Yat. San. ve Tic. A.Ş. and/or its subsidiaries that are fully in confor- mity with the market during the fiscal year 2022 are included in this Report. 230 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 231 Sectoral and Financial Information Turkcell Group: 2022 Financial & Operational Review Forward Looking Statements Our Companies and Sector Developments Independent Auditor’s Report and Financial Statements Our Offices Glossary TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Turkcell Group: 2022 Financial & Operational Review Our audited annual consolidated financial statements including our consolidated statements of financial position as of December 31, 2022 and 2021 and our consolidated statements of profit and loss, comprehensive income, changes in equity and cash flows for the two years in the period ended December 31, 2022 and the related notes included in this annual report have been prepared in accordance with Turkish Accounting Standards/Turkish Financial Reporting Standards (“TAS”/“TFRS”) only. These standards are issued by the Public Oversight Accounting and Auditing Standards Authority (“POA”) and are in full compliance with IAS/IFRS Standards. In an announcement published by the POA on January 20, 2022, it is stated that TAS 29 “Financial Reporting in Hyperinflationary Economies” does not apply to TFRS financial statements as of December 31, 2021. 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 2022 refer to the same item for the year end of 2021 unless otherwise stated. In the tables’ totals may not foot due to rounding differences. The same applies to the calculations in the text. TURKCELL GROUP: FINANCIAL SUMMARY Profit & Loss Statement (million TRY) Revenue Cost of revenue1 Gross Margin1 Administrative expenses Selling and marketing expenses Net impairment losses on financial and contract assets EBITDA2 EBITDA Margin Depreciation and amortization EBIT3 EBIT Margin Net finance income / (expense) Finance income Finance expense Other income / (expense) Investment activity income / (expense) Non-controlling interests Share of profit of equity accounted investees Income tax expense Net Income (1) Excluding depreciation and amortization expenses. (2) EBITDA is a non-GAAP financial measure. FY21 35,920.5 (17,938.1) 50.1% (919.0) (1,778.5) (271.2) 15,013.8 41.8% (7,291.9) 7,721.9 21.5% (10,144.6) 3,051.1 (13,195.7) 6,409.6 464.1 (0.2) 90.1 490.2 5,031.1 Year FY22 53,878.5 (27,310.6) 49.3% (1,519.0) (2,700.1) (354.9) 21,993.8 40.8% (9,478.0) 12,515.8 23.2% (13,489.0) 210.8 (13,699.8) 6,800.9 1,779.9 1.0 (71.4) 3,516.1 11,053.2 y/y% 50.0% 52.2% (0.8pp) 65.3% 51.8% 30.9% 46.5% (1.0pp) 30.0% 62.1% 1.7pp 33.0% (93.1%) 3.8% 6.1% 283.5% n.m (179.3%) 617.3% 119.7% Consolidated Balance Sheet Data (Year End) (million TRY) 2021 Cash and cash equivalents Total assets Long term debt Total debt Total liabilities Total equity Summary Consolidated Cash Flow Statement (million TRY) Net cash inflow from operating activities Net cash outflow from investing activities Net cash (outflow)/inflow from financing activities Effects of exchange rate changes on cash and cash equivalents Cash and Cash Equivalents Profitability and Solvency Ratios (%) Gross Profit Margin EBITDA Margin EBIT Margin Net Profit Margin Total Liability / Equity Ratio Net Debt / EBITDA Multiple EXPLANATIONS: Revenue 18,628.7 70,682.6 27,929.7 36,778.1 48,120.4 22,562.3 2021 21,171.1 (10,361.5) (3,942.2) (108.0) 18,619.9 2021 50.1% 41.8% 21.5% 14.0% 213.3% 1.1x 2022 25,960.7 101,264.8 37,133.1 53,854.4 70,369.8 30,891.1 2022 25,151.9 (19,647.8) 1,760.0 56.1 25,940.1 2022 49.3% 40.8% 23.2% 20.5% 227.8% 0.9x Change% 39.4% 43.3% 33.0% 46.4% 46.2% 36.9% Change% 18.8% 89.6% n.m n.m 39.3% Change% (0.8pp) (1.0pp) 1.7pp 6.5pp 14.5pp (0.2pp) Turkcell Group revenues rose 50.0%. Turkcell Turkey revenues grew 50.1% to TRY40,851 million (TRY27,224 million). • Consumer business rose 47.9% driven mainly by strong subscriber net additions both in mobile and fixed segments, price adjustments and upsell efforts. • Corporate revenues rose 58.3% mainly supported by digital business services revenue growth of 88.3%. • Standalone digital services revenues from consumer and corporate segments grew 30.3% driven mainly by expanding standalone paid user base. • Wholesale revenues grew 72.7% to TRY3,285 million (TRY1,903 million). (3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses. Turkcell International revenues rose 69.4% to TRY6,354 million (TRY3,750 million). Techfin segment revenues rose 71.9% to TRY1,849 million (TRY1,076 million). Other subsidiaries’ revenues were at TRY4,825 million (TRY3,871 million), indicating a 24.6% growth. 234 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 235 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Cost of revenue (excluding the depreciation and amortization) Income tax expense Cost of revenue (excluding depreciation and amortization) rose to 50.7% (49.9%) as a percentage of revenues. This was due mainly to the rise in radio expenses (2.0pp) and other cost items (1.7pp), despite the decline in cost of goods sold (1.7pp) and interconnection expenses (1.2pp) as a percentage of revenues. Administrative expenses Administrative expenses were at 2.6% (2.6%) as a percentage of revenues. Deferred tax income of TRY4,047 million and current tax expense of TRY531 million were reported, leading to an income tax gain of TRY3,516 million in FY22. Please note that in Q422, we made use of the right introduced by Law No. 7338, which allows the revaluation of pro- perties and depreciable economic assets under certain conditions. This resulted in an impact on the deferred tax asset reported in Q422. For the full year, net impact was at TRY4.6 billion. Please refer to our consolidated financial statements and notes as at December 31, 2022 for details. Selling and marketing expenses Net income Selling and marketing expenses were at 5.0% (5.0%) as a percentage of revenues. Net impairment loses on financial and contract assets Net impairment losses on financial and contract assets was at 0.7% (0.8%) as a percentage of revenues. EBITDA1 EBITDA grew 46.5% resulting in an EBITDA margin of 40.8% (41.8%). • Turkcell Turkey’s EBITDA rose 41.3% to TRY17,197 million (TRY12,168 million) leading to an EBITDA margin of 42.1% (44.7%). • Turkcell International EBITDA increased 76.8% to TRY3,233 million (TRY1,828 million) driving an EBITDA margin of 50.9% (48.8%) on 2.1pp improvement. • Techfin segment EBITDA rose 41.1% to TRY902 million (TRY639 million) with an EBITDA margin of 48.8% (59.4%). • The EBITDA of other subsidiaries rose 74.9% to TRY662 million (TRY379 million). Depreciation and amortization expenses Depreciation and amortization expenses increased 30.0% in FY22. Net finance expense group net income rose 119.7% to TRY11,053 million (TRY5,031 million) on the back of strong operational performance and the deferred tax income impact despite lower finance income. Without the deferred tax income impact, group net inco- me is TRY6,445 million in FY22. Please note that in FY22 an impairment charge of TRY214 million has been recognized on the assets of Ukraine in terri- tories under the control of Ukraine but not operating for more than 92 days and those in territories invaded by Russia. Total cash & debt Consolidated cash as of December 31, 2022 increased to TRY25,961 million from TRY24,344 million as of September 30, 2022. This was driven mainly by the positive impact of currency movements. Excluding FX swap transactions, 51% of our cash is in US$, 15% in EUR, and 32% in TRY. Consolidated debt as of December 31, 2022 increased to TRY53,854 million from TRY51,922 million as of September 30, 2022 due mainly to the impact of currency movements. Please note that TRY3,055 million of our consolidated debt is comprised of lease obligations. Please note that 46% of our consolidated debt is in US$, 26% in EUR, 3% in CNY, 5% in UAH, and 19% in TRY. Net debt1 as of December 31, 2022 was at TRY20,838 million with a net debt to EBITDA ratio of 0.9 times. Excluding finance company consumer loans, our telco only net debt was at TRY17,473 million with a leverage of 0.8 times. Turkcell Group had a short FX position of US$25 million as at the end of the year (Please note that this figure takes hed- ging portfolio and advance payments into account). The short FX position of US$25 million is in line with our FX neutral definition, which is between -US$200 million and +US$200 million. Net finance expense increased to TRY13,489 million (TRY10,145 million) mainly due to lower fair value gain on derivate instruments compared to FY21. Capital expeditures Net other operating income Net other operating income increased to TRY6,801 million (TRY6,410 million) mainly due to interest income from time de- posits in FY22. Net investment activity income Net investment activity income increased to TRY1,780 million (TRY464 million) in FY22. This was driven mainly by the fair value difference recognized on currency-protected time deposits. Capital expenditures including non-operational items were at TRY16,361 million in FY22. In 2022, operational capital expenditures (excluding license fees) at the Group level were at 20.2% of total revenues. Capital expenditures (million TRY) Operational Capex License and Related Costs Non-operational Capex (Including IFRS15 & IFRS16) Total Capex FY21 7,629.8 - 3,849.6 11,479.4 Year FY22 10,859.4 317.5 5,183.6 16,360.6 (1) Starting from Q421, we have revised the definition of our net debt calculation to include “financial assets” reported under current and non-current assets. Required reserves held in CBRT balances are also considered in net debt calculation. We believe that these assets are highly liquid and can be easily converted to cash without significant change in value. 236 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 237 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL GROUP: FINANCIAL SUMMARY Summary of Operational Data Number of subscribers (million) Mobile Postpaid (million) Mobile M2M (million) Mobile Prepaid (million) Fiber (thousand) ADSL (thousand) Superbox (thousand)1 Cable (thousand) IPTV (thousand) Churn (%)2 Mobile Churn (%) Fixed Churn (%) ARPU (Average Monthly Revenue per User) (TRY) Mobile ARPU, blended Mobile ARPU, blended (excluding M2M) Postpaid Postpaid (excluding M2M) Prepaid Fixed Residential ARPU, blended Residential Fiber ARPU Average mobile data usage per user (GB/user) FY21 39.4 23.7 3.3 12.0 1,887.8 754.9 603.6 54.6 1,082.2 2.0% 1.5% 50.5 54.9 62.8 71.7 26.9 77.9 78.4 13.3 FY22 41.7 25.6 4.0 12.0 2,121.8 751.4 670.7 43.9 1,281.7 2.0% 1.4% 70.0 77.0 84.7 98.4 40.5 98.7 99.2 14.7 Mobile MoU (Avg. Monthly Minutes of usage per subs) blended 551.2 546.4 (1) Superbox subscribers are included in mobile subscribers. (2) Churn figures represent average monthly churn figures for the respective quarters. Year y/y % 5.8% 8.0% 21.2% - 12.4% (0.5%) 11.1% (19.6%) 18.4% - (0.1pp) 38.6% 40.3% 34.9% 37.2% 50.6% 26.7% 26.5% 10.5% (0.9%) In FY22, we had 234 thousand fiber net additions, making the best net add performance ever. This resulted mainly by focus on fiber network investments, and the strong demand for high-speed and quality broadband connections. In FY22, we had a net 14 thousand decline in our ADSL and cable subscribers. Total fixed subscribers reached 2.9 million on 220 thousand annual net additions. Meanwhile, IPTV customers reached 1.3 million on 200 thousand annual net additions. The average monthly mobile churn rate was at 2.0% in FY22. Meanwhile, the average monthly fixed churn rate was at 1.4% in FY22 on the back of our superior customer experience resulting from the speed and quality we offer on our fiber infrastructure which plays an important role in maintaining a healthy churn level. Mobile ARPU (excluding M2M) grew 40.3% for the full year mainly by price adjustments to reflect inflationary impacts and upsell to higher tariffs, as well as larger postpaid subscriber base. For the full year, fiber residential ARPU rose 26.5%. Average monthly mobile data usage per user rose 10.5% in FY22 to 14.7 GB with the increasing number and data consumption of 4.5G users. Accordingly, the average mobile data usage of 4.5G users reached 16.0 GB in FY22. Total smartphone penetration on our network reached 87% in FY22. 93% of those smartphones were 4.5G compatible. FORWARD LOOKING STATEMENTS 2023 GUIDANCE 2023 guidance; revenue target of between 55-57%, EBITDA target of around TRY34 billion, and operational capex over sales ratio target of around*22%. Turkcell Turkey subscriber base grew by 2.3 million net additions in FY22 to 41.7 million, thanks to our customer-centric strategy and differentiated value proposition offered to customers. In addition, we achieved and doubled our 1 million net subscriber additions target for the year on the back of our diversified solutions that meet customer needs and our innovative campaigns that facilitate their lives. (1) Excluding license fee On the mobile front, our subscriber base expanded to 37.5 million on 1.9 million net annual additions in FY22. This was driven by net additions from the postpaid subscriber base, which reached 68.1% (66.4%) of total mobile subscribers. In FY22, we had a net 10 thousand decline in our prepaid subscribers, due mainly to the disconnection of 430 thousand inactive prepaid sub- scribers during the quarter in line with our churn policy. Please note that this paragraph contains forward looking statements based on our current estimates and expectations re- garding market conditions for each of our different businesses. No assurance can be given that actual results will be consis- tent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual Report on Form 20-F for 2021 filed with the U.S. Securities and Exchange Commission, and in particular, the risk factor section therein. 238 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 239 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Our Companies and Sector Developments Electronic Communications Sector in Turkey According to the Q3 2022 Q3 Market Data report published by the regulato- ry authority of our industry, Information and Communication Technologies Authority (ICTA), the number of oper- ators in the electronic communication sector in Turkey is 464 and the number of authorizations granted to these op- erators is 840. (Vodafone), TT Mobil In the first thre quarters of 2022, the total revenues of mobile operators, in- cludingTurkcell İletişim Hizmetleri A.Ş. (Turkcell), Vodafone Telekomünikasyon A.Ş. İletişim Hizmetleri A.Ş. (TT Mobile), and Türk Telekomünikasyon A.Ş. (Türk Telekom) were approximately TRY 65.8 billion, while the revenue of other operators was TRY 24.2 billion. During the same period, the total investments made by Turkcell, Türk Telekom, TT Mobil, and Vodafone was realized as TRY 12.5 billion. Mobile Market As of the 3rd quarter of 2022, there were 90.8 million mobile subscribers in Turkey, corresponding to approximately 107.2% penetration rate (Mobile penetration rate excluding M2M devices and 0-9 age population is 114.6%). In the 3rd quarter of 2022, the num- ber of 4.5G subscribers was 83.4 million, while the number of 3G subscribers was 4.3 million. The number of mobile broad- band subscribers who use 3G and 4.5G broadband services via computers and mobile phones rose to 72.6 million. As of the 3rd quarter of 2022, 68.2% of mo- bile subscribers were in postpaid tariffs, while 31.8% were in prepaid tariffs. The number of prepaid mobile broadband subscribers was 21.3 million and the number of postpaid mobile broadband subscribers was 50.3 million, while the number of M2M subscribers reached 8.1 million. In the first three quarters of 2022, the number of mobile numbers ported de- clined to 6.7 million. As of September 30, 2022, total mobile number portability transactions has reached 164 million. Based on number of subscribers, Turkcell has 41.3%, Vodafone has 30.8%, and TT Mobil has 27.9% market share. Based on revenue generated from subscrib- ers, Turkcell’s market share was 46.1%, Vodafone’s was 29.1%, and TT Mobil’s was 24.8%. Approximately 85% of mobile sub- scribers were individual subscribers and 15% were corporate subscribers. The average monthly data usage in mo- bile broadband was 14.8 GB, while the average monthly data usage of sub- scribers who have a 4.5G-compatible device and SIM card was 16 GB. The total mobile voice traffic volume in the third quarter of 2022 decreased by 0.7% com- pared to the same period of last year and was 80.6 billion minutes. Broadband Internet Market The number of broadband internet subscribers, which was around six mil- lion in 2008, reached 91.4 million (18.8 million fixed broadband, 72.6 million mobile broadband subscribers) as of the end of the 3rd quarter of 2022. Total number of internet subscribers has increased by 4.5% compared to the same period of the previous year. While the number of xDSL subscribers was 11.3 million, the number of fiber subscribers reached 5.5 million. The total length of fiber infrastructureof operators was 498,397 km. In the first three quarters of 2022, the total revenues related to internet ser- vice providers reached TRY 15 billion. The average monthly data usage of fixed broadband internet subscribers reached 243 GB. Approximately 72% of fixed broadband subscribers pre- fer packages that offer a 10-35 Mbit/s connection speed. TV Market As of the 3rd quarter of 2022, there are 16 operators, which have the Cable Broadcasting Service (KYH) authori- zation. While the number of subscrib- ers of Türksat’s Cable TV s is 1.4 million, the operators providing IPTV services, Superonline (TV+) and TTNet (Tivibu) have 1,231 thousand and 974 thousand subscribers, respectively. satellite platform Of the operators authorized to pro- vide services, Digital Platform Teknoloji Hizmetleri A.Ş. (Digitürk), Andromeda TV Dijital Platform İşletmeciliği A.Ş. (DSmart), and TTNET A.Ş. (Tivibu) continue broadcast- ing actively. Fixed Voice Market As of the end of 3rd quarter of 2022, there are 11.5 million fixed telephone- subscribers, while the service penetra- tion rate is approximately 13.8%. Legal and Regulatory Developments Concerning Our Industry and Our Companies Removal of Asymmetry in Mobile Interconnection Rates The Information and Communication Technologies Authority decided, un- der Board Decision dated 25 June 2021, to update the Mobile Termination Rates and to completely remove the asymmetry in the rates as of January 1, 2024. In scope of the Board Decision, for Turkcell, Mobile Termination Rates will be applied as 2.39 kr/min start- ing from January 1, 2022 and 2.25 kr/ min starting from January 1, 2023 and gradually reduced every year. Mobile Termination Rates will be made equal at the level of 2.1 kr/min for all operators as of January 1, 2024, and the ongoing asymmetry in fees that has been unfa- vorable for Turkcell since 2006 will thus come to an end. Removal of Tariff Control Obligation for SMS/MMS Termination Services The Information and Communication Technologies Authority, within the scope of the Market Analysis in accord- ance with its Council Decision No. 2020/ İK-SRD/258 published on 08.09.2020, has decided to repeal the obligation to be subject to tariff control (cost- based tariff determination) regarding the SMS/MMS call termination services as of 01.10.2021. After the conciliation process conducted, the mobile oper- ators’ SMS/MMS call termination fees were determined as 0.80 Kr/unit as of 01.04.2022, 1.00 Kr/unit as of 01.01.2023 and 1.20 Kr/unit as of 01.01.2024 through Council Decision No. 2021/UK-ETD/390 dated 14.12.2021. Update on Fixed Interconnection Rates With the Board Decision dated December 14th 2021, the Information and Communication Technologies Authority decided that with the tran- sition to IP interconnection technology, a single-stage fee structure shall be adapted in Fixed Call Termination Rates as of January 1st 2022. For Superonline, the related rates will be applied as 2.8 kr/min as of January 1st 2022 and 2.2 kr/ min as of January 1st 2023. It has been decided that as of January 1st 2024, the termination rates for all operators will be equalized at the level of 1.47 kr/min to totally remove the asymmetry in the sector. Maximum Tariff Regulation on Mobile Electronic Communication Services Maximum tariffs of the services (domes- tic/international voice and SMS, name/ti- tle change, line transfer, number change, SIM card change, on/off, detailed invoice, unknown numbers service etc.) includ- ed in the Maximum Tariff Regulation of Mobile Electronic Communication Services are updated every six months by ICTA. Tariffs were increased by ap- proximately 40.5% on 01.04.2022 and by approximately 26.1% on 01.10.2022. Establishment of Electronic Communication Subscription Contracts in the Electronic Environment The regulations regarding the verifi- cation process of the applicant’s iden- tity in the electronic communication sector for subscription agreement, number porting application, opera- tor switching applications, qualified electronic certificate application, registered electronic mail applica- tions and SIM change applications, in the event that the related documents are prepared electronically, have come into effect as of 01.03.2022, as per the “Regulation on the Verification Process of the Applicant’s Identity in the Electronic Communication Sector” published in the Official Gazette on 26.06.2021. The Amendment to the Regulation on Consumer Rights in the Electronic Communications Sector the The Regulation on Consumer Rights the Electronic Communications in Sector, regulating consumer rights and operator obligations in the elec- tronic communications sector, was amended with a Regulation that was published in the Official Gazette dated 18.01.2022. The provisions of the amendment governing the har- monization with “Regulation on the Authentication Process of the Applicant the Electronic in Communications Sector” came into effect on 01.03.2022, and various matters regarding subscriber agree- ments, contracts and subscriber no- tifications, and obligations such as cancellation, without an early ter- mination fee, of services failing to meet the criteria of “Address-based Internet Speed Test Criteria” that would be determined subsequent- ly by the ICTA came into effect on 31.12.2022. 240 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 241 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Limiting the Number of Prepaid and Postpaid Subscriptions Refurbished Device Sales Installment Regulations With the Board Decision numbered 2022/DK-THD/384 and dated 07.12.2022, the provisions of the Board Decision numbered 2009/DK-10/552 and dat- ed 27.10.2009, which limits the number of prepaid subscriptions that can be activated in order to resolve the “fraud- ulent subscriptions” issue, have been updated. Accordingly, the number of prepaid consumer mobile subscriptions for Turkish citizens is limited to 15, and for foreign nationals, it is limited to 3. The number of postpaid consumer mo- bile subscriptions for Turkish citizens is limited to 15, and for foreign nationals, it is limited to 3. Moreover, the number of “Prepaid and Postpaid Consumer Mobile Subscriptions” that can be activated on behalf of each person in the same month by an authorized retailer was limited to 4. Repeal of Pandemic Measures With the Board Decision numbered 2022/DK-THD/402 and dated 20.12.2022, ICTA has announced that the terms of the Board Decision dated 31.03.2020 and numbered 2020/DK-THD/100 - which regulated certain issues with the aim of ensuring continuation of electronic com- munication services and keeping the ser- vice quality at a safe and qualified level to respond to societal demands in order to reduce the effects of the pandemic have been repealed as of 31.12.2022. Authorizing Provision of Over-the-Top Services With the “Law on Amendments to the Press Law and Other Laws” that was into effect on published and came 18.09.2022, amendments were made on Articles 3, 9 and 60 of the “Electronic Communications Law” numbered 5809 (ECL) and it was regulated that over- the-top service providers that offer in- terpersonal electronic communication services in the scope of voice, text and visual communication need to perform their services through a fully authorized representative, i.e. a joint stock or limited company established in Türkiye, within the framework of the authorization by the Authority (ICTA). With the amend- ment, over-the-top service providers will gain operator status and will become subject to rights and obligations deter- mined by ICTA according to the nature of the over-the-top service provision. According to the “Banking Regulation and Supervision Board Decision No. 10479” published on the web- site of the Banking Regulation and Supervision Authority on 05.01.2023; • • For purchases of cell phones with the status of “refurbished prod- uct” under the Regulation on the Sale of Refurbished Products, the installment period for purchases made with a credit card with- out any amount limit is set to 12 months, provided that they are sold by a “refurbishing center” or an “authorized seller”. (including The maturity limit for consumer loans used for cell phone pur- chases refurbished products) is set to 12 months for cell phones with a price of up to 12,000 Turkish Liras, and 3 months for cell phones with a price over 12,000 Turkish Liras. to the According Regulation Amending the Regulation on the Principles and Rules to be Applied in Retail Trade, excluding sales of cell phones with the status of “refur- bished product” carried out by refur- bishing centers or authorized sellers under the Regulation on the Sale of Refurbished Products, the maturi- ty limit is set to 3 months for sales of pledged cell phones with a price over 12,000 TL, and 12 months for sales of pledged cell phones, regardless of the price being below or above 12,000 TL, for refurbished product purchases. Litigation Procedures Regarding Rejection of Domestic Goods Liability Exemption Requests and ICTA’s R&D SME Audit regarding Our company’s exemption appli- cation for the period of 27.10.2015- the domes- 26.10.2019 investment obligation tic product specified in the IMT Authorization Document, has been rejected by the its decision dated 01.09.2020 and numbered 2020/İK- YED/245. Furthermore, our company’s exemption application regarding the average of the first four-year period covering the years 2015-2019 has also ICTA with been rejected, and an administra- tive sanction has been imposed on our company as a result of the audit carried out by ICTA for the period 2013-2017. Additionally, the decisions regard- ing the rejection of our company’s exemption request for the 2019-2020 and 2020-2021 investment periods regarding the obligation to use do- mestic products have been deemed implicitly rejected by the application made in 2022 for the revocation of these decisions, and legal proceed- ings are being conducted on this matter. Amendment to the Procedures and Principles on the Investigation and Supervision of R&D Investments With the decision of the Information and Communication Technologies Board dated 16.11.2021 and numbered the Procedures 2021/DK-YED/361, and Principles on the Investigation and Supervision of Hardware and Software Investments to be Used in the 4.5G Network have been up- dated. The new regulation includes issues such as ensuring that the amount of purchase per supplier does not exceed 50% of the total in- vestments made during an invest- ment period, informing ICTA before the investments for critical network elements and complying with a pos- sible notification, ensuring a defi- nition for national product, and im- posing obligations on R&D projects carried out in R&D centers. Our com- pany’s application regarding revo- cation of related Board decision has been rejected and legal proceedings conducted regarding this matter. Lawsuit issued by TT Mobil and our Company intervened regarding the “Multiplying Campaign” administra- tive fine applied to our Company The administrative fine of TRY 25,245,565.18 applied by the arti- cles 1, 2, 3 and 4 of ICTA’s decision dated 16.03.2021 and number 2021/ İK-THD/76 for our Company’s oper- ation under “Multiplying Campaign” has been paid with discount (TRY 18,934,173.9) by our company and le- gal methods have not been pursued against the decision. Within the pe- riod, there was an application by TT Mobil for the amendment of the ICTA decision taken regarding our increase the applied company to administrative fine and modifying the aforementioned decision to in- clude a money return to subscribers, and after the implicit rejection of this request a lawsuit against ICTA has been filed with the request of cancel- lation of the aforementioned implicit rejection. Our company is intervening in this lawsuit on the side of ICTA. The lawsuit process continues. Establishment of Re-Pie Portföy Yönetimi A.Ş. Turkcell New Technologies Venture Capital Investment Fund An agreement has been concluded between our Company and Re-Pie Portföy Yönetimi A.Ş. (“Re-Pie”) for establishing a venture capital in- vestment fund to invest into startups that are in line with our Company’s business model and where common ground can be found with our group’s strategic focus areas. Consequently, Re-Pie applied the Capital Markets Board as the founder of Re-Pie Portföy Yönetimi A.Ş. Turkcell New Technologies Venture Capital Investment Fund on 07.03.2022 and with the permission obtained on 28.03.2022, the fund was established. to With the establishment of the fund and by investing in technology-fo- cused startups with high growth po- tential in different sectors, it is aimed to enable these companies to meet their growth targets and to add stra- tegic and financial benefit to our Company as well as create long- term value thanks to the synergy to be created through such startups. In this context, investments were made in companies and venture capital investment funds, including Easycep Holdings Limited, Barikat İnternet Güvenliği Ticaret Bilişim A.Ş. and Procenne Teknoloji A.Ş. through the Re-Pie Portföy Yönetimi A.Ş. Turkcell New Technologies Venture Capital Investment Fund, in 2022. Share Transfer and Investment Agreement with the Republic of Belarus Meetings have been held be- tween Turkcell and CJSC Belarusian Telecommunications Network (“CJSC BeST”) and the Republic of Belarus with respect to the restructuring of invest- Turkcell’s and CJSC BeST’s ments in Belarus, potential improve- ments on competitive conditions and various tax advantages. In this re- gard, an Investment Agreement has been signed between the Republic of Belarus, Turkcell and CJSC BeST on 30.11.2022 and the agreement has come into effect on 06.12.2022. Pursuant to this agreement; • • • • The Share Sale and Purchase Agreement signed between Beltel Telekomünikasyon Hizmetleri A.Ş. (“Beltel”), the Republic of Belarus and Turkcell on 29.07.2008 has been terminated with all its rights and duties by signing a separate agreement for termination. Turkcell signed a share transfer agreement with the Republic of Belarus on 30.11.2022 to pur- chase of 20% shares held by the Republic of Belarus in CJSC Best, 80% shares of which is owned by Beltel, a 100% subsidiary of Turkcell. 20% shares of CJSC BeST has been purchased by Turkcell from the State Committee on Property of the Republic of Belarus for a cash payment of USD 1,165.66. It has been decided that an in- vestment of no less than USD 100,000,000 shall be made to develop the telecommunications infrastructure between 2022- 2032. Additionally, it was decided that an additional amount of USD 100,000,000 shall be paid over 10 years which to be funded by the payment of at least 50% of the annual net profit of CJSC BeST, and in case the aforementioned amount is not reached at the end of 10 years, the remainder shall be paid in lump sum by Turkcell to the Republic of Belarus. Communications Belarus Presidency has rearranged the mobile communication intercon- nection fees by taking into ac- count the Investment Agreement, and determined a mobile call termination fee of 0,001 BYR for CJSC BeST for 5 years. The Newly Established Companies of Turkcell Dijital Sigorta A.S. and Dijital Egitim Teknolojileri A.S. The incorporation procedures of Turkcell Dijital Sigorta A.Ş., which is fully owned by Turkcell Finansman A.Ş. and whose initial capital is TRY 1,000,000 have been completed and the compa- ny was registered with the trade regis- try on 21.06.2022 to provide innovative insurance solutions that are focused on digital experience and data, and to carry out business in other areas al- lowed by the legislation. On 12.10.2022, the capital of the company was in- creased to TRY 175,000,000. The incorporation procedures of Dijital Eğitim Teknolojileri A.Ş., whose ini- tial capital is TRY 100,000, 51% shares of which is owned by our subsidiary Turkcell Dijital İş Servisleri A.Ş. and 49% shares of which is owned by Şahinkaya Özel Eğitim Kurumları A.Ş. have been completed and the company was registered with the trade registry on 11.03.2022 to produce all kinds of train- ing and communication solutions suit- able for computers, internet and next generation technologies for education and training purposes, and to design mobile applications, electronic and hy- brid mailing systems. On 18.10.2022, the capital of the company was increased to TRY 10,100,000. Transfer of Turkcell Europe GmbH Shares and Change of Title All shares of Turkcell Europe GmbH, of which headquarters is located in Germany, and which was fully owned by our subsidiary Lifecell Ventures the Coöperatief U.A. Netherlands, have been transferred to another subsidiary, Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., on 10.10.2022. located in In addition, an application for change of title and address of Turkcell Europe GmbH has been submitted, and the ti- tle of the company has been changed to Paycell Europe GmbH following the approval dated 03.01.2023. 242 | TURKCELL 2022 INTEGRATED ANNUAL REPORT TURKCELL 2022 INTEGRATED ANNUAL REPORT | 243 Consolidated Financial Statement TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 This report is 122 pages. TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 CONTENT PAGE CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................... 1-3 CONSOLIDATED STATEMENT OF PROFIT OR LOSS ....................................................................... 4 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME ..................................... 5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY................................................................ 6 CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................... 7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.. ............................................... 8-122 NOTE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 ORGANIZATION AND OPERATIONS OF THE COMPANY .............................................................. 8 BASIS OF PRESANTATION OF FINANCIAL STATEMENTS .......................................................... 16 BUSINESS COMBINATIONS ............................................................................................................... 51 SEGMENTAL REPORTING .................................................................................................................. 52 CASH AND CASH EQUIVALENTS ..................................................................................................... 56 TRADE RECEIVABLES AND PAYABLES ......................................................................................... 56 RECEIVABLES FROM FINANCE SECTOR OPERATIONS .............................................................. 58 OTHER RECEIVABLES AND PAYABLES ......................................................................................... 59 ASSETS ARISING FROM CUSTOMER CONTRACTS ...................................................................... 60 INVENTORIES ....................................................................................................................................... 60 PREPAID EXPENSES AND DEFERRED REVENUE ......................................................................... 60 INVESTMENTS VALUED BY EQUITY METHOD ............................................................................ 61 INVESTMENT PROPERTIES ............................................................................................................... 61 PROPERTY, PLANT AND EQUIPMENT ............................................................................................. 64 INTANGIBLE ASSETS .......................................................................................................................... 66 RIGHT-OF-USE ASSETS ...................................................................................................................... 69 GOODWILL ............................................................................................................................................ 70 IMPAIRMENT OF ASSETS ................................................................................................................... 70 BORROWING COSTS ........................................................................................................................... 70 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES .............................................................. 71 COMMITMENTS ................................................................................................................................... 78 EMPLOYEE BENEFITS ........................................................................................................................ 79 LIABILITIES ARISING FROM CUSTOMER CONTRACTS .............................................................. 81 EXPENSES BY NATURE ...................................................................................................................... 81 OTHER ASSETS AND LIABILITIES ................................................................................................... 82 PAID-IN CAPITAL, LEGAL RESERVES VE OTHER EQUITY ITEMS ............................................ 83 REVENUE AND COST OF REVENUE ................................................................................................ 85 GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES ......................................... 87 OTHER OPERATING INCOME / EXPENSES ..................................................................................... 88 INVESTMENT INCOME ....................................................................................................................... 89 FINANCIAL INCOME AND EXPENSES ............................................................................................. 89 INCOME TAXES .................................................................................................................................... 90 EARNINGS PER SHARE ....................................................................................................................... 95 FINANCIAL INVESTMENTS ............................................................................................................... 95 DERIVATIVE INSTRUMENTS ............................................................................................................ 98 BORROWINGS .................................................................................................................................... 106 RELATED PARTY DISCLOSURES ................................................................................................... 109 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS ..................... 113 SUPPLEMANTARY CASH FLOW INFORMATION ........................................................................ 121 FEES FOR SERVICES RECEIVED FROM INDEPENDENT AUDIT FIRM .................................... 122 OTHER MATTERS MATERIALITY AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS ..................................................................................................................................... 122 SUBSEQUENT EVENTS ..................................................................................................................... 122 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) ASSETS Current Assets Cash and cash equivalents Balances with the Central Bank of the Republic Turkey Financial investments -Time deposits -Fair value through profit or loss financial assets -Fair value through other comprehensive income financial assets Trade receivables -Trade receivables from related parties -Trade receivables from non-related parties Receivables from finance sector operations -Non-related party receivables from finance sector operations Other receivables -Other receivables from non-related parties Assets arising from customer contracts -Assets arising from goods and service sales contracts Derivative instruments Inventories Prepaid expenses -Prepaid expenses to related parties -Prepaid expenses to non-related parties Assets related to current tax Other current assets -Other current assets from non-related parties TOTAL CURRENT ASSETS Non-Current Assets Financial investments -Fair value through profit or loss financial assets -Fair value through other comprehensive income financial assets Investments valued by equity method Trade receivables -Trade receivables from non-related parties Receivables from finance sector operations -Non-related party receivables from finance sector operations Other receivables -Other receivables from non-related parties Assets arising from customer contracts -Assets arising from goods and service sales contracts Investment properties Property, plant and equipment -Plant, machinery and devices -Other tangible assets Intangible assets -Licenses -Computer softwares -Other intangible assets -Goodwill Right-of-use assets Prepaid expenses -Prepaid expenses to related parties -Prepaid expenses to non-related parties Deferred tax assets Other non-current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS Notes 31 December 2022 31 December 2021 Audited 5 34 34 6 7 8 9 35 10 11 25 34 34 12 6 7 8 9 13 14 15 17 16 11 32 25,960,674 162,593 4,783,562 748,665 4,034,897 - 6,741,511 76,449 6,665,062 3,276,788 3,276,788 145,589 145,589 1,888,942 1,888,942 2,032,416 277,670 478,781 10,475 468,306 446,892 611,232 611,232 46,806,650 2,109,457 258,627 1,850,830 1,122,943 298,759 298,759 285,138 285,138 375,694 375,694 67,054 67,054 11,599 21,904,044 18,289,041 3,615,003 17,742,007 4,624,517 8,038,431 5,030,638 48,421 3,062,298 2,423,822 178 2,423,644 4,991,224 64,116 54,458,155 101,264,805 18,628,665 - 55,330 4,164 - 51,166 4,332,024 175,170 4,156,854 2,014,626 2,014,626 331,333 331,333 1,180,236 1,180,236 2,131,070 260,535 271,595 6,965 264,630 196,019 110,173 110,173 29,511,606 1,376,645 - 1,376,645 678,584 256,442 256,442 137,559 137,559 162,980 162,980 67,505 67,505 16,588 18,002,779 15,510,759 2,492,020 14,661,779 5,289,996 5,429,486 3,893,876 48,421 2,983,648 1,009,586 347 1,009,239 1,799,612 17,330 41,171,037 70,682,643 246 | TURKCELL 2022 INTEGRATED ANNUAL REPORT The accompanying notes form an integral part of these consolidated financial statements. Translated into English from the report originally issued in Turkish 1 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 247 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) EQUITY Equity attributable to owners of the parent Paid in capital Treasury shares (-) Share premiums Additional capital contributions of shareholders Accumulated other comprehensive loss that will not be reclassified in profit or loss (-) -Defined benefit plans remeasurement loss (-) Accumulated other comprehensive loss that will be reclassified in profit or loss (-) -Currency translation reserve -Hedging reserve -Gain (loss) from cash flow hedges -Loss from net investment hedge on the company operating abroad (-) -Changes in the time value of options -Loss from fair value through other comprehensive income financial assets (-) Legal reserves Prior years’ profit Net profit for the period Non-controlling Interests TOTAL EQUITY TOTAL LIABILITIES Audited Notes 31 December 2022 26 26 26 35 26 26 30,891,061 2,200,000 (118,399) 269 - (985,578) (985,578) (1,882,081) 1,876,409 (2,383,736) 270,905 (2,654,641) (1,292,251) (82,503) 3,948,937 16,674,720 11,053,193 3,990 30,895,051 101,264,805 31 December 2021 22,562,025 2,200,000 (128,057) 269 35,026 (225,892) (225,892) (1,165,727) 2,036,379 (1,595,923) (9,746) (1,586,177) (1,555,773) (50,410) 3,612,388 13,202,920 5,031,098 247 22,562,272 70,682,643 LIABILITIES Short-term Liabilities Short-term borrowings Short-term borrowings from related parties -Bank loans -Lease obligations -Issued debt instruments Short-term borrowings from non-related parties -Bank loans -Lease obligations -Issued debt instruments Short-term portion of long-term borrowings from non- related parties -Bank loans -Issued debt instruments Trade payables -Trade payables to related parties -Trade payables to non-related parties Payables related to employee benefits Other payables -Other payables to related parties -Other payables to non-related parties Liabilities arising from customer contracts -Liabilities arising from goods and service sales contracts Derivative instruments Deferred revenue -Deferred revenue from related parties -Deferred revenue from non-related parties Current tax liability Short-term provisions -Short-term provisions related to employee benefits -Other short-term provisions Other short-term liabilities TOTAL SHORT-TERM LIABILITIES Long-term Liabilities Long-term borrowings Long-term borrowings from related parties -Bank loans -Lease obligations -Issued debt instruments Long-term borrowings from non-related parties -Bank loans -Lease obligations -Issued debt instruments Trade payables -Trade payables to related parties -Trade payables to non-related parties Liabilities arising from customer contracts -Liabilities arising from goods and service sales contracts Deferred revenue -Deferred revenue from related parties -Deferred revenue from non-related parties Long-term provisions -Long-term provisions related to employee benefits -Other long-term provisions Deferred tax liabilities Other long-term liabilities TOTAL LONG-TERM LIABILITIES TOTAL LIABILITIES Notes 31 December 2022 31 December 2021 Audited 36 37 36 6 22 8 23 35 11 32 20 20 36 37 23 22 20 32 25 10,758,843 3,190,039 2,791,256 41,286 357,497 7,568,804 5,969,598 831,991 767,215 5,962,404 4,955,284 1,007,120 7,821,670 240,385 7,581,285 354,375 2,392,209 925 2,391,284 706,046 706,046 150,923 113,402 13,628 99,774 243,485 753,933 722,063 31,870 1,474 29,258,764 4,762,578 907,138 762,613 42,587 101,938 3,855,440 3,004,972 850,468 - 4,085,835 3,340,237 745,598 5,037,635 61,110 4,976,525 140,630 1,606,940 4,046 1,602,894 459,289 459,289 71,325 111,136 18,102 93,034 241,686 573,662 506,641 67,021 630 17,091,346 37,133,103 84,095 - 84,095 - 37,049,008 17,945,061 2,097,859 17,006,088 35,258 938 34,320 261,328 261,328 6,095 - 6,095 2,758,758 1,790,031 968,727 249,835 666,613 41,110,990 70,369,754 27,929,720 54,749 - 54,749 - 27,874,971 13,356,013 1,958,061 12,560,897 - - - 170,445 170,445 5,838 1,139 4,699 1,230,410 614,613 615,797 928,554 764,058 31,029,025 48,120,371 The accompanying notes form an integral part of these consolidated financial statements. Translated into English from the report originally issued in Turkish 2 248 | TURKCELL 2022 INTEGRATED ANNUAL REPORT The accompanying notes form an integral part of these consolidated financial statements. Translated into English from the report originally issued in Turkish 3 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 249 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) Notes 31 December 2022 31 December 2021 Audited PROFIT OR LOSS SECTION Revenue Revenue from finance sector operations TOTAL REVENUE Cost of revenue (-) Cost of revenue from finance sector operations (-) TOTAL COST OF REVENUE Gross profit from business operations Gross profit from finance sector operations GROSS PROFIT General administrative expenses (-) Marketing expenses (-) Other operating income Other operating expenses (-) OPERATING PROFIT Investment income Impairment losses determined in accordance with TFRS 9 (-) Share on (loss)/profit of investments valued by equity method PROFIT BEFORE FINANCIAL INCOME (EXPENSES) Financial income Financial expenses (-) PROFIT FROM CONTINUING OPERATIONS BEFORE TAXATION Tax income from continuing operations Tax expense for the period (-) Deferred tax income for the period PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS Distribution of profit for the period Non-controlling interests Owners of the parent Earnings per share (TL) Earnings per share from continuing operations 27 27 27 27 28 28 29 29 30 31 31 32 32 33 52,169,979 1,708,508 53,878,487 (36,148,784) (639,858) 34,906,646 1,013,896 35,920,542 (24,940,126) (289,848) (25,229,974) (36,788,642) 16,021,195 1,068,650 17,089,845 (1,519,021) (2,700,077) 7,561,993 (761,126) 19,671,614 1,779,890 (354,918) 9,966,520 724,048 10,690,568 (919,023) (1,778,483) 7,077,695 (668,076) 14,402,681 464,116 (271,162) (71,416) 21,025,170 210,775 (13,699,811) 90,090 14,685,725 3,051,082 (13,195,713) 7,536,134 4,541,094 3,516,100 (530,581) 4,046,681 490,184 (681,513) 1,171,697 11,052,234 5,031,278 (959) 11,053,193 180 5,031,098 5.06 5.06 2.30 2.30 PROFIT FOR THE PERIOD Other comprehensive income/(loss) Items that will not be reclassified to profit or loss Defined benefit plans remeasurement loss (-) Tax effect of defined benefit plans remeasurement loss Items that will be reclassified to profit or loss Currency translation differences related to translation of companies operating abroad -Gain from currency translation differences related to translation of companies operating abroad Loss from fair value through other comprehensive income financial assets (-) Gain from cash flow hedges Reclassification adjustments for cash flow hedge Gain/(loss) from changes in the time value of options Reclassification adjustments for changes in the time value of options Loss from net investment hedge on the company operating abroad (-) Taxes based on other comprehensive income that will be reclassified to profit or loss -Tax effect of currency translation differences related to translation of companies operating abroad -Tax effect of loss from fair value through other comprehensive income financial assets -Tax effect of gain/(loss) from cash flow hedges -Tax effect of gain/(loss) from changes in the time value of options -Tax effect of loss from net investment hedge on the company operating abroad Notes 31 December 2022 31 December 2021 Audited 11,052,234 5,031,278 22 32 34 35 35 32 34 35 (759,582) (950,686) 191,104 (131,312) (163,588) 32,276 (716,354) (556,702) 378,459 378,459 (40,116) 439,706 (74,818) 2,410,295 2,410,295 (65,494) 1,909,730 (1,712,519) 316,048 (1,266,102) 13,355 81,028 (1,335,580) (1,558,374) (413,408) (355,266) (538,429) (861,143) 8,023 (84,237) (65,881) 267,116 13,099 (55,912) 237,015 311,675 OTHER COMPREHENSIVE LOSS (-) (1,475,936) (688,014) TOTAL COMPREHENSIVE INCOME Distribution of total comprehensive income for the period Non-controlling interests Owners of the parent 9,576,298 9,576,298 (959) 9,577,257 4,343,264 4,343,264 76 4,343,188 250 | TURKCELL 2022 INTEGRATED ANNUAL REPORT The accompanying notes form an integral part of these consolidated financial statements. Translated into English from the report originally issued in Turkish 4 The accompanying notes form an integral part of these consolidated financial statements. Translated into English from the report originally issued in Turkish 5 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 251 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) Accumulated other comprehensive loss that will not be reclassified in profit or loss Paid in capital Treasury shares (-) Share premiums Additional capital contributions of shareholders Defined benefit plans remeasurement (loss) Accumulated other comprehensive loss that will be reclassified in profit or loss Gains/(losses) from fair value through other comprehensive income financial assets Loss from net investment hedge on the company operating abroad Gains/ (losses) from cash flow hedges Changes in the time value of options Currency translation reserve Retained Earnings Legal reserves Prior years’ profit Net profit for the period Equity attributable to owners of the parent Non- controlling interests Equity 2,200,000 - (147,914) - 269 - 35,026 - (94,684) - 1,985 - (339,478) - (151,045) - (607,714) - 487,227 - 3,009,025 603,363 12,154,984 3,633,723 4,237,086 (4,237,086) 20,784,767 - 171 - 20,784,938 - - - - - - - - 19,857 - - - - - - - - 2,200,000 (128,057) 269 35,026 2,200,000 (128,057) 269 35,026 (131,208) (52,395) (1,246,699) 141,299 (948,059) 1,549,152 - - - - - - (131,208) (52,395) (1,246,699) 141,299 (948,059) 1,549,152 - - - - - - - - - - - - - (2,585,787) 5,031,098 4,343,188 76 4,343,264 5,031,098 5,031,098 180 5,031,278 - - (687,910) (104) (688,014) (2,565,930) - (2,565,930) (225,892) (50,410) (1,586,177) (9,746) (225,892) (50,410) (1,586,177) (9,746) (1,555,773) 2,036,379 3,612,388 13,202,920 5,031,098 22,562,025 247 22,562,272 (1,555,773) 2,036,379 3,612,388 13,202,920 5,031,098 22,562,025 247 22,562,272 - - - - - - - - 2,200,000 - - - - - - - 9,658 - - - - - - - - (35,026) (118,399) 269 - - - - - - - - - - - - - - (759,582) (32,093) (1,068,464) 280,651 263,522 (159,970) - - - - - - (759,582) (32,093) (1,068,464) 280,651 263,522 (159,970) - - - - (104) - - - - - - - - - - - - - - - - - - - (985,578) (82,503) (2,654,641) 270,905 (1,292,251) 1,876,409 - - - - - - - 3,948,937 336,549 4,694,549 (5,031,098) - - - 11,053,193 9,577,257 (959) 9,576,298 11,053,193 11,053,193 (959) 11,052,234 - - - 35,026 - - (1,257,775) - - - (1,475,936) - - - - (1,475,936) - 4,949 4,949 - - (1,248,117) (104) (247) (351) - (1,248,117) 16,674,720 11,053,193 30,891,061 3,990 30,895,051 Audited Balance at 1 January 2021 Transfers Total comprehensive income Net profit for the period Other comprehensive income/(loss) Dividends (Note 26) Balance at 31 December 2021 Balance at 1 January 2022 Transfers Total comprehensive income Net profit for the period Other comprehensive income/(loss) A change in the ownership interest of a subsidiary without a loss of control Acquisition of subsidiary (Note 1) Other changes Dividends (Note 26) Balance at 31 December 2022 The accompanying notes form an integral part of these consolidated financial statements. Translated into English from the report originally issued in Turkish 6 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) Notes 31 December 2022 31 December 2021 Audited A. CASH FLOWS FROM OPERATING ACTIVITIES Profit for the Period Profit for the period from continuing operations Adjustments Related to Reconciliation of Net Profit for the Period Adjustments for depreciation and amortization Adjustments for impairment Adjustments for provisions Adjustments for interest expenses Other adjustments related to (profit)/loss reconciliation Adjustments for fair value loss/(gain) from derivative instruments Adjustments for tax income Adjustments for (gain) arising from the disposal of fixed assets Adjustments for fair value (gain) from financial assets Adjustments for retained loss/(gain) of investments valued by equity method Adjustments for unrealized foreign currency translation differences Changes in Working Capital: Adjustments for (increase) in trade receivables Adjustments for (increase) in inventories (Increase) in Central Bank of the Republic of Turkey account (Increase) in receivables from finance sector operations (Increase) in other assets related to operations Adjustments for decrease in other receivables Adjustments for (increase) in assets arising from customer contracts Adjustments for (decrease) in trade payables (Increase) in prepaid expenses Adjustments for increase in liabilities arising from customer contracts Deferred revenue increase/(decrease) Adjustments for increase in other payables (Decrease) in other liabilities related to operations Cash Generated by Operating Activities Interest paid Tax paid Interest received B. CASH FLOWS FROM INVESTING ACTIVITIES Cash outflows due to acquisition of property, plant and equipment Cash outflows due to acquisition of intangible assets Cash inflows from disposal of property, plant and equipments and intangible assets Cash outflows due to acquisitions to obtain control of subsidiaries Cash outflows due to additional share acquisition or capital increase of associates and/or joint ventures Cash inflows from sale of shares in other entities or shares in funds or borrowing instruments Cash outflows due to acquisition of shares in other entities or shares in funds or borrowing instruments Other cash (outflows)/inflows Change in other cash advances given C. CASH FLOWS FROM FINANCING ACTIVITIES Cash inflows from loans Cash inflows from issued debt instruments Cash outflows due to loan repayments Dividends paid Cash outflows due to issued debt instruments repayments Cash outflows due to payments of lease obligations Cash inflows from derivative instruments Cash outflows due to derivative instruments CHANGE IN CASH AND CASH EQUIVALENTS BEFORE CURRENCY TRANSLATION RESERVE EFFECT (A+B+C) D. CURRENCY TRANSLATION RESERVE EFFECT ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D) E. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (A+B+C+D+E) 13-14-15-16 14-15 35 32 6 10 7 25 8 6 11 11 8 25 14 15 3 39 39 39 5 5 25,151,859 11,052,234 11,052,234 19,031,897 9,289,357 188,655 1,506,510 1,662,617 83,866 418,528 (3,516,100) (114,247) (863,852) 71,416 10,305,147 (3,193,029) (2,576,956) (17,135) (162,593) (1,439,282) (564,104) 10,700 (709,360) 2,095,537 (268,247) 337,640 2,523 999,014 (900,766) 26,891,102 (3,087,234) (779,655) 2,127,646 (19,647,765) (7,216,300) (6,869,302) 244,487 21,171,108 5,031,278 5,031,278 19,446,607 7,252,075 39,838 1,247,427 739,943 (23,281) (2,401,053) (490,184) (109,489) - (90,090) 13,281,421 (1,944,725) (998,377) (56,820) - (200,765) (32,024) 16,703 (148,573) 11,333 (71,359) 149,900 (22,127) 438,011 (1,030,627) 22,533,160 (1,822,815) (763,103) 1,223,866 (10,361,547) (5,568,300) (4,014,234) 190,153 - (86,703) (515,775) 1,023,116 (1,023,124) (3,937,538) (1,353,329) 1,760,024 27,656,215 2,327,594 (23,239,784) (1,248,117) (1,855,088) (2,243,432) 3,102,658 (2,740,022) 7,264,118 56,067 7,320,185 18,619,881 25,940,066 (484,568) 693,322 (1,035,421) 238,395 (294,191) (3,942,240) 13,033,337 192,157 (12,496,149) (2,565,930) (142,157) (1,649,046) 1,403,609 (1,718,061) 6,867,321 (107,995) 6,759,326 11,860,555 18,619,881 252 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 7 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 253 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 1 ORGANIZATION AND OPERATIONS OF THE COMPANY 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) Turkcell İletişim Hizmetleri Anonim Şirketi (“Turkcell - Parent Company”) was established on 5 October 1993 in İstanbul and started its activities in 1994. Turkcell's commercial address is registered as Aydınevler Mahallesi İnönü Caddesi No:20 Küçükyalı Ofispark Maltepe/İstanbul. The fields of activity of Turkcell (“Company”) are the works and services envisaged in the GSM (“Global System for Mobile Communications”) Pan European Mobile Telephone System tender signed with Republic of Turkey Ministry of Transport and Infrastructure (“the Ministry”), and all kinds of telephones, telecommunication and similar services are activities within the scope of authorization regarding IMT services and infrastructures provided that it is not contrary to the law of Posta ve Telgraf Teşkilatı A.Ş. (“PTT”). As of 31 December 2022, Turkcell's shares are quoted in Borsa İstanbul A.Ş. (“BIST”) and the New York Stock Exchange (“New York Stock Exchange” - “NYSE”). The company signed a revenue sharing agreement in 1993 with Türk Telekomünikasyon A.Ş. (“Türk Telekom”) and has been made responsible for realizing a mobile phone system in GSM standards by covering the investment cost within the framework of this agreement. Turkcell signed a license agreement with the Ministry on 27 April 27, and in accordance with this agreement, it was entitled to obtain a 25-year GSM operating license (“2G License”) for a license fee of 500,000 USD. In the 3rd Generation tender made by the Information Technologies and Communication Authority (“BTK”) for the issuance of four licenses for the authorization of 2000/UMTS services and infrastructures, the company was entitled to receive the A type license, which includes the widest frequency band, in return for 358,000 Euros (excluding VAT). After the approvals regarding the 3rd Generation License (“3G License”) were completed, the license fee was paid and the concession agreement was signed between Turkcell and BTK on 30 April 2009. The contract is valid for 20 years from the date of signing. Turkcell started to provide services under the contract on 30 July 2009. The Company was entitled to receive a total of 172.4 MHz frequency for a fee of 1,623,460 EUR (excluding VAT), with the "Authorization Tender for IMT Services and Infrastructures", popularly known as ("4.5G License"), held by BTK on 26 August 2015. The IMT Authorization period is until 30 April 2029, and operators have started the provision of IMT services from 1 April 2016. 2x1.4 MHz wide packages in the 900MHz frequency band and 2 2x5 MHz wide packages in the 2100 MHz frequency band started to be used as of 1 December 2015, and the remaining packages were started to be used as of 1 April 2016. The Company pays 90% of 15% of monthly gross sales as treasury share and 10% of 15% of monthly gross sales as universal service contribution to BTK every month. In addition, the Company pays annual contributions in an amount equal to 0.35% of net revenue to the BTK’s expenses and 5% of net revenue to BTK as a frequency fee (TRx). As of 31 December 2022, TVF Bilgi Teknolojileri İletişim Hizmetleri Yatırım Sanayi ve Ticaret Anonim Şirketi (“TVF BTIH”) and IMTIS Holdings S.a r l. (“IMTIS Holdings”)'s shares in the Company's capital and voting rights are 26.2% and 19.8% respectively. 53.95% of the Company's shares are still publicly traded in domestic and foreign capital markets (Note 26.1). As of 31 December 2022, the main and ultimate shareholders of the Company are TVF BTIH and Türkiye Varlık Fonu (“TVF”), respectively. TVF was established by the Law No. 6741, published in the Official Gazette dated 26 August 2016. 15% of the total issued shares of Turkcell, owned by TVF BTIH, have been re-classified as a separate class of Group A Shares (the “Group A Shares”); (i) On Group A shares, to the shareholders; (a) Election of five members of the Company's Board of Directors, (b) In the election of the chairman of the General Assembly meeting, a voting privilege has been created to give six votes for each Group A Share, again, the privilege of nomination is envisaged on Group A Shares, allowing the shareholders to nominate four candidates to be used in the election of five members of the Company's Board of Directors, (ii) All shareholders of the Company (including the holders of Group A Shares) are entitled to cast one vote per share on all other matters submitted to a vote of the Company’s shareholders, including the appointment of the residual four members of the board of directors of the Company (including independent ones); (iii) The chairman of the board of directors shall be elected among the members of the board of directors elected through the exercise of the privileges granted to Group A Shares; (iv) In order for the quorum for the meeting of the Board of Directors to be formed, the participation of at least five members constituting the majority of the total number of members is required and a decision can be taken with the affirmative votes of at least five members present at the meeting; (v) As long as the privileges mentioned above are in effect, as regulated in Article 370 of the Turkish Commercial Code (“TCC”), the unlimited power to represent and bind the Company shall be exercised by two members of the Board of Directors, at least one of whom was elected by the holders of Group A Shares through the use of the privileges mentioned above. The Company’s board of directors consists of a total of nine non-executive members including three independent members as of 31 December 2022. 254 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 8 Translated into English from the report originally issued in Turkish 9 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 255 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) The shareholding structure of the Company as of 31 December 2022 is disclosed in Note 26.1. As of 31 December 2022, the Company's investments to its subsidiaries, associates and joint ventures are as follows: Subsidiary Title Turktell Bilişim Servisleri A.Ş. (“Turktell”) Superonline İletişim Hizmetleri A.Ş. (“Turkcell Superonline”) Turkcell Satış ve Dijital İş Servisleri Hizmetleri A.Ş. (“Turkcell Satış”) Turkcell Teknoloji Araştırma ve Geliştirme A.Ş. (“Turkcell Teknoloji”) Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”) Turkcell Dijital İş Servisleri A.Ş (“Turkcell Dijital”) Turkcell Dijital Eğitim Teknolojileri A.Ş (“Dijital Eğitim”) (1) Atmosware Teknoloji Eğitim ve Danışmanlık A.Ş. (“Atmosware Teknoloji”) Turkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.Ş. (“Turkcell Enerji”) Boyut Grup Enerji Elektrik Üretim ve İnşaat Sanayi ve Ticaret A.Ş. (“Boyut Enerji”) Turkcell Finansman A.Ş. (“Turkcell Finansman”) Turkcell Sigorta Aracılık Hizmetleri A.Ş. (“Turkcell Sigorta”) Turkcell Dijital Sigorta A.Ş. (“Turkcell Dijital Sigorta”) (2) Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. (“Turkcell Ödeme”) Lifecell Dijital Servisler ve Çözümler A.Ş (“Lifecell Dijital Servisler”) Lifecell Bulut Çözümleri A.Ş. (“Lifecell Bulut”) Lifecell TV Yayın ve İçerik Hizmetleri A.Ş. (“Lifecell TV”) Lifecell Müzik Yayın ve İletim A.Ş. (“Lifecell Müzik”) Kule Hizmet ve İşletmecilik A.Ş. (“Global Tower”) LLC UkrTower (“UkrTower”) Beltower LLC (“Beltower”) East Asian Consortium B.V. (“Eastasia”) Kıbrıs Mobile Telekomünikasyon Limited Şirketi (“Kıbrıs Telekom”) Lifecell Digital Limited Şirketi (“Lifecell Dijital”) Country Turkey Business Information technology, value added GSM services and entertainment investments Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Telecommunications Sales, delivery and digital sales services Research and development Property investments Providing advanced product and solutions for digitalization needs of institutions Education technologies Develop software products and services, training software developers Electricity energy trade and wholesale and retail electricity sales Renewable energy production Consumer financing services Insurance agency activities Digital agency activities Payment services and e-money Development and providing of digital services and products Cloud solutions services and other services Online radio, television and on-demand streaming services Radio, television and on-demand streaming services Telecommunications infrastructure business Ukraine Republic of Belarus Telecommunications infrastructure business Telecommunications infrastructure business Netherlands Telecommunications investments Turkish Republic of Northern Cyprus Turkish Republic of Northern Cyprus Telecommunications Telecommunications Global Bilgi Pazarlama Danışmanlık ve Çağrı Servisi Hizmetleri A.Ş. (“Turkcell Global Bilgi”) Turkey Customer relations and human resources management 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) Country Subsidiary Title (cont'd) LLC Global Bilgi (“Global Ukrayna”) Ukraine Rehberlik Hizmetleri A.Ş. (“Rehberlik Hizmetleri”) Turkey Lifecell Ventures Coöperatief U.A. (“Lifecell Ventures”) LLC lifecell (“lifecell”) Ukraine Netherlands Paycell Limited Liability Company (“Paycell LLC”) Ukraine Paycell Europe GmbH ("Paycell Europe") (3) Yaani Digital BV (“Yaani”) BiP Digital Communication Technologies B.V (“BiP B.V.”) BiP İletişim Teknolojileri ve Dijital Servisler A.Ş. (“BiP A.Ş.”) Beltel Telekomünikasyon Hizmetleri A.Ş. (“Beltel”) Turkey CJSC Belarusian Telecommunications Network (“BeST”) (4) Turkey Germany Netherlands Netherlands Business Customer relations management Directory assistance Telecommunications investments Telecommunications Consumer financing services, payment services and e-money Payment services and e-money Internet search engine and browser services Dijital services, sales of services and products Dijital services, sales of services and products Telecommunications investments Republic of Belarus Telecommunications Lifetech LLC (“Lifetech”) Republic of Belarus Information technology, programming and technical support Turkcell Yeni Teknolojiler Girişim Sermayesi Yatırım Fonu (“Turkcell GSYF”) (5) W3 Labs Yeni Teknolojiler A.Ş. ("W3") Turkey Turkey Venture capital investment fund Bilişim teknolojileri Associate Title Country Business Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş. (“TOGG”) Turkey Electric passenger car development, production and trading activities Joint Venture Title Sofra Kurumsal ve Ödüllendirme Hizmetleri A. Ş. (“Sofra”) Country Business Turkey Meal coupons and cards (1) Dijital Eğitim has been incorparated respectivelty with the shareholding percentage 51% and 49% by Turkcell Dijital which is fully owned by the Group and Şahinkaya Özel Eğitim Kurumları A.Ş. to offer education and communication solutions compatible with new generation technologies. Initial capital is TL 100 and registration and announcement of the respective company was completed on 11 March 2022. (2) Turkcell Dijital Sigorta, in which fully owned by Turkcell Finansman was established to offer insurance activitites based on digital and innovative technologies and registration and announcement of the respective Company was completed on 21 June 2022. (3) The title of Turkcell Europe GmbH which is fully owned by the Group has been changed to Paycell Europe GmbH. (4) Share Transfer transactions regarding the purchase of 20% of BeST’s shares owned by the Republic of Belarus were completed on 9 December 2022. (5) In accordance with business model of the Group, Turkcell GSYF has been established by on 28 March 2022 by RE-PIE Portföy Yönetimi A.Ş.(“RE- PIE) to invest in initiatives that create synergies with the Group's strategic focus areas and also Turkcell contributes. Turkcell GSYF has been included to the consolidated financial statements as of 30 September 2022 in accordance with the “TFRS 10 Consolidated Financial Statements”. Turktell Turktell was established to participate in companies that provide services such as information technology, entertainment and value-added GSM services and to develop, sell and market these services. 256 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 10 Translated into English from the report originally issued in Turkish 11 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 257 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) Turkcell Superonline Turkcell Superonline was established to make and operate the necessary investments for telecommunication services and to undertake the representation of domestic and foreign enterprises providing these services. In addition, Turkcell Superonline provides international and national public voice transport, private international leased data lines for corporations, internationally connected internet access services, and develops consumer and corporate Internet service. Turkcell Satış Turkcell Satış operates in the fields of telecommunication and information technology products sales, distribution, marketing and information technology services, system integration and digital business services. Turkcell Teknoloji Turkcell Teknoloji's field of activity is to develop, produce, mount, install, maintain and repair, operate, buy, sell, rent, lease, and provide consultancy on all kinds of software and hardware systems in telecommunication, communication, and informatics or for general purposes. Turkcell Gayrimenkul Turkcell Gayrimenkul buys, sells and rents any real estate on its behalf or on behalf of its customers; was established to make all kinds of constructions on the real estate belonging to itself or others. Turkcell Dijital Turkcell Digital Business Services operates in the fields of selling, installing, operating, mounting, and after- sales support, necessary training and operability of all kinds of digital products, services, services, and devices to institutions. Dijital Egitim The establishment of Dijital Egitim, whose business subject is the provision of all kinds of education and communication solutions suitable for computer, internet, and new-generation technologies for educational purposes, was registered and announced on 11 March 2022. Atmosware Teknoloji Atmosware Teknoloji was established in 2021 to develop software products and services and to train software developers. Turkcell Enerji Turkcell Enerji’s field of activity is electrical energy trade, wholesale and retail sales, and established on February 20, 2017. Turkcell Enerji, wholly owned by Turktell, was granted an electricity supply license by EMRA on 11 May 2017. Boyut Enerji Boyut Enerji’s main field of activity is the establishment, commissioning, and leasing of an electrical power generation facility, electricity generation, and sales of the generated electrical energy and/or capacity to customers (Note 3). Turkcell Finansman Turkcell Finansman was established to provide financing to its customers by providing loans for the purchase of all kinds of goods and services, within the framework of the Financial Leasing, Factoring and Financing Companies Law No. 6361, and other relevant legislation provisions and (“BRSA”) regulations. Turkcell Finansman carries out its activities in Turkey through sales points with which it has signed a General Seller Agreement, as well as internet and telesales channels. Turkcell Sigorta Turkcell Sigorta was established on 19 June 2018 operate insurance agency activities. Turkcell Dijital Sigorta Turkcell Dijital Sigorta was established to offer insurance activities based on digital and innovative technologies. Turkcell Ödeme Turkcell Odeme was established on 13 June 2000 in Istanbul. Turkcell Payment is authorized to operate as a "payment institution" and "electronic money institution", to provide services to mobile users with mobile payment systems, to act as an intermediary for bill payments, an intermediary for money transfers, and intermediation for card payments. Lifecell Dijital Servisler To buy, sell, import and export content to be presented in electronic environments and to act as an intermediary; to sell the advertising spaces of digital services, to manage the advertising platform and to mediate the sales of all advertising spaces in the Turkish advertising ecosystem; Providing services in the cloud playground; was established in 2020 to operate in the field of development of all kinds of digital services and products. Lifecell Bulut Operating under the Lifebox brand, Lifecell Bulut was established in 2020 to provide services to operator- independent users in the field of cloud computing, where photos, videos, documents, phone books and music files can be safely stored, and to establish and operate the necessary technological infrastructure and systems for this purpose. The lifebox transfer product, which offers free and membership-free file transfer within the company, and the lifebox business product, which offers file storage, transfer and office features over the cloud, are among the products offered to the field. Lifecell TV Operating under the TV+ brand, Lifecell TV was established in 2020 to transmit all kinds of audio and visual content to operators-independent users in encrypted, unencrypted digital and/or analogue media. With different subscription packages, the TV+ platform serves its subscribers on smart phones and tablets with iOS and Android operating systems, web, smart TV, Apple TV, Android TV and many other devices. It is among its activities to buy, sell, import, and export the content to be created for the purpose of providing all kinds of audio and video services in the electronic environment and to mediate these transactions. Lifecell Müzik Serving under the Fizy brand, Lifecell Music was established in 2020 to provide on-demand audio and visual broadcasting and transmission over the internet to operator-independent users. 258 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 12 Translated into English from the report originally issued in Turkish 13 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 259 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) 1 ORGANIZATION AND OPERATIONS OF THE COMPANY (cont’d) Global Tower, Kule Ukrayna ve Beltower Yaani All of Yaani's shares were taken over on 14 May 2019, and the transfer of all assets of the company was completed on 1 June 2020, with the contract signed with Ntent Inc. Yaani; has indefinite license and usage rights for the Yaani search engine and joined the group to sell and disseminate the search engine to international markets. BiP B.V. BiP B.V. was established on 7 September 2020 to market the BiP application developed by Turkcell to other operators around the world as a product and service. BiP A.Ş. BiP A.S. offers instant, fast and secure messaging, audio and/or video calls and video conference services to operator-independent users via applications on their smart phones or tablet terminals with internet connection. Developing and collecting new services, services and products for consumers for situations where mobile communication, internet or these two platforms are intertwined are among its activities. Beltel Beltel was established to make and operate telecommunications and advanced technology investments and to participate in investments that provide these services. BeST BeST was established in Belarus to invest in and operate telecommunications and advanced technology. Lifetech Lifetech was established in Belarus to operate in the fields of programming and consulting. . Global Tower, Kule Ukrayna, and Beltower were established to operate the infrastructure by renting space in the towers to the telecommunication and media sector, private and public institutions, and organizations. Global Tower, Kule Ukrayna, and Beltower provide bundle services to its customers with all the necessary permissions, renting the place and field, making the tower investment, providing medium and low voltage energy and container infrastructure, and performing periodical maintenance (tower, fence, power line, access road). In addition, Global Tower started to provide end-to-end closed-circuit satellite services to its customers by purchasing a satellite communication service license from BTK in January 2018. In this context, satellite communication service solutions are offered to mobile operators, corporate customers and public institutions. Eastasia Eastasia was established in the Netherlands to invest in and operate telecommunications and advanced technology. Kıbrıs Telekom Kibris Telekom was established in TRNC to make and operate telecommunication and advanced technology investments. Lifecell digital Lifecell digital was established in TRNC to provide Internet Service Provider service within Kibris Telecom. Turkcell Global Bilgi ve Global Ukrayna Turkcell Global Bilgi and Global Ukrayna serve as customer experience and human resources management centers. Rehberlik Hizmetleri Rehberlik Hizmetleri was established to provide guidance and value-added services, and to establish and operate infrastructure for these services. Lifecell Ventures Lifecell Ventures was established to offer applications developed by Turkcell to other operators around the world as products and services, and it carries out marketing activities. lifecell lifecell was established in Ukraine to make and operate telecommunications and advanced technology investments. Paycell LLC The company named "Paycell LLC", which was established in Ukraine by lifecell, whose capital is wholly owned achieved the status of "financial company" on 21 September 2017. Paycell LLC has loan lending, leasing licenses, and local money transfer licenses to provide its customers with credit device sales and digital payment services via e-money. Paycell Europe Paycell Europe was established to continue the activities of Turkcell Odeme, which operates in the field of digital payment and electronic money in Europe. 260 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 14 Translated into English from the report originally issued in Turkish 15 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 261 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.1 Basis of Presentation (a) Statement of Compliance 2.1 Basis of Presentation (cont’d) (i) Subsidiaries The accompanying consolidated financial statements of the Company have been prepared in accordance with Turkish Financial Reporting Standards (“TFRS”) promulgated by the Public Oversight Accounting and Auditing Standards Authority (“POA”) that are set out in the 5th article of the communiqué numbered II-14.1 “Communiqué on the Principles of Financial Reporting In Capital Markets” (“the Communiqué”) announced by the Capital Markets Board (“CMB”) on 13 June 2013 and published in Official Gazette numbered 28676. The accompanying consolidated financial statements of the Company have been prepared in accordance with the CMB's “Announcement on Financial Statement and Footnote Formats” dated 7 June 2013. The Company has made the necessary adjustments and reclassifications in accordance with the formats specified in the “2022 TFRS Taxonomy” and “Financial Statement Examples and User Guide” published by the POA on 10 October 2022. Among the equity items, paid-in capital, share premiums and legal reserves are presented over their amounts in the accounting records. The Company and its subsidiaries registered in Turkey prepare their accounting records and statutory financial statements in Turkish Lira (“TL”) in accordance with the principles and conditions issued by the CMB, the TCC, tax legislation and the Uniform Chart of Accounts issued by the Ministry of Finance. Financial statements are presented rounded to thousands of TL. Subsidiaries operating in foreign countries prepare their statutory financial statements in accordance with the laws and regulations in force in the countries in which they operate and in the currency valid in the main economic environment (functional currency) in those countries. The General Assembly is authorized to amend and approve the consolidated financial statements of the Company. The consolidated financial statements of the Company are approved for publication by the Board of Directors. The consolidated financial statements of the Company for the period ending on 31 December 2022 were approved for publication by the Company's Board of Directors on 9 March 2023. (b) Preparation of financial statements While preparing the consolidated financial statements, necessary adjustments and classifications have been made to the amounts determined on the historical cost basis of assets and liabilities and derivative instruments, which reported with their fair values, in order to make the correct presentation in accordance with TFRS. The consolidated financial statements of the Company for the year ended 31 December 2022 consist of the Company and its subsidiaries the Group's associates and joint venture (collectively referred to as the "Group"). (c) Offsetting When the Group has a legal right to set off financial assets and liabilities and intends to settle those financial assets and liabilities by netting, or to have the asset recognized and settle the liability at the same time, the Group presents these financial assets and liabilities with their netted amounts in the statement of financial position. Consolidated financial statements include the financial statements of the companies controlled by the Company and its subsidiaries. Control is provided by the Company and its subsidiaries by meeting the following conditions: • • • power over the investee, i.e. the investor has existing rights that give it the ability to direct the relevant activities (the activities that significantly affect the investee's returns), exposure, or rights, to variable returns from its involvement with the investee, the ability to use its power over the investee to affect the amount of the investor's returns. In the event that a situation or event arises that may cause any change in at least one of the criteria listed above, the company re-evaluates whether it has control over its investment. The table below shows the total effective control ratios of all subsidiaries under the direct or indirect control of the Company as of 31 December 2022 and 2021: 31 December 2022 31 December 2021 Turktell Turkcell Superonline Turkcell Satış Turkcell Teknoloji Turkcell Gayrimenkul Turkcell Dijital Dijital Eğitim Atmosware Teknoloji Turkcell Enerji Boyut Enerji Turkcell Finansman Turkcell Sigorta Dijital Sigorta Turkcell Ödeme Lifecell Dijital Servisler Lifecell Bulut Lifecell TV Lifecell Müzik Global Tower UkrTower Beltower Eastasia Kıbrıs Telekom Lifecell Digital (%) 100 100 100 100 100 100 51 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 (%) 100 100 100 100 100 100 - 100 100 100 100 100 - 100 100 100 100 100 100 100 100 100 100 100 262 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 16 Translated into English from the report originally issued in Turkish 17 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 263 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.1 Basis of Presentation (cont’d) (d) Consolidation principles (cont’d) (i) Subsidiaries (cont’d) 2.1 Basis of Presentation (cont’d) (d) Consolidation principles (cont’d) (ii) Associates (cont’d) Turkcell Global Bilgi Global Ukrayna Rehberlik Hizmetleri Lifecell Ventures lifecell Paycell LLC Turkcell Europe Paycell Europe Yaani BiP B.V. BiP A.Ş. Beltel BeST Lifetech Turkcell GSYF 31 December 2022 31 December 2021 (%) 100 100 100 100 100 100 - 100 100 100 100 100 100 100 100 (%) 100 100 100 100 100 100 100 - 100 100 100 100 80 80 - Changes in ownership Changes in the Company's shareholding in its subsidiaries that do not result in a loss of control are accounted for as equity transactions. The book values of the Company's shares and non-controlling interests are adjusted to reflect changes in subsidiary shares. The difference between the adjustment for non-controlling interests and the fair value of the consideration received or paid is accounted for directly in equity as the Group's share. If the Company loses control of a subsidiary, the profit/loss after sale is is calculated as the difference between i) the sum of the sales price received and the fair value of the remaining interest and ii) the previous book values of the subsidiary's assets (including goodwill) and liabilities and non-controlling interests. Amounts previously recognized in equity through other comprehensive income related to the subsidiary are recorded according to the accounting method to be used on the assumption that the Group has sold the related assets. The fair value at the date of loss of control of the investment remaining after the sale of the subsidiary is determined as the fair value in the initial recognition under TFRS 9 “Financial Instruments: Recognition and Measurement” (“TFRS 9”) or, where applicable, the initial recognition cost of an investment in an entity controlled as an associate or joint operations. (ii) Associates An associate is an entity over which the Group has significant influence. Significant effectiveness is the power to participate in the decisions of an entity's financial and operational policies, without having sole or joint control. With the acquisition of shares of the associate, the portion of the purchase price above the fair value of the identifiable assets, liabilities and contingent liabilities of the associate at the date of acquisition is considered as goodwill. Goodwill is included in the carrying amount of the investment and is reviewed for impairment as part of the investment. The excess of the fair value of the identifiable assets, liabilities and contingent liabilities of the associate at the date of acquisition is recognized directly in the profit or loss statement after reassessment. Under the equity method, an investment in associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Company’s share of the change in the subsidiary's net assets less any impairment. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognizing its share of further losses. Any additional losses are recognized if the Group is exposed to any legal or constructive obligation or the Group has made payments on behalf of the associate. Profits and losses resulting from the transactions between the Company and its subsidiaries and the Group's associate are eliminated in proportion to the Group's share in the relevant associate. TOGG, in which the Group currently has a share of 23%, was established on 28 June 2018 to develop, produce and trade electric motor vehicles (31 December 2021: 23%). As of 31 December 2022 and 2021, TOGG classified as investments valued by equity method in the consolidated financial statements. (iii) Shares in joint ventures 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. Investments in joint ventures are accounted for using the equity method from the moment the investee becomes a joint venture. Sofra, in which the Group currently has a share of 33.3%, is a joint venture between Turkcell Ödeme, BELBİM Elektronik Para ve Dağıtım Hizmetleri A.Ş. and PTT, in which all parties have equal share, was established on 30 July 2018, in order to carry out operations such as service coupons, meal checks, meal cards, electronic coupons and/or smart cards, transportation machines, smart keys. As of 31 December 2022 and 2021, Sofra classified as investments valued by equity method in the consolidated financial statements. (iv) Consolidation adjustments The statements of financial position and profit or loss of the companies included in the consolidation are consolidated using the full consolidation method, and the book values in the Company's assets and their shares in the equity are mutually offset. The parts of the net assets of the subsidiaries corresponding to the shares outside the direct and/or indirect control of the parent company are classified under the “Non-controlling interests” item in the consolidated statement of financial position. Similarly, the parts of the net profits or losses of the subsidiaries corresponding to the shares outside the direct and/or indirect control of the parent company are classified under the “Non-controlling interests” item in the consolidated statement of profit or loss. Intra-group transactions and balances between companies included in the consolidation are eliminated during consolidation. Profits and losses resulting from transactions between associates and joint ventures and the parent company and its subsidiaries subject to consolidation are netted off in proportion to the share of the parent in the associate. However, the losses incurred as a result of these transactions have not been clarified if they show that there has been an impairment in the value of the asset subject to the transaction. 264 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 18 Translated into English from the report originally issued in Turkish 19 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 265 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.1 Basis of Presentation (cont’d) (d) Consolidation principles (cont’d) (v) Business combinations under common control Business combinations under common control are outside the scope of TFRS 3 “Business Combinations” (“TFRS 3”). In accordance with the decision of the POA published in the Official Gazette on 17 October 2018, assets and liabilities subject to a business combination under common control are included in the consolidated financial statements with their carrying values. Statements of profit or loss are consolidated from the first period in which comparative financial statements are presented and prior period financial statements are restated. Goodwill or negative goodwill resulting from these transactions is not recognized in the consolidated financial statements. The difference resulting from the offsetting of the amount of the participation amount and the share in the capital of the acquired company is directly accounted for under the equity as an equity transaction in the “Effect of Business Combinations Under Common Control” account. e) Adjustment of Financial Statements During High Inflation Periods POA made an announcement on 20 January 2022 whether companies that apply TFRS will apply TAS 29 Financial Reporting in Hyperinflationary Economies in the 2021 financial reporting period. According to this announcement, it is stated that companies that apply TFRS do not need to make any adjustments within the scope of TAS 29 in their financial statements for the year 2021. As of the report date, no new statement has been made by the POA regarding the scope and application of TAS 29. In this context, while preparing the consolidated financial statements as of 31 December 2022, no inflation adjustments were made in accordance with TAS 29. 2.2 Changes in Accounting Policies and Errors Significant changes in accounting policies and significant accounting errors detected are applied retrospectively and the prior period financial statements are restated. In order to comply with the presentation of the current period consolidated financial statements, comparative information is reclassified when deemed necessary and important differences are disclosed. 2.3 Changes in Accounting Estimates If changes in accounting estimates are for only one period, changes are applied in the current year but if the estimated changes affect the following periods, changes are applied both on the current and following periods prospectively. In the current year, there are not any material changes in accounting estimate methods of the Group. 2.4 Summary of Significant Accounting Policies (a) Inventories Inventories are stated at the lower of cost and net realizable value. Costs, including some of the fixed and variable overheads, are valued according to the method appropriate to the class of inventories, and mostly according to the weighted average cost method. Net realizable value represents the estimated selling price in the ordinary course of business less all estimated costs of completion and costs necessary to make a sale. When the net realizable value of inventories falls below its cost, the inventories are reduced to their net realizable value and charged as an expense to the statement of profit or loss in the year in which the impairment occurred. In cases where it is proven that the conditions that previously caused inventories to be reduced to net realizable value no longer apply or an increase in net realizable value due to changing economic conditions, the reserve for impairment is reversed. The reversed amount is limited to the previously allocated impairment amount. As of 31 December 2022 and 2021, inventories mainly consist of mobile phones, tablets, sim cards, mobile phone accessories, tower construction materials and other electronic products. (b) Property, Plant and Equipment Property, plant and equipments are carried at cost less accumulated depreciation and any accumulated impairment losses. Property, plant and equipments of the Company and its subsidiaries operating in Turkey and subsidiaries operating in Belarus have been adjusted for the effects of inflation as of 31 December 2005 and 31 December 2014, respectively. The cost of property, plant and equipments consists of purchase price, import taxes and non-refundable purchase taxes, expenses incurred to tangible asset for use, and the interest exchange rate difference expenses incurred on the loans used lto acquire the tangible asset, while the property is in the investment phase. Changes in the obligation to dismantle the property, plant and equipment and to restore the site are added to the cost of the property, plant and equipment in the period in which they occur. If the amount to be deducted from the cost of the property, plant and equipment is greater than the book value of the property, plant and equipment as of the date of the change, the difference is recorded in the statement of profit or loss in the relevant period. (i) Subsequent expenses Expenses arising from replacing any part of property, plant and equipments, together with maintenance and repair costs, can be capitalized if they increase the future economic benefit of the asset. All other expenses are recognized in the statement of profit or loss on an accrual basis. 266 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 20 Translated into English from the report originally issued in Turkish 21 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 267 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (b) Property, Plant and Equipment (cont’d) (ii) Depreciation Depreciation of property, plant and equipment is calculated using the straight-line depreciation method on the basis of the assets' ready-to-use dates over their useful lives. Leasehold improvements are depreciated over the shorter of the lease term or useful life, using the straight-line method. The depreciation expenses calculated in this way are recognized in the cost of revenue item in the consolidated statement of profit or loss. Lands are not depreciated as their useful life is considered indefinite. The useful lives used by the Group are as follows: Mobile network infrastructure Fixed network infrastructure Call center equipment Buildings Equipment, fixtures and fittings Motor vehicles Electricity power plant Leasehold improvements 4 - 20 years 3 - 25 years 4 - 8 years 21 - 25 years 2 - 10 years 4 - 6 years 20 years 3 - 5 years Depreciation methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. (iii) Disposal Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in profit or loss and their costs and accumulated depreciation are written off from the relevant accounts. (c) Intangible Assets Intangible assets consist of GSM and other telecommunication business licenses, brand values, computer software, transmission line software, electricity generation license, subscriber acquisition costs, indefeasible rights and customer lists. Intangible assets are carried at cost less accumulated depreciation and any accumulated impairment losses. Intangible assets of the Company and its subsidiaries operating in Turkey and subsidiaries operating in Belarus have been adjusted for the effects of inflation as of 31 December 2005 and 31 December 2014, respectively. 2.4 Summary of Significant Accounting Policies (cont’d) (c) Intangible Assets (cont’d) Purchased computer software and transmission line software are capitalized over the costs incurred during the purchase and during the period from purchase until they are ready for use. Costs associated with maintaining computer software are recognized in the statement of profit or loss in the period in which they are incurred. Expenditures that are directly attributable to identifiable and unique software products controlled by the Group and that will generate economic benefits in excess of costs for more than one year are recognized as intangible assets. Costs include the costs of the employees developing the software and some of the manufacturing overheads. Internally generated intangible assets - research and development expenses Internally generated intangible assets consist of computer software and are reported under computer softwares. Research costs are recorded in the statement of profit or loss as the cost of sales in the period in which they are incurred. Internally generated intangible assets resulting from development activities (or the development phase of an intra-Group project) are capitalized only when all of the following conditions are met: it is technically possible to complete the intangible asset so that it is ready for use or ready for sale, the intention to complete, use or sell the intangible asset, • • • whether the intangible asset can be used or sold, • • it is clear how the asset will generate potential future economic benefits, there are appropriate technical, financial and other resources to complete the development of the intangible asset to use or sell it; and the development cost of the asset can be measured reliably during the development process. • The amount of intangible assets generated internally is the total amount of expenses incurred since the intangible asset meets the above-mentioned recognition conditions. When internally generated intangible assets do not meet the capitalization conditions, development expenses are recognized as expense in the period in which they are incurred. After initial recognition, internally generated intangible assets are carried at cost less accumulated depreciation and any accumulated impairment losses, just like intangible assets purchased separately. Indefeasible rights Indefeasible rights are acquired rights to use part of an asset's capacity for a specified period of time. If the Group has a predetermined capacity usage right on a certain asset for a period close to the useful life of that asset; these indefeasible rights are reported under intangible assets. Indefeasible rights are amortized over the shorter of the useful life of the asset or the contract period. 268 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 22 Translated into English from the report originally issued in Turkish 23 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 269 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (c) (i) Intangible Assets (cont’d) Amortization (d) Investment Properties (cont’d) Depreciation Amortization of intangible assets is calculated using the straight-line amortization method on the basis of the assets' ready-to-use dates over their useful lives. The amortization expenses calculated in this way are recognized in the cost of revenue item in the consolidated statement of profit or loss. Depreciation of investment properties is calculated using the straight-line depreciation method. The useful life of investment properties is 25 - 45 years. (e) Impairment of Assets The useful lives used by the Group are as follows: GSM and other telecommunications licenses Indefeasible rights Transmission line softwares Computer softwares Brand name Customer base Subscriber acquisition costs Electricity production license 3 - 25 years 15 years 5 - 10 years 3 - 8 years 9 - 10 years 2 - 15 years 2 - 6 years 20 years Amortization methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. The Company obtained the 2G, 3G and 4.5G Licenses with the Concession Agreements signed on 27 April 1998, 30 July 2009 and 26 August 2015, respectively. The terms of use of the relevant licenses are 25, 20 and 13 years. (ii) Disposal Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in profit or loss and their costs and accumulated depreciation are written off from the relevant accounts. (d) Investment Properties Investment properties are properties held for the purpose of earning rent and/or capital appreciation and are carried at cost less accumulated depreciation and any accumulated impairment losses. If it meets the accepted criteria, the cost of replacing any part of the existing investment property is included in the amount in the statement of financial position. This amount does not include daily maintenance to investment properties. Investment properties are derecognised if they are sold or become unusable or it is determined that no future economic benefit will be obtained from the sale. Profit/loss arising from the expiry of the investment property or its sale is recognized in the statement of profit or loss in the period in which they occur. Transfers are made when there is a change in the use of investment property. For a transfer from investment property to owner-occupied property, the estimated cost of post-transfer recognition is the carrying amount of the property at the date of the change in use. If an owner-occupied property converts to an investment property, the entity applies the accounting policy applied to property, plant and equipment until the change in use occurs. The Group assesses whether there is any indication that an asset is impaired at the relevant reporting date. If such an indication exists, the recoverable amount of that asset is estimated and tested for impairment. Goodwill and intangible assets that have an indefinite useful life or are not yet in use are tested for impairment annually, regardless of whether there is any indication of impairment. The recoverable amount is determined by choosing the higher of the asset's value in use and its fair value less costs to sell. 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. Value in use is the present value of the expected future cash flows from an asset or cash-generating unit. If the carrying value of the asset or any cash generating unit of that asset is higher than the amount to be recovered through use or sale, an impairment has occurred. For impairment testing, assets are divided into the smallest units that generate cash inflows from continued use (“cash generating unit”) independently of other assets and asset groups. Goodwill arising in a business combination is allocated to cash-generating units that are expected to benefit from the synergies of the combination for impairment testing. The impairment resulting from the cash- generating units is first deducted from the carrying amounts of the goodwill allocated to the units, and then from the carrying amounts of the other assets in the units. Impairment losses are recognized in the consolidated statement of profit or loss. It is not always necessary to determine both the asset's fair value less costs to sell and its value in use. If any of these amounts exceeds the carrying amount of the asset, the asset is not impaired and it is not necessary to estimate the other amount. An impairment loss on a receivable is reversed if the subsequent increase in the recoverable amount of that asset can be attributed to an event that occurs in the periods following the recognition of the impairment. The impairment loss in assets other than goodwill is reversed if there is a change in the estimates used in determining the recoverable amount. The increase in the carrying value of the asset due to the reversal of the impairment loss should not exceed the carrying amount (net amount after depreciation) that would have been determined if no impairment loss had been recognized in the financial statements in previous years. 270 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 24 Translated into English from the report originally issued in Turkish 25 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 271 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (f) Financial Instruments Financial assets - classification and subsequent measurement - measurement categories: According to TFRS 9 Financial Instruments, the classification and measurement of financial assets is determined according to the business model in which the financial asset is managed and whether it depends on the contractual cash flows that include only the principal and interest payments on the principal balance. TFRS 9 includes three main categories of classification for financial assets: amortized cost (“AC”), fair value through other comprehensive income (“FVTOCI”) and fair value through profit or loss (“FVTPL”). The Group classifies its financial assets on the date of acquisition. Financial assets - Reclassification: Financial instruments are reclassified only when the business model for portfolio management is completely changed. The reclassification has a prospective effect and takes place from the beginning of the first reporting period following the business model change. The Group did not change its business model and did not make any reclassification in the current period and the comparison period. Impairment of financial assets - Credit loss provision for expected credit losses: TFRS 9 replaces the "incurred loss" model in TAS 39 with the prospective "expected credit loss" (“ECL”) model. In this context, an important evaluation was needed on how the economic factors, which will be determined by weighting according to their realization probabilities, affect the ECLs. The new impairment model is applied to financial assets measured at amortized cost or FVTOCI (excluding investments in equity instruments) and contract assets. In accordance with TFRS 9, loss provisions are measured on the following basis; - 12 month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date and 2.4 Summary of Significant Accounting Policies (cont’d) (f) Financial Instruments (cont’d) Financial assets and liabilities – derecognition: The Group derecognises the financial asset when its contractual rights to cash flows from the financial asset expire or transfer the related financial asset and all the risks and rewards of ownership of that asset to another party. In cases where all the risks and rewards of ownership of the asset are not transferred to another party and control of the asset is retained by the Group, the Group continues to recognize its remaining interest in the asset and the liabilities arising from that asset. In the event that the Group retains all the risks and rewards of ownership of a transferred asset, the financial asset continues to be recognized and a collateralized liability amount is also recognized for the income earned against the transferred financial asset. The Group derecognises financial liabilities only if the contractual obligation ceases, cancels or expires. Fair valuation principles Financial assets and liabilities are carried at fair values without taking into consideration the periods following their retention, the operating costs in the event of a sale or similar disposal. However, if there is no quoted market price in an active market, it is found using fair value pricing models or discounted cash flow consumption. When discounted cash flow techniques are used, estimated cash flows are based on Group Management's best estimates and the discount rate used is based on the market rate applicable to an instrument with similar maturities and conditions at the reporting date. In pricing models, market data valid at the reporting date is used as a measure. Cash and Cash Equivalents Cash and cash equivalents are cash on hand, demand deposits and other highly liquid short-term investments with maturities of 3 months or less, easily convertible into cash, and do not carry a significant risk of impairment. The Group reviews cash and cash equivalents for impairment using the expected credit loss model. - Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a Sale and Repurchase Agreements financial instrument. The lifetime ECL measurement is applied if, at the reporting date, the credit risk associated with a financial asset increases significantly after initial recognition. In all other cases where the relevant increase was not experienced, the 12-month ECL calculation was applied. The Group may determine that if the credit risk of the financial asset has a low credit risk at the reporting date, the credit risk of the financial asset has not increased significantly. However, lifetime ECL measurement (simplified approach) always applies to trade receivables and contract assets without a significant financing element. The Group has applied the lifetime ECL measurement for all group companies except Turkcell Finansman. Since Turkcell Finansman is a financing company, it has applied both 12-month and lifetime ECL measurement (general approach). Securities sold under repurchase agreements (“Repo) are classified in the Company portfolio as “fair value differences that recorded as “profit or loss”, “fair value differences that recorded other comprehensive income” or “amortized cost” portfolios and valued according to relevent portfolio basis. Securities purchased under aggrements to resell (“Reverse Repo”) are recorded as cash and cas equivalents in the balance sheet. Reserve Deposits with Central Bank of the Republic of Turkey In accordance with the “Communique Regarding the Reserve Requirements (No: 2013/15)” published in the Official Gazette dated 23 April 2022 and numbered 31818, the current reserve deposits ratio for assets subject to reserve deposits is determined as 20% as of 31 December 2022. For liabilities subject to required reserves, the rates applicable for Turkish lira reserve deposits are between 3% and 8% according to the maturity structure; The applicable rates for FX reserve deposits are between 5% and 21% according to the maturity structure. 272 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 26 Translated into English from the report originally issued in Turkish 27 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 273 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (f) Financial Instruments (cont’d) Trade Receivables Trade receivables are recognized at their costs by less provision for permanent impairment. Trade receivables, net of deferred finance income, are calculated by discounting the amounts to be obtained in the following periods of the receivables recorded from the original invoice value using the effective interest method. Short- term receivables with no specified interest rate are recognized at their original invoice values, unless the effect of accruing interest is significant. The Group monitors the collectability of its trade receivables periodically and allocates provision for doubtful receivables for possible losses and overdue trade receivables within the scope of TFRS 9, based on the collection rates of previous years. Following the provision for doubtful receivables, if all or part of the doubtful receivable amount is collected, the collected amount is deducted from the doubtful receivable provision and recognized in the consolidated statement of profit or loss Trade and Other Financial Payables Trade and other financial payables are stated at cost less maturity differences. Trade payables net of deferred finance costs are recognized by discounting the amounts to be obtained in the following periods from the original invoice value using the effective interest method. Related Parties Related parties are persons or companies that are related to the reporting Group. (a) A person or a close member of that person’s family is related to the Group if that person: (i) (ii) (iii) has control or joint control of the Group has significant influence over the Group; or is a member of the key management personnel of the Group or of a parent of the Group. (b) An entity is related to the Group if any of the following conditions applies: (i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. If the Group is itself such a plan, the sponsoring employers are also related to the Group. (vi) The entity is controlled or jointly controlled by a person identified in (a). (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). (viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. (f) Financial Instruments (cont’d) Financial Liabilities A financial liability is recognized initially at fair value. Financial liabilities at fair value through profit or loss are financial liabilities that are classified as held for trading or, at initial recognition, at fair value through profit or loss by the company. Gain or loss on a financial liability classified as fair value through profit or loss is recognized in the statement of profit or loss. Financial liabilities, whose fair value difference is not recognized in profit or loss, are carried at their fair values, net of transaction costs, on the date they are received. Subsequently, financial liabilities are stated at amortized cost using the effective interest method. The difference between the amount remaining after deducting the transaction costs and the amortized cost is recognized in the statement of profit or loss as financing expense during the loan period. Financing expenses arising from financial liabilities can be included in the cost of qualifying assets if they are associated with the acquisition and construction of qualifying assets When accounting for the financial instrument or its components for the first time, the Group makes a classification in accordance with the substance of the arrangements in the contract and in line with the definitions of financial debt and equity instruments. Derivative Instruments and Hedge Accounting Derivative instruments are initially recognized at their acquisition cost, which reflects their fair value at the contract date, and are carried at their fair value in the following periods. The derivative instruments of the Company mainly consist of structured cross currency swap contracts, cross currency/interest swap contracts, foreign currency swap contracts and forward foreign currency transactions. Although these derivative instruments provide an effective protection against risks for the Group, when they do not meet the requirements for hedge accounting, they are accounted for as derivatives held for trading in the consolidated financial statements and the fair value changes related to them are recognized in the statement of profit or loss. The fair values of forward, option, interest and currency swap transactions are determined by using market interest rates and Central Bank of the Republic of Turkey (“CBRT”) exchange rates data on the valuation date, valuation methods and pricing instruments in line with market standards. Fair value if quoted market values are not available; It is determined by discounting the difference (profit/loss) between the forward price subject to a forward foreign currency purchase and sale contract and the price of the current exchange rate as of the reporting date, with the risk-free investment interest rate at the reporting date. The fair value of interest rate and currency swaps is calculated as the difference between the risk-free investment rate of the parties in the swap cash flow and the CBRT exchange rates and their discounted values. The fair value of option transactions is determined by using option pricing models. . 274 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 28 Translated into English from the report originally issued in Turkish 29 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 275 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (f) Financial Instruments (cont’d) Derivative Instruments and Hedge Accounting (cont’d) The recognition of subsequent changes in the fair value of derivative instruments depends on whether the derivative is designated as a hedging instrument and, if so, on the nature of the hedged item. The Group designates certain derivatives as hedging instruments based on cash flows and high probability forecast transactions (cash flow hedges) of recognized assets and liabilities. At the inception of the hedging relationship, the Group documents the economic relationship between hedging instruments and hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of the hedged items. The Group documents its risk management objective and strategy for carrying out hedging transactions. Hedging transactions that fulfill the Group's hedge accounting requirements are recognized as explained below: (i) Fair value hedges The fair value changes of derivative instruments designated as fair value hedges are recognized in the statement of profit or loss together with the changes in the fair value of the hedged asset or liability. The change in the fair value of the hedged asset or liability is stated together with the related asset or liability during the hedge accounting period. In cases where the hedge no longer fulfills the hedge accounting requirements, the adjustments made to the carrying value of the hedged item are discounted using the effective interest rate method within the time to maturity and recognized in the statement of profit or loss (ii) Cash flow hedges In accordance with TFRS 9 hedge accounting requirements, the Group determines the transactions that provide hedging against changes in the cash flows of a registered asset or liability or transactions that can be associated with a certain risk and that are likely to occur at the date of the derivative contract, which may affect profit or loss due to a certain risk, as cash flow hedges. The Group recognizes gains and losses on effective cash flow hedges as “gains/(losses) on cash flow hedges and changes in the time value of options” in equity. In the event that the hedged commitment or possible future transaction becomes an asset or liability, the gains or losses related to these transactions, which are recognized as equity items, are taken from these items and included in the acquisition cost or book value of the said asset or liability. Otherwise, the amounts recognized under equity are transferred to the consolidated statement of profit or loss in the period in which the hedged possible future transaction affects the consolidated statement of profit or loss and recognized as profit or loss. Gains or losses related to the effective portion of the change in the intrinsic value of the options are recognized in the cash flow hedge in equity. Changes in the time value of options related to the hedged item (“congruent time value”) are recognized in other comprehensive income and under changes in the time value of options in equity. 2.4 Summary of Significant Accounting Policies (cont’d) (f) Financial Instruments (cont’d) Derivative Instruments and Hedge Accounting (cont’d) (ii) Cash flow hedges (cont’d) Amounts accumulated in equity in the period in which the hedged item affects the statement of profit or loss are classified as follows: - If the hedged item subsequently results in the recognition of a non-financial asset, both the deferred hedge gains and losses and the deferred time value of option contracts or deferred forward contracts, if any, are included in the initial cost of the asset. Deferred amounts are ultimately recognized in profit or loss as the hedged item affects profit or loss. - The gain or loss on the effective portion of hedging interest rate swaps on floating rate borrowings is recognized in profit or loss at the cost of financing at the same time as the interest expense on hedged loans. The effectiveness test model may be qualitative, depending on the hedging relationship, only if it is applied prospectively. The 80-125% efficiency range in TAS 39 has been replaced by a target-based test that focuses on the economic relationship between the hedged item and the hedging instrument and the impact of credit risk on this economic relationship. In accordance with TFRS 9 hedge accounting, the purpose of the hedge accounting model is to ensure that financial reporting more accurately reflects how the Group manages and mitigates its risks. In particular, it is intended to provide a better link between the risk management strategy, hedging logic and the impact of hedging transactions. When a hedging instrument expires, is sold or expires, or no longer meets hedge accounting criteria; the cumulative deferred gain or loss in equity at the relevant time and the deferred costs of hedging and the amounts remaining in equity until the estimated transaction takes place result in the recognition of a non-financial asset. When the forecast transaction is no longer expected to occur, the cumulative gain or loss reported in equity and deferred costs of hedging are reclassified to profit or loss. Under TFRS 9, the hedging relationship ends when the required criteria are no longer met after rebalancing has been taken into account. Hedge accounting ends when the hedge objective changes, the hedging instrument expires or is sold, terminated or used, when the economic relationship between the hedging instrument and the hedged item ceases, or when credit risk affects fair value changes arising from the economic relationship. If the Group discontinues hedge accounting for the cash flow hedge, the accumulated amount of losses or gains on the cash flow hedge is recognized as follows: - If the future cash flows that are hedged are still expected to occur, this amount remains in the cash flow hedge losses or gains until the future cash flows are realized. 276 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 30 Translated into English from the report originally issued in Turkish 31 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 277 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) Derivative Instruments and Hedge Accounting (cont’d) (ii) Cash flow hedges (cont’d) - If a hedging instrument is due, sold, or expires, or does not meet the accounting requirements of a hedge, any deferred gain or loss accumulated until the forecast transaction is realized and any deferred costs currently accumulated in equity, until the recognition of a non-financial asset remains in equity. When such a forecast transaction is no longer expected to occur, the cumulative gain or loss in equity and deferred costs for hedging are immediately reclassified to profit or loss. (iii) Hedge of net investments in foreign operations The Group has hedged its net investment in a foreign operation with a foreign currency loan. The effective part of the gain or loss arising from the hedging instrument related to the net investments in the subsidiaries operating in foreign countries is recognized directly in equity and the ineffective part is recognized in the statement of profit or loss. Tax effects related to translation differences followed under other comprehensive income are also classified under other comprehensive income (Note 35). The gain or loss on the hedging instrument that relates to the effective portion of the hedge and is recognized directly in equity is recognized in profit or loss on the disposal of the foreign operation. (g) Revenue Recognition The Group generally provides telecommunications services. Products and services are sold to customers as individual or multiple products and/or services under a separate contract. When (or as) a performance obligation is satisfied, the Group recognizes the transaction price corresponding to that performance obligation as revenue. The transaction price is the amount the entity expects to be entitled in exchange for transferring the promised goods or services to the customer. An asset is transferred when (or as) control of an asset is transferred to the customer. Income recorded by the Group as revenue cosists of telecommunications revenues are revenues from postpaid and prepaid lines, revenues from value-added GSM services including voice, data and short message services, device revenues, call center revenues, financial operation revenues and other sales revenues (Note 27). If the Group transfers control of a service over time and thus fulfills telecommunication revenues over time, it recognizes the revenue over time. Telecommunication services are also offered by pricing together with devices, value-added services and/or other services and products. A good or service promised to a customer is distinct if both of the following criteria are met: (a) The good or service is capable of being distinct, (b) The promise to transfer the good or service is distinct within the context of the contract. Device revenues recognized as revenue where the Group is the prime contractor when significant control and returns on the ownership of the device have been transferred to the buyer, the amount of revenue and the costs incurred or to be incurred in relation to the sale have been measured reliably, collection of sales is probable, and the Group has no effective control over the goods sold or when ownership does not maintain a management activity as generally required. 2.4 Summary of Significant Accounting Policies (cont’d) (g) Revenue Recognition (cont’d) The Group, the distributors and dealers offer joint campaigns to the subscribers which may include the sale of device by the dealer and/or the distributor and the sale of communication service by the Group. In certain campaigns, dealers make the handset sale to the subscribers, the instalments of which will be collected by the Group based on the letters of undertaking signed by the subscribers. Based on this undertaking, the dealer assigns the installment receivable arising from the sale of the device to the distributor, and the distributor to the Group. The Group pays the distributor the net present value of the instalments to be collected from the subscribers and recognizes contracted receivables in its statement of financial position. The undue portion of assigned receivables from the distributors which were paid upfront by the Group is classified as “undue assigned contracted receivables” in trade receivables. When monthly installment is invoiced to the subscriber, related portion is presented as “receivables from subscribers”. The Group collects the contracted receivables in installments during the contract period and does not recognize any revenue for the handset in these transactions when the Group does not act as principal for the sale of handset (Note 2.5). The Group and distributors started to offer the option to buy a device through consumer financing loan, which will be collected by Turkcell Finansman. The Group carries a risk of collection in these transactions. Turkcell Finansman collects the purchased credit from the subscriber during the contract period and does not record revenue related to the device when it does not act as principal for the sale of device (Note 2.5). Revenue from financial operations comprise of interest income generated from consumer financing activities. Interest income is recognized as it accrues, using the effective interest method. 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. Call center revenues are revenues from call center services provided by Turkcell Global Bilgi and Global Ukraine. Call center revenues are recognized at the time services are rendered during the contractual period. Volume-related refunds and discounts in international roaming and other services, and other contractual price changes, are taken into account by the payer and the collector, when they are likely to be earned and effective. For this reason, contractual returns and discounts are taken into account, but refunds and discounts at the request of the other party are not taken into account as they do not meet the definitions of assets and liabilities. “Contract Regarding the Addition of Mobile Broadband Internet Service to the Existing Infrastructure Providing GSM Service and Operation with the Existing Network within the scope of the Universal Service Law” regarding the continuation until 31 December 2021 of the "Contract for the Establishment and Operation of Mobile Communication Infrastructure in Settlements Without Mobile Coverage Area" signed with the Ministry. Mobile broadband internet service will be added to the existing infrastructure in the settlements where mobile communication service is provided through the mobile network infrastructure installed under the first contract, and service will be provided for the operation of the infrastructure together with the existing network. During the year ending on 31 December 2022, the company earned a revenue of 198,313 TL (31 December 2021: 252,049 TL). This amount is classified under telecommunications revenues. 278 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 32 Translated into English from the report originally issued in Turkish 33 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 279 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (g) Revenue Recognition (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (h) Business Combinations When the Group sells goods or services as a principal, revenue and operating costs are recorded on a gross basis. When the Group sells goods or services as an agent, revenue and operating costs are recorded on a net basis, representing the net margin earned. The Group management decides whether the Group is considered to be acting as principal or agent in the transaction based on the following indicators: a) The company is primarily responsible for fulfilling the promise to provide the specified good or service, b) The company has inventory risk before the specified good or service has been transferred to a customer ;or after transfer of control to the customer, c) The company has discretion in establishing the price for the specified good or service. Such judgments impact the amount of reported revenue and operating costs but do not impact reported assets, liabilities or cash flows. Since the Company acts as principal, revenue and operating costs related to “Contract Regarding the Addition of Mobile Broadband Internet Service to the Existing Infrastructure Providing GSM Service and Operation with the Existing Network within the scope of the Universal Service Law” are reported on a gross basis. Within the scope of TFRS 15, in the consolidated financial statements, certain contractual costs in customer/subscriber acquisition are deferred and amortized over the life of the contract and as the revenue is realized. When either party fulfills the contract, the Group presents the contract as a contract asset or contractual liability in the statement of financial position, depending on the relationship between the Group's performance and the customer's payment. The Group presents its unconditional rights regarding the price separately as a receivable. Before the Group transfers a good or service to the customer, if the customer pays the consideration or the Group has the right to receive the consideration (ie a receivable) unconditionally, the contract is presented as a contractual obligation on the date the payment is made or the payment is due (whichever is earlier). The contractual obligation is the Group's obligation to transfer the goods or services to the customer in return for the amount it collects (or is entitled to collect) from the customer. In cases where the Group performs its performance by transferring goods or services to the customer before the customer pays the price or before the payment is due, the Group presents the contract as a contract asset (excluding the amounts presented as receivables). A contract asset is the Group's right to receive consideration for goods or services transferred to the customer. The group assesses the contract asset for impairment in accordance with TFRS 9. The impairment of a contract asset is measured, presented and disclosed on the same basis as a financial asset within the scope of TFRS 9 Business combinations 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 recognized in profit or loss as incurred. Identifiable assets acquired and liabilities assumed are accounted for at their fair values at the date of purchase, with certain exceptions. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree (if any), 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. When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e., the date when the Group obtains control) 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. The measurement period is the period after the acquisition date during which the acquirer can adjust the temporary amounts recognized in the business combination. The measurement period provides the acquirer with a reasonable time frame to allow it to collect the information necessary to determine and measure the following as of the acquisition date in accordance with the requirements of TFRS, which cannot exceed one year from the acquisition date: (i) identifiable assets acquired, liabilities assumed and, if any, non-controlling interests (minority interests) in the acquiree; (ii) consideration transferred to the acquiree (or other amount used to measure goodwill); (iii) equity interests in the acquiree previously held by the acquirer in a business combination accomplished in stages; and (iv) Consequential goodwill or gain on bargain purchase. Goodwill Goodwill arising from an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For impairment testing, goodwill is allocated to the Group's cash-generating units (or groups of cash- generating units) that expect to benefit from the synergies brought about by the acquisition. The cash-generating unit to which the goodwill is allocated is tested for impairment annually. Where there are indications that the unit is impaired, impairment testing is performed more frequently. If the cash-generating unit's recoverable amount is less than its carrying amount, the impairment allowance is first set aside from the goodwill allocated to the unit, then the carrying amount of the assets in the unit is reduced. Impairment provision for goodwill is recognized directly in the consolidated statement of profit or loss. Provision for impairment of goodwill is not reversed in subsequent periods. 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. 280 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 34 Translated into English from the report originally issued in Turkish 35 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 281 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (i) The Effects of Changes in Foreign Exchange Rates 2.4 Summary of Significant Accounting Policies (cont’d) (l) Provisions, Contingent Assets and Liabilities When converting foreign currency transactions to TL, the Group takes the relevant exchange rates valid at the date of the transaction as a basis. Monetary assets and liabilities in foreign currencies in the statement of financial position are translated into TL using the exchange rates at the reporting date. Non-monetary assets and liabilities in foreign currency denominated at their fair values are translated into TL at the exchange rate of the day their fair value is determined. Exchange differences are recognized in profit or loss in the period in which they occur, except as follows: • Exchange differences related to assets under construction for future use and included in the cost of such assets, treated as an adjustment to interest costs on foreign currency denominated liabilities, • Exchange differences arising from monetary debts and receivables from foreign operations that form part of the net investment in foreign operations, recognized in translation reserves and attributed to profit or loss on the sale of the net investment. Subsidiaries whose functional currency is not the currency of a hyperinflationary country are translated into TL at the closing rates as of the reporting date, excluding those resulting from the assets, liabilities and recognized income and expense of the period. Equity items are translated into TL based on the exchange rates on the transaction date. Income and expenses recognized in the financial statements during the period are also converted into TL based on the monthly average exchange rates. All differences resulting from this transaction are shown in “Currency Translation Reserve” in equity. Foreign currency exchange differences are recognized in equity if they relate to qualifying cash flow hedging instruments and net investment hedging instruments in a foreign subsidiary or are attributable to a portion of the net investment in a foreign business. Foreign exchange gains and losses are statement in the statement of profit or loss by netting off under financial income and financing costs. (j) Earnings Per Share Earnings per share stated in the consolidated statement of profit or loss is calculated by dividing the net profit of the parent company shares by the weighted average number of shares outstanding during the relevant period, excluding the repurchased shares. Companies in Turkey can increase their capital by distributing shares (bonus shares) to their existing shareholders from their retained earnings and equity inflation adjustment differences in proportion to their share in the capital. Such bonus share distributions are treated as issued shares in earnings per share calculations. Accordingly, the weighted average number of shares used in these calculations is calculated by taking into account the retrospective effects of the aforementioned share distributions. (k) Events After the Reporting Period Events after the reporting period covers all events between the reporting date and the date the consolidated financial statements are authorized for issue, even if they arise after any announcement regarding profit or other selected financial information has been made public. The Group adjusts the amounts included in the consolidated financial statements in accordance with this new situation, in case of occurrence of events requiring adjustment after the reporting date. Non-adjusting events after the reporting date, if material, are disclosed in the notes to the consolidated financial statements. The Group Management makes a provision in the accompanying consolidated financial statements in cases where there is a present legal or constructive obligation arising from past events, it is probable that an outflow of resources embodying economic benefits will be required to settle this obligation and the amount of the said obligation can be reliably estimated. Contingent liabilities are evaluated on an ongoing basis to determine whether it is probable that resources with economic benefits will exit the COmpany. It is disclosed in the notes to the financial statements, except when the probability of outflow of resources embodying economic benefits is remote. If it becomes probable that economic benefits will flow into the business, it is disclosed in the notes to the financial statements regarding the contingent asset. If it is almost certain that the economic benefit will flow into the Company, the asset and related income are recognized on the date of the change. Propert, plant and equipment dismantling, transportation and restoration obligations The Group has obligations for dismantling, transportation and restoration of property, plant and equipments. Dismantling costs are calculated by discounting the fair future cash flows determined by reliable estimates to the reporting date with a pre-tax discount rate determined by taking into account the time value of money and the effects of risks related to the liability in current market conditions. (m) Government Grants and Aids Government grants and aids are recognized at their fair values when there is a reasonable assurance that these grants and aids will be received and that the Group meets the conditions that it is obliged to comply with. Government grants for costs are recognized as revenue on a consistent basis over the relevant periods when they match the costs they will cover. Government grants and aids related to property, plant and equipments are classified under non-current liabilities as deferred grants and aids and are credited to the statement of profit or loss by applying straight- line depreciation method over their useful lives. Government grants to cover previously incurred expenses or losses are recognized in profit or loss when they become collectible. (n) Taxes on Corporate Income Income tax liability on profit for the period includes current period tax and deferred tax. Current period liability includes tax liability calculated over the taxable portion of the profit for the period with tax rates enacted at the reporting date. Deferred tax assets or liabilities are determined by calculating the tax effects of temporary differences between the values of assets and liabilities stated in the financial statements and the amounts taken into account in the legal tax base calculation, according to the statement of financial position method. The main temporary differences arise from the recognition of income and expenses in the financial statements and in different reporting periods according to tax laws, and capitalization, depreciation and amortization differences related to property, plant and equipment and intangible assets. 282 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 36 Translated into English from the report originally issued in Turkish 37 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 283 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (n) Taxes on Corporate Income (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (p) Retirement Plans Deferred tax assets or liabilities are recognized in the accompanying consolidated financial statements at the rate of increase and decrease in the tax amounts to be paid in the future periods when the temporary differences will disappear (Note 32). A deferred tax asset is recognized when it is probable that tax benefits will be available in future periods. It is deleted from the relevant asset to the extent that it is understood that this receivable can no longer be utilized. Interest and penalties related to current tax are classified according to their nature in the statement of profit or loss. Deferred tax assets and liabilities are offset when there is a legal right to offset current tax assets and liabilities and deferred tax balances are subject to the same tax authority. Current tax assets and tax liabilities are offset when the entity has a legal right to offset and is settled net, or when it simultaneously accrues assets and intends to settle liabilities. Current and deferred tax are recognized in the statement of profit or loss, except when related to an item recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. The Group may be entitled to claim special tax deductions for its investments in qualifying assets or on qualifying expenditures. The Group recognizes such appropriations as tax receivables, which means that appropriations reduce income tax payable and current tax expense. A deferred tax asset is carried as an unclaimed tax receivable. (o) Employee Benefits/Termination Indemnity According to the laws in force, the Group is obliged to make a certain lump sum payment to the employees whose employment is terminated due to retirement or for reasons other than resignation and behaviors specified in the labor law. The said payment amounts are calculated based on the termination indemnity ceiling valid at the relevant date. Provision for termination indemnity, future liabilities due to retirement of all employees are calculated according to their net present value and recognized in the accompanying consolidated financial statements. The provision for termination indemnity has been calculated by an independent actuarial consultancy company using the projected unit credit method. Payments made for employees leaving the senior management level are accounted for in other operating expenses. Assets related to retirement plans are kept separately from the Group's consolidated financial statements. The Group's obligation for retirement plans is to pay certain fixed contributions. Payments made are recognized as expense in the relevant period. (r) Share Based Payments The Group has cash-based (cash-paid) share-based benefit plans for service received from its employees. In the case of share-based payment transactions to be settled in cash, the relevant liability amount is measured at the fair value of the debt assumed. Until the liability is settled, the fair value of the liability is remeasured at the end of each reporting period and also at the date of redemption, and any changes in fair value are recognized in profit or loss. Share-based payment transactions to be settled in cash are subject to the fulfillment of certain vesting conditions. (s) Employee Bonus Provisions Employee bonus provisions are calculated when the Group has an obligation arising from its legal or constructive acceptance or because the practice has been in existence for a while, and the Group makes a reliable estimate of this obligation. (t) Capital Ordinary shares are classified in equity. Costs associated with the issuance of new shares are recognized in equity, less the tax effect, less the amount collected. (u) Dividend Income Dividend income from equity investments is recognized in the consolidated financial statements when the shareholders' right to receive dividends arises. (v) Dividend Payables Dividend payables are recognized as a liability in the consolidated financial statements in the period they are declared as part of the profit distribution. (y) Interest Income Interest income is accrued in the relevant period based on the effective interest method, which brings the remaining principal balance and estimated cash inflows to the net book value of the related financial asset during its expected life. (z) Borrowing Costs In the case of assets that take significant time to get ready for use or sale, borrowing costs directly attributable to their acquisition, construction or production are included in the cost of the asset until it is ready for use or sale. All other borrowing costs are recognized in the statement of profit or loss in the period in which they are incurred. 284 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 38 Translated into English from the report originally issued in Turkish 39 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 285 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (aa) Non-Current Assets Held for Sale and Discontinued Operations 2.4 Summary of Significant Accounting Policies (cont’d) (ab) Leases (cont’d) Non-current assets (or disposal groups) are classified as held for sale when their carrying amount will be recovered through a sale transaction rather than through continuing use and when the probability of sale is considered high. An impairment loss is recognized initially or later when the value of an asset (or disposal group) is reduced to its fair value less costs to sell. Any subsequent increases in the fair value of an asset (or a disposal group) are recognized as a gain, provided they do not exceed any accumulated impairment losses previously recognized. Gains or losses of an asset (or a disposal group) that were not previously recognized until the day of sale are recognized as of the day the related asset is derecognised. A non-current asset classified as held for sale and assets in a disposal group classified as held for sale are stated separately from other assets in the statement of financial position. Discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale and represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale. Results of discontinued operations are presented separately in the statement of profit or loss. (ab) Leases At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, The Group assesses whether: (a) The contract contains an identified asset; an asset is usually identified by being explicitly or implicitly specified in the contract. (b) A functional portion of the asset is physically distinct or represents nearly all of the asset's capacity. (c) The asset is not defined if the supplier has a substantive right to substitute the asset and derive economic benefits from it. (d) Having the right to derive substantially all of the economic benefits from the use of the identified asset. (e) Having the right to manage the use of the identified asset. If these decisions are predetermined; the Group has the right to operate the asset or, the Group designed the asset in a way that predetermines how and for what purpose it is used. The Group has the right to manage the use of the asset in the following cases: i) The Group has the right to operate the asset (or direct others to operate the asset as it determines) throughout the period of use and the supplier does not have the right to change these operating instructions; or ii) The Group has designed the asset (or certain features of the asset) to predetermine how and for what purpose the asset will be used throughout its useful life. The Group as a Lessee Right-of-use asset The Group recognizes a right-of-use asset and a lease liability in its financial statements at the commencement date of the lease. The right-of-use asset is initially recognized using the cost method and includes: (a) Amount of the initial measurement of the lease liability, (b) Any lease payments made at or before the commencement date, less any lease incentives received, (c) Any initial direct costs incurred by the Group and (d) An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date or as a consequence of having used the underlying asset during a particular period. When applying the cost method, the Group measures the right-of-use asset: (a) less accumulated depreciation and accumulated impairment losses; and (b) at cost adjusted for the remeasurement of the lease liability. While depreciating the right-of-use asset, the Group applies the depreciation provisions of TAS 16 Property, Plant and Equipments. If the supplier transfers ownership of the underlying asset to the Group at the end of the lease term, or if the cost of the right-of-use asset indicates that the Group will exercise a call option, the Group depreciates the right-of-use asset from the date the lease actually began to the end of the useful life of the underlying asset. In other cases, the Group depreciates the right-of-use asset over the shorter of the asset's useful life or the lease term, starting from the actual commencement date of the lease. The Group applies TAS 36 Impairment of Assets to determine whether the right-of-use asset is impaired and to recognize any identified impairment losses. 286 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 40 Translated into English from the report originally issued in Turkish 41 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 287 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (ab) Leases (cont’d) Lease obligation (ab) Leases (cont’d) Lease obligation (cont’d) At the commencement date of the lease, the Group measures the lease liability at the present value of the lease payments not paid at that date. Lease payments are discounted using the implied interest rate on the lease, if that rate can be easily determined. If this rate cannot be easily determined, the Group uses its own alternative borrowing rate. At the commencement date of the lease, the lease payments included in the measurement of the lease liability consist of the following payments for the right to use the underlying asset during the lease term, which were not paid at the commencement date of the lease: (a) the amount obtained by deducting any lease incentive receivables from the fixed payments; The Group remeasures the lease liability by discounting the revised lease payments if one of the following situations occurs: (a) a change in the amounts expected to be paid under a residual value commitment. The Group determines the revised lease payments to reflect the change in the amounts expected to be paid under the residual value commitment. (b) a change in those payments as a result of a change in an index or rate used to determine future lease payments. The Group remeasures the lease liability to reflect those revised lease payments only when there is a change in cash flows. (b) variable lease payments based on an index or rate, initially measured using an index or rate at the commencement date of the lease; The Group determines the revised lease payments for the remaining lease term based on the revised contractual payments. The Group then uses an unmodified discount rate. (c) the exercise price of the call option if the Group is reasonably confident that it will exercise; and (d) penalties for termination of the lease if the lease term indicates that the Group will exercise an option to terminate the lease. After the actual commencement date of the lease, the Group measures the lease liability as follows: (a) Increase the carrying amount to reflect the interest on the lease liability; (b) Reduce its carrying amount to reflect lease payments made; and (c) Remeasure book value to reflect reassessments and restructurings or to reflect revised lease payments that are fixed in substance. The interest on the lease liability for each period in the lease term is the amount found by applying a fixed periodic interest rate to the remaining balance of the lease liability. The periodic rate of interest is the implied rate of interest in a lease, if it can be easily determined. If this rate cannot be easily determined, the Group uses its own alternative borrowing rate. After the lease actually commenced, the Group remeasures the lease liability to reflect changes in lease payments. The Group recognizes the remeasurement amount of the lease liability as an adjustment to the right- of-use asset in its financial statements. The Group remeasures the lease liability by discounting the revised lease payments at a revised discount rate if one of the following situations occurs: (a) There is a change in the lease term. The Group determines the revised lease payments based on the revised lease term. (b) There is a change in the assessment of the option to purchase the underlying asset. The Group determines the revised lease payments to reflect the change in the amounts payable under the option to buy. The Group uses the revised discount rate for the remainder of the lease term as this rate if the implied interest rate in the lease can be easily determined; If it cannot be determined easily, it is determined as the alternative borrowing interest rate of the Group at the date of reassessment. The Group recognizes for the restructuring of the lease as a separate lease if both of the following conditions are met: (a) the restructuring expands the scope of the lease by adding the right to use one or more of the underlying assets; and (b) the rental price increases by the amount of appropriate adjustments to that stand-alone price to reflect the stand-alone price of the increase in coverage and the terms of the relevant contract. The Group as a lessor The Group classifies each of the leases as operating leases or finance leases. A lease is classified as a finance lease if substantially all the risks and rewards of ownership of the underlying asset are transferred, otherwise as an operating lease. For a contract that includes a lease component and one or more additional lease or non-leasing components, the Group allocates the contract price by applying TFRS 15, “Revenue from contracts with customers”. (ac) Financial Investments If the Group has investments in associates, some of which are held indirectly through venture capital firms or similar businesses that include funds, investment trusts and investment insurance funds, the Group can choose to measure this part of the investment in associates as at fair value through profit or loss in accordance with TFRS 9. In this case, it is not taken into account whether the venture capital institution or similar enterprises covering the fund, investment trust and investment insurance funds have a significant effect on this part of the investment. The entity makes this choice separately for each associate or joint venture when recognizing the associate or joint venture for the first time. If the Group makes such a choice, the equity method is applied to the remainder of the investment in associates that are not held through a venture capital institution or similar businesses including funds, investment trusts and investment insurance funds (Note 34). 288 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 42 Translated into English from the report originally issued in Turkish 43 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 289 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.4 Summary of Significant Accounting Policies (cont’d) (ad) Financial Risk Management The Group practice envisages meeting the needs of the centrally managed Group through capital increase and/or lending in line with predetermined debt/equity ratios. The Group borrows long and short term according to its financing needs and market forecasts. Different money market products are also evaluated from time to time, such as debt products, basic commercial bank loans, and bond issuance in order to maintain resource diversity. The Group determines the fair values of financial and non-financial assets and liabilities in accordance with its accounting policies and disclosures in the footnotes (Note 2.6). In all borrowing transactions, it is taken into consideration the Group's credit ratings and basic financial borrowing ratios are not adversely affected. The Group is exposed to the following risks from the use of financial instruments: • Credit risk • Liquidity risk • Market risk Note 38 provides information about the Group's objectives, policies and processes regarding the assessment and management of each of the above risks, and the Group's capital management. The Group's risk management policies have been established to identify and analyze the risks faced by the Group, to determine appropriate risk limits and controls, and to monitor adherence to these limits. Risk management policies and systems are constantly reviewed to reflect the Group's activities and changes in market conditions. Credit Risk Arises from the failure of a customer or counterparty to fulfill the terms of the agreement regarding financial instruments, and financial losses that may arise from the Group's receivables and financial investments constitute credit risk. Group management has an existing credit risk policy to monitor credit risk. The Group can obtain collateral for its financial assets. In addition, the Group requests letters of guarantee from unrelated parties for certain projects and contracts, and may request mortgages for the loans it has given to provide financing. In order to observe the credit risk arising from the receivables from the subscribers, the Group divides the subscribers into groups according to the prospective credit loss model, taking into account the payment terms, the financial difficulties that the Group has experienced before in collection and their aging profiles. Most of the trade receivables are related to the receivables from the subscribers. The credit risk of the Group's trade receivables mainly arises from the personal payment characteristics of its postpaid customers. Investments are evaluated in liquid financial instruments. Bank limits are determined by credit ratings given by reliable rating institutions and their paid-in capital. Credit ratings and paid-in capital amounts are reviewed on a monthly basis. Transactions related to derivatives and similar instruments are carried out with national and international banks with which the Group has signed international contracts and whose credit ratings are sufficient. 2.4 Summary of Significant Accounting Policies (cont’d) (ad) Financial Risk Management (cont’d) Credit Risk (cont’d) As of the reporting date, the Group has no significant credit risk concentrated in a particular party. The Group's maximum exposure to credit risk is reflected by presenting all financial assets, including derivative instruments, with their carrying values in Note 38 in the consolidated statement of financial position. The Group makes provision for doubtful receivables for the balance of trade receivables and contract assets arising from sales of goods and services to show the estimated loss. This provision has been calculated considering possible collection problems and past experience arising from trade and contract assets receivables. As per its policy, the Group only provides financial guarantees to its subsidiaries and distributors (Note 21). Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its future financial obligations. The Group's liquidity risk is managed by obtaining sufficient financing opportunities from various financial institutions in a way that will not harm the Group or damage its reputation, in order to meet its current and potential debt requirements under normal conditions or in crisis situations. Liquidity risk is managed using sufficient cash and cash equivalents to cover expected operational expenses, including financial liabilities. Market risk It is the risk that changes in the money market, such as exchange rates, interest rates or the prices of instruments traded in the securities markets, will change the Group's income or the value of its financial assets. Market risk management aims to optimize risk return while controlling exposure to market risk within acceptable limits. The Group uses derivative financial instruments to manage market risk. All trading transactions are carried out in accordance with the Group's treasury and risk management policy. (i) Exchange rate risk The Group is exposed to foreign currency risk due to various income and expense items in foreign currencies such as wholesale income and expenses, some operational expenses, network costs and foreign currency debts, receivables, financial liabilities arising from them, financial liabilities arising from investment agreement related to BeST acquisition. The majority of other currencies that the Group carries out transactions consist of the US Dollar, Euro and Chinese Yuan. Keeping a large portion of the cash portfolio in foreign currency is one of the methods used in managing currency risk. In addition, the Group has been a party to various forward contracts, swap (barter contract) and option contracts in order to control the risk arising from fluctuations in foreign exchange rates, and hedging accounting has been applied since 1 July 2018 (Note 35). Additional information on the Group's foreign exchange sensitivity is provided in Note 38. 290 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 44 Translated into English from the report originally issued in Turkish 45 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 291 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.5 Critical Accounting Judgements, Estimates and Assumptions (cont’d) 2.5 Critical Accounting Judgements, Estimates and Assumptions (cont’d) (ad) Financial Risk Management (cont’d) (ii) Interest rate risk Interest rate risk arises from financial assets and liabilities. The Group manages its financial liabilities by making an appropriate distribution between fixed and variable-rate debts. Variable-rate debts can be converted into fixed-rate debts, taking into account the market forecasts, the Group's maturity needs, and short and long- term interest rate expectations. The use of derivative financial instruments is managed in line with the Group's treasury and risk policy, in which the written principles regarding the use of derivative financial instruments are approved by the Audit Committee in accordance with the Group's risk management strategy. 2.5 Critical Accounting Judgements, Estimates and Assumptions The preparation of the consolidated financial statements in accordance with TFRS requires the Group Management to make certain assessments, estimates and assumptions that will affect the application of accounting policies and reported items such as assets, liabilities, income and expenses. However, actual results may differ from the estimates made. Estimates and assumptions are reviewed periodically. The effects arising from changes in accounting estimates are taken into account in the current period and in future periods that may be affected by this estimate. Estimates and assumptions that may cause significant adjustments in the carrying values of assets and liabilities in the Company's consolidated financial statements in the next reporting period are set out below. Provision for doubtful trade receivables The Group allocates provision for doubtful receivables for the estimated losses caused by the inability of its customers and subscribers to make the necessary payments. The Group calculates provision for doubtful receivables according to the prospective credit loss model. In this context, the loss is weighed according to the probabilities of realization and it evaluates how economic factors affect the expected credit loss. The provision is revised periodically. The provision expense calculated for trade and other receivables is calculated over the percentages determined for the aging group in which the receivable is included and increasing as the receivables age. Capitalization and useful lives of assets The Group evaluates the nature of the capitalized asset for its property, plant and equipment and intangible assets within the scope of TAS 16 and TAS 38 standards, and accordingly, the related assets are capitalized when they are ready for use. The residual values and useful economic lives of the Group's assets are determined by the Group Management at the acquisition date of the asset and are regularly reviewed for appropriateness. The group determines the useful life of an asset by considering the estimated benefits of that asset. This assessment is based on the Group's experience with similar assets. When determining the useful life of an asset, the Group also considers the situation when the assets become technically and/or commercially unavailable as a result of changes or developments in the market. The useful lives of GSM and other telecommunication business licenses depend on the validity period of the license agreements. Gross and net presentation of revenue When the Group sells goods or services as a principal, revenue and operating costs are recorded on a gross basis. When the Group sells goods or services as an agent, revenue and operating costs are recorded on a net basis, representing the net margin earned. The Group Management decides whether the Group sells goods or services as a principal or as an agent by analyzing both the legal form and content of the agreements between the Group and its business partners. Such decisions affect reported revenue and operational expenses; however, it has no impact on reported assets, liabilities and cash flow. Contracted handset sales Company, distributors and dealers; organizes joint campaigns for subscribers, where the distributor and/or dealer sells devices, and the Company provides communication services. The management does not recognize revenue related to the device by evaluating the following issues: • The Company is not the main contractor in device sales, • The Company has no control over device sales prices, • The Company does not have stock risk. Multi-element contracts In multi-element contracts where the Group is the main contractor, each element in the package is considered as separate parts that can be separated from each other if their fair value can be measured reliably and has a distinct value to the customer, and is recognized separately, provided that the revenue elements of each have been realized. The total price obtained from the package is distributed to the products and services in proportion to the fair values of the elements in the package and revenue is recognized. Tax expense In case of any disputes with tax institutions, tax expense calculation, estimation and evaluations are required for the items whose tax calculation method cannot be determined exactly until a decision is taken from the relevant authorities or until the end of the legal process. As part of the preparation of the consolidated financial statements, the Group is responsible for estimating taxes for each country in which operations are conducted. This process includes estimating the deferred tax asset or liability by evaluating temporary timing differences calculated from adjustments made for reporting purposes such as current tax expenses, deferred income and accruals. Group Management records deferred tax assets when they can be deducted from future taxable income. A deferred tax asset is recognized when it is probable that tax benefits will be available in future periods. Therefore, the separation of the deferred tax receivable depends on the estimation of the financial performance in the future periods. 292 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 46 Translated into English from the report originally issued in Turkish 47 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 293 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.5 Critical Accounting Judgements, Estimates and Assumptions (cont’d) 2.6 Fair Value Measurement (cont’d) Provisions, contingent assets and liabilities (iii) Trade and other receivables and receivables from finance sector operations As detailed in Note 20, the Group has become a party to multiple investigations, examinations and lawsuits, both as defendant and plaintiff, within the scope of its ordinary activities during the period. All these investigations, examinations and lawsuits are reflected in the consolidated financial statements or related notes by the Group Management by evaluating the paragraph 91 of TAS 37 “Provisions, Contingent Liabilities and Contingent Assets” standard. Future results of these investigations, examinations and lawsuits may differ from the Group's assessments. As a result of the evaluations made under the current conditions as of the reporting date, the Group Management is of the opinion that the necessary information is presented in the accompanying consolidated financial statements in order to ensure that appropriate accounting criteria and measurement principles are applied to provisions, contingent liabilities and contingent assets and that financial statement users understand their nature, timing and amount. Annual impairment assessment The group annually evaluates whether there is any indication that an asset is impaired. If such an indication exists, the recoverable amount of that asset is determined by its fair value less costs to sell. Fair value determination process Some of the Group's assets and liabilities are measured at fair value for financial reporting purposes. Observable market information is used whenever possible to measure fair value. The valuation method and the inputs used in determining the fair value are explained in Note 2.6. 2.6 Fair Value Measurement The Group determines the fair values of financial and non-financial assets and liabilities in accordance with some accounting policies and explanations in the notes. Fair values have been determined by using the methods stated below for finding the values of financial and non-financial assets and liabilities in the financial statements and/or explanations in the notes. If necessary, the assumptions used in determining fair values are explained in the related notes. (i) Investment properties The fair values of investment properties are calculated by an independent valuation company authorized by the CMB, with various methods (income approach and market comparison or evaluation of any or all of these methods together), taking into account the applicability of these methods in the relevant real estates. The value of investment properties generally differs according to the valuation method. For this reason, the valuation company makes an evaluation with a reasonable method by comparing the valuation results calculated with different methods and the differences. The independent valuation company estimates the fair value of the investment property reflecting the market conditions at the reporting date, according to the valuation method used. (ii) Financial investments The fair values of financial investments are determined based on the selling prices quoted on the stock exchange or on the basis of their market value, which is not quoted in the over-the-counter exchange. The fair values of receivables from trade, other and financial sector operations are determined by discounting the present values of future cash flows to the reporting date with market interest rate. (iv) Derivative instruments The fair values of forward, option, interest and currency swap transactions are determined by using market interest rates and CBRT exchange rates data on the valuation date, valuation methods and pricing instruments in line with market standards. If quoted market values are not available, the fair value is determined by discounting the difference (profit/loss) between the forward price of the forward foreign currency contract and the current exchange rate at the contract maturity, using the risk-free investment interest rate at the reporting date. The fair value of interest rate and currency swaps is calculated as the difference between the risk-free investment rate of the legs in the swap cash flow and the CBRT rates and their discounted values. The fair value of option transactions is determined by using option pricing models. (v) Non-derivative financial liabilities Fair values stated in the notes are determined by discounting future cash flows related to principal and interest to the reporting date with market interest rate. Fair values of lease liabilities are discounted using the implied interest rate on the lease, if it can be easily determined. If this rate cannot be easily determined, the Group uses its own alternative borrowing rate. 2.7 New and Amended Standards and Interpretations a) Standards, amendments and interpretations applicable as at 31 December 2022: Amendment to TFRS 16, ‘Leases’ – COVID 19 related rent concessions extension of the practical expedient (effective as of 1 April 2021); Due to the COVID 19 pandemic, some privileges have been provided to lessees in rent payments. In May 2020, with the amendment published in the TFRS 16 Leases standard, IASB introduced an optional expedient practice for the lessees not to evaluate the concessions granted due to COVID 19 in the lease payments, whether there is a change in the lease. On 31 March 2021, IASB published an additional amendment to extend the date of expedient implementation from 30 June 2021 to 30 June 2022. Lessees may choose to account for such lease concessions in accordance with the terms that would apply in the absence of a lease modification. This ease of application often causes the lease concession to be recognized as a variable lease payment during periods when the event or condition that triggers the reduction in lease payments occurs. A number of narrow-scope amendments to TFRS 3, TAS 16, TAS 37 and some annual improvements on TFRS 1, TFRS 9, TAS 41 and TFRS 16; effective from Annual periods beginning on or after 1 January 2022. o Amendments to TFRS 3 ‘Business combinations’; this amendment updates a reference in TFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. 294 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 48 Translated into English from the report originally issued in Turkish 49 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 295 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.7 New and Amended Standards and Interpretations (cont’d) 2.8 Comparative Information and Revision of Prior Period Financial Statements (cont’d) a) Standards, amendments and interpretations applicable as at 31 December 2022 (cont’d): o Amendments to TAS 16 ‘Property, plant and equipment’; this amendment prohibits a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. o Amendments to TAS 37 ‘Provisions, contingent liabilities and contingent assets’; this amendment specifies which costs a company includes when assessing whether a contract will be loss-making. b) Standards, amendments and interpretations that are issued but not effective as at 31 December 2022: TAS 1, Application Statement 2, and narrow changes to TAS 8; Effective for annual reporting periods beginning on or after 1 January 2023. These amendments are intended to improve accounting policy disclosures and help financial statement users distinguish between changes in accounting estimates and changes in accounting policies. TAS 12, Amendment to deferred tax on assets and liabilities arising from a single transaction; Effective for annual reporting periods beginning on or after 1 January 2023. These amendments require deferred tax recognition on transactions that cause equal amounts of taxable and deductible temporary differences when first recognized by companies. TFRS 16, Sale and leaseback transactions; Effective for annual reporting periods beginning on or after 1 January 2024. These amendments include the sale and leaseback requirements in TFRS 16 that describe how an entity accounts for a sale and leaseback transaction after the transaction date. Sales and leaseback transactions where some or all of the lease payments consist of variable lease payments that are not tied to an index or rate are likely to be affected. TAS 1, Amendment to the long-term obligations, which are the terms of the contract; Effective for annual reporting periods beginning on or after 1 January 2024. These amendments clarify how conditions that an entity must comply with within twelve months of the reporting period affect the classification of a liability. TFRS 17, 'Insurance Contracts', as amended in December 2021; Effective for annual reporting periods beginning on or after 1 January 2023. This standard replaces TFRS 4, which currently allows for a wide variety of applications. TFRS 17 will fundamentally change the accounting of all entities that issue insurance contracts and investment contracts with discretionary participation features. 2.8 Comparative Information and Revision of Prior Period Financial Statements The consolidated financial statements of the Group are prepared comparatively with the previous period in order to enable the monitor the financial position and performance trends. In order to comply with the presentation of the current period consolidated financial statements, comparative information is reclassified when deemed necessary and significant differences are disclosed. Significant changes in accounting policies and significant accounting errors are applied retrospectively and prior period financial statements are restated. In order to comply with the presentation of the current period consolidated financial statements, comparative information is reclassified when necessary and significant differences are disclosed. In its consolidated financial statements as of 31 December 2021, the Company has classified the short-term trade receivables from non-related parties amounting to 30,075 TL as short-term trade receivables from related parties. The reclassification has no effect on the consolidated statement of profit or loss and cash flow statement. 2.9 Developments in the Current Period Developments regarding the operations in Ukraine The company's subsidiaries Lifecell, UkrTower, Global LLC and Paycell LLC provide telecommunications services, telecommunications infrastructure management, customer relationship management and mobile payment services in Ukraine, respectively. The Group's Ukraine operations constitute approximately 8.9% of the consolidated net sales and 14% of the consolidated non-current assets for the period ended 31 December 2022. With the start of the Russia-Ukraine war on 24 February 2022, uncertainties have emerged regarding the Group's activities in Ukraine. The impact of this situation on the Group's operations is closely monitored, and corporate action plans regarding the continuation of operations and the safety and health of Group employees are updated instantly according to developments. As of the end of December 2022, 92% of the daily average stores across the country are open. The ratio of telecommunications equipment and revenue generated in the territory currently occupied by Russia to the total Group's telecommunications equipment and total revenue in Ukraine is at a low level. Banking systems continue to operate in the country. Liquidity is mostly held in creditor banks, and the cash position is suitable for the continuation of operations. The occupation is not expected to have any impact on the going concern of the Group. As of 31 December 2022, the network and other equipment in the regions under Russian control and active military operations and in Ukraine-controlled regions that have not operated for more than 92 days have been impaired. As of 31 December 2022, the amount of impairment recognized in the consolidated financial statements is 214,210 TL. A general impairment assessment has been made and it has been concluded that there is no need for an impairment test (Note 18). 3 BUSINESS COMBINATIONS The Company's subsidiary Turkcell Enerji has signed a Share Transfer Agreement to acquire the entire shares of Boyut Grroup Enerji Elektrik Uretim ve Insaat Sanayi ve Ticaret A.S. ("Boyut Enerji") on 6 July 2021. The respective transaction is based on an enterprise value of 29,600 USD. After adjusting for the net debt of Boyut Enerji, the Group made a payment of 10,972 USD. 500 USD of this amount shall be paid after two-years as from the agreement date. The control power of Boyut Enerji has transferred to the Group as of 18 August 2021. At the time the financial statements were authorized for issue, goodwill, identifiable assets and liabilities has been accounted in accordance with TFRS 3, “Business Combinations. The details of the goodwill calculation, total consideration amount and the net assets acquired are as follows: Total consideration amount -Cash consideration amount -Contingent and deferred consideration amount (Note 25) Net asset acquired Goodwill (Note 15-17) 95,534 92,259 3,275 (87,123) 8,411 296 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 50 Translated into English from the report originally issued in Turkish 51 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 297 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 3 BUSINESS COMBINATIONS (cont’d) 4 SEGMENTAL REPORTING (cont’d) The fair values of identifiable net assests in accordance with TFRS 3 arising from the acquisition are as follows: Cash and cash equivalents Other current assets Property, plant and equipment (Note 14) Intangible assets (Note 15) Other non-current assets Borrowings (Note 36) Trade and other payables Deferred tax liabilities (Note 32) Other liabilities Fair value of total identifiable net assets (100%) The details of cash outflow due to acquisition are as follows: Total consideration - cash Cash and cash equivalents - acquired Cash outflow due to acquisition (net) 4 SEGMENTAL REPORTING 5,556 5,737 103,933 182,881 166 (151,892) (9,233) (48,755) (1,270) 87,123 92,259 (5,556) 86,703 In accordance with its integrated communication and technology services strategy and economic integrity, Group divides its main business segments into three groups as “Turkcell Turkey”, “Turkcell International” and “Techfin”. While some of these strategic segments offer the same types of services, they are regularly review by the chief operating decision maker function according to their resource allocation and performances because they operate in different geographical locations and are affected by different economic conditions. The chief operating decision maker function is carried out by the Board of Directors, however Board of Directors may transfer the authorities, other than recognized by the law, to the General Manager and other directors. Turkcell Turkey reportable segment includes the operations of Turkcell, Turkcell Superonline, Turkcell Satış’s digital business services, Turkcell Dijital, Dijital Eğitim, Turkcell Global Bilgi intra-group operations, Turktell,Atmosware Teknoloji, Turkcell Teknoloji, Global Tower, Rehberlik Hizmetleri, Turkcell Gayrimenkul, Lifecell Dijital Servisler, Lifecell Bulut, Lifecell TV, Lifecell Müzik ve BiP A.Ş. Turkcell International reportable segment includes the operations of Lifecell, BeST, Kıbrıs Telekom, Eastasia, Lifecell Ventures, Beltel, UkrTower, Global Ukrayna, Paycell Europe, Lifetech, Beltower, Lifecell Digital, Yaani ve BiP B.V. Techfin reportable segment includes the operations of Turkcell Finansman, Turkcell Ödeme, Turkcell Sigorta, Turkcell Dijital Sigorta, Paycell Europe ve Paycell LLC. Other reportable segment mainly comprises non-Group call center operations of Turkcell Global, Turkcell Satış’s other operations, Turkcell Enerji, Boyut Enerji and Turkcell GSYF’s operations. Information about segments is presented at below. The Board primarily uses EBITDA (earnings before interest, tax, depreciation and amortization) to assess the performance of the operating segments. EBITDA is calculated by the Group by adding depreciation and amortization to the net amount of sales revenue, cost of sales, marketing and general administrative expenses. Reconciliation of EBITDA to the consolidated profit for the period is included in the accompanying notes. EBITDA is not a financial measure defined by TFRS as a measurement of financial performance and may not be comparable to other similarly-titled indicators used by other companies. TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 4 SEGMENTAL REPORTING (cont’d) Turkcell Turkey 2022 2021 Turkcell International 2021 2022 Techfin Other 2022 2021 2022 2021 Inter-segment Eliminations 2022 2021 Consolidated 2022 2021 Total segment revenue 40,851,070 Inter-segment revenue (216,232) Revenues from external customers EBITDA TFRS 9 impairment loss provision 40,634,838 17,196,783 (290,933) 27,223,543 (175,173) 6,353,603 (140,722) 3,750,081 (99,353) 1,849,132 (140,624) 1,075,742 (61,846) 7,042,489 (1,720,229) 4,930,019 (722,471) (2,217,807) 2,217,807 (1,058,843) 1,058,843 53,878,487 - 35,920,542 - 27,048,370 12,167,845 6,212,881 3,233,015 3,650,728 1,828,333 1,708,508 901,571 1,013,896 638,946 5,322,260 693,953 4,207,548 401,086 - (31,481) - (22,397) 53,878,487 21,993,841 35,920,542 15,013,813 (251,870) (33,577) (7,785) (29,538) (10,436) (870) (1,071) - - (354,918) (271,162) Translated into English from the report originally issued in Turkish 54 298 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 52 Translated into English from the report originally issued in Turkish 53 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 299 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 4 SEGMENTAL REPORTING (cont’d) 5 CASH AND CASH EQUIVALENTS Reconcilations regarding to revenue, EBITDA, assets and liabilities and other significant items As of 31 December 2022 and 2021 the details of cash and cash equivalents are as follows: Profit for the year Add/(Less): Income tax expenses Other operating income Other operating expense Investment income Finance income Finance expense Depreciation, amortization and impairment losses Share of (profit)/loss of equity accounted investees Consolidated EBITDA Geographical Information Revenue Turkey Ukraine Belarus Turkish Republic of Northern Cyprus The Netherlands Non-Current Asset Turkey Ukraine Belarus Turkish Republic of Northern Cyprus Unallocated non-current assets 31 December 2022 31 December 2021 11,052,234 5,031,278 (3,516,100) (7,561,993) 761,126 (1,779,890) (210,775) 13,699,811 9,478,012 (490,184) (7,077,695) 668,076 (464,116) (3,051,082) 13,195,713 7,291,913 71,416 21,993,841 (90,090) 15,013,813 31 December 2022 31 December 2021 47,665,602 4,807,505 934,675 447,039 23,666 53,878,487 32,269,797 2,832,145 508,289 290,498 19,813 35,920,542 31 December 2022 45,323,207 7,678,128 746,265 640,837 69,718 54,458,155 31 December 2021 32,577,485 7,759,046 493,213 268,760 72,533 41,171,037 Cash in hand Banks - Demand deposits - Time deposits - Receivables from reverse repo Allowance for impairment Cash and cash equivalents 31 December 2022 31 December 2021 184 359 2,184,052 20,100,956 3,704,160 (28,853) 25,960,674 3,045,179 15,595,648 - (12,346) 18,628,665 As of 31 December 2022, the average effective interest rates of TL, USD, EUR and RMB time deposits are 22.8%, 2.4%, 2.6% and 0.3% (31 December 2021: 27.7%, 1.3%, 0.5% and 0.3%) respectively. As of 31 December 2022, average maturity of time deposits is 22 days (31 December 2021: 29 days). As of 31 December 2022, the effective interest rates of USD and EUR receivables from reverse repo are 3.0% and 2.8% respectively. As of 31 December 2022, average maturity of receivables from reverse repo is 23 days. As of 31 December 2022, the net amout of cash and cash equivalents is 25,940,066 TL excluding the interest income accrual amounting to 20,608 TL. 6 TRADE RECEIVABLES AND PAYABLES Current trade receivables As of 31 December 2022 and 2021 the details of current trade receivables from non-related parties are as follows: Receivables from subscribers Trade receivables and cheques received Undue assigned contracted receivables Provisions for doubtful receivables 31 December 2022 31 December 2021 3,175,200 1,137,499 467,693 (623,538) 4,156,854 4,463,294 2,303,696 518,184 (620,111) 6,665,062 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 by the Company in installments. When the monthly installment is billed to the subscriber, that portion is transferred to “Receivables from subscribers”. The Group measures the undue assigned contracted receivables at amortized cost. The significant part of trade receivables and notes receivables represent receivables from distributors and receivables from customers and roaming receivables. 300 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 55 Translated into English from the report originally issued in Turkish 56 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 301 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 6 TRADE RECEIVABLES AND PAYABLES (cont’d) Non-current trade receivables As of 31 December 2022, the undue assigned contracted receivables related to handset campaigns, which will be billed after one year amounted to 198,628 TL (31 December 2021: 169,570 TL) is recognized under non- current trade receivable amounted to 298,759 TL (31 December 2021: 256,442 TL). Provision for long-term doubtful trade receivables is 514 TL (31 December 2021: 725 TL). As of 31 December 2022 and 2021, movements of allowance for doubtful trade receivables from non-related parties and other assets are are as follows: Trade Receivables Other Assets Opening balance Period charge Translation differences Receivables written off Amounts collected Closing balance Opening balance Period charge Translation differences Receivables written off Amounts collected Closing balance 624,263 495,911 40,311 (340,514) (199,346) 620,625 618,708 455,461 50,661 (300,377) (200,190) 624,263 13,387 27,714 362 (49) (5) 41,409 31 December 2022 637,650 523,625 40,673 (340,563) (199,351) 662,034 8,672 4,250 528 (28) (35) 13,387 31 December 2021 627,380 459,711 51,189 (300,405) (200,225) 637,650 Trade Receivables Other Assets Short-term trade payables As of 31 December 2022 and 2021, the detail of short-term trade payables to non-related parties are as follows: Trade payables Accrued selling and marketing expenses Other 31 December 2022 6,898,412 192,500 490,373 7,581,285 31 December 2021 4,615,606 74,214 286,705 4,976,525 7 RECEIVABLES FROM FINANCE SECTOR OPERATIONS Current receivables from finance sector operations 31 December 2022 31 December 2021 2,014,626 3,276,788 Non-current receivables from finance sector operations 31 December 2022 31 December 2021 137,559 285,138 Receivables from finance sector operations consist of contractual assignment receivables from subscribers regarding Turkcell Finansman's consumer financing activities, receivables of Turkcell Ödeme and Paycell LLC regarding payment services and electronic money services and Turkcell Sigorta's receivables related to insurance agency services. These receivables are recognized at amortized cost using the effective interest rate method. Provision for credit loss: General provisions 31 December 2022 31 December 2021 92,094 89,917 Movements of provision for doubtful receivables from finance sector operations are as follows at 31 December 2022 and 2021: Opening balance Period charge Disposal Receivables transferred by receivable transfer contract (*) Closing balance 31 December 2022 31 December 2021 154,548 66,678 (56,000) 92,094 88,410 (58,869) (31,718) (73,132) 89,917 92,094 (*) Turkcell Finansman signed a transfer of claim agreement in 2022 with a debt management company to transfer some of its doubtful receivables stemming from the years 2016 and 2021. Transferred doubtful receivables comprise of balances that Turkcell Finansman started legal proceedings for as well as procedings without legal cases. Trade payables arises from the ordinary course of business. Accrued selling and marketing expenses mainly result from services received from non-related parties related to the selling and marketing activities of the Group, but not yet invoiced. 302 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 57 Translated into English from the report originally issued in Turkish 58 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 303 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 8 OTHER RECEIVABLES AND PAYABLES Current other receivables As of 31 December 2022 and 2021, the detail of current other receivables from non-related parties are as follows: Receivables from Evrensel project Deposits and guarantees given Receivables from tax office Other Non-current other receivables 31 December 2022 137,734 3,198 1,904 2,753 145,589 31 December 2021 306,806 3,666 12,276 8,585 331,333 As of 31 December 2022 and 2021, the detail of non-current other receivables from non-related parties are as follows: Deposits and guarantees given Other Short-term other payables 31 December 2022 374,454 1,240 375,694 31 December 2021 162,921 59 162,980 As of 31 December 2022 and 2021, the detail of short-term other payables from non-related parties are as follows: Other taxes and other deductions payable Accrued treasury share, Universal Service Fund and contributions to the BTK’s expenses Other 31 December 2022 1,381,243 31 December 2021 930,879 986,508 23,533 2,391,284 652,028 19,987 1,602,894 9 ASSETS ARISING FROM CUSTOMER CONTRACTS Current assets arising from customer contracts Contract assets from sale of goods and services contracts Non-current assets arising from customer contracts 31 December 2022 31 December 2021 1,180,236 1,888,942 Contract assets from sale of goods and services contracts 31 December 2022 31 December 2021 67,505 67,054 The contract assets represent contract assets from subscribers. Billing periods differ because of high number of subscribers. Revenue is accrued for services rendered but not billed at the end of each reporting period. Contract assets also include contracted receivables related to handset campaigns, and the portion which will be billed after one year is recognized under non-current contract assets. Movements of allowance for doubtful assets arising from goods and service sales contracts are as follows at 31 December 2022 and 2021: Opening balance Charge for the period Closing balance 31 December 2022 31 December 2021 5,243 998 6,241 6,241 1,105 7,346 10 INVENTORIES As of 31 December 2022, inventories amounting to 277,670 TL which consist of mainly mobile phone and its accessories, tablet, sim-cards and tower construction materials (31 December 2021: 260,535 TL). 11 PREPAID EXPENSES AND DEFERRED REVENUE Short-term Prepaid Expenses Short-term prepaid expenses to non-related parties amounting to 468,306 TL (31 December: 264,630 TL) mainly consist of other prepaid expenses amounting to 367,458 TL (31 December: 167,678 TL) and the advances given amounting to 100,848 TL (31 December 2021:96,952 TL) as of reporting date. A significant portion of other prepaid expenses mainly consists of short-term sponsorship and insurance expenses. Long-term Prepaid Expenses Long-term prepaid expenses to non-related parties amounting to 2,423,644 TL (31 December 2021:1,009,239 TL) mainly consist of advances given for fixed asset acquisition amounting to 2,208,819 TL (31 December 2021: 855,490 TL), other prepaid expenses amounting to 194,894 TL (31 December 2021: 153,749 TL) and business advanced given amounting to 19,931 TL as of reporting date. Other significant parts of long-term prepaid expenses consist of long-term sponsorship and insurance expenses. Short-term Deferred Revenue Short-term deferred revenue from non-related parties amounting to 99,774 TL (31 December 2021: 93,034 TL) mainly consists of other deferred revenue amounting to 73,571 TL (31 December 2021: 61,348 TL) and advances taken amounting to 26,203 TL (31 December 2021: 31,686 TL) as of reporting date. Other significant parts of long- term prepaid expenses consist of employee salary promotions and rent income. 304 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 59 Translated into English from the report originally issued in Turkish 60 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 305 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 12 INVESTMENTS VALUED BY EQUITY METHOD 13 INVESTMENT PROPERTIES (cont’d) Joint Ventures and Associates The net asset amounts corresponding on Group’s shares of the investments valued by equity method in the financial statements are as follows: a) Joint Ventures Sofra b) Associates TOGG 31 December 2022 31 December 2021 13,202 6,421 31 December 2022 31 December 2021 665,382 1,116,522 The movement investments valued by equity method is as follows: Opening balance Shares of profit /(loss) from investments valued by equity method Contribution to share capital Closing balance 13 INVESTMENT PROPERTIES 31 December 2022 31 December 2021 103,926 678,584 (71,416) 515,775 1,122,943 90,090 484,568 678,584 Depreciation expenses amounting 2,417 TL for the year ended 31 December 2022 (31 December 2021 : 1,109 TL) are recognized under cost of revenue. Fair value measurement of the Group’s investment properties As of 31 December 2022, the fair values of the Group's investment properties are measured by independent valuation companies authorized by the Capital Markets Board, which perform the valuation of investment properties in accordance with the capital market legislation and have sufficient experience and qualifications in the fair value measurement of investment in the related regions. This valuation companies use different methods to measure the fair values of investment properties (discounted cash flow, market comparison) and these methods are calculated by considering applicability to real estates. In estimating the fair values of the properties, the highest and best use of the property is its current use. Rent income from investment properties during the year ended 31 December 2022 is 11,489 TL (31 December 2021: 6,872 TL). There is no direct operating expense for investment properties during the year ended 31 December 2022 (31 December 2021:None). As of 31 December 2022 and 2021, the group’s investment properties and their fair value hierarchy are as follows: 31 December 2022 Level 1 Level 2 Level 3 Investment properties in Gebze free zone - - 98,860 As of 31 December 2022 and 2021, the movements of investment properties are as follows: 31 December 2022 31 December 2021 Investment properties in Ankara - 58,500 - Cost Opening balance Transfer Disposals Closing balance Accumulated depreciation Opening balance Transfer Additions Disposals Closing balance Net book value 51,100 51,321 (38,593) 63,828 34,512 40,990 2,417 (25,690) 52,229 11,599 37,079 14,021 - 51,100 23,404 9,999 1,109 - 34,512 16,588 Investment properties in Adana - 13,000 - Investment properties in İstanbul - 6,500 - Investment properties in Aydın Total - - 8,650 86,650 - 98,860 Valuation Method Discounted cash flow Market approach Market approach Market approach Market approach 306 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 61 Translated into English from the report originally issued in Turkish 62 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 307 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 13 INVESTMENT PROPERTIES (cont’d) 31 December 2021 Level 1 Level 2 Level 3 Investment properties in Gebze free zone - - 52,725 Investment properties in Ankara - 32,315 - Investment properties in Adana - 6,705 - Investment properties in İstanbul - 3,765 - Investment properties in Aydın Total - - 3,600 46,385 - 52,725 Valuation Method Discounted cash flow Market approach Market approach Market approach Market approach TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 14 PROPERTY, PLANT AND EQUIPMENT The movements of property, plant and equipment for the year ended 31 December 2022, are as follows: Cost Network infrastructure (All operational) Land and buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant Construction in progress Accumulated depreciation and impairment Network infrastructure (All operational) Buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant 1 January 2022 34,307,250 1,720,401 1,102,084 51,138 329,758 103,750 810,568 38,424,949 18,796,491 443,425 821,201 47,105 312,026 1,922 20,422,170 Addition 2,480,060 117,046 306,608 - 23,147 - 4,647,482 7,574,343 Disposals (734,492) (1,810) (62,905) (209) (4,317) - (6,468) (810,201) Transfer 3,759,821 2,118 30,321 569 646 - (3,806,920) (13,445) Impairment /reversal - - - - - - 7,053 7,053 3,375,844 83,534 91,751 2,837 6,923 5,241 3,566,130 (615,784) - (52,436) (174) (3,996) - (672,390) - - - - - - - 166,203 211 7,978 - 25 - 174,417 Transfer to investment property Foreign currency translations (51,321) - 1,166,570 5,023 23,214 3,841 1,207 - 19,890 1,219,745 - - - - - (51,321) - (40,990) 967,414 5,440 20,419 3,849 620 - 997,742 - - - - (40,990) 31 December 2022 40,979,209 1,791,457 1,399,322 55,339 350,441 103,750 1,671,605 46,351,123 22,690,168 491,620 888,913 53,617 315,598 7,163 24,447,079 Property, plant and equipment, net 18,002,779 4,008,213 (137,811) (13,445) (167,364) (10,331) 222,003 21,904,044 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) Translated into English from the report originally issued in Turkish 64 14 PROPERTY, PLANT AND EQUIPMENT (cont’d) Significant unobservable inputs and sensitivity of fair values of respective investment properties are as follows: The movements of property, plant and equipment for the year ended 31 December 2021, are as follows: In the “discounted cash flow” 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 current market conditions 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 similar areas with similar conditions will cause a significant increase/(decrease) in the fair value. Cost Network infrastructure (All operational) Land and buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant (Note 3) Construction in progress Accumulated depreciation and impairment Network infrastructure (All operational) Buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant (Note 3) 1 January 2021 24,923,118 1,485,249 955,894 44,999 342,093 - 681,299 28,432,652 Addition 1,415,616 40,466 87,930 2,162 8,849 - 4,217,377 5,772,400 Disposals (435,571) (10,191) (25,762) (2,399) (32,476) - (4,817) (511,216) Transfer 4,084,711 185,428 16,858 - 546 - (4,298,421) (10,878) Acquisition through business combination - - 27 156 - 103,750 - 103,933 13,090,823 354,312 717,871 40,027 326,889 - 14,529,922 2,762,649 82,528 66,229 3,373 7,698 1,922 2,924,399 (372,950) (3,804) (21,141) (2,399) (31,026) - (431,320) - - - - - - - - - - - - - - Impairment /reversal - - - - - - (20,000) (20,000) 4,493 - - - - - 4,493 Transfer to investment property - (14,021) - - - - - (14,021) Foreign currency translations 4,319,376 33,470 67,137 6,220 10,746 - 235,130 4,672,079 31 December 2021 34,307,250 1,720,401 1,102,084 51,138 329,758 103,750 810,568 38,424,949 - (9,999) - - - - (9,999) 3,311,476 20,388 58,242 6,104 8,465 - 3,404,675 18,796,491 443,425 821,201 47,105 312,026 1,922 20,422,170 Property, plant and equipment, net 13,902,730 2,848,001 (79,896) (10,878) 103,933 (24,493) (4,022) 1,267,404 18,002,779 Depreciation expenses for the years ended 31 December 2022 and 2021 amounting to 3,733,494 TL, 2,948,892 TL respectively including impairment losses are recognized in cost of revenue. Impaired network infrastructure mainly consists of damaged or technologically inadequate mobile and fixed network infrastructure investments. Impairment losses on property, plant and equipment for the year ended 31 December 2022 are 167,364 TL and are recognized under depreciation expenses (31 December 2021: 24,493 TL) Translated into English from the report originally issued in Turkish 65 308 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 63 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 309 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 15 INTANGIBLE ASSETS The movements of intangible assets for the year ended 31 December 2022, are as follows: Cost GSM and telecommunication licenses Computer softwares Transmission line softwares Indefeasible right of usage Brand name Customer base Goodwill Subscriber acquisition cost Electricity production power plant (Note 3) Other Construction in progress Accumulated amortization GSM and telecommunication licenses Computer softwares Transmission line softwares Indefeasible right of usage Brand name Customer base Subscriber acquisition cost Electricity production power plant (Note 3) Other 1 January 2022 10,742,945 14,437,848 89,263 166,122 12,211 15,512 48,421 6,645,600 182,881 256,282 15,743 32,612,828 5,452,949 9,008,362 79,919 68,506 7,345 13,522 3,165,629 3,382 151,435 17,951,049 Additions 244 4,058,103 544 3,345 371 - - 2,531,415 - 108,673 166,607 6,869,302 767,281 1,657,392 4,460 11,847 71 437 1,421,246 - 92,828 3,955,562 Disposals (1,919) (167,559) - - (331) - - (67,744) - (445) (226) (238,224) (1,919) (164,839) - - (239) - (67,744) - (445) (235,186) Transfer 913 180,427 - - 75 - - - - 2 (167,972) 13,445 Foreign currency translations 177,644 178,120 Impairment - - - - - - - - - 4,125 - 631 - 403,399 - 31 December 2022 10,919,827 18,686,939 89,807 169,467 13,893 15,512 48,421 9,150,583 - 182,881 368,637 14,783 39,660,750 - - 1,567 - - 41,312 - - - - - - - - - - 307 30,730 (10,077) - - - - - 331 21,291 76,692 116,863 - - 13 31,805 - 654 226,027 6,295,310 10,648,508 74,302 80,353 7,190 13,959 4,550,936 3,382 244,803 21,918,743 - Intangible assets, net TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) (21,291) (3,038) 14,661,779 2,913,740 177,372 13,445 17,742,007 15 INTANGIBLE ASSETS (cont’d) The movements of intangible assets for the year ended 31 December 2021, are as follows: Translated into English from the report originally issued in Turkish 66 Cost GSM and telecommunication licenses Computer softwares Transmission line softwares Indefeasible right of usage Brand name Customer base Goodwill Subscriber acquisition cost Electricity production power plant (Note 3) Other Construction in progress Accumulated amortization GSM and telecommunication licenses Computer softwares Transmission line softwares Indefeasible right of usage Brand name Customer base Subscriber acquisition cost Electricity production power plant (Note 3) Other Intangible assets, net 1 January 2021 9,188,733 11,835,827 88,499 159,995 9,483 15,512 40,010 4,787,853 - 186,743 1,142 26,313,797 4,253,203 7,304,194 79,073 56,974 7,040 13,085 2,133,755 98,689 13,946,013 12,367,784 Additions 279 2,003,373 764 6,127 534 - - 1,804,368 - 63,722 135,067 4,014,234 662,888 1,324,586 846 11,532 32 437 995,510 3,382 52,106 3,051,319 962,915 Disposals (830) (73,673) - - (48) - - (56,666) - - (551) (131,768) (830) (73,471) - - (33) (56,666) (131,000) (768) - - - - Acquisition through business combinations - - - - - - 8,411 - 182,881 - - 191,292 - - - - - - - - - - Transfer 18 131,439 - - 592 - - - - (457) (120,714) 10,878 - - - - - - - - - - Foreign currency translations 1,554,745 540,882 Impairment - - - - - - - - - - - - - - 1,650 - - 6,274 799 2,214,395 110,045 31 December 2021 10,742,945 14,437,848 89,263 166,122 12,211 15,512 48,421 6,645,600 182,881 256,282 15,743 32,612,828 - 26 15,319 - - - - - - - 15,345 537,662 437,734 - - 306 - 93,030 - 640 1,069,372 1,145,023 5,452,949 9,008,362 79,919 68,506 7,345 13,522 3,165,629 3,382 151,435 17,951,049 14,661,779 10,878 191,292 (15,345) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 15 INTANGIBLE ASSETS (cont’d) Turkcell As of 31 December 2022, net book value of licenses 2G, 3G and 4.5G are 11,496 TL, 237,391 TL, 2,469,941 TL respectively (31 December 2021: 57,478 TL; 276,957 TL; 2,882,117 TL). lifecell Lifecell has 9 operation licenses which are one 3G operation license, one long distance and international call and seven PSTN operation license in different regions. As o f 31 December 2022, it has 23 licenses of radio frequency usage rights which are related to IMT (LTE-2600, LTE-1800, LTE-900), IMT-2000 (UMTS), GSM- 900, GSM-1800, microwave radio relay, and broad band radio access. Also, it has 3 NCD code for mobile network, 29 permits for short numbers, 10 permits for SS-7 code (6 regional and 4 international), 1 permit for MNC, 8 permits for PSTN licenses in local regions. In addition, it has two service code authorizations for alternative call forward about international and long distance calls and also has authorization for “800” which is global telecommunication service . The net book value of lifecell’s licenses is 1,903,187 TL (31 December 2021: 2,054,249 TL). TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 16 RIGHT-OF-USE ASSETS Closing balances and depreciation and amortization expenses of right of use assets for the years ended 31 December 2022 and 2021 are as below: Balance at 1 January 2022 Depreciation and amortization charge for the year Balance at 31 December 2022 Balance at 1 January 2021 Depreciation and amortization charge for the year Balance at 31 December 2021 Site Rent Building Network equipment Vehicle Right of way 1,521,783 283,175 262,267 135,530 45,307 License 631,630 Other Total 103,956 2,983,648 (969,241) (87,025) (380,927) (58,973) (31,105) (112,764) (125,213) (1,765,248) 1,698,248 316,179 51,291 88,141 159,984 628,890 119,565 3,062,298 Site Rent Building Network equipment Vehicle Right of way 1,182,847 306,343 218,104 159,769 24,956 License 376,693 Other Total 111,462 2,380,174 (688,321) (67,500) (297,333) (50,291) (19,575) (58,087) (94,141) (1,275,248) 1,521,783 283,175 262,267 135,530 45,307 631,630 103,956 2,983,648 As of 31 December 2022, right of use assets are amounting to 1,918,438 TL (31 December 2021: 1,692,693 TL) are capitalized by the Group. Interest expense on lease liabilities for the year ended 31 December 2022 is 508,721 TL (31 December 2021: 359,240 TL); depreciation and amortization expenses are 1,765,248 TL (31 December 2021: 1,275,248 TL) and are recognized in cost of revenue. Amortisation including impairment losses is respectively 3,976,853 TL and 3,066,664 TL srecognized under cost of revenue. As of 31 December 2022, impairment of intangible assets amounting to 21,291 TL (31 December 2021: 15,345 TL). That amount is recognized among depreciation expense under cost of revenue. Computer softwares include, intra-group software development costs that meet the criteria of intangible assets. As of 31 December 2022, computer software that created intra-group amounting to 546,260 TL (31 December 2021:345,369 TL). Research and development expenses amounting to 66,326 TL recognized under cost of revenue (31 December 2021:44,347 TL). Translated into English from the report originally issued in Turkish 67 Translated into English from the report originally issued in Turkish 69 310 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 68 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 311 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 17 GOODWILL As of 31 December 2022, the Group has a total of 48,421 TL in goodwill related to Turkcell Superonline amounting to 32,834 TL, Boyut Enerji amounting to 8,411 TL (Note 3), and Yaani amounting to 7,176 TL (31 December 2021: 48,421 TL) recognized in its financial statements. Since the impairment test for these goodwill amounts is not material in terms of financial statements, it has not been performed. 18 IMPAIRMENT OF ASSETS Impairment of assets: The Group evaluates whether there is any indication of impairment for an asset on the relevant reporting date. If such an indication exists, the asset's recoverable amount is estimated. If the recoverable amount of the asset or any cash-generated unit to which the asset belongs exceeds its carrying amount, no impairment loss is recognized. As of 31 December 2022, due to ongoing war in Ukraine, impairment test of lifecell’s tangible and intangible assets was performed using the assumption that lifecell was the CGU. As of 31 December 2022, the recoverable amount of lifecell is determined based on fair value less cost of disposal calculations. As the recoverable amount of CGU was higher than its carrying amount, no impairment charge was recognized. (31 December 2021: No indication of impairment was found in any cash-generated unit of the Group and no impairment test was performed). Sensitivity analysis was performed on the change in weighted average cost of capital (WACC) by +0.5%/- 0.5%. Besides, considering of the potential effect of Ukraine-Russia war on lifecell’s business plans, sensitivity analysis was performed on the change in subscribers, average revenue per user (ARPU) and EBITDA margin by 1.0%-5.0%. No material sensitivity has been noted. As of 31 December 2022, the assumptions used in recoverable amount calculations of lifecell were: Impairment test was performed based on lifecell’s business plans covering a six-year period. A post-tax WACC rate of 37.7% - 39.0% for the period from 2023 to 2028, and a terminal growth rate of 5.0% were used. 19 BORROWING COSTS When assets require a substantial amount of time to be prepared for use or sale (qualified assets), borrowing costs that are directly related to the acquisition, construction, or production of the relevant asset are considered part of the asset's cost until it is ready to be used or sold. All other borrowing costs are recognized in the statement of profit or loss in the period in which they are incurred. Total borrowing cost included in the cost of the qualified assets is 216,668 TL for the year ended 31 December 2022 (31 December 2021: 183,951 TL). The capitalization rate for borrowings is 18.3% (31 December 2021: 7.6%). 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 20.1 Short-term Provisions As of 31 December 2022 and 2021, the movements of other short-term provisions are as follows: Balance at 1 January 2022 Provisions recognized Payments Transfers from long-term provisions Effect of changes in exchange rates Balance at 31 December 2022 Balance at 1 January 2021 Provisions recognized Payments Transfers from long-term provisions Effect of changes in exchange rates Balance at 31 December 2021 Legal (**) 67,021 (90) (52,923) 17,862 - 31,870 Legal (**) 253,633 221,453 (420,663) 10,198 2,400 67,021 Bonus (*) 506,641 919,750 (706,407) - 2,079 722,063 Bonus (*) 376,655 659,066 (567,025) - 37,945 506,641 (*) Includes share-based payment. Refer to Note 22 for details. (**) Refer to Note 20.3 for details. 20.2 Long-Term Provisions As of 31 December 2022 and 2021, the movements of other long-term provisions are as follows: Balance at 1 January 2022 Provisions recognized Payments Transfers to short-term provisions Effect of changes in exchange rates Remeasurement Discounting effect Balance at 31 December 2022 Balance at 1 January 2021 Provisions recognized Payments Transfers to short-term provisions Effect of changes in exchange rates Remeasurement Discounting effect Balance at 31 December 2021 Obligations for dismantling, removing and site restoration 596,135 10,271 (6,106) - 42,432 208,930 69,373 921,035 Obligations for dismantling, removing and site restoration 395,037 21,477 (3,068) - 145,337 (375) 37,727 596,135 Legal 19,662 45,892 - (17,862) - - - 47,692 Legal 16,894 12,966 - (10,198) - - - 19,662 Total 573,662 919,660 (759,330) 17,862 2,079 753,933 Total 630,288 880,519 (987,688) 10,198 40,345 573,662 Total 615,797 56,163 (6,106) (17,862) 42,432 208,930 69,373 968,727 Total 411,931 34,443 (3,068) (10,198) 145,337 (375) 37,727 615,797 Obligations for dismantling, removing and site restoration are discounted using a discount rate of 14.4% at 31 December 2022 (31 December 2021: 17.3%). 312 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 70 Translated into English from the report originally issued in Turkish 71 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 313 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d) 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d) 20.2 Long-Term Provisions (cont’d) 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 the 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. It is expected that the obligations for dismantling, removing and site restoration will be realized in accordance with the useful life of GSM services materials. Additions to obligations for dismantling, removing and site restoration during the period are non-cash transactions and are recorded against property, plant and equipment. 20.3 Turkcell’s Contingent Assets and Liabilities The following disclosures comprise of material legal lawsuits, investigations and in-depth investigations against the Company. Disputes on Special Communication Tax and Value Added Tax SCT Investigation of 2011 The Large Taxpayers Office levied Special Communication Tax (SCT) and tax penalty on the Company as a result of the Tax Investigation for the year 2011. The Company filed lawsuits for the cancellation of the notification regarding the aforementioned SCT assessment. The court partially accepted and partially rejected the cases and the parties appealed the decisions regarding the parts against them. The Large Taxpayers Office has collected 80,355 TL calculated for the parts against the Company for the assessment of the SCT for the year 2011 by offsetting the receivables of the Company from Public Administrations. While the cases are pending before the court of appeal the Company filed application for the restructuring as per Law no. 6736. The tax Office has rejected the application. The Company has also filed a case for the cancellation of aforementioned rejection act of the Tax Office. In this case, with the decision that notified to the Company on 14 April 2020, the Council of State decided to cancel the rejection act regarding the application for the restructuring. The Large Taxpayers Office and Ministry of Treasury and Finance appealed the decision. The Company replied the appeal request in due time. As a result of the appeal process, The Council of State Plenary Session of the Tax Law Chambers, approved the first instance court decision in favor of the Company with its definitive judgment. Thus, the case was finalized in favor of the Company, the assessment of the SCT for the year 2011 was structured within the scope of Law No. 6736 and 47,534 TL overpaid amount was returned to the Company in 2021 by deduction from the debts of the Company to the State. On the other hand, upon the favorable decision taken in this case, a lawsuit was filed for the cancellation of the tacit rejection of the restructure request of the SCT assessment with tax penalty for the period 2011 within the scope of Law No. 6736 and request of collection of 47,405 TL principal receivable and 36,000 TL damage accrued with a deferment interest until the collection date. The Court partially accepted the case; and decided to cancel the tacit rejection act for the 47,269 TL part, and to return this amount to the Company together with the interest to be calculated at the deferred interest rate determined in accordance with the Law No. 6183 as of the collection date. The parties appealed the decision before Regional Administrative Court regarding the parts against them. In the cases regarding the cancellation of the SCT assessment for the year 2011, Council of State accepted the appeal and decided to reverse the first instance court decisions in favor of the Company, on the ground that; in the case filed for the cancellation of the rejection act regarding the request to restructure the cases filed for the year 2011, the court decided in favor of the Company and since the mentioned case will affect these cases, finalization of the respective decision should be waited. The Large Taxpayers Office applied for the correction of the decisions. The Company replied to application for the correction of the decisions. 20.3 Turkcell’s Contingent Assets and Liabilities (cont’d) Disputes on Special Communication Tax and Value Added Tax (cont’d) SCT Investigation of 2011 (cont’d) The Company replied to application for the correction of the decisions. The Council of State, rejected the correction of decision requests of the Large Taxpayers Office, in favor of the Company. In 2021, The Court decided there is no need to make ruling regarding the essence of the cases, due to the fact that the amount of the SCT assessment for the year 2011, which are the subject of the lawsuit, was structured within the scope of the Law No. 6736. Disputes regarding the Law on the Protection of Competition The investigation initiated by the Competition Board with respect to the practices of the Company regarding the distributors and their dealers in the distribution network. As a result of the investigation the Competition Board rejected the claims that Turkcell determined the resale price. But with the same decision, The Competition Board decided to apply administrative fine on the Company amounting to 91,942 TL, on the ground that the Company forced its sub dealers to actual exclusivity. The Company filed a lawsuit on 8 December 2011 for the stay of execution and cancellation of the aforementioned Board decisions regarding the parts against itself. The Court rejected the case The Company appealed the decision, but the Council of State Plenary Session of the Chambers for Administrative Cases decided to approve the first instance court’s decision. The Company made an individual application to the Constitutional Court, against the respective decision within due time. The Constitutional Court process is pending. Also, the Large Taxpayers Office issued a payment order regarding the aforementioned administrative fine. The Company has not made any payments and filed a lawsuit for the stay of execution and cancellation of the payment order. The Court accepted the case. The Large Taxpayers Office appealed the decision. As a result of the appeal process, due to the reverse decision of the Council of State about the first instance court decision, the case file was sent to the first instance court. The Court rejected the case. The Company appealed the decision. The appeal process is pending. 47,780 TL part of the administrative fine amounting to 91,942 TL has been deducted from the receivables that the Company has earned in the case of cancellation of the application for restructuring the 2011 SCT assessment within the scope of Law No. 6736 in 2021. The remaining 44,162 TL part of the administrative fine was paid in April 2022 upon the request of the administration. Three private companies filed a lawsuits against the Company in relation with this case claiming in total of 112,084 TL 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. Among these cases, in the case filed for the compensation of total 110,484 TL material damages together with compensation amounting to three times of the damage and interest, the court decided to reject the case in favor of the Company, at the hearing on 12 June 2019. The plaintiff appealed the case before Regional Court of Justice. The Regional Court of Justice decided to revoke the decision of the first instance court, stating that a new decision should be made after the procedural actions within the scope of the file were re-executed and the expert report was received. The expert report has been submitted to its file, and the Company has submitted its statements and objections regarding the report in due time. In accordance with our objections, The Court decided to obtain an expert report from a new expert committee, mentioning that there was a clear contradiction between the expert reports in the case. The expert report within this scope has been submitted to its file, and the Company has submitted its statements and objections regarding the report in due time. 314 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 72 Translated into English from the report originally issued in Turkish 73 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 315 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d) 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d) 20.3 Turkcell’s Contingent Assets and Liabilities (cont’d) 20.3 Turkcell’s Contingent Assets and Liabilities (cont’d) Disputes regarding the Law on the Protection of Competition (cont’d) BTK – Investigation Regarding the R&D Obligations (Period of 2013-2016) During the hearing of the case dated 22 June 2022, the court partially accepted the case and ruled reimbursement of 215,555 TL (three times of the actual damage of 71,851 TL loss pursuant to the Act on Protection of Competition, including 40,600 TL previous year loss, 14,335 TL fixed asset loss, 14,163 TL leasing, exchange difference and financing loss, and 2,751 TL profit loss) together with the discount interest TL applicable from the date of the case to Demirören Dağıtım Satış Pazarlama Matbaacılık ve Tahsilat Sistemleri A.Ş, June 2012, and partially rejected the case for the remaining part. The reasoned decision notified to the Company. Demirören made the decision the subject of enforcement proceedings. Turkcell appealed the decision before Regional Court of Justice and has suspended the execution proceedings until the appeal proceedings are concluded by submitting a letter of guarantee to the file. Also Demirören appealed the decision before Regional Court of Justice and the Company replied this appeal in due time. An application for complaint has been filed by company with the request for cancellation of the enforcement order and the enforcement proceedings initiated by Demirören. The court decided to accept company's complaint and cancelled the interest charge of 34,142 TL requested in the enforcement order. As a result of the appeal examination made by the Regional Court of Appeal, Turkcell's appeal request was accepted and the decision of the first instance court was revoked. The file was returned to the first instance court for a re-decision within the scope of the removal decision, and the appeal request of Demirören were not examined at this stage. Among these cases, in the case filed for the compensation of total 500 TL material damages together with compensation amounting to three times of the damage and interest, the expert report has been submitted to its file, and the Company has submitted its statements and objections regarding the report in due time. In accordance with our objections, The Court decided to obtain an expert report from a new expert committee. The other case is pending. On the other hand, a lawsuit was filed by a third party, for the cancellation of the part of the aforementioned Competition Board decision, regarding the rejection of the claims that the Company determined the resale price. The Council of State cancelled this part of the aforementioned Competition Board decision. Thereafter Competition Board launched a new investigation and as a result of it the Competition Board decided to apply administrative fine amounting to 91,942 TL on the Company. The Company has taken all legal actions by requesting the cancellation of the aforementioned decision and its withdrawal by the Competition Authority. The Competition Authority accepted some of the objections of the Company and reduced the administrative fine to 61,294 TL with its decision. The aforementioned fine that amount of 61,294 TL was paid with twenty five percent discount on 9 April 2020, in the amount of 45,971 TL. Then, a lawsuit was filed on 10 April 2020 for cancellation of the aforementioned administrative fine. The hearing was held on 19 January 2021 in this case. The Court rejected the case. The Company appealed the case before Regional Administrative Court. The Regional Administrative Court rejected the appeal request. The Company appealed the decision in due time. The appeal process is pending. BTK initiated an investigation on the obligation of investing to products in electronic communication network and communication services, partly from suppliers which have a R&D center in Turkey; partly from the products manufactured in Turkey by SME suppliers which are established to develop products or systems in Turkey; and partly from products that are certified to be domestic goods within the framework of the relevant legislation. As a result of the investigation BTK has decided to imposed an administrative fine of 18,031 TL to Turkcell. The administrative fine notified to the Company on 29 January 2021 and was paid on 26 February 2021 as 13,523 TL with taking on the account the early payment discount (1/4). The Company filed totally ten different lawsuits for the cancellation of the administrative fines. The Court rejected the 8 of these cases. The Company appealed the decisions before Regional Administrative Court in due time. Other cases are pending. BTK – Investigation Regarding the R&D Obligations (Period of 2016-2017) For the period of 27 October 2016-27 October 2017; the BTKcarried out an investigation in order to examine whether Our Company fulfills its obligations arising from relevant legislation about R&D Center and SME, and using of Domestic Goods Certified products. As a result of the investigation BTK has decided to imposed an administrative fine of 31,139 TL to the Company. The administrative fine notified to Turkcell on 29 January 2021 and was paid on 26 February 2021 as 23,354 TL with taking on the account the early payment discount (1/4). The Company filed totally seven different lawsuits for the cancellation of the administrative fines. The Court rejected the four of these cases. The Company appealed the decisions before Regional Administrative Court in due time. Other cases are pending. BTK – Investigation on 3G and 4.5G Service Quality Obligations BTK initiated an investigation to examine whether the 2018 Q4 – 2019 Q3 term notifications meet the criteria and target values defined in the service quality legislation and whether or not our obligations about the service quality criteria which is set in the IMT Certificate of Authority have been fulfilled. As a result of the investigation BTK has decided to impose an administrative fine of 3,622 TL to Turkcell. The administrative fine notified to the Company on 20 January 2022 and was paid on 17 March 2022 as 2,716 TL with taking on the account the early payment discount (1/4). After notification of the Board Decision to the Company, the Company applied to BTK with the demand of withdraw of the Board Decision. The application of the Company was tacitly rejected by BTK. The Company filed five separate lawsuits in total for the cancellation of the related transactions and administrative fines. The cases are pending. BTK – Inspection on Service Quality (2020 H2) BTK initiated an investigation due to exceeding the target value determined for “Call Failure Rate” and “Call Blocking Rate” criteria. As a result of the investigation BTK has decided to impose an administrative fine of 568 TL to the Company. The administrative fine notified to the Company on 20 January 2022 and was paid on 17 March 2022 as TL 426 with taking on the account the early payment discount (1/4). After notification of the Board Decision to the Company, the Company applied to BTK with the demand of withdraw of the Board Decision. The application of the Company was tacitly rejected by BTK. The Company filed a lawsuit for the cancellation of the related transaction and administrative fine. The case is pending. 316 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 74 Translated into English from the report originally issued in Turkish 75 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 317 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d) 20 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d) 20.3 Turkcell’s Contingent Assets and Liabilities (cont’d) BTK – Investigation of 3G and 4,5G Coverage Obligations (cont’d) As a result of the investigation initiated to audit our 3N coverage area obligations determined in accordance with Article 6 of the Concession Agreement titled "Coverage liability" and the relevant legislation, ii) audit our 4.5N coverage obligations for highways, high-speed train lines and tunnels over 1 (one) kilometer long, which we are obliged to cover within the framework of the 4.5N Authorization Certificate and the relevant legislation; BTK has decided to impose an administrative fine of 1,459 TL. The fine, which was notified to the Company on 2 September 2022, was paid as 1,094 TL (1/4 discounted) on 27 October 2022. An application has been made to the BTK for the revocation of the decision. The application was tacitly rejected by the BTK by not responding within 30 days. BTK – Directory Assistance Service Investigation As a result of the investigation initiated in order to inspect the compliance of our Company’s directory assistance services with the relevant legislation, BTK has decided to impose an administrative fine of 1,250 TL on the Company. The fine, which was notified to the Company on 28 July 2022, was paid as 938 TL (1/4 discounted) on 23 September 2022 by taking advantage of the early payment discount. An application was made to the BTK for the revocation of the decision and tacitly rejected by BTK. The Company filed a lawsuit for the cancellation of the related transaction and administrative fine. BTK – Refunds Investigation As a result of the investigation initiated to examine the compliance of the activities carried out within the scope of the Board Decisions dated 01.03.2018 and numbered 2018/DK-THD/58(Board Decision on Refunds to Subscribers), dated 12.04.2018 and numbered 2018/DK-THD/116(Refund/Use of Remaining Amount on Prepaid Lines) and dated 16.04.2018 and numbered 2018/DK-THD/123(Transferring Non-refundable Amounts on Prepaid Lines as Universal Service Contribution), (i) The BTK has decided that the unpaid 412 TL will be transferred to the Ministry, along with the late fee from 14 April 2020 and inform the BTK about this transfer. (ii) The BTK has decided to transfer the 161 TL that could not be refunded to subscribers regarding the period between 27.04.2017-31.05.2018, which were not fully paid to the Ministry. The BTK has also decided to transfer the refund amounts related to the period between 01.04.2010-27.04.2017 -along with the late fee from 28 July 2020- and to inform the BTK about this matter. (iii) The BTK has decided to impose an administrative fine of 5,680 TL in total. The fine, which was notified to the Company l on 2 January 2023, was paid as 4,260 TL (1/4 discounted) on 31 January 2023 by taking advantage of the early payment discount. Additionally, an application (İYUK 11) will be made to the BTK with request for re-evalutaion and revocation of the decison. 318 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 76 20.3 Turkcell’s Contingent Assets and Liabilities (cont’d) BTK – Sub-Agency/Dealership Investigation As a result of examinations carried out by the BTK due to large number of complaints from consumers who were victimized by being called illegally, the BTK started an investigation to determine whether sub-dealers were used. As a result of the investigation, the BTK decided to impose a 894 TL administrative fine on Our Company. The fine, which was notified to the Company on 26 January 2023, is planned to be paid as 625 TL (1/4 discounted) on 24 February 2023 by taking advantage of the early payment discount. Additionally, an application (İYUK 11) will be made to the BTK with request for re-evalutaion and revocation of the decison. BTK – Fizy Service Investigation The BTK initiated an investigation to examine the «Fizy» Service, in the scope of service delivery, the information given to the consumers, the purchasing methods and the complaints selected as examples. As a result of the investigation; (i) the BTK has decided to impose an administrative fine of 1,682 TL on Our Company, (ii) the BTK has decided to give a warning to Our Company due to the implementation of the double opt-out method in the cancellation process of consumers, (iii) the BTK has also decided that the additional amounts reflected to subscribers due to the aforementioned violations will be refunded to consumers within the framework of the relevant legislation. The fine, which was notified to the Company on 26 January 2023, is planned to be paid as 1,262 TL (1/4 discounted) on 24 February 2023 by taking advantage of the early payment discount. Additionally, an application (İYUK 11) will be made to the BTK with request for re- evalutaion and revocation of the decison. Other ongoing lawsuits and tax investigations Probability of an outflow of resources embodying economic benefits for 2018 and 2019 fiscal years with regards to notification of Information and Communication Technologies Authority for radio fee related to 2018 fiscal year was considered by the Company management. In this respect, 128,429 TL was paid in November 2019 by reserving our right to take legal actions and legal actions were taken for 2018 fiscal year. The lawsuits are pending. On the other hand, additional 13,465 TL for 2018/December was paid with reservation on 29 January 2021 with regards to notification of Information and Communication Technologies Authority for the same reason. On the other hand, mobile payment services provided by the Company Odeme were investigated within the scope of the Law No. 6493 and secondary legislation issued pursuant to this Law. As a result of the investigation, an administrative fine was imposed on the Company Odeme in the amount of 18,763 TL. the Company Odeme filed a lawsuit for the cancellation of the aforementioned administrative fine. The hearing was held on 30 December 2020 in this case. The Court decided to accept the case in favor of the Company and cancelled the administrative fine subject to the case. The defendant appealed the decision before the Regional Administrative Court. The Company replied this appeal request in due time. The appeal process is pending. While this case was ongoing, the Tax Office sent a payment order for collection of the aforementioned administrative fine. the Company Odeme filed a lawsuit for the cancellation of the payment order. The Court accepted the case and cancelled the payment order. Tax office appealed the decision before the Regional Administrative Court. The Company replied this appeal request in due time. The Regional Administrative Court, rejected the appeal request of the Tax Office in favor of the Company. The defendant appealed the decision before the Council of State. The Company replied this request in due time. The appeal process is pending. Based on the management opinion, an outflow of resources embodying economic benefits is deemed as probable on some of the aforementioned lawsuits and investigations, thus 4,629 TL provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2022 (31 December 2021: 53,603 TL) Translated into English from the report originally issued in Turkish 77 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 319 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 21 COMMITMENTS (a) Bank loans and guarantees given: Collaterals, pledges and mortgages (“CPM”) given by the Group as of 31 December 2022 and 31 December 2021 are as follows: A. CPM’s given in the behalf of own Company Collateral Pledge Mortgages B. CPM’s given on behalf of the fully consolidated subsidiaries Collateral Pledge Mortgages C. CPM’s given on behalf of third parties or ordinary course of business Collateral Pledge Mortgages D. Total amount of other CPM’s given i. Total amount of CPM’s given on behalf of the parent Collateral Pledge Mortgages ii.Total amount of CPM’s given on behalf of the Group companies which are not in scope of B and C Collateral Pledge Mortgages iii.Total amount of CPM’s given on behalf of third parties which are not in scope of C Collateral Pledge Mortgages Total CPM TL Equivalents 5,871,529 5,871,529 - - 3,204,246 3,204,246 - - 31 December 2022 TL 3,102,872 3,102,872 - - USD 14,628 14,628 - - EUR UAH 125,159 125,159 - - 208 208 - - 42,025 - 32,028 3,481,128 - - - 42,025 - - 32,028 - - 3,481,128 - - 31 December 2021 TL Equivalents 3,021,743 3,021,743 - - 2,946,257 2,946,257 - - TL 912,672 912,672 - - - - - - USD 17,022 17,022 - - 48,109 48,109 - - EUR UAH 124,751 124,751 - - 213 213 - - 40,020 3,481,643 40,020 - - 3,481,643 - - 748,536 748,536 748,536 - - - 748,536 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 968,046 968,046 - - - - 968,046 - - - 968,046 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9,824,311 - - - 3,851,408 - - - 56,653 - - - 157,187 - - - 3,481,336 - - - 6,936,046 - - - 1,880,718 - - - 65,131 - - - 164,771 - - - 3,481,856 Since there are not any CPM’s mentioned in D item, the ratio to the total equity is not stated. Translated into English from the report originally issued in Turkish 78 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 21 COMMITMENTS (cont’d) (b) Purchase commitments As of 31 December 2022, outstanding purchase commitments with respect to property, plant and equipment, inventory, advertising and sponsorship amount to 3,927,476 TL (31 December 2021: 1,311,359 TL). Payments for these commitments will be made within 4 years. BeST has an investment commitment covers the years 2022-2032 with a total investment amount of not less than 100,000 USD equivalent to 1,869,830 TL in accordance with the aggreement which signed between the Republic of Belarus, BeST and the Company on 30 November 2022. (c) Resale commitments The Company has resale commitment regarding to reverse repo receivables amounting 3,704,160 TL as of 31 December 2022 (31 December 2021:None). 22 EMPLOYEE BENEFITS Payables related to employee benefits As of 31 December 2022 ve 2021, payables related to employee benefits are as follows: Payables related to social security contributions Accrual personnel salaries Other 31 December 2022 31 December 2021 68,892 67,010 4,728 140,630 226,880 119,347 8,148 354,375 Long-term provisions related to employee benefits The Group’s accounting policies require actuarial valuation methods to estimate employee termination benefits. Provision for employee termination benefits is calculated annually by independent actuaries using the projected unit credit method and by estimating the present value of future probable obligation of the Group and its subsidiaries in Turkey arising from retirement of employees and recognized in financial statements. Discount rate used for calculating employee termination benefit as of 31 December 2022 is 0.6% (31 December 2021: 2.9%). The main assumption is that the ceiling obligation set for each annual service will increase in proportion to inflation. Thus, the discount rate applied reflects the real rate after adjusting for the expected effects of inflation. As of 31 December 2022, the Group's employee termination benefit liability is calculated at 15.4 TL due to the expectation that the ceiling price increases in the coming years will exceed inflation (31 December 2021: 8.2 TL). As of 31 December 2022 and 2021, the long-term provision for employee benefits includes provisions for employee termination benefit and unused vacation. The provision for unused vacation as of 31 December 2022 and 2021 is 199,275 TL and 100,495 TL, respectively. 320 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 79 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 321 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 22 EMPLOYEE BENEFITS (cont’d) Long-term provisions related to employee benefits (cont’d) Movements in provision for employee termination benefits are as follows: Opening balance Additions Actuarial loss/(gain) Payments Discount expense Acquisiton through business combinations Closing balance 31 December 2022 31 December 2021 301,459 62,749 163,588 (51,138) 37,383 77 514,118 514,118 87,258 950,686 (57,909) 96,603 - 1,590,756 As of 31 December 2022 and 2021, the sensitivity analysis regarding to actuarial assumptions made during the calculation of employee termination benefit provision is as follows: 23 LIABILITIES ARISING FROM CUSTOMER CONTRACTS Short-term Liabilities Arising from Goods and Service Sales Contracts Contract liabilities from sale of goods and services contracts 31 December 2022 706,046 31 December 2021 459,289 Long-term Liabilities Arising from Goods and Service Sales Contracts Contract liabilities from sale of goods and services contracts 31 December 2022 261,328 31 December 2021 170,445 Contract liabilities primarily consist of right of use sold but not used by prepaid subscribers. Revenue recognized in the current reporting period relating to carried forward contract liabilities is 459,289 TL (2021: 315,070 TL). As of 31 December 2022, the details of unsatisfied contract liabilities are as follows: 31 December 2022 Sensivity Level Change in assumption Impact on provision for employee termination benefits 31 December 2021 Sensivity Level Change in assumption Impact on provision for employee termination benefits Discount Rate Inflation Rate 1% increase 1% decrease 1% increase 1% decrease (15.6%) (248,158) (15.4%) (244,976) 18.9% 300,653 19.0% 302,244 Discount Rate Inflation Rate Telecommunication income Device income Total 1% increase 1% decrease 1% increase 1% decrease (13.8%) (70,948) (13.4%) (68,892) 16.5% 84,829 16.3% 83,801 31 December 2022 31 December 2021 1,485,719 1,061,141 2,546,860 1,844,463 849,574 2,694,037 Management expects that 48% of the transaction price allocated to the unsatisfied contracts as of 31 December 2022 will be recognized as revenue during 2023 and the remaining 52% will be recognized in next years. 24 EXPENSES BY NATURE Depreciation and amortization (*) Personnel expenses Cost of goods sold Treasury share Interconnection and termination expenses Radio expenses Frequency expenses Marketing expenses Transmission expenses Internet expenses Roaming expenses Universal service fund Cost of revenue from financial services (**) Selling expense Other 31 December 2022 (9,478,012) (5,572,800) (5,651,973) (4,084,897) (3,265,242) (2,965,792) (1,497,117) (1,031,669) (809,970) (643,275) (610,932) (568,470) (565,229) (229,204) (4,033,158) (41,007,740) 31 December 2021 (7,291,913) (3,482,663) (4,377,966) (2,816,508) (2,608,009) (1,258,037) (1,032,410) (733,381) (565,820) (353,386) (340,282) (388,817) (223,050) (163,974) (2,291,264) (27,927,480) (*) As at 31 December 2022, depreciation and amortization expenses include depreciation and amortization expenses related to the financial services amounting to 74,630 TL (31 December 2021: 66,798 TL). (**) As at 31 December 2021, cost of revenue from financial services includes employee benefit expenses related to the financial services amounting to 71,133 TL (31 December 2021: 31,722 TL). The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. Defined Contribution Plans Obligations for contribution to defined contribution plans are recognized as an expense in the consolidated statement of profit or loss as incurred. The Group is obliged to contribute a certain percentage of personnel wages to pension plans. The Group incurred 31,399 TL and 20,004 TL in relation to the defined contribution retirement plan for the years ended 31 December 2022 and 2021 respectively. Share Based Payments The Group has a share performance based payment plan (cash settled incentive plan) in order to build a common interest with its shareholders, support sustainable success, and ensure loyalty of key employees. The KPIs of the plan are; the total shareholder return in excess of weighted average cost of capital (WACC), and ranking of total shareholder return in comparison with BIST-30 and peer group. Bonus amount is determined according to these evaluations, and it is distributed over a three-year payment plan. As of 31 December 2022 and 2021, the Group has not recognized any expenses regarding this plan. 322 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 80 Translated into English from the report originally issued in Turkish 81 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 323 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 25 OTHER ASSETS AND LIABILITIES Other current assets As of 31 December 2022 and 2021, the details of other current assets are as follows: VAT receivable Due from personnel Other Other long-term liabilities 31 December 2022 31 December 2021 90,645 18,589 939 110,173 585,060 24,790 1,382 611,232 As of 31 December 2022 and 2021, the details of other long-term liabilities are as follows: Liabilities to BeST investment agreement (*) Consideration payable in relation to acquisition of BeST (**) Consideration payable in relation to the acquisition of Boyut Enerji (Note 3) Other 31 December 2022 31 December 2021 663,338 - - 758,261 3,275 - 666,613 3,275 2,522 764,058 (*) The transfer of ownership of BeST's 20% share in the Republic of Belarus was completed on 9 December 2022. On 30 November 2022, an agreement was signed between the Republic of Belarus, BeST and the Company for the development of telecommunications infrastructure, which covers the years 2022-2032 and involves a 100.000 USD obligation to be paid over a period of 10 years based on a minimum of 50% of the net profit earned by BeST, with the entire amount being paid by the Company to the Republic of Belarus if the specified amount is not reached at the end of the 10-year period. The liability recorded in the consolidated financial statements for the BeST investment agreement reflects the amortized cost value of future payments at the balance sheet date. The total future payments to be made is 100,000 USD (equivalent to 1,869,830 TL as of 31 December 2022) and will be paid depending on the financial performance of BeST. A discount rate of 14.99% was used in the amortized cost calculation. BeST expects the payment to be made in installments between 2027- 2031. (**) Consideration payable (conditional consideration) in relation to acquisition of BeST in 2008 was recognized at fair value within the scope of TFRS 3. The assumptions used in the fair value calculation are explained in Note 38. On 30 November 2022, the relevant contract was canceled by mutual agreement. and an investment agreement was signed instead of the relevant contract. 324 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 82 26 PAID-IN CAPITAL, LEGAL RESERVES VE OTHER EQUITY ITEMS 26.1 Paid-in capital As at 31 December 2022, paid-in capital represents 2,200,000,000 authorized, issued and fully paid shares with a par value of 1 TL each (31 December 2021: 2,200,000,000 and 1 TL). The Company’s issued capital is 2,200,000 TL which is authorized share capital. Shareholders’ structure is as follows: 31 December 2022 31 December 2021 Public Share TVF BTIH IMTIS Holdings Other Total Inflation adjustment to share capital Inflation adjusted capital Share ratio Share amount Share ratio Share amount (%) 53.95 26.2 19.8 0.05 TL 1,187,004 576,400 435,600 996 (%) 53.95 26.2 19.8 0.05 TL 1,187,004 576,400 435,600 996 100 2,200,000 100 2,200,000 (52,352) 2,147,648 (52,352) 2,147,648 As at 31 December 2022, total number of shares pledged as security is 995,509 (2021: 995,509). 26.2 Treasury shares The Company purchased 816,290 TL of its shares on-market with prices ranging from 12.09 to 12.35 TL in accordance with the share buyback decisions made on 27 July 2016 and 30 January 2017. During 2022, there are not any shares buyback transactions executed. (2021: None). Treasury shares are recognized by deducting from equity. 26.3 Share premiums Share premiums represent the cash inflows obtained as a result of selling the shares at market prices. These premiums are recognized under equity and are not subject to distribution. However it can be used for future capital increases. 26.4 Reserves Legal Reserves The legal reserves consist of initial and secondary reserves in accordance with the TCC. The TCC stipulates that the initial legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of a company’s paid-in capital. The secondary legal reserve is appropriated at the rate of 10% per annum of all cash dividends in excess of 5% of the paid-in capital to make dividend distribution in accordance with the CMB’s announcement, however the legal records it is appropriated at the rate of 11% per annum of all cash dividends in excess of 5% of the paid-in capital in accordance with the legal records. The initial and secondary legal reserves can only be used to offset losses and are not available for any other usage unless they exceed 50% of paid-in capital. As at 31 December 2022, the Company’s reserves consist of legal reserves. The total amount of the Company’s legal reserves is 3,948,937 TL(31 December 2021: 3,612,388 TL). Translated into English from the report originally issued in Turkish 83 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 325 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 26 PAID-IN CAPITAL, LEGAL RESERVES VE OTHER EQUITY ITEMS (cont’d) 27 REVENUE AND COST OF REVENUE (cont’d) 26.5 Dividends 27.1 Revenue (cont’d) At the General Assembly held on 16 June 2022, it was decided to distribute gross 1,257,775 TL part of the distributable profit of the Company for the year ended 31 December 2021 to the shareholders on 26 July 2022 in cash, as 0.5717 gross for each share with a nominal value of 1 TL. The amount was paid to the shareholders on the relevant date (31 December 2021: 2,585,787 TL). 26.6 Non-controlling interests The portion of subsidiaries' net assets which are not directly or indirectly controlled by the parent company, are classified under the "Non-controlling interests" in the consolidated statement of financial position. The portion of subsidiaries' net income or loss that belong to non-controlling interests are classified under the "Non-controlling interests" in the consolidated statement of profit or loss. . TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 27 REVENUE AND COST OF REVENUE 27.1 Revenue Revenue for the year ended 31 December 2022 and 2021 is as follows: Turkcell Turkey Turkcell International Techfin Other Intersegment Eliminations Consolidated 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Telecommunication services Equipment related revenue Revenue from financial services Call center revenue Other sales revenue Total 38,403,988 2,158,917 - 25,791,341 1,257,639 - 6,007,115 135,994 - 3,479,631 120,113 - - - 1,849,132 - - 1,075,742 - 3,570,404 - - 2,832,180 - (90,607) (20,211) (66,525) (49,219) (140,624) (61,846) 88,111 200,054 40,851,070 46,268 128,295 27,223,543 46,262 164,232 6,353,603 48,060 102,277 3,750,081 - - 1,849,132 - - 1,075,742 762,524 2,709,561 7,042,489 540,553 1,557,286 4,930,019 (99,520) (1,866,845) (2,217,807) (65,313) (815,940) (1,058,843) 44,320,496 5,845,104 1,708,508 797,377 1,207,002 53,878,487 29,204,447 4,160,713 1,013,896 569,568 971,918 35,920,542 Translated into English from the report originally issued in Turkish 85 Telecommunication Services At a point in time Over time Equipment Related At a point in time Over time Revenue from financial operations At a point in time Over time Call Center At a point in time Over time Other At a point in time Over time Total At a point in time Over time Telecommunication Services At a point in time Over time Equipment Related At a point in time Over time Revenue from financial operations At a point in time Over time Call Center At a point in time Over time Other At a point in time Over time Total At a point in time Over time Turkcell Turkey 38,403,988 291,598 38,112,390 2,158,917 1,898,025 260,892 - - - 88,111 - 88,111 200,054 3,281 196,773 40,851,070 2,192,904 38,658,166 Turkcell Turkey 25,791,341 229,120 25,562,221 1,257,639 1,035,373 222,266 - - - 46,268 - 46,268 128,295 6,013 122,282 27,223,543 1,270,506 25,953,037 Turkcell International 6,007,115 47,884 5,959,231 135,994 135,994 - - - - 46,262 - 46,262 164,232 4,077 160,155 6,353,603 187,955 6,165,648 Turkcell International 3,479,631 26,085 3,453,546 120,113 120,113 - - - - 48,060 - 48,060 102,277 351 101,926 3,750,081 146,549 3,603,532 31 December 2022 Techfin - - - Other - - - Intersegment eliminations (90,607) (122) (90,485) (20,211) (20,211) (140,624) (140,619) (5) (99,520) - (99,520) (1,866,845) (6,160) (1,860,685) (2,217,807) (167,112) (2,050,695) Consolidated 44,320,496 339,360 43,981,136 5,845,104 - 5,584,212 260,892 1,708,508 737,567 970,941 797,377 - 797,377 1,207,002 55,800 1,151,202 53,878,487 6,716,939 47,161,548 3,570,404 3,570,404 - - - - - - - 762,524 - 762,524 2,709,561 54,602 2,654,959 7,042,489 3,625,006 3,417,483 31 December 2021 Other - - - 2,832,180 2,832,180 Intersegment eliminations (66,525) (1) (66,524) (49,219) (49,219) - - - - 540,553 - 540,553 1,557,286 46,625 1,510,661 4,930,019 2,878,805 2,051,214 (61,846) (61,846) (65,313) - (65,313) (815,940) (2,953) (812,987) (1,058,843) (114,019) (944,824) - - Consolidated 29,204,447 255,204 28,949,243 4,160,713 3,938,447 222,266 1,013,896 379,558 634,338 569,568 - 569,568 971,918 50,036 921,882 35,920,542 4,623,245 31,297,297 1,849,132 878,186 970,946 - - - - - - 1,849,132 878,186 970,946 Techfin - - - - - - 1,075,742 441,404 634,338 - - - - - - 1,075,742 441,404 634,338 326 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 84 Translated into English from the report originally issued in Turkish 86 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 327 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 27 REVENUE AND COST OF REVENUE (cont’d) 28 GENERAL ADMINISTRATIVE EXPENSES AND MARKETING EXPENSES (cont’d) 27.2 Cost of revenue Cost of revenue the year ended for 31 December 2022 and 2021 is as follows: 28.2 Marketing Expenses Marketing, sales and delivery expenses at the end of the year 31 December 2022 and 2021 as follows: Depreciation and amortization Cost of goods sold Treasury share Personnel expenses Interconnection and termination expenses Radio expenses Frequency expenses Transmission expenses Internet expenses Roaming expenses Universal service fund Cost of revenue from financial services Other 31 December 2022 (9,478,012) (5,651,973) (4,084,897) (3,293,808) (3,265,242) (2,965,792) (1,497,117) (809,970) (643,275) (610,932) (568,470) (565,229) (3,353,925) (36,788,642) 31 December 2021 (7,291,913) (4,377,966) (2,816,508) (2,085,343) (2,608,009) (1,258,037) (1,032,410) (565,820) (353,386) (340,282) (388,817) (223,050) (1,888,433) (25,229,974) As at 31 December 2022, depreciation and amortization expenses include depreciation and amortization expenses related to the financial services amounting to 74,630 TL (31 December 2021: 66,798 TL). Personnel expenses Marketing expenses Selling expenses Other 31 December 2022 31 December 2021 (779,470) (733,381) (163,974) (101,658) (1,778,483) (1,255,283) (1,031,669) (229,204) (183,921) (2,700,077) 29 OTHER OPERATING INCOME / EXPENSES 29.1 Other Operating Income Other operating income at the end of the year 31 December 2022 and 2021 as follows: Foreign exchange gain, net Interest income from time deposits with maturity of less than 3 months Interest income from overdue payments Other 31 December 2022 5,913,287 31 December 2021 6,097,168 1,219,162 233,440 196,104 7,561,993 658,482 186,700 135,345 7,077,695 As at 31 December 2022, cost of revenue from financial services includes employee benefit expenses related to the financial services amounting to 71,133 TL (31 December 2021: 31,722 TL). 29.2 Other Operating Expenses 28 GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES 28.1 General Administrative Expenses General administrative expenses at the end of the year 31 December 2022 and 2021 as follows: Personnel expenses Consultancy expenses Service expenses Maintenance and repair expenses Collection expenses Travel and entertainment expenses Other 31 December 2022 31 December 2021 (617,850) (88,534) (44,971) (27,419) (38,224) (17,938) (84,087) (919,023) (1,023,709) (121,307) (83,805) (47,766) (46,786) (34,735) (160,913) (1,519,021) Other operating expenses at the end of the year 31 December 2022 and 2021 as follows: Revaulation tax expense (*) Donation expenses Litigation provision and penalty expenses Revaluation of fixed asset dismantling, moving and restoration Discount expenses Restructuring expenses Supplementary contributions to retailers Interest expenses related with legal cases Other 31 December 2022 31 December 2021 (156,577) (89,481) (313,049) (12,083) (47,697) (5,993) (4,492) (542) (38,162) (668,076) (253,945) (152,909) (118,035) (99,055) (34,497) (8,703) (2,510) (148) (91,324) (761,126) (*) It consists of 2% tax expense paid over the value increase resulting from the revaluation of the properties and depreciable economic assets which are registered in statutory books. (Note 32). 328 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 87 Translated into English from the report originally issued in Turkish 88 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 329 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 30 INVESTMENT INCOME 32 INCOME TAXES Fair value difference of financial investments Foreign exchange gain, net Discount income / (expense) on consideration in relation to acquisition of BeST Gain on sales of fixed asset, net Interest income on financial investments Other 31 December 2022 31 December 2021 863,852 395,383 - 234,756 342,380 114,247 53,053 10,975 1,779,890 70,514 109,489 43,086 6,271 464,116 (*) Fair value difference of financial investments mainly consist of fair value difference of currency protected time deposits. 31 FINANCIAL INCOME AND EXPENSES 31.1 Financial Income Financial income at the end of the year 31 December 2022 and 2021 as follows: Fair value gains / (losses) and interest on derivative instruments, net Gain on cash flow hedges reclassified to profit or loss Other interest income 31 December 2022 31 December 2021 - - 210,775 210,775 1,258,961 1,631,491 160,630 3,051,082 31.2 Financial Expenses Financial expenses at the end of the year 31 December 2022 and 2021 as follows: Foreign exchange losses, net (*) Net interest expenses from financial assets and liabilities measured at amortized cost Fair value and interest gain from derivatives instruments, net Gain on cash flow hedges reclassified to profit or loss Other 31 December 2022 (10,143,113) 31 December 2021 (11,870,467) (3,111,003) (319,212) 61,463 (187,946) (13,699,811) (1,198,628) - - (126,618) (13,195,713) (*) Net foreign exchange losses within financial expenses mainly consist of foreign exchange loss from bank borrowings and issued debt instruments as at 31 December 2022. Tax income included in at the end of the period 31 December 2022 and 2021 as follows: Current income tax expense Deferred tax income Total tax income originated from continuing operations. a) Corporate tax 31 December 2022 31 December 2021 (681,513) (530,581) 4,046,681 1,171,697 3,516,100 490,184 The amount of 243,485 TL recognized in current tax liability represents tax liability calculated for the period ended 31 December 2022 less temporary tax payments made during the year (31 December 2021:241,686 TL). Turkish tax regulations does not allow the parent company to prepare tax return over the consolidated financial statements and subsidiaries. Therefore tax provisions reflected int he financial statements calculated seperately for companies included in full consolidation. In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns by the end of the fourth month following the closing of the accounting year to which they relate. Corporate tax payment is made by the end of the month in which the tax return is filed. The tax authorities may, however, examine such returns and the underlying accounting records, and may revise assessments within a five-year period. Advance tax returns are filed on a quarterly basis. In Turkey, the transfer pricing provisions have been stated under 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 out the details of implementation. If a taxpayer enters into transactions regarding the 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. The deduction of 100% of the research and development expenses is allowed when the taxpayers are made these expenditures exclusively for new technology and information researches. On 22 April 2021, a temporary article is added to the Turkey’s Corporate Tax Law No. 5220 which was published in the Official Gazette. The Law increases the corporate tax rate under Corporate Tax Law from the current 20% rate to 25% for the tax year 2021 and to 23% rate for the tax year 2022; the change took effect on the Law’s date of publication. It is expected to continue with 20% afterwards. However, with the publication of the Law No. 7394 in the Official Gazette dated 15 April 2022, banks, consumer finance companies, factoring and financial leasing companies, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies The corporate tax rate for pension companies has been permanently increased to 25%, and this change will be valid for returns to be submitted after 1 July 2022. 330 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 89 Translated into English from the report originally issued in Turkish 90 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 331 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 32 INCOME TAXES (cont’d) a) Corporate tax (cont’d) 32 INCOME TAXES (cont’d) a) Corporate tax (cont’d) 7532 Law on amending the Tax Procedure Law and Corporate Tax Law was enacted on 20 January 2022. It has been decided that the financial statements will not be subject to inflation adjustment in the 2021 and 2022 accounting periods, including the provisional accounting periods, and in the provisional tax periods of the 2023 accounting period, regardless of whether the conditions for the inflation adjustment within the scope of the Repeated Article 298 are met. In line with the Law No. 7352, inflation adjustment will be applied to the financial statements dated 31 December 2023, and the profit/loss difference arising from the inflation adjustment will not be taxed. Dividend payments of Turkish resident corporations to Turkish real persons, foreign corporations and foreign real persons are subject to 10% withholding tax. It is possible to apply reduced withholding tax rate for dividend payments made to abroad, under the scope of provisions of an applicable double taxation treaty. Dividend income of Turkish taxpayers received from other Turkish taxpayers is exempted from corporate tax. However, dividends received from participation shares and stocks of fund and investment partnerships cannot utilize from this exemption. The earnings arising from the sale of founding shares, redeemed shares and priority rights, which the institutions have for at least two full years in their assets are exempted from corporate tax for 75%. The earnings arising from the sale of immovables, which the institutions have for at least two full years in their assets are exempted from corporate tax for 50%. The exempted earnings are transferred to another account in any way other than being added to the capital within five years or withdrawn from the business or taxes not accrued on time due to the exception applied for the part transferred to the head office by limited taxpayer institutions are considered to be lost. The sales must be collected until the end of the second calendar year following the sale. Reconciliation of income tax expense at 31 December 2022 and 2021 are as follows: Reconciliation of tax expense Profit from continuing operations before income tax expense Tax expense calculated over legal tax rate Difference in overseas tax rates Effect of amounts which are not deductible and permanent differences Effect of exemptions (**) Unrecognized deferred tax assets (***) Revaluation effect of tangible and intangible assets (*) Adjustments for current tax of prior years Effect of legal tax rate change on deferred tax Deferred tax on investment in subsidiaries Other Total tax expense 31 December 2022 7,536,134 (1,733,311) 102,512 (242,700) 752,225 (333,765) 4,775,742 6,101 181,878 10,712 (3,294) 3,516,100 31 December 2021 4,541,094 (1,135,274) 16,711 (467,266) 231,817 (17,970) 1,641,145 (5,115) 237,709 (13,514) 1,941 490,184 (*) With the article 52 of the Law No. 7338 published in the Official Gazette on 26 October 2021 Within the scope of the regulation added as the Temporary Article 32 of the Tax Procedure Law No. 213, axpayers who can make revaluation within the scope of the paragraph (Ç) added to the Repeated Article 298 of the same Law can revalue their immovables and other depreciable economic assets (excluding real estate and economic assets subject to the sale-lease-repurchase transaction or the issuance of lease certificates as long as they maintain these qualities) stated in their balance sheets as of the end of the accounting period before the accounting period in which they will revalue for the first time, under the conditions specified in the article. The covered assets will be valued with the D- PPI rate and tax will be paid in 3 installments (at two-month intervals) at the rate of 2% over the value increase amount. For revalued assets, the valuation difference can be depreciated and written off as an expense. Within the scope of the said amendment, deferred tax asset has been recognized in the statement of financial position based on the revaluation records for fixed assets in the legal book, and the deferred tax income related to this asset has been recognized in the consolidated statement of profit or loss (31 December 2021: Revaluation was carried out within the scope of Law No. 7326). Income or corporate taxpayers, who are subject to full liability and keep books on the balance sheet basis (Except for those who make inflation adjustments within the scope of subparagraph (9) of subparagraph (A), regardless of the conditions in subparagraph (1) of the aforementioned paragraph, and those who are allowed to keep their records in a currency other than Turkish currency including Unlimited liability, limited partnerships and ordinary partnerships), can revalue their depreciable economic assets (except for those that are subject to a sell-lease-repurchase transaction or issuance of lease certificates, as long as they maintain these qualifications) recognized in their balance sheets and the depreciation recognized in the liabilities of their balance sheets, in accordance with the conditions specified in the article, at the end of the accounting periods in which the conditions for making inflation adjustments are not met. In revaluation, the values of economic assets and their depreciation, which are determined in accordance with the valuation provisions of this Law and included in the statutory books as of the end of the accounting period in which the valuation will be made, are taken into account. The values after revaluation of economic assets are calculated by multiplying the values determined in this way and their depreciation with the revaluation rate of the year in which the revaluation will be made. Taxpayers who subject their economic assets to revaluation within the scope of this article continue to depreciate these assets over the values reached after the revaluation.Within the scope of the said amendment, deferred tax asset has been recognized in the statement of financial position based on the revaluation records for fixed assets in the statutoy book, and the deferred tax income related to this asset has been recognized in the consolidated statement of profit or loss. (**) Discounts and exceptions for the period of 31 December 2022, mainly consist of R&D discounts. (***) Mainly comprises of unused tax losses for which no deferred tax asset has been recognized. Income tax relating to each component of other comprehensive income: 31 December 2022 Foreign currency translation differences Change in cash flow hedge reserve Change in cost of hedging reserve Fair value reserve Hedges of net investments in foreign operations Remeasurements of employee termination benefits 31 December 2021 Foreign currency translation differences Change in cash flow hedge reserve Change in cost of hedging reserve Fair value reserve Hedges of net investments in foreign operations Remeasurements of employee termination benefits Other comprehensive income before tax 378,459 364,888 329,403 (40,116) (1,335,580) (950,686) (1,253,632) Other comprehensive income before tax 2,410,295 197,211 (1,185,074) (65,494) (1,558,374) (163,588) (365,024) Tax effect (538,429) (84,237) (65,881) 8,023 267,116 191,104 (222,304) Other comprehensive income after tax (159,970) 280,651 263,522 (32,093) (1,068,464) (759,582) (1,475,936) Tax effect (861,143) (55,912) 237,015 13,099 311,675 32,276 (322,990) Other comprehensive income after tax 1,549,152 141,299 (948,059) (52,395) (1,246,699) (131,312) (688,014) 332 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 91 Translated into English from the report originally issued in Turkish 92 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 333 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 32 INCOME TAXES (cont’d) b) Deferred tax 32 INCOME TAXES (cont’d) b) Deferred tax (cont’d) Deferred tax liability or assets are determined by calculating the tax effects of temporary differences between the values of assets and liabilities shown in the financial statements and the amounts taken into account in the calculation of legal tax base, according to the balance sheet method. Deferred tax liability or assets are reflected in the consolidated financial statements by taking into account the tax rates that are expected to be valid in the future periods when the temporary differences will disappear. The Group considers factors such as developments in the sector in which it operates, future taxable profit estimations, macroeconomics and political situation in Turkey and the countries in which its subsidiaries are located, and/or international macroeconomics and political situation that may affect the Group, while reflecting deferred tax assets in the financial statements. Deferred tax assets and liabilities at 31 December 2022 and 2021 are attributable to the following: Depreciation and capitalization difference related with property, plant and equipment and intangible assets Subsidiaries Derivative instruments Reserve for employee termination benefits and provisions Tax losses carried forward Tax exemptions Other assets and liabilities (*) Deferred tax assets/ (liabilities) Offsetting Net deferred tax assets/ (liabilities) Deferred Tax Assets Deferred Tax Liabilities 31 December 2022 31 December 2021 31 December 2022 31 December 2021 Net Deferred Tax Assets/Lia. 31 December 2021 31 December 2022 2,324,218 412,728 (800,510) (953,814) 1,523,708 (541,086) - 29,967 - 5,922 (98,257) (547,459) - (520,298) (98,257) (517,492) - (514,376) 455,263 235,581 (7,765) (19,295) 447,498 216,286 2,313,498 97,466 1,075,658 6,296,070 1,155,781 62,692 596,974 2,469,678 (1,304,846) 4,991,224 (670,066) 1,799,612 - - (100,420) - - (105,213) (1,554,681) 1,304,846 (1,598,620) 670,066 (249,835) (928,554) 2,313,498 97,466 975,238 4,741,389 - 4,741,389 1,155,781 62,692 491,761 871,058 - 871,058 (*) Mainly comprises deferred taxs effects of loans, bonds, prepaid expenses and lease liabilities. Movement in deferred tax assets/(liabilities) for the years ended 31 December 2022 and 2021 were as follows: Opening balance, net Recognized in statement of profit or loss Recognized in statement of other comprehensive income Acquisition through business combinations Exchange differences 31 December 2022 871,058 4,046,681 (222,304) - 45,954 4,741,389 31 December 2021 (501,223) 1,171,697 (322,990) (48,755) 572,329 871,058 As of 31 December 2022, the Group did not recognize deferred tax assets of 7,270,241 TL (31 December 2021: 5,518,647 TL) in respect of tax losses amounting to 1,398,834 TL (31 December 2021: 1,043,849 TL) that can be carried forward against future taxable income. The unused tax losses were incurred mainly by Belarusian Telecom. Unused tax losses will expire at the following dates Expiration 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Indefinite Amount 483,247 826,727 2,903,840 227,219 1,849,040 411,144 - 182,827 227,175 - 159,022 7,270,241 334 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 93 Translated into English from the report originally issued in Turkish 94 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 335 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 33 EARNINGS PER SHARE 34 FINANCIAL INVESTMENTS (cont’d) Profit attributable to owners of the Company Weighted average number of shares: Weighted average number of ordinary shares (*) Earnings per share with a nominal value of 0.001 TL (unshortened full TL) (*) For details of Treasury Shares see Note 26.2. 31 December 2022 31 December 2021 11,053,193 5,031,098 2,183,106,193 2,183,106,193 5.06 2.30 34 FINANCIAL INVESTMENTS The details of financial investments as of 31 December 2022 and 2021 are as follows: 31 December 2022 31 December 2021 Financial investments measured at amortized cost - Time deposits with maturity more than three months Financial assets measured at fair value through profit or loss - Currency protected time deposit (**) - Investment funds (***) Financial assets measured at fair value through other comprehensive income - Debt securities issued (*) Short Term 748,665 748,665 4,034,897 4,034,897 Long Term - - 258,627 Short Term 4,164 4,164 - Long Term - - - - - 258,627 - - - - - - 1,850,830 1,850,830 4,783,562 2,109,457 51,166 51,166 55,330 1,376,645 1,376,645 1,376,645 (*) Debt securities issued are classified as financial assets at fair value through other comprensive income. (**) Currency-protected time deposit accounts are classified as financial assets at fair value through profit or loss. The Group has converted its foreign currency deposit account amounting to 123,300 USD and 73,300 EUR into “Currency Protected TL Time Deposit Accounts”. Maturity of currency protected time deposit accounts is 1 year. (***) Investment funds mainly include Turkcell GSYF, established by Re-Pie., and its associate and financial assets which is carried at fair value and valuation differences are recognized in profit or loss. The table of fair value of financial investments as of 31 December 2022 and 2021 is as follows: 31 December 2022 31 December 2021 Fair value hierarchy Fair Value Financial assets at fair value through other comprehensive income 1,850,830 1,427,811 Level 1 Financial assets at fair value through other comprehensive income 19,982 Level 1 - Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss 4,034,897 238,645 - - Level 2 Level 3 Total 6,144,354 1,427,811 Valuation technique Pricing models based on quoted market prices at the end of the reporting period, Pricing models based on quoted market prices at the end of the reporting period, Forward exchange rates at the balance sheet date Pricing models based on discounted cash flow As of 31 December 2022, the nominal and fair value amounts of financial assets measured at fair value through other comprehensive income are as follows: Currency EUR EUR EUR USD USD USD USD USD USD USD Total financial invesments Nominal amount 24,000 15,000 5,000 3,700 21,000 18,000 5,000 3,000 1,000 50,000 Fair Value 472,022 279,082 99,975 73,314 391,211 308,358 97,785 55,835 18,540 54,708 1,850,830 Maturity 16 February 2026 8 July 2027 11 April 2023 31 March 2025 14 July 2023 25 March 2027 13 November 2025 25 January 2023 10 August 2024 Indefinite 336 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 95 Translated into English from the report originally issued in Turkish 96 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 337 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 34 FINANCIAL INVESTMENTS (cont’d) 35 DERIVATIVE INSTRUMENTS As of 31 December 2022, the nominal and fair value amounts of financial assets measured at fair value through profit or loss are as follows: The fair value of derivative instruments at 31 December 2022 and 31 December 2021 are as follows: Currency Nominal amount Fair Value TL TL TL TL TL TL Total financial investments 949,475 704,109 701,033 436,793 230,364 185,454 1,236,256 950,130 820,390 511,377 299,793 216,951 4,034,897 Maturity 10 May 2023 27 February 2023 15 August 2023 16 August 2023 11 May 2023 2 October 2023 As of 31 December 2021, the nominal and fair value amounts of financial assets at fair value through other comprehensive income are as follows: Currency EUR EUR TL TL USD USD USD USD USD USD Total financial invesments Nominal amount 1,995 15,189 24,312 24,108 21,000 996 19,824 2,168 25,000 18,470 Fair Value 31,347 216,874 25,583 25,583 286,017 13,479 250,956 27,595 319,874 230,503 1,427,811 Maturity 16 February 2026 8 July 2027 2 March 2022 2 March 2022 14 July 2023 10 August 2024 14 October 2025 26 January 2026 22 June 2026 25 March 2027 Following gains and losses were recognized under other comprehensive income during current year: Gains / (Losses) recognized in other comprehensive income Gain/ (loss) related to Financial investment Gain/ (loss) related to Financial investment, tax effect 31 December 2022 31 December 2021 (40,116) 8,023 (32,093) (65,494) 13,099 (52,395) Held for trading Derivatives used for hedge accounting Total 31 December 2022 31 December 2021 Asset 794,399 1,199,843 1,994,242 Liability 131,074 21,432 152,506 Asset 1,181,740 999,577 2,181,317 Liability - 60,518 60,518 At 31 December 2022, short-term derivative assets of 2,032,416 TL also includes a net accrued interest income of 38,174 TL and the short-term derivative liabilities of 150,923 TL also includes a net accrued interest expense of 1,583 TL. At 31 December 2021, the short-term derivative assets of 2,131,070 TL also includes a net accrued interest expense of 50,247 TL and the short-term derivative liabilities of 71,325 TL also includes a net accrued interest income of 10,807 TL. TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 35 DERIVATIVE INSTRUMENTS (cont’d) Derivatives used for hedge accounting The notional amount and the fair value of derivatives used for hedging contracts at 31 December 2022 are as follows: Currency in original currency Fair value in original currency Fair value Maturity date Hedge ratio 31 December 2022 31 December 2021 Notional value Notional value Participating cross currency swap contracts EUR Contracts EUR Contracts USD Contracts Cross currency swap contracts RMB Contracts Interest rate swap contracts USD Contracts 233,600 50,711 165,478 108,148 120,105 203,017 53,612 560,982 300,200 63,365 206,770 174,747 48,443 523,571 256,943 135,134 235,617 103,857 150,075 (43,319) 939,059 October 2025 April 2026 April 2026 April 2026 April 2026 01:01 01:01 01:01 01:01 01:01 Derivatives used for hedge accounting 1,178,411 Participating cross currency swap contracts amount of 269,624 EUR (2021: 340,220 EUR) includes 1,194,300 TL (2021: 1,170,728 TL) guarantees after the CSA agreement. Translated into English from the report originally issued in Turkish 99 338 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 97 Translated into English from the report originally issued in Turkish 98 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 339 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 35 DERIVATIVE INSTRUMENTS (cont’d) Held for trading The notional amount and the fair value of derivative contracts held for trading at 31 December 2022 are as follows: Currency in original currency Fair value Maturity date in original currency Fair value Maturity date 31 December 2022 31 December 2021 Notional value Notional value Cross currency swap contracts USD Contracts RMB Contracts EUR Contracts Currency swap contracts USD Contracts EUR Contracts FX swap contracts USD Contracts RMB Contracts Participating cross currency swap contracts USD Contracts EUR Contracts Interest rate swap contracts USD Contracts EUR Contracts Derivatives held for trading 18,858 25,883 - 377,435 26,900 357,451 148,422 27,000 53,380 53,380 - 243,287 March 2023 - November 2025 57,482 - April 2026 - 7,673 28,699 January 2023 - June 2023 February 2023 - April 2023 (3,980) 1,864 75,051 254,040 (791) - 663,325 January 2023 January 2023 November 2025 April 2026 April 2026 - 36,572 32,342 24,000 175,000 - 200,000 - 36,000 66,700 - 35,000 284,868 March 2023 - November 2025 50,842 168,900 April 2026 December 2022 169,478 - January 2022 - March 2022 - 193,504 - 58,890 243,478 - 11,780 1,181,740 January 2022 - November 2025 April 2026 - September 2028 Translated into English from the report originally issued in Turkish 100 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 35 DERIVATIVE INSTRUMENTS (cont’d) Held for trading (cont’d) Fair value of derivative instruments and risk management Fair value: Hierarchy on the presentation of financial assets and liabilities at their fair values: The fair values of financial assets and financial liabilities are determined and grouped as Level 1, Level 2, Level 3: • 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 determine fair value of asset or liability. The table below provides information on fair value measurement of financial assets and liabilities: a) Participating cross currency swap contracts b) Fx swap, currency, interest swap and option contracts c) Currency forward contracts Fair value level Level 3 Level 2 Level 2 Valuation tecnique Pricing models based on discounted cash flows calculated in-line with yield curves Pricing models based on discounted cash flows calculated in-line with observable yield curves Pricing models based on forward exchange rates at the reporting date There were no transfers between fair value hierarchy levels during the year. Since the bid-ask spread is unobservable input; in the valuation of participating cross currency swap contracts, prices in the bid- ask price range that were considered the most appropriate were used instead of mid prices, If mid prices were used in the valuation the fair value of participating cross currency swap contracts would have been 15,892 TL lower as at 31 December 2022 (31 December 2021: 253,788 TL). As of 31 December 2022, the Company has no financial assets and liabilities carried at fair value on a non- recurring basis. 340 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 101 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 341 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 35 DERIVATIVE INSTRUMENTS (cont’d) 35 DERIVATIVE INSTRUMENTS (cont’d) Fair value of derivative instruments and risk management (cont’d) Fair value of derivative instruments and risk management (cont’d) Fair value (cont’d): The details of the movement between the opening and closing balances of derivative instruments with level 3 hierarchy are shown in the table below: Participating cross currency swap contracts Opening balance Cash flow effect Total gain/loss Recognized in profit or loss Closing balance Net off/Offset 31 December 2022 31 December 2021 1,049,129 (1,124,027) - 1,221,600 1,146,702 797,060 45,951 - 206,118 1,049,129 The Company signed a Credit Support Annex (CSA) against the default risk of parties in respect of a 233,600 EUR participating cross currency swap transaction executed on 15 July 2016 and restructured respectively on 26 May 2017 and 9 August 2018. Additionally, in the 25 June 2019, The Company signed a new CSA to 32,028 EUR participating cross currency swap transaction. As per the CSA, the swap’s current (mark-to- market) value will be determined on the 10th and 24th calendar day of each calendar month, and if the mark- to-market value is positive and exceeds a certain threshold, the bank will be posting cash collateral to the Company which will be equal to an amount exceeding the threshold (i.e. if the mark-to-market value is negative, the Company would be required to post collateral to the bank by an amount exceeding the threshold). With respect to valuations, on a bi-weekly basis, a transfer will take place between the parties only if the mark- to-market value changes by at least 1,000 EUR. Following the execution of CSA, the bank transferred to the Company 330,138 EUR as collateral (31 December 2022: 6,581,268 TL) which was the amount exceeding the threshold (10,000 EUR) and the Company transferred 270,228 EUR as collateral to the bank (31 December 2022: 5,386,968 TL) which was the amount exceeding the threshold (10,000 EUR). The Company clarified this with the derivative assets included in the statement of financial postion because it has the legal right to offset the collateral amount 1,194,300 TL (31 December 2021: 1,170,728 TL) that it recognizes under the borrowings and intends to pay according to the net fair value. This amount was netted from the borrowings and deducted from the derivative instruments in the balance sheet. As of 31 December 2022, if this transaction was not conducted, derivative financial instruments assets, liabilities and borrowings would have been 3,072,349 TL (31 December 2021: 3,167,736 TL), (3,444) TL (31 December 2021: (62,737) TL) and 17,915,547 TL (31 December 2021: 10,019,141 TL) respectively. Financial risk management Market risk The Group uses various types of derivatives to manage market risks. All such transactions are carried out within the guidelines set by the treasury and risk management department. Generally, the Group seeks to apply hedge accounting to manage volatility in profit or loss. Currency risk The Group’s risk management policy is to hedge its estimated foreign currency exposure in respect of borrowing payments with various maturities at any point in time. The Group uses participating cross currency contracts, currency swaps, interest swap contracts, currency forward contracts to hedge its currency risk, mostly with a maturity of over one year from the reporting date. These contracts are generally designated as cash flow hedges. The Company started to apply hedge accounting as of 1 July 2018 for existing participating cross currency swap and cross currency swap transactions in accordance with TFRS 9 hedge accounting requirement. TFRS 9, also includes new hedge accounting policies that aiming to be convenient with risk management implementation. The time value of options in participating cross currency swap contracts are included in the designation of the hedging instrument and are separately accounted for as a cost of hedging, which is recognized in equity in a cost of hedging reserve. The Group’s policy is for the critical terms of the participating cross currency contracts to align with the hedged item. The Group determines the existence of an economic relationship between the hedging instruments and hedged item based on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. In these hedge relationships, the main sources of ineffectiveness are; - The effect of the counterparties’ credit risk on the fair value of the swap contracts, which is not part of the hedged risk and associated credit risk considered to be very low at inception in the fair value of the hedged cash flows attributable to the change in exchange rates. - The entire fair value of the derivative contracts including currency basis was designated as the hedging instrument in cash flow hedge. The hypothetical derivative is modelled to exclude the impact of currency basis. 342 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 102 Translated into English from the report originally issued in Turkish 103 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 343 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 35 DERIVATIVE INSTRUMENTS (cont’d) 35 DERIVATIVE INSTRUMENTS (cont’d) Fair value of derivative instruments and risk management (cont’d) Fair value of derivative instruments and risk management (cont’d) Financial risk management (cont’d) Currency risk (cont’d) The Company’s future contracts are designated as hedging instruments against the spot foreign exchange rate risk (USD/TL) associated with highly probable device purchases. In this context, the Group started to apply cash flow hedge accounting effective from 10 September 2021. The amount of forward currency contracts associated within this scope is amounted to 13,763 USD as of 31 December 2022. Profit or loss from cash flow hedges recognized under “gain/(loss) from cash flow hedges” in the consolidated statement of other comprehensive income of 2022. The Company’s lease liabilities are designated as hedging instruments against the spot foreign exchange rate risk (EUR/TL) associated with highly probable EUR telecommunication revenues. In this context, the Group started to apply cash flow hedge accounting effective from 1 October 2021. The amount of lease liabilities associated within this scope amounted to 12,474 EUR as of 31 December 2022. Profit or loss from cash flow hedges recognized under “gain/(loss) from cash flow hedges” in the consolidated statement of other comprehensive income of 2022. The Company designated 290,008 EUR of bank loan, as hedging instruments in order to hedge the foreign currency risk arising from the translation of net assets of the subsidiaries operating in Europe from EUR to Turkish Lira. Foreign exchange gains/losses of the related loans are recognized under equity as “gains/(losses) on net investment hedges” in order to offset the foreign exchange gains/(losses) arising from the translation of the net assets of investments in foreign operations to Turkish Lira. The after tax foreign exchange loss recognised under “cash flow hedges” in the consolidated statement of other comprehensive income of 2022 in the scope of cash flow hedge amounted to (1,068,464) TL (2021: (1,246,699) TL). Interest rate risk The Group adopts a policy of ensuring that its interest rate risk exposure is at a fixed rate. This is achieved partly by entering into fixed-rate instruments and partly by borrowing at a floating rate and using cross currency and interest rate swaps as hedges of the variability in cash flows attributable to movements in interest rates. The Group applies a hedge ratio of 1:1. The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts. The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. In these hedge relationships, the main sources of ineffectiveness are: – The effect of the counterparties’ credit risk on the fair value of the swap contracts, which is not part of the hedged risk and associated credit risk considered to be very low at inception in the fair value of the hedged cash flows attributable to the change in interest rates. Financial risk management (cont’d) Interest rate risk (cont’d) Cash flow sensitivity analysis for variable-rate instruments A reasonable potential change of 100 basis points in interest rates and 10% change in foreign exchange currency at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. 31 December 2022 Participating cross currency swap contracts Cross currency swap contracts Cash Flow sensitivity (net) 31 December 2021 Participating cross currency swap contracts Cross currency swap contracts Cash Flow sensitivity (net) Profit or Loss 100 bp increase 100 bp decrease Equity, net of tax 100 bp increase 100 bp decrease (37,531) 64,781 27,250 (25,064) 236,336 211,272 755,812 236,439 992,251 787,206 206,121 993,327 Profit or Loss 100 bp increase 100 bp decrease Equity, net of tax 100 bp increase 100 bp decrease 1,199,942 159,719 1,359,661 2,230,500 (33,859) 2,196,641 (620,462) (220,694) (841,156) (1,445,257) (186,611) (1,631,868) 344 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 104 Translated into English from the report originally issued in Turkish 105 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 345 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 36 BORROWINGS Group’s foreing currency risk of borrowings is explained in Note 38. Bank loans Short-term unsecured bank loans Short-term secured bank loans Issued debt instruments Lease liabilities Current portion of long term borrowings Current portion of unsecured long-term bank loans Current portion of secured long-term bank loans 31 December 2022 8,760,854 8,395,861 364,993 1,124,712 873,277 4,955,284 4,474,648 480,636 31 December 2021 3,767,585 3,767,585 - 101,938 893,055 3,340,237 3,098,826 241,411 Current portion of long-term issued debt instruments 1,007,120 745,598 Long-term bank loans Long-term unsecured bank loans Long-term secured bank loans 17,945,061 15,653,822 2,291,239 13,356,013 13,084,545 271,468 Long-term issued debt instruments 17,006,088 12,560,897 Long-term lease liabilities 2,181,954 2,012,810 53,854,350 36,778,133 The Company has used loans in accordance with the loan agreement previously signed with ING Bank N.V. and AB Svensk Exportkredit under the Swedish Export Credit Organization (“EKN”) insurance on 18 December 2020. As of 31 December 2022, the Company has used USD 23,750 and USD 25,180 loan on 1 April 2022 and 3 June 2022, respectively, with a fixed interest rate of 1.53%. The Company has used loans in accordance with the loan agreement previously signed with China Development Bank on 7 August 2020. As of 31 December 2022, the Company has used 100,000 EUR and 52,876 EUR loan on 26 April 2022 and 24 June 2022, respectively, with interest rate of 6M Euribor+2.29% for the EUR and 40,000 CNY on 29 September 2022 and 29 November 2022 with interest rate of 5.15%. Within the scope of buy-back decisions on 27 July 2016, 30 January 2017 and 24 March 2020, the Company purchased its debt securities issued with a total nominal value of 37,239 USD as at 31 December 2022. Under CMB approval taken by The Company on 3 November 2022 for issuance of debt securities to 1,000,000 TL, the Company has issued debt securities on 23 November 2022 amounting 500,000 TL with the maturity of 17 May 2023. The remained limit is 500,000 TL from 1,000,000 TL specified total limit. 36 BORROWINGS (cont’d) On 29 September 2022, CMB approval has been taken by Turkcell Ödeme on issuance of management agreement-based lease certificates in accordance with capital markets legislation in the domestic market, in Turkish Lira terms, at an amount of up to 1,000,000 TL on various dates and at various amounts without public offering, as private placement and/or to be sold to institutional investors within one year. On 26 October 2022, after CMB approval lease certificates amount of up to 1,000,000 TL. The Company has issued lease certificates amounting 150,000 TL with the maturity of 1 February 2023. On 25 August 2022, CMB approval has been taken by Superonline on issuance of management aggrement- based lease certificates up to 1,000,000 TL, the Company has issued lease certificates on 13 September 2022 amounting 200,000 TL with the maturity of 12 December 2022 after this issuance on 13 December 2022 The Company has issued a new lease certificates amounting 200,000 TL with the maturity of 15 March 2023. Additionally, on 5 January 2023, the Company has issued management agreement based lease certificates amounting 150,000 TL with the maturity of 5 July 2023 after on 3 February 2023 the Company has issued management agreement baseda new lease certificates amounting 150,000 TL and the remained limit is 700,000 TL specified total limit 1,000,000 TL. On 30 December 2021 CMB approval has been taken by Turkcell Finansman for issuance of debt securities up to 500,000 TL, the Company has issued debt securities on 10 June 2022 A.S amounting 200,000 TL with the maturity of 9 September 2022. On 9 September 2022 the Company has issued another debt securities amounting 250,000 TL with the maturity of 5 December 2022. On 29 September 2022, CMB approval has been taken by Turkcell Finansman with the same conditions at an amount of up to 1,000,000 TL. The new application was made to the CMB on 2 December 2022 accordingly. Within the scope of this issuance ceiling, on 6 December 2022, a nominal amount of 250,000 TL coupon debt securities with the maturity of 7 March 2023. The remained limit is 750,000 TL from specified total limit 1,000,000 TL. TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 36 BORROWINGS (cont’d) The details of loans as at 31 December 2022 and 2021 are as follows: 31 December 2022 31 December 2021 Currency Interest rate type Payment period Nominal interest rate TL Payment period Unsecured bank borrowings Unsecured bank borrowings Unsecured bank borrowings Unsecured bank borrowings Unsecured bank borrowings Unsecured bank borrowings Unsecured bank borrowings Secured bank borrowings Secured bank borrowings Secured bank borrowings Issued debt instruments Issued debt instruments Lease obligations Lease obligations Lease obligations Lease obligations Lease obligations EUR TL USD RMB UAH EUR USD USD USD UAH USD TL TL UAH EUR BYN USD Floating 2023-2028 Euribor+2.0%-Euribor+2.3% 13,673,783 2022-2028 Fixed Floating Fixed Fixed Fixed Fixed Fixed Floating Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed 2023 2023-2026 2023-2028 2023-2024 - 2023-2026 2023-2032 2023-2028 2023 2023-2028 2023 2023-2048 2023-2071 2023-2034 2023-2037 2023-2052 12.4%-38.0% Libor+1.7%-Libor 2.2% 3.7%-5.5% 10.0%-21.0% - 2.6% 1.5%-3.8% Libor+0.6% - Libor+1.6% 16.4%-19.5% 5.8% 20.3%-25.5% 9.8%-45.0% 7.6%-47.7% 1.0%-10.3% 11.5%-20.0% 3.9%-11.5% 7,782,214 3,982,309 1,485,067 1,429,174 - 171,784 2,119,044 652,831 364,993 18,013,208 1,124,712 1,207,596 1,148,563 309,670 309,259 80,143 53,854,350 2022 2022-2028 2022-2028 2022-2024 2022 2022-2030 2022-2026 2022-2026 - 2022-2028 2022 2022-2048 2022-2069 2022-2034 2022-2028 2022-2028 Nominal interest rate Euribor+1.9%- Euribor+2.3% 14.8%-29.0% Libor+2.1%-Libor+2.2% 4.9%-5.2% 8.0%-10.9% 1.7% 3.8% 2.6% Libor+1.6% - Libor+1.9% - 5.8% 16.3% 9.8%-45.0% 7.6%-25.7% 1.0%-10.0% 11.5%-15.8% 3.9%-10.9% TL 9,188,487 3,044,848 3,639,052 930,395 1,712,723 362,593 1,072,858 152,667 360,212 - 13,306,495 101,938 1,262,449 1,074,000 303,265 185,618 80,533 36,778,133 346 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 106 Translated into English from the report originally issued in Turkish 108 Translated into English from the report originally issued in Turkish 107 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 347 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 37 RELATED PARTY DISCLOSURES Transactions with related parties Transactions with key management personnel Key management personnel comprise the Group's members of the Board of Directors and chief officers. There are no loans to key management personnel as of 31 December 2022 and 2021. The Group provides additional benefits to key management personnel and contributions to retirement plans based on a pre-determined ratio of compensation. The benefits paid and provided to key management personnel as of 31 December 2022 and 2021 are as follows: Short-term benefits Long-term benefits Employee termination benefits 31 December 2022 31 December 2021 89,692 1,091 182 90,965 159,278 1,610 798 161,686 Transactions with other related parties Material transactions with related parties as of 31 December 2022 and 2021 are as follows: Revenues: 31 December 2022 31 December 2021 Türk Telekom Mobil İletişim Hizmetleri A.Ş (“TT Mobil”) (*) Enerji Piyasaları İşletme A.Ş. (“EPİAŞ”)(*) Türk Hava Yolları A.Ş. (“THY”) (*) Ziraat Bankası A.Ş. (“Ziraat Bankası”) (*) Güneş Express Havacılık A.Ş. (“Sun Express”) (*) Türk Telekomünikasyon A.Ş (“TT”)(*) Türksat Uydu Haberleşme Kablo TV ve İşletme A.Ş.(“Türksat”)(*) TOGG TVF İFM Gayrimenkul İnşaat ve Yönetim A.Ş. (*) Türkiye Vakıflar Bankası TAO (“Vakıfbank”)(*) Türkiye Halk Bankası AŞ (“Halkbank”) (*) Türkiye Hayat ve Emeklilik A.Ş.(*) Ziraat Katılım Bankası A.Ş. (“Ziraat Katılım”)(*) BIST (*) Sofra Other 607,952 138,393 152,282 61,379 57,457 50,896 45,760 46,759 43,072 26,826 14,773 13,080 8,091 4,221 1,479 19,275 1,291,695 - 201,611 73,767 47,944 16,607 - 39,732 5,407 1,454 14,633 8,225 10,479 3,238 11,724 1,006 16,145 451,972 37 RELATED PARTIES (cont’d) Transactions with other related parties (cont’d) Expenses: EPİAŞ (*) Türk Telekomünikasyon A.Ş (*) TT Mobil (*) İstanbul Takas ve Saklama Bankası A.Ş. ("Takasbank") (*) Türksat (*) Sofra Boru Hatları İle Petrol Taşıma A.Ş. (“BOTAŞ”) (*) PTT (*) Other 31 December 2022 31 December 2021 864,464 1,515,182 666,547 568,676 79.862 73,204 41,399 34,278 21,391 54,173 3,054,712 - - 50 57,521 28,918 19,290 14,340 15,603 1,000,186 (*) Related parties which TVF and the entities over which TVF has control directly or joint control or significant influence. TVF becomes the largest shareholder of Türk Telekom with 61.68% of the shares as of 31 March 2022. Therefore, companies of Türk Telekom has been reported as related party as of 31 March 2022. Transactions between the Group and Türk Telekom are related with telecommunication services. Financial instruments Financial instruments with related parties as of 31 December 2022 and 31 December 2021 are as follows: Time deposits Demand deposits Currency protected time deposit (*) Receivables from reverse repo Bank loans Debt securities issued Lease liabilities Impairment loss provision 31 December 2022 14,178,529 234,117 1,359,651 3,704,160 (2,791,256) (357,497) (125,381) (20,974) 16,181,349 31 December 2021 7,720,468 154,291 - - (762,613) (101,938) (97,336) (5,001) 6,907,871 (*) The Group has converted its currency deposit account in Vakıfbank amounting to 15,000 USD and 50,000 EUR into currency protected TL time deposit accounts. As of 31 December 2022, the amount of letters of guarantee given to the related parties is 133,277 TL (31 December 2021: 97,135 TL). 348 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 109 Translated into English from the report originally issued in Turkish 110 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 349 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 37 RELATED PARTIES (cont’d) Financial instruments (cont’d) 37 RELATED PARTIES (cont’d) Financial instruments (cont’d) Details of the time deposits at related parties as of 31 December 2022 and 31 December 2021 are as follows: Details of the debt securities at related parties as of 31 December 2022 are as follows: Ziraat Bankası Vakıfbank Halkbank Ziraat Katılım Bankası A.Ş. ("Ziraat Katılım") Other Details of time deposits as of 31 December 2022 are as follows: 31 December 2022 2,003,561 5,748,392 5,140,582 1,285,994 - 14,178,529 31 December 2021 2,681,804 2,205,630 2,432,802 400,168 64 7,720,468 Principal Amount 187,624 395,430 2,774,821 55 Currency USD EUR TL GBP Effective Interest Rate 3.0% 2.7% 23.9% 0.1% Maturity January 2023 January 2023 January 2023 January 2023 31 December 2022 3,510,080 7,888,259 2,778,946 1,244 14,178,529 Details of the receivables from reverse repo at related parties as of 31 December 2022 are as follows: Principal Amount Currency 120,025 70,000 EUR USD Effective Interest Rate 2.8% 3.0% Maturity January 2023 January 2023 31 December 2022 2,394,311 1,309,849 3,704,160 Details of the bank borrowings at related parties as of 31 December 2022 are as follows: Principal Amount 1,802,550 536,714 89,997 35,000 39,900 Currency TL TL RMB TL TL Effective Interest Rate 13.5% - 19.0% 13.4% - 24.0% 3.7% 14.8% 16.4% Maturity January 2023 – October 2023 February 2023 – December 2023 February 2023 August 2023 May 2023 31 December 2022 1,934,918 537,478 241,247 36,818 40,795 2,791,256 Principal Amount 200,000 150,000 Currency TL TL Effective Interest Rate 20.8% 20.3% Maturity March 2023 February 2023 Details of the lease liabilities at related parties as of 31 December 2022 are as follows: Currency EUR TL Effective Interest Rate 0.2% - 5.1% 11.7% - 44.5% Maturity 2022 - 2024 2022 - 2036 31 December 2022 202,005 155,492 357,497 31 December 2022 74,012 51,369 125,381 Interest income from related parties: Vakıfbank Ziraat Bankası Halkbank Ziraat Katılım Other Interest expense from related parties: Vakıfbank Ziraat Bankası Halk Varlık Kiralama A.Ş. ("Halk Varlık Kiralama") Halk Bankası Ziraat Katılım Other 31 December 2022 31 December 2021 97,296 88,334 150,389 321 1,934 338,274 434,446 192,964 174,477 33,850 46 835,783 31 December 2022 31 December 2021 17,889 4,831 284,524 60,612 54,188 2,288 528 551 402,691 3,644 - 31 97 26,492 Revenue from related parties are generally related to telecommunication, call center and other miscellaneous services. Transactions between the Group and EPİAŞ are related to the energy services; transactions between the Group and Sofra are related to meal coupon services; transactions between the Group and BOTAŞ are related to infrastructure services; transactions between the Group and Halkbank, Halk Varlık Kiralama A.Ş., Ziraat Bankası, Ziraat Yatırım and Vakıfbank are related to banking services; transactions between the Group and Türksat are related to telecommunication services and transactions between the Group and Borsa İstanbul (BIST) are related to stock market services. Receivables from related parties are not collateralized. 350 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 111 Translated into English from the report originally issued in Turkish 112 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 351 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS Credit Risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is: 31 December 2022 As of reporting date amount of maximum credit risk ( A+B+C+D+E) -Amount of maximum risk which is secured by guarantee etc. A. Carrying amount of financial assets which is undue or not impaired B. Carrying amount of financial assets whose conditions have been renegotiated otherwise would be deemed to be overdue or impaired C. Carrying amount of assets which is overdue but not impaired -Amount which is secured by guarantee etc. D. Carrying amounts of assets which is impaired -Overdue (gross book value) -Impairment (-) -Undue (gross book value) - Impairment (-) E. Items containing off-statement of financial position loans Trade Receivables Other Receivables Related party Non-related party Related party Non-related party (*) Receivables Other assets (**) Deposits at banks Derivative instruments Receivables from financial services Financial investments Assets arising from customer contracts 76,449 6,963,821 - 442,520 58,229 5,378,907 - - - 18,220 18,257 (37) - - - - - - 1,584,914 2,114,490 (529,576) 91,012 (91,012) - - - - - - - - - - - - - 381,645 39,622 25,960,315 2,032,416 3,561,926 6,893,019 1,955,996 - - - - 71,868 - - 331,217 13,635 25,960,315 2,032,416 3,304,886 6,893,019 1,955,996 - 207 - - - - - 50,428 25,780 50,548 26,137 (357) 701 (701) (120) - - - - - - - 28,853 (28,853) - - - - - - - - - - - - - - - - - 257,040 326,924 (69,884) 20,033 (20,033) - - - - - 11,378 (11,378) - - - - - 7,346 (7,346) - - - (*) Receivables from Evrensel Projects, VAT receivable and receivables from public administration are not included in other receivables. (**) Current and non-current deferred VAT are not included in other assets. TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) Credit Risk (cont’d) As 31 December 2022 and 2021 expected credit loss from finance sector receivables is as follows: 31 December 2022 Not due Overdue 0-1 months Overdue 1-3 months Overdue more than 3 months Total Balance at year end Expected credit loss 3,324,918 20,033 180,530 1,802 31,964 366 114,431 67,716 3,651,843 89,917 31 December 2021 Not due Overdue 0-1 months Overdue 1-3 months Overdue more than 3 months Total Trade Receivables Translated into English from the report originally issued in Turkish Other Receivables 113 Related party Non-related party (*) Non-related party Deposits at banks Related party Other assets (**) Receivables Derivative instruments Receivables from financial services Financial investments Assets arising from customer contracts Balance at year end Expected credit loss 1,878,048 12,294 232,589 2,163 20,374 296 113,268 77,341 2,244,279 92,094 Credit Risk (cont’d) 31 December 2021 As of reporting date amount of maximum credit risk ( A+B+C+D+E) -Amount of maximum risk which is secured by guarantee etc. A. Carrying amount of financial assets which is undue or not impaired B. Carrying amount of financial assets whose conditions have been renegotiated otherwise would be deemed to be overdue or impaired C. Carrying amount of assets which is overdue but not impaired -Amount which is secured by guarantee etc. D. Carrying amounts of assets which is impaired -Overdue (gross book value) -Impairment (-) -Undue (gross book value) - Impairment (-) E. Items containing off-statement of financial position loans 175,170 4,413,296 - 240,592 171,725 3,188,320 - - - 3,445 3,493 (48) - - - 2- - - 1,224,976 1,785,005 (560,029) 64,186 (64,186) - - - - - - - - - - - - - 175,231 19,828 18,628,481 2,131,070 2,152,185 1,431,975 1,247,741 - - - - - - - 139,638 14,142 18,628,481 2,131,070 1,865,754 1,431,975 1,247,741 - - - - - 35,593 35,664 (71) - - - - 5,686 6,004 (318) 636 (636) - - - - - 12,346 (12,346) - - - - - - - - - - - - - - - 286,431 366,231 (79,800) 12,294 (12,294) - - - - - - - 16 (16) - - - - - - - 6,241 (6,241) - (*) Receivables from Evrensel Projects, VAT receivable and receivables from public administration are not included in other receivables. (**) Current and non-current deferred VAT are not included in other assets. Translated into English from the report originally issued in Turkish 114 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) Liquidity Risk The table below shows the maturity of the Group’s financial liabilities. Tables are prepared without discounting the financial liabilities and on the basis of the earliest due dates. Tables include principal and interest payments. When interest rates are variable, the undiscounted amount is calculated using interest curves at the end of the reporting period. The maturity is determined on the basis of the earliest date the Group has to pay. Contractual maturities Non-derivative financial liabilities Bank loans Issued debt instruments Lease obligations Payables to related parties Consideration payable in relation to acquisition of BeST & Boyut Trade payables (*) Derivative instruments Participating Cross Currency Swap and FX swap contracts Contractual maturities Non-derivative financial liabilities Bank loans Issued debt instruments Lease obligations Payables to related parties Consideration payable in relation to acquisition of BeST & Boyut Trade payables (*) Derivative instruments Participating Cross Currency Swap and FX swap contracts (*) Accruals are not included in trade payables. 31 December 2022 Carrying amount Total contractual cash flows (=I+II+III+IV) Less than 3 Months (I) 3 months-12 months (II) 1-5 year (III) More than 5 year (IV) 31,661,199 19,137,920 3,055,231 241,310 666,613 6,932,732 - 150,923 (34,847,008) (23,654,946) (5,186,425) (334,850) (1,879,158) (7,233,483) - 349,200 (4,331,420) (633,264) (457,869) (334,850) - (6,336,361) - (598) (10,301,938) (1,600,863) (897,980) - - (752,927) - 131,178 (17,548,078) (11,915,987) (2,376,995) - (118,086) - - 218,966 (2,665,572) (9,504,832) (1,453,581) - (1,761,072) (144,195) - (346) 31 December 2021 Carrying amount Total contractual cash flows (=I+II+III+IV) Less than 3 Months (I) 3 months-12 months (II) 1-5 year (III) More than 5 year (IV) 20,463,835 13,408,433 2,905,865 65,156 761,536 4,615,606 - 71,325 (22,166,206) (17,479,087) (4,593,322) (87,294) (1,339,566) (4,812,238) - 159,206 (4,029,860) (104,734) (371,643) (87,294) - (4,678,734) - - (3,234,724) (769,750) (890,649) - - (133,504) - 40,113 (13,401,987) (9,360,291) (1,998,722) - (79,975) - - 119,093 (1,499,635) (7,244,312) (1,332,308) - (1,259,591) - - - Translated into English from the report originally issued in Turkish 116 352 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 115 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 353 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) Foreign currency risk Foreign currency risk is the risk arising from the change in the value of any financial instrument depending on the change in the exchange rate. The main foreign currencies are USD, EUR and RMB that consist of the main risk for the Company. As of 31 December 2022, the Group’s exposure to foreign exchange risk, based on notional amounts, is presented at below table. 1. Trade receivables 2a. Monetary financial assets (Cash and banks accounts included) 2b. Non-monetary financial assets 3. Other 4. Current assets (1+2+3) 5. Trade receivables 6a. Monetary financial assets 6b. Non-monetary financial assets 7. Other 8. Non-current assets (5+6+7) 9. Total assets (4+8) 10. Trade payables 11. Financial liabilities 12a. Other monetary liabilities 12a. Other non-monetary liabilities 13. Short-term liabilities (10+11+12) 14. Trade payables 15. Financial liabilities 16a. Other monetary liabilities 16b. Other non-monetary liabilities 17. Long-term liabilities (14+15+16) 18. Total liabilities (13+17) 19. Net asset/(liability) position of off balance sheet derivative (19a-19b) 19a. Derivative assets 19b. Derivative liabilities 20. Loans defined as hedging instruments (*) 21. Net foreign currency asset/(liability) position (9-18+19+20) 22. Net asset/(liability) position of foreign currency monetary items 31 December 2022 31 December 2021 TL Equivalent USD EUR RMB TL Equivalent USD EUR RMB 929,167 24,436,263 - 425,579 25,791,009 - - - 1,509 1,509 25,792,518 3,385,575 6,887,925 119,351 - 10,392,851 - 34,794,204 663,341 - 35,457,545 45,850,396 10,796,866 18,412,995 7,616,129 6,287,293 2,973,719 2,973,719 25,196 561,089 - 14,580 600,865 - - - 69 69 600,934 109,401 151,703 886 - 261,990 - 1,186,324 35,476 - 1,221,800 1,483,790 915,570 915,570 - 13,763 46,477 46,477 22,977 673,375 - 6,455 702,807 - - - 11 11 702,818 17,514 183,151 5,156 - 205,821 - 578,239 - - 578,239 784,060 355,150 26,900 382,050 302,482 133,910 133,910 - 194,430 - 9,057 203,487 - - - - - 203,487 369,627 149,310 - - 518,937 - 404,695 - - 404,695 923,632 282,453 282,453 - - 437,692 437,692 500,290 14,521,460 - 256,069 15,277,819 - - - 2,672 2,672 15,280,491 2,301,844 5,337,362 144,741 - 7,783,947 - 25,230,031 758,260 - 25,988,291 33,772,238 10,986,492 10,986,492 - 4,174,307 3,330,948 3,330,948 14,729 899,928 - 10,297 924,954 - - - 188 188 925,142 96,236 147,906 953 - 245,095 - 1,248,441 56,888 - 1,305,329 1,550,424 761,825 761,825 - 16,987 153,530 153,530 20,148 157,563 - 5,931 183,642 - - - 11 11 183,653 17,315 208,961 8,752 - 235,028 - 521,821 - - 521,821 756,849 32,022 32,022 - 261,680 279,494 279,494 - 71,600 - 14,079 85,679 - - - - - 85,679 363,670 102,395 - - 466,065 - 344,052 - - 344,052 810,117 167,476 167,476 - - 556,962 556,962 (*) Turkcell, the parent company of the Group, utilized a loan amounting to 290,008 EUR as a hedging instrument in order to hedge its net investment in subsidiary operating abroad from the foreign exchange risk arising from the translation into Turkish Lira. Foreign exchange gain/loss of this loan is reccognized amoung “net investment hedge gains/losses on a foreign operation” under equity to be deducted from the foreing exchange differences arising from the translation of the net investments in subsidiary operating abroad. Translated into English from the report originally issued in Turkish 117 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) Sensitivity analysis 10% strengthening/weakening of TL, UAH, BYN and EUR against the following currencies at 31 December 2022 and 2021 would have increased/(decreased) profit or loss before taxation by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Exchange Rate Sensitivity Analysis Table 31 December 2022 Profit/(Loss) Equity Appreciation of foreign currency Depreciation of foreign currency Appreciation of foreign currency Depreciation of foreign currency 1- USD net asset/liability 2- Hedged portion of USD risk (-) 3- USD net effect (1+2) 86,904 (86,904) - 86,904 (86,904) - - (25,335) (25,335) - 25,335 25,335 4- EUR net asset/liability 5- Hedged portion of EUR risk (-) 6- EUR net effect (4+5) (266,948) - (266,948) 266,948 - 266,948 - (25,720) (25,720) - 25,720 25,720 7- RMB net asset/liability 8- Hedged portion of RMB risk (-) 9- RMB net effect (4+5) TOTAL (3+6+9) (117,328) - (117,328) (297,372) 117,328 - 117,328 297,372 - 1,600 1,600 (49,455) - (1,600) (1,600) 49,455 Exchange Rate Sensitivity Analysis Table 31 December 2021 Profit/(Loss) Equity Appreciation of foreign currency Depreciation of foreign currency Appreciation of foreign currency Depreciation of foreign currency 1- USD net asset/liability 2- Hedged portion of USD risk (-) 3- USD net effect (1+2) 191,136 (191,136) - 191,136 (191,136) - - (17,218) (17,218) - 20,995 20,995 4- EUR net asset/liability 5- Hedged portion of EUR risk (-) 6- EUR net effect (4+5) (421,664) - (421,664) 421,664 - 421,664 - (24,020) (24,020) - 24,020 24,020 7- RMB net asset/liability 8- Hedged portion of RMB risk (-) 9-RMB net effect (4+5) TOTAL (3+6+9) (116,071) - (116,071) (346,599) 116,071 - 116,071 346,599 - 1,960 1,960 (39,278) - (1,960) (1,960) 43,055 354 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 118 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 355 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) Sensitivity analysis (cont’d) Fair value estimation: Cash flow sensitivity analysis for variable interest instruments: Level classification of financial assets and liabilities carried at fair value: As of 31 December 2022 and 2021, if the interest rates increase or decrease by 1 point, the equity and statement of profit or loss will be affected as follows. When analyzing, it is assumed that all other variables, in particular exchange rates, remain constant. If the interest rate in Turkish Lira currency had been 1 basis point higher/lower on 31 December 2022, and all other variables had remained constant, the profit before tax and non-controlling interests would have been 315,213 TL lower/higher (31 December 2021: 103,782 TL). The change in interest rate would not have a direct impact on equity, without affecting the profit/loss. The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined Level 1, Level 2 and Level 3 as follows: • The information at Level 1 consists of unadjusted market prices obtained by an entity on the measurement date for identical assets or liabilities traded in active markets. • Level 2 information is observable information for an asset or liability, other than the exchange price specified in the first level, either directly or indirectly. • Level 3 information is information that does not rely on observable market data for determining the fair value of an asset or liability. 31 December 2022 31 December 2021 Methods and assumptions used to determine the fair value of derivative transactions are disclosed in Note 35. Interest Position Financial Assets Financial Liabilities Financial Assets Financial Liabilities 1 point increase in interest rates - (315,213) 1 point decrease in interest rates - 315,213 - (103,782) - 103,782 After the financial crisis, the reform and replacement of benchmark interest rates such as USD LIBOR and other Interbank Offer Rates (IBORs) offered by other banks have become a priority for global regulators. Workings are ongoing for these changes. The Group's direct exposure to interest rate reform is its variable rate debt of 236,361 USD. After Phase 2 was published in August 2020, the Group has structured cross-currency and interest rate swap transactions to mitigate the variability of cash flows in the debt due to changes in the 6- month USD LIBOR, which is the current benchmark interest rate and has hedged this debt. The total nominal amount of these instruments in derivative products is 294,075 USD and the portion for hedging purposes is 194,837 USD. The management has formed a committee to oversee the Group's USD LIBOR transition plan. This transition project will include changes in relevant tax and accounting practices as well as in systems, processes, risk, and valuation models. The Group anticipates that the biggest changes will be on the terms of contracts used to update variable rate debt, intercompany swap contracts, and hedging transactions that reference to USD LIBOR. In calculating the fair value changes attributable to the Group's hedging reserve for its variable rate debt, the Group has made the following assumptions that reflect its current expectations: • Given the Group's 'Probable' requirements, it has assumed that the IBOR reform will not result in any • changes to the USD LIBOR interest rate on which its financial hedging debt is based. In assessing whether the risk management transaction will be effective going forward, the Group has assumed that there will be no changes resulting from the IBOR reform to the USD LIBOR interest rate on which the cash flows of the financial hedging debt are based and the swap interest rate on which the financial risk management transactions are based. • The Group has not retrospectively changed the risk management fund for the period expected to be affected by the reform. • 356 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 119 Effects of valuation inputs to fair value The following table summarizes the quantitative information about the significant unobservable inputs used in Level 3 fair value measurement of contingent consideration. Fair value at 31 December 2022 31 December 2021 - 758,261 Contingent consideration Unobservable Inputs Risk-adjusted discount rate Expected settlement date Inputs 31 December 2022 - - 31 December 2021 6.8%-8.0% in instalments between 2026-2031 Relationship of unobservable inputs to fair value 2022 - - 2021 An increase/decrease in the discount rate by 1 p would change FV by (51,092) TL and 55,485 TL, respectively. If expected settlement date extended/shortened by 1-year, FV would change by (53,167) TL and 57,145 TL, respectively. Changes in the consideration payable in relation to acquisition of BeST: Opening balance Total gain and loss: Statement of profit or loss Closing balance (*) Note 25 for details. 31 December 2022 31 December 2021 475,879 758,261 (758,261) - 282,382 758,261 Translated into English from the report originally issued in Turkish 120 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 357 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are expressed in thousand of Turkish Lira unless otherwise stated. Currencies other than Turkish Lira are expressed in thousands unless otherwise stated.) 38 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) 40 FEES FOR SERVICES RECEIVED FROM INDEPENDENT AUDIT FIRM Valuation inputs and relationships to fair value (cont’d) It is assumed that the carrying values and fair values of financial assets and liabilities held to maturity converge to each other. Fair value of cash and cash equivalents and debt securities issued are classified as Level 1 and fair value of other financial assets and liabilities are classified as Level 2. Financial assets: Carrying values of a significant portion of financial assets do not differ significantly from their fair values due to their short-term nature, Fair values of financial assets are presented in Note 34. Financial liabilities: As of 31 December 2022 and 2021; for the majority of the borrowings, the fair values are not materially different from their carrying amounts since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature. The carrying amounts and fair values of non-current borrowings and current portion of non-current borrowings are as follows: Bank loans Debt securities 31 December 2022 Fair Value 21,453,658 16,573,025 Carrying amount 22,900,345 18,013,208 31 December 2021 Fair Value 16,622,479 13,233,743 Carrying amount 16,696,250 13,306,495 39 SUPPLEMANTARY CASH FLOW INFORMATION Reconciliation of financial liabilities: Balance at 1 January 2022 Cash inflows Cash outflows Other non-cash movements Balance at 31 December 2022 Balance at 1 January 2021 Cash inflows Cash outflows Acquisition through business combination Other non-cash movements Balance at 31 December 2021 Debt securities issued (13,408,433) (2,327,594) 2,856,875 (6,258,768) (19,137,920) Loans (20,463,835) (27,656,215) 24,529,166 (8,070,315) (31,661,199) Debt securities issued (7,362,554) (192,157) 645,926 Loans (12,124,982) (13,033,337) 12,984,771 Lease liabilities (2,905,865) - 2,243,432 (2,392,798) (3,055,231) Total (36,778,133) (29,983,809) 29,629,473 (16,721,881) (53,854,350) Derivative Assets, net 2,059,745 3,102,658 (2,740,022) (540,888) 1,881,493 Total (34,718,388) (26,881,151) 26,889,451 (17,262,769) (51,972,857) Lease liabilities (2,098,886) - 1,649,046 Total (21,586,422) (13,225,494) 15,279,743 Derivative Assets, net 798,326 1,403,609 (1,718,061) Total (20,788,096) (11,821,885) 13,561,682 - (6,499,648) (13,408,433) (151,892) (8,138,395) (20,463,835) - (2,456,025) (2,905,865) (151,892) (17,094,068) (36,778,133) - 1,575,871 2,059,745 (151,892) (15,518,197) (34,718,388) The Group's explanation regarding the fees for the services received from the independent audit firms, which is based on the letter of POA dated 19 August 2021, the preparation principles of which are based on the Board Decision published in the Official Gazette on 30 March 2021, are as follows: Audit fee for the reporting period (*) Fee for other assurance services 31 December 2022 18,989 21 19,010 31 December 2021 10,009 77 10,086 (*) Compensations of foreign currency-denominated subsidiaries abroad have been converted to TL using the annual average exchange rates of the relevant years. 41 OTHER MATTERS MATERIALITY AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS None. 42 SUBSEQUENT EVENTS The 7.7 and 7.6 magnitude earthquakes centered in Kahramanmaraş, which occurred in our country on 6 February 2023, effected eleven provinces and caused significant loss of life and property. The process of evaluating the effects of earthquakes on the Group's activities and consolidated financial statements is in progress. In accordance with the option provided by the Capital Markets Board's decision dated 9 February 2023, due to the earthquake disaster on 6 February 2023, epicenter of which was Kahramanmaraş, that caused a devastation and loss of lives, Board of Directors of Turkcell has resolved to make in-kind and/or cash donation and provide all the appropriate benefits and aid up to 3,5 billion TL to the earthquake victims directly and/or through the Ministry of Interior Disaster and Emergency Management Presidency ("AFAD"), the Turkish Red Crescent ("Kızılay") and/or other institutions and organizations announced by mentioned agencies. Turkcell Dijital Teknolojileri Ltd. was established which Lifecell Digital owns 99.9998% that the Group owns 100% directly, and Kıbrıs Telekom owns 0.0002%. The company, established to operate electronic payment services in KKTC, has a capital of 500 TL. The registration and announcement of the establishment were completed on 26 January 2023. Within the scope of our Board of Directors' share buy-back decisions on 27 July 2016 and the following dates, the Company purchased a total of 1,000,000 shares at a price range of 33.46 – 34.00 TL with an average of 33.88 TL totaling 33,884 TL on 17 February 2023. On 1 February 2023, Turkcell Ödeme has issued a new lease certificate amounting up to 150,000 TL with the maturity of 3 May 2023 within the scope of 1,000,000 TL issuance ceiling approved by the CMB to be sold to institutional investors in domestic market without public offering. On 6 March 2023, Turkcell Finansman has issued a new coupon bond amounting up to 250,000 TL with the maturity of 5 September 2023 within the scope of 1,000,000 TL issuance ceiling approved by the CMB to be sold to institutional investors in domestic market without public offering. 358 | TURKCELL 2022 INTEGRATED ANNUAL REPORT Translated into English from the report originally issued in Turkish 121 Translated into English from the report originally issued in Turkish 122 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 359 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Our Offices Glossary Location Address Abbreviation Description ADANA PLAZA SAKARYA NDC ANKARA PLAZA BAŞKENT NDC Turhan Cemal Berikel Bulvarı No: 212 Seyhan - Adana Bahçelievler Mah.Cumhuriyet Cad. Kamelya Sok. No:14 Sakarya - Adapazarı Eskişehir Yolu 9. Km No:264 Pk.06510 Söğütözü - Ankara Başkent İvedik Mah. 1323. Cadde No:37 Yenimahalle - Ankara ANKARA DATA CENTER Veri Merkezi Anadolu Osb. 12 Cd. No:15 Malıköy Sincan- Ankara ANTALYA PLAZA BURSA PLAZA Kızıltoprak Mah. 915 Sok.No:3 Muratpaşa-Antalya Organize Sanayi Bölge Müd. Kırmızı Cad. No:4 Nilüfer - Bursa DİYARBAKIR PLAZA Bağcılar Mahallesi Urfa Bulvarı Turkcell Plaza Apt. No:151 Bağlar- Diyarbakır EDİRNE NDC ERZURUM PLAZA GAZİANTEP PLAZA HATAY NDC KÜÇÜKYALI PLAZA / HEAD QUARTER Şükrü Paşa Mah. Kıyık Cad. Hilly Otel Yanı No:254 Edirne Ilıca yolu Organize Sanayi Bölgesi 4.Sok Erzurum Kocaoğlan Mah. Demokrasi Bulvarı No:185 / 1 Şahinbey - Gaziantep Güzelbirlik Mah. Yunus Emre Cad. No:11-B Güzelburç Hatay Aydınevler Mahallesi İnönü Caddesi No:20 B Blok 34854 Maltepe - İstanbul KARTAL DATA CENTER Topselvi Mahallesi Dipçik Sokak No:31 Kartal - İstanbul TEPEBAŞI PLAZA Meşrutiyet Cad.No:71 Tepebaşı 34430 İstanbul MAHMUTBEY NDC Mahmutbey Mah İnönü Caddesi No:89 Bağcılar - İstanbul DUDULLU DATA CENTER Dudullu OSB Nato Yolu 4. Cadde No:1 Ümraniye - İstanbul İZMİR PLAZA Kazım Dirik Mah. 367/7 Sokak No:12 Bornova - İzmir İZMİR DATA CENTER 1 0005. Sk. No:37 İTOB OSB Tekeli Menderes -İzmir İZMİT PLAZA KAYSERİ PLAZA Yahya Kaptan Mah. Bahçeşehir Sok. No: 30 İzmit-Kocaeli Kayseri Organize Sanayi Bölgesi 13. Cadde No:16 Melikgazi- Kayseri GEBZE DATA CENTER Gebze OSB, Tembelova Mevkii Mah. 3300 Sok. No: 3314 Gebze-Kocaeli KONYA OFFICE KONYA NDC MALATYA NDC MERSİN PLAZA MUĞLA PLAZA Parsana Mh. Zümrütova Sok.Selçuker Merkez Kat:8 No:1 Selçuklu/Konya 1.Org.San. Sıhhiye Sok.Selçuklu/ Konya Hoca Ahmet Yesevi Mah. Mahfuz Sok. No: 35/A Yeşilyurt - Malatya Portakal Mah. 80050 Sok. No:3 Toroslar – Mersin Musluhittin Mahallesi Atatürk Bulvarı No:61 Muğla SAMSUN PLAZA Mimar Sinan Mah. 160.sok.No:18 PK:55200 Atakum - Samsun EUROPEAN DATA CENTER Karaağaç OSB Mh.48.Sok.No: 1/1 Kale Kilit fab. yanı Kapaklı-Tekirdağ TRABZON PLAZA Mısırlı Mah. Hasan Turfanda yolu No:3 Çukurçayır – Trabzon VAN PLAZA İpek yolu 8 km Yeni Mah. Sahil Sok. No: 27 Edremit - Van 3G 4.5G 5G ADS OSCE PA ARPU Base Station Beacon BİST IT ICTA CELTIC CİMER Roaming DSS EMS ER ESG ETSI EUREKA FCPA Gbps GRI GSM GSMA HTK IDC IIRC IMS IoT ITEA IVR KEP KPI LTE LTE-Advanced A third generation mobile telecommunication system established according to IMT-2000/UMTS standards, or standards developed based on these standards A generation containing technologies of more advanced features than standard 4G technology A generation containing technologies having more advanced features than standard 4G technology American Depositary Share Organization for Security and Co-operation in Europe Parliamentary Assembly Average monthly revenue generated per mobile subscriber A fixed transceiver device in each cell of a mobile communications network enabling communicati- on between mobile phones and radio signals within the cell A location-based data provider utilized in My Dream Companion project Borsa İstanbul Tools for generating, collecting, accumulating, processing, recovering, disseminating, protecting, and assisting Information Communication Technologies Authority EUREKA Cluster focusing on the Information and Communications Technology and Telecommunications The Presidential Communication Center A mobile communication feature that allows subscribers of one network to use their own mobile phones and numbers within the coverage area of another operator. Digital Service Provider Emergency Mobile Services Integrated Reporting Framework Environmental, Social, Governance European Telecommunications Standards Institute (Exceptional Unconventional Research Enabling Knowledge Acceleration) It is an intergovernmental R&D organization financed by governments of more than forty countries Foreign Corrupt Practices Act A data transmission speed Global Reporting Initiative This is a digital mobile communication system, standardized by the European Communications Standards Institute and based on digital transmission with roaming and the cellular network structu- re being used in Europe, Japan and various other countries (The GSM Association - Global System for Mobile Communications) The GSM Association is a com- munity consisting of mobile operators and telecom-related companies with the aim of standardizing and developing the Mobile Telecommunications Sector Communication Technology Cluster (International Data Corporation) American market research company examine the development of technology International Integrated Reporting Council (IP multimedia subsystem) Platform to provide a new generation of wired, wireless service providers (Internet of Things) The mobilization, interpretation and communication/interaction of the data rece- ived through sensors EUREKA Cluster program supporting innovative, industry-driven, pre-competitive R&D projects in the area of Software-intensive Systems & Services Interactive Voice Response Registered E-mail Key Performance Indicator Technology that ensures to achieve very high speeds by combining carriers in the same or different frequency bands A mobile communications standard comprising advanced features such as carrier coupling, which enables mobile broadband speed of over 150 MBps in LTE 360 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.1 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 361 TURKCELL AT A GLANCE VALUE CREATING TURKCELL POSITIVE IMPRINT TO OUR BUSINESS INCLUSIVE POSITIVE IMPRINT POSITIVE IMPRINT TO THE ENVIRONMENT APPENDICES Abbreviation Description m-TOD M2M MHz MSCI ESG NB-IoT NFVI NGMN NPS NYSE OFAC OIC-CERT OSS RPA RTM ABC Sarbanes-Oxley (SOX) SASB SBTi Scratch SD-WAN SDG SEC SingleRAN SKD SMS SOAR SOC CMB NGO Carrier Aggregation Tbps TÇM TODİEK Togg TTK IFRS UN UN WEPs UNGC WBCSD WEF Association of Mobile Telecommunication Operators Machine to Machine is the general name of the technology that allows devices to exchange infor- mation and conduct transactions without human intervention (Megahertz) A frequency unit Morgan Stanley Capital International Environmental, Social, Governance Index A technology defined by 3GPP for Internet of Things Network Infrastructure Virtualization Infrastructure An organization (Next Generation Mobile Networks Association), of which Turkcell is a member, and which several operators, suppliers and universities in the world are a part of, giving direction to tech- nology standards and technology producing companies in relation to operator requirements (Net Promoter Score) The score that measures whether or not customers recommend the products they use to others New York Stock Exchange Office of Foreign Assets Control The Organization of the Islamic Cooperation – Computer Emergency Response Team Operational Support System Robotic Process Automation (Real Time Monitoring) 24/7 monitoring and reporting system on the system Anti-Bribery and Anti-Corruption Corporate and Auditing Accountability, Responsibility, and Transparency Act Sustainability Accounting Oversight Board Science Based Targets Initiative Scratch is a programming language developed by MIT (Massachusetts Institute of Technology), whi- ch has a user-friendly interface, designed for the use of children between the ages 8 and 16 Acronym for software-defined networking in a wide area network (WAN) Sustainable Development Goals U.S. Securities and Exchange Commission Radio network equipment that can support technologies of different generations (2G, 3G, 4G and 5G) at the same time Sustainable Development Association of Türkiye A mobile communication system allowing users to receive and send messages that can be constitu- ted of both alphabetic and numerical characters of up to 160 characters, to and from mobile phones through a short message service Security Orchestration Automation and Response Service Operations Center Capital Markets Board Non-Governmental Organisations A technique allowing more bandwidth and consequently higher speeds to be obtained by joining frequencies called carriers (TeraBytes Per Second) One trillion bits or bytes per second Consumer Solution Center Turkcell Common Values and Code of Business Ethics Turkey's Automobile Joint Venture Group Inc. Turkish Code of Commerce International Financial Reporting Standards United Nations UN Women’s Empowerment Principles United Nations Global Compact World Business council for Sustainable Development World Economic Forum Other Considerations Explanations regarding other matters as per the CMB legislation and other relevant regulations to which we are subject are given below: • Explanations regarding the amendment of Company’s Articles of Association in 2022 are included in the ordinary general assembly mee- ting minutes, which was held on June 16, 2022: Minutes • Information regarding the changes in the Board of Directors in 2022 are included in the ordinary general assembly meeting minutes, which was held on June 16, 2022: Minutes • No extraordinary general assembly was held in 2022. • No administrative or judicial sanctions were imposed on our Company’s upper management. • Turkish Commercial Code Article 376 is not applicable as the Company made profits in 2022. • There is no cross-ownership subsidiary in which the direct contribution to the capital exceeds 5%. Contact Turkcell İletişim Hizmetleri A.Ş. Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No:20 Küçükyalı Ofispark B Blok - Maltepe / İSTANBUL Registration No: 304844 www.turkcell.com.tr dahaiyibirdunya@turkcell.com.tr Reporting Advisor & Design: www.kiymetiharbiye.com/en/ Legal Disclaimer The sustainability section of our integrated report has been prepared in accordance with the principles of the Global Reporting Initiative (GRI), the United Nations Global Compact, and the United Nations Women’s Empowerment Principles. Sustainability data has been provided for informational purposes only and is not intended to form the basis of any investment decision. The publication of this data does not constitute an offer or invitation to sell Turkcell shares or any part of an offer or invitation to such a sale process. The information and related documents provided in this section are accurate, made in good faith, and based on reliable sources as of the date of this report. However, Turkcell does not make any statements, warranties, or promises regarding this data. 362 | TURKCELL 2022 INTEGRATED ANNUAL REPORT GRI 2.1 TURKCELL 2022 INTEGRATED ANNUAL REPORT | 363