Turkcell Iletisim Hizmetleri AS
Annual Report 2023

Plain-text annual report

Contents 06 Introduction 46 Turkcell Creating Value 6 Message from the Chairman of the Board 8 Board of Directors 14 Message from CEO 16 Management Team 21 Top Management of Subsidiaries 28 About the Report 30 Turkcell at a Glance 36 Turkcell 2023 Awards 40 Turkcell Group: Developments in 2023 42 2023 Strategic Objective and Managerial Achievement Assessment 47 Turkcell Sustainability Management and Involvement of Senior Management 48 Turkcell Sustainability Priorities 50 Turkcell Sustainability Strategy: Positive Impact in Sustainability 52 Supported Sustainable Development Goals 54 Interactions with Our Stakeholders 56 Turkcell’s Sustainability Initiatives Memberships 60 Measuring the Value Created 61 Our Core Competencies 62 Our Strategic Focuses Initiatives and Opportunities 63 Leadership in Telecom 65 Digital Services 66 Digital Business Services (DBS) 68 Digital Financial Services 70 Strong Corporate Governance 78 Effective Risk and Crisis Management 2 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 3 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL 84 Financial Capital Human Capital 106 Appendices 124 Manufactured Capital Social Capital 148 190 APPENDIX-1: Awards Received by Turkcell in 2023 191 APPENDIX-2: Turkcell ISO Certificates 192 APPENDIX-3: Cooperated National, International and Non-Governmental Organizations 193 APPENDIX-4: GRI Content Index 197 APPENDIX-5: UNGC Progress Table 198 APPENDIX-6: Sustainability Principles Compliance Framework Table 202 Group Companies and Other Information on Corporate Governance 206 Statement Of Compliance With Corporate Governance Principles 207 Corporate Governance Principles Compliance Report 211 Corporate Governance Information Form 217 Roles of Turkcell Board Members at Other Companies 217 Conclusion of the Subsidiary Report 218 Turkcell Group: 2023 Financial & Operational Review 223 2024 Guidance 224 Our Companies and Sector Developments 228 Subsequent Events After the Reporting Period 230 Consolidated Financial Statements 336 Our Offices 337 Glossary 338 Contact 132 Intellectual Capital Natural Capital 178 4 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 5 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Message from Chairman of the Board By contributing to the "Türkiye Tek Yürek" campaign, we supported the effort to strengthen the spirit of social unity and cooperation promoted by this campaign. Furthermore, through our "Gönül Bağı" projects, we engaged in the process of social solidarity and reconstruction in the wake of the earthquake. This process witnessed exemplary unity, fueled by our employees and customers' extraordinary efforts and support. Şenol Kazancı Chairman of the Board Dear Stakeholders, Early in 2023, Türkiye suffered one of the greatest disasters of its history, a major earthquake that impacted many of its cities. During this challenging period, as Turkcell, we became part of a wide- spread solidarity effort to heal society's wounds and support those affected by the awful event. By contributing to the "Türkiye Tek Yürek" campaign, we sup- ported the effort to strengthen the spir- it of social unity and cooperation pro- moted by this campaign. Furthermore, through our "Gönül Bağı" projects, we engaged in the process of social soli- darity and reconstruction in the wake of the earthquake. This process wit- nessed exemplary unity, fueled by our employees and customers' extraordi- nary efforts and support. Additionally, this period stood out as a time marked by tragic outcomes of conflict and internal turmoil witnessed increasingly worldwide and by the evident challenges brought on by cli- mate change. In response to the grow- ing impacts of the latter, we intensified our sustainability strategies, working to increase the use of green energy and eco-friendly technologies. Through- out the year, despite challenges and uncertainties, we continued on our mission of creating shared value main- taining close communication with all our stakeholders without compromis- ing our principles of transparency and strong governance. As Turkcell, fully aware of the eco- nomic and strategic importance of the telecommunications sector, we have continued our operations with a deep sense of responsibility towards our ecosystem and to create sustain- able value. In this process, in line with our Company's mission, we have me- ticulously invested in Türkiye's digital future while further strengthening our infrastructure. In this era, where digi- talization increasingly occupies every aspect of our lives, we have developed innovative solutions tailored to the evolving needs of diverse customers and sectors. With these solutions, we aim to add value to our customers and consolidate our leadership as the digi- tal transformation leader. As a result of these focused efforts, the past year has been another one boasting operation- al and financial successes that confirm our drive for sustainable growth. While the rapid spread of digital trans- formation in the business world and the increasing use of technology offers companies many opportunities, they also invite cyber security threats. In this context, as Turkcell, we blend our ex- pertise in digital operatorship with our extensive experience in cybersecurity and information security to meet the needs of all our corporate and individ- ual customers. Through the Turkcell New Technolo- gies Venture Capital Investment Fund, we invest in high-potential technolo- gy startups in areas such as financial technologies, cybersecurity, artificial intelligence, gaming, and health tech- nologies, contributing to the growth of these companies while supporting the entrepreneurship ecosystem. With these investments, we aim to help the startups achieve their goals while creating collaborations that bring our Company long-term strategic and fi- nancial value. like Togg, As Turkcell, participating in innovative and visionary projects in which we hold a 23% stake, and con- tributing to Türkiye's digital future in every field is important for us. Through Turkcell, we offer Togg users innova- tive payment solutions through Paycell, while an enhanced music experience is available via our digital music plat- form, fizy. These projects contribute significantly to national development in technology and innovation, as well as socially and economically. We will continue to support such collabora- tions and innovations in the future. Since 2000, with the pride and re- sponsibility of being the only Turkish Company traded on both the Borsa Istanbul (BIST) and the New York Stock Exchange (NYSE), we have complied with the capital market regulations of both countries, conducted effec- tive internal control and internal audit activities and continuously improved our corporate governance process- es. By adopting the best practices in corporate governance, we focus on transparency, accountability, and fair management. Following these princi- ples, we enhance market confidence and investor interest and strengthen our vision for sustainable growth and long-term value creation. We are tak- ing firm steps to further solidify our po- sition in international capital markets and advance our leading position in corporate governance. On this path, the support and trust of you, our val- uable stakeholders, are our greatest motivators. At Turkcell, beyond offering our cus- tomers high-quality services, we prior- itize touching and improving lives using the power of technology and commu- nication. Our efforts to achieve societal benefit and reduce inequality are real- ized through our social responsibility projects. Through these projects, we continued to stand by our community and support our people in 2023. As Turkcell, our commitment to sustain- ability goes beyond aiming to protect our planet, and we view it as a funda- mental component of the social and economic responsibilities that fall on us as a sector leader. In this context, with our operational wind power plant and the solar energy plant project that will have a capacity of 300 MW, we are taking decisive steps to source 65% of our energy from our own renewable resources. Step by step, these strategic investments bring us closer to our goal of net-zero carbon emissions by 2050. At Turkcell, we approach sustainability by managing our social, economic, and environmental impacts in a balanced way across all our activities. With this comprehensive perspective, we work to ensure that everyone can equally benefit from the opportunities technol- ogy offers. Our efforts towards empow- ering women in the technology sector have materialized through our goal of increasing the ratio of female employ- ees within the Company. Our projects "Women Writing the Future" and "Equal Opportunities, Equal Conditions" sup- port women's entrepreneurship and employment in technology. Together with all our stakeholders, we at Turkcell will continue contributing to building a more equitable and sustainable future. This year, we are proud and thrilled to celebrate the 100th anniversary of our Republic. At this historic milestone, we commemorate the spirit of the inde- pendence struggle led by Mustafa Ke- mal Atatürk and the glorious day when the foundations of our Republic were laid. With the motto "This love never ends," we express our commitment to this honorable heritage and our end- less love for our country as we advance into the future through Türkiye's Digital Century with hope and courage. I extend my deepest gratitude to our valued customers, who empower us with their support for the Turkcell brand; to our shareholders and inves- tors, who have enabled our Compa- ny to rise on solid foundations; to our employees, who, with their superior effort and passion for work never shy away from any difficulty, and to all our stakeholders. With the support of our stakeholders, we are fully committed to continuing our work centered on ethi- cal values and social benefit, to carry on our mission of adding value to the lives of our customers and the business processes of institutions, and to remain on our path as "Türkiye's Turkcell" with determination. Sincerely, 6 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 7 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Board of Directors He was born in 1975, in İstanbul. He graduated from the Istanbul University, Faculty of Law. Şenol Kazancı worked as TVNET General Manager between 2007 and 2011, as the Advisor of the Prime Minis- ter 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 held on April 15, 2021, Şenol Kazancı was elected to the Member of the Turkcell Board of Directors and he is Chairman of the Board of Directors since September 14, 2023. Figen Kılıç, born in 1970 in Gaziantep, graduated from Selçuk Univer- sity, Electrical Electronics Engineering department and received her Master’s Degree from Gebze High Technology Institute, Electrical Engineering Department. Trained in project management, process management, and test engineering, 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 moving to İstanbul Municipality BELBİM A.Ş. in 1995 for a lengthy period, working on payment projects as R&D engi- neer, Project Coordinator and R&D Manager. In 2010, she transferred to E-Kent Ödeme Sistemleri A.Ş. where she served as IT and Oper- ational team manager for electronic ticket and payment systems integration and management projects in various cities of Türkiye. 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 Infor- mation and Communication Technologies Authority (ICTA) of Türkiye as its first women board member. Kılıç became the vice president of ICTA in 2018. After her term in office ended in 2019, she acted as Ser- vice Delivery General Manager of the Republic of Türkiye Ministry of Family 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. Şenol Kazancı Chairman of the Board Figen Kılıç Board Member 8 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 9 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL 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 PAK Yatirim A.Ş. and NORA Elektrik A.Ş. and as the board member of compa- nies 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 Türkiye (TURK EXIMBANK), Board Member of Turk- cell, Board Member of İstanbul Development Agency (İSTKA), Member of Coordination Council for the Improvement of Investment Environ- ment (YOİKK), Member of High Advisory Board of MÜSİAD, Chairman of the Board of Trustees of OLPAK FOUNDATION, Member of the Founding Committee of International Technological, Economic and Social Re- search Foundation (UTESAV), Member of the Board of Trustees of Tourism Development and Education Foundation of İstanbul Chamber of Com- merce (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 (Independ- ent Industrialists and Businessmen’s Association) and the Chairman of MÜSİAD High Advisory Board, Council Member of B20 Steering Commit- tee of Türkiye, 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 Effi- ciency 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 Com- mercialize Center Istanbul (CCI), Board Member of Türkiye 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 by Istanbul Technical University, Ahi Evran University and Mehmet Akif Ersoy University. Olpak is married and is the father of two children. He speaks English very well. Nail Olpak Board Member 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 mas- ter'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 Direc- tor. He also served as a member of the Board of Directors and Risk Com- mittee 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 servic- es to International Telecommunications in 2004. In addition to his posi- tion at Turkcell, Sir Julian is also The Chairman of eBuilder AB (Sweden) and a Senior Advisor at Viasat (U.S.). He is also a Director of Cybereason (U.S.). He works as a Senior Advisor at AlixPartners (U.S. Consultancy) and worked 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 (Soft- ware), China Mobile and Verizon Wireless (U.S.). Afif Demirkıran was born in Siirt in 1952. Having completed his primary and secondary education in Siirt, Afif Demirkıran graduated from Mining Fac- ulty 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 var- ious executive positions in private sector companies, as General Man- ager 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 Türkiye. 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 Türkiye-EU Joint Parliamen- tary Commission. In the 23nd and 24th periods, he was the President in the Türkiye-EU Joint Parliamentary Commission. In the 22nd, 23rd and 24th pe- riods, he served as the Chairman of Türkiye-Spain Inter-Parliamentary Friendship Group. In the 24th period, he also was the Deputy Chairman of Türkiye-Pakistan Inter-Parliamentary Friendship Group. Mr. Demirkıran was appointed as an independent member to the Turkcell Board of Di- rectors 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. Sir Julian Horn-Smith Board Member Afif Demirkıran Independent Board Member 10 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 11 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Prof. Dr. Hüseyin Arslan, who was born in 1968, received his bachelor's de- gree 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 na- tional 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 Fac- ulty of Engineering at Istanbul Medipol University in 2013. Hüseyin Arslan served as a consultant to many domestic and international companies and organizations such as Anritsu, Türksat, Savronik and TÜBİTAK. Having over 100 United States Patent and Trademark Office's (US) patents and applications, 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 Engi- neering department and holds an MSc in Management (Grande Ecole) from HEC School of Management in Paris with a major in strategic man- agement. 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 between July 2007 and June 2017. Follow- ing 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 Il- iad in November 2020. Serdar Cetin was a board member of Turknet Ileti- sim Hizmetleri A.S. and its then parent company NetOne Holdings S.a.r.l., between 2007 - 2013. He served as a board member or board observer in several telco or technology companies including Machinezone, which is 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 was a board member of WOM S.A. Chile from July 2015 till December 2023. Additionally, he was a partner of Novator Partners LLP, a London based investment advisory firm until April 2023 and is currently a Partner of PurpleCrest Investments Llp. Prior to joining Novator, Mr. Cetin worked at Merrill Lynch investment banking 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 Direc- tors. He is fluent in English and French. Hüseyin Arslan Independent Board Member Serdar Çetin Independent Board Member Melikşah Yasin, born in Istanbul in 1975, graduated from Istanbul Uni- versity Faculty of Law in 1996. In the same year, he began his master's degree at Istanbul University's Institute of Social Sciences and com- pleted it in 1998 with his thesis titled “Control of the Administration by the Parliament.” In 1997, he started working as a research assistant in the Department of Administrative Law at the Marmara Universi- ty Faculty of Law. He initiated his doctoral studies at Marmara Uni- versity's Institute of Social Sciences in 1998 and completed them in 2002 with his doctoral thesis titled “The Capital Markets Board and Its Transactions.” Mr. Yasin conducted academic research at King's College in 2007 and 2008. In 2010, he was appointed as an associ- ate professor at the Istanbul University Faculty of Law. Since 2016, he has served as a professor of Administrative Law at Istanbul Universi- ty. He has also held various administrative positions at the university. Mr. Yasin, who has authored books and numerous articles in the field of administrative law, is currently a visiting academic at Oxford Uni- versity Faculty of Law. Mr. Yasin is married and a father of one child. On September 14, 2023, he was elected as a member of the Turkcell Board of Directors. Ayşe Nur Bahçekapılı was born in Istanbul in 1954 and is from Trabzon originally. Ms. Bahçekapılı completed high school education in Istanbul Kız Lisesi and later graduated from Istanbul University Faculty of Law. Starting her career as a private attorney, Ms. Bahçekapılı served as a member of the Istanbul Bar Association Board of Directors and General Secretary from 1988 to 1992. She was also a member of the Board of Di- rectors of the Union of Turkish Bar Associations from 1997 to 2005. In 2007, she was elected as a member of parliament from the second district of Istanbul. From 2007 to 2009, Ms. Bahçekapılı served as the Speaker of the Constitutional Committee of the Turkish Grand National Assembly, and chaired the Türkiye-Cuba Inter-parliamentary Friendship Group. Ms. Bahçekapılı served as the Deputy Group Chairman of the Justice and Development Party from 2009 to 2013. Between 2013 and 2015, she held the position of Deputy Speaker of the Turkish Grand National As- sembly, and resumed the role between 2015 and 2018. From 2020 to 2023, Ms. Bahçekapılı served as the Chief Advisor to the President and contin- ues to hold the position of a member of the Legal Policies Council of the Presidency. On September 14, 2023, she was elected as a member of the Turkcell Board of Directors. Melikşah Yasin Board Member Ayşe Nur Bahçekapılı Board Member 12 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 13 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Message from CEO Our primary goal is to strengthen our digital sovereignty and make Türkiye a leader in the 'Digital Century.’ The 100th anniversary of our Republic is not only a celebration for us but a starting point to renew our hopes and commitments for the future. With faith in our country and future generations, we will continue to work towards a brighter future. Ali Taha Koç, PhD Chief Executive Officer Dear Turkcell Family and Stakeholders, As Turkcell, we are proud to lead our country's digital transformation journey on the 100th anniversary of the founding of our Republic, a significant milestone. Inspired by our past, we continue to add value to the future of Türkiye by main- taining our pioneering role in innova- tion and technology. Our primary goal is to strengthen our digital sovereignty and make Türkiye a leader in the 'Digital Century.’ The 100th anniversary of our Re- public is not only a celebration for us but a starting point to renew our hopes and commitments for the future. With faith in our country and future generations, we will continue to work towards a brighter future. Despite worldwide economic and social challenges, for Turkcell, 2023 has been a year of sustained growth and strength- ened leadership in the industry. As the Turkcell family, we continue our efforts with unparalleled solidarity to heal and rebuild in the aftermath of the earth- quake, the disaster of the century that affected 11 of our provinces. Together, on this journey of solidarity, we look forward to the future with hope and pledge to remain beside our society. Our priority is to accelerate our digital transformation journey and continue making technolo- gy accessible to everyone. With our pro- jects supporting digital transformation in education, health, the business world, and every aspect of social life, we are fo- cused on adding value to every segment of society and investing in the future of Türkiye. While maintaining our leadership in mo- bile, technology integration, and data center fields, we have continuously im- proved our innovative product and ser- vice portfolio, successfully meeting our customers' needs. To advance these achievements further, we will continue to focus on offering the most suitable solu- tions that meet their changing expecta- tions, placing customer satisfaction at the center. Additionally, we will continue taking pioneering steps to manage our operations sustainably. And by increas- ing our investments in renewable energy sources, we aim to leave a livable and greener world for future generations. As Turkcell, we continue to create value for our stakeholders with our diversified business strategy. With our mobile mar- ket leadership continuing with a wide margin, we registered 799 thousand net subscriber additions in 2023. In line with our vision of strengthening Türkiye's digi- tal infrastructure, we continued our fiber investments, reaching 5.8 million home passes, which brings us the contentment of knowing we’re on the right track. And so, with our innovative product and ser- vice portfolio, we will continue to meet our customers' increasing and changing needs. In 2023, we further advanced our fi- nancial and operational achievements, strengthening our leading position in the industry. Thanks to our expanding sub- scriber base and stable price increases, our revenues and operational profitabil- ity increased, leading to strong financial and operational results in 2023. By the end of 2023, our consolidated revenues had risen 14.6% year-over-year to TRY 107.1 billion. Our consolidated EBITDA rose 19.9% to TRY 43.9 billion. Our net profit in- creased by 82.5% compared to the previ- ous year, to TRY 12.6 billion. This year, we continued to offer compre- hensive solutions to meet our customers' digital needs through our applications developed entirely by Turkish engineers. Those applications include BiP, TV+, fizy, and lifebox, which are brands within the Turkcell ecosystem. In 2023, our digital services' number of stand-alone paid us- ers increased by 9% year-on-year to 5.6 million. As a leading technology integrator, we pioneer Türkiye's digital transformation with our digital business services. In ad- dition to our traditional telecom services, with our extensive services in managed transformation projects, data digital center and cloud solutions, cybersecuri- ty, and new technologies, we enable our customers to stand out among the com- petition and meet their increasing needs. As Türkiye's largest and highest-quality data center operator, we combine Türki- ye's strategic geographical position with our high-tech solutions. We continue our efforts to transform our country into a major data center hub and ensure that data remains within our borders. With our four new generation data centers, we host 31.6 thousand square meters of white space. Through Turkcell Cloud services, we host the information technology infra- structures of institutions at these centers, offering cost advantages and flexibility. In our techfin services, Paycell and Finan- cell, we continued to expand our portfo- lio and diversify our activities with inno- vative initiatives. The pre-sale payments for Togg, Türkiye's leading initiative in the mobility sector and the first domestical- ly-produced electric car, were success- fully realized through the Paycell wallet. This transaction once again proved the strength of Paycell's technological infra- structure and its active role in the mobile payment sector. Alongside providing fi- nancing for technological products and services to individual and corporate cus- tomers through Financell, we have also successfully launched new loan solutions such as solar energy system (SES) loans, furniture, and home appliance financing. Furthermore, by offering more in-depth options in shopping and pre-owned car loans, we have diversified our financing solutions and focused on responding to customer needs across a broader spec- trum. Within the framework of Turkcell's financial services vision, Turkcell Dijital Sigorta A.Ş., operating under the "Wiyo" brand since June 2023, began offering our customers a customer-focused and technology-based insurance experience. 4.5G technology was the last major inno- vation focused on people. Now, with 5G, we will focus on the Internet of Things and smart industrialization. We will turn to- wards the new possibilities and applica- tions of 5G technology's enhanced con- nectivity options for smart applications. With the introduction of 5G technology in Türkiye, we aim to be the company that offers the highest quality 5G experience. This reflects our promise to provide our customers with an uninterrupted and fast connection. On Turkcell’s sustainability journey, we see our commitment to renewable en- ergy not just as an effort to protect our planet but as a fundamental component of the social and economic responsi- bilities we bear as a leader in the tech- nology and telecommunications field. With our existing wind power plant and our ongoing 300 MW solar power plant project, we are taking decisive steps to- wards sourcing 65% of our energy from our own renewable resources. These stra- tegic moves bring us closer to our goal of net-zero carbon emissions by 2050 every day and strengthen our environmental sustainability while making our business model more competitive and resilient. In addition to our sustainability efforts, we emphasize social responsibility projects aimed at spreading digital literacy and technology awareness across all seg- ments of society. Within our vision of "dig- ital literacy for everyone from 7 to 70," we aim to create awareness of artificial intel- ligence and technology and disseminate knowledge. This two-pronged approach facilitates our goal of zero carbon emis- sions and strengthens the societal inte- gration and inclusiveness of technology. We believe that with the steps Turkcell will take in the coming periods for envi- ronmental and social sustainability, we will shape Türkiye's Digital Century under the leadership of Turkcell. At Turkcell, while effectively using artificial intelligence solutions in every area of our operations, we ensure the ethical use of AI. The chatbot we developed, serving 200 thousand customers daily, provides a concrete example of how these tech- nologies can be applied in practice. Our Turkcell AI team has undertaken a signif- icant task in developing the "In-Car Face Detection, Recognition, and Analysis Sys- tem" for Togg, Türkiye's domestic and na- tional automobile. Dear stakeholders, as we continue to- wards Turkcell’s 30th anniversary with the mission of building a sustainable future, merging technological innovations with societal benefit, and leading Türkiye's dig- ital transformation journey, we continue working determinedly for a greener, fair- er, and technologically advanced world with your support and contributions. 2023 stood out as a year where we celebrated our achievements and ex- perienced unity and solidarity. I have full confidence that we will continue to build a better future for our society by leveraging the power of technology. I express my gratitude to our colleagues, our Board of Directors, and all our stake- holders who have continuously support- ed this journey. Sincerely, 14 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 15 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Management Team* Ali Taha Koç, PhD was born in Ankara in 1980. He completed his un- dergraduate degree in 2001 at Bilkent University, Department of Electrical and Electronics Engineering with full scholarship. After- wards, he received his master's and doctorate degrees in the De- partment of Electrical Engineering at University of Texas at Dallas, both with full scholarships. Ali Taha Koç, PhD joined Intel in 2006 as a research and development (R&D) engineer in the USA. During his tenure at Intel, he developed 61 patents, published 23 scientific ar- ticles, and developed and managed several international projects. In 2013, he became one of the 10 awarded engineers who devel- oped the most patents at Intel. After returning to Türkiye in 2014, he started to work as the Chief Counsellor of the Prime Ministry and in the same year he was appointed as the Head of Information Tech- nologies of the Presidency. During his tenure at the Presidency, he also managed the formation of the State Information Coordination Center (SICC) in the Presidency Security Policies Department, and started the information flow from all ministries and security units to the Presidency. Koç was appointed as the Head of Digital Transfor- mation Office on September 12 , 2018. Besides his duties at the Pres- idency, he also served as a board member of Türksat Uydu Haber- leşme Kablo TV ve İşletme A.Ş. (Türksat Satellite Communications Cable TV and Business Inc.). Koç teaches graduate and doctorate courses at the Department of Electrical and Electronics Engineering at Bilkent University. He is also a licensed pilot, fluent in English and married with one child. Graduated from the Marmara University Department of Business Administration, Kamil Kalyon began his professional career at the Ernst Young Türkiye (E&Y) Tax department in 1996. During his twelve- year career at E&Y, he took part in many strategic projects, ulti- mately holding the position of Senior Manager. Between 2008 and 2012, he worked as the Finance Director in Kont Bilişim Group oper- ating in the information technologies sector. He entered OMV Petrol Ofisi A.Ş., a subsidiary of the Austria-based OMV Group, as Tax Di- rector 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 worked as the Financial Planning and Anal- ysis Director as of February 2021. He has been appointed as Turkcell Chief Financial Officer as of September 2023. Kalyon holds the titles of Sworn-in Certified Financial Advisor and Independent Auditor. Ali Taha Koç, PhD Chief Executive Officer 􀕬 The information regarding the changes in Executive Officers that took place within our Company in 2023 is included in our announcements dated February 8, 2023, February 21, 2023, September 11, 2023, September 14, 2023, September 19, 2023, September 25, 2023, October 13, 2023, November 9, 2023, November 9, 2023, and December 20, 2023. Kamil Kalyon Chief Financial Officer 16 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 17 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Kadri Özdal graduated from Dokuz Eylül University, Faculty of Economics and Administrative Sciences, Department of Public Administration. He started his professional career at Vodafone in 1999 and worked in sales, marketing and commercial operations departments, and later joined Turk Telekom in sales development, channel optimization and management. He worked as sales de- velopment director and then acting as CSO between 2011-2012. Kadri Özdal took part in foundation and management of n11.com which is one of the largest e-commerce platforms in Türkiye and worked in the CSO role. In February 2016, he started as Alternative Sales Channels Director at Turkcell and subsequently served as non-exclusive and digital sales channels, later as Retail Channels Sales Director and finally as Executive Vice President of Consum- er Sales. Özdal was appointed as Turkcell Chief Sales Officer as of November 2023. Mustafa Demirhan completed his undergraduate studies in the Electrical and Electronics Engineering department of Bilkent Uni- versity with a full scholarship in 2001, and received his master's degree in the Electrical and Electronics Engineering department of Rutgers University in 2003. Mustafa Demirhan, who started his professional career as a re- search and development engineer at Intel in 2003, developed 14 patents until 2007. In 2007, he started working on smartphone software at Microsoft. Later, he took on the manager role in pro- jects such as Microsoft 365, Microsoft's first successful cloud com- puting product, and subsequently, Microsoft Azure. He served as a manager in open-source cloud computing projects at Google in 2018, and returned to Microsoft in 2021 to manage critical pro- jects in the field of cyber security. Kadri Özdal Chief Sales Officer As of December 2023, Mustafa Demirhan started his role as Chief Information and Communication Technologies Officer at Turkcell. Mustafa Demirhan is married and has four children. Mustafa Demirhan Chief Information and Communication Technologies Officer Mr. Erkan Durdu completed his undergraduate studies in the Radio and Television department of Istanbul University and received his master's degree in the Communication Sciences department at Marmara University. He began his career as a program producer at TRT Istanbul Radio, and worked as a reporter and editor at Kanal 7, Radikal, and Akşam newspapers. From 2003 to 2011, he served as a Minister Advisor at the Prime Ministry. Between 2011 and 2014, he held the position of Deputy Director General of Press, Publishing, and Information at the Prime Ministry. From 2014 to 2021, he served as Vice Chairman of the Board and Deputy General Manager at TRT. Between 2022-2023, he held the position of General Secretary at TÜBİTAK. In addition to these roles, he served in various impor- tant positions such as a member of the Audit Committee at the De- velopment Bank, a member of the Board of Directors at Euronews, and a member of the Board of Directors at the Press Advertise- ment Agency. He provided leadership in areas such as Human Re- sources, Budget and Financial Operations, Broadcast Strategies, Change Management, Content Management, and Digital Business Services in the institutions where he worked. As of November 2023, Durdu has been appointed as Turkcell Chief People and Business Support Officer. Ali Uysal, a graduate of Istanbul University Faculty of Law, com- pleted his master's degree in European Union Law at Stockholm University Faculty of Law. Ali Uysal started his professional career as a lawyer in 2003 and worked as a senior lawyer in the corpo- rate consultancy department of law firms serving national and international clients until 2009. In 2009, he started working at Sun- Express Airlines, a joint venture company of Turkish Airlines and Lufthansa, as Legal Counsel responsible for the establishment of the Company's internal legal department and continued until 2014. Ali Uysal, who served as the General Legal Counsel of Turk- ish Airlines between 2014 and 2019, has been working as the Cor- porate Legal Affairs Director within the Deputy General Manager of Legal Regulation at Turkcell İletişim Hizmetleri A.Ş. since 2020. As of November 2023, Uysal was appointed as Turkcell Chief Le- gal and Regulation Officer. Erkan Durdu Chief People and Business Support Officer Ali Uysal Chief Legal and Regulation Officer 18 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 19 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Top Management of Subsidiaries Murat Akgüç completed his undergraduate degree at Boğaziçi University, Department of Industrial Engineering, and the Execu- tive MBA program at Rotterdam School of Management. He has over 20 years of experience in business development, technolo- gy, telecommunications, strategy, digital innovation and venture capital. Akgüç, who started his career at the Osmanlı Bank, lat- er worked in treasury projects in the banking sector. In 2004, he served as Vice President of Business Development and Strategy at Credit Europe Bank in the Netherlands. Akgüç, who returned to Türkiye in 2015, held senior management positions in the fields of technology, digital product development, strategy and market- ing in the media and gaming industry on an international scale. He started working as Deputy General Manager responsible for Venture Capital and Technology Investments at the Türkiye Wealth Fund, which he joined in 2021. He led the establishment of the Türkiye Technology Fund - TTF, which invests in Türkiye Ven- ture Capital funds, and other important projects, especially the acquisition of Türk Telekom, which is Türkiye's largest acquisition in 2022. In addition to these duties, he served as a Member of the Board of Directors of Türkiye Sigorta and Member of the Board of Directors of TVF Technologies Investments. As of November 2023, Akgüç was appointed as Turkcell Chief Marketing and Digital Services Officer. Prof. Dr. Vehbi Çağrı Güngör was born in Ankara in 1979. He re- ceived his B.Sc. and M.Sc. degrees from Middle East Technical University, Department of Electrical and Electronics Engineer- ing in 2001 and 2003. He obtained his Ph.D. degree from the Department of Electrical and Computer Engineering at Geor- gia Institute of Technology (Atlanta, GA, USA) in 2007. Receiv- ing the Full-Professor title in 2018, Prof. Dr. Güngör's research areas are in the fields of next-generation wireless communi- cations, 5G and 6G mobile networks, Internet of Things and Artificial Intelligence. Prof. Dr. Güngör served as a project manager at Eaton Cor- poration, a researcher at Siemens Corporate Research, and an Executive Board Member in the TÜBİTAK TEYDEB BILTEG. Prof. Dr. Güngör has received many international and nation- al scientific awards. Prof. Dr. Güngör's research projects have been funded by several institutions, such as the European Union, the Ministry of Science, Industry and Technology, and TÜBİTAK. Prof. Dr. Güngör has more than 100 research articles published in international peer-reviewed journals and con- ferences and several patents. Prof. Dr. Güngör, who joined Turkcell as Chief Network Tech- nologies Officer as of November 2023, is married and the fa- ther of three children. See page 17 for the resume. Murat Akgüç Chief Marketing and Digital Services Officer Ali Taha Koç, PhD Turkcell Chief Executive Officer İsmet Yazıcı received his bachelor’s degree in Electrical-Electronics Engineering from Hacettepe University in 1992, and his postgradu- ate 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. Beginning his professional career in 1993, Yazıcı served as the Re- search & Development Engineer, International Sales Engineer, Ro- mania Country Manager, Product Marketing Manager, EMEA Re- gion CDMA Business Development Director, and Enterprise Leader, respectively, at the Türkiye and USA offices of Nortel until 2009. İsmet Yazıcı joined Turkcell in 2009. Mr. Yazıcı has been serving as the General Manager of lifecell, Turkcell’s subsidiary in Ukraine, since May 2017. Prior to this position, Yazıcı worked as the Deputy Gen- eral Manager of Sales and Business Development at Global Tow- er 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. İsmet Yazıcı General Manager of lifecell Ukraine Prof. Dr. Vehbi Çağrı Güngör Chief Network Technologies Officer 20 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 21 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Erdal Yayla graduated from Marmara University Faculty of Econom- ics and Administrative Sciences in 1999 and completed the Executive Development Program at Wharton School in 2016. Mr. Yayla started his career as a Senior Auditor at PricewaterhouseCoopers in 1999, and then worked as a Financial Controller at LafargeHolcim in 2002. BeST General Manager Erdal Yayla joined Turkcell İletişim Hiz- metleri 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), re- spectively 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 Gen- eral Manager role starting from November 2018 until March 2020 in addition to his existing responsibility. Mr. Yayla serves as BeST Gen- eral Manager since March 2020. Mr. Aynur graduated from Department of Metallurgical Engineering at Middle East Technical University in 1993. After working in differ- ent companies in the private sector, 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 Af- fairs, Sales Manager in charge of Large Scale Businesses, Corpo- rate Sales Director in charge of Large Scale Businesses and Corpo- rate Sales Director in charge of Mid-Scale Businesses at Turkcell. 1 Çağatay Aynur's term of office ended as of January 2024. Metin Tuğtağ has been appointed as the General Manager of Turkcell Global Bilgi as of February 2024. Çağatay Aynur1 General Manager of Turkcell Global Bilgi Korhan Bilek has a M.S. degree from Boğaziçi University Electrical and Electronics Engineering department, and received his MBA from University of Rochester. He began his professional life as Re- search Analyst at the Federal Reserve Bank. He served as an an- alyst at AkInvest between 2002 and 2004 and Finance Director at Sabancı Holding between 2004 and 2013. He worked as the CFO at Teknosa for 3 years and was a Board member at Carrefoursa Türki- ye between 2011 and 2016. Korhan Bilek joined Turkcell team as Investor Relations and Merg- ers & Acquisitions Director in November 2016, and was appointed as Treasury and Capital Markets Management Director in December 2018. In July 2020, he was appointed as CEO and Board member of Turkcell Finansman AŞ. He also serves as the Coordinator of Turkcell Financial Services, and he is Board member at Turkcell Ödeme Hiz- metleri AŞ, Paycell Europe GMBH, Turkcell Sigorta Aracılık Hizmetleri AŞ and Sofra Kurumsal ve Ödüllendirme Hizmetleri AŞ. Erdal Yayla General Manager of BeST Z. Korhan Bilek Turkcell Financial Services Coordinator and General Manager of Financell Murat Küçüközdemir graduated from İstanbul Technical Universi- ty, Department of Electronics and Communication Engineering in 1992. Subsequently, he completed Insead Business School Lead- ership Development and IMD Business School Global Leadership programs. He started his professional life in 1993 and assumed technical and managerial 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 Glob- al 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 Gen- eral Manager since February 1, 2021. Murat Küçüközdemir General Manager of Kuzey Kıbrıs Turkcell 22 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 23 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Erkin Kılınç received his bachelor’s degree in Mechanical Engineer- ing from Istanbul Technical University in 1998, and Executive MBA degree from Işık University in 2003. Kılınç began his career 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 Türkiye Sales Director at RWE (2011-2015) and as Assistant General Manager at Limak Energy (2015-2017). Erkin Kılınç joined Turkcell Energy Solu- tions as the General Manager in 2017. 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 establish 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 Man- agement Director in 2015 and was appointed as General Manager of Turkcell Digital Business Services as of 1 April 2022. Atilla Yıldız, graduated from İstanbul Technical University, Depart- ment of Electronics and Communication Engineering in 1999. Atilla Yıldız joined Turkcell family in 2000. After serving at departments of Network Operations, Service Control Center and Business Intelli- gence Systems, he managed 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 Solu- tions Director. As of September 2021, Mr. Yıldız was appointed as At- mosware Teknoloji General Manager. Erkin Kılınç General Manager of Turkcell Energy Solutions Atilla Yıldız General Manager of Atmosware Teknoloji A.Ş. Serhat Dolaz graduated from Yıldız Technical University with a de- gree in Electronics and Communication Engineering and complet- ed the Bahçeşehir University MBA program. Serhat Dolaz joined the Turkcell family in 2009. After taking several technological manage- ment positions in Turkcell Teknoloji A.Ş. and Paycell, he took on re- sponsibilities as CTO and Deputy CEO of Paycell. As of May 1, 2022, Serhat Dolaz is the General Manager of Paycell, a new generation payment and financial services platform. 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 Institu- tions of Türkiye). Gürkan Arpacı General Manager of Turkcell Digital Business Services Serhat Dolaz Paycell General Manager 24 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 25 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Emre Erdem graduated from Istanbul Technical University, Depart- ment of Management Engineering. Emre Erdem, who started his professional career as Financial Auditor at Arthur Andersen in 2000, worked as Senior Auditor at Ernst & Young until 2004 and moved to the liberalized telecommunications sector as Billing & Customer Ac- counts Manager at Borusan Telekom. In 2007, he started working at Turkcell Superonline, the fixed tel- ecommunication 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 Opera- tor Relations and Wholesale Department. In addition to leading the International and Wholesale Team, Emre Erdem has been serving as Turkcell Superonline General Manager since April 2021. Uğur Çağlar graduated from Middle East Technical University In- dustrial 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 Türkiye and the Middle East. He joined the financial services sector in 2007 with TEB (a BNP Par- ibas Company) as Strategic Planning Manager. He later moved on to the insurance domain with BNP Paribas Cardif as Chief Market- ing 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 started working for MetLife as AVP of Business Development and Corporate Sales. He joined Turkcell as the General Manager of Turkcell Dijital Sigorta A.Ş. in August 2022. Emre Erdem General Manager of Turkcell Superonline Uğur Çağlar General Manager of Turkcell Dijital Sigorta A.Ş. 26 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 27 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL About the Report We are pleased to present to our stakeholders our performance and future approach in the areas of social, economic, environmental and corporate governance, in addition to our financial achievements, through the Integrated Annual Report, which we have published for the fourth time this year. This report, which we have published to provide Turkcell's stakeholders with an objective and holistic assessment of our integrated and sustainable val- ue creation approach and the results we have achieved in this direction, in accordance has been prepared with the Turkish Commercial Code (TCC) and the Capital Markets Board's (CMB) Communiqué Serial II.14.1 "Com- muniqué on Principles Regarding Fi- nancial Reporting in Capital Markets" and the (IR) Framework Principles published by the International Integrated Reporting Council (IIRC). Integrated Reporting This report has been prepared by Turkcell Iletisim Hizmetleri A.S. in ac- cordance with the GRI Standards for the period between 1 January 2023 and 31 December 2023. In addition to the financial and operational data in- cluded in the report as required by law, the main content of the report is Turk- cell's sustainability priorities, which are the key performance areas of the integrated value model. Turkcell's sustainability priorities have been identified among social, economic, environmental and sectoral issues in accordance with the principles set out in the GRI Standards through methods that ensure multi-stakeholder par- ticipation. The content of the report also responds to the United Nations Global Compact Communication on Progress, the CMB Sustainability Prin- ciples Compliance Framework and the SASB Telecommunication Services Indicators, to which Turkcell became a signatory in 2007. The scope of the content is designed to meet the infor- mation needs of Turkcell's long-term investors (shareholders, bondholders and potential investors) as well as a general portfolio of corporate stake- holders, including Turkcell employees, customers, public institutions and or- ganisations and non-governmental organisations. The terms "Turkcell", "Company" and "Organisation" in this report refer to Turkcell İletişim Hizmetleri A.Ş. The fi- nancial information presented in this report is presented on a consolidat- ed basis in accordance with legal requirements and international stand- ards, and covers the organisational integrity of Turkcell. Unless otherwise stated, the social and environmental performance data refer to the Turk- ish operations, which represent the most significant part of the company's operations. You can send your questions, com- regarding ments and suggestions Turkcell's Integrated Value Creation Model and details of our activities, fi- nancial performance and future goals to dahaiyibirdunya@turkcell.com.tr. For explanations of abbreviations and technical definitions used in the report, please refer to the Glossary section. 28 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 29 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Turkcell at a Glance Established in 1994 as the pioneer of the telecommunications sector in Türkiye, Turkcell has continued its steady progress over the past 30 years. Today, Turkcell continues to operate as Türkiye's leading provider of communications and technology services. 􀎲 Please visit www.turkcell.com.tr for further information about Turkcell. Turkcell has played a key role in the de- velopment of the telecommunications sector in Türkiye with the innovations it has brought to the sector over the past 30 years. Founded in 1994 as a mobile communications company, Turkcell has transformed itself over the years, first as an integrated communications opera- tor and then as a digital operator. To- day, together with its group companies operating in different service catego- ries, Turkcell offers its customers a wide range of value-added and innovative digital services, including voice, mes- saging, data and IPTV services over its mobile and fixed networks, as well as digital services for individuals and businesses, digital financial solutions such as insurance and loans, and dig- ital mobility solutions through Togg, in which Turkcell is a shareholder. Turkcell, which has expanded its operations abroad over the years, currently op- erates in four countries in addition to Türkiye, namely Belarus, the Turkish Re- public of Northern Cyprus and Ukraine1 (discontinued operations). Turkcell launched its first LTE mobile communication services on 1 April 2016 and today provides services in 81 prov- inces of Türkiye with LTE-Advanced and 5-carrier aggregation technologies at speeds of up to 1.6 Gbps. Turkcell's total spectrum bandwidth of 234.4 MHz cor- responds to 43% of the total spectrum available to mobile operators in Türkiye. Providing fibre data access at speeds of up to 10 Gbps in fixed technology, Turkcell is at the forefront of 5G efforts in Türkiye with the test studies carried out over its pilot network and the lead- ing roles it has assumed in national and international consortia. As of 29 July 2022, Turkcell started to offer 5G tech- nology at Istanbul Airport with the au- thorization of the Ministry of Transport and Infrastructure. During the reporting period, Turkcell continued its prepara- tions for the 5G services planned to be launched in Türkiye in the coming peri- od with its pilot applications. Turkcell shares have been traded on both NYSE and BIST since July 2000. Thus, Turkcell is the only Turkish compa- ny whose shares are traded simultane- ously on two different stock exchanges. Turkcell debt instruments are listed on the Irish Stock Exchange. Turkcell is also listed on the MSCI ESG Index and BIST Sustainability Index. As of 31 December 2023, Turkcell had revenues of TRY107.1 billion and assets of TRY247.1 billion. Turkcell’s Shareholder Structure Shareholders Nominal (TRY thou- sand) 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 26.2 19.8 54.0 100.0 􀕬* Publicly traded shares also include ADS trading at NYSE. 1 As per our Company's Board of Directors’ decision dated December 20, 2023; a share transfer agreement was signed on December 29, 2023 for the transfer of all shares, along with all rights and debts, of lifecell LLC, LLC Global Bilgi, and LLC Ukrtower, which are Turkcell's subsidiaries operating in Ukraine, to NJJ Capital. The sale of the Ukrainian assets remains subject to the completion of closing conditions. As of December 31, 2023, lifecell LLC, LLC Global Bilgi and LLC UkrTower have been classified as a disposal group held for sale and as discontinued operations. 30 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 31 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. Global Bilgi Pazarlama Danışmanlık ve Çağrı Servisi Hizmetleri A.Ş. 100% Kıbrıs Mobile Telekomünikasyon Limited 100% CJSC 100% Eastasian Consortium B.V. 100% Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. 9% Turktell Bilişim Servisleri A.Ş. 100% Limited Liability Company 100% Rehberlik Hizmetleri Servisi A.Ş. 100% Lifecell Digital Limited 100% Lifetech LLC 100% Turkcell Gayrimenkul Hizmetleri A.Ş 100% Turkcell Satış A.Ş. 100% Kule Hizmet ve İşletmecilik A.Ş. 100% Atmosware Teknoloji Eğitim ve Danışmanlık A.Ş. 100% Turkcell Finansman A.Ş. 100% Turkcell Dijital Teknolojileri Limited 100% Lifecell Ventures B.V. 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 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% Turkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.Ş. 100% Lifecell Bulut Çözümleri A.Ş. 100% Lifecell Müzik Yayın ve İletim A.Ş. 100% Dijital Eğitim Teknolojileri A.Ş. 51% Turkcell Sigorta Aracılık Hizmetleri A.Ş. 100% Lifecell TV Yayın ve İçerik Hizmetleri A.Ş. 100% Turkcell Dijital Sigorta A.Ş. 100% Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. 90.91% Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş. 23% Beltower LLC 100% Ukrtower LLC 100% Paycell Europe GmbH 100% Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş. 66.6% Boyut Grup Enerji Elektrik Üretim İnş. San. ve Tic. A.Ş. 100% 32 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 33 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Our Vision Superior digital services for a better future Our Mission To add value to the digitalization journey of our customers, both in Türkiye and across the globe, and enrich their lives with our continuously improving competencies and robust ecosystem 34 | TURKCELL 2022 ENTEGRE FAALİYET RAPORU TURKCELL 2023 INTEGRATED ANNUAL REPORT | 35 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Turkcell 2023 Awards Achievement in Customer Excellence Awards Employer Brand Stars Turkcell - Diamond Award in Communication (GSM) Category TV+ - Gold Award in the Digital Platform Category Turkcell Superonline - Silver Award in the Internet Service Providers Category Paycell - Silver Award in Electronic Money Applications Category GNÇYTNK - Graduate Recruitment Programme - Gold Award T.Life - Use of Digital Programme - Gold Award T.Life - Employer Brand Strategy - Silver Award T.Life - Internal Communication Programme - Bronze Award Brandon Hall Excellence Awards Brandverse Awards GNÇYTNK - Best Unique or Innovative Talent Acqusition Programme - Gold Award Future of Leadership Masters - Best Advance in Competencies and Skill Development - Gold Award Inclusive and Effective Benefits Supporting Flexible Working Model - Best Advance in Benefits Strategy and Administration - Bronze Award Superwomen of Cyber Security - Best Unique or Innovative Learning and Development Programme - Bronze Award Tekno Waste Project - Silver Award in the Social Responsibility and Sustainability Category Pasaj Aylardan Cuma Project - Media/Sectoral: Silver Award in E-commerce Category Paycell Feed Integrations Project - Bronze Award in Media / Sectoral Finance Category Turkcell Store Geforce Now Mall IQ Project - Bronze Award in Media / Outdoor Category MarTech Awards Escaping Eyes Project - First Prize in the category of Wonders Created with Low Budgets Paycell Feed Integrations Project - First Prize in the Best Marketing Automation Technology Category TV+ Dynamic Streaming Ads Project - First Prize in the Best Media Technology Category Fizy Decibelmetre Project - First Prize in the Best Use of Technology in Content Marketing Category Fizy Moodmeter Project - First Prize in the Best Use of Technology in Mobile Applications Category Happy Place to Work selected We were from among 303 companies in the "Türkiye's Happiest Workplac- es" survey organised by Happy Place to Work, a platform es- tablished by academics and consultants to help compa- nies on their way to creating a happy workplace culture. We were also named the happi- est workplace in the telecom- munications industry and re- ceived the Excellent Employee Experience Certificate. 36 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 37 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL TURKCELL HAKKINDA Turkcell 2023 Awards 21st Golden Compass Awards T.Life - Best Internal Communication Project GNÇ SporFest - Sponsorship Communication - Other Women Writing the Future Climate Idea Marathon - TÜHİD KAGİDER 1e1 Gender Equality Award IDC DX Summit 2023 RPA Marathon Programme First Prize in the Future Enterprise of the Year Category Best Mobile App Awards İşTurkcell Online Mobile Application Silver Award 13th GLOBEE® International Business Awards Emergency Robot Project 2 Awards in Best Use of Technology in Customer Services Category Stevie 2023 The International Business Awards Contact Risk-Scoring System Bronze Stevie Award in the Legal Solution Category Association for Talent Development RPA Training and Development Programme Talent Development Innovation Award MIXX (Marketing and Interactive Excellence) Awards TV+ Sahibinden F1 Viral Project Special Award Best Innovative Service Provider of the Year Turkcell Transport Network Best Innovative Service Provider of the Year Award International Loyalty Awards Barrier-Free Stores First Prize in the Best Customer Experience Category Data Center ICT Management Innovation of the Year DCMAN Application in Data Centre White Space Operation Processes 2nd Prize in Data Centre ICT Management (DCIM) Innovation of the Year Category RDCNOF 2023 Showcase Project The Best Agile Project Paper in all Industries Third Prize Web Excellence Awards Corporate Compass Platform Award in Corporate & B2B Category Green All-optical Network Forum 2023 Super Wi-Fi project Great Advencement of Smart Home Service Award Felis Awards Google Hack Project 5 Felis Award Burnout Syndrome Film Curious Felis Award T.Life 1 Year Old Achievement Award IDC CIO Awards Turkcell Omnichannel Project 3rd Prize in Change Management Category Stevie Awards Turkcell Market Instant Store Stock Display Project - Gold Stevie Award in the Award for Innovation in Sales Technology Industries Category Atmosphere Application - Gold Stevie Award in the "Sales & Marketing Mobile Application" Category LegalTech Breakthrough Awards Contract Risk Scoring Application Overall Legal Analytics Innovation of the Year Award Secret CV HR Stars T.Life 2023 Best Employer Brand of the Year YTU Business World Awards Step into the Future Project Best Social Responsibility Project Award selected by students Boğaziçi University Business World Awards Technology Company of the Year Award Bosphorus Environment Awards Turkcell Transform to Education Project Recycling Project of the Year Award Future of Cloud & AI Robotic Device Requirement and Order Management, Robotic Process Automation Project Future of Cloud & AI Award Turkcell Data Centre Energy Saving with Reinforcement Learning Pro Future of Cloud & AI Award 􀕬 All awards received by Turkcell in 2023 can be found in Annex 1 - Awards Received by Turkcell in 2023 of the Report. 38 | TURKCELL 2023 ENTEGRE FAALİYET RAPORU TURKCELL 2023 ENTEGRE FAALİYET RAPORU | 39 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCE Turkcell Group: Developments in 2023 Turkcell Group companies, with 24,352 employees, operate in 4 countries, namely Türkiye, Belarus, the Turkish Republic of Northern Cyprus (TRNC) and Ukraine2 (discontinued operations). TÜRKİYE Turkcell Türkiye 92.0 Billion TRY Revenue 38.0 Million Mobile Customers 3.1 Million Fixed Customers 1.4 Million IPTV Customers BELARUS BeST 1.5 Million Mobile Customers 1.4 Billion TRY Revenue 2 As per our Company's Board of Directors’ decision dated December 20, 2023; a share transfer agreement was signed on December 29, 2023 for the transfer of all shares, along with all rights and debts, of lifecell LLC, LLC Global Bilgi, and LLC Ukrtower, which are Turkcell's subsidiaries operating in Ukraine, to NJJ Capital. The sale of the Ukrainian assets remains subject to the completion of closing conditions. As of December 31, 2023, lifecell LLC, LLC Global Bilgi and LLC UkrTower have been classified as a disposal group held for sale and as discontinued operations. TRNC Kuzey Kıbrıs Turkcell 0.6 Million Mobile Customers 1.1 Billion TRY Revenue UKRAINE (DISCONTINUED OPERATIONS) lifecell 11.7 Million Mobile Customers 7.6Billion TRY Revenue 40 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 41 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL 2023 Strategic Objective and Managerial Achievement Assessment Revenue increased by 14.6% to 107.1 billion TRY EBITDA of TRY billion with 43.9 19.9% growth Net income realised at billion with an increase TRY 12.6 of 82.5% Strong revenue, EBITDA and net income performance thanks to our diversified business model with strategic focus areas, consistent price increases and our inclusive people-centred strategy Double- digit mobile ARPU growth supported by increased usage and upgrades Debt ratio below the sector average thanks to effective balance sheet management; healthy foreign currency position thanks to disciplined financial risk management Strong cash flow generation through successful operational performance despite challenging macroeconomic conditions Net leverage ratio at 0.5x level3 USD 22 million net long FX position4 TRY 7.3 billion free cash flow generation5 18.4% mobile ARPU6 increase 0.7%residential fiber ARPU growth Successful subscriber acquisition performance with strong infrastructure, quality customer service and rich value proposition 493 thousand net mobile subscriber additions 71.5% postpaid subscriber base, which reached 169 thousand net fiber subscriber additions 799 thousand total net additions7 Continued strong momentum in our strategic focus areas 3 As of 4Q21, we revised the definition of our net debt calculation to include "financial assets" reported under current and non-current assets. Required reserves held at CBRT are also included in the net debt calculation. We believe that these assets are highly liquid and easily convertible into cash without any significant change in value. 4 Advance payments included. 5 Free cash flow calculation includes EBITDA and the following items as per IFRS 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. 6 Excluding M2M. 7 Including mobile, fixed broadband, IPTV, and wholesale (MVNO&FVNO) subscribers Continued growth in data usage through digitalisation, increased smartphone penetration and 4.5G user growth Average monthly mobile data usage per user increased to 17.0 GB with 15.6% increase 19.4% increase in total digital services revenues 23.0% revenue growth in digital business services 28.9% growth in Techfin revenues, 28.6% growth in Paycell revenues 27.7% growth in Financell revenues 42 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 43 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Strong performance in sustainability indices Strengthening Türkiye's sector leadership in intellectual property CDP Climate Change Rating upgraded from A- to A Being included in the BIST Sustainability Index since the first day Listing in the BIST Sustainability 25 Index 992 Number of R&D employees1 550 national patent applications; 1,019 registered patents2 6 ongoing international projects on Eureka platforms (supported by TÜBİTAK), 8 ongoing HORIZON 2020/Europe projects, 8 ongoing national projects supported by TÜBİTAK Increasing momentum towards net zero targets 76,258 GJ energy savings, 40,267.93 tonnes CO2e emission reduction 750 green field commissioning Increasing reuse practices in e-waste management Promoting equal opportunities and diversity 35.2% female employees 31% female employees graduated from engineering departments 35% female employees in IT positions 76 Whiz Kids classes in BİLSEMs across Türkiye 􀕬 1 The number of R&D employees working at Turkcell Teknoloji is 992. Turkcell Group has 1,497 R&D employees in total. 2Turkcell Group has 4,144 national and 261 international patent applications and 1,039 registered patents in total. 44 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 45 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Turkcell Creating Value Turkcell Sustainability Management and Involvement of Senior Management Integrated Corporate Value Creation Management Structure of Turkcell Board of Directors Integrated Value Creation Committe Integrated Value Creation Committe Sustainability Committe Project Teams Turkcell's Board of Directors, which is elected by the General Assembly in accordance with the provisions of our Articles of Association, is the highest governing body of the company and its duties and competencies are defined in accordance with the provisions of the Turkish Commercial Code. Turkcell's Board of Directors has direct responsi- bilities such as evaluating the strategic management of our Integrated Value Creation Model and monitoring the progress of these matters. The main task of the Integrated Value Creation Committee, which operates at the senior management level under the leadership of the Chairman of the Board of Directors, is to ensure the link between the strategic level and the op- erational level of Turkcell's Integrated Value Creation Model. The Committee regularly monitors the Company's activ- ities and informs the Board of Directors and relevant committees. While it is the responsibility of Turkcell's senior management to implement the activities carried out within the Inte- grated Value Creation Model and the integrated reporting process, it is the re- sponsibility of Turkcell's Board of Direc- tors to review these activities. Our Com- mittee reports to the Board of Directors on the activities carried out within the framework of the Environmental, Social and Governance (ESG) policy and ob- tains its approval for disclosure to the public through the Integrated Annual Report published annually. The responsibilities of the Integrated Value Creation Committee include; 􀰫 Providing guidance for report plans within the scope of integrated value creation process and integrated report, 􀰫 Reviewing the integrated value creation process in line with Turkcell 's strategy, 􀰫 Providing direction to the content of the integrated report and giving opinion on the draft. The Turkcell Sustainability Committee, which operates with the participation of the company's business unit directors, is responsible for identifying sustainability priorities and the risks and opportunities arising from these issues in line with the ESG policy, determining and implement- ing short and long-term action plans for these issues, and reporting the results ob- tained to the Board of Directors through the Integrated Value Creation Commit- tee. Efforts to improve performance in the identified target areas are carried out by project teams, which are formed with the participation of the Company's senior management and are determined ac- cording to their areas of expertise. Turkcell's environmental, social and gov- ernance policies become effective after being discussed by the Sustainability Committee and the Integrated Value Creation Committee and approved by the Board of Directors. The prepared policies are published in the 􀎲 Sustainability section of Turkcell's cor- porate website in order to provide them to our stakeholders for their views and information. In line with Turkcell's quality manage- ment philosophy, many sustainability issues are managed through systems created by following ISO standards. In this context, ISO 9001 Quality Manage- ment System, ISO 14001 Environmental Management System, ISO 14064 Green- house Gas Calculation and Verification Management System, ISO 27001 Infor- mation Security Management System, ISO 27017 Cloud Information Security System Standard, ISO 22301 Business Continuity Management System, ISO 45001 Occupational Health and Safe- ty Management System and ISO 50001 Energy Management System are the system standards followed in managing sustainability issues. The currency and level of implementation of these system standards are verified and certified through periodic independent external audits. The greenhouse gas verification process for the period between 1 Janu- ary 2023 and 31 December 2023 is ongo- ing, and when the process is complete, the verification statement will be pub- lished in the certificates section of the company's website. You can access our certificates in the ISO Certificates section in Appendix 2. As Turkcell, we have completed 30 successful years by achieving many industry firsts in the journey we started with the aim of introducing mobile communications to Türkiye. We continue to create value for all our stakeholders with the integrated digital operator identity we have gained over time by continuously evolving in line with our stakeholders' expectations. In the coming years, as in the past, we will con- tinue to transform innovative digital technologies into ser- vices that improve people's quality of life, support the digital transformation of organisations, contribute to sustainable development in our areas of operation and create value with strategies that translate these elements into a profita- ble and responsible integrated business model. During the reporting period, we reviewed our strategic focus areas in line with changing requirements through the materiality study, which we repeated in line with the opinions of our managers, employees and external stakeholders. Through our integrated management model, we regularly monitor our performance against concrete and measurable in- dicators and ensure effective management of the value we create for all our stakeholders. 46 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 47 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell Sustainability Priorities Turkcell's Sustainability Priorities form the basis of our Sustainability Strategy and Integrated Value Model. Last year, we renewed our sustaina- bility priorities by following the "double materiality" approach. This approach, which combines the "financial materi- ality" approach, which addresses the factors that can affect the compa- ny's value from the outside in, and the "sustainability materiality" approach, which assesses the company's impact on the environment and society from the inside out, is also recommended by standard organisations such as GRI, IIRC and SASB and regulations such as EUCSRD. As part of this study, we assessed the universe of 46 different social, eco- nomic, environmental and technologi- cal issues and 17 Sustainable Develop- ment Goals (SDGs), which we obtained by reviewing past practices, industry initiatives such as GSMA, reporting standards such as GRI and SASB, re- search such as the WEF Global Risk Report and various index contents in consultation with our internal and ex- ternal stakeholders. 969 Turkcell em- ployees and 369 stakeholders repre- senting groups such as our customers, suppliers and business partners in our ecosystem, media, NGOs, public insti- tutions and regulatory bodies partic- ipated in this screening exercise. As a result of this study, which was designed with a focus on risks, opportunities and expectations, with parameters tai- lored to each stakeholder category, we arrived at both an overall portfolio of priorities and a comprehensive por- trait of expectations on a stakeholder group basis. We finalised the Turkcell Sustainability Priorities by presenting the results to the Turkcell Integrated Value Creation Committee, which was convened with the participation of our Chairman and Senior Executives, for their opinion and approval. High s n o i t a t c e p x E r e d l o h e k a t S ⓭ Earthquake and Emergency Preparedness Supporting the Development of Domestic Technologies ㊵ ❹ ❶ Emergency Preparedness and Ensuring Infrastructure Güvenilir, Kaliteli ve Hızlı Dijital Hizmet Altyapısının Coğrafi Kapsamının Geliştirilmesi ❸ Increasing the Use of Renewable Energy ㉖ Becoming an Active Integrated Telecom Operator in the Value Chain Extending from Fiber Infrastructure to Digital Business Services Efficient Use of Energy Pioneering Digital Technologies and Innovation ㉗ ❷ ㉘ Increasing Solar Energy Investments Improving Digital Customer Experi- ence and Satisfaction ❺ ⓲ ㉑ ㉚ ㊶ ㊴ Pioneering the use of innovative digital technologies in key sectors such as education, health, agriculture, transport and finance ㉙ ㊷ ⓱㊺ ㉛ ㊸㉜ ㊹ ㉝❼㉒ ❻ ㉔ ❾ ㉞ ㉟㉓ ❽㊱ ㉕ ⓳⓴❿ ⓫ ㊲ ㊻ ㊳ ⓯ ⓮ ⓬ ⓰ Low Company Impact High ❶ Emergency Preparedness and Ensuring Infrastructure ❷ Pioneering Digital Technologies and Innovation ❸ Becoming an Active Integrated Telecom Operator in the Value Chain Extending from Fiber Infrastructure to Digital Business Services ❹ Improving the Geographical Coverage of Reliable, Quality and Fast Digital Service Infrastructure ❺ Improving Digital Customer Experience and Satisfaction ❻ Managing the Financial Impacts of Climate and Sustainability Risks ❼ Contribution to Local Economy ❽ Favouring Local Procurement Activities ❾ Prevention of Anti-Competitive Behaviour ❿ Transparent Corporate Tax Practices and Policies ⓫ Protection of Intellectual Property Rights ⓬ Increasing Employee Satisfaction and Loyalty ⓭ Earthquake and Emergency Preparedness ⓮ Protection of Employee Rights ⓯ Dissemination of New Working Models such as Remote Working, Flexible Working ⓰ Talent Management, Employee Development and Training Activities ⓱ Cyber Security and Data Privacy Protection ⓲ Protecting Children, Youth and Seniors Against Cyber Risks ⓳ Ensuring Gender and Equal Opportunities in the Workplace ⓴ Supporting the Social and Cultural Development of the Society ㉑ Improvement of Employee Health and Safety ㉒ Managing the Health Impacts of Mobile Devices and Base Stations ㉓ Transparency in Product Information and Responsible Marketing Practices ㉔ Legal Compliance, Business Ethics and Anti-Corruption Practices ㉕ Promoting Digital Rights, Ethics and Diversity of Expression ㉖ Increasing the Use of Renewable Energy ㉗ Efficient Use of Energy ㉘ Increasing Solar Energy Investments ㉙ Developing Environment and Climate Friendly* Digital Products and Services ㉚ Efficient Use of Water ㉛ Promoting Circular Economy and Responsible Waste Management ㉜ Management of Climate Change Risks ㉝ Preferring Environmentally Friendly Material Consumption in Activities and Reducing Consumption ㉞ Green Building Applications ㉟ Development of Green IT Application and Infrastructure ㊱ Applications for the Protection of Biological Diversity and Natural Life ㊲ Reducing GHG Emissions in Operations ㊳ European Union Border Carbon Tax Practices ㊴ Pioneering the use of innovative digital technologies in key sectors such as education, health, agriculture, transport and finance ㊵ Supporting the Development of Domestic Technologies ㊶ Supporting Vocational Training Activities that will increase the employment chances of young people by increasing their capacity in the field of Information and Communication Technologies ㊷ Increasing Access to Digital Technologies and Digital Literacy of Large Social Masses, Disadvantaged Groups or Groups with Low Purchasing Power ㊸ Supporting Business Model Ideas Aiming to Solve Sustainability Problems with Digital Technologies ㊹ Supporting Smart Mobility and City Applications ㊺ Supporting Ethical Rules in Artificial Intelligence Applications ㊻ Managing Sustainability Impacts in the Supply Chain 48 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 49 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL SUSTAINABILITY STRATEGY Inclusive Equal Digital and Social Opportunities Digital Security and Wellbeing to Our Business Transparency and Accountability Ethical Conduct Human Oriented Turkcell Culture Responsible Value Chain to the Environment Decarbonization and Renewable Energy Circular Conduct Efficient Technology Solutions Turkcell Sustainability Strategy: in Sustainability By listening to our stakeholders and understanding their expectations, we support sustainable development through the solutions we develop, following international trends and best practices. On the other hand, we strengthen our leading position in the sector with our efficient and profitable business model that creates long-term value for our stakeholders. We pursue a sustainability strategy that gen- erates positive impacts in the short, medium and long term by combining the potential of our sector, the agility of our organisation and our superior digital service experience with sectoral risk and opportunity parame- ters and sustainable development goals. We regularly measure the timeliness and results of this strategy and update our position as necessary. We have reviewed our sustainability strat- egy through the monitoring studies carried out during the period. As a result, we have updated the definitions of our strategy, which we have adopted as our main slogan 'We are Positive in Sustainability', in the light of emerging developments and changing stakeholder expectations. The Positive Imprint in Sustainability Strategy consists of 3 main axes: Inclusive to Our Business to the Environment 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 being good in the digital world and to “not leave anyone behind” in social, economic and cultural development. With the axis of Positive Imprint to our Business, we aim to develop a strong business model that is shaped by the principles of transparency, accountability and business ethics throughout our value chain, and where sustainability risks and opportunities are effectively managed. With the axis of Positive Imprint to the Environment, we aim to manage our environmental impacts, protect natural life and play a leading role in tackling environmental problems, especially climate change. 50 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 51 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Sustainable Development Objectives Supported 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 developmentoriented 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 caus- es of climate change and a fundamental operational efficien- cy parameter, is seriously managed with international system standards such as ISO 50001. The energy consumption 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 Türkiye’s young population is the main driving force behind its development. In this context, Turkcell develops programs aimed at enhancing the entrepreneurial spirit of the young, preparing them for their careers with a qual- ity education 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 disad- vantages, by providing access to a wide range of digital ser- vices such as techfin infrastructures such as Financell, Paycell and Güvencell, as well as financial, communication, and infor- mation technology products and services. Turkcell strives to be a trusted business partner for all economic actors, from small businesses to large industrial ventures, on their digital transfor- mation 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 man- ages environmental risks arising from its operations in accord- ance with international standards. In this context, the company aims to improve resource efficiency, environmental 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 are- as such as energy and water resource efficiency, waste man- agement, circular economy practices, and preservation of biodiversity. Turkcell offers solutions online and in its stores to support the use of second-product technology, and develops projects to recycle unusable information technology products. 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 pro- cesses related to operational and service development. Turk- cell manages seriously the elements that may affect climate change, including energy consumption and greenhouse gas emissions, among its operations. Additionally, Turkcell will in- crease 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 socie- ty organizations. Turkcell, as the only Turkish company simultaneously listed on the NYSE and Borsa Istanbul, adheres to internationally rec- ognized principles of corporate governance as an integral 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 corpo- rate governance structure across the Company and its Group companies. Maintaining a superior business ethics mindset among all Company employees and throughout 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 monitored and improvement measures taken as necessary 52 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 53 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Interactions with Our Stakeholders We determine our activities and savings 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 take care to be consistent, inclusive and ac- cessible in our interactions with our stakeholders and respond to their information and communi- cation requests in a transparent, open and timely manner. Stakeholder Group Communication Tools and Frequency Frequently Asked Questions and Demands in 2023 Employees Integrated Annual Report (annual), Meetings and Interviews (periodic), Assistant General Managers Open Door Meetings (periodic), Performance Evaluations (quarterly), Announcements (continuous), Reports, Awayday, Events (periodic), Information Reports (periodic), Publications and Bulletins (periodic), Corporate Website (continuous) Adaptation to changing working conditions, implementation conditions of working models such as teleworking and flexible working, which seem to take their place permanently in business life, stand out among the questions and demands submitted by employees during the period. On the other hand, health and psychological support needs also increased during the period. Various practices and programmes were developed to meet these demands. In line with macro-economic developments, the Company responded to requests for wages and fringe benefits in line with the remuneration policy. Integrated Annual Report (annual), Supplier Management System (continuous), Supplier Portal (continuous), Internal and External Meetings (periodic), Supplier Days (annual), Cooperation Meetings with SMEs and Local Producers (continuous), Technopark Visits (continuous), Turkcell Partner Network (continuous), Corporate Website (continuous) We came together with suppliers at Turkcell Supplier Summit 2023 to promote innovation, localisation and startup development programmes, and successful projects were rewarded. Idea application channels were shared and new innovative ideas were collected. In order to contribute to the development of Türkiye's startup ecosystem, collaborations are made with technoparks and efforts are made to include start-up companies in our supplier ecosystem. Suppliers Integrated Annual Report (annual), Media (continuous), Advertising and Promotion Activities (continuous), Social Media Accounts (continuous), Corporate Website (continuous), Dealers (continuous), Call Centre (continuous), IVR (continuous), SMS and E-mail (continuous), Satisfaction Surveys (periodic), Turkcell App (continuous), KEP, CIMER, BTK, TCM channels (continuous) During the period, the main questions and demands from customers were concentrated on service plan conditions, promotions, service package purchases and the solution of technical problems. These requests and problems are quickly resolved by the relevant units. As a result of the digitalisation efforts implemented during the period, the speed of developing solutions to customer requests was significantly increased. Customers Integrated Annual Report (annual), Press Releases (planned or instant), Press Meetings (planned or instant), Meetings and Interviews (upon request), Turkcell and Turkcell General Manager Social Media Accounts (continuous), Corporate Website (continuous) Media During the period, the Company responded transparently and in a timely manner to media members' requests for information on Turkcell and the sector, including financial and company projects and practices. Stakeholder Group Communication Tools and Frequency Frequently Asked Questions and Demands in 2023 Shareholders and Investors Integrated Annual Report (annual), Board of Directors Meetings (periodic), Conferences, Meetings and Roadshow Activities (periodic), Investor and Analyst Day Meetings (upon request), Financial and Operational Results Announcements and Annual Reports (quarterly), Investor Relations Website (continuous), Teleconferences (periodic), Material Disclosures (instant), Frequently Asked Questions (continuous), E-mail (continuous), Telephone Calls (continuous), Corporate Website (continuous) During the period, financial and operational information, which is the most basic expectation of shareholders and investors, was met by transparent and timely disclosure through various channels. On the other hand, the increasing interest and expectations of shareholders and investors regarding the increasing practices in cyber security, corporate governance and legal compliance were met with the practices and information activities developed during the period. Integrated Annual Report (annual), Official Correspondence (continuous), Meetings and Events (periodic), Public Opinion Documents (upon request), Information Reports (periodic), Presentations and Position Papers (upon request), Publications and Bulletins (periodic), Corporate Website (continuous) During the period, the Company responded to various information and opinion requests from public institutions and regulatory bodies. Requests for cooperation and project development were responded positively to the extent that the subject of the relevant application is compatible with the Company's activities and corporate resources allow. Public Institutions and Regulatory Organisations NGOs Integrated Annual Report (annual), Memberships (continuous), Board of Directors Council and Working Group Meetings (periodic), Workshops (upon request), Seminars, Conferences and Events (periodic), Meetings and Interviews (upon request), Joint Projects (upon request), Corporate Website (continuous), Social Media (continuous), E-mail communication (instant) The main expectations communicated by NGOs during the period were concentrated in information needs, membership requests, joint project and sponsorship requests. While information requests were responded to in line with corporate information sharing policies, membership, sponsorship and joint project requests were responded to to the extent that the relevant organisation adopts the values of working together with Turkcell and that the relevant work is in line with Turkcell corporate policies, field of activity and expectations. On the other hand, the relevant department employees periodically participated in the working groups of NGOs. Turkcell Academy Curriculum Courses (periodic), Certificate Programmes (periodic), Technical Trips (upon request), Project Competitions (annual), Academic Publications (upon request), Joint Projects (upon request), Information Sharing Meetings (upon request), PhD Scholarships (upon request), Project Sponsorships (upon request), Corporate Website (continuous), Social Media (continuous) Universities, Academics, Students Requests such as course content support, field visits and support for academic research submitted by universities and academics during the period were responded positively as much as possible. Within the scope of student scholarship requests, the demands of students working at the doctoral level in the field of artificial intelligence were met. 54 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 55 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell’s Sustainability Initiatives Memberships We believe that we can produce a greater impact by working together with non-governmental organisations (NGOs) with which we share common goals and values. In this context, the main organisa- tions we actively support are UN Global Compact, WEPs, GSMA, Sustainable Development Associa- tion and Mobile Telecommunication Operators Association. In addition to these, Turkcell operates as a member of many non-governmen- tal organisations operating in differ- ent fields and is represented in their management and working groups. You can find the full list of the organizations we are a mem- ber of and their level of engage- ment in the Table of Appendix-3: Non-Governmental Organizations Memberships. GSMA We have been a member of the GSMA since 1998, which brings together more than 800 indus- try players and shapes the mo- bile communications industry worldwide. As Turkcell, we have the opportunity to share our local and international experi- ence on this platform and ben- efit from the experiences of oth- er member organisations. On the other hand, we contribute to initiatives and activities or- ganised within GSMA, such as the development of new gen- eration communication tech- nologies, supporting the digital economy with mobile platforms and the use of mobile communi- cation for social benefit, Mobile Net Zero. Among these activi- ties, Mobile Net Zero is impor- tant in terms of enabling mobile operators to carry out their op- erations with the Net Zero tar- get within the scope of efforts to combat climate change. As a sub-association of GSMA, Turkcell also contributes to the GSMA Sustainability Network, a platform that provides inter- national sectoral experience sharing for the development of applications in line with the Sus- tainable Development Goals. In this context, Turkcell was among the first 8 companies in the world to sign the GSMA Accessibility Principles and the first company from Türkiye. As a signatory of these principles, we have committed to design and develop all of our Com- pany's platforms according to globally accepted accessibili- ty standards for our customers and employees with disabilities. Turkcell is also among the pilot companies that play a leading role in determining ESG metrics for the mobile industry. United Nations (UN) Global Compact Turkcell supports the 10 principles of the United Nations Global Compact, the world's largest corporate sustainability initiative, which it signed in 2007, and its sub-initiatives in line with sustainable development. In this context, Turkcell is one of the founding members of the UN Global Compact CFO Coalition for the SDGs, which brings together CFOs of leading companies around the world in the field of sustainability. The CFO Coalition for the Sustainable Development Goals aims to make the concept of sustainable finance an im- portant factor in the policy-making pro- cesses of the leading institutions of the global business community and to cre- ate a large, liquid and effective market for investments that serve sustainable development goals. As Turkcell, we take an active role in the work of the CFO Coalition for Sustainable Development Goals. In 2023, we participated in the "SDG (Sustainable Development Goals Investment Forum) held at the New York Stock Exchange as part of the 78th United Nations Gen- eral Assembly and Global Goals Week. Speaking at the 'CFO Principles as a Holistic Approach for Fundamental Business Transformation' panel organ- ised within the SDG Investment Forum, Turkcell's Executive Vice President of Fi- nance, Kamil Kalyon, informed investors about Turkcell's sustainability efforts, its firsts, investments and goals in this area. Investment Forum" In addition, Turkcell's sustainability ef- forts were included as an example in the Corporate Investments to Achieve Cli- mate Goals report, which was present- ed for the first time by the CFO Coalition for Sustainable Development Goals within the scope of COP28. As part of the UNGC Statement for the Private Sector, which we signed in 2020, we are integrating the 10 principles in the areas of human rights, labour, the environment and anti-corruption into our policies and business processes. As part of the Integrated Annual Report, we publicly report on our compliance with these 10 principles as part of the UNGC Communication on Progress. Our Relations with Public Institutions Turkcell and its Group Compa- nies are subject to many different regulations, and these regula- tions form the basic structure of our relations with public institu- tions and organisations. These regulations have a direct impact on the technical and commer- cial operations of Turkcell and its Group Companies, the conditions for the provision of services and the framework for their relations with stakeholders. For this rea- son, we closely follow the leg- islative activities related to our activities and respond to the reg- ulatory authorities' requests for opinions during the consultation, maturation and implementa- tion processes of the regulations by analysing the possible legal, technical, commercial, opera- tional and economic impacts on the sector. On the other hand, we participate in the legislative studies opened to public opinion within the NGOs of which we are members and support the pro- cess of shaping the regulations by preparing joint position and opinion documents. At the same time, Turkcell and the Group companies create added value by pioneering technolog- ical transformation in the coun- tries where they operate with their mobile network, fibre infra- structure, world-class data cen- tres, digital products and servic- es. As a result of this added value, Turkcell contributes to the public sector in terms of taxes and legal obligations. Sustainable Development Association The Association for Sustainable Development (SKD) Türkiye, the Turkish regional network and business partner of the World Business Council for Sustainable Development (WBCSD), ensures the dissemination of interna- tional and local knowledge and experience among its members through the working groups it has established. We have identified circular econ- omy, sustainable finance, the fu- ture of business with technology, carbon net zero and women's employment as the main focus of our cooperation with the BCSD. We actively participate in the association's working groups. WEPs Believing in equal opportunities in the workplace, Turkcell joined the signatories of the Women's Empowerment Principles estab- lished by UNGC and UN Women in 2012 to improve the position of women in business and social life with the aim of supporting Gender Equality, one of the Sustainable Development Goals. Within the scope of UN WEPs, we continue our activities to support Turkcell's goal of becoming the company that women most want to work for thanks to its gender equality approach by supporting practic- es that aim to empower women in the business environment, such as equal pay practices and zero tol- erance against discrimination. Mobile Telecommunications Operators Association (m-TOD) The Mobile Telecommunications Operators Association was es- tablished in 2016 by three opera- tors operating in the sector and holding authorisations in order to create areas of activity to solve the common problems of the sec- tor and to take initiatives before all stakeholders to implement the solution proposals. Turkcell is one of the founding members of this platform, which aims to contrib- ute directly to an ethical, efficient and competitive approach in the mobile telecommunications ser- vices sector in Türkiye. Our chief executive officer Dr. Ali Taha Koç, executive vice presidents Ali Uysal and Prof. Dr. Vehbi Çağrı Güngör are members of the m-TOD Board of Directors. Relations with Shareholders and Investors Turkcell is committed to being transparent, equitable, consistent and accessible to its investors and shareholders. We consider it a fun- damental responsibility to respond to the information requests of our investors and shareholders in a clear, accurate and timely manner. Through our disclosure activities, we aim to introduce Turkcell in the right way, to convey our business model, risk and opportunity analy- ses and strategies to investors and to enable them to make well-in- formed investment decisions. You can find detailed information on the management of our relations with our share- holders and investors in the Trans- parent Investor Relations section of our report. 56 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 57 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell Value Creaiton Process Inputs Created Value Outputs SDGS Relevant Stakeholders Strategic Focuses Core Competencies Strong Customer Relations Strategic Business Focuses Advanced Analytical and Technological Competencies Our Telecom Business Financial Services Platform Sustainability Digital Business Services Digital Services Strong and Agile Team Strong Infrastructure ䷬ Financing diversity ䷬ Efficient capital allocation ䷬ Strong revenue model ䷬ Business model hedging ䷬ Transparent financial management Financial 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 ䷬ Robust network ䷬ Strong spectrum ䷬ Broad fiber infrastructure ䷬ Data centers Manufactured Capital Intellectual Capital Social 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 ䷬ 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 Natural Capital ䷬ Environmental impact management through digitalization ䷬ Efficient use of energy ䷬ Turkcell waste management ䷬ 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 107.1 Billion Revenue TRY 43.9 Billion EBITDA TRY 12.6 Billion EBIT TRY 12.6 Billion Net Income TRY 7.3 Billion Free Cash Flow 1.9% 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 Türkiye’s data in Türkiye ䷬ Leadership in technology and digital transformation ䷬ Access to information and the internet for everyone ䷬ Development of indigenous and national technological infrastructure ䷬ 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 24,352 Members of Turkcell’s Large Family 35.2% Woman Employee Rate 24.2% Woman Manager Rate 1.43 Accident Frequency Rate 592 New Recruits 1.2 Million hours*person Total Trainings Up to 1.6 Gbps 4.5G Speeds Up to 10 Gbps Fiber Internet Speeds 73% Network Virtualization Rate 12% Network Traffic (internet) Increase Rate 12,037 Base Station Sites with Risk Assessment 99.910% Rate of Data Accessibility 992 R&D Employees 550 Patent Applications 25% Growth in Digital OTT Services Revenues and 19% Growth in Digital Services Total Revenues 6 Number of Applications to TÜBİTAK Supported Projects 8 Hospitals Which We Provide Infrastructure To 10 Incubator Firm Collaborations 56.3 Million Group Subscriber Count 38.0 Million Mobile Subscriber Count (Türkiye) 799 Thousand Net New Customers Acquired (Türkiye) 4 Number of Volunteer Projects 64% Local Procurement Rate 40,267.93 tonnes CO2e Energy Reduction 76,258 GJ Energy Saving 3.644.596 GJ Renewable Energy Consumption 7.8 Tons Recovered e-Waste 62,388 MWh Renewable Energy Generation 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. 58 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 59 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Measuring the Value Created Our Core Competencies We aim to achieve more timely and comparable results by taking into account the indicator recommendations of international organisations such as the GSMA, WEF, GRI and SASB, as well as suggestions from our stakeholders and industry practices in measuring performance resulting from the value chain. As of 2021, sustainability targets, which include the internalisation of sustain- ability and ESG policies in social, eco- nomic, environmental and governance (ESG) areas, have been included in the company's strategic goals and as- signed as key performance indicators by Turkcell's Chief Executive Officer to all employees. The internalisation of the policies by employees at all lev- els of the company through training in this direction has been reinforced with competitions and awards that support sustainable living. In 2022, we revised the Key Perfor- mance Indicators used in performance evaluation in line with the renewed sus- tainability priorities. In this context, the Sustainability Committee continues to work on creating a system for detailed monitoring of sub-parameters related to performance evaluation. An important pillar of our efforts to an- alyse our sustainability performance using internationally recognised meth- odologies is the assessment of sustain- ability indices and rating systems. In this context, we provide annual informa- tion to the MSCI ESG Index, the Borsa Istanbul Sustainability Index and the CDP Climate Change Reporting. As the leading telecommunications company in Türkiye, we have set our greenhouse gas emission reduction targets, ap- proved by the Science Based Targets Initiative (SBTi), to systematise and ra- tionalise our commitment to tackling climate change. Since its foundation in 1994, Turkcell has been continuously generating high added value for its stakeholders. Turkcell's success is attributable to its corporate competencies, which have been developed with the experience gained over the past 30 years. Strong Bond with Customers Strong Infrastructure 􀰫 The operator that meets customers' ever-increasing need for quality service and communication 􀰫 Superior digital customer experience with growing digital services 􀰫 Uninterrupted 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 offered to customers 􀰫 Activities carried out within the scope of the importance given to customer data security 􀰫 Maintaining the pioneering and distinctive network quality in the sector, reinforcing its position as the leading operator by being ready to offer services for next generation technologies such as 5.5G and beyond 􀰫 Increasing efficiency through technology independent spectrum utilisation 􀰫 Providing the latest and innovative technologies in fixed and mobile technologies in the individual, corporate and home segments 􀰫 Cyber security products and services that require digital operator competence 􀰫 Contribution to digital transformation through joint infrastructure works 􀰫 Reliable grid structure ready for emergencies 􀰫 In-country protection of local data with an extensive network of data centres Strong & Agile Team Advanced Analytical Capabilities & Technology 􀰫 The importance of agile and flexible teams that increase with the need to 'master difficult tasks quickly' with digitalisation 􀰫 Ensuring efficiency through transformation of company culture with flexibility and agility approach 􀰫 Strategic workforce management 􀰫 Inclusive and egalitarian corporate culture 􀰫 Unique people and talent orientated employee experience 􀰫 Increased focus and need for analytical capability with increasing digitalisation 􀰫 Providing appropriate solution proposals in line with better customer recognition and early detection of their needs through big data and analytical modelling 􀰫 Capacity to develop domestic alternatives in digital services 60 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 61 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Our Strategic Focuses, Initiatives and Opportunities Leadership in Telecom In addition to our core telecommunications business, we focus on digital personal, business and financial services, which we have developed rapidly in recent years by leveraging our strong technical infrastructure and experience from our core business. In addition, we prioritise efficiency in our operations with a focus on value maximisation, more effectively allocat- ing resources to our revenue-generat- ing areas, becoming unique in terms of employee and customer experience, and conducting our activities within the framework of sustainability principles. We continue to diversify our digital ser- vices in line with evolving technologies and customer needs. At the same time, we are working to improve access to information technology for disadvan- taged groups, young people and wom- en, and to bring the power of technolo- gy to more and more users. As part of our Digital Business Services for corporate customers, we support digital transformation with end-to-end solutions we have developed, particu- larly in the areas of data centres, cloud solutions, cyber security and the Inter- net of Things. We help companies of all 99 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 2022 and the risk factors section within this report. sizes to embrace digital trends with ac- cessible service solutions. With our financial services portfolio, which we offer through the success- ful implementation of Techfin business models, we develop various digital pay- ment options for our customers; we of- fer financing options that facilitate their access to products and services, and insurance solutions that enable them to protect themselves against risks. We continue to rapidly improve the val- ue we create with our technology and innovation capabilities by evaluating global trends in our strategic focus are- as and the development potential in the countries where we operate. Each year, we assess current trends and focus our efforts on the areas of opportunity we have identified through practices in- volving all our employees. In this context, we monitor our business with short, me- dium and long-term targets. In 2023, we started to implement our new 3-year strategic plan within this framework. We want the growth we have built on our strong infrastructure to come from our focus and deepening in areas such as IPTV, data centre, cloud and techfin solutions. But another area we will focus on is how we do this. While delivering all these services and providing digital solutions to our customers' needs, we want to be more efficient and maxim- ise shareholder value. With our focus on technology, we will continue our efforts to deepen, develop and expand tech- nology by developing new products and supporting R&D activities in areas such as artificial intelligence, cyberse- curity and quantum technologies. Sus- tainability, which is one of our strategic focus areas, reflects the importance we attach to the environment and society in our business in a tangible way, while maximising the experience of our col- leagues and customers through Human Orientation. We are also prioritising the development and dissemination of object technologies that add value to people's lives with our new focus 'Ob- jects for People'. In short, we continue to deliver superior digital services for a better future with the complementary and balancing power of technology. tomer satisfaction scores, while main- taining our mobile churn rate at 2%, which we see as the optimal level for us in 2023. In 2023, we will continue to strengthen our digital capabilities. With our om- nichannel approach, we provide an integrated experience where chan- nels are managed in harmony in our customers' interactions on Turkcell channels and customer journeys. At the same time, we continue to empha- sise the digitalisation of all our pro- cesses by offering additional benefits on digital channels and increasing the intensity of our communications. In the new period, we aim to increase our capabilities at every step in the name of digital transformation. Using machine learning (ML) models, we provide analyses based on the applications and Internet links (URLs) used by our customers. For each class, we help increase the subscriber base by more accurately determining the target audience of products in the Turkcell ecosystem. We use the results of these analyses to provide more ac- curate targeting in digital channels. We continue to use this in our digital advertising activities. For our fixed internet and Superbox customers, we use machine learning models to provide the most appropri- ate offers for the customer. We have implemented upgrades to higher packages in Fibre and ADSL and the proactive churn model in Superbox. With these models we aim to minimise churn while increasing our revenue metrics by applying the experience we have gained with mobile customers to fixed customers. In line with the analytical marketing approach, we continue to implement best offer & upsell and churn preven- tion models that affect all our post- paid, prepaid, fibre, ADSL and/or su- per-box customers. During the period, we delivered mo- bile ARPU growth of 18.4%10, through increased data usage, our strategy of migrating customers to higher val- ue bundles and our price adjustments according to economic conditions. We also continued to focus on the val- ue proposition we offer our custom- ers, adding 493 thousand net mobile subscribers. As a result, we achieved growth in both ARPU and the subscrib- er base and a healthy and balanced increase in revenues. At the same time, we continue to focus on solutions and campaigns that meet our customers' telecommunication needs in the digi- talised world of consumption. As Turkcell continues to be a pio- neer in digital transformation and a leader for our individual/corporate customers, we also continue our stra- tegic initiatives to further strengthen our already high corporate market share. By anticipating the changing and evolving needs of the market, we provide integrated mobile and fixed communications solutions wherev- er businesses need them through our tariffs and campaigns designed spe- cifically for professionals, SMEs and large enterprises. Through our Digital Business Services, we deeply support the digital transformation processes of our corporate customers by offer- ing a wide range of services from data centre to cloud computing, from cyber security to the Internet of Things. Turk- cell's digitalisation journey not only creates value for businesses, but also strengthens our innovation leadership in our sector. We continue to improve our analytics capabilities to provide our custom- ers with the best offers at the most affordable prices according to their needs. Thanks to our analytical and artificial intelligence-based models that are specific to each Turkcell cus- tomer, we analyse all our customers according to their life cycles, usage habits and behaviour, and immediate- ly identify their needs and set up sys- tems where they can take advantage of the appropriate offers. Through integrated channel communication, proactive actions and cross-commu- nication constructions, we bring our customers together with rich content offers. In this way, we positively in- crease our revenue metrics and cus- 10Excluding M2M 􀕬 62 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 63 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Initiatives and Opportunities that ䷲Thanks to our plans that are in line with customer expectations and offer high benefits, our process in- improvement projects crease customer satisfaction and business efficiency, and our stable price adjustments that continued throughout the year in parallel with economic developments, we achieved 18.4% ARPU growth in the mobile segment. As a result, we gained net 493 thousand mobile subscribers and maintained our healthy and stable growth trend both in terms of subscribers and ARPU. ䷲One of our main objectives is to ac- celerate the digital transformation of our corporate customers, espe- cially tradesmen and SMEs, and thus further consolidate our strong presence in the market. To this end, we develop innovative campaign and solution plans for the unique needs of each corporate customer segment. The corporate packages we design minimise our customers' operational expenses by ensuring cost efficiency through digitalisa- tion, while helping our customers to maximise their revenue potential. The value proposition we offer to our customers is directly reflected in the value creation of Turkcell. This strategic approach not only increases customer satisfaction, but also consolidates our leading position in the sector. ䷲We continue to improve our ability to listen to our customers' expec- tations and offer them the most level of appropriate price and service, as well as improving our analytical capabilities to make our service processes more efficient and increase satisfaction. Through channel improvements and pay- ment diversification, IVR process and content improvements, and chatbot application, we are both making our business processes more efficient and increasing loy- alty through customer satisfac- tion. In parallel with the increase in customer satisfaction, we have positively increased our revenue metrics, while we have managed to keep our mobile churn rate at the same level in 2023 as in 2022, which was 2.0%, despite the price updates. Our fixed churn rate was 1.5%. Digital Services In recent years, the strong trend in consumer behaviour to meet many needs through digital services has increased and become permanent with the pandemic. In this direction, as Turkcell, we respond to these expectations of our customers with digital solutions that we offer in various areas such as instant commu- nication and online meeting platforms, email, personal cloud storage, digital advertising, digital TV and digital music platform, and gaming technologies. In previous periods, we have trans- formed our digital services such as BiP, fizy, TV+ and lifebox into globally com- petitive structures by focusing on their individual performance as separate profit centres. During the period under review, our services continued to im- prove their performance and to build on their success stories by delivering digital experiences to their customers on an international scale. In addition to the revenues generated by our digital services, their positive contribution to the ARPU levels of our telecom custom- ers and their increased loyalty to Turk- cell increase the importance of these services to the Turkcell ecosystem. In this context, we continue our efforts to increase the diversity of our digital ser- vices as well as their number of users and international penetration. By positioning our digital services and solutions, which play a key role in our strategy to transform Turkcell from a telecom operator to an integrated dig- ital ecosystem brand, as independent brands under the Turkcell umbrella, we are also strengthening their value as in- tellectual property and assets. Initiatives and Opportunities ䷲We are increasing our transaction volume with a wide range of products for both indi- vidual and corporate needs and an increasing number of active customers, and our digital ser- vice revenues with our adver- tising, subscription and business partnerships. ䷲ The importance of mobile appli- cations, communication infrastruc- tures, software used and cyber security of these systems has in- creased for companies as remote and flexible working practices, which developed with great mo- mentum during the pandemic pe- riod, have become permanent. In this context, we offer benefits with our digital services such as BiP, Yaani Mail, lifebox, Digital Security Service and Mobile Signature and our superior security standards. ䷲With our GAME+ next-generation gaming platform, we offer our users the opportunity to experi- ence the highest quality games from wherever they are, without the need to make large hardware investments. ䷲With our belief in the twin (or even triple) transformation, we invite everyone to digitise, save energy through smart applications and thus build a better future. 64 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 65 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Digital Business Services (DBS) Digital Business Services plays an important role in combining Turkcell's traditional identity as a telecommunications service provider with its "Digital Transformation Business Partner" strategy for corporate customers. We aim to be the most trusted business partner in the digitalisation process by providing end-to-end value-added services to the business world with many new-generation technologies, including cloud services, cybersecurity, Internet of Things, big data analytics, business ap- plications, managed services and artifi- cial intelligence solutions. Turkcell, the world's first digital opera- tor, contributes to the transformation of business models with digital technol- ogies by offering its 30 years of experi- ence in communication and information technologies to private and public or- ganisations of all sizes. Our value-add- ed services help our customers stay ahead of the competition and increase their productivity and business value. On the other hand, our business consulting services in the field of digitalisation ena- ble us to provide an end-to-end service in business processes by improving the knowledge and skills of our customers. In addition to our 61.8 thousand km of end-to-end fibre optic infrastructure, Turkcell has a total of 8 data centres, 4 of which are new generation, with Tier-3 Facility, Design and Operation Sustain- ability certificates from Uptime Institute, an international certification body. Our data centres have a total of 36.5 thou- sand m2 of white space. With Turkcell Cloud Services, we position the entire information technology infra- structure of companies in Turkcell data centres, providing a more flexible infra- structure while reducing costs. The cloud service we provide from fully redundant infrastructures in 8 different data cen- tres has the ISO 27017 Cloud Information Security Certificate, which registers our information security, and we are the first service provider in Türkiye to hold this certificate. In order to provide services to our public institutions in accordance with the Presidential Circular on Information and Communication Security Measures, which came into effect regarding the security of public data and its transfer to digital environments, and the guide- lines published accordingly, we have made our public cloud service available to institutions. In addition, we have been accredited by the CBRT by creating iso- lated cloud environments in accordance with the Community Cloud Guide pub- lished by the CBRT. In this way, financial institutions or credit institutions that are regulated and supervised by an author- ised authority can receive the Finance Cloud service from an environment that complies with their regulations. On the multi-cloud side, we are also addressing our customers' large-scale cloud (hy- perscaling) needs through our strategic business partnerships with global cloud providers, together with our strategy of offering end-to-end cloud needs under a single roof. Within our Cyber Security product port- folio, our vision to virtualise the network protection services we provide for the network institutions infrastructures of continues at full speed. In this context, we continued our virtualisation journey, which we started with FW, DDoS+, Load Balancer and IPS, across all our data centres by increasing our vendor diver- sity in 2023. In addition to our existing services, we expanded our portfolio to include endpoint security services within our SOC, SOAR, BOZOK and consultan- cy offerings, enabling us to provide pro- active protection. In this way, we contin- ue to be the end-to-end cyber security service provider for our institutions, en- suring early detection of cyber threats and rapid response. Through IoT solutions, we provide our corporate customers with device, ma- chine and process management servic- es via cloud systems or in-house servers. One of our IoT projects, Energy Efficien- cy Scenarios, enables companies to measure their energy consumption im- mediately. The data collected from the field by our solutions is transformed into information that helps users make better decisions, while management functions can save companies significant costs with our energy solutions. In addition, our solutions for digital transformation consulting, digital production monitor- ing, efficiency tracking and zero carbon emissions in the production sector also support our customers' effective pro- duction activities. With Turkcell's digital business applications, we meet all the needs of organisations in their digital transformation journey and in digitising their business processes. As part of our Digital Business Servic- es, in addition to our internal resources, products, processes and technologies, we have implemented more than 3,400 managed service and system integra- tion projects tailored to our customers' needs with our business partner eco- system of experienced experts in their fields. With our consultants, who are experts in their fields, we develop verti- cal solutions that meet the needs of our customers in our focus sectors, such as Healthcare, Education, Manufacturing, Retail, Finance, Logistics, Energy, SMEs, and Central and Local Government. We use 360-degree analysis to identify our customers' current situation and create solution sets that meet their needs. We deliver high value projects in the healthcare sector, one of the areas where we have achieved vertical in- is tegration. Digital Business Services the market leader in terms of both the number of hospitals it serves and the to- tal number of beds in the City Hospitals projects, which have become the loco- motive of our country's success and are among the leading healthcare provid- ers in the world, especially in the coun- tries of the region. We are the leader in the public-private partnership (PPP) market as an integra- tor that provides and operates all the technological solutions required in the city hospitals in the field of healthcare. We continue to play an important role in the digital transformation of hospitals with our Hospital Information Manage- ment System (HIMS) software, devel- oped with the equity of Turkcell Digital Business Services. We are currently ac- tive in a total of 8 city hospitals, including Yozgat, Adana, Eskişehir, Elazığ, Bursa, İstanbul-Başakşehir, Gaziantep and Tekirdağ hospitals. The entire technolo- gy infrastructure of these hospitals, from hardware to software, from system to operation, is managed by Digital Busi- ness Services. In addition, Turkcell Digital Business Ser- vices develops and manages the tech- nology of strategic public projects such as the Speciality Education Tracking Sys- tem (UETS), Electronic Case System (EVS) and Vaccine Tracking System, which are among the most important technology projects of the Ministry of Health. Our business partnership ecosystem comprises three main categories that we manage end-to-end: our subcontrac- tors, our product/solution development partners and our channel partners. We have established the Business Partner- ship Programme for business partners with different competencies in our eco- system. We reward the success of our business partners with success-based compensation models. We continue to develop our Partner 360 model to man- age all of our Digital Business Services business partners in a single system. Our business partnerships with global sup- pliers broaden the range of solutions we offer our customers every day in terms of technical expertise and project diversity. Initiatives and Opportunities ䷲As Türkiye's largest data centre operator, we work with the aim of "keeping Türkiye's data in Türkiye" to ensure data security and privacy of personal data. In this context, reg- ulatory arrangements for keeping the data generated in our country in Türkiye contribute to the develop- ment of our business area and our revenues by increasing the demand for our data centres. ䷲We utilise our experience and com- petencies in big data, Internet of Things (IoT) and artificial intelligence (AI) in many areas such as product and service development. In the still developing IoT and AI solution mar- ket, the absence of major players recognised in AI solutions creates an advantage for Turkcell. We consider the National Technology Move vi- sion of the Republic of Türkiye, which encourages the development of do- mestic and national technologies, as an opportunity for Turkcell in this field. ䷲As the need for remote solutions accelerated significantly with the pandemic period, an increase was observed in the demand for prod- ucts and services that we focus on and continue to work on in the field of remote health, education and work solutions. Our Lifecare product, which we developed in the field of remote health, has passed the Minis- try of Health KTS audit and has been able to respond to the opportuni- ties in this field. New business model opportunities are being evaluat- ed through meetings with leading healthcare groups in Türkiye. ䷲For private companies and public sector institutions, digitalisation of- fers many opportunities to increase efficiency and service quality. As Turkcell, we offer customised, reli- able and sustainable solutions tai- lored to the needs of companies and public institutions in Türkiye with our end-to-end digital transformation services, while making digitalisation processes more accessible thanks to our affordable costs. We also coop- erate with our local business part- ners to steer the digital transforma- tion journey of our country. 66 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 67 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Techfin Services While finance and information technology operate as two distinct sectors that drive each other's development, we observe that many financial services and transactions have been rapidly digitised with the transformation we have seen in recent years. As a digital operator closely following these developments, we believe in the high potential of "techfin" applications and continue to develop our services in this direction. We continue to facilitate our customers' financial transactions and lives with the innovative solutions we offer under our Paycell, Financell and Wiyo brands, developed with this perspective. The main objective of Paycell is to pro- vide consumers with easy access to financial services by offering fast, con- venient and secure payment solutions through the combination of digital tech- nologies and financial services catego- ries. In addition, with Paycell's vision of financial inclusion, we aim to make life easier by providing access to financial services to everyone - with or without a bank account - and to make Paycell the largest payment platform in Türkiye. A significant portion of Türkiye's young, dynamic and tech-savvy population does not yet have access to banking services. The growing e-commerce market and favourable regulatory de- velopments, as well as the presence of a population of over 30 million with a high cash usage rate, significantly in- crease the potential opportunities for Paycell. In this context, we continue our strong growth performance with the servic- es and solutions we offer in different verticals such as direct carrier billing, e-wallet, bill payment, prepaid card, money transfer, financial marketplace solutions and payment facilitation, with our application we position as a Super App. Paycell differentiates itself from its competitors with its broad ser- vice portfolio and Turkcell's technology, customer base and distribution chan- nel advantage in a fragmented market structure where different players focus on different solutions. As part of its market expansion strat- egy, Paycell is focusing on increasing the number of merchants signed up with Paycell Android POS, Paycell QR and QR, Virtual POS, Vitrin and Linkle payment products in a mutually sup- portive manner, while continuing its efforts to rapidly increase the number of users with its Super App vision. To- gether with many partners, we offer a wide range of services, especially games, to our customers through our Paycell Mobile application. Financell, which provides digital fi- nancing solutions to meet the product and service needs of its customers in various sectors by harnessing the agile power of the mobile industry, is the leader of the non-bank finance sector in Türkiye with its large number of customers. As one of the most im- portant business partners of Turkcell's digital consumer services and digital business services, Financell effective- ly manages credit risk while making faster credit assessments thanks to its credit risk infrastructure and digital transformation capabilities. In 2022, our insurance company Turk- cell Dijital Sigorta A.Ş., which has the capacity to provide end-to-end insur- ance services, was established with our decision to expand the insurance services we have been providing to our customers through our insurance agency Turkcell Sigorta Aracılık Hiz- metleri A.Ş. since 2018. The licence application we submitted on behalf of Turkcell Dijital Sigorta A.Ş. to the Insurance and Private Pensions Regu- latory and Supervisory Board (SEDDK) was approved in February 2023, and Turkcell Dijital Sigorta A.Ş. started its operations under the Wiyo brand in June 2023. Initiatives and Opportunities 䩉 Techfin and mobile communica- tion services provide a suitable environment for many people to access financial services thanks to their practicality and ease of access. Access to financial services is crucial for both eco- nomic independence and social equality for individuals. With this in mind, we have the potential to reach approximately 30 million unbanked users in Türkiye. 䩉 The increase in the use of these systems along with the pan- demic process, which intro- duced many people to digital and contactless payment sys- tems, creates an important op- portunity for Turkcell. The fact that people in Türkiye and the world continue to be inclined towards contactless and digi- tal payment methods after the pandemic shows that the po- tential continues to grow. 䩉 The e-commerce sector, which grew rapidly after the pan- demic, also increased the de- mand for practical and ad- vantageous payment solutions for all parties. With the Paycell Virtual POS product, service is provided from a single platform without the need to make sep- arate agreements with different banks for card payments, cre- ating advantages for both the workplace and Paycell. 䩉 With the Paycell Shopping Limit product, it proves its success not only in the field of digital pay- ments but also in facilitating ac- cess to finance in areas ranging from holidays to e-commerce marketplaces. 䩉 Users who want to take ad- vantage of investment oppor- tunities can buy and sell gold, silver and platinum on Paycell. In addition, by bringing the young audience the stock exchange world, it offers the opportunity to become an investor in Borsa Istanbul and international stock exchanges through Colendi Menkul. together with 䩉 As Turkcell, we know our cus- tomers closely thanks to the corporate know-how built up through our telecom activities. In this way, we are able to offer the most suitable credit options to our customers in financing busi- nesses in line with the Credit Bu- reau (KKB) and telecoms data. 䩉 Financell, one of our Techfin services, offers financing loan solutions suitable for the needs individual and corporate of customers. Companies that use "Digital Transformation Fi- nancing" loans can own the hardware and devices such as software, servers, smartphones, tablets, etc. that they need in their digital transformation jour- ney with specially determined prices, interest rates and flexible payment plans. 䩉 As the newest of our Techfin companies, Turkcell Dijital Sig- orta A.Ş., our insurance com- pany, which started operations in 2023 under the Wiyo brand, aims to provide fast, easy and personalised insurance servic- es with innovative solutions to be produced for the insurance sector. 68 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 69 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Strong Corporate Governance Maintaining a strong corporate governance structure enables us to manage our business operations with high efficiency, and to demonstrate an exemplary corporate citizenship through ensuring compliance with legal obligations which we are subject to. Moreover, we differentiate as a com- pany, trusted by our stakeholders, thanks to compliance with domestic and international business regulations ensured by our Company’s compliance programs and our understanding of su- perior business ethics. As the only Turkish company both list- ed on the Borsa Istanbul (BIST) and the New York Stock Exchange (NYSE), through effective corporate processes and the internalization of internation- ally accepted corporate governance principles throughout the organiza- tional 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 Depos- itory Share)” Level III. With a high free float rate of 54%, we aim to provide long-term benefits not only to our cus- implementing tomers, but also to all our Company’s the stakeholders by highest standards of corporate gov- ernance practices. Our sustainability strategy and value creation model that we have developed in this con- text, as well as our goal to prioritise to act in accordance with international standards in the fields of human rights, business ethics, anti-bribery and cor- ruption, competition management, risk and crisis management allow us to be a good role-model for corpo- rate citizenship. Our shareholder structure can be found in Note 1 of the CMB report. Board of Directors Structure Taking into account privileged share rights defined in the Articles of Association, the Turkcell Board of Directors, consists of a total of 9 members, two of whom are woman, who are elected by the General Assembly with simple majority vote. Three of the Board members meet the inde- pendence criteria specified in the CMB and SEC/NYSE regulations. The Turkcell Board of Directors, whose du- ties and authorities are determined within the framework of the Turkish Commercial Code, has committees established at the Board of Directors level in accordance with the relevant legal provisions to ensure operational efficiency. These committees are the Early Detection of Risk Committee, Corporate Governance Committee, Audit Committee, Nomination Committee, Re- muneration Committee and Strategy and Digitalization Committee. While the duties of the Chairman of the Board of Directors and the CEO are car- ried 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. According to the Internal Directive on the Operation of Turkcell Board of Directors, as Turkcell and its Group Companies op- erate in many fields, especially in tele- communications, finance, technology, dig- ital services, energy, infrastructure, digital education, etc., in order to ensure the nec- essary diversity and professional expe- rience, it is endeavored that, at least two of the members of the Board of Directors have sectoral experience in the electronic communications, information and commu- nication technologies sectors and all the members of the Board of Directors have at least seven years of sectoral experience in their respective fields of expertise and had the necessary education in the areas including engineering, finance, law, busi- ness administration, economics, public administration and international relations. In addition, in the election of members, the Nomination Committee and the Board of Directors shall pay attention to the fact that the candidate will be able to devote sufficient time for the Board membership taking into account the external commit- ments of the candidate. 5 out of 9 members are elected by Group A preferred stock owner, TVF Bilgi Te- knolojileri İletişim Hizmetleri Yatırım Sanayi ve Ticaret A.Ş. (TVF) by using privileged share rights as per the Articles of Associ- ation. Four of those 5 members are also nominated by TVF. There are no privileges foreseen for the election of the remain- ing 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 car- ried out within the framework of the Turk- ish Commercial Code. In the event that the membership of any Director of the Board becomes vacant for any reason, anoth- er member who meets the legal require- ments for the vacant chair may be elected temporarily in accordance with Article 363 of the Turkish Commercial Code, and the elected member is submitted to the ap- proval of the first General Assembly to be held following his election. 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. Evaluation process was designed taking into account best practices. Performance Evaluation Form was filled by the Board Members. Feedbacks were reviewed. Action map determined. 70 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 71 You can find further information about the Board of Directors Committees, their duties and members on our Corporate Governance Principles Compliance Report or on our on our website. TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES The member whom elected in this way serves until the General Assembly meet- ing, when it is submitted for approval, and if approved, completes the term of the predecessor. No classified or staggered Board structure has been adopted in the Board of Directors. Since 2019, Turkcell has adopted specific internal rules regarding possible conflicts of interest at the Board level. In this con- text, 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 suf- ficient in general, there are cases where aggravated quorums are sought as per the articles of association and the rele- vant regulations. The annual performance evaluation by the Board of Directors based on certain criteria was implemented initially in 2021 as part of the improvement of corporate governance across our Company. and in line with the aim of using the improve- ment areas identified after the perfor- mance evaluation process as the basis for advanced corporate governance practices, a number of actions were tak- en at corporate level in 2022, including but not limited to the implementation of a new platform that ensures the digitali- zation of access to the Board of Directors meeting documentation, the transfer of documentation to a secure platform and the continuous access to the relevant documentation and Strategy and Digi- talization Committee was established. In 2023, improvement areas were iden- tified from the outputs of performance evaluation process carried out by the Board of Directors for the year 2022 and focus areas relating to corporate gov- ernance practices were determined with relevant departments within the Compa- ny by conducting a gap analysis for the is- sues communicated to our Company both from our shareholders and from all other corporate governance stakeholders. In this context, the structure of the Ethics Committee was reorganized with the amendments adopted by Board of Di- rectors to ensure senior management’s oversight of ethical policies, and an in- ternal audit was conducted regarding awareness of Turkcell Common Values and Code of Business Ethics for 2023. Within the scope of NYSE’s listing rules regarding clawback policy that are ap- plicable to our company, which entered into force on October 2, 2023, it was ob- ligated for public companies to recoup/ recover erroneously awarded perfor- mance based compensations from de- fined executive persons (if any) under certain criteria if the Company is required to prepare a restatement of incomplete, inaccurate or misleading financial tables. In this context, our Company’s Board of Directors adopted Clawback Policy with a resolution dated 7 November 2023. Au- dit Committee, consisting of independ- ent members, is designated for the ad- ministration of the Clawback Policy. The performance evaluation process of the Board of Directors was completed for the year 2023 in line with the methodolo- gy below that Corporate Governance & Capital Markets Compliance Directorate designed and submitted to the Corpo- rate Governance Committee and the committee later proposed this perfor- mance evaluation process to the Board of Directors. 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 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. 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 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 Information Provided to the Board Board Composition and Function Standards of Conduct The set of questions contained in this section addresses issues such as conflict of interest and adequacy of contribution. Within the scope of the above methodology, an action map was determined as per the outputs of the performance evaluation carried out by the Board of Directors. 72 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 73 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES ance with Turkcell Human Rights Policy to Turkcell subsidiaries. Currently, human rights policies are being prepared for other group companies in Türkiye. 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 our employees and adopt exemplary ethical behavior across our ecosys- tem. With this understanding, with the changes made in the structure and duties of the Ethics Committee in 2023, above policies and other ethical policies that may be established, if deemed ap- propriate by the Ethics Committee, have been included to the scope of the Ethics Committee’s oversight responsibility. In 2023, 31 cases were reported to our Company through Ethical Reporting Channels. The reviewed cases exam- ined were handled under two main categories: unethical and immoral be- haviors and financial issues. In 7 out of 31 cases reviewed, it was decided to apply the “Termination of Employment” sanction. It was further decided that the cases reviewed did not involve any actions that violate the Turkcell Group Anti-Bribery and Corruption Policy. Our employees, customers and suppliers have the opportuni- ty to anonymously communi- cate their reasonable suspicions and sensations about situations that violate or potentially vio- late business ethics to the Turk- cell Ethics Committee via the Ethics Line (0532 210 4444). Our employees can communicate situations that are contrary to the legislation and ethically in- appropriate situations related to the Company to the Audit Committee via the Company in- tranet, internal forms, telephone, 􀍘 etikbildirim@turkcell.com.tr e-mail address or indirectly or directly to the Audit Commit- tee via the Ethics Committee via 􀍘auditcommittee@turkcell.com.tr e-mail address. 􀎲 You can accvess the text of our Human Rights Policy on our website. Human Rights, Business Ethics and Common Values Turkcell believes that in order to create long-term sustainable value and ensure stakeholder trust and social accept- ance, it is vital to ensure that its opera- tions, including its Group companies and business partners in the value chain, are conducted in accordance with interna- tionally recognised ethical principles. In this context, Turkcell implements its Hu- man Rights Policy in order to create a working environment worthy of human dignity and to establish a people-ori- ented operation in its ecosystem. On the other hand, Turkcell pays due attention to the ethical and responsible devel- opment and use of the technologies it uses and will develop in its business pro- cesses. In the technologies developed by Turkcell, such as artificial intelligence technologies, Turkcell aims to act on the basis of human dignity, fundamental rights and freedoms by contributing to the UN Global Compact Principles and Sustainable Development Goals and creating a more livable world. In accordance with our Human Rights Policy, we comply with the Universal Declaration of Human Rights, the Inter- national Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, the UN Convention on the Rights of Persons with Disabilities, the UN Convention on the Rights of the Child and the UN Princi- ples on Business and Human Rights, We respect the UN Global Principles and the OECD Principles for Multinational Enter- prises, the provisions of the ILO Con- ventions to which Türkiye is a party, the "Right and Freedom of Assembly" and the "Right to Form Trade Unions and to Engage in Trade Union Activities" of our employees as set out in the Constitution of the Republic of Türkiye; In addition, our employees are encouraged to be- come members of professional associa- tions in their field or NGOs that provide social benefits. In 2021, Superonline, Financell and Kuzey Kıbrıs Turkcell were included in the pro- cess with the aim of extending compli- 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 citizen, we oversee compliance with national and international Anti-Bribery and An- ti-Corruption (ABC) standards covering all our activities. The Board of Directors approved the Anti-Bribery and Corrup- tion Policy in 2016 to establish the basis of our fight against bribery and corrup- tion. This document is a major indication of how the Board of Directors is commit- ted 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 frame- work drawn up by the ABC Policy, the ABC Program has been carried out with the establishment of the Corporate Governance & ABC Program Office as of April 2018, which takes necessary preventive measures to ensure com- pliance with these rules and provides risk-based trainings and internal com- munications. The Corporate Govern- ance & ABC Program Office continues its activities under the name of Corpo- rate Governance & Capital Markets Compliance Directorate (“Compliance Directorate”) with its autonomous struc- ture, reporting directly to the Board of Directors. The Compliance Directorate, respon- sible for implementing the anti-bribery and corruption compliance program in 2023, continued the end-to-end de- signed ABC training program, identi- fied focus groups with a risk-based approach, produced differentiated content specific to the focus groups that includes all employees and exec- utives of the Turkcell Group, as well as the supplier and business partner eco- system, and measured the awareness of the participants after the training. In addition, Compliance Directorate was involved in contract and tender processes, especially in key activities such as mergers and acquisitions, le- gal approach to the relationships with financial institutions and technology business partners, maintained coor- dination with domestic and foreign Group companies to ensure compli- ance with the ABC policy and con- ducted further workshops to improve the dissemination of the ABC policy to the whole Turkcell ecosystem. In 2023, trainings were given to two dif- ferent focus group (sub-focus groups were established as per the risk as- sessments), one is the Company/Group company employees and managers and the other is the suppliers and busi- ness partners. Within this framework, Anti-Bribery and Corruption trainings were provided to more than 2450 participants in a total of 22 one-hour sessions. In 2023: 䩉The second generation ABC train- ing, which comparatively measures the level of knowledge of the par- ticipants before and after the train- ing and addresses ethical dilemmas from actual daily professional life regarding bribery and corruption in a fictional flow, was assigned to all new employees who joined the Company. 䩉Coordination and awareness ac- tivities were held with domestic and international group company com- pliance contacts within the scope of the fight against bribery and corruption. 䩉On December 9, 2023, World An- ti-Corruption Day, an awareness ac- tivity was carried out via the internal communication channel for all Turk- cell employees. 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. Practices based on the Public Com- panies Accounting Reform and Inves- tor Protection Act, also known as Sar- banes-Oxley (SOX) Act and U.S. Foreign Corrupt Practices Act (FCPA), which aim to improve the control mechanisms of companies’ financial reporting while supporting effective corporate man- agement, particularly stand out as part of Turkcell’s short- and longterm and sustainable corporate DNA. Due to our dual listing in the capital markets, SOX Coordination and Com- pliance Unit has been established with- in the ABAC Office as of January 2019 in order to carry out our obligations to comply with capital markets regula- tions and corporate governance prac- tices that we are subject to under an autonomous structure that has direct access to the Board of Directors. 74 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 75 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES The SOX Coordination and Compli- ance Unit has been continuing its op- erations under the name of SOX Com- pliance and Governance Unit since January 1, 2021. The SOX Compliance and Governance Unit, along with moni- toring the regulations of SEC and Public Company Accounting Oversight Board, supports corporate transparency and contributes to reliable information dis- closure 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 6 hours training were given to 1,287 employees in 2023. Economic and Trade Sanctions and Export Controls Turkcell Sanctions Compliance Program Procedure, which is constantly mon- itored and revised under the coordi- nation of the Compliance Directorate, was adopted by the Board of Directors in 2020. The Sanctions Compliance Pro- gram Procedure plays an important role by following our company’s compliance program, which aims to observe eco- nomic and trade sanctions and export control rules, both at the shareholders’ level and in our ecosystem for taking necessary actions Within the scope of the Sanctions Compliance Program Pro- cedure, a periodical review covering all business activities of the Turkcell group is carried out by the Compliance Di- rectorate using the data received from the business owners. Business owners in Turkcell are obliged to screen their counterparts/business partners before initiating any business relationship using the consolidated sanctions list data- bases of the United Nations, European Union, USA and UK. If required, addition- al due diligences are performed by the Compliance Directorate, and addition- al measures are taken. Turkcell is also aware of the intensifying sanctions especially on Russia and Belarus and comprehensive sanctions against other jurisdictions imposed particularly by the European Union, United Kingdom, United States, and closely monitors the impacts of these sanctions on group companies with the coordination of group compa- nies’ compliance units. Updates and risk assessments regarding the sanctions imposed on Russia and Belarus are also reported to Turkcell's Early Detection of Risk Committee and, if necessary, to the Board of Directors. Economic and trade sanctions related screening is also sup- plemented with an outsourced service provider. In 2023, the Compliance Directorate continuously monitored legislation and developments regarding eco- nomic and trade sanctions and export controls, and provided trainings and awareness activities in this regard. In 2023, economic and trade sanctions trainings were provided to employees and managers of the Company/Group companies, suppliers and business partners (more than 2,450 participants) in a total of 21 one-hour sessions. In 2023, coordination and awareness activities on economic and trade sanc- tions and export controls were carried out with the compliance contacts with- in our Group companies located both in Türkiye and abroad. Competition Management Turkcell believes that a market charac- terised by fair competition has a pos- itive impact on the development and strengthening of the parties and that fair and strong competitive conditions are necessary for a healthy market structure. Turkcell and its Group Com- importance to panies attach great ensuring and maintaining an effective competitive environment in all markets in which they operate. Turkcell endeavours to act in compli- ance with competition laws and reg- ulations in all its business activities and transactions. The main objectives of competition law include the prevention of agreements, decisions and practic- es of associations of undertakings that prevent, distort or restrict competition and the abuse of such dominance by undertakings that dominate the mar- ket, the control of mergers or acquisi- tions in order to establish competition in the markets and the protection of competition by adopting the neces- sary regulations and reviews. In this context, the following procedures, in- cluding but not limited to those listed below, are followed within Turkcell: 䩉It is ensured that all employees review the guidelines, information and train- ings prepared within the scope of the competition compliance process. 䩉In line with our general principles, we avoid written or verbal agreements between competitors on price fixing, customer/region sharing, sharing of trade channels, limitation of supply or boycott, collusion in tenders, and communication on these issues. 䩉There is no sharing of competitive- information between ly sensitive competitors. 䩉Making the activities of rival under- takings difficult, preventing under- takings wishing to enter the market, high sales prices, below-cost sales prices are avoided. 䩉We do not intervene in the resale prices of third parties that resell Turk- cell products and services. The rec- ommended resale price notification rules are strictly adhered to. Turkcell and Turkcell Group companies continue their operations in compliance with competition rules in all markets in which they operate within the scope of the Turkish Commercial Code, the Law on the Protection of Competition, the Electronic Communications Law and related secondary legislation. Information regarding critical lawsuits to which Turkcell is a party is published in accordance with CMB and IFRS standards and in reports submitted to authorities such as BIST and SEC. In this context, critical lawsuits arising from competition law are also included in these reports. The investigation process initiated against our Company with the decision of the Competition Board to determine whether there has been a vi- olation of Article 4 of the Law No. 4054 on the Protection of Competition by concluding gentleman's agreements in the labour market with the allegation of violation of competition regulations within the scope of the Law on the Pro- tection of Competition continues. 76 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 77 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Effective Risk and Crisis Management Turkcell manages the risks that may negatively affect the realisation of the Company's strategies within the scope of the Enterprise Risk Management System. In this process, a comprehensive and effective risk management process is implemented to cover key risk indicators, technology-based opportunities, global trends and industry developments. Corporate Risk Management Pursuant to Article 378 of the Turkish Commercial Code and the CMB Corpo- rate Governance Communiqué, the Ear- ly Detection of Risk Committee, which was established under the Board of Di- rectors at the end of the 2012 financial year, reports to the Board of Directors every two months for the purpose of early detection of risks that may jeop- ardise the existence, development and continuity of the Company, the imple- mentation of necessary measures to mitigate such risks and the management of such risks. The reports prepared are also shared with the independent au- ditors. The Enterprise Risk Management Team is responsible for assessing risks within the framework of Enterprise Risk Management methodology, coordinat- ing risk prevention activities at Turkcell and Group companies and reporting to the Early Detection of Risk Committee. Turkcell's Enterprise Risk Management is designed in accordance with the COSO Enterprise Risk Management Frame- work and ISO 31000 standards. Our ap- proach integrates the risk management process with key management pro- cesses. Within the model, risks are cat- egorised on the basis of Turkcell Group companies and managed by recording them in the "risk universe". Each company has a risk library and risks are managed in a more effective and focused manner. Information Security Risks Data security risk: It includes the risks of theft, loss, leakage, intentional or accidental disclosure, misrecording, alteration, deletion, destruction and inaccessibility of all types of informa- tion, whether internal or external to the organisation, stored in physical and/or electronic media, due to authorised/ unauthorised access. Turkcell takes the necessary technical and administrative measures against the risks related to data security. and external computer and network systems. In this context, Turkcell imple- ments all end-to-end security controls and tests and manages vulnerabilities. The Security Operations Centre mon- itors and defends against cyber-at- tacks by tracking current threats 24/7. Financial Risks Macroeconomic risks: This includes the risk of deterioration of expectations and/or the current situation due to eco- nomic and political uncertainties. Turk- cell is currently diversifying its funding sources and has various sources and necessary agreements in place in case of regional inability to access certain sources due to possible sanctions. Credit limit, inflation and exchange rate risk: This includes the risk of in- creased costs and reduced revenues due to fluctuations in interest rates, inflation and exchange rates. In this context, market conditions are close- ly monitored and liquidity measures are taken against the risk of access to funding and high borrowing costs, strong cash generation and limit in- creases. Appropriate financial instru- ments are selected and implemented to minimise the impact of the high infla- tion environment on our balance sheet and medium to long term plans. Liquidity, cash generation and collec- tion risks: In the event that cash inflows and outflows cannot be financed and new loans cannot be obtained due to possible imbalances in the markets and cash flows, we increase the financing in the portfolio, emphasise diversity fixed-rate loans and systematically monitor our future cash projections using liquidity management principles. The effects of investments and collec- tion risks arising from the February 6 earthquakes on cash flows are being monitored. Strategic risks Cyber Security Risk: It includes the risks of destruction of information and systems and damage to systems due to malicious use of Turkcell's internal Risks of adapting to investment and technological developments: These are risks that may affect the company's position, reputation and image in the in market and in the sector in the short, medium or long term, as a result of missed opportunities due to insufficient innovation, new busi- investment nesses in the sector and other areas, and/or failure to achieve the expect- ed return on investment. In this context, sectoral, local and global trends and competitor activities in new businesses are closely monitored and appropri- ate actions are taken. Technological developments are monitored through cooperation with major internation- al industry organisations such as the GSMA, relevant R&D activities, national and international projects. Legal risks Compliance risks: This includes the risk of administrative sanctions as a result of non-compliance with applicable regulations. Turkcell's Legal and Regu- latory function closely monitors regula- tions and aims to monitor and prevent any possibility of non-compliance with a proactive management approach. In this context, the relevant business teams are informed about legislative changes and new regulations, the Per- sonal Data Steering Committee, Com- pliance Committee, Sub-Compliance Committee and Information Systems Compliance Committee are monitored by senior management and relevant compliance activities are carried out in this respect to comply with them, and various measures are taken to prevent any violations and administrative sanc- tions through digitalised tools such as internal audits and a continuously op- erating automated control system. nation of Corporate Risk Management. Corporate Risk Management ensures the adoption of a scenario-based risk management approach with an effec- tive and dynamic risk management per- spective and raises awareness of risk- based management. litigation risks: Legal Litigation and endeavors are being undertaken to ensure the resolution of litigation and disputes arising within the purview of Turkcell's operations, contracts, and pro- jects. These endeavors aim to conclude these matters in a manner that aligns with Turkcell's interests, particularly in the event of unfavorable outcomes. Business Continuity Risks Risks that may arise as a result of events that the Company may face as a re- sult of operational disruptions, natural disasters, terrorism, etc. The company has detailed contingency, business and service continuity plans. These plans are periodically reviewed to determine their effectiveness and to identify potential areas for improvement, and regular drills are conducted each year. Risks related to earthquakes and climate change that may be associated with business continuity are identified, assessed and actions monitored to cover all func- tions of our business under the coordi- Operational Risks Environmental, sustainability and eco- logical risks: Problems that may arise due to global climate change (tem- perature changes, increase in energy consumption, increase in energy prices, lack of waste management, failure to protect water resources, etc.); environ- mental factors that may affect human health and biodiversity. In this context, Turkcell, Türkiye's first ISO 50001 certi- fied mobile operator, is monitoring its energy consumption and making sig- nificant investments in renewable en- ergy through its subsidiaries. Under ISO 14064 (International Standard for GHG Calculation and Verification), Turkcell calculates and verifies its GHG emis- sions through an independent organi- sation. The greenhouse gas verification process for the period between Jan- uary 1, 2023 and December 31, 2023 is ongoing and when the process is com- pleted, the verification statement will be published in the certificates section of the company's website. 78 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 79 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell Group maintains two main measures in response to a possible increase in energy prices: The first ac- tion is to invest in renewable energy sources through large-scale projects with the aim of providing a large por- tion of the Group's energy consumption from its own power plants by 2030. The Karadağ Wind Power Plant (WPP) in Iz- mir-Çeşme, with an installed capacity of 18 MW, the acquisition of which was completed in 2021, was the first step in this strategy. As part of the three-year strategic plan, the Turkcell Group will invest in 300 MW of solar power plants (SPP) in suitable locations across Tür- kiye to meet its own consumption. The Karadağ Wind Power Plant, which will be acquired in 2021, will be expanded by adding new turbines. The second measure is to hedge against tempo- rary effects in the market by entering into long-term and fixed-price power purchase agreements, where appli- cable. Since 2018, when we started re- ceiving energy supply services through Turkcell Enerji Çözümleri A.Ş., we have continued to supply electricity at the most favourable prices. Risks associated with the manage- ment of third party relationships: This includes the risk of fraudulent activities resulting from ineffective management of third parties, or from third parties not fully and accurately fulfilling their re- sponsibilities, or from third parties out- side the organisation violating compa- ny procedures and laws, or engaging in fraudulent behaviour. The risk of dis- ruption to operations and objectives is minimised by obtaining legal opinions in accordance with agreements with business partners. With regard to the risk of disruption to global supply chains, developments leading to current supply shortages are closely monitored. The future pe- riod predictions are being made, and actions are being taken by reviewing the order plans regarding the supply times of the affected products.. Market Risks Macroeconomic and political uncer- tainties: Due to economic and polit- ical uncertainties, a deterioration in expectations or the current situation may result in unrealised revenues and deviations from forecasts. Global trends and economic indicators, reve- nue and subscriber data are regularly monitored with a focus on pricing and competitive strategy. Competition risks: These include the risks of rapid market changes, unex- pected project/revenue losses due to aggressive moves by competitors, and being at a disadvantage in tech- nological or industry developments. In this context, market and compet- itor activities are closely monitored and efforts are made to respond to such competitor activities with timely actions. Customer risks: Customer dissatisfac- tion and experience problems arising from a failure to understand the needs of the customer base due to demo- graphic changes (age, education, in- come, etc.), a failure to meet their re- quirements and expectations, a failure to identify the right target group. Mar- ket research and detailed analysis of customer complaints and requests are carried out. Business Continuity Management Turkcell Group's Business Continuity Management System has been struc- tured in accordance with the interna- tional ISO 22301 and Social Security Business Continuity Management Sys- tem standards to ensure the continuity of our voice, messaging, Internet, serv- er services, data centres, call centres, tower installation and acceptance ser- vices, testing and operational support services in our mobile and fixed net- works of our companies Turkcell, Turk- cell Superonline, Global Bilgi and Glob- al Tower as well as the relevant critical products and services of our DSS com- panies BiP İletişim, Lifecell Bulut and Turktell Bilişim and has been certified as a result of an independent external audit. The external audit, which was conducted on the revised version of ISO 22301 2019, was successfully com- pleted with full compliance with the updated standard. Regular drills are conducted to ensure that our business continuity plans, which have been de- veloped taking into account customer expectations, corporate policies and legal obligations, work in emergency and disaster situations. Our strong network infrastructure, wide coverage, network of solution partners, mobile switching centres, mobile base stations, additional capacity, emergen- cy centre and past experience allow us to mitigate risks to the greatest extent possible, while the customer service expertise of our Group companies, high speed fibre optic infrastructure, data storage service, experienced software development teams allow us to manage the disaster from another centre and ensure the continuity of our operations. To increase the effectiveness of the Crisis Management Plan, which covers events such as business interruption, natural disasters (earthquakes, floods, etc.), cyber-attacks, fire, pandemic and epidemic diseases and poisoning, internal exercises, training and awareness activities are regular- ly carried out with the participation of crisis management teams and relevant groups. terrorism, Turkcell Disaster and Crisis Management Programme As the Turkcell Group Business Con- tinuity Unit, we continue our efforts to increase the resilience of all functions under our responsibility to possible dis- asters and crises within the framework of the Turkcell Disaster and Crisis Man- agement Programme. Turkcell regularly shares its climate change performance and approach to climate change risks and opportu- nities with its stakeholders through the CDP Climate Change Reporting. As a company that consumes and gener- ates 100% renewable energy, Turkcell continues its efforts and investments in line with its goal to become net zero by 2050. Turkcell is also a Zero Waste cer- tified company that recycles 100% of its waste. Climate crisis: Turkcell holds the inter- nationally recognised ISO 14001 Envi- ronmental Management System, ISO ISO 50001 Energy Management System and 31000 Enterprise Risk Management System certificates. These certificates are subject to annual external audits by independent accredited organisa- tions. Climate change risks also have a direct impact on Turkcell's opera- tions. Measures are taken against the risks of extreme weather events and natural disasters caused by climate change, and studies are carried out in anticipation of a long-term increase in average air temperatures. The impact and consequences of climate change risks are addressed and monitored through the corporate risk manage- ment framework. Turkcell is taking precautions against the risks of extreme weather events and natural disasters caused by cli- mate change by conducting site risk analyses during the installation phase of base stations and planning the relo- cation of data centres to cold climate locations, anticipating the increase in average air temperatures in the long term. One example of the agile and creative solutions required by climate change is Turkcell's base stations. Mo- bile base stations with solar panels on the top of the vehicle, powered by these panels, provide service by be- ing dispatched and positioned where there is a loss of service or a need for additional capacity. In addition, port- able solar fields can also be shown as an example of agile energy solutions for climate change. In addition, Turkcell is integrating solar panels into some of its base stations and switching to solar power in the event of a power outage. In this way, Turkcell has set an example abroad with control mechanisms that take all risks into account to prevent communication interruptions. Global energy crisis: In 2021, increasing energy demand and supply constraints of energy resources drove energy commodity prices to record highs in international markets. Electricity pric- es, which primarily affect the Turkcell Group, vary depending on the prices of thermal resources such as natural gas, coal and renewable generation ca- pacity. In parallel with the USD-based price increases of energy commodi- ties in the same period, the increase in the exchange rate in Türkiye and the drought-related production decline in hydroelectric power plants, where we have the highest installed capacity, pushed up electricity prices in Türkiye, similar to the European markets. 80 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 81 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Internal Audit The selection process of the independ- ent audit firm is carried out by the Audit Committee, which takes into account the competence and independence requirements of the independent audit firms and recommends the audit firm it deems appropriate to the Board of Directors. Güney Bağımsız Denetim ve SMMM A.Ş. was elected as the independent au- ditor for the audit of the accounts and transactions for 2023 in accordance with the Turkish Commercial Code and Capital Market Law at the Ordinary General Meeting of our Company held on September 13, 2023. The Internal Audit Department, which reports directly to the Board of Direc- tors, is responsible for conducting audit activities throughout Turkcell İletişim Hizmetleri A.Ş. and its subsidiaries in ac- cordance with International Standards for the Professional Practice of Internal Auditing and reporting the results to the Audit Committee. Audit activities mainly consist of operational audits performed within the framework of an- nual risk-based audit plans and com- pliance audits performed in accord- ance with Section 404 of the Sarbanes Oxley Act (SOX). Operational audit activities are per- formed in accordance with the annu- al audit plan, which is based on the risk-based audit approach. Through these audits, Internal Audit assesses the effectiveness of the Company's risk management, control and govern- ance processes, provides assurance to the Board of Directors and the Audit Committee on these processes, and assists the Company in achieving its objectives. At the same time, due to our listing on the New York Stock Exchange in the United States of America, in order to comply with Article 404 of the Sar- banes Oxley Act, which public com- panies are required to comply with, audit activities are performed within the framework of an annual plan to provide assurance on the existence, adequacy and effective operation of the internal control structure estab- lished at Turkcell and Turkcell Group Companies whose financial state- ments are consolidated. All stages of the audit activities performed in compliance with the aforementioned article, from the planning stage to the follow-up and completion of the iden- tified internal control deficiencies and actions, are regularly reported to the Audit Committee, the Chief Executive Officer and the Executive Vice Presi- dent in charge of Finance. Internal Audit Department also per- forms an advisory function on current issues and matters as requested by management. Internal Audit Depart- ment reports to the Audit Committee, the Chief Executive Officer and the Executive Vice President of Finance on its activities in relation to the Sarbanes Oxley Act, section 404. The Internal Audit function uses a risk-based audit approach. Within this framework, po- tential functional and organisational risks are constantly reviewed. The main input to the audit activities are the risk analyses resulting from these studies. The Turkcell Disaster and Crisis Man- agement Programme coordinates our pre-disaster preparations, actions during disasters and post-disaster re- covery plans and projects to strength- en our preparedness for disasters and emergencies. In order to minimise the risks that may occur during emergen- cies and to be able to intervene, we conduct natural disaster and man- made crisis drills in all our work areas and fields. Internal Control and Continuous Improvement Turkcell Group's Internal Control and Continuous Improvement Directorate performs level 2 control activities by identifying internal risks and process improvement activities by monitoring the effective management of business processes within the framework of ap- plicable laws and professional stand- ards within the authority granted by the General Manager, including Turkcell İl- etişim Hizmetleri A.Ş. and Turkcell Group Companies. As the Internal Control Unit, risk-based internal control activities are planned by determining the objectives, priorities and risks of the functions under our re- sponsibility, and preventive and detec- tive control activities are carried out in accordance with the control frequen- cies determined during the period, uti- lizing Early Warning System, automat- ed tools or manual methods. The Continuous Improvement Centre designs the company's business pro- cesses to ensure that they are lean, ag- ile, efficient, sustainable, with minimum risk and error criteria, creates the con- structs that will make the transforma- tion continuous and carries out process development studies to make maxi- mum use of the possibilities offered by technology. In addition to evaluating the effective- ness of the controls performed at the first level of internal control activities, the business units are guided to im- prove processes taking into account Turkcell's sustainable values. Any de- ficiencies identified as a result of the controls are communicated to the relevant teams to ensure that action is taken and the relevant action plans are followed up. If the failure is due to a process deficiency, the process is reviewed and redesigned end-to- end in coordination with the Continu- ous Improvement Centre. In addition to assessing the effec- tiveness of the controls of the busi- ness units' processes, other areas of include conducting responsibility internal audits regarding the obliga- tions of the ISO certificates held by the company within the framework of legal regulations and following up on the results of Turkcell's internal au- dit/external audit. ISO 27001 and ISO 27017 certifications are international frameworks that help organisations protect their financial data, intellec- tual property and sensitive customer information. Information ISO 27001 Technology Security Techniques for Information Security Management System standards are international certifications held by Turkcell, Lifecell Bulut, Turkcell Superonline, Turktell, BiP, Turkcell Teknoloji, Kule A.Ş. and Turkcell Ödeme Hizmetleri A.Ş. ISO 27017 Information Technology Secu- rity Techniques for Cloud Services standards are international certifi- cations held by Turkcell and Turkcell Superonline. These certifications help protect the information in our companies and re- duce risks by implementing a robust and systematic approach to infor- mation management. Thanks to the ISO 27001 and ISO 27017 certificates, we identify, manage and mitigate our information security risks in accord- ance with the standards. On the con- tinuous improvement side, ISO 9001 Quality Management System audits are successfully completed and audit results are used as input to the contin- uous improvement cycle. With the integrated quality manage- ment system approach, continuous improvement awareness, culture and training activities are carried out to- gether with the document manage- ment system, governance develop- ment activities and the internal process improvement suggestion platform. New generation continuous improve- ment technologies are used and man- aged in our processes. A data-driven approach to process management, process mining studies and internal deployment of Robotic Process Auto- mation (RPA) are being undertaken. End-to-end process design and model- ling of all processes of Turkcell and Turk- cell Group companies are carried out. A monitoring and management struc- ture is established by defining KPI and metric-based process performance indicators. The corporate process and document architecture is created, up- dated and maintained by establishing common process design principles and ensuring their integration into the pro- cess development cycle. To strengthen our internal control and continuous improvement activities, studies are carried out to create a flow, risk and internal control inventory of all processes. Reasonable assurance in detection and preventive internal con- trol activities is provided by automated controls using advanced data analyt- ics and robotic automation. The Internal Control Unit reports to the Executive Committee. At regular meet- ings, internal control activities planned and performed during the year, find- ings, action plans and future plans are evaluated. As part of the initiative to increase the awareness and competence of Robotic Process Automation (RPA) in the com- mercial functions, an RPA marathon was held with five commercial functions. As a result of these marathons, with 448 participants, 284 manual jobs requir- ing 59.7 thousand hours of effort were transferred to robotic automation. 82 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 83 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Financial Capital Strong Financial Performance Our financial capital is the main economic input that enables all our activities to create value for our stakeholders. Providing innovative services to our customers through a widespread and strong telecoms infrastructure, devel- oping indigenous technologies, build- ing a service network that creates satisfaction, benefiting society through social projects, creating favourable employment conditions for our employ- ees and creating value for our share- holders can only be achieved through strong financial performance. Strong and sustainable financial performance is therefore one of our top priorities. We aim to generate a strong operat- ing profit from the revenue generated by our operations, while focusing on efficient management of our working capital requirements and on making our capital expenditures on a de- mand-driven basis to support long- term value creation. As we operate in an emerging market, risk management is an important item on our agenda. With a prudent risk management approach, we protect our business model against macro- economic and financial fluctuations through our hedging practices. In this context, we attach importance to ad- justing the prices of our products and services according to the general level of prices in our country in order to en- sure real income growth and minimize the impact of inflationary pressures on our operational profitability.We also support growth through focus areas such as customer acquisition, consum- er and business digital services reve- nue and techfin. We also ensure that our balance sheet is resilient to curren- cy movements through the active use of hedging instruments. We focus on keeping our liquidity re- sources strong to be prepared for fi- nancial crises and shocks. We ensure the efficient and controlled use of cap- ital through balanced debt manage- ment. We closely monitor the debt and capital markets and focus on the use of different structured funding instru- ments with appropriate currency, cost and maturity conditions to demon- strate an effective funding approach. We contribute to working capital man- agement by effectively managing our receivables. For efficient capital management, we continue our efforts to allocate our capital resources to more profitable, higher growth areas, while maintaining our objective to reflect the true value of our assets on our balance sheet. As part of our strong corporate govern- ance approach, we communicate our financial management transparently to our stakeholders through our integrat- ed annual reports, quarterly and annu- al results releases, our website, physi- cal/virtual investor meetings we attend and events we organise. Accordingly, we continue our efforts to increase the Company's market capitalisation and share trading volume, to diversify and deepen the investor profile and to in- crease the weight and number of long- term institutional investors. You can review the details of our audited annual financial performance in the Consolidated Financial Statements section. Outputs 107.1 Billion TRY Revenue 20.0% Operational CAPEX / Sales Ratio 0.5x Consolidated Leverage Ratio 22 Million USD Net Long FX Position 258 Meetings with Investors 43.9 Billion TRY EBITDA 12.6 Billion TRY EBIT 12.6 Billion TRY Net Income 7.3 Billion TRY Free Cash Flow 84 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 85 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Revenues from Operations Turkcell Group Revenue (TRY million) With a focus on value creation, one of the key inputs of all our activities is the revenue we generate from our opera- tions. This is how we deliver our innova- tive services to our customers, improve the conditions of our employees, ben- efit the economy and society through our investments, pay dividends to our investors; in short, we create value for all our stakeholders. 2023 was a year in which inflationary pressures continued to be effective and macroeconomic and political diffi- culties continued to be felt around the world due to the impact of global wars. In light of these developments, Türkiye maintained its growth performance in 2023, and inflation followed a down- ward trend in the first half of the year, but has been on an upward trend since July. As Turkcell, while the challenging mac- roeconomic conditions remained on the agenda. we maintained our strong operational and financial performance in 2023, thanks to our business model diversified with strategic focus areas In and customer-centric approach. 2023, our consolidated revenues in- creased by 14.6% year-on-year to TRY 107.1 billion. The key drivers of this per- formance were our growing subscriber base, accelerating ARPU growth with price adjustments and the positive con- tribution to growth from our strategic focus areas. For further details, please refer to our consolidated financial statements and footnotes. 93,487 2022 107,116 2023 14.6% 2023 growth With the positive impact of our strong revenue growth and disciplined cost management, we achieved an EBIT- DA of TRY 43.9 billion in FY2023, with an increase of 19.9%. The reduction in energy prices in the second and third quarters of the year offset the impact of higher employee costs due to mac- roeconomic conditions. Turkcell Group EBITDA (TRY million) 36,608 2022 43,877 2023 19.9% 2023 growth In 2023, Turkish lira depreciated by 57% against US dollar and 63% against Euro. In a period of challenging macroe- conomic conditions, our prudent ap- proach to financial risk management enabled us to limit the impact of curren- cy movements on our financial results. As a result of our strong operational performance and effective risk man- agement, we achieved a net income of TRY 12.6 billion. Turkcell Group Net Income (TRY million) 6,880 2022 12,554 2023 82.5% 2023 growth Business Model Hedging Practices In 2003, we continued to minimise the negative impact of challenging mac- roeconomic developments on our fi- nancial results by hedging our business model. The stable pricing of our prod- ucts and services in line with current market price developments, the use of hedging instruments for our foreign cur- rency borrowings, the maintenance of strong liquidity resources and the man- agement of collection performance were the areas on which we focused this year. We continued to adjust the prices of our products and services with a consistent approach in line with the current eco- nomic conditions. In addition to accu- rate pricing to maintain ARPU growth, we continued our strategy of increasing the postpaid subscriber base and mi- Aware of our responsibility to have a strong network infrastructure and with the aim of connecting our customers with the latest technologies, we con- tinued our investments in 2023 with a controlled approach. In line with the continued post-pandemic increase in demand for high quality fixed broad- band, we accelerated our investment in fibre infrastructure, bringing fibre access to a total of 1.5 million new homespass- es in 2021 and 2022. In 2023, we focused more on increasing our fibre customer take-up rate and provided access to 386 thousand new homepasses. On the other hand, we accelerated our in- vestments in the region due to the dev- astating earthquake we experienced as a country on February 6, 2023. The depreciation of the TRY against foreign currencies also led to an increase in our capital expenditures. In this context, our operating capital expenditures (exclud- ing licences) amounted to 20.0% of our total revenues in 2023. We attach importance to our free cash flow performance in order to maintain our strong financial performance and create value for our investors. In this context, we generated TRY 7.3 billion of free cash flow in 2023. You can find the details of our domestic network investments and 5G studies in the Manufactured Capital section of our report. grating our customers to higher value packages with a richer value proposi- tion. In this context, mobile ARPU (exclud- ing M2M) grew by 18.4% year-on-year, while residential fiber ARPU remained almost flat year-on-year. We pursued a balanced growth strategy by support- ing our revenue growth with subscriber additions. In this context, we increased our subscriber base12 by 799 thousand net additions on an annual basis. At the same time, our digital services and tech- fin solutions, which provide faster reve- nue growth than our telecom services, also supported our consolidated reve- nue growth. In this context, we minimised inflationary pressures on operating profitability in a year where macroeco- nomic conditions remained challenging. 12 Including mobile, fixed 􀕬 broadband, IPTV, and wholesale (MVNO&FVNO) subscribers. 86 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 87 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Net Foreign Currency Position (Million USD) By the end of 2023, we have TRY 50.0 billion in cash on our balance sheet. 22 -25 2022* 2023 􀕬*Balance Sheet items for 2022 include discontinued operations in Ukraine. Debt Service (Principal and Interest) Million USD* Local Currency Foreign Currency 􀕬*Turkcell Group excluding TFC. Principal and interest payments are included. 5 0 8 7 5 4 8 4 3 3 9 9 6 1 3 3 2 2 3 9 9 6 1 3 3 2 2 0 6 7 0 6 7 2024 2025 2026 2027 2028+ In addition to our strong cash position, our liquidity position is also supported by our committed availability facility of around USD 120 million and our free cash flow generation. Consolidated Leverage Ratio 2022* 2023 0.9x 0.5x 􀕬Balance Sheet items for 2022 include discontinued operations in Ukraine. Another important aspect of our liquid- ity focus is debt management. In 2023, despite the depreciation of the Turkish Lira against the US Dollar and the Euro, we were able to reduce the net debt/ EBITDA multiple to 0.5x, thanks to cash generation where we are monitoring the performance of our debt level. The timely actions we've taken and the sensitivity our customers have shown in their bill payments, given that tele- com services are an integral part of their lives, have enabled us to maintain strong collection performance in 2023. While maintaining strong collection performance in consumer finance, we ensured strict management to keep risk costs below the industry average. When providing consumer loans, we continued to evaluate numerous and diverse data from systems such as the Credit Registration Bureau (KKB), identi- ty and address sharing systems, taking into account various criteria, including especially the customers' payment performance of their telecom bills. Efficient Capital Allocation As part of Turkcell's focus on efficient capital management, we are making targeted investments in areas with high demand and value creation potential, such as digital services, digital business services, techfin offerings and fibre connectivity solutions. In doing so, we aim to create value for our stakeholders by strengthening our financial and op- erational performance. Our approach is to fund our investments in these areas through active portfolio management, in addition to borrowing and cash flow generation. In this context, we regularly monitor mar- ket conditions and investor interest and aim to unlock the true value of the assets on our balance sheet through various capital market and strategic transac- tions when the conditions are right. We maintained our prudent risk man- agement approach to our foreign cur- rency denominated liabilities on our balance sheet throughout 2023. As part of our prudent risk management ap- proach, we continued to actively use hedging instruments. We supported the effectiveness of our portfolio with short- instruments, which we term hedging started using in the last quarter of 2021. In order to reduce our risk by diversifying our foreign currency transactions and position, we emphasised local currency trade in payments to our suppliers this year as well. By establishing Turkish lira payment arrangements with our largest suppliers, we have taken a step towards protecting our foreign currency position. We define a neutral currency position as minus USD 200 million and plus USD 200 million and aim to maintain our position within this range. In this context, we have a long foreign exchange position of USD 22 million at the end of 2023. On the other hand, these financial in- struments also protect us against in- terest rate risks in the market. At the end of 2023, approximately 60% of our total debt has fixed interest rates, while the proportion of our debt with fixed interest rates was approximately 75% thanks to hedging instruments. Another important aspect of our risk management approach is closely monitoring the effectiveness of our en- tire derivative instrument portfolio and ensuring the principal and interest pay- ments of long-term foreign currency debt are secured. Additionally, we work with internationally recognized, relia- ble, and reputable financial institutions when executing these agreements. As a telecommunications company op- erating in emerging markets, it is imper- ative for us to always be prepared for financial ups and downs and to main- tain a strong liquidity position to ensure the continuity of our operations. In this context, liquidity management stands out as an important component of our financial assets. In this context, we have TRY 50.0 billion in cash on our balance sheet by the end of 2023, most of which is denominated in foreign currencies. This amount is sufficient to cover all our debt service until the end of 2025. 88 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 89 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Financing Diversity We aim to create alternative funding methods and sources and develop our strong market relationships to provide funding diversity to our strong equity position. In this direction, we continue to use various financing methods such as bank loans from domestic and in- ternational banks, Eurobond issuance in international markets, bonds, bills, lease certificates and asset-backed securities local markets, loans to finance purchases country from foreign suppliers and sustainable financing (sustainability indexed loan, green loan). issuance in In 2023, Turkcell's Board of Directors decided to issue bonds in Turkish lira, domestically, in one or more tranch- es, in different maturities with a maxi- mum maturity of 2 years, to be sold to investors and/or allocated qualified to qualified investors and/or without a public offering, up to a nominal amount of TRY 8,000,000,000, and our applica- tion to the Capital Markets Board was approved. Under this issuance limit, our company issued a bond in 2023 with a nominal amount of TRY 2,060,000,000. In addition, a total of TRY 925,000,000 of bonds were issued in 2023 through our subsidiary Financell. In the same period, Sukuk issuances totalling TRY 3,580,000,000 were completed through our subsidiaries Turkcell Superonline and Paycell. During the period under review, we continued to diversify our funding sources through the use of sustainabil- ity-related loans. In this regard, in May 2019, we used a sustainability loan of EUR 50 million with a maturity of 3 years from BNP Paribas. In 2021, through an agreement with the same bank, we will increase the amount of this loan to EUR 70 million and extend its maturity to December 2026. The new sustainability targets covered by the agreement in- clude the share of renewable energy in electricity consumption, the share of renewable energy generated within the Group and the annual amount of electronic waste collected. In parallel with the company's targets, we have continued our efforts in 2023 without slowing down, including po- tential green issues that can be made in the capital markets, as well as with domestic and foreign banks regard- ing these sustainable/green financing transactions. As part of our goal to meet 100% of our electricity needs with our own renewable energy resources by 2030, we signed a new loan agree- ment with Bank of China for EUR 30 mil- lion with a maturity of one year. In ad- dition to sustainability-related loans, we signed a new EUR 50 million 4-year loan agreement with Societe Generale in 2023 to finance the ongoing infra- structure investments of our subsidiary Turkcell Superonline. Loans Received under Sustainable/Green Financing (EUR Million) Strong and Transparent Financial Management It is important to our corporate struc- ture that our financial management is as transparent and accountable as it is strong. As part of our transparent and rigorous financial management ap- proach, we plan, manage and analyse our budget effectively. In the countries where we operate, we manage our direct and indirect tax practices in a transparent and accountable manner and publish them in our annual reports, material event disclosures, quarterly and annual results. Internally, we share information in a variety of contexts, such as share performance reports, senior management reports and peer company analysis. In line with our approach to being an exemplary corporate citizen, we have a zero-tolerance approach to bribery and corruption and act in accordance with the law to protect effective com- petition in the markets. We conduct all our financial transactions in accord- ance with the CMB and SEC regula- tions to which we are subject to. 0 5 0 2 0 3 2021 2022 2023 You can find the details of our principles and reporting on anti- bribery and corruption, competition management and related issues in the Strong Corporate Governance section, and data on taxes in the Consolidated Financial Statements section. Turkcell New Technologies Venture Capital Investment Fund (VCIF) Turkcell New Technologies Venture Capital Investment Fund (VCIF), which was established in March 2022 in coop- eration with Turkcell and Re-Pie Portföy Yönetimi A.Ş., makes investments to pro- vide strategic and financial support to technology-oriented start-ups with high growth potential in various sec- tors. Turkcell New Technologies VCIF's investment ceiling is currently set at TRY 500 million. Turkcell New Technologies VCIF has in- vested in companies and venture cap- ital funds such as EasyCep and Mobil- fon, a provider of refurbished phones and electronic devices; Barikat Siber Güvenlik, an IT security company; Pro- cenne, a developer of products in the field of digital security and encryption technologies; Passion Punch, a local mobile gaming venture; and Kuartis, a developer of machine learning, com- puter vision and autonomous driving technologies. Turkcell New Technologies VCIF also established Ultia, our application de- velopment platform. investment This technology-focused fund aims to invest in minority stakes in start-ups operating in high-tech sectors such as cybersecurity, finan- cial technologies, artificial intelligence, etc. in the coming period. The aim is to create long-term value and strategic and financial benefits for our company through synergies with the start-ups. Transparent Investor Communication - Investor Relations We manage our Investor Relations ac- tivities in parallel with the Corporate Governance Principles in accordance with the principles of accessibility, rapid response to stakeholders, trans- parency, consistency and disclosure in accordance with the relevant laws and regulations to which we are subject to. As part of transparent and active com- munication, we publish results such as audit reports, press releases and in- vestor presentations, which include our financial and operational performance every quarter during the operating period, on our website in Turkish and English to address all our stakeholders. Since 2020, we have been publishing an integrated annual report with an in- creasing focus on sustainability. We explain our approach to communicating with our investors and other stakeholders in the Interaction with stakeholders section and our communication channels in the Stakeholder communication channels table. 90 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 91 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Capital market instruments performance Turkcell shares are traded on the Borsa Istanbul (BIST) and the New York Stock Exchange (NYSE). Turkcell's shares began trading simulta- neously on the Borsa Istanbul (BIST) and the New York Stock Exchange (NYSE) on July 11, 2000. The shares are traded on BIST under the ticker symbol "TCELL" and on NYSE under the ticker symbol "TKC" as American Depositary Receipts (ADR).11 Turkcell's paid-up capital has a nominal value of TRY 2.2 billion.12 Turkcell, the only Turkish company listed on Borsa Istanbul and the NYSE, is the 17th most valuable company on BIST with a market capitali- sation of TRY 123.4 billion as of 31 Decem- ber 2023. Turkcell's American Depositary Receipts amounted to 74.1 million at the end of 2023. Turkcell has a free float ratio of 54% and lot based foreign ownership13 was 69% as of 31 December 2023. In the same pe- riod, foreign investor share in Borsa Is- tanbul is 38%. The average daily trading volume of Turkcell shares in 2023 is 39.9 million shares. Turkcell has bonds issued on October 15, 2015 with a nominal value of USD 500 million, a maturity of 10 years and a cou- pon rate of 5.75% and bonds issued on April 11, 2018 with a nominal value of USD 500 million, a maturity of 10 years and a coupon rate of 5.80%. Share and Bond Buybacks In order to protect our investors from the perception of instability that may be caused by the developments on and after July 15, 2016 in the short and medi- um term and/or the possible negative effects of the fluctuations that may occur in the global economy on Türki- ye, Turkcell's Board of Directors has au- thorised the Company's management to repurchase the Company's shares and bonds within the framework of the announcements made by the Capital Markets Board on July 21, 2016 and July 25, 2016. On February 8, 2023, the Board of Directors set the maximum amount of the fund at TRY 1,250,000,000. In this context, 17.9 million shares (equivalent to TRY 214.1 million) and bonds with a nom- inal value of USD 37.2 million (equivalent to TRY 521.8 million) have been pur- chased since 2016. No bond purchas- es were made in 2023 and 1.0 million shares were repurchased in February for TRY 33.9 million. Our working principles are based on strong foundations We adopt Corporate Governance Principles. The key working principles of Turkcell's Investor Relations Department include accessibility, providing quick response to stakeholders and informing stake- in a transparent, consistent holders and timely manner. Turkcell's Investor Relations team, which consists of peo- ple who have a good understanding of the dynamics of the company and the sector and who can comprehensively communicate the company's strategy and focus areas, makes a difference in the sector with its dynamic structure and effective communication. Long- term relationships with all stakeholders are sought. The flow of information to all stakeholders is provided in Turkish and English through the Turkcell Inves- tor Relations website and in particular through the Public Disclosure Platform. Investor Relations Department through- out 2023: 䩉We held a total of 258 meetings with institutional investment funds. 䩉We participated in 8 investor confer- ences, 1 of which was held virtually. 䩉We organised 1 group investor meet- ing and 2 roadshows. 䩉We shared our financial results via teleconference four times during the year. Approximately 80 analysts and investors attended these meetings each quarter and the recordings of these meetings are available on the website. 䩉One-to-one and regular meetings were held with 18 analysts to man- age expectations. 䩉Throughout the year, we received over a thousand requests for infor- mation by phone and e-mail, and we responded to all of these requests. We strive to maximise the benefits for Turkcell and our stakeholders As Turkcell Investor Relations, our prima- ry objective is to increase the company's market capitalisation. In this context, our goal is to diversify and deepen Turkcell's investor profile and increase the weight and number of long-term institutional investors. Turkcell's institutional investors represent 64% of the listed shareholder base. Of these investors, 50% are locat- ed in North America, 32% in Europe (in- cluding Türkiye) and 12% in the UK and Ireland. (Source: S&P Global, January 2024) Sustainability Indices and Performance Indicators BIST Our sustainability efforts are reflected in our performance on local and glob- al indices. Since its launch in 2014, we have been included in the BIST Sustain- ability Index (BIST SI), which provides an SÜRDÜRÜLEBİLİRLİK independent assessment of compa- ENDEKSİ nies' activities and is registered by Bor- sa Istanbul, by revealing companies' approaches to sustainability-related issues such as global warming, de- pletion of natural resources, depletion of water resources, health, safety and employment. Additionally, as of 2023, SÜRDÜRÜLEBİLİRLİK we continue to be included in the BIST ENDEKSİ ŞİRKETİ Sustainability 25 Index, which was first calculated by Borsa İstanbul in 2022. BIST BIST SUSTAINABILITY INDEX BIST SUSTAINABILITY INDEX CONSTITUENT COMPANY Our sustainability rating was evaluated as BBB by Morgan Stanley Capital In- ternational (MSCI) in August 2023. Turk- cell is the only Turkish telecommunica- tions company to be included in the FTSE4Good Emerging Markets Index, which measures the ESG performance of FTSE, an independent organisation jointly owned by the London Stock Ex- change and the Financial Times. 11 Two ADRs represent five 􀕬 shares. 12 It contains 2.200 million shares with a nominal value of TRY 1 each. 13 Source: Matriks Share Information and Dividend Yield As Investor Relations, we aim to in- crease Turkcell's market capitalisation and achieve fair value. Accordingly, we evaluate the possibilities of creating strategic value and distribution of div- idends to our shareholders in accord- ance with our dividend policy within the framework of financial discipline. Dividend Yield % 6 3 . % 3 2 . % 5 7 . % 2 3 . % 9 . 1 2019 2020* 2021 2022** 2023** 􀕬*In 2020, dividends were distributed to our shareholders at the rate of 25.0% of distributable net income, the highest rate permitted by the legislation. ** The Board of Directors of our Company has decided to pay 25.0% and 20.4% of distributable net income as dividend for the years 2022 and 2023 respectively, within the framework of our Company's Articles of Association and Dividend Distribution Policy, as a result of a comprehensive evaluation of macroeconomic and financial conditions, our investment plans and our cash projection accordingly. Analyst Recommendations BUY 100% HOLD 0% SELL 0% 18 brokerage houses actively follow and analyse Turkcell shares. As of the end of 2023, all 18 analysts give a "buy" recommendation. TCELL (TRY)* 2019 2020 2021 2022 2023 Lowest Highest Closing 9.28 12.52 11.86 10.36 14.80 14.16 12.55 22.13 17.53 15.38 37.89 37.17 29.98 59.41 56.10 TKC (USD)* 2019 2020 2021 2022 2023 Lowest Highest Closing 3.85 5.83 4.99 3.77 5.40 4.74 3.20 5.28 3.41 2.28 4.70 4.70 3.49 5.43 4.81 *Share prices are adjusted according to dividend distributions. Source: Bloomberg Stock Exchange Symbols Stock Exchange Symbol Share Certificates Borsa Istanbul Warehouse Certificate NYSE TCELL TKC Bonds Bonds Euronext Dublin ISIN. XS1298711729 Euronext Dublin ISIN. XS1803215869 Share performance (Relative) (2023) January 2023 April 2023 July 2023 October 2023 December 2023 BIST - 100 Turkcell 92 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 93 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Credit Rating Turkcell receives credit ratings from S&P, Fitch and JCR Eurasia Ratings. In addition, our subsidiaries are also evaluated by JCR Eurasia Ratings within the scope of the relevant regulations. Measures to avoid conflicts of inter- est with organisations from which credit rating services are purchased are included both in the service agreements and in the code of ethics of the company from which the services are purchased. Long-term credit rating Outlook Rating Date Review Date S&P (FC&LC) Fitch (FC) B+ B+ Fitch National AAA (tur) Positive Positive Stable December 2023 December 2023 March 2024 March 2024 March 2021 November 2022 JCR-ER (FC) BB Negative May 2022 JCR-ER National AAA (Trk) Stable May 2021 May 2023 May 2023 Investor Relations Contact : +90 (212) 313 18 88 Tel : +90 (216) 504 40 58 Fax : investor.relations@turkcell.com.tr E-Mail : https://www.turkcell.com.tr/en/aboutus/investor-relations Web Address : Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İsmet İnönü Caddesi No: 20 B Blok Küçükyalı Ofispark, 34854 - Maltepe / İSTANBUL Digital Finance Transformation Increasing the digital maturity of our strong finance function is one of our top priorities. Turkcell is digitising its finance function operating model to create an environment where business processes are system-based, manual intervention is minimised, operational excellence inter- and efficiency are achieved, nal control points are automatically supported and the working environ- ment is brought up to the level of best practices. The studies initiated following the as- sessment of our current finance ma- turity level, which will restructure the end-to-end finance operating model from process to technology, from or- ganisation to data, are ongoing. Within this framework, our financial reporting and budgeting processes, prepared in accordance with TFRS and IFRS, have started to be carried out with in- creased digital maturity as part of our work in 2023. Techfin's shining stars. Paycell, Financell and Wiyo In 2023, we continued to develop and expand the products and services we offer to our customers under the Pay- cell umbrella. As Paycell, offering a wide range of products and services to 22,420 member businesses, we contin- ue to enhance our capabilities. Along- side our commercial Android POS and Virtual POS products, we also provide Paycell Vitrin, a marketplace solution enabling businesses to instantly en- gage in e-commerce, and Paycell Lin- kle, our remote credit card payment solution, ensuring secure transactions. Paycell Android POS, which is the first Android POS device registered by the Revenue Administration in accordance with TPL 507 legislation, offers collec- tion, inventory tracking and e-invoicing processes on a single platform, while providing cost and efficiency benefits to merchants. With this product, which Paycell has developed in response to the needs of its customers, Paycell is serving a new POS world in compliance with the TPL 507 communiqué, where e-invoicing requirements are met, while at the same time bringing together mul- tiple banks in Paycell POS, which offers standard bank collection management to workplaces that transmit their own invoice flow, and has started to offer favourable commission pricing, where points and instalment benefits are po- sitioned on a single device. On the oth- er hand, the feature allowing Android POS users to automatically generate the total payment amount by simply selecting products without entering the amounts also contributes to the widespread adoption of the product at events. With the ongoing develop- ments and collaborations with integra- tors providing services in the e-com- merce sector, our Virtual POS product ensures a seamless end-to-end expe- rience. This not only provides cost sav- ings for our users in card transactions both in the market and through Turkcell e-commerce channels but also serves as a value-added and revenue-gener- ating product for Paycell. In 13 different brands, we provide QR payment service with Paycell wallet in 12,420 points and Paycell payment ser- vice with our integrations in the online sales channels of 9 different brands. In 2023, we continue our direct integra- tions with third-party wallet applica- tions to deploy Paycell payment ser- vices. This enables our users to make payments at leading marketplaces and retail points and reflect them on their invoices via direct carrier billing. Additionally, we are enhancing our merchant ecosystem by collaborating directly with various brands serving in e-commerce and physical channels, either directly or through integrators. Paycell provides a service that allows shopping at affiliated merchants with- out the need for a bank card or cash on delivery, with the option to charge the fee to the invoice. Paycell also en- ables the payment of corporate bills both through the application and at Turkcell stores. With an increasing number of registered users each year, Paycell customers can make quick and secure purchases using QR codes. Pay- cell Kart, on the other hand, offers the opportunity for individuals under the age of 18 who are not bank customers to use a card. Additionally, Paycell Kart customers can manage balances and mobile payment limits from a single account. Paycell has created a world first by adding a new option to its simple pay- ment alternatives. Thanks to the "Ready to use limit" feature, users can spend whenever they want by transferring their limits to their Paycell cards and pay them back at the end of the month with their Turkcell bill. Paycell, Türkiye's most inclusive digital payment and financial services plat- form, continues to increase financial inclusion and expand innovative pay- ment services while leading the digital transformation of our country. Com- bining technology and financial ser- vices in line with changing customer needs, Paycell offers fast and secure payment solutions and aims to enable its users to easily benefit from financial services with its vision of becoming a financial marketplace. In line with this objective, Paycell Shopping Limit of- fers all Paycell customers the oppor- tunity to pay for products and services offered by contracted merchants in in- stalments for up to 36 months with the shopping credit provided by Financell, as well as the opportunity for Turkcell postpaid subscribers to easily pay the credit instalments together with their Turkcell bill. Paycell, which cooperates with banks for its users' cash needs, also offers the possibility of using bank loans from within the application. Pay- cell users can apply for loans offered by contracted banks from within the application, spend the loan with their Paycell card wherever they want or withdraw it in cash. Paycell enriches the application every day with new services and solutions to offer Payce- ll users all the financial products they need on a single platform and with the aim of providing a superior custom- er experience. In this regard, Paycell users can trade commodities such as gold, silver, platinum, etc. through the "Investment Transactions" menu in the application, and follow the current prices of these products instantly. Us- ers can use the balance on their Pay- cell cards for commodity transactions, and even if there is no balance on their cards, they can also save by having it reflected on their Turkcell bills. In the last quarter of 2022, stock trading transactions were added to commod- ity trading transactions in the Invest- ment Transactions menu. Paycell users can invest any amount, with a mini- mum of TRY 10 in Turkish Lira, in Amer- ican stock exchanges from this menu, which has a simple and understanda- ble interface. As with other credit and commodity transactions, this service is provided by the authorised business partner. In addition to credit intermedi- ation and investment products, Paycell also offers its customers personal in- surance packages through the Group company Wiyo. 94 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 95 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Paycell 2022 2023 Paycell 3-month active users (million) Total transaction volume (TRY billion) Revenue (million TRY) EBITDA (TRY million) EBITDA margin (%) 7.7 37.1 1,693 762 45.0% 8.0 65.6 2,177 926 42.5% ations with the vision of becoming the "insurer of mobile life", with an ap- proach that aims to expand the rela- tionship it has established with its cus- tomers through their mobile devices to all areas of life where mobility and technology are present, to be a com- panion that protects its customers' as- sets on this journey, and to create an easy, understandable, simple and cus- tomer-oriented experience where they can complete their insurance process- es easily and with tailored proposals. The first result of these efforts was the Kredim Güvende product, a credit protection insurance offered to cus- tomers together with Financell loans. Kredim Güvende (My Loan is Safe), the credit protection insurance product launched in June 2023, was followed by Cyber Security Insurance, which se- cures Turkcell Group companies, and in November we launched Wiyo Healthy Life and Wiyo Life at Home personal accident insurance packages. Aiming to provide its customers with in- surance products that meet the needs of mobile life, as well as value-added services and solutions that make their lives easier, Wiyo aims to accompany its customers in their daily lives and at every stage of their active lives, and to create solutions that meet their chang- ing habits and expectations. In 2022, the scope of business offered through our existing insurance agen- cy Turkcell Sigorta Aracılık Hizmetleri A.Ş. was expanded and Turkcell Dijital Sigorta A.Ş. was established. The li- cence application submitted on behalf of Turkcell Dijital Sigorta A.Ş. to the In- surance and Pension Regulation and Supervision Board (SEDDK) in October 2022 was approved and the insurance licences of Turkcell Dijital Sigorta A.Ş. were registered in February 2023. Turkcell Dijital Sigorta A.Ş., Turkcell's new insurance company with the ca- pacity to provide end-to-end services, which is positioned as a continuation of Turkcell's financial services strategy, started its operations in June 2023 fol- lowing the registration of its licences with the SEDDK. Turkcell Dijital Sigorta A.Ş., under the brand name Wiyo, started its oper- Financell 2022 2023 Number of customers brought to Turkcell through Financell (thousand) Number of loans utilised annually (million) Number of customers utilising annual loans (million people) Total loan portfolio (TRY billion) Revenue (million TRY) EBITDA (TRY million) EBITDA margin (%) 123 1.9 1.3 5.5 1,848 1,011 54.7% 138 1.7 1.2 6.2 2,361 808 34.2% its increased Paycell revenues by 28.6% this year, while the EBITDA mar- gin was realized at 42.5%. The num- ber of 3-month active users of Paycell reached 8.0 million. While Financell continued to provide financial loan solutions for the tech- nological product and service needs of individual and corporate customers, from 2023, it launched various financial loan solutions in areas such as SPP loan (solar energy system financing loan), furniture and white goods, and deep- ened in shopping loan and used car loan products. Since 2020, the Bank has continued to be active in corporate loans with the digital transformation loan. To date, nearly 100 digital trans- formation financing loans have been disbursed. Meanwhile, thanks to the credit risk infrastructure and digital transformation projects implemented in 2021, credit assessments were conduct- ed more quickly and credit risk man- agement continued to be effective. The cost of risk ratio hovered around 1%. With the projects completed in 2020, financing services were also provided to corporate customers and Superon- line customers. Thus, financing solutions continued to be offered for all products and services sold by Turkcell. In addi- tion, the transformation of our system infrastructure, one of the most impor- tant investments in our digital transfor- mation, was completed in 2021. With the strengthened infrastructure, in 2022 we started to operate in non-Turkcell channels with new products such as digital holiday loans and vehicle loans. 96 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 97 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Trends Leadership in Telecom 2023 was a year of major events that affected the whole world. The Rus- sian-Ukrainian war that began in 2022 is still ongoing, while the Israeli-Pales- tinian conflict has intensified, especially since October 2023. In 2022, the prob- lems in the supply chain decreased to a large extent, while inflation generally decreased after the central banks of most countries raised interest rates. In our country, after peaking in October 2022, inflation declined slightly in 2023 due to the CBRT's rate hikes and the base effect, closing the year at an av- erage of 54%. The number of tourists, on the other hand, continued its upward trend after the pandemic in 2023. As Turkcell, we maintained our strong operational structure by taking the necessary actions in an agile and fast manner in line with these devel- opments. In our mobile business, we achieved strong growth thanks to subscriber acquisition, which is mainly due to our brand recognition, superior infrastructure, unrivalled customer ex- perience and analytical capabilities, increased data usage, our strategy of switching to higher value packag- es, the impact of the increase in the postpaid customer base and price up- dates to reflect inflationary pressures. Increasing competition, which started in the second quarter of the year and continued throughout the rest of the year, continued to impact the mobile number portability (MNP) market. While the general price level in the market continued to rise, we observed ag- gressive campaigns by competitors. As Turkcell, although we responded to these campaigns from time to time, we maintained our subscriber acqui- sition without abandoning our pricing focus. In 2023, although the number of tourists increased compared to the previous year, the impact of service providers offering alternative data solutions curbed subscriber growth. On the fixed line side, we continued to drive growth with our continued focus on fibre, 12-month contract structure, focus on migration to higher speeds and increased IPTV customer numbers and prices. Digital Transformation and Inclusion Mobile communication technologies are at the heart of the digital transfor- mation process for both individuals and organisations, facilitating and acceler- ating access to information. The number of people accessing the Internet through mobile applications has reached 4 billion, proving that the telecoms sector is one of the most ef- fective channels for digital services to reach people. By facilitating people's access to information and its increas- ing importance globally, the telecoms sector stands out as one of the most important sectors for eliminating ine- qualities and ensuring equal access to information, services and financial services. In this context, the telecom- munications sector can ensure social equality with digital solutions that cov- er many different social groups and accelerate global development with smart applications. As Turkcell, we have been focusing on the equalising power of technology in all our activities since the day we were implementing projects that founded, aim to ensure that everyone has equal opportunities to access information. By utilising our high analytical capabili- ties, we develop high quality innovative products, services and projects and provide services in many areas from ed- ucation to finance. We are developing rapidly in the field of mobile payments with our Payce- ll application, which is positioned as a new generation super-app with more than 24 million downloads. Our digital services offer solutions to our custom- ers' needs with products such as TV+, fizy, BiP, lifebox and Suit Conference. We support the digitalisation of busi- nesses with our Digital Business Servic- es. With our Superbox product, which provides fibre speed internet in areas where there is insufficient infrastructure for fibre, we can offer fast and reliable internet access to everyone without the need for a cable connection. Our Whiz Kids project connects gifted students with technology and science. My Dream Companion With My Dream Companion, we are committed to supporting equal access to information and independent par- ticipation in social life for the visually impaired. The My Dream Companion service is a free service available to all subscribers of the operator via iOS and Android mobile applications and 8020 IVR line, where the visually impaired can bene- fit from navigation technology in indoor areas such as Turkcell stores, shopping malls and universities, and instant au- dio description technology for movies shown in cinemas and on digital plat- forms, in addition to accessing content such as current news, columns, audio books and education since 2012. In the Disabled-Friendly Stores Pro- ject, which made 100 Turkcell stores in 78 provinces of Türkiye accessible, the Dream Companion indoor navigation technology enabled visually impaired people to easily find what they were looking for in the store. Throughout 2023, we expanded the scope of our audio description technol- ogy, through which we provided audio description of 54 films to the visually im- paired, and developed our live descrip- tion technology to provide description of performances such as theatre and musicals. Thanks to these technologies, we supported equal access to the arts for the visually impaired by participat- ing in FilmEkimi and the Films Without Barriers Festival, as well as live descrip- tion of the Flawless World Musical per- formed at the Zorlu PSM Turkcell Platin- ium Stage. While meeting the increasing demands of our customers with innovative offers and options such as Esneyen Paket (Flex Package) and Yapboz Paketi (Puzzle Package), we continued to offer the right solutions to our customers by uti- lising our analytical competencies. We broke new ground in the industry with Gold Membership, which we offer ex- clusively to prepaid customers. With smart offers and win-win fictions, we reinforced the usage habits of our cus- tomers who turn to our digital channels. As a result of our strategy of always being there for our customers, our in- novative and comprehensive tariffs and value-added services, our brand recognition, our superior infrastruc- ture and our unrivalled customer ex- perience, we achieved a total net subscriber17 growth of 799 thousand, of which 493 thousand were mobile subscribers. Our mobile ARPU18 grew by 18.4% year-on-year, driven by price increases, increased data usage, our strategy of switching to high benefit packages and the increase in postpaid customer base. Thus, we continued to achieve healthy growth in both cus- tomer acquisition and ARPU growth in a balanced manner. Especially starting from 2021, we had accelerated our fiber infrastructure in- vestments. In 2023, we expanded our infrastructure to 386 thousand new households and continued to con- tribute to our country's digital trans- formation. With the contribution of our expanding fibre infrastructure, we achieved 169 thousand net fibre sub- scriber additions in 2023. Due to the de- layed price adjustments by the leading operator in the fixed market and the 24-month contract structure, there was a 0.7% growth in fixed residential fiber ARPU in 2023. Accordingly we convert- ed the majority of our offers to 12-month contract packages in order to pass on price adjustments to our subscribers in a more timely manner. Big Data In today's communications world, mas- sive amounts of data are generated by social media networks, connected de- vices, customer behaviour, government service portals, call logs, billing informa- tion and similar sources. As a result, mo- bile operators are finding it increasingly difficult to cope with rapid fluctuations in data volumes. While Big Data chal- lenges the telecommunications industry with its technical infrastructure require- ments, it also offers the opportunity to turn this challenge into an opportuni- ty with Big Data analytics techniques. This is an opportunity that needs to be embraced by the entire organisation, not just the technical staff. It is also im- portant for all organisations to develop decision-making mechanisms through data-driven analysis. While this scope requires everyone without software ex- perience to work with data, it pushes us towards a structure where everyone can perform data analysis and analyt- ics with low-code platforms. As Turkcell, we offer big data analytics services to our corporate customers, giving them the opportunity to differentiate their services in this context. We analyse big data and make our in- vestments taking into account the de- mands and needs of our customers. In an era of transparent competition, it is crucial to monitor and act on customer satisfaction immediately. In this context, we strive to ensure maximum satisfac- tion by closely monitoring our custom- ers' experiences. 17 Including mobile, fixed 􀕬 broadband, IPTV and wholesale (MVNO & FVNO) subscribers. 18 Excluding M2M 98 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 99 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Regulatory Developments and Sector Regulations As the electronic communications sector is an element of the constitutional right to freedom of communication and one of the most critical sectors in Türkiye, sector activities are closely monitored and supervised through regulations and legal arrangements. In this critical sector, ensuring the for- mation of effective and competitive market conditions and helping to shape the digital experience environ- ment desired by consumers requires the active participation of sector players, relevant NGOs and regulato- ry authorities. It is crucial that sectoral regulations serve the objectives of unleashing the potential of electronic communication technologies, supporting the devel- opment of the digital economy, fos- tering fair competition, and creating a conducive investment environment in terms of developing innovative servic- es that meet consumers' needs. We centralise our comprehensive le- gal services that require national and international compliance and assess the compliance of all activities con- ducted within Turkcell. As Turkcell, we effectively manage disputes while providing preventive legal services; we build corporate strategies on sol- id legal foundations, making our op- erations and expansion in the global market more viable. By digitalising our processes, we add value to the lead- ership and reputation of Turkcell and our Group companies. We consider public institutions and regulators as an essential part of our ecosystem, and by focusing on the continuity of the sustainable ecosys- tem and consumer welfare, we con- tribute as an active stakeholder at every stage of any legislative work that directly or indirectly affects our sector. We act with an awareness of the potential for regulatory develop- ments to have a direct impact on our business model and strategies. We continue our activities in line with our objective to create value for our coun- try and our industry by working with regulatory authorities and relevant stakeholders. In addition, we also conduct stud- ies on the legal aspects of emerging technologies such as artificial intelli- gence, blockchain, space technolo- gies, cybersecurity and smart cities, both in our country and internationally, and create value for both our Compa- ny and our country in this area. Climate Change In the World Economic Forum's (WEF) Global Risk Report 2023, 6 of the 10 risks that will have the most impact if they materialised in the next decade are related to environmental and climate change risks. These are defined as failure of climate change, mitigation and adaption, ex- treme weather events, loss of biodi- versity, human-caused environmental damage and natural resource crises. In addition to a number of catastrophic events, changes in climate policy, tech- nology, consumer preferences and financial market expectations have led to large fluctuations in commodity prices and increased costs in recent years. As a result, research and devel- opment spending on new and alterna- tive technologies is increasing. To effectively manage these risks, the business world and companies need to focus on implementing strategies that support the circular economy, renew- able energy, and recycling to rapidly reduce emissions to zero. In line with the goals of the Paris Agreement, 73 countries, including EU countries, have committed to become carbon neutral by 2050, and the number of countries making commitments is increasing. The Republic of Türkiye also joined the list of committed countries by becoming a party to the Paris Agreement within the year 2021 and announced its target for 2053. Climate change risks also directly af- fect Turkcell's business operations. As Turkcell, we are taking precautions against the risks of extreme weather events and natural disasters caused by climate change by conducting field risk analyses during the installation phase of base stations, and we are making plans to relocate data centres to cold climate locations by forecasting the in- crease in average air temperatures in the long term. In our energy-related activities, we are focusing on environmentally friendly green energy sources within the frame- work of the Sustainable Development Goals, and we are making investments for this purpose. With the Turkcell Sus- tainability Strategy announced in 2020, we are working towards our goal of becoming a net-zero company by 2050 as a company that consumes 100% renewable energy and produces renewable energy. In this context, our acquisition of the Izmir Karadağ Wind Power Plant in 2021 and our investments in solar energy support our vision of becoming not only a company that consumes renewable energy, but also a company that produces renewable energy. Turkcell has identified our climate change-related risks and opportuni- ties by considering the recommenda- tions of the Task Force on Climate-Re- lated Financial Disclosures (TCFD). This work enables us to evaluate our invest- ments in a holistic manner by highlight- ing our development areas and oppor- tunities on which we can focus. 􀎲 The full report is available on our corporate website. 100 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 101 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES We are also continuing our efforts as one of the founding members of the UNGC CFO Task Force, which aims to create a market for SDG investments. The Progress in Techfin Applications The expansion of digitalisation, the use of cryptocurrencies and block- chain, and the global in smartphone penetration provide a suitable environment for the develop- ment of financial technologies. increase Smartphones, which have become the first choice for many people’s ac- cess to internet, play a facilitative role for many technologies and services, including fintech. Techfin and mobile services have the potential to provide access to financial resources and ser- vices to people who have been ex- cluded from the financial system. As part of our technology focus in the Turkcell ecosystem, our financial tech- nology activities, known as techfin, are carried out through our three sub- sidiaries, Paycell, Financell and Wiyo. With more than a quarter of a century of experience, superior digital services and advanced analytical capabilities, we closely follow developments in techfin and develop market-leading products and solutions. Paycell, Turkcell's new generation payment platform, is a platform full of opportunities for both consumer and corporate customers in the field of mobile payments. While services such as money transfer, shopping limit fa- cilitation, bill payment, transport card payment, commodity trading and fi- nancial marketplace payments can be easily applied through the Paycell application, we provide a simplified payment experience with applica- Sustainable Financing Activities financing differs Sustainable from conventional finance in that the funds provided are used in accordance with various environmental, social or gov- ernance criteria. Today, the magnitude of the climate crisis has led investors to pay more attention to non-financial risk factors and to increase reporting on these factors. In response, compa- nies have begun to align their business strategies, corporate finance and in- vestment activities with the goals set out in the Sustainable Development Goals supported by the United Nations Global Compact. With the growing risks associated with the climate crisis, it is inevitable that sustainable credit instruments will become more widespread and that banks will increasingly impose sanc- tions on the sustainability of the pro- jects they finance. In the coming period, ESG investment is expected to continue to grow globally. Sustainable sources of finance are crucial in the context of the European Green Deal, which encour- ages these investments and the invest- ment in long-term planning and financ- ing of the projects to be implemented. By focusing on sustainable funding options, weare increasing our funding diversity, supporting our sustainability activities and continuing to access fi- nance under more favourable condi- tions. In this context, we aim to further increase our Sustainability Indexed Loan and Green Loan business in 2019 and 2020. In 2019, we increased the amount of the 3-year Sustainability Indexed Loan of EUR 50 million with a maturity of 3 years that Turkcell İletişim used from BNP Paribas to EUR 70 million and extended its maturity to December 2026. In 2023, within the scope of our Self-Consumption Project, we signed a new green loan agreement with Bank of China for EUR 30 million to finance renewable energy investments. In addi- tion to bank loans, we continue to focus on the capital markets to access and diversify funding. In the new period, we continue to monitor the market to meet our increasing investments with green issues, especially in domestic markets. tions including solutions such as Pay- cell Android POS, QR, Virtual POS and Link Payment. In 2023, we achieved significant volume growth in our Vir- tual POS and Android POS solutions, as well as our link payment solution. In addition, we were the first in the event sector to launch the Event POS solu- tion, which allows product-oriented sales without entering the amount, as a new generation field sales product. Financell, our financing service that provides consumer and corporate customers with access to financing solutions in areas such as solar ener- gy system financing loans, used vehi- cles, furniture and white goods, and technology products, has disbursed approximately 17 million loans totalling TRY 40 billion since its establishment. In insurance sector, another highly in- teresting business line in the fintech ecosystem, we expanded our ongoing agency operations and began offer- ing services through Turkcell Dijital Sig- orta A.Ş., which became operational under the Wiyo brand as of 2023. As part of Turkcell's digital financial services strategy, we launched Turk- cell Dijital Sigorta A.Ş., brand name Wiyo, as a non-life insurance compa- ny with the aim of extending the digi- tal-based shopping and payment ex- perience, the foundations of which we have laid with our agency Turkcell Sig- orta Aracılık Hizmetleri A.Ş., to the ar- eas of pricing, product design, claims and customer service. By merging technology and insurance, Wiyo pro- vides innovative solutions in the insur- ance sector and offers comprehen- sive insurance solutions that adapt to the changing lifestyles of customers. Financell 17 million loans totalling TRY 40 billion since its establishment. Cyber Security In line with the increase in data gener- ated in the digital age and the growing demand for data centres, as Türkiye's largest data centre operator, we are working with the vision of keeping Tür- kiye's data in Türkiye to ensure data security and the confidentiality of per- sonal, critical and sensitive data. The national studies and regulatory ele- ments that have been carried out to make our country a centre for hosting and transferring data are undoubtedly contributing to the development of our cybersecurity capabilities by increas- ing the demand and investment for data centres and cloud services in our country. The rapid spread of digital transfor- mation in the business world and the increasing use of technology by indi- viduals and institutions brings with its cyber security risks for organisations, as well as benefits. The increase in cy- ber security threats is a reminder of the importance of information security for companies and organisations. We identify emerging threats in the cyber environment, develop measures to reduce or eliminate the impact of potential attacks and incidents, and collaborate nationally and interna- tionally to share them with relevant stakeholders. We build secure system infrastructures by developing our pro- cesses with new experiences, raising information security awareness, train- ing competent human resources, creat- ing layered security controls and using next-generation technologies. Through our Turkcell Security Operations Cen- tre, we monitor current threats and cy- ber-attacks 24/7 and take necessary actions by implementing end-to-end security controls and testing. We of- fer our cyber and information security expertise, which is integrated with our digital operator expertise, as a service to our corporate and individual cus- tomers. In this context, we continue to meet the needs of all companies, insti- tutions, organisations and individuals in many areas, such as ensuring cyber security, protecting data and building an integrated infrastructure. 102 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 103 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Artificial Intelligence Artificial intelligence technology, which is high on the agenda of decision-mak- institutions and ing mechanisms of organisations, is reshaping business strategies as it has become a term for applications and software that per- form complex tasks. Many companies are making significant investments in data science teams to take advantage of the opportunities and value offered by artificial Institutions intelligence. incorporating machine learning and cognitive interactions into traditional business processes and application software can significantly improve user experience and productivity, proving the value of artificial intelligence. As Turkcell, we work in accordance with our company's policies and proce- dures, which are prepared in accord- ance with international standards, in- ternal controls and audits, and the laws we are responsible for, based on the principles of artificial intelligence that we announced in January 2020, which consist of "human and environmental orientation, transparency, profession- al responsibility, data privacy, security, fairness, and sharing and cooperation for a better future". We are prioritising compliance with these seven principles in our work on artificial intelligence, which is expected to be at the heart of technological developments. With this pioneering step, we as an organisation have joined the ranks of global players seeking solutions to the ethical issues that will arise from artificial intelligence. We have led a turning point in our country in artificial intelligence, which will be one of the concepts that will affect the global leadership claims of countries. Our AI principles ensure that AI is for and about people, and that technology is used responsibly, without harming human value. With our artificial intelligence technol- ogy, we make sense of the big data obtained from our operations and offer propositions with our analytical capabilities. We use machine learning techniques to traffic density, capacity management and anomaly detection in our network, contributing to infra- structure efficiency. Through our Digital Business Services company, we offer artificial intelligence solutions to insti- tutions and organisations. As AI activities are directly linked to the technology function, we operate in a rapidly changing technology eco- system, and regulatory developments around AI are rapidly evolving in every sector from health to security, finance to education, our strategic goals are frequently revised in line with senior management knowledge and business plans. Our legal and regulatory team has been collaborating with global or- ganizations for a long time to address concerns related to AI and to enhance its positive impacts. As Turkcell, we play an active role in international platforms discussing the responsible and ethical use and future of artificial intelligence. Contributions we have made include: 䩉Studies on children's rights and artifi- cial intelligence, 䩉 Studies on the responsible use of fa- cial recognition systems, 䩉 Standardisation studies carried out within the IEEE to address ethical issues and concerns that may be raised by artificial intelligence, 䩉Activities under the Planet Positive 2030 initiative within IEEE, 䩉Studies on the responsible and ethi- cal use of artificial intelligence tech- nology in smart, sustainable cities, and studies on artificial intelligence and health conducted at the ITU. Acting meticulously within the frame- work of the Personal Data Protection Law, Turkcell continues to work without deviating from the principles it has an- nounced by using artificial intelligence for the realisation and development of human potential. Fiber Infrastructure The increasing popularity of remote education and work applications, along with the resulting changes in user behavior and factors like the rise in the number of devices connected to the internet at home simultaneously, has significantly increased the demand for strong internet services. The low level of access to fiber to the home or building, which is the main solution that can ful- ly meet these needs, cannot meet the current needs of users in our country and hinders the digital transformation process of our country. The increasing demand of users for internet and the fact that our country's infrastructure cannot fully meet this demand at the moment increases the importance of investments to be made in this area. As Turkcell, we have made 386 thou- sand homepasses accessible to Turk- in 2023. With the cell fiber quality contribution of these investments, we achieved 169 thousand net fiber sub- scriber additions in 2023. We aim to continue to focus on our fiber infra- structure investments in the coming pe- riods, taking into account the favoura- ble market conditions. In addition, we believe that our investments in this area will make a significant contribution to the transition to 5G. 104 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 105 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Human Capital Decent Workplace Our employees are at the heart of the success we have achieved in Turkcell's activities with a focus on creating value. We consider our employees as brand ambassadors of our company, an in- tegral part of our people-centric ap- proach to employee experience. From recruitment onwards, we prioritise pro- viding them with an exemplary work environment where they feel valued, satisfied and secure. We ensure equal access to development opportuni- ties, enabling them to realise their full potential. implement our human re- processes, which we line with our implemented We sources have human resources in 􀎲 policies and strategies, in accordance with the legal require- ments. We communicate all operation- al changes that may arise in these pro- cesses and practices and that could significantly impact our employees within the legal notice period through our internal communication channels. Outputs Performance Indicator Short Term Target Medium Term Target Long Term Target 2022 Performance 2023 Performance Target Towards Current Status 24.2% Female Manager Ratio 35.2% Female Employee Ratio 1.43 Accident Frequency Rate 99% Rate of return to work of female employees whose maternity leave has ended Increasing the ratio of female employees - Increasing the number of female members in the Board of Directors (including independent members) - Increasing the ratio of female managers - - - - 40% (until 2030) 34.6% 35.2% 2 1 2 28% (until 2030) 24.9% 24.2% Increasing the rate of return to work of female employees whose maternity leave has ended Increasing the retention rate of female employees after the end of maternity leave 98% 98% 98% 98% 99% 88% 90% 90% 86% 94% Positive development Negative direction Contuniues In accordance with 􀎲 Turkcell Human Rights Policy Turkcell oppose discrimination based on gender, age, belief, ethnic- ity, nationality, marital status, health status, and physical ability in all of our business activities. We continuously im- prove ourselves by implementing 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 requirements of the rapidly evolving digital age with an ag- ile manner in order to better respond to customer needs, and we improve our skills with rich training programs We design all our people processes to touch the employee experience at every stage, from recruitment to exit and beyond, end-to-end. We design and manage our compensation and benefits policies, as well as the inte- grated execution of performance and career management, leveraging our data-driven approach and the power of digital. In this way, we lead the busi- ness world with our analytical solutions, which we place at the heart of all our processes. By listening to our employees, we en- sure that the employee experience is best managed in line with expecta- tions, needs and international develop- ments. We work collaboratively to plan our people, define roles and responsi- bilities, and identify business risks and goals. 106 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 107 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Diversity, Inclusion, and Equal Opportunity In order to provide a suitable environment for our employees to fulfil their demands and needs, we implement our human resources practices that provide equal opportunities to all individuals, advocate inclusion and diversity with the vision of a people- oriented company and the belief that ensuring that we operate in accordance with human rights is one of our most fundamental duties, and we improve in this area every day. With the Human Rights Policy we have published as Turkcell, we carry out ac- tivities to prevent discrimination, ine- quality, human rights violations, forced labour and child labour in our business processes and we continue our efforts to ensure that these values are adopt- ed throughout our ecosystem within the supply chain. In addition, in line with the UN Women's Empowerment Principles - WEPs, to which we are a signatory, we implement practices that support gender equality in busi- ness and Turkcell's goal to become the company that women most want to work for thanks to its gender equality approach. We are committed to adopting an at- titude based on fundamental rights and freedoms in our relations with our employees, customers, business part- ners and all our stakeholders, to com- plying with the principles set out in our policy to ensure compliance with national labour legislation and inter- national regulations to which we are subject, and to fulfilling our obliga- tions to ensure our organisation's full commitment to these principles. Our human resources practices pro- tect the mutual rights of employees and employers. We apply ILO (Inter- national Labour Organisation) stand- ards on the prohibition of child labour and forced labour throughout our val- ue chain, including our suppliers. As an equal opportunities of employer, we offer fair and equitable consider- ation for employment to all qualified applicants regardless of disability, race, colour, religion, gender, national or ethnic origin, age, physical appear- ance or condition, marital or military status. recruitment We also design our processes to ensure that our disa- bled candidates experience a disa- bled-friendly and accessible process throughout. We do not ask for infor- mation about disability status during the application process and apply the same equal opportunities approach to our assessments. We conduct our interviews and procurement digitally, and we make our physical working environment accessible. As of 2023, we have 136 disabled employees in our company. All employees of Turkcell and Turkcell Group Companies, especially the sen- ior management and the manage- ment level, are responsible for achiev- ing the gender equality and gender balance targets. As Turkcell, we aim to increase the proportion of female employees to at least 40% by 2030. In this context, we monitor the ratio of female employees and female man- agers on a monthly basis. We monitor the targets for the ratio of female em- ployees and female managers within the scope of gender equality in the performance cards of the employees responsible for the process, starting from the senior management level. We work to increase the number of fe- male managers and employees in line with the inclusive Pozitifİz strategy. We evaluate the results achieved in terms of financial, operational, legal compli- ance and environmental aspects and review them as part of our internal au- dit activities. We believe that gender discrimination in professions and fields of expertise should be left behind, and with our identity as a leading digital operator company, we continue our activities to ensure equal participation of women, especially in STEM (Science, Technol- ogy, Engineering, Mathematics) fields. To empower women in business and support initiatives led by them, we are implementing many practices and taking important steps to increase the employment of "female engineers" in Türkiye. By 2023, 31% of positions will be held by female engineering grad- uates, while 35% of IT positions will be held by female employees. We are also providing new job opportunities for female engineers who are starting their careers or female profession- als who have taken a break from the business world for various reasons. As part of Turkcell's remuneration pol- icy, we apply the principle of "equal pay for equal work" and do not dis- criminate between our male and fe- male employees in terms of base sal- ary. We apply our remuneration policy in an impartial manner to all our oper- ations within the framework of rele- vant standards to ensure that our fe- male and male employees in the same role and at the same job level are not subjected to wage discrimination. The fact that there are no cases filed against Turkcell İletişim Hizmetleri A.Ş. by our employees or third parties on the grounds of discrimination based on language, religion, race, creed, sect, ethnic origin, political or ideolog- ical opinion, marital status, age, gen- der difference is an important indica- tor of our approach to this issue. Employee Demographics in 2023 Employee Breakdown by Gender Employee Breakdown by Education Level Male Employeers 3,484 - 64.8% Doctorate Female Employeers 1,895 - 35.2% Graduate Degree Undergraduate Degree Associate Degree High School 0.5% 29.2% 66.8% 1.8% 1.8% Employee Age Group Distribution Age Group Distribution of Managers 30 years and under Between 30-50 years 50 years and over 18% 78% 4% 30 years and under Between 30-50 years 50 years and over 0.2% 91.7% 8.1% 􀕬 *Demographic information presented in Our Human Assets section includes data from the following 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 Dijital Sigorta 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., BiP İletişim Teknolojileri ve Dijital Servisler A.Ş., Boyut Grup Enerji A.Ş., Turkcell Gayrimenkul Hizmetleri A.Ş. and Turkcell Satış ve Dağıtım A.Ş. Employee demographics do not change significantly during the year. 108 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 109 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES In 2023, the Young Talent Programme received more than 40,000 applications 82 number of talents joining our team 38% female 62% graduated from engineering department Employer Branding and Talent Acquisition With T.Life, our young, dynamic, and inclusive employer brand strategy that does not discriminate between Turk- cell's generations, we aim to create a world that “you want to be in” and “you are happy to belong to”. We carry out our employer brand activities so that Generation T, which we have creat- ed in line with Turkcell's dynamism and the dynamism of the new generation that will have a greater impact on the business world and which we define as “technology savvy”, “taking matters into their own hands” and "global citi- zens", can realise their potential. We organise events at Turkcell on Cam- pus, where we host university students at Turkcell offices, and Turkcell on Cam- pus, where we bring Turkcell members together with university students. In 2023, we organised events with 24 dif- ferent universities and 75 student clubs in İIstanbul, Ankara and İIzmir, where we touched more than 20,000 students. Making a Difference in Employment As Türkiye's leading digital operator, we contribute to employment with pro- grammes that we have customised to reach Generation T, from information technologies to finance, from market- ing and sales to human resources. With the aim of recruiting talented young people, we offer opportunities to both university students and grad- uates through various internship and graduate programmes every year. As part of the 2023 Stajcell Programme, which offers university students the opportunity to get to know Turkcell's technological world, a total of 223 in- terns from various universities and de- partments in Türkiye gained experience in professional business life at Turkcell. After the successful completion of this programme, 39 high potential in- terns were hired in the Turkcell Plus Programme. Since 2016, we have been success- fully running our The Young Talent (GNÇYTNK) Program for recruiting new graduates. With this program, we aim to recruit talents who achieve results every year without giving up, pursue their dreams, have a high technologi- cal aptitude and adapt quickly to new conditions. In 2023, we received more than 40,000 applications for the Young Talent Pro- gramme and recruited 82 talents who successfully completed the process. 38% of the talents who joined us are female candidates and 62% are engi- neering graduates. We recruit graduates and young tal- ents as well as experienced profession- als. With the perspective of competent employees recommending competent candidates, Turkcell employees can recommend external candidates for open positions through the “Tell Your Candidate, Create Benefit” program. If the candidates recommended by our employees successfully complete all processes and join Turkcell, we offer a thank you gift to our employees who recommended the candidate through Paycell. Within the scope of this pro- gram, 33 candidates were hired. New Hires Full Time Part Time 2022 2023 706 592 0 0 New Hires 2022 2023 Female Male 277 429 224 368 110 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 111 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Employee Experience and Talent Management Life at Turkcell We want to enhance our employees' experience at Turkcell and create a world they want to be a part of. To this end, we offer internal communication activities that support corporate culture and loyalty, rewards and benefits that prioritise employee well-being, career and skills development opportunities, and a safe working environment. Since 2016, as a pioneering company that has experienced flexible working, we have been working under the motto "If you are there, Turkcell is everywhere" by eliminating borders with our flexible working model, which we have expand- ed in 2021. Happiness Day brand. We brought Gen- eration T together at Function Breakfasts based on Deputy Director Generals. We organised many special in-house events to increase employee motivation, from Winter Festival to Yeşilçam Night, from Taste Carnival to Baht-ı Büs. By defining the principles of our innova- tive working model in the Flexible Work- ing Manifesto, we ensure that we can work from anywhere and be accessible in any situation. When our employees want to use company locations, we use the T.Life Digital Office application to maintain work-life balance and support and improve our work environment with "Flexible Working Support". Turkcell em- ployees whose work requirements lend themselves location-independent working can work remotely or flex their working hours from Turkcell offices in dif- ferent cities in Türkiye. to With the flexible working model, we in- crease our motivation and synergy and implement activities that contribute to our work culture. We aim to achieve strong business results, both operation- ally and financially, with physically and mentally healthy, highly productive em- ployees who are committed to the com- pany's values and culture. To increase the interaction of the T. Gen- eration, we have carried out many ac- tivities with the T. club, T. studio, T. labs and T. stage concepts. With our T.club concept, we brought together art lov- ers, adventurers, travellers and gour- mets among our employees in activities such as open-air cinema, weekend camping and cultural tours. With our T.club volunteer formation, we covered all our employees at Turkcell locations. Our T.stage concept brought togeth- er music-loving Turkcell employees for acoustic concerts. With the T.Life mo- bile application, which brings Human Resources applications to the pockets of Turkcell employees, we made per- sonal development and healthy living videos available to employees with the T.labs concept. We brought Generation T together with many famous names through live broadcasts and podcasts on T.studio. We also held many special events and instant surprises in our offices under the With healthy living activities titled "Take Care of Yourself", we organised many activities for the mental, physical and spiritual health of Turkcell employees, from walking and jogging in the forest to cycling tours, from outdoor yoga to brisk exercise. We created Türkiye's largest corporate sports club with 13 branches and 17 teams within Turkcell. We organ- ised summer and winter sports schools for our employees' children to have a healthy and fun time. In 2023, 148 events were organised and more than 68 thousand Turkcell employ- ees participated in these events. In addi- tion, the Avantajlar Dünyası campaigns published in the T.Life application of- fered more than 25 thousand benefits to Turkcell employees and their families by providing discount codes, and the Step into the Future social responsibility pro- ject transformed the digital steps of em- ployees into Turkcell forests and sports fields in village schools. Employee Loyalty and Happiness At Turkcell, we design our applications with a human-centered approach. By maintaining a constant dialogue with our effective and competent human re- sources, we measure the effectiveness of our processes through the feedback we receive from our employees. To con- tinuouslyimprove the employee experi- ence, identify our strengths and areas for development, and take the necessary action, we conduct employee opinion surveys. We analyse the results of the surveys and individual interviews and in- itiate processes to take action. We conduct regular employee loyalty surveys with independent consultancies to measure the overall loyalty and sat- isfaction of our employees, and use the feedback from the survey to develop ac- tion plans. This allows us the opportunity to continually review the effectiveness of our practices. 2023 Employee Turnover Rate 9.5% Female turnover rate Male turnover rate 9.2% 9.6% Career and Skill Development Practices We support our employees through programmes such as career manage- ment, succession management, and rotation, and we shed light on their career paths. In this way, we focus on both the needs of the organisation and individual success. To achieve the best business results, we conduct effective performance management and sup- port our employees with rewards, sal- aries and benefits. Within the scope of Turkcell's career management, we determine the tech- nical knowledge and critical experi- ence of employees in relation to their roles and responsibilities on a pathway basis for each job within the frame- work of our KariyerimFlex career ar- chitecture. We provide our employees with career and skill development ap- plications where they can develop the technical knowledge and critical ex- perience they need. Turkcell employees who feel ready to move to the next lev- el in their career path proactively ap- ply to the Career Progression Process promotion system and start their ca- reer progression on their own initiative. In the evaluation committees, which are composed of various functional managers to ensure a fair and trans- parent evaluation process, Turkcell employees explain themselves, their work results and their contributions to the company with the perspective that "your job and career are in your hands". In this way, they have the opportunity to receive concrete and transparent feedback from both their own manag- ers and managers from different func- tions.We offer Turkcell employees the opportunity to gain new experiences and develop their competencies in line with their career and personal devel- opment needs through our Appren- ticeship Program, which aims to create different opportunities by supporting 360-degree thinking and facilitating increased internal communication. Thanks to the Apprenticeship Program, Turkcell employees have the chance to gain experience in the departments of their choice. With the FLEXSourcing programme, Turkcell employees can voluntarily spend a part of their working time on innovative projects that require a vari- ety of different perspectives, expertise and skills. They apply for projects that are opened up throughout the year, which both increase synergy within the company and develop new skills. Through our FLEXSourcing application, more than 300 Turkcell employees who want to add value to Turkcell in 2023 applied for a total of 31 projects. We diversify our employees' talents internal transfers, enabling through them to develop new skills, increase their motivation, and enhance their job satisfaction. Our internal transfer process, which allows employees to acquire different technical knowledge and skills, enabled more than 100 of our employees to move to different depart- ments and functions in 2023. Through succession management, we back up employees in management positions (C-level, GM, Director, Man- ager) and critical expert positions with internal and/or external resources to ensure business continuity and sustain- able performance of our business. In disaster and crisis situations, we identify critical roles and positions as part of the Geographical Redundancy Process to protect the business continuity and sus- tainable performance of our business against unexpected loss of managers and employees.We back up employees in these positions with internal and/or external resources, and develop our em- ployees in line with this process. 112 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 113 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Performance Management and Feedback System Flex Performance Management We provide effective, fair and flexible performance management for our em- ployees to achieve the best business re- sults. We use a performance system that enables all Turkcell employees to mon- itor and update their goals throughout the year, aims to continuously improve their work performance and personal development through regular and im- mediate feedback, and supports them through recognition practices. As part of the goal-setting process at Turkcell, we expect each employee to set specific, measurable and realistic goals with their manager in line with the company's goals, and to update these goals throughout the year in line with their changing priorities. Through the mid-year review meetings that are part of the process, we enable Turkcell man- agers and their teams to benefit from the power of communication by com- ing together to clarify goals and action plans, evaluate the facilitating effects of achieving the result, and continu- ously improve employee performance through regular and frequent feedback. At the end of the year, we complete the process by giving each employee an objective-based appraisal, with a fair approach to rewarding success. Behavioural and Skills Assessment: ReFlex360 We conduct a competency assessment process to evaluate the competencies expected of Turkcell employees in an impartial and multi-stakeholder man- ner and to raise awareness by identi- fying strengths and areas for improve- ment. Our ReFlex360 process, through which each competency is assessed on an employee basis by managers and peers, provides Turkcell employ- ees with comprehensive and objective feedback for their personal develop- ment throughout their careers, while also contributing to corporate harmo- ny, courtesy and effective functioning among employees. Continuous Feedback Mechanism: ReFlex We believe in the power of construc- tive feedback to boost motivation in our business processes. With ReFlex, our mobile mechanism for providing instant feedback, we give our em- ployees the opportunity to appreci- ate each other and make constructive suggestions so that we can develop and improve together. Remuneration, Reward and Fringe Benefits We administer our remuneration policy at all job levels in the most reliable way, based on knowledge, skills and critical experience, and transparently to all our stakeholders. We update and de- fine our compensation policies based on the roles in which business units are experiencing talent loss or are seeking to attract talent, peer companies and the wage market. We also update the salary scales by taking into account the needs, recruitment and talent loss data as well as labour market research con- ducted by independent consultancies. Within the framework of Turkcell's remu- neration policy, we apply the principle of "equal pay for equal work" and do not discriminate between the base sal- aries of our female and male employ- ees, and we apply our remuneration policy impartially within the framework of our standards without differentiating between the salaries of our female and male employees in the same role and at the same job level. In determining Turkcell's remuneration policy, we pay attention to creating competitive and motivating conditions that ensure the retention of our man- agers and employees, as well as the talents that take on critical roles within the company. We reward performance with performance-based compensa- tion practices. We provide all our employees with a basic benefits package based on the nature of their job, and allow them to choose some of these benefits flexibly through the Flex Menu, in line with their annual budgets. In this way, our em- ployees have the opportunity to choose health and life insurance, meals and gift vouchers according to their lifestyle and different needs. In our benefits practices, we provide inclusive opportunities not only for our employees but also for their families, and we focus on maintaining employ- ee satisfaction. In this context, we offer health insurance packages that allow employees to include their spouses and children in addition to themselves. We offer all our employees "life insurance with death and critical illness cover" and support them with disability insurance in the event of accident or illness. In the event of an employee's death, we pro- vide educational support for primary, secondary, high school and university age children related to the employee. With our Turkcell Private Pension Plan, we contribute to the savings and invest- ments of our employees so that they can maintain their standard of living after retirement. We extend the legal pater- nity leave from 5 days to 10 days so that our employees who become fathers can spend more time with their children in their first moments and support child- care. We are also committed to making life easier for our female employees returning to work after giving birth. For example, we have carefully designed lactation rooms in our workplaces and provide items such as tools, fridges, rocking chairs and hygiene kits that may be needed. To support our working mothers, we offer childcare assistance to our employees with pre-school chil- dren. We enable our parents with chil- dren in primary school to share their excitement by being with them on the first days of school and on report card days. We also offer birthday leave and paternity leave to ensure the wellbe- ing of our employees and support their work-life balance. For employees with seven or more years of service, we offer a renewal leave of up to three months once every seven years at the employ- ee's request. We provide interest-free loans to em- ployees for financial needs such as health, marriage and home purchase. We support our employees' internet access with Turkcell Superonline cam- paigns. We offer our employees the op- portunity to use Turkcell digital service memberships (Fizy, TV+, Lifebox, etc.) free of charge and enable them to benefit from Turkcell Platinum benefits. We provide our employees with a com- pany computer, a company phone and a GSM line. We also renew their comput- ers and phones after a certain period of use. Taking into consideration the rela- tives of our employees, we offer a cer- tain number of our employees' relatives the opportunity to benefit from Turkcell's mobile services with appropriate pack- ages and tariffs through the Employee Relatives Campaign. We use an application that enables us to strengthen the appreciation mech- anism, increase motivation and spread exemplary work. With this application, our managers at the director level send a message to our employees who per- form an innovative, exemplary project or value-added work, stating that they have done a super job, thus support- ing motivation by ensuring that the employee is appreciated by all his/her colleagues. In addition, every year we financially reward our employees who make a difference, as identified by our Assistant General Managers, and pres- ent them with certificates at a ceremony organised within the function as part of the CXO Awards. In addition, as part of the Turkcell family, we financially reward our employees who have completed 5 years of service and multiples of 5 years of service and present them with a sen- iority plaque. We respect the "Rights and Freedoms of Assembly" and "Rights to Establish Trade Unions and to Engage in Trade Union Activities" of our employees as stipulat- ed in the Constitution of the Republic of Türkiye. In this regard,there has been no written application made to Turkcell by any authorised labor union in 2023. 114 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 115 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Training and Development Our Approach As Turkcell Academy, we stand by our employees in their development jour- ney. With the aim of creating a sustain- able learning culture for a better future, we aim to provide innovative solutions that create value for the Turkcell eco- system, society and the sector to de- velop a skilled workforce by ensuring the development of individuals whose lives we touch with a focus on people and the future. We support our ecosys- tem of more than 70,000 people with distinctive training and development solutions. Our Turkcell Ecosystem Leadership ap- proach consists of 8 core competen- cies that bring our employess and eco- system together with a focus on people (Aware, Flexible, Reliable, Trustworthy, Sharing) and the future (Visionary, Inno- vative, Sustainability Conscious, Inclu- sive of Diversity). With these competen- cies, we aim to demonstrate common behaviours and spread our corporate culture. Our training and development focus is based on our Turkcell Ecosys- tem Leadership approach and we aim to create global employees and lead- ers who make a difference in Turkcell's vision of "superior digital services for a better future". In 2023, in addition to designing devel- opment programmes, leadership pro- grammes and development journeys specifically for Turkcell's young talents, we implemented employment pro- grammes that benefit society, training and development journeys for universi- ty students and in the field. Turkcell Academy Trainings Turkcell Academy Trainings 3 3 . 3 3 . 8 2 . 1.4 1.8 1.5 0 2 . 1.2 33.1 40.8 36.6 32.0 2020 2021 2022 2023 2020 2021 2022 2023 Turkcell Academy Total Training Hours (million people*hours) Turkcell Academy Total Number of Training Participants (million people) Training Hours per Employee (hours/person) Turkcell Academy Participants by Gender (%) Turkcell Academy Participants by Age Groups (%) 2022 2023 2022 2023 2022 2023 Male Female Male Female 51% 49% 49% 51% 2022 Between 30-50 years 30 years and under 50 years and over 2023 Between 30-50 years 30 years and under 50 years and over 36% 63% 1% 42% 57% 1% Orientation Programmes Turkcell Group Orientation Programme Focus on our flexible working model and learning styles , we have designed an induction programme where we ac- company and experience together our employees' journey of adapting to their roles and the company, starting from their first day of work. Our programme, which utilizes both synchronous and asynchronous train- ing methods, not only provides guid- ance to new employees through expe- rience and learning-from-each-other sessions but also facilitates interaction among employees. As part of our orientation programme, we organise experiential learning ses- sions for our employees some time after they start work. Through these sessions, we give them the opportunity to expe- rience Turkcell's customer experience by visiting a call centre and our tech- nology infrastructure by visiting a data centre. We organise breakfast meetings where they can hear the company's vi- sion and strategy from Turkcell's senior management. Young Talent (GNÇYTNK) Orientation Programme We introduce our candidates who apply for the GNÇYTNK programme to certified training and development programmes with Turkcell Academy. We welcome GNÇYTNKs who are suc- cessful in the recruitment evaluation process with a dynamic orientation programme to ensure their rapid ad- aptation to Turkcell's corporate cul- ture and technology. We bring them together with senior management by creating an environment where they can discover what it means to be a Turkcell employee. We structure the first 90 days of their working life so that they learn about training workshops where they can learn about Turkcell's digital services and products, sustain- ability strategies, company culture and values. As part of the programme, we also work with Turkcell's Technology teams and various global business partners to enhance their technology visions.We provide trainings focused on artificial intelligence, cybersecurity, data cen- tres, data analytics, and blockchain. Legal Mandatory Trainings We aim to keep the knowledge and awareness level of Turkcell Group em- ployees high through regular training within the framework of the laws and regulations to which Turkcell is subject. The trainings that Turkcell employees receive in this context are planned in two separate categories: legally man- datory trainings and basic awareness trainings. At Turkcell, we provide “Basic Occupa- tional Health and Safety Training” and “Information Security Training” within the scope of legally required training, and “Business Continuity Training”, “Sustainability”, “Bribery and Cor- ruption”, “Economic and Commercial Sanctions”, “Turkcell Common Values and Code of Business Ethics” and “Per- sonal Data Protection Law” training within the scope of awareness and awareness-raising with the participa- tion of all our employees. Basic Occupational Health and Safety Training is a mandatory training that all Turkcell employees must complete in accordance with the Occupation- al Health and Safety Law No. 6331. All employees receive OHS training every two years. The basic OHS training is reviewed and updated on a regular basis. In 2023, our employees increased their OHS awareness by participating in more than 30,000 hours of training. In addition, Turkcell makes donations to Tohum Autism, TEV and OGEM Foun- dation for every employee who com- pletes the basic OHS training. While our employees receive basic OHS training, they also add value to society and the environment. 116 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 117 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Information Security Training is another training received in the same frame- work. Information security training is given to all employees every two years. The basic awareness training varies according to the needs, but basically consists of the following trainings: 䩉TODIEK (Turkcell Common Values and Code of Business Ethics) training 䩉Anti-bribery and corruption training 䩉Economic and Trade Sanctions Training 䩉KVKK (Personal Data Protection Law) training 䩉Sustainability Training 䩉Business Continuity Training 䩉Enterprise Risk Management Training The duration, content and method of the relevant training will be planned and delivered in the most appropriate manner. KÜP - Turkcell Academy Digital Library Through the Turkcell Academy Digital Library (KÜP) programme, which is de- signed in accordance with the learn- ing organisation and self-learning ap- proaches, we make over 1,500 content available to all Turkcell employees. We offer Turkcell employess the opportuni- ty to design their learning journey with e-learning, reading, video, podcast and interactive video options that they can access from KÜP according to their pre- ferred learning method. Turkcell Function Trainings Turkcell offers Functional Development Programs that are synchronized with Turkcell’s main strategy and initiatives and support end-to-end develop- ment throughout the year. These pro- grammes, we aim to prepare Turkcell employees for the Turkcell and tech- nologies of the future, while providing them with perspectives that add value to their current jobs, support collabo- ration and achieve success together for common goals together. Different learning methods and tools such as online, live virtual classroom, face-to-face and laboratory environ- ments are used in the development programmes, which are conducted using the experiential learning method together with business partners in the ecosystem, Turkcell Academy trainers and development partners with ex- perts in their fields. These programmes are designed with a flexible model that can be differentiated according to the changing needs and priorities of the relevant functions throughout the year and can be redesigned with immedi- ate needs. In 2023, all employees will be support- ed in their development journey from aspiration to practice through flexible and personalised programmes. In this context, the focus in 2023 was on 'expe- riential training and development pro- grammes' and 'systemic personalised development solutions'. By diversifying personalised and flexible development solutions into functional development journeys programmes, development in were successfully implemented which the targeted development is monitored throughout the year with a senior manager. KEY - Personal Education Journey We support the development of social skills and competencies of all Turk- cell employees through the Personal Education Journey (PEY) programme with a focus on experiential learning. By allowing participants to choose the training they need, we give them the opportunity to develop their com- petencies that will contribute to their business and personal lives. In 2023, the Personal Education Journey was com- pleted with the participation of 1,200 people on 15 topic areasidentified in parallel with the competencies of the future and Turkcell's strategies. Leadership Development Programmes We design Leadership Development Programmes with a focus on people and the future, taking into account the specific needs and sphere of influ- ence of leaders at all levels. With these programmes, we support our leaders in every area they need to make de- cisions that will take Turkcell into the future, identify new opportunities, cre- ate the right strategies with a holistic perspective, communicate them in a way that establishes the strategy and business context, inspire employees at all levels to find meaning and excite- ment, lead change, keep team spirit and we-consciousness alive. We continuously update the Lead- ership Development Programmes by creating innovative development solu- tions with a holistic and flexible ap- proach, taking into account individual needs at six different levels. As every year, the leadership programmes have been designed in parallel with the 2023 strategies and development needs. On the way to the 2023 corporate strate- gies, the main focus was identified as "Creating Value Together", and the de- velopment programmes for our leaders were built around the goal of creating shared value. At the same time, lead- ership programmes were designed to manage uncertainty, push boundaries in an environment of uncertainty, and aim for personalised and experiential learning to serve strategic holism. In 2023, 692 leaders were trained in this context. University Collaborations By signing major value-added pro- jects for Türkiye, we are working with universities to train skilled workers for the sector. We bring our students, who will shape the technologies of the fu- ture, together with Turkcell's experts in the fields of communication networks, information networks, techfin and ERP systems. Through these collaborations, we have the opportunity to share our experience and vision in current tech- nology and business areas with uni- versity students. Through these events, where our employees with experience and knowledge in their fields come together with students who want to shape their careers, we contribute to the brand value of our company and at the same time help our university students in their career choices. In order to support Turkcell employ- ees in their career and academic de- velopment, we have partnered with 9 different universities to offer master's and doctoral programmes. A total of 147 employees participated in 9 dif- ferent master's and 2 doctoral pro- grammes in the fields of Business Ad- ministration, Management Information Systems, Capital Markets and Finance, Marketing and Brand Management, International Computer Information Internet Security, Technologies and Business Management, Engineering Management, Management Econom- ics and Management and Organisa- tion Management. The aim of these programmes is to contribute to the development of our company and our country by enriching the academic theoretical knowledge of the universi- ties with current practical knowledge from the world of technology. RPA (Robotic Process Automation) Marathon increase efficiency We are involving our colleagues in a long-term training programme as part of the RPA Marathon, which was implemented in line with our digitali- sation strategy and aims to save time and in business processes by automating routine op- erational processes across Turkcell. In this context, we conducted 12-hour on- line or face-to-face trainings with 958 participants in various cities, including İIzmir, Ankara and İIstanbul in 2023. At the end of the trainings, we ensure that our participants, who participate in the RPA Marathon and write their own ro- botic process automation scenarios, contribute to our operational excel- lence and digitalisation strategy by digitising their business processes. Future Talks In the Future Talks seminars, we organ- ise for Turkcell strategies and initiatives, we bring together all Turkcell employ- ees with researchers and practition- ers who set good examples globally. In 2023, we held seminars on Artificial Intelligence Technologies, 5G, Cyber Security, Techfin, Metaverse, Digital Broadcasting and OTT, Digital Trans- formation, and RPA. In addition, we or- ganised seminars on safe structures, psychological safety and disaster pre- paredness of our locations for Turkcell employees during disasters. In 2023, 692 leaders were trained in this context. we conducted 12-hour online or face-to-face trainings with 958 participants in various cities, including Izmir, Ankara and Istanbul in 2023. A total of 147 employees participated in 9 different master's and 2 doctoral programmes in the fields of Business Administration 118 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 119 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Mentoring In the internal mentoring programme, we aim to ensure the development of the managerial skills of volunteer mentees and to create a common management culture so that volunteer mentors in Turk- cell Group companies can share their experiences in an environment of trust, independent of hierarchy. In 2023, 210 employees took part in the programme as mentors and 260 employees took part in the programme as mentees and became each other's companions. Furthermore, we provide mentoring sup- port not only to Turkcell Group employ- ees, but also to Turkcell employees in the entire ecosystem, especially in projects that will support university students, those who want to work in the field of STEM or young people in a diverse way, and we are increasing this number day by day. In 2023, the programme as mentors and 210 employees took part in 260 employees took part in the programme as mentees and became each other's companions. Academy Trainer Development Programme We highly value the contribution of skilled Turkcell employees, who have deep expertise in various fields, to the training processes.In this context, we place great importance to the develop- ment of our Academy trainers. In addition to their current responsibilities within the company, we offer the Academy Trainer Development Programme to employees who are volunteer trainers in order to improve their trainer skills, and we share development bulletins that we regularly publish every month in order for them to gain deep expertise in their fields. Number of Turkcell Academy Trainers 2022 764 2023 607 Developers of the Future Since 2013, we have been providing free software, training, development and earning opportunities through the Devel- opers of the Future Programme. In order to improve lives through technology and contribute to the realisation of dreams of all segments of society, we are eliminat- ing inequality of opportunities, financial impossibilities, insufficient resources and lack of role models, and we are striving for Türkiye to become a leading country in software development. With the Turk- cell Developers of the Future Platform, we are working to strengthen Türkiye in the field of technological awareness by offering many integrated training and development solutions that add value to society, such as Gameventure, Con- ditions are Equal, Chances are Equal, In- vesting in Youth Software for the Future, Superwomen of Cyber Security, and Em- ployment Mobilisation. More than 280,000 people received certificates through the Developers of the Future Platform. Our platform has been visited more than 10 million times in 10 years. The platform includes more than 100 asynchronous training con- tents such as data science, cyber se- curity, mobile programming, web pro- gramming, K12, robotic coding, basic networking, database programming. These training contents are used for the benefit of the participants before our bootcamp programmes. To date, there have been 500,000 registrations for the training and more than 280,000 certificates have been awarded to our participants. Forums and blogs are also available on our platform. In the forum, users can find answers to their ques- tions about the training from expert trainers, but they can also exchange information with each other. The blogs on the platform are written content cre- ated by people specialised in the field of software to inform the community about current software developments and share their experiences. More than 280,000 people received certificates through the Developers of the Future Platform. Developers of the Future - Investment for Youth, Software for the Future In order to increase the diversity of Tür- kiye's technological skills and skilled software developer workforce, we launched the Investing in Youth, Soft- ware for the Future programme in col- laboration with the Ministry of National Education. The aim of this programme is to prepare young people for the world of software, to ensure that they have a high level of coding skills and to pro- vide them with career opportunities in this field. In this context, the programme has been held 3 times. We have suc- cessfully run this programme, which includes training on various software languages such as Java, .Net, Swift, Kot- lin, Front-end, for three terms. A total of 2,400 hours of training and 7,000 hours of one-on-one mentoring support were provided. In addition, 45 peer-to-peer sessions have been held. To date, 150 participants of our programme have been employed in Turkcell Group com- panies, while 300 participants have found job opportunities in various com- panies within the software ecosystem. 210 students have successfully graduat- ed from the "Investing in Youth Software 2.0 for the Future" programme. In ad- dition, applications for our fourth term have been completed. Superwomen of Cyber Security Programme The Superwomen of Cyber Security programme was launched to increase employment in cyber security, ensure a greater presence of women in the sec- tor and raise awareness of the issue. Candidates for the programme, which was open to all women interested in cyber security from many parts of our country, regardless of age, completed the 22-hour asynchronous training on the Developers of the Future platform and were eligible to participate in the programme after passing the gener- al skills and technical tests. A 120-hour experiential bootcamp programme was conducted with 100 selected par- ticipants. In addition, at the end of the programme, a cyber security hand- book was created with the guidance of 13 female mentors from our cyber security team, with each participant positioned as an author. The book cov- ered wireless network security, social media security, safe internet, password attacks, device security, email securi- ty and hardware security, topics that touch the lives of individuals. Cloud Technologies Bootcamp Programme The Cloud Technologies Bootcamp Pro- gramme was launched to train human resources in the field of cloud tech- nologies and to meet the employment needs of both our company and the ecosystem in this field. Participants se- lected among thousands of applicants completed an intensive 96-hour appli- cation-oriented training programme. At the end of the programme, which fo- cused on CCNA, Linux and VmWare, 12 successful participants were employed to work in Turkcell Cloud teams. Earthquake Region Employment Mobilisation Following the earthquake disaster in our country in 2023, Turkcell has been working to support the development and employment of young people in the affected region. In this context, we have launched various development programmes in 11 provinces. As part of the employment mobilisa- tion, we offered personalised pro- grammes to people impacted by the earthquake who applied for employ- ment in the fields they wanted to learn. More than 7,000 people benefited from these training programmes. In addition to personal development training, we also provided technical training to our earthquake victims to prepare them for the jobs of the future. These digital trainings include Kotlin, Java, Basic Li- nux, Python. In addition, 700 candidates who inter- ested in technical advancement had the opportunity to participate in the mini bootcamp training. The success- ful candidates among these candi- dates started the synchronous training process in three different areas. Java, Kotlin and Cloud Technologies train- ing programmes of 120 hours each. As part of each programme, 490 hours of one-to-one mentoring support and 15 different experience sharing sessions were provided. Participants were sup- ported throughout the programme with intensive homework and projects. 29 participants from Java, 23 from Kotlin and 30 from Cloud Technologies suc- cessfully completed the programme and received certificates. The success- ful candidates have been employed by Turkcell and its Group companies. More than 7000 people were support- ed with personal and technical devel- opment trainings in the earthquake region. We launched our annual software testing skills training in Gaziantep to support the professional development and employment of young women in the earthquake region. This project, which we ran in partnership with the Union of Chambers and Commodity Exchanges of Türkiye (TOBB), delivered a total of 66 hours of training, includ- ing 50 hours face-to-face and 16 hours online, to 60 participants selected from 317 applications, 140 hours of one-to- one mentoring support and 8 hours of experience sharing sessions. Partici- A total of participants completed 105 120hours of the bootcamp programme in Java, Kotlin and Cloud Technologies. pants were supported throughout the programme with intensive assignments and projects. Candidates who suc- cessfully complete the programme are employed on a part-time basis at Turk- cell and its Group companies. In Hatay, we implemented the Game Development Programme in coopera- tion with TÜBİSAD (Turkish Informatics Industrialists' Association) to support the development of middle and high school students identified by TÜBİSAD and Hatay Directorate of National Ed- ucation. A total of 52 students received 112 hours of game development training in the C++ software language, 2D for middle school students and 3D for high school students, and participants were supported throughout the programme with intensive homework and projects. Gönül Bağı Sales and Marketing Development Programme The Sales and Marketing Development Programme was designed specifically for our earthquake-affected citizens in the disaster area to improve their skills in sales, communications, e-commerce and office productivity applications, giving them an edge in starting a busi- ness or finding a job in the region. During the five-month development programme, young participants from the Nurdağı district of Gaziantep prov- ince were trained as sales and market- ing professionals, while women entre- preneurs at the Women Entrepreneurs Support Centre (KAGİDEM) had the op- portunity to gain the sales skills needed to sell their products to more customers. 120 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 121 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES We develop together with our ecosystem Distributor Development Programme For the development of Turkcell's stra- tegic business partners, we conduct training and development programmes focused on leadership, functional ex- pertise, technology and people, with the participation of many different teams such as sales, human resources, finance, marketing, technology, law, and customer services. In the development programmes we conduct with our stra- tegic business partners, we aim to use the data produced more effectively, in- crease the financial analysis skills of em- ployees and achieve positive outputs in customer satisfaction. Approximately 1,000 employees from our ecosystem participated in our development pro- grammes in 2023. Approximately 1,000 employees from our ecosystem participated in our development programmes in 2023. Digital Transformation Consultant Programme We aim to provide our Corporate Sales and Digital Business Services teams with consulting skills as part of the development programme we have launched to become the company of choice for our corporate customers' digital transformation journey with our infrastructures and applications. The programme was designed with a focus on 8 competencies identified as core consulting competencies by the world's leading consulting firms. Ac- tive participation in the learning jour- ney was ensured at every stage of the programme through various learning methods. These included visioning seminars with global technology com- panies and research firms, applied pro- ject studies and industry case studies. The Digital Transformation Consultan- cy Programme is a living programme that is updated every year in line with business strategies and technological developments. The first phase of the programme will be completed in 2022 and the second phase in 2023. Safe and Healthy Work Environment As Turkcell, protecting the health and well-being of our employees is our primary responsibility. In the field of health, we organise health seminars on many topics throughout the year and raise awareness among our em- ployees. In 2023, we organised 23 sem- inars in this field. During Breast Health and Awareness Month, 30 employees were screened, 336 eye exams were performed in September and 33 em- ployees donated blood to the Red Crescent. Psychological, nutritional, educational and laboratory services are also available to employees and their families. For nursing mothers, we have 8 lactation rooms and ready-to- use equipment in our facilities. In addition to this, we provide our em- ployees with the opportunity to receive consultancy services from experts for the care of their pets and plants they grow. In accordance with the Occupation- al Health and Safety Act No. 6331 and the ILO-OSH (ILO Occupational Safety and Health) 2001 standard, our prin- ciples and practices are set out in our Occupational Health and Safety Policy. We also work in accordance with the ISO 45001 Occupational Health and Safety Management System we have obtained in this area. In all supplier contracts, legal compli- ance is expected first and then compli- ance with the OHS improvement issues that Turkcell has adopted for its own workplaces, and the Occupational Health and Safety Policy is published on the company's website. In accordance with Law No. 5188 on Private Security Services and the Reg- ulation, we ensure the physical security standards of our buildings and facili- ties. In addition to professional training, all our security personnel are informed about the dynamics of Turkcell by their own companies before they start working at Turkcell. We are very sensitive to occupational health and safety at Turkcell. In 2023, 67 OHS Board meetings were held across the company and 4859 OHS inspec- tions were carried out in network oper- ations field works. At base station sites, equipment and facilities were reviewed in terms of OHS. In 2023 18 emergency drills were conducted at our sites and actions were taken to address negative findings in light of the reports prepared. In the contracts we have with our sup- pliers, the definitions of "contractor" and "subcontractor" are considered to be turnkey contracts for the purposes of the legislation, and an OHS chart is not followed for these suppliers for whom we are not jointly liable. How- ever, figures for "third party" companies providing cleaning and security ser- vices that we have used in the same workplace are included. For 2023, the accident severity rate of these compa- nies was also calculated and included in the report. In 2023, there were no work-related occupational diseases and fatal ac- cidents at Turkcell and Turkcell Group companies. Although the document containing their records is ready, a nu- merical figure cannot be given for this reason. Deaths due to natural causes other than work-related accidents are not recorded as there is no legal obli- gation to do so. We communicate with all our employ- ees on OHS topics through our Turkcell T.Life mobile application. We expect the companies we work with to comply with the Turkcell Occupational Health and Safety Policy and ensure that they take action within this framework through our employment contracts. We analyse all work-related accidents and OHS data through our OHS ex- perts, present the statistical studies we compile based on the accident reports we prepare to senior management on a monthly basis, and set our OHS tar- gets along with our future action plan. Accident Frequency Rate Number of Occupational Accidents Lost Day Ratio 1.2 1.68 2022 1.14 1.29 2023 1.18 1.43 8 7 2022 7 10 2023 15 0 2022 1.46 0.67 17 0.48 0.34 0.26 2023 Workdays Lost Due Occupational Accidents Number of Health Examinations for Recruitment Number of Periodic Health Examinations 0 2 2022 9 2 2023 9 4 402 260 2022 452 386 2023 854 480 2022 600 1,080 646 201 564 363 2023 Number of third- party work accidents 2022 2023 Female Male Female Male 0 1 2 3 Third- party accident frequency rate 0 12.5 16.9 3.18 Number of working days lost as a result of third- party occupational accidents Third-party accident severity rate 0 0 0 3 5 17.4 24.29 5.31 􀕬 * The Accident Frequency Rate, which we use in reporting, expresses the number of occupational accidents occurring in 1 million working hours in a certain period of time. It is calculated as follows: Accident Frequency Rate = [(Total Number of Accidents in a Year / Total Working Hours) * 1,000,000] Accident Severity Rate refers to the number of days lost due to work accidents occurring in 1 million working hours in a certain period. It is calculated as follows; Accident Severity Rate = [(Total Lost Working Days in a Year / Total Working Time) * 1,000,000] 122 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 123 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Manufactured Capital Outputs 12,037 base station sites for which risk assessment was performed 12% network traffic (internet) increase rate 73% network virtualisation rate 10 Fiber internet speed up to 10 Gbps Up to1.6 Gbps 4.5G speeds 99.910% Data Accessibility Rate 11,152 tower portfolio Performance Indicator Short Term Target Medium Term Target Long Term Target 2022 Performance 2023 Performance Current Status towards the Target Increasing the number of base station sites with risk assessment Increasing the number of processes improved as a result of risk assessments carried out at base station sites 10,800 14,800 28,000 11,341 12,037 14,000 16,000 23,200 13,208 13,306 Positive Development Negative Development Continues We recognise the importance of a reliable, fast and ubiquitous network system for an efficient and reliable customer experience. In this regard, we continue to improve our infrastructure on a daily basis through investments, R&D studies, and technological solutions. Today, the rapid development of tech- nology requires companies to actively follow new informatics and technolog- ical innovations. As Turkcell, we contrib- ute to the development of our country in the digital world with our efforts to implement the most technologically advanced in our sector and to develop local tech- nologies. We are also increasing our revenues by improving the quality of our services. infrastructure solutions In 2023, our fiber infrastructure will pro- vide access to 386,000 homepasses. We are increasing the number of fiber-con- nected base stations and strengthening our mobile network with our expanding fiber infrastructure, which has made a significant contribution to our country's infrastructure. In line with the exponential growth in digital demand, we are increasing our efficiency by developing various tech- nology applications in line with current needs.In addition to our investments in this area, in order to manage our sub- scribers' network traffic, which is in- creasing year-on-year. In this way, we ensure high efficiency without compro- mising the quality of our service, even during periods of heavy network usage. Strong Infrastructure Thanks to our manufactured capital, we continue to invest in our infrastruc- ture with the aim of adding value to our customers' digital journeys, and to offer one of the fastest 4.5G services in the world by establishing a strong ac- cess network with our rich frequency resources. As Türkiye's largest data centre operator, we conduct our operations with the goal of "keeping Türkiye's data in Türkiye" and support the creation of added value for the national economy by prioritising domestic production equip- ment in the procurement of our network equipment. We are focusing more on our fiber infrastructure investments in order to deliv- er fast internet and high service quality to more households. Simultaneously, we comply with applicable regulations and ensure our service quality with the awareness of corporate citizenship. Strong infrastructure and superior service quality With 30 years of telecom experience in telecommunications, we ensure the reliability and speed of the services we provide for our customers with our superior digital competencies and strong financial management. Having a strong infrastructure and providing superior service quality are of critical importance for Turkcell and its stakeholders. To this end, we close- ly follow the latest technological developments and develop world-class applications in our country. In this context, in addition to our contribution to domestic technological developments, we also take part in global projects and take our brand beyond the borders of our country. As Türkiye's largest data centre operator, we are proud to offer our world- class data centres, which are managed with the understanding of contrib- uting to domestic technology, using the most modern technologies, to the service of Türkiye as well as the countries in the region. We manage our base stations, which are the end point of our network in- frastructure at the stage of providing services to customers, based on com- pliance values that exceed national and global standards within the frame- work of the importance we attach to the environment and public health. Network Traffic (Internet) Increase (Rate in bandwidth) 16 2019 38% 2020 76% 2021 8% 16Total data volume: mobile and fixed 2022 27% 2023 12% 124 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 125 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Mobile Network Infrastructure Our mobile network infrastructure con- sists of base stations and technological equipment designed in an intelligent and flexible architecture for coverage and capacity management. Thanks to the coverage and capacity solutions we provide with our base stations, which form the basis of our telecoms business, we are constantly making im- provements to increase the accessibili- ty and durability of our services. Base Stations We manage our base stations equipped with the latest technologies within a framework compliant with national international stand- regulations and ards, prioritizing the protection of pub- lic health and the prevention of visual pollution.. The base stations in our network are equipped with the most advanced fea- tures to showcase the capabilities of the technology we offer. In addition, thanks to the increasingly compact size of our base stations, which can offer mul- ti-technology support (singleRAN), we manage their environmental impact in an optimum way by being eco-friendly manner with lower energy consumption. We conduct risk assessments to ensure the safety of our base stations and field teams. We aim to minimise risk factors by implementing improvements based on the results of the risk assessments. During the field work required for base station installation, occupational health and safety risks may arise from activi- ties such as working at height, electrical work, excavation and the use of vehi- cles. We have prepared working prin- ciples and action plans to prevent these risks. By the end of 2023, 4,859 sites will have been inspected, risk analysis forms will have been prepared for 696 sites, and 98 sites will have been revised and repaired for healthier work. In addition, with the "Network Tech- nologies Geographical Risk Analysis Reports" we have prepared, we aim to ensure that base station sites are effi- cient, healthy, safe and environmentally friendly, considering the harmony of the human-environment-telecommunica- tions triad throughout our country, and to facilitate the planning of working hours. Towers Telco Cloud Base Stations and Public Health To ensure that our base stations do not adversely affect public health, we keep them below the electromagnetic field intensity levels set by the reg- ulatory body, the Information and Communication Technologies Authority (ICTA). The values set by the ICTA are based on the limits set by the Interna- tional Committee on Non-Ionising Radiation Protection (ICNIRP) and accept- ed by the World Health Organisation (WHO), and are considered lower and safer, taking into account the precautionary principle. In addition, research on the subject has shown that radio signals below the ICNIRP limits are not harmful to human health. The values set by the regulation for Türkiye are 70% of the limits set by ICNIRP and 20% per device. It is known that the maximum limits at which a base station can operate in Türkiye are much lower (around 20%) than the limits set for reference countries in the European Union, in line with higher sensitivity. Since we are subject to the ICTA and the regulations issued by the ICTA re- garding the installation and inspection of base stations, the power values, antennas used, installation location and surroundings are reported in de- tail to the ICTA for the base stations to be installed, and base stations are installed in the areas if approval is obtained. EMR (electromagnetic field) measurements are carried out by independent institutions accredited by ICTA within one week after the site is put into operation and the results are reported to ICTA. In addition to this process, ICTA also carries out inspections and measurements at the sites. Two of ICTA's most important public health criteria are that there are no residential areas within the "safety distance" calculated according to the output power of the site, and that the sites are configured so that the specified limits are not exceeded. If non-compliance with the relevant criteria of the ICTA is detected, the sites will be shut down and severe sanctions or penalties will be imposed, including dismantling if necessary. As Turkcell, we are concerned about the impact of our network manage- ment operations on public health and work with a sensitivity that exceeds the criteria set by the relevant legal authorities. In 2023, there were no cas- es where legal penalties were imposed regarding the health impact of our products and services. Global Tower, Türkiye's leading tower company and one of our subsidiaries, operates in four countries. Providing tower leasing, tower build-sell, tower maintenance and contract manage- ment services to telecom operators, broadcasters, internet service provid- ers, energy companies and public in- stitutions, Global Tower has started to offer satellite services solutions to its customers as part of its end-to-end service approach. Global Tower pro- vides closed-circuit satellite services to over 2,000 points through its own ge- ographically redundant infrastructure, and aims to expand its product range and service diversity by following the trends in the satellite industry. As of the end of the 4th quarter of 2023, Global Tower has a tower portfolio of 11,152 towers portfolio distribution is as follows; 䩉Türkiye: 9,163 (owned: 4,737, right to use: 2,189, contract management: 2,237) 䩉Ukraine: 1,038 (owned) 䩉Belarus 836 (right of use) 䩉TRNC: 115 (right of use) To date, through our efforts, we have expanded 73% of our mobile and fixed core network functions to our Telco Cloud infrastructure. Thanks to the virtu- alisation transformation, we are achiev- ing efficiency in our investments and operations with a common cloud infra- structure for network applications. This allows us to more easily take advantage of the opportunities offered by emerg- Network Virtualisation Rate (%) ing cloud technologies for our network. In addition to our VM (Virtual Machine) based Telko Cloud infrastructure, we have taken the first step of the Contain- er Platform infrastructure and continued to expand this infrastructure with new applications in 2023. With this infrastruc- ture, we have been able to more easily and flexibly integrate next-generation network functions i"nto our network and initiate the Telko Cloud transformation compatible with 5G technology. 2018 18% 2019 41% 2020 51% 2021 60% 2022 65% 2023 73% 2024 Target 78% Connected Vehicles and Mobility Solutions As vehicles such as cars and trucks have become connected in recent years, we have received requests from our corporate customers to connect in this direction. Accordingly, we are completing our integrations so that the SIM profiles of connected vehicles can work integrated with our network in accordance with the new regulations in Türkiye. As a result, we are well positioned to provide services such as telemetry data required by vehicle manufacturers, in-vehicle information, entertainment and HD voice services desired by end-users, and B-Call and C-Call, which enable special customer services to be called from vehicles. In this context, the production and remote download of multiple eUICC pro- files was successfully implemented for the first time in Türkiye in 2023. Technol- ogies such as autonomous driving via 5G are also being tested with various vehicle manufacturers. As part of the Togg launch, the camera data received from the vehicle was for the first time subjected to image analysis on Turkcell's servers, and the user's emotions and situation were assessed. 126 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 127 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES with the investments we made in 2023, we expanded our fiber infrastructure to reach 386 thousand more homes. In 2023, the number of customers using our 100 Mbps and above fiber plans increased by 52% year-on-year. Strong Fiber Infrastructure We continue our efforts to facilitate ac- cess to the Internet, which has become one of our most basic needs, by provid- ing our customers with fast, high quali- ty and comprehensive services. Today, Turkcell's fiber backbone is available in 81 provinces of Türkiye. However, our goal is to launch a fiber mobilisation and deliver true fiber internet at the speed of light to homes across Türkiye. In this context, with the investments we made in 2023, we expanded our fiber infrastructure to reach 386 thousand more homes. With these investments, we continue to expand our coverage day by day, bringing our fiber internet service to 5.8 million homes. Aware of the need for internet and access to information, which has increased significantly dur- ing the pandemic period, we are con- tinuing to invest at a fast pace, aware of our responsibilities. We are devel- oping our fiber internet infrastructure, higher speed internet tariffs and new technological solutions. As Turkcell, we can provide fiber data access to homes at speeds of up to 10 Gbps using the globally recognised G-PON/XGS- PON technology. This value, which is an upper limit, may vary depending on variables such as the type of tariff, the intensity of fiber internet usage or the maximum speed that the modem used can support. According to Speedtest Median Country Speeds November 2023 data, the average fixed internet speed in Türkiye is 38.54 Mbps. We are connecting our customers faster to the internet with our strong and expanding fiber infrastructure. In 2023, the number of customers using our 100 Mbps and above fiber plans increased by 52% year-on-year. We were the first operator to launch an SD-WAN service for our business customers. We delivered security and access as a single service. We created solutions to reduce rising costs and in- crease production capacity. To meet the changing needs of our corporate and wholesale customers, we are deploying services such as Enterprise Wi-Fi as part of managed services. We continue to offer our cus- tomers the latest technologies such as Wi-Fi service, SMS integration, logging, Wi-Fi 6. While expanding our fiber optic in- frastructure, we are able to offer high quality internet over the mobile net- work thanks to the Superbox product, which we developed to provide fib- er optic internet access with Turkcell quality in places where fiber optic has not yet reached. We serve more than 700,000 users with our Superbox prod- uct, which allows our customers to in- stall it on the same day. Service Operations Centre (SOC) Turkcell's Service Operations Centre (SOC) operates 24/7 to conduct analysis and operation activities that will main- tain infrastructure and service continu- ity at the highest level.. We believe it is crucial to identify potential network and service failures before they occur and to provide permanent solutions through preventive measures in order to keep the quality of service offered to custom- ers at the highest level. While the need for immediate interven- tion and error-free operation to ensure service continuity increases every day, our rapidly growing and complex net- work and the number of devices and services under management require more human resources. The Zero touch transformation, enabling complete and end-to-end automation of network and service management, has become a critical requirement for rapid service de- livery and ensuring the economic sus- tainability of the wide range of services offered by digital service providers. As a result of the digitisation efforts ini- tiated in past years, we have ensured that the service monitoring and fault reporting activities performed for the access network have been largely au- tomated. We continued our zero touch transformation activities, which we con- sider to be one of the main focuses of network technologies, with increasing momentum in 2023. We held hacka- thons to expand the use of automation technologies in network operations and contributed to developing the digi- talisation skills of more than 100 network engineers through internal training. We aimed to increase service continuity and efficiency by introducing mobile application solutions to our network, which will enable many operational activities to be carried out much faster and more accurately. In addition to the benefits they provide, these solutions also play an important role in spreading the culture of digitalisation. In addition, by participating in inter- national platforms, we are taking firm steps towards our goal of shaping the global standards to be established and becoming one of the first operators to achieve 'zero touch' transformation on a network basis. In line with our goal, we are meeting with many global technol- ogy companies that are solution pro- viders in this field and exchanging ideas to determine the path to be taken and the methods to be applied. As a result, we have initiated our infrastructure De- vOPS transformation activities. Investment in Domestic Equipment In line with our mission to create val- ue for our country, we are supporting Türkiye's technological development and digitalisation process with our ef- forts to develop domestic technology and equipment. We continue to make a difference in the market by applying innovative technologies that have not been used in Türkiye before and that bring efficiency to our infrastructure. With our localisation approach, we continue to carry out development projects in cooperation and support 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. We share the knowledge we have gained by playing an active role in in- ternational platforms with domestic and national product development companies in our country's technology ecosystem, combining them with our experience. Through this approach, we guide and support our companies in developing competitive products that meet expectations at the right time. We actively participate and lead lo- calisation efforts in areas such as 5G base stations, core network, radio link, management system software, virtu- alisation platforms, base station an- tennas, energy products, cyber secu- rity software, base station antennas, energy products and cyber security software through many projects and collaborations, especially R&D projects supported by the Ministry of Industry and Technology, the Ministry of Trans- port and Infrastructure, the Information and Communication Technologies Au- thority (ICTA) and TÜBİTAK. In addition, we continue to work side-by-side with our domestic manufacturers by sign- ing cooperation agreements with the companies participating in the R&D Support Programme opened by the Presidency of Transport, Maritime Af- fairs and Communications Research in April 2023 and Centre (UDHAM) launched on November 21, 2023 to de- velop products for 5G infrastructure. We are currently conducting 5G Do- mestic Data, 5G Domestic Voice, MANO and EMS projects under the 5G Core Domestic Products Programme, pro- viding know-how and laboratory/test- ing support to domestic manufacturers in their development processes. We continue to increase our investment in high-capacity domestic servers in our Telco Cloud infrastructure. 128 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 129 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Refarming With the increasing 4.5G data traffic, there has arisen a need to en- hance the spectrum resource to be used in 4.5G technology. In line with our strong spectrum strategy, we plan and implement refarming efforts between technologies. By the end of 2023, we provided 40% of our 4.5G capacity installed in the network from the 2100 MHz band, which was pre- viously used in 3G. In this way, we achieved additional network capacity to meet the increasing data usage needs as well as improving customer experience. High-speed, high-quality, inclusive services and access to information and the Internet for all We continue to invest in and improve our network and infrastructure in line with our aim to provide faster, more inclusive and higher quality services to our customers. We maintain our high network accessibility with our data availability rate of 99.910% calculated on the basis of traffic loss in our mobile network and our low interruption rate of 0.304% in mobile voice calls. In 2019, 2020, and 2021, we reduced our carbon emissions by generating 125 MWh of electricity with 507 solar fields with solar panels, which we added in 2022 to the 15 portable solar fields we established within the scope of our Portable Solar Field project. By the end of 2023, we increased the number of solar fields with solar panels to 1,400. With these panels, we increased our contribution to reducing carbon emissions by generating 2.23 GWh of electricity. Powerful Spectrum Turkcell owns the widest spectrum li- cence for mobile services in Türkiye. Thanks to this spectrum, which is 34% and 68% more than competing oper- ators, our customers enjoy the advan- tage of high-quality services. The rapid development and transformation of the technologies used in the telecom- munications sector, the high cost of in- frastructure investments and the need to maximise the use of long lifetimes make it imperative that we formulate our spectrum strategy in a way that can adapt to technological develop- ments and is technology agnostic. Thanks to our broad-spectrum pres- ence, we aim to maintain the quality of service we have proven with our maxi- mum speed of 1.6 Gbps17 for 4.5G tech- nology, which is currently widely used in our country, in 5G technology, which is expected to be implemented in the coming period. With the approval of the Ministry of Transportation and Infrastructure, we started commercial 5G broadcasting at Istanbul Airport from July 2022 as part of our 5G activities. We led the in- stallation of this network, where three mobile operators provide services over a shared 5G infrastructure. In or- der to experience high-speed internet with 5G service at Istanbul Airport, it is necessary to have a 5G-ready mobile phone with 5G functionality enabled, a 4.5G-compatible SIM card, and to initi- ate a 5G subscription by requesting to use 5G via SMS. Turkcell customers will not pay any additional fee to experi- ence the 5G service. Our guests com- ing from abroad can also enjoy the 5G service at İstanbul Airport. All their op- erators need to do is sign a 5G roaming agreement with Turkcell. 17 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. In addition to İstanbul Airport, Turkcell’s subscribers have the privilege of expe- riencing 5G technology in more than 40 countries thanks to our internation- al roaming agreements. To experience 5G abroad, it is necessary to be a 5G subscriber. Turkcell customers will not pay any additional fee to experience 5G services and will continue to be charged in the same way as part of their roaming packages and tariffs. Within the framework of R&D activi- ties, in addition to the national projects supported by TÜBİTAK, we have also carried out various projects in the in- ternational arena, and we have add- ed 8 more projects to our R&D projects in the Horizon Europe and SNS (Smart Network and Services) programmes funded by the European Union, bring- ing the total number of ongoing active projects to 12. In these projects, we fo- cused on 6G-oriented projects and applications during 2023, and we act- ed with the vision of being the designer and implementer of these trends that will transform our own sector as well as vertical sectors in the near future, and we carried out our R&D studies in which we aim to develop innovative solutions on the national/international platform. As Turkcell, we continue to develop our local and foreign cooperation ecosys- tem, which we have established with R&D centres, universities, technology suppliers, as well as various vertical sec- tor players that play a leading role on a global scale. In addition, in 2023, when international publication and intellec- tual property acquisition goals that will positively accelerate our country's R&D capabilities in the field of communica- tions were pursued in a more focused manner, Turkcell's 6GEN-LAB project, which was eligible for funding under TÜBİTAK 1515 (Pre-Specified R&D Labo- ratory Support Programme), began to deliver results in the light of innovative R&D activities. Turkcell’s subscribers have the privilege of experiencing 5G technology in more than 40 countries. Data Centres With our approach of keeping Türkiye's data in Türkiye, we maintain our lead- ing position in data centre operations. We have 36.5 thousand square metres of white space in 8 data centres, 4 of which are new generation. As a pio- neer of digital transformation in Türki- ye, we provide data storage and cloud services to more than 3,000 corporate customers, offering them cost benefits and helping them increase their oper- ational efficiency. We ensure business continuity by providing 24/7 uninter- rupted service, and in unusual situa- tions, we provide remote support from Turkcell engineers who are experts in their fields and solve problems within seconds. In 2023, we launched another module in both our Kocaeli-Gebze and Ankara-Temelli data centres. In 2023, we started the construction of new in our Ankara-Temelli and modules Tekirdağ Europe data centres. In 2024, we aim to further strengthen our lead- ership in this field by commissioning two more modules with our ongoing data centre investments. Our next-generation data centres in Ankara-Temelli, Kocaeli-Gebze, İzmir and Tekirdağ-Kapaklı (Europe) were built to withstand the highest possible level of earthquake and their system rooms are constructed to fire-resistant for up to 120 minutes.. In addition to the rooftop solar application completed at our Ankara and Tekirdağ data cen- tres, we commissioned our solar power plant (SPP) with a generation capacity of approximately 770 kWp on an area We attach great importance to cyber security, which is one of our top priorities in our data centres, and offer solutions with domestic technologies. of 7,000 m2 at our Ankara data centre in 2023. With this investment, we aim to generate approximately 1.6 GWh of electricity annually for use in our data centre. With our LEED (Leadership in Energy and Environmental Design) Gold-cer- tified data centres, we aim to lead the way not only in terms of technology, but also in terms of our impact on the environment. Taking into account the importance we attach to domestic production and localisation in technology in the con- struction of our data centres, we are increasing our localisation rate in the data centres we build. We offer services at global stand- in our data centres with ards many international certificates: ISO 27001, ISO 9001, ISO 20000, ISO 50001, ISO 10002, ISO 22301, PCI-DSS We have Uptime Institute Tier III Operational Sustainability Gold certification in our Gebze and Temelli data centres. Localisation Rate of Data Centers (%) Gebze Data Centre Izmir Data Centre Ankara Data Centre European Data Centre 50% 50% 65% 75% 130 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 131 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Intellectual Capital Outputs 25% Digital OTT service revenue and 19% digital services total revenue growth 992 R&D employees 550number of patent applications 10incubator company co-operation 8 number of city hospitals for which we provided technological infrastructure 12.5 million customers using chatbot Performance Indicator Short Term Target Medium Term Target Long Term Target 2022 Performance 2023 Performance Existing Status Towards the Target ISO 27001 Certification Annual target Certification renewal Certification renewal ISO 27001 Certification Renewed ISO 27001 Certification Renewed Positive development Negative direction Continues With a total of 992 R&D employees, we transform our corporate culture with innovative solutions that create value, and we adopt the principle of integrating these solutions by our stakeholders. Continuously Developing Intellectual Capital We believe that an innovative business culture based on strong performance in systems, processes and technology is necessary for our strategic initiatives and business model to achieve the most efficient and effective results. Our intellectual assets are based on innovation, entrepreneurship, brand strength, products responsibility, and services that represent Turkcell's unique expertise and knowledge. They differentiate Turkcell and are one of the key drivers of sustainable growth. We combine new technological devel- opments such as artificial intelligence, Internet of Things (IoT) and blockchain with our superior digital capabilities and analytical skills to improve our products and services. Thanks to our services, which are developed and im- proved by Turkcell's engineers, we cre- ate solutions tailored to our customers' needs and demands. With a strong bond with customers, which is among our core competences, and our ad- vanced analytical capabilities, we de- liver our products to the right customer base with the right timing and pricing. Thanks to our big data analytics appli- cations, we are able to provide tailored offers to 42.5 million customers. Innovation and Entrepreneurship As Turkcell, while maintaining our com- mitment to the principles of sustaina- bility, creativity and efficiency in our research and development (R&D) activ- ities, we continue on our path to devel- op products and production processes that take into account the economic, environmental and social impacts that may result from these activities, and we aim to develop sustainable production technologies. To this end, we are under- taking activities to reduce our carbon footprint in all our product and service developments. We continue to move forward by in- creasing our competitiveness in all our people-related activities and by play- ing a more effective role in national/ international markets with our high val- ue-added products and services. While maintaining our image as a leading company in the telecommunications sector, we also contribute to society and the economy. We continue to operate on the principle of creativity with our 992 R&D employees, who aim to integrate an innovative approach into our corpo- rate culture. We value the opinions and suggestions of all our stakeholders, sup- porting their initiatives and encouraging them to put their ideas into practice. Thanks to the value created by our technological expansions, we produce qualified solutions for both national and global markets. With the added strength of being the Turkcell of Türki- ye, we are making expansions in many sectors in line with our vision of being a "service-oriented experience provider". In this context, we carry out joint R&D programmes and academic publi- cations with universities, incubation collaborations with technopolis com- panies, national and international spon- sored projects, and technical publica- tions, training and conference activities that enable knowledge transfer. We attach great importance to sharing with the ecosystem the accumulation of knowledge on innovative technology products and their areas of applica- tion that has been developed with the culture of innovation within Turkcell Te- knoloji A.Ş., our R&D company, in order to support research and technological development in our country. In this di- rection, intensive mentoring and training support is provided within the frame- work of production and use of new technologies, methodology and meth- ods used in the production process, R&D intellectual and centre management, industrial rights, university, incubation cooperation and R&D studies with na- tional/international partners. Number of R&D Employees 2019 956 2020 1,153 2021 1,216 2022 965 2023 992 132 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 133 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Number of Applications to TUBITAK Supported Projects Number of HORIZON Projects Applications 2019 2020 2021 2022 2023 10 10 9 15 10 9 8 10 6 13 2019 2020 2021 2022 2023 Number of TUBITAK Supported University Collaborations Number of Collaborations with Incubation Companies 4 9 5 10 5 11 7 7 8 10 TuTurkcell Technology collaborates with universities and research institutes on many of its R&D projects. Project ideas and needs are evaluated and joint project development goals are set for those that are in line with strategic focus areas. For example, in 2023, noise cancellation studies were conducted with Özyeğin University. In Turkcell's Suit Conference product, a structure has been designed that detects sounds coming from behind and provides iso- lation from the environment. As a result, we expect the efficiency and custom- er satisfaction of the Suit Conference product to increase. In parallel with our strategy to expand our products and services in interna- tional markets, we aim to develop our new digital and ICT services on a glob- al scale in line with the latest technol- ogies and market requirements, and to expand the regions in which we pro- vide services. The information and communication sector have a dynamic and competi- tive structure that requires large invest- ments in infrastructure and technology. In Türkiye, this sector has had to finance the R&D investments of foreign compa- nies through foreign acquisitions over the years. Since its establishment, Turkcell Tech- nology has provided import substitu- tion for royalties of over TRY 2 billion. Through strategic collaborations and joint projects with our business part- ners, we have ensured that much more foreign currency than our own technol- ogy production volume stays in Türkiye and that Turkcell engineers produce high value-added products. In order to identify the areas where we will make a difference in our new- ly developed products and services, we study the patents filed and regis- tered by technology companies in the field in which we work, and we gath- er information about the competition and trends while preparing our patent applications, which we have become champions in recent years. We contin- ue to share our experience with univer- sities, incubators, SMEs, business part- ners and the entire ecosystem in our patent application processes. 2019 2020 2021 2022 2023 Cumulative Number of National Patent Registrations 521 699 813 966 1,019 Number of National Patent Applications 511 557 565 325 550 Turkcell Technology, our R&D compa- ny, is the leader in its sector in Türkiye with 4,114 national and 247 internation- al patent applications and 1,019 regis- tered patents since its establishment in 2007. As Turkcell Technology, we have filed 550 new national patent applica- tions in 2023. As part of our technological transfor- mation goal, we are taking an active role in the TÜSİAD Task Force on Tech- nology Standards and Patents Based on Standards to support the initiative to create standard patents. In order to enable our company and the companies in our ecosystem to partic- ipate in international projects, we are on the board of ITEA4, which deals with software technologies under the EU- REKA umbrella, and Celtic Next, which deals with new generation communi- cation-telecom infrastructures. In the projects we are involved in under the EUREKA umbrella, the financial support is evaluated by TÜBİTAK-TEYDEB (The Scientific and Technological Research Council of Türkiye's Technology and Innovation Support Programmes Direc- torate). For example, Turkcell is carrying out international coordination and na- tional project management activities in the Integrated Health and Care Solu- tions for Next Generations (iCare4N- extG) project, which will start in 2021 and be completed in the first quarter of 2024 in the Eureka-Celtic Next cluster. In addition to Türkiye, the project involves 17 stakeholders from Canada, Portugal, Hungary, South Korea and Ukraine. As part of the project, which aims to de- velop a platform in the field of smart health technologies, Turkcell Technol- ogy is conducting artificial intelligence studies for cardiological rehabilitation. In recent years, we have increased the number of our project applications on platforms with more competitive and selective project ideas, especial- ly within the framework of the Hori- zon Europe main programme and its sub-programmes, which are directly funded by the European Commission. Within this programme, to which we have submitted 13 applications in 2023, we have the opportunity to work and collaborate with very valuable com- panies in the international arena. Under the guidance of the Ministry of Industry and Technology, we are pursuing cooperation opportunities between universities and incubation companies in order to support incuba- tion companies, expand the R&D eco- system in Türkiye and improve domes- tic products and services. We provide technological support to incubation companies and increase their visibility and recognition by including the prod- ucts developed within this framework in the European Union projects in which we are involved. As an example of our work with incu- bation companies, we conducted a study on data mining in sales process- es with a technopolis company that we started in 2023. The aim of the study is to increase customer satisfaction and revenue by identifying customer and sales trends in sales processes. Our human capital is at the heart of our R&D and innovation strategies. In this context, we provide academic development opportunities to Turkcell in Technology researchers the processes. Since 2014, our efforts to improve the technical infrastructure of our employees in line with the qual- ifications required in our sector have continued unabated, with our PhD and Masters support programmes increas- ing in content. involved At the same time, in line with our vision to be a leader in the production of new technologies, we are contribut- ing to the dissemination of technology through the realisation of 40 academic publications, 297 technical publications and 205 national/international pres- entations, product introductions, and participation as speakers in national and international platforms in 2023. In our academic publication efforts, we conduct studies for national and inter- national peer-reviewed journals and conferences, as well as activities for technology accessibility and dissemi- nation. As an example of our academic publications, our paper presenting an innovative approach was published in the 'Journal of Software: Evolution and Process'. 134 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 135 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Paycell R&D Centre, a Turkcell Group company, is Türkiye's next- generation technological finance platform that conducts innovation- focused research and development activities on payment systems and mobile payment technologies. In 2023, we achieved a 19% increase in total Digital Services revenues and a 25% increase in digital OTT service revenues. Value Creating by Use of Open Source Code One of the most subject we pri- oritize most as both users and is developers within Turkcell open-source software.. In ad- dition to creating value in terms of licence management and cost advantage through the use of open source code, we are contributing to the future of the software world by supporting the development of high quality, secure software without vendor restrictions. As Turkcell, we have carried out many open source code transformation projects in the last 5 years. We have shared the experience gained from these projects with the com- munity, government agencies and private companies through presentations articles published on platforms such as Open Source Code Confer- ences, Open Source Software Sector Workshops, Medium and Future Writers. and In addition to using open source software, we started contribut- ing to open source code pro- jects published on github, we supported some libraries as developers. Paycell R&D Centre Paycell R&D Centre, a Turkcell Group is Türkiye's next-genera- company, tion technological finance platform that conducts innovation-focused re- search and development activities on payment systems and mobile payment technologies. As part of its vision to lead the sector in the transition to a digital society with distinctive customer experiences and innovative payment solutions, Paycell continues to create continuous value for its customers and all stakehold- ers with its payment solutions creat- ed with a quality service approach. Paycell, which has experienced rapid growth in the Techfin world, crowned its success by obtaining the R&D Cen- tre certificate from the Ministry of In- dustry and Technology in November 2022, in parallel with its investments in technology and innovation. Since November 2022, the Paycell R&D Center has been continuing its work with a total of 8 R&D center projects, one of which is supported by the Euro- pean Union (CELTIC-NEXT).. As part of the R&D activities, a total of 5 national patent applications, 2 of which will be filed in 2023, and a total of 21 national and international academic publica- tions, 15 of which will be filed in 2023. In addition, 2 employees with doctoral degrees in computer engineering and related disciplines teach undergradu- ate and postgraduate courses at var- ious universities. Since its inception, Paycell has been a company that val- ues R&D and technology, continuously growing and investing. With more than 130 research engineers in its R&D cen- tre, Paycell is working with the vision of having a say in research, development and innovation in the field of technol- ogy in Türkiye and setting an example for other companies in our country. Innovative products and services de- veloped through engineering studies carried out by Paycell's technology teams are categorised in the follow- ing groups: 䩉Smart payment solutions 䩉Value-added services 䩉Artificial Intelligence and Big Data analytics and solutions In order to sustain Paycell's R&D and innovation culture sustainable, we en- gage in a number of activities. These include studies such as the project life cycle of the technological finance area and the development of new ideas, university-industry cooperation, personnel training, support for post- graduate studies, applications for na- tional and international funds, nation- al/international patent applications. Digital Service Portfolio Digital Services and Solutions While our digital services and solutions add value to the lives of our users, we continue to develop our portfolio by dynamically updating our products according to user needs. All the servic- es we produce require different tech- nical infrastructure, skills and expertise. All the services we produce require diverse technical infrastructure, skills, and expertise. We are part of every- day life not only with the communica- tion services we offer but also with the digital services we create and devel- op.. Based on this strategy, we have developed many domestic digital ser- vices to date with over 1,000 engineers. we have taken important steps for our competitive position in the world by transforming these digital services into new major companies. Each of our brands, BiP, lifebox, TV+ and fizy, which aim to stand out in the global competition, is positioned as a separate company and thanks to this structuring, the brands continue their activities faster, stronger and more focused in their own organisational structures. We continue to be at the forefront of the digital transformation required by soci- ety with numerous digital services such as video conferencing, email services, instant messaging, TV, cloud storage, identity solutions, digital advertising, gaming services and a music platform, all developed by Turkish engineers and software developers. We are using our advanced analytics capabilities to make this digital transformation acces- sible and increase customer satisfac- tion by accurately positioning the most appropriate products for our custom- ers. With these solutions, we also aim to make a significant contribution to the lo- calisation rate in technology. While con- tributing to the national economy with self-sustaining technology solutions, we are also creating global brands and technologies that will spread from our country to the world through digital ex- ports. Our top priority is to turn these ser- vices, which create jobs in our country in the field of technological innovation, into global brands and to use this suc- cess to create useful results worldwide. Our primary goal is to make a positive contribution to Türkiye's economy and reputation by creating economic value through the data security of individuals and institutions in our country and our own data. Secure Communication Platform: BiP BiP has approximately been download- ed over 116 million times and used in 192 countries in the world. BiP aims to be more than just a communication appli- cation that provides solutions to all of its users' communication needs with its messaging, calling, and video calling options. It offers experiences and con- veniences to its users in all areas of life through its services such as information, entertainment, bill payment, shopping, prize winning options offered under Dis- cover, fun games, Digital Asset where crypto can be exchanged, Emergency Button that can be used in case of dis- asters and many more. BiP offers servic- es not only to Turkcell users, but also to users of all operators in Türkiye. From the beginning of 2021, Turkcell, Turk Telekom and Vodafone İletişim Pass users will be able to use BiP without using their data packages. 136 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 137 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES BiP continues to work with various pub- lic institutions in Türkiye to increase the number of users. In this context, BiP pro- vides services to Anadolu University, Istanbul Kültür University, the Open Ed- ucation Faculty of Anadolu University and Istanbul Galata University, where students, staff and academics can re- information and notifications ceive about their schools, and students can access exam and grade information and other personal content. There are plans to expand the scope of the ser- vice by establishing similar collabora- tions with other universities. Developed entirely by Turkcell engi- neers, BiP is now the communication choice of millions of users abroad. It aims to offer its users a richer experi- ence with superior service quality and local content through cooperation with operators in foreign markets. With its advanced technological infrastructure, it is also capable of integrating coun- try-specific services and offering solu- tions that allow communication data to remain in-country. Launched in December 2022 with Pa- kistan's leading operator Jazz, BiP reached 1 million active users in the country in a short period of 6 months. The aim is to further increase the num- ber of users and make a much greater contribution to Pakistan's digitisation. In this context, the Bangladesh coopera- tion, launched in August 2023, aims to achieve similar success in the Bangla- deshi market. BiP aims to increase the number of users with its vision of a com- munication application that offers local experiences in global markets with new collaborations in foreign markets. Used in 192 countries around the world, BiP has reached more than 116 million downloads. Open Room for Life with lifebox! Lifebox, which offers the ability to se- curely store and share photos, videos and documents in a digital environ- ment, provides a personalised expe- rience while offering a safe and easy way to store happy memories. Lifebox appeals to users not only in Türkiye but also around the world. Offering more than just storage, Life- box features face and object recog- nition, automatic creation of stories, albums and collages from selected photos, memories of the past and pres- ent, and contact backup to ensure contact information is not lost in the event of an emergency. Documents archived in different categories can be securely accessed via fingerprint, facial recognition or password, and Office documents can also be opened and edited online via Lifebox. In 2023, Lifebox revamped its web and mobile applications from start to finish, taking the user experience to an even high- er level. At the same time, it offered its users the opportunity to experience affordable storage with the annual packages launched in 2023. By offering experiences that make life easier for our users, lifebox reached more than 2.1 million paid subscribers and more than 8.1 million total users with its successful performance in 2023. The corporate storage solution lifebox Business was brought under the um- brella of İşte Suit in 2023 and renamed Suit Drive. Suit Drive provides the nec- essary storage needs for businesses of all sizes in a secure and stable way. Its affordable package structure for every need puts Suit Drive ahead of its local and global competitors. Inter- nal and external file sharing, access from all mobile and desktop devices, real-time collaboration with online of- fice feature, file versioning, person and file based reporting, personalised disc and corporate shared space usage are just some of the features that make Suit Drive different as a cloud storage solution for the business world. Lifebox Transfer, on the other hand, aims to meet the need for fast file shar- ing with a simple experience that re- quires no membership and is free, while providing the service from Turkcell's data centres. 􀎲 You can access the products, services and detailed infor- mation we offer within the scope of lifebox via www.mylifebox.com, and www.lifeboxtransfer.com. lifebox Paid Subscribers (thousand) 2020 910 2021 1,319 2022 1,838 2023 2,133 TV joy is everywhere TV+, the first and only digital platform in Türkiye in terms of television viewing experience, is breaking the rules of the television world. TV+, which has be- come the "platform of platforms" in IPTV broadcasting with its collaborations with different digital broadcasting platforms, continues to play an impor- tant role in the process of digitalising the user experience by enabling its users to access the content they want whenever and wherever they want. In addition to its superior technical features that provide ease of use, TV+ strengthens its archive in sports, se- ries, films, children, documentaries and many other titles, while increasing the loyalty of its users. The UEFA Champi- ons League, UEFA European Cup, La Liga, Formula 1 and EuroLeauge excite- ment, which sports fans follow with in- terest, also met with TV+ users in 2023. Number of TV+ Users (thousand) 2019 2020 2021 2022 2023 720 871 1,082 1,282 1,409 􀎲 You can access the prod- ucts, services and detailed information we offer within the scope of TV+ on www.tvplus.com.tr. Türkiye's digital music platform: fizy Digital gaming platform: GAME+ As of December 2023, more than 6,000 companies are using İşte Suit with more than 8,000 licences. In 2023, fizy, one of Türkiye's most pop- ular and most preferred domestic dig- ital music platforms, continues to offer a more personalised music experience to its users with its investments in artifi- cial intelligence and continues to meet its users with its enriched content ar- chive. In addition to having an ad-free and uninterrupted music experience, fizy Premium users can listen to their songs in high sound quality and see the lyrics, and access their content of- fline without internet. In 2023, fizy also started to bring podcast content to its users. Bringing together the content of leading podcast content distributors such as podfresh, podcastbpt, podbee with its users, fizy has rapidly increased its unity among podcast listeners with special episodes of the most popular podcast series available only on fizy. Number of fizy content (million) 2019 2020 2021 2022 2023 32.6 33.5 35.4 43.0 56.3 GAME+, the gaming brand of Lifecell Di- jital Servisler A.Ş., started to offer cloud in our country gaming technology through Türkiye servers in 2021 within the scope of its cooperation with NVIDIA GEFORCE NOW, the world's most pop- ular and advanced technology cloud gaming platform. The world's most ad- vanced technology cloud gaming in- frastructure, which enables advanced computer games to be played without downloading; eliminates the need for powerful hardware required to play games. Thanks to GAME+, playing the latest games becomes as easy and accessible as watching a film over the internet. The necessities such as hav- ing expensive hardware and enough disc space to play games are eliminat- ed. GeForce NOW powered by GAME, which has been met with great interest in our country, has the highest num- ber of users in Türkiye after the United States of America. GAME+ continues to expand its library of games, rapidly increasing the number of subscribers and growing. İşte Suit Developed by Turkcell engineers, İşte Suit is a solution that provides one- stop service to users with e-mail, file management, office applications and video conferencing solutions that cor- porate companies will need. In March 2023, we launched İşte Suit to provide our Suit Mail, Suit Drive, Suit Confer- ence and Suit Office services, which currently serve our corporate custom- ers separately, with a single portal and management panel on istesuit.com. As of December 2023, more than 6,000 companies are using İşte Suit with more than 8,000 licences. Secure and Uninterrupted Video Conferencing Experience: Suit Conference The video conferencing service (for- merly known as "BiP Meet"), which pro- vides service from our data centres in Türkiye with infrastructure its strong and easy-to-use service, was renamed as Suit Conference in 2023 under the roof of İşte Suit. 138 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 139 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES In the future, we aim to add value to our customers' lives and save them time by increasing the capabilities of Turkcell Assistant with the opportunities offered by our technology. our Selfbot solution has started to pro- vide 24/7 online support to the users of a brand operating in the textile indus- try with the integration to the official website. through is continuous- Our chatbot solution ly developed integrations with our digital platforms such as BiP, GAME+, lifebox, fizy, TV+ and Platinum, and serves Turkcell Superonline users through special scenarios. In the near future, we plan to integrate our chatbot system with lan- guage models and launch our produc- tive artificial intelligence-based studies for both Turkcell's internal dynamics and general user needs. large Selfbot, another advanced self-service implemented with chatbot platform Turkcell's engineering expertise, is not limited to the municipality and educa- tion sectors, but has also stepped into the e-commerce sector. In this context, Our chatbot is also supported by the "UNDP Gender Responsive Communi- cation Guidelines" and adopts a gen- der-sensitive and inclusive language. This is an indicator of our brand's com- mitment to social values. With Suit Conference video conferenc- ing service, users can communicate with anywhere in the world at any time. With Suit Conference, meetings can be held via web browsers as well as desktop and Suit Conference mobile applications. In addition to its easy-to-use and sim- ple design, Suit Conference offers a solution suitable for the use of institu- tions with its features such as provid- ing service in data centres in Türkiye and allowing institutions to purchase a special domain name. Suit Conference, which has been developed especially for the needs of sectors such as ed- ucation, public and health, can meet the remote communication needs of all small and large organisations. Local E-Mail Service: YaaniMail Launched in 2020 for individual use and developed by Turkcell's R&D engineers, the local email service YaaniMail will offer the most reliable email service to individuals and institutions from the beginning of 2021. The platform, which provides a free service to individual subscribers with the @yaani.com ex- tension, offers a strong domestic alter- native to global competitors. YaaniMail Corporate offers services via the cloud or on-site installation, depending on the preferences of the organisation. Corporate customers of the platform, which provides its users with advanced security measures, can use their own domain names. In 2023, the name of the YaaniMail Corporate service was changed to Suit Mail by merging under the umbrella of İşte Suit. The service, which can be used through IOS, Android, Web and Corporate Management Panel applications suit- able for corporate or individual needs, makes it easy to use features such as Calendar, Contacts and Tasks. Suit Mail, with its easy access and simple design, offers the tools that business users need most, such as filtering, legal text, disclaimers and signatures, in a re- liable, simple and free way. Compatible with many email platforms, users can easily switch to the Suit Mail service. Our Suit Mail service, which we launched for business use in early 2021, will continue to benefit more than 3,000 businesses by the end of 2023. Eco-friendly and practical solutions through digitalisation: Digital Signature at Home subscription Thanks to the new solution de- veloped by Turkcell engineers, customers who want to use fib- er, DSL, Superbox and TV+ ser- vices can use digital signatures in transactions, enabling installation teams to do their work 30% faster. In this way, 1,400 tonnes of documents will be digitised annually, con- tributing to the protection of the environment. will continue to benefit more than 3,000 businesses by the end of 2023. Smart Legal Documentation Automation In addition to the customer-facing solutions we offer, we have also devel- oped the Smart Legal Document solu- tion for the legal department, where paper usage is high. With this project, we have digitised the flow of the legal department's response to legal docu- ment requests from official institutions (automatic assignment of 172,000 doc- uments), we reduced manual process- es and at the same time saved paper. Thus, we prevented errors in the work performed and achieved labour force gains through the automation of man- ual work assignment (25% speed/time gain) and query functions with robot- ic processes (15% speed/time for IP queries). A better customer experience with artificial intelligence improve our We enrich and products and services with ar- tificial intelligence applications developed by Turkcell engi- neers. We provide services both in our applications and custom- er services with artificial intel- ligence, which facilitates the personalisation of user experi- ences and helps to make them effective. In 2020, we committed to use a powerful tool such as artificial in a responsible intelligence and ethical manner and set out 7 principles that we will adhere to. In this context, we became the first company in Türkiye to publish the Principles for the Use of Artificial Intelligence. In addi- tion, in our Human Rights Policy published at the beginning of 2021, we aim to act based on human dignity, fundamental rights and freedoms in the tech- nologies we develop, especially artificial intelligence technolo- gy, by contributing to the SDGs. 􀎲 You can find infor- mation about the Artificial Intel- ligence Usage Principles on our "Digital Responsibility" page on our website. Our analytical solutions team conducts post analyses and insightful studies for Turkcell products, services, tariffs, and campaigns; at the same time, we carry out predictive model- ling and segmentation studies to generate target audiences for business units to take action. By supporting our business units with analytical trend models to ensure that the tariffs, products and services offered by our company to its customers meet the right customers, we contrib- ute to our company's revenue growth and play a role in in- creasing customer satisfaction by ensuring that customers are offered the right offers. Chatbot - Turkcell Assistant Turkcell Asistan is a strategic milestone in our company's digital transforma- tion journey and is an artificial intelli- gence-powered self-service solution implemented entirely with Turkcell en- gineering vision. This innovative platform has been in- tegrated into the Turkcell app platform and plays a critical role in the mobile infrastructure of our company's digital asset, the Turkcell app. Powered by artificial intelligence, Turk- cell Asistan makes life easier for our cus- tomers by assisting them in hundreds of areas, from invoice management to overseas service settings, from pack- age information to special offers. With its structure that can anticipate custom- er needs, it offers proactive information and suggestions to our users by syner- gistically utilising our analytical skills. For example, when a customer ap- proaches the package limit or the cur- rent contract expires, Turkcell Assistant information automatically provides and digital guidance to complete the necessary transactions smoothly. As of 2023, our 15 million standalone us- ers had approximately 89 million inter- actions through Turkcell Assistant each month and 98% of the transactions were successfully concluded at the first contact. As of 2023, our 15 million standalone users had approximately 89 million interactions through Turkcell Assistant each month and 98% of the transactions were successfully concluded at the first contact. 140 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 141 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Voice analytics - Turkcell Artificial Intelligence Voice Image Processing Services and Solutions TWe continue to use our arti- ficial intelligence voice devel- oped in-house by Turkcell engi- neers in different products and processes of Turkcell. Thanks to this competence, we can inform our customers by sending voice SMS when necessary, voice on- line trainings prepared by our Turkcell Academy team, and convey personalised messag- es to our employees through different taking channels, communication to a different dimension by using artificial intelligence. In our call centre, our artificial intelligence voice serves our customers at many points as the voice of the digital assis- tant. We contribute to the ac- tion of meeting our customers with the right package at the right time by automatically voicing the package readings in the flows in which we offer package suggestions to cus- tomers through the call centre with our artificial intelligence voice. We improve the expe- rience of our customers by re- sponding to an average of 113 thousand call centre voice re- quests on a daily basis. In addition to our existing arti- ficial intelligence voice tech- nology, thanks to our intensive R&D studies on this subject, we have gained the competence to clone professional voices with only 30 minutes of voice recording. In this way, we aim to gain the flexibility to serve our customers through different channels with different voices in the coming period. Turkcell Digital Verification ap- plication, another good prac- tice example developed by Turkcell engineers within the scope of artificial intelligence studies, enables the control of identity documents with image processing, voice processing, machine learning methods and remote customer acquisition process with face verification. In the digital world, since many organisations now need to make transactions with their customers remotely via vid- eo calls, authentication of the customer on the digital plat- form has become an inevitable control. In Digital Verification processes, recognition face services developed by Turk- cell engineers, STT (speech to text) services that enable voice confirmation from the custom- er and OCR (Optical Charac- ter Recognition) services that enable high accuracy reading of ID card information are used. The Turkcell Digital Verification application, which brings to- gether different services and competences, can be quick- ly IOS and Android platforms with SDK software. integrated into 2023, Turkcell In March achieved a high score in the NIST FRVT 1:1 (Face Recogni- tion Vendor Test) test, the only globally recognised test in the field of face verification, with its in-house developed one-to- one face verification algorithm, thus proving that it meets the accuracy rates defined in tel- ecommunications and banking legislation. Artificial intelligence- based recommendation engine At the point of understanding and meeting the needs of our customers, we benefit from the recommendation engines infra- structure developed by Turkcell engineers to increase the per- sonalised user experience in our applications and commu- nication channels we provide to our customers. In fizy and TV+ applications, which are person- alised with artificial intelligence support, we bring together content such as recommenda- tions, product similarities and personalised product lists with our customers.müşterilerimizle buluşturuyoruz. Digital Security and Wellbeing We aim to create an unprecedented experience for our customers with the technologies and products that we continuously increase our diversity in parallel with developing technologies and stakeholder expectations. Two important components of this experi- ence are digital security and well-be- ing, which are manifested in two main areas of our operations: The first is the management of cyber security and information privacy risks in our infra- structure, technology, products and services, and the other is the cyber se- curity and digital well-being services we offer to our customers. During the reporting period, there was no data breach or personal data (PII) privacy violation due to cyber security vulnerability, and no legal sanctions or fines were imposed on the company in this regard. With the spread of information tech- nologies and digital services, cyber security risks have started to take an important place in our lives. With the pandemic process, the importance of cyber security activities has increased even more due to the widespread use of remote working and education in Türkiye as in the whole world, the use of IoT services and devices, ransomware attacks, and the increase in cloud ser- vices and customers. Cybersecurity is an important com- ponent of Turkcell's business strategy. Cyber security and data privacy risks, which are assessed in 11 different pro- files within the scope of corporate risk management, are monitored in the re- alisation of activities and operations for all strategic business focuses. Every service that is implemented recognises cyber security as a component among its outputs. Cyber security related risks are managed in RISK and RESK com- mittees according to their priority. Cyber security processes across op- erations are managed in accordance with the principles regulated by 10 different corporate policies, includ- ing Information Security Management Systems Policy, Information Security Organisation Policy, Information Se- curity Incident and Vulnerability Man- agement Policy, Information Security Cryptology Policy, Information Securi- ty Access Policy, Information Security Operating Policy, Information Security Communication Policy, Information Se- curity System Policy and Information Security Business Management Poli- cy. In order to ensure the reliability of these processes, Turkcell obtained the ISO 27001 Information Security System Standard certificate in 2008, becoming the first telecom operator in Türkiye to hold this certificate. Turkcell also has ISO 27017 Cloud Information Security System Standard. We maintain our cer- tification by improving our information security maturity every year and being audited by independent auditors. implementing While designing and cyber security processes and practic- es, in addition to compliance with the relevant legal regulations, reference is taken from governance principles such as ITIL and COBIT, and good practices such as NIST, CIS, OWASP, CSA, ENISA and MITRE. Legal regulations such as the Presidential Digital Transformation Office Information and Communica- tion Security Guide (BİGR), Personal Data Protection Law (KVKK), Global Data Protection Regulation (GDPR) and ICTA and CMB regulations are includ- ed in the legal compliance portfolio followed in cyber security processes. In addition to being subject to internal audit processes for service and pro- cess control, the activities implemented 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 audit processes. During the reporting period, there was no data breach or personal data (PII) privacy violation due to cyber security vulnerability, and no legal sanctions or fines were imposed on the company in this regard. Privacy and Security In line with its responsible digital operator identity, Turkcell pays utmost attention to the protec- information tion of customer privacy. Customer information privacy activities, which are carried out in compliance with relevant regulations as well as laws such as KVKK and GDPR, are managed within this scope when they cover physical busi- ness processes where personal information is processed beyond cyber security. Our third- party business partners are also re- quested to manage personal data in line with the same princi- ples as Turkcell. Our customers are informed about our policies on the privacy and security of their personal in- formation, and they can contact us through our complaint chan- nels if they have any doubts or problems. 􀎲 Turkcell’s privacy and security policies are available on our corporate website. 142 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 143 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Three main strategic focuses are followed in our Cyber Security activities: Improving cyber resilience through innovative new tech- investments, existing nology improvements, technology standards, dig- processes, italisation, communication, awareness, training, compe- tence development activities carried out within the scope of the services provided by Turk- cell and Group companies Developing thef local ecosys- tem and integration through localisation in existing and new products Increasing the revenues of cyber security products and services in individual, corpo- rate and wholesale customer portfolios The Cyber Security Directorate is re- sponsible for cyber security manage- ment throughout the company. The Directorate is one of the largest cyber security teams in Türkiye with over 160 expert personnel. The work carried out and the results obtained are present- ed to senior management and relevant units at periodic meetings held by vari- ous committees and teams. The month- ly CXO security managers meeting, the annual ISO 27001 review meeting, and the Cyber Security Meeting, which brings together technology Assistant General Managers and Directors every two months and quarterly, are the meet- ings where information is shared in this area. The Security Operations Centre, which operates 24/7 within the Cyber Security Directorate, monitors attacks 24/7 with IoT and forensic laboratories and takes threats. measures against potential Our Bozok Threat Intelligence platform, which is integrated with the Security Operations Centre, provides informa- tion on threats and risks to our custom- ers as a cyber security protection layer. While offering penetration testing and vulnerability analysis services to our customers with new tools and methods in order to identify the cyber security needs of institutions, we carry out secu- rity vulnerability scans and penetration testing studies of critical institutions. We enrich Turkcell's Cyber Securi- ty product and service portfolio with cloud-based security solutions running in Turkcell data centres. As Turkcell, we contribute to ensuring security for mo- bile service providers and the organisa- tions and individuals who benefit from mobility services with our investments in cyber security and data privacy and the services we offer. With our digital security service, we pre- vent thousands of our active customers from accessing these malicious ad- dresses in order to protect them against threats such as phishing, malware, etc., while informing users about past pass- word leaks and warning them via SMS and e-mail against new password hacking attempts. All our corporate and individual mobile customers can benefit from this service, which we offer to pre- vent fraud or to protect the device used and personal data. As a member of the Turkish Cyber Se- curity Cluster community, we continue to collaborate by bringing together the public, private sector, and academia by contributing to the development of the domestic and national cyber security increasing cyber security ecosystem, awareness and collaboration. Numerous practices are implemented to improve the level of cybersecurity awareness, experience and knowl- edge of employees. For example, every year all Group employees receive cy- ber security training in technical and non-technical areas, tailored to differ- ent employee groups. The T.Life Cyber Star application, Security Reflex feed- back, Security Champion scorecard points awarded to technology teams that make a positive contribution in the area of security, and Security Scorecard points based on cyber security per- formance are performance incentive practices for employees. On the other hand, award-winning cy- ber security activities such as Unibounty, Bugbounty and CTF are also conduct- ed with the participation of different groups such as Turkcell employees, se- curity experts and university students. Turkcell's cyber security experts partic- ipate as speakers and trainers in many national and international conferenc- es and events within their areas of expertise. Digital Wellbeing A certain level of digital literacy and understanding of privacy and confidentiality is a prerequi- site for protection against security risks and the actions of malicious people when using the Internet. However, some users who lack digital literacy or are in vulnerable situations (such as children, elder- ly users) may be more vulnerable in this context. To address this, we are first creating various security and content filters under paren- tal control to keep children and young people away from inap- propriate content on our services. In addition, we aim to enhance the safe internet experience of our stakeholders through education- al activities aimed at increasing their knowledge and awareness. In this context, during the reporting period we created game content to increase children's information awareness. We aim for our Galakcell educa- tional game content, which we launched in August 2023, to serve as a guide for children on the risks of the digital world and digital footprint awareness. On the other hand, our company has actively participated in the standardisation studies (IEEE SA P2089) developed within IEEE SA on age-appropriate digital services, and has also initi- ated studies on the suitability of its products and services in this sense. Digital Business Services (DBS) Digital Business Services combines Turk- cell's telecom service provider strategy with its "Digital Transformation Business Partner" strategy for corporate custom- ers. With Digital Business Services, we are addressing the needs of all sectors and developing our business model to deliver value-added projects with many horizontal and vertical solutions in health, education, manufacturing, retail, transportation, logistics, finance, ener- gy and similar sectors. We contribute to Türkiye's digital economy by providing organisations with end-to-end digital solutions from a single source. In this way, we deliver projects with high val- ue propositions that deliver cost savings and revenue growth. In line with our vision, we have imple- mented and continue to manage more than 3,400 managed services and sys- tems integration projects tailored to the needs of our corporate customers. In these projects, we analyse the needs of our customers from all sectors, ad- dress the right solution and implement many solutions and services such as fixed access, network, cyber security, data centre and cloud services, sys- tems integration and managed servic- es, IoT, big data, business applications, new generation technologies such as artificial intelligence and many similar solutions and services in accordance with our customers' business process- es with our project management team. In delivering our projects, we leverage our internal resources, products, pro- cesses and technologies, as well as the strength of our ecosystem business partners, who we have identified as experts in their fields, to deliver end-to- end, high value projects from a single source. We have a strong mobile network, an end-to-end fiber infrastructure of 61.8 thousand km, which enables us to pro- vide high quality services, and a total of 8 data centres, 4 of which are new generation data centres with Tier 3 Fa- cility, Design and Operation Sustaina- bility certificates from Uptime Institute, an international certification body. With Turkcell Cloud Services, we posi- tion the entire information technology infrastructure of companies in our data centres, providing a more flexible infra- structure while reducing costs. In the field of cyber security, we are the end-to-end cyber security service provider for institutions thanks to our expert staff, our current technology investments and the diplomacy and processes we have established with the defence groups we are a member of at home and abroad, which are the 3 basic components of cyber security against the ever-changing, developing and increasing cyber threats. Our Big Data and Artificial Intelligence services provide meaningful and pre- dictive analysis based on dynamic and real data. We enable our customers to increase their profitability and effi- ciency by facilitating their strategic de- cision-making processes with our big data services, which we offer to many sectors, especially manufacturing, re- tail, e-commerce, shopping malls, fuel, and finance. In the health sector, considering the hospitals we manage as an integrator that provides and operates all the re- quired technological solutions in city hospitals, we are a leader in the pub- lic-private partnership (PPP) market with 8 hospitals and a capacity of over 10,000 beds. We operate in a total of 8 city hospitals in Yozgat, Adana, Eskişe- hir, Elazığ, Bursa, İstanbul-Başakşehir, Tekirdağ and Gaziantep. 144 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 145 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell and Mobility At Turkcell, we are closely following developments in mobility and assess- ing the impact of these trends - autonomous driving, connectivity, electric vehicles and shared transport - on the way we do business and the life- styles of our customers. Advances in mobility are expected to have a broad impact, from the companies in the industry to the structure of cities and the roads used. In addition, we expect the concept of mobility to lead to sig- nificant changes in the automotive and transportation sectors, as well as in the technology sector. As Turkcell, we continue to monitor these devel- opments and take the necessary steps to provide the best service to our customers. With the rapid development of mobility and technology trends, our country is entering a new era. In this sense, the transport sector is focusing on the production of new generation technologies and working on flexible and innovative solutions. The Togg project, in which Turkcell is one of the share- holders, has taken an important step in the field of mobility by designing an electric vehicle as Türkiye's first domestic car. Today, seeing Togg on the roads shows that this project has been successfully implemented. Türkiye's participation in the electric vehicle competition and its ability to effectively use its own resources is a great advantage for our country. Togg is an im- portant milestone in Türkiye's mobility efforts. Our mobility solutions, which we offer as part of Turkcell's Digital Busi- ness Services (DBS), help us provide the most advanced vehicle and fleet technologies for vehicle and employee safety. Mass production of Togg's C-segment SUV, developed by Türkiye's Automobile Initiative Group, in which Turkcell holds a 23% stake, will start in 2022. On the other hand, Togg continues to finalise the necessary collaborations for the mobility eco- system to be created around the electric car, which it defines as a "smart device". In this context, following the establishment of a strategic collab- oration between our techfin company Paycell and Togg to integrate in- novative payment systems and digital financial solutions into the mobility ecosystem, we have started to bring Togg users together with music in 2023 through Togg's collaboration with fizy, our digital music platform. The entire technology infrastructure of these hospitals, from hardware to software, from system to operation, is managed by Turkcell. For the first time in Gaziantep City Hospital, which start- ed operations in October 2023, Turkcell DBS teams, the leading integrator in the sector, carried out the installation of all end-to-end services with their own resources. In addition, many initiatives continue to be implemented by Turk- cell engineers in our hospitals. One of the most important of these initiatives is a comprehensive paperless hos- pital project at Başakşehir Çam and Sakura City Hospital in Istanbul, which has made significant progress in com- pletely eliminating paper and digitising all systems. As a result of this initiative, the hospital was awarded the HIMSS 6 certificate by HIMSS, the world's lead- ing digital certification organisation in healthcare, following a rigorous audit and assessment. As a result, Başakşehir Çam and Sakura City Hospitals have been awarded the HIMSS EMRAM Lev- el 6 certificate according to the 2023 criteria and have gained the title of "the world's largest healthcare facility". In addition, Eskişehir and Bursa Municipal Hospitals were also entitled to receive the HIMSS 6 certificate in the audit car- ried out by the inspection teams as- signed by HIMSS in October 2023 and November 2023, which included rep- resentatives from different regions of Europe. On the other hand, we continue to expand our ecosystem qualitatively by working with our subcontractors, co-developers and distribution part- ners in our business partnership eco- system with a win-win focus. In addi- tion, through our business partnerships with global suppliers, we are expand- ing the solution sets we offer our cus- tomers every day in terms of technical competence and project diversity. Within the framework of RPA (Robot- ic Process Automation) technology, installation and infrastructure works have been carried out within Turkcell and 402 business processes have been implemented using RPA to automate manual processes. Türkiye's New Generation Payment Platform: Paycell techfin Paycell, which is gaining ground every day with its easy-to-use and secure payment solutions, stands out as a technology-oriented that manages all its processes with end- to-end automated structures, thanks to its modern and powerful techno- logical infrastructure. The agile work- ing model, adopted to make a differ- ence in the fast-changing dynamics of the techfin ecosystem, manages both business processes more efficiently and adds value to the products and services offered. This approach al- lows for quick and easy adaptation to advanced technologies. Paycell provides value-added data analytics models not only on the infrastructure side, but also in analytical solutions to provide better and sustainable ser- vice to both individual consumers and business partners. Wiyo: Insurance for Mobile Life Turkcell Dijital Sigorta A.Ş. established in line with Turkcell's digital financial services strategy, started its opera- tions under the Wiyo brand with the vision of becoming the "insurer of mo- bile life". Wiyo aims to understand and meet all kinds of mobile life needs of its customers in order to provide innova- tive solutions to users in the insurance sector by bringing technology and insurance together. At the same time, its deep knowledge of technology and mobility enables it to offer com- prehensive insurance solutions that adapt to the ever-changing lifestyles of its customers. Wiyo, which takes its name from the combination of the words "with you" and carries the promise of being with its customers in its name, combines its desire to be the first brand that comes to mind in the field of device protec- tion insurance with its passion for cre- ating superior customer satisfaction, and is moving forward with a focus on increasing the added value it creates every day by using big data and dif- ferent technologies in its processes. 146 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 147 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Social Capital Outputs 38.0 Million Mobile Customers 3.1 Million Fixed Customers 12 min. Response Time Performance Indicator Short Term Target Medium Term Target Long Term Target 2022 Performance 2023 Performance Current Status Towards Target Covering the whole of Türkiye with social projects and accessibility studies Increasing the number of start-ups working with the cooperation model 200,000 250,000 300,000 70,000 190,000 30 40 - 36 36 Positive development Negative direction No Change the public, public dealers, non-govern- mental organizations, universities and the media. In this context, our policies that we share publicly consist of the headings and main ideas summarised below: Our Brand Turkcell, which started its digital opera- tor journey as one of Türkiye's strongest brands, continues to be a brand that always puts its customers at the center by implementing an ecosystem-based brand transformation and enhancing its strength by investing in technology. With 30 years of strong experience, the Turkcell brand aims to touch every aspect of its customers' lives by com- bining its superior technological infra- structure and quality with our distinc- tive products and services, as befits its leadership in the new world. We offer our customers a world that is easier, more fun, more secure, more privileged, sensible, people and environment ori- ented, while at the same time providing them with the difference of “excellent service” with personalised, consistent, and simple experiences by leveraging our technological superiority. With the responsibility of a leading brand, we lead all companies that strive to achieve our country's econom- ic goals, and we stand by companies and small businesses with corporate businesses. By constantly researching global hardware and software technology trends and equivalents, we enhance the capacity and durability of our superior digital services and the Turkcell brand with new features that make our customers' lives easier Brand and Responsibility We strive to eliminate the digital barri- ers and increase access in every field we operate in, at every point we touch in society, and we continue to support the development of technology and communication. We are glad to note that our products and services across various fields are growing the Turk- cell brand without losing the focus on technology. Turkcell's approach is based on its re- sponsibility its customers, employees, suppliers, shareholders, towards Human Rights Policy: We are committed to fulfill our duties by adopting an attitude em- bracing fundamental rights and freedoms, contributing to the creation of a decent work environment honoring human dignity, and ensuring compli- ance with national and inter- national legislation on work life. Environmental Policy: Turk- cell aims to contribute to the long- economy and meet term environmental sustain- ability by raising awareness of circular economy, with an awareness ofthe environ- throughout impact mental the value chain. Customer Satisfaction Pol- icy: We resolve customer requests in an open, trans- parent, swift and custom- er-orientated manner. Quality Policy: We continu- ously improve our processes and implement an effective Quality Management System. Anti-Bribery and Anti-Cor- ruption Policy: We consider it a necessity to carry out our activities fairly, honestly and in accordance with legal and ethical codes. Information Security Policy: At Turkcell, we ensure the security of information in accordance with business needs, laws and legal regulations. Donation Policy: Through our Company and its subsidiaries, with the authorization from the Board of Directors and within the annual donation limit de- termined at the General As- sembly meeting; donations are made to organizations, asso- ciations and foundations that carry out projects related to education, sports, culture and arts, environment, health, res- toration of historical artifacts, humanitarian aid, involving the disabled in society, entre- preneurship and technology, and similar publicly beneficial activities. 􀎲 As Türkiye's leading telecom company, you may access the policies we implement to aim for the highest standards at turkcell.com.tr. 148 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 149 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Our Brand Communication Activities in 2023 At the beginning of 2023, after the dis- asters that left our country in deep mourning and changed all our com- munication plans, we promised to im- plement many projects with our love for our country as Türkiye's Turkcell and our sensitive brand behaviour model. By identifying the necessary areas for the reconstruction of the disaster area, we have implemented and communicated our Turkcell Gönül Bağı projects in many areas, from education to employment, from starting commercial businesses after the earthquake to using solar en- ergy. In Gönül Bağı projects, we com- municated issues such as the opening of the Hatay Call Centre, Gönül Bağı Passage, employment mobilisation, academy training, open businesses, Fi- nancell solar energy power plant loan with commercial films, while we carried out integrated campaign management with tent city events and social media communication. In the same period, we launched our Fizy, Pasaj, TV+, Paycell and Lifebox products with the "Türki- ye's Couples" advertising platform. With these commercials, we tried to trans- form the Turkcell brand, which has a strong recognition as a telecom oper- ator, into a digital ecosystem brand. In this advertising platform, Melis Sezen and Onur Tuna portrayed the couples with different characters in life. We explained Turkcell's mobile/fixed tariffs and offers to its customers by leveraging our strengths in technolo- gy and using comedy elements. Doğu Demirkol was the main character in our advertisements in this area. We continued to be among the repu- table companies with our commercial film accompanying the enthusiasm of the 100th anniversary of our Republic and we were shared millions of times with our slogan produced for digital sharing. As Turkcell prepares for its 30th anniver- sary, we will continue to produce ad- vertisements that focus on our custom- ers, embrace the whole country, touch emotions and are much talked about. Our Strong Sales Channels and Services Our Sales Channel Structure As Türkiye's leading communications and technology company, we continue to bring our customers together with all the tariffs, campaigns, devices, servic- es and solutions we offer. We continue to provide customer-oriented servic- es and solutions through our Turkcell stores, alternative sales channels, on- line channel, Turkcell mobile applica- tion, Pasaj application, fiber and DSL solution centres and corporate sales channels. We bring our integrated Turkcell solu- tions to our customers in all our sales channels and strive to provide the same high quality service at every point. Our Retail Channel With our 1,104 Turkcell Stores and 3,952 digital points of sale, where we have completed the transformation of our retail channel into a digital experience chain, we are present at every point our customers need with the superior Turkcell service quality. In order to increase our market share and customer loyalty with our Smart Offer Management model focusing on existing and new customer acquisition, we continue to provide our customers with content-rich offers tailored to their needs and at different price levels. We continue to run our regular monthly customer campaigns with competitive device offers under titles such as "Yel- low Days, Stretching Limits, Star Prod- uct of the Month". In this way, we ensure that we keep our customer traffic at the highest level by presenting our cus- tomers advantageous offers across many product groups at different times. After the earthquakes on February 6, 2023, 20 Turkcell Store Containers and 38 DSN Store Containers were sent to the disaster area. Our container stores are still in operation in 5 provinces of the earthquake zone. Neces- sary plans have been made to provide spare containers in case of another possible disaster. Employee Experience in Sales Channels The Store Employee Certificate Programme, which was implemented with the aim of positioning employees with the same qualification and knowl- edge level in Turkcell stores and providing excellent customer experience, continued in 2023 with a 99% success rate. The additional benefits provided to our Certified Ambassadors according to the Store Employee Satisfaction Surveys also continued. Training was provided to all channels on 91 topics for focus, business and personal development. We issued Certificates of Expertise to 740 individuals who successfully completed the Financell Certificate Programme, which enhances our Am- bassadors' knowledge of our financial products. This brings the total num- ber of employees with Advanced Financell Certificates to 12,449. The award-winning BEST Knowledge Level Assessment exams were launched for Turkcell Store employees. The winner of each of the 15 regions with the highest scores was awarded a Paycell prize and cultural trips with accommodation. The Super Stars Training Programme, which contributes to retail, digital transformation, personal competence and management awareness of employees, is conducted as a one-week, 42-hour in-person training with a leading university in Türkiye. The programme was voluntarily attended by 100 employees with 2 years of experience and the best scores in BEST exams. 䩉Support payments were made to employees in the State of Emergency provinces. 䩉Additional data packages were provided for all employees in the rele- vant provinces. 䩉Earthquake-related health expenses were included in the scope of the health policy, enabling services to be received from all hospitals. 䩉Life insurance procedures were initiated for the deceased personnel. 䩉Aid packages were sent to a total of 1,050 employees and company owners in 5 provinces during Ramadan and Eid al-Adha. 䩉Psychological First Aid and Psychosocial Support trainings were given to employees directly and indirectly affected by the earthquake. 150 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 151 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES By transforming our Turk- cell stores into technology stores and as an ecosys- tem brand, we continue to open new categories where we can meet all the electronic needs of our customers. With the high instalment ad- vantage of up to 36 months in our Turkcell stores, we offer our customers all categories of products such as small home care appliances, personal products, accessories, food preparation sets and e-games with Turkcell assurance. In ad- dition, we are now able to of- fer our prepaid Turkcell and non-Turkcell customers our ad- vantageous cash offers, which were previously only available to Turkcell postpaid customers. Starting with air conditioners and TV products in 2021, our "Sales from Catalogue" model, in which large-volume prod- ucts that our customers se- lect from digital catalogues in Turkcell stores are sold without stock, delivered and installed directly to the customer, con- tinues to grow without slowing down with new product cate- gories such as the PC category from November 2022 and white goods and small home appli- ances from January 2023. investments In line with our retail channel deepening strat- egy, we continue to shape our in this direction by focusing on traf- communication, fic, sales, supply, loyalty, blending physical and digital experiences and delivery. Continuing the transformation of technology and experience in our stores, in May 2022, we transformed 103 stores, at least 1 in every province of Türkiye and more than 1 in major cities, into the Disabled-Friendly Store concept. We enabled all our hearing-impaired, visually im- paired and physically disabled customers to receive equal and accessible service with our in- store applications. With We strive to provide our customers with the same high quality service in all our sales channels, and we continue to make a difference in our service and sales processes with our integrated channel experience solutions. Since 2021, with the "Customer Contact Journey Platform", we have been following the inte- grated experience in terms of service by showing the store and call center employees the channel in which our customers have made transactions. Since all our channel employees see this journey before serving our customers, they have informa- tion about our customers' pre- vious experiences, which con- tributes positively to customer satisfaction.katkı sağlıyor. Friendly Store in 103 Disabled- 79 provinces of Türkiye, we enabled all our hearing- impaired, visually impaired and physically disabled customers to receive equal and accessible service from our in-store applications. In line with our sustainable environmental approach, the "Refurbished Device Sales Campaign", which we started as of July 2021, continues at full speed in order to bring the de- vices that continue their life cycle back into the economy. Thanks to the refurbished devices we offer to our customers with cash and contracted offers through all Turkcell stores and the online channel, we support the reduction of unregistered device sales and device imports, while also reducing the environmental impact of the device trade. In 2023, we collected a total of 19,500 old devices from our customers, 9,000 through the cash collection scheme at Turkcell stores and Pasaj and 10,500 through the "Bring Old, Take New" scheme, and sold 1,800 refurbished devices. We expect this trade, which we have started only in the smartphone category at the moment, to grow in different categories in the future, supported by the regulations to be published by the relevant institutions, thus promot- ing the understanding of sustainability in all categories of the technology world. Training on energy efficiency, energy saving and sustainability in Turkcell stores has been developed with the support of Turkcell Academy and shared with all Ambassadors. Projects have been implemented to reduce energy consumption in the stores. The backlighting of LCD screens in stores was reduced by 30%, resulting in energy savings of 25%. In addition, air con- ditioning methods were discussed and measures such as correct place- ment, appropriate temperature settings, etc. were determined. In 2023, efforts on reducing the ecological footprint and implementing alternative energy solutions continued. We continue to contribute to education by recycling technical waste through our another sustainability project, the "Recycle to Education" campaign. As part of the "Recycle to Education" project, e-waste (mobile phones, computers, tablets and accessories, etc.) brought to the recycling bins in Turkcell stores are sent for recycling in cooperation with the Infor- matics Industry Association (TÜBİSAD), an authorised organisation in this field. All proceeds from the recycling are donated to the Educational Vol- unteers Foundation of Türkiye (TEGV) to be used for the qualified education of our children. From November 2019, when the project was launched, until the end of 2023, Turkcell has recycled approximately 34 tonnes of electron- ic waste, including 4.2 tonnes last year. All proceeds from this project were donated to TEGV, contributing to the qualified education of more than 40 children. We are improving the procurement processes of all Turkcell channels thanks to our "Digital B2B Procurement Platform", which can supply multiple channels with a wider range of prod- ucts and categories and a multi-buy- er-seller structure. We continue to provide customised guidance to our merchants according to their orders and sales by speeding up our process- es and improving the experience with our content management team Currently, the Turkcell portal offers products from 30,000 120 brands to Turkcell dealers with 20active suppliers. 􀎲 he delivery of devices pur- chased through turkcell.com.tr in the physical channel via "Delivery Point" and the delivery of SIM card products such as Postpaid Number Transfer, Prepaid Number Transfer, Postpaid New Line, Prepaid New Line, which are pre-applied turkcell.com.tr, via "In Store Delivery with a Click ", have been carried out in our stores since 2019. through Thanks to the “In Store Delivery with a Click ” service, our customers, who do not have to wait at home for their par- cel to be delivered to them, can get their parcel faster through our stores, while at the same time they can satisfy their related or other product and ser- vice needs, if any, in our stores. 152 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 153 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Our Alternative Sales Channel With a sales volume of 24 million units, our alternative sales channel continues to be present in telesales, chains, bank channels and hypermarkets, and we have turned every channel that touch- es the customer into a sales channel. Our alternative sales channel has be- come the main sales channel for our digital services, with 3.2 million units of sales of TV+, lifebox and fizy products, using analytical models and artificial intelligence and big data. With the TV+, lifebox, fizy collaborations we made in alternative channels, we ensured brand awareness of our DSS products and increased our sales by directing our customers to digital channels. We continued to drive awareness and sales of our DSS products through the positioning of scratch cards in chain stores. We also achieved mass DSS sales through bundle campaigns. Our Digital Sales Channels and Services With our focus on digitalisation, our online sales channel continued to lead the Turkish e-commerce sector in 2023. In Q4 2023, the monthly average num- ber of visits to our website and Turkcell mobile app reached 32.6 million and 25 million, respectively. The number of top-ups made through our digi- tal channels increased by 130% com- pared to 89% growth in the previous year. The ratio of postpaid subscribers who switched tariffs via digital chan- nels increased by 11 percentage points year-on-year to 34%, while the ratio of prepaid subscribers who top-up their TRY/packages increased by 9 per- centage points year-on-year to 49%. In addition, new customer acquisition through digital channels increased by 123%. In line with our channel growth strategy, we continue to focus on com- munication, traffic, sales, delivery and loyalty, and to invest accordingly. We have implemented all the technical im- experience. By this way, our subscrib- ers can easily change their package and sign new contracts with just a few clicks. At the point of understanding the needs of our customers, we con- tinue to design campaign setups for Turkcell products in both postpaid and prepaid new facility and customer number portability categories in order to offer more internet and more ad- vantageous price services. provements we have made to improve the processes in this area by working with Turkcell's expert and dynamic In- formation and Communication Tech- nologies (ICT) team. Under the guid- ance of our Artificial Intelligence and Data Analytics teams, we have imple- mented our sales setups that empha- sise the importance of personalisation. By adopting a creative, lifelike, sincere, value-oriented and intimate approach to communication, we have enabled our customers to spend more time with Turkcell. As part of our digital transfor- mation project, we have redesigned the screens by making them very con- cise and focusing on perfecting the By the end of 2023, new customer acquisition through digital channels increased by 123% The number of top-ups made through our digital channels increased by 130% With the goal of "safe online shopping", Turkcell launched Turkcell Pasaj, Türkiye's electronic marketplace platform, in December 2020 in cooper- ation with Türkiye's largest and most reliable suppliers. At Turkcell Pasaj, where thousands of products ranging from phones to vacuum cleaners, televisions to computers, white goods to mother and baby products are available, users are offered fast delivery and flexible payment options, as well as easy cancellation and return rights. Products purchased from Turk- cell Pasaj are delivered to customers in 100% environmentally friendly and recyclable boxes. At the same time, by offering a real online/offline shop- ping experience together, customers are offered the opportunity to receive the products they purchase on this platform from the Turkcell store. Adding a new one to our range of discount options and different payment alternatives suitable for everyone at Turkcell Pasaj, from which all opera- tors’ customers can benefit, the shopping loan offered by Turkcell Finans- man A.Ş. was launched in the first quarter of 2023 by making it available to non-Turkcell customers. We also continue to take steps to take our service level one step further with Pasaj Blog and Pasaj Gaming. In Turkcell Pasaj world, we know our customers and recommend the right products and offers to our customers by predicting their next step with arti- ficial intelligence technology. With Pasaj Personalised Offer World, we offer our customers instant personalised campaigns according to their interests. We continue to implement technology developments that provide an inte- grated channel experience for our customers to continue their uninterrupt- ed shopping journey across all channels. Today, our customers can receive a product purchased on Pasaj in Turkcell stores, reserve stock from a store of their choice by viewing the products on Turkcell Pasaj, or purchase the product of their choice on Pasaj screens in stores and have it delivered to their address. During the period of the earthquake, we ensured that the products in Turk- cell Pasaj were purchased by customers and delivered to those in need without any profit within the framework of the "mobilization" call by the Ministry of Trade. In addition, with the mobilization we started as Turkcell Pasaj from the first period of the earthquake, we delivered various prod- ucts such as heaters, sanitary pads, coats to those in need with trucks co- ordinated by AFAD. We also did not forget our furry friends in the region and sent thousands of pieces of cat and dog food to the earthquake zone. With 'Gönül Bağı Pasajı', one of the Gönül Bağı projects implemented by Turkcell to improve the disaster area after the Kahramanmaraş earth- quakes, we reached thousands of households with local products rang- ing from food, plants and decorations to jewellery and accessories. With Gönül Bağı Pasajı, we continued to reach out to women in the disaster area. We continue to support women producers by bringing together earth- quake-affected women entrepreneurs who want to participate in the Pasaj via showcasing the products produced by the women by exhibiting their craftsmanship with consumers through the Women Entrepreneurs As- sociation of Türkiye (KAGIDER). In addition, together with our business partners who contribute to our sus- tainability goal, we continue to make the process easier for our customers by offering a "door-to-door appraisal" service in certain regions, as well as receiving used equipment from our customers by freight and courier. Turkcell Super App In 2022, we renewed the design of Turk- cell mobile application, and in 2023, we transformed it into an ecosystem gate- way that brings together sub-brands and award-winning digital services in the Turkcell ecosystem with users with the Super App model. In 2023, it was downloaded 29 million times, and our customers logged in to Turkcell mobile application 162 million times a month on average in the last 1 year and car- ried out their transactions through the application. In the new version of the Turkcell mobile application, a more sales-oriented experience is offered on the Pasaj side with areas such as cat- egory structure, Recommended for You and Deal of the Day, while on the op- erator transactions side, our customers can view their remaining usage, review and pay their bills, access packages, services and campaigns suitable for their usage, and switch between tariffs instantly. In this way, our users can now easily discover and subscribe to Turk- cell, Superonline and Pasaj, as well as many brands and services in the Turk- cell ecosystem, without downloading the application to their phones. On the redesigned stores screen, they can ac- cess the nearest store information, as well as review store campaigns and personalised device offers. Our users have the opportunity to discover and subscribe to TV+'s content with a single mobile application through the ecosys- tem entrance gate, apply for Güven- cell's products, benefit from brand col- laborations at the Opportunities Gate and review corporate solutions at İşTurkcell. In addition, our customers can add fixed internet and all other Turkcell lines from the "Add Account" step and man- age them through a single application. Nearly 475 thousand Superonline cus- tomers perform an average of 8.9 mil- lion transactions per month via Turkcell mobile application. 154 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 155 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Our Tariffs and Packages Our Postpaid Packages Our intelligent offer management mod- el, based on artificial intelligence, en- ables us to provide our customers with content rich offers that meet their needs at different price and content levels. We also ensure that our customers see the same offers across all our chan- nels and can easily take advantage of them. At a time when cost optimisation is becoming increasingly important for companies, we have achieved our goal of making digital channels, which offer advantages in terms of both cost and customer experience, the primary chan- nel through which customers can carry out many transactions, such as re-con- tracting, upgrading and buying addi- tional packages, without intermediaries. Using our analytical models to increase the share of the digital channel, we designed personalised campaigns, discounts and gifts specifically for this channel. While implementing these ac- tions, we communicated with our cus- tomers at the right time and developed user-friendly designs that allow our customers to make their transactions through the digital channel much faster and easier. Throughout 2023, we continued to pro- vide our customers with offers with dif- ferent content and price levels, in line with rapidly changing market condi- tions and customer usage habits. We launched main packages and addition- al packages with high content for high data usage. By 2023, we have advanced our digi- talisation vision, which is at the core of our corporate strategy, and created a channel that creates value for our po- tential customers. Our decisive steps to digitise our business processes and cus- tomer interactions were supported by extensive innovations on our platform. With these innovations, we increased our channel share of new postpaid sub- scriber acquisition from 5.9% in 2022 to 12% in 2023, strengthening our position in the market. At the same time, with our campaigns for new postpaid sub- scribers through our digital channels, we exceeded our targets by increasing the number of applications by 82% and customer acquisition growth by 123% in 2023. We have used an advanced analytics model to analyse the behaviour pat- terns of our customers who want to convert their prepaid lines to postpaid in detail, in order to offer them the most suitable offers for their specific con- sumption habits and needs. As a re- sult of these analyses, we have further personalised the offer management process for our customers. We also re- duced the number of transaction steps by 66% to improve the customer expe- rience. This new sales process led to a significant increase in customer satis- faction and results that clearly demon- strate the success of our digital market- ing approach. Our Prepaid Packages We constantly monitor the usage hab- its and needs of our prepaid customers through big data and market research, and expand and regularly update our prepaid package alternatives accord- ingly. In addition to monthly packages, we meet the short or long term needs of our customers with our daily, weekly and 3-6-12 month solutions. Based on customer feedback, we are continuing our practice of adapting our telecom- munications services to better meet customer needs and demands by offer- ing new high data packages and addi- tional social media-oriented packages to meet growing data needs. At the same time, we are using our artificial-in- telligence-based analytics models to deliver our packages tailored to our customers' changing needs through the right channel at the right time. We also focus on offering solutions and campaigns to meet our customers' tel- ecommunications needs in the digital world of consumption. We continued to ensure the loyalty of our customers us- ing the Turkcell application to the chan- nel with digital channel-specific pack- ages, comparability of all packages, a world full of gifts and continuous renew- al. The segmentation structure we have established according to the channel usage habits of our digital customers allows us to create customer-specific campaigns, which helps us to increase both the number of customers who are new to the channel and the num- ber of customers who use the channel regularly. By tracking digital footprints and personalising campaigns, we are also increasing the top-up amounts of our customers. We contribute to digital transformation, especially by attracting our customers who have never used digital channels to the channel with au- tomated short-term opportunities. In parallel with Turkcell's digital transfor- mation strategy, we started to offer our prepaid line services through our digital platforms. With these developments, we have made significant progress in our digital transformation process and provided value-added interactions to our customers. Corporate Packages We continued to develop specializsed solutions to meet the growing inter- net and communication needs of our corporate customers with our innova- tive offers. Our diversified campaigns covered a wide range from popular social media and instant messaging applications to internal communica- tion benefits, enhancing the benefits of being a Turkcell customer. We con- tinued to make a difference with our unique offers specially designed for new customers, merchant and the SME segment. Considering the dynamics of the local market, we offered special campaigns for specific provinces. By focusing on the lifecycle of our custom- ers at Turkcell with the power of ana- lytical modelling, we immediately met their needs with the most appropriate offers. As a result, we further strength- ened our value for money perception among new and existing customers. We exceeded our targets by increasing the number of applications by acquisition growth by 82% and customer 123% in 2023. 156 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 157 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES We Focused on Valuable Customer Acquisition with Turkcell Fiber and VDSL Speed Festival Considering the increasing need for speed in homes, we prioritised our Light Speed campaigns in Turkcell Fiber in order to bring Turkcell Fiber speed and quality to more homes. As a pioneer in the market in high speed campaigns, we continued to offer 1000 Mbps speeds to our customers. In this way, we doubled the number of customers using speeds of 100 Mbps and above, and more than tripled the number of customers using 1000 Mbps. Turkcell Wi-Fi 6 Technology We bring our customers together with the most advanced technologies in internet. Wi-Fi 6 technology, home which increases coverage within the home, was introduced to Turkcell Su- peronline customers for the first time in Türkiye in 2022, and we started to offer this technology to all fiber homes in 2023. We are currently testing the latest technologies such as Wi-Fi 6E, an ad- vanced technology of Wi-Fi 6, which we call "the technology that breaks down walls". In this way, we are work- ing to make Türkiye one of the leading countries in digital transformation and access to information. As of the end of 2023, we offer Wi-Fi 6 technology to 41% of our fiber cus- tomers. As with Wi-Fi 6 technology, we also maintain our leadership with Wi-Fi 7 technology. In this context, we conducted Wi-Fi 7 product trials for the first time in Türkiye and announced it with a press launch. In this manner, we are striving to position Türkiye as one of the leading countries in digital transfor- mation and access to information. Innovation Flex Package Turkcell Gold Membership We were the first in the industry to launch the Gold Membership World for prepaid customers. We have created a world full of privileges based on the understanding of prepaid customers who operate on a limited budget and feel relatively more distant from mem- bership worlds compared to postpaid customers. This membership world, which our customers who top up reg- ularly can join, is monitored through the Turkcell application and aims to both encourage customers to purchase bundles and contribute to digital trans- formation. An innovative digital world has been created where customers can track their top-ups and gifts and participate with screens that motivate them to make more top-ups and be- come Gold Members. These screens are designed to make it easy to under- stand the requirements to become a Gold Member and to benefit from priv- ileged gifts once becoming a member. Summer Package We have specially developed the Summer Package concept for our cus- tomers who have seasonal internet needs and who express their wish to "have my internet with me anytime, an- ywhere". This package promises a free and uninterrupted connection to our customers who travel, enjoy holidays or spend time in summer regions dur- ing the summer months. Whether you are by the sea or in the mountains, with the Summer Package, our internet ser- vice is always with our customers and always accessible to them. With this package, we offered our customers the pleasure of staying connected to the digital world even while enjoying the season. With the Flex Package, we adapt to the usage of our customers. Our customers' internet usage needs may change over time. In this direction, we have launched our Flex Package for our customers whose package is not enough, but who do not prefer to change packages or buy additional packages. In the Flex Package, when the package is not enough, our customers automatically switch to the next level and continue their usage at an affordable price level. 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 launched Turkcell Yapboz, the flexible tariff system which allows our customers to shape their package according to their needs, across entire Türkiye and on digital channels. With the billing system based on unit price, we offered this free world, where our customers can increase or decrease content such as GB/SMS/MIN during the month, not only to new customers, but also to customers who want to switch from Prepaid Card to Postpaid. We opened the door to a world where they manage the whole process them- selves by overcoming the fear of bills. Two New Features for Prepaid Customers: Doubling and Extending Focusing on customer insights, we con- tinued to offer our customers two new features that specifically address their needs for non-wastefulness and con- venience. Prepaid customers can pur- chase the ability to double the internet in their package or extend the duration of their package by one week. Thus, we continue to offer a more flexible world to our customers this year by of- fering a GB solution to customers who do not have enough GB and an addi- tional time solution to customers who think that the content of their package is wasted. Superbox GO While maintaining our leadership in the mobile broadband sector, we launched Superbox Go in June 2022 for both postpaid and prepaid custom- ers by positioning the Turkcell brand in our devices. This year, we continued to make Superbox Go special with fea- tures that other devices do not have, such as high quality, device connection up to 32 people and automatic switch- on feature. We explained our product to our customers with different style communication videos and closed the season with ATL communication by advertising it in Turkcell Vadi for the first time outside of BTL communication. Fixed Services We continue to meet the needs of our customers with high-speed internet options, home installation and a wide range of Turkcell Home Internet offers with favourable commitments. We con- tinued our new homepass investments in 2023 to deliver lightning-fast internet to more homes on Turkcell Fiber. We continue to improve our analyt- ical capabilities in order to present offers that are in line with our custom- ers' usage habits and our marketing strategies. By integrating models such as customer promotion and direct- ing to higher speeds with the Turkcell application, we present our offers to customers digitally. We have also initi- ated an end-to-end digital activation experience by launching our online sales process. Concurrently, we have further emphasized digitalisation for all our processes by offering addition- al benefits to our new customers on digital channels and increasing the intensity of our communications. We aim to increase our competencies at every step in the new period for digital transformation. We also use our ana- lytical competencies in acquiring new customers with location-based analy- ses in fiber and converting our existing customers to fiber. 158 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 159 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES International and Wholesale Through our business partnerships with national and international operators, we shape the change and contribute to the development of Türkiye's telecommunications sector through international roaming, interconnection, wholesale voice, wholesale data, tower and digital services. The Main Internet Route of Türkiye Since 2008, we have been working to position Türkiye as the main internet route and Istanbul as the internet hub of the region with our vision of transforming the historical Silk Road route into a fiber route. As a result of these efforts, we have become the most important capacity and internet provider in many neighbouring countries. Through our partnerships with the world's leading operators, we have acted as a bridge to provide uninterrupted and light- ning-fast internet from east to west for our wholesale customers. Istanbul: Traffic Exchange Hub of the Region Within the scope of our wholesale data services, our international transport capacity exceeded 15 Tbps. We collaborated with the world's largest global traffic exchange platforms and played a major role in their decision to come to Türkiye. Thus, we have taken one of the most important steps in making Istanbul the traffic exchange centre of the region. We also played a major role in content providers' decision to provide their services from Istanbul. Wholesale Voice Services Turkcell and Turkcell Superonline provide wholesale voice services through interconnection agreements with fixed or mobile operators and international carriers. Turkcell Superonline has interconnection agreements with more than 100 national and in- ternational carriers. Turkcell has interconnection agreements with Türk Telekom, Vodafone, TT Mobil and other fixed telephone service operators, whereby the parties interconnect their networks to enable the transmission of incoming and outgoing calls to and from mobile communication systems. Turkcell has interconnection agreements with more than 70 fixed line and mobile operators and carriers. International Roaming Our Roaming strategy has been to provide our customers with uninterrupted communication wherever they travel, thereby achieving broad international coverage and offering foreign visitors the opportunity to benefit from Turkcell's service quality. In addition to existing services, we continue to position our service quality at the highest level by launching innovative services such as VoLTE and 5G. Our international coverage extends to many countries globally through our International Roaming agreements. With more than 800 business partners in more than 210 destinations worldwide, we are strengthening our position as Türkiye's leading international roaming services provider. Digital Export In 2023, we aimed to increase the international spread of our digital services and technologies through our global collaborations and closely monitored opportunities. In 2024, we will continue our efforts to expand the spread of our solutions by deepening in new markets where we will offer our international services and services. The Place for Youngsters to Have Fun and Win: GNÇ GNÇ, the most popular mobile applica- tion among young people, underwent a new design process in 2023. With the new design, the benefits and paid content within the application became much more visible. As a result, it was bet- ter positioned for young people as the "shortcut to winning while having fun". As a result, the application's score in the Apple Store and Play Store increased by 0.8 points out of 5. The Apple Store rose from 2.6 to 3.5 and the Play Store from 3.0 to 3.9. With this score increase and in-app innovations, GNÇ exceeded 19 million downloads this year, once again be- coming one of Türkiye's top 5 apps in the entertainment category. GNÇ, which surpassed 5 million in 3 month-active- ness, increased its application revenue to a record level in 2023. While Çatlat, the most popular internet campaign among young people, had over 91 million participants this year, our new campaign GNÇ Galaksi allowed young people to win vouchers from their favourite brands with the stars they collected in the application. In GNÇ Galaxy, 32 million stars were collected, resulting in 550 thousand prizes in the Galaxy, where users who completed the stars won dozens of benefits. In 2023, when we developed our game content, 5 new free games and 1 new paid game met with the young people in the application. The total number of games played exceeded 7.5 million. In 2024, we will continue to engage young people with our innovations with our AI-powered gaming platform, while increasing interaction with our game content with the PvP (player vs. player) structure that users can play against each other. Finally, in 2023, we launched GNÇ UP, a new video and social media platform, to add another dimension to the GNÇ application, which is active in the en- tertainment category. In 2024, we will strengthen GNÇ UP, which has reached over 1 million views in 7 months, to offer a unique experience by feeding it with an artificial intelligence approach. Strengthened by our user-friendly expe- rience in our completely renewed ap- plication in 2023, we will continue to be the most favorite application of young people with our rich and entertaining content by moving forward in 2024 with a more technology-centered and user experience-oriented approach. Our Segments Turkcell's World of Privileges: Platinum In 2023, we brought content suitable for our rejuvenated audience and new trends to our customers in the Platinum application. We launched the privilege of exclusive membership for our cus- tomers on Türkiye's leading digital plat- forms. With the "Surprise of the Week", we increased our online benefits and brand diversity that are valid on Tür- kiye's leading e-commerce platforms, and continued to offer thousands of gifts from different brands every week. We continued to give our customers the latest devices and accessories with our regular "Dream Gifts" draws. Gift Coffee became one of our most pop- ular campaigns. Our popular Platinum GB Hunt game continued to give cus- tomers the chance to win mobile inter- net while having fun. In November, we held the Platinum Offroad Challenge, one of the most prestigious events, at Turkcell Platinum Park. With car rentals, discounts at exclusive brands, Havaş and many other privileges, the Plati- num Privilege Programme was visited around 23 million times in 2023. Our brand enriched the lives of our custom- ers with our sponsorships and privileg- es such as Turkcell Platinum Park, Zorlu PSM, Turkcell Vadi, Winter and Summer. 􀎲 You can review the Turkcell Platinum application to discover the privileged opportunity world of Turkcell Platinum. 160 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 161 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Shake and Win Continued to Put a Smile on the Faces of Our Customers Thanks to Shake and Win, one of Turk- cell's most popular and well-attended campaigns, we continued to make our customers smile with rich gift options this year. In 2023, we distributed millions of gifts every week. We will continue to innovate the Salla Kazan campaign and the gifts we offer in line with the chang- ing needs of our customers over time. We continued our Shake and Win set- ups for special periods such as Ram- adan and the 100th anniversary of the Republic. In the coming years, we will continue to let our customers experi- ence the richness of Turkcell and con- tribute to our company's KPIs with our Shake and Win innovations. Turkcell Biz Turkcell Biz has been in our lives since September 2020 and has created a difference by offering features like free- of-charge GB transfers, which our cus- tomers had been expecting. It has been successful in terms of originality and has reached a wide audience as a value in line with Turkcell’s innovative image. Turkcell Bizce, the Application of Active Women, Became Women's Favourite Application We continued to offer brand new fea- tures and content to meet the changing needs of our female customers with the renewed Turkcell Bizce, which we aim it to be the most popular application among women by increasing interac- tion through innovative approaches and creating pleasant moments. Inspired by the "Just For You ToSmile" sweepstakes, which we held for the first time with ar- tificial intelligence technology, our users showed high participation in the "Au- tumn Sweepstakes", where participants took part in the sweepstakes with flow- er and tree photos using our artificial intelligence-based photo recognition infrastructure to celebrate autumn, and the "New Year Sweepstakes", which we designed to celebrate the New Year. In total, 500 thousand people took part in the competitions we ran throughout the year. Our "Collect Coupons" cam- paign, which we have been running for four years, taking into account women's past habit of collecting coupons, con- tinued this year with innovations. In our campaign, where approximately 10.5 million coupons were issued, our users redeemed their coupons by converting them into GB or branded gift vouch- ers. Around 700 thousand gifts were redeemed in this way. Our brand new games "Is It Him or Her?", "Which One Is You?" and "Hint", which we designed for our users to have fun, were played 4.8 million times. The games "Win GB with a Pair", "Winning Words" and "4 Trans- actions with Plenty of GB" were played 175 thousand times. While we hosted experts on Our Forum platform, where many different questions on women's minds, from health to food, were an- swered by experts with videos. In the "Get Inspired" and "Do It Yourself" cat- egories, we shared success stories, re- pairs, recipes, crafts and personal de- velopment videos that our users could be inspired by, with videos narrated by women. Our customers listed discounts 120 thousand times with 'Share Discount'. By collaborating with different brands, we offered various discounts and ben- efits to Bizce users. Turkcell Kid With the rich in content and advanta- geous offers specific to children aged 7-15, Turkcell Kid packages are inno- vative plans for the children’s segment providing umbrella solutions to address security concerns of parents with fea- tures allowing them to manage their children’s mobile usage. These pack- ages have been offered to parents first by Turkcell, after analyzing their needs and bringing together the solutions suitable for them. Turkcell has owned the children’s segment 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. As the Turkcell family, we aim to make our customers feel "Safe, Valuable, Happy" in every step we take, in all the products and services we design, and to provide them with an "easy, personalized and consistent" experience in line with our "Our Brand and Our Connection with Customers" initiative. Our Customer Relations Customer Satisfaction and Loyalty We want all Turkcell employees to make decisions with the awareness of "I am here for my customer" and we take care to consider the Turkcell Experience Principles when making these decisions. As part of our peo- ple-oriented communication, we listen to the opinions of our customers and consider their needs, suggestions and requirements. Above all, we want to contribute to the elimination of social inequalities by making our products and services, which are designed to create value for people, accessible to everyone. We consider the high level of customer satisfaction that is the result of all these efforts to be one of the most important measures of our success. In line with the goal of managing the wealth of channels Turkcell offers its customers as "One Turkcell", "Om- nichannel Experience" is one of our priorities in customer relationship man- agement. With our Omnichannel pro- ject, we aim to provide an integrated experience where our customers do not have to repeat the same informa- tion in their interactions across Turkcell channels, where we surprise them with our technology, and where channels are managed in harmony in the cus- tomer journey. Customer Orientated Company Culture We aim to create and implement inno- vative solutions that contribute to the lives of our customers with the partic- ipation of our employees in order to improve the customer experience by keeping the customer-centric culture alive throughout Turkcell. For this purpose, in 2023 we came to- gether with our locations in different re- gions of Türkiye and organised "Hacx- athon" experience competitions with our representatives. We answered the questions of our employees in our loca- tions in the "Voice on Rota" sessions. We listened to calls in all locations and to- gether with our teams we took meas- ures for improvement. As Turkcell, we will continue to listen to our customers and stand by them with the solutions we produce for their needs, with the awareness that there is always something better for our customers. Customer Satisfaction Management As part of our people-focused ap- proach, our Customer Satisfaction Pol- icy commits us to resolving our custom- ers' concerns in an open, transparent, fast and reliable manner. We also want to design all our processes with our cus- tomers in mind. To this end, this year we launched our TX-Cube design space, which is designed to stimulate innova- tion, encourage a user-centric mindset and provide an environment where we can work with multi-disciplinary teams to design differentiated products and customer journeys. In the TX-Cube, we develop our new strategies, improve our customer touch points and try to develop projects that contribute to ef- ficiency and digitalization. We continue our efforts to strengthen the bond with our customers across channels, to closely monitor customer sentiment and to create products, ser- vices and journeys that best meet our customers' needs. In line with our cus- tomer experience strategies, we set, target and monitor our customer expe- rience performance metrics each year. 162 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 163 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Artificial Experience Intelligence in Customer To provide a better experience for our customers, we have made listening, understanding and empathizing with our customers our core principles. In this context, we can instantly under- stand the voice of our customers with our text and voice analytics capabil- ities integrated with artificial intelli- gence technologies and work to pro- vide better services to our customers. Turkcell Asistan, Turkcell's artificial in- telligence-powered digital assistant, is a strategic milestone in the com- pany's digital transformation journey. locally by Turk- Developed entirely cell engineers, the chatbot operates within Turkcell's mobile applications and provides 24/7 mobile and fixed- line service on hundreds of issues ranging from billing transactions to international service settings, pack- age information and special offers. In 2023, Turkcell Asistan conducted 89 million conversations with 15 million customers, successfully completing 98% of transactions on average on first contact. This innovative platform plays a critical role in the mobile infra- structure of Turkcell's application and enriches the customer experience. In the coming years, we will continue to make significant investments to im- prove our contribution to the custom- er experience and enrich it with new technologies. The Turkcell Voice Response System is evolving every day to provide a pro- active and personalised service by anticipating the needs of customers. With the proactive activities we add- ed in 2023, we continue to support our customers in 6 million calls per month. Our voice response system, powered by artificial intelligence, provides pro- active information and personalised suggestions on a wide range of top- ics, from billing to parcel information. Average Response Time of All Media and Accounts (minutes) 2019 20 2020 18 2021 17 2022 12 2023 12 For example, if a customer's contract is coming to an end or their pack- age is about to expire, special offers are proactively recommended to our customer, and the package informa- tion provided in these recommenda- tions is read out by an artificial intel- ligence voice. Or, if our customer has been called by Turkcell for some rea- son and could not pick up the phone, when he calls Turkcell back, he will receive information about why he was called before he says anything, and offers suitable for his needs will be presented. In social media, we serve our users 24/7 with a total of 65 accounts on Facebook, X (Twitter), Instagram, You- Tube, LinkedIn and Tiktok (6 channels). We coordinate a total of 1 million piec- es of social media content per year. We support our digital applications by establishing dialogues with users ac- cording to the nature of the channels and our brand positioning. At the same time, we index 10 million pieces of social data each year us- ing our artificial intelligence analytics models and take various actions to improve both reputation management and customer experience. 164 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 165 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Value-oriented and responsible supply chain management We evaluate the activities and practices of every company in our supply chain, the products and services we purchase, and every process in our supply chain management within our value creation principle. With the aim of making our supply network agile, flexible, and sustainable in our activities in Türkiye and abroad, we are restructuring our main business processes, logistics, and technologies with a holistic approach, with the support of our suppliers. We sign a framework contract with each company we work with in our supply chain; our policies and contracts guarantee our ethical, fair and honest business practices. In this contract, we ensure compliance with our principles on issues such as workers' rights, no use of child labour and no use of forced or bonded labour. As part of the child labour clause in our framework agree- ment, the clause "The company shall not use child labour" is included. In this context, We joined the Alliance 8.7 Ac- tion Pledge to end child labour. Unless a higher age limit is required by local law, "No person under the age of 15 (as defined in International Labour Organ- ization Convention No. 138) who has not completed compulsory education shall be employed. Employees under 18 years of age shall not be employed in hazardous work and shall not be employed in night work to meet their educational needs" by our suppliers. To prevent forced labour, we also en- sure that "no employee shall be forced to work in any situation". This require- ment includes forced labour in prisons, forced labour for high-interest loans or other forms". We ensure the ethical management of our business process- es. If a supplier fails to meet the require- ments of the clause, we will identify the breach of the framework contract and activate the relevant penalty clause. With our Supplier Code of Conduct, Human Rights, Environment, Anti-Brib- ery and Anti-Corruption Policies pub- lished on the Turkcell Supplier Portal, we expect our supplier ecosystem to conduct all labour-employer relations within the framework of respecting workers' rights with an environmentally and humanely sensitive management approach. In addition, we require all suppliers we work with to approve their environmental and human rights policies during the registration process of our supplier management system. As Turkcell, we provide services that di- rectly touch people at every moment. Working with suppliers that do not cause possible service disruptions that could have a direct negative impact on the vital needs of our society, such as communication, health and safety, is of great importance in terms of the prod- ucts or services offered to our custom- ers. We select all suppliers with whom we will work on the basis of mutual trust as well as characteristics such as value for money, past performance, market conditions and references. In our evalu- ations, we give priority to potential sup- pliers who have quality management and information security management certificates, are sensitive to environ- mental balance and work within the framework of social responsibility prin- ciples, among other basic criteria. In this context, in our critical hardware and software categories that impact our network, we evaluate candidates and the products and services they offer in terms of sustainability with a weight of 5-10% in the technical evaluation during the tender process. We assess the process maturity of our critical suppliers, which represent the majority of our purchasing volume, in the areas of management systems, hu- man rights, environment, sustainable supply chain, legal compliance and occupational health and safety. After the assessment, we share their scores, areas for improvement and the Supplier Sustainability Roadmap that we expect all our suppliers to follow. For suppliers with less than 70 points, we assign train- ing that includes general sustainability training and the Supply Chain Sustain- ability Journey that we have prepared through Turkcell Academy. 䩉ISO 9001 Quality Management Sys- tem and ISO 27001 Information Secu- rity Management System 䩉Customs Law No. 4458 and Free Zones Legislation 䩉Liabilities regarding other countries that we operate in (Ukraine, Belarus, TRNC) We received the highest score of A in the CDP Supplier Relations Rating, which assesses priority actions and strategies to reduce greenhouse gas emissions and climate change risk throughout the supply chain. As part of our 2024-2026 strategic goals, we will address supply chain sustainability transformation. We aim to improve the sustainability perfor- mance of our suppliers through ac- tions such as improving the ESG per- formance of our supplier ecosystem, taking action to measure and reduce emissions in critical categories, sus- tainable logistics management and increasing supplier diversity. We are applying cost analysis and dy- namic working principles to the man- agement of our procurement process- es, prioritising practices that will deliver savings by using the integrative power of technology to evaluate processes. Our boxes are made from 100% recyclable materials. By creating year-round material re- quirement plans for our network, we deliver the right amount of material to our regions at the right time to meet the needs of the field through our region- al warehouse organisation and “push” principle. In this way, we minimise pur- chasing, logistics and inventory costs by avoiding unnecessary or excessive de- mand. In addition, for our e-commerce products, we define the product width, length and height values at the point of receipt and ensure that the system selects the most appropriate box for the product size at the point of pack- ing. Whereas our smallest boxes used to be SIZE 3, we are now producing smaller SIZE 1 boxes and ensuring that our products such as mobile phones, wired and wireless headphones etc. are shipped in these boxes. We classify our purchasing categories according to the Kraljic Matrix. Accord- ing to this classification, we evaluate our suppliers whose purchase volume exceeds a certain amount in the rele- vant categories under the headings of commercial, quality, delivery, process management and communication, in- novation and business continuity. As part of our value-based and respon- sible supply chain practices, we imple- ment complaint procedures in accord- ance with the key contractual clauses, in line with feedback from general cus- tomer communication channels or business units, business owner and buyer evaluations through surveys, and ensure that corrective actions are implemented quickly. We measure supplier compliance through regular assessments and audits and report to senior management. In 2023, we are proud to announce that we have not identified any cases where our supply chain and suppliers have caused or may cause negative environmental or social impacts. As Turkcell Group, we keep in mind ethical elements, anti-corruption and social contribution in all processes of our procurement management struc- ture, which we address under 4 main headings as strategy, people, process and implementation, and we realise our activities with a transparent un- derstanding towards our stakeholders. We follow national and international standards to make our procurement processes fully transparent. We con- duct our procurement processes in such a way that the following rules and standards are continuously met: 䩉Sarbanes-Oxley Act (SOX) 䩉Security Exchange Commission (SEC) Regulations 䩉Foreign Corrupt Practices Act (FCPA) (CMB) 䩉Capital Markets Board Regulations 䩉Information Communica- and tion Technologies Authority (ICTA) Regulations 䩉Liabilities regarding the Turkish Code of Commerce (TTK) 䩉Liabilities regarding the Turkish Penal Code (TCK) 䩉Liabilities regarding the Turkish Tax Legislation 166 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 167 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL presented our Supplier Based Innova- tion, Localism and My Big Partner pro- grammes, which we are implementing to develop the ecosystem. We shared our communication channels with our businesses for new idea submissions. Localisation Efforts We support domestic and national technological transformation to con- tribute to the growth and sustainability of entrepreneurial activities in Türkiye. In this context, we carry out category localisation activities, supplier rela- tions, technopolis relations and entre- preneur support programmes (My Prin- cipal Partner Program), efforts to bring global investments to Türkiye, Commer- cial Attaché Office and coordination of all internal stakeholders. We believe that localisation efforts are critical as they have a direct impact on our rela- tionship with the local ecosystem and ICTA. As part of Turkcell's localisation initiative, we are prioritising domestic suppliers for our network technologies, software and other value-added tech- nology needs, and we are continuing our category-based indigenisation ef- forts with teams consisting of demand and procurement experts. We are undertaking project devel- opment activities with manufacturing companies to support our manufactur- ers in our localisation efforts. Examples of these efforts include the localisation of a critical application that generates alerts for problems in our fixed and mo- bile networks and performs cross-de- vice impact analysis, and the devel- opment of a single package of access and security services that we previous- ly imported with our local supplier to provide local services to our enterprise customers. Our definition of localisation is that for product purchases, the product is manufactured in Türkiye, and for ser- vice purchases, local labour is used. In 2023, our localisation rate with our main suppliers, which represents ap- proximately 90% of our total procure- ment volume, was 64%. By reducing the volume of our box- es in our shipments, we both reduce the amount of paper used and avoid excessive logistics by increasing the amount of products transported at one time. At the same time, our boxes are made from 100% recyclable materials. By implementing the digital delivery and activation process for our SIM card order deliveries, we have eliminated the printing of 427 thousand units of paper per year. By eliminating the use of nylon in our e-commerce orders, we have avoided the use of approximately 20 kilometres of plastic. We achieved a 33% fuel saving by carrying out the or- der preparation process in the provinc- es where the order is placed. instead of paper posters We apply sustainability principles to our Construction Dealer Management processes. We favour recycled options in the LTV materials we use in our stores. We save paper and ink by using remote screens in stores and by taking signatures on tab- lets instead of paper contracts with our customers. We use slim, energy-saving LED products in lighting fixtures. We have converted a total of 103 stores, at least one in every province, into accessible stores that can be used and accessed by our customers with disabilities. Supplier Ecosystem Management We position our value-focused efforts with our suppliers under a single team to ensure rapid applicability. Our Inno- vation and Ecosystem Relations Process Management team under the Supply Chain Process Development team, car- ries out localisation studies, SME and start-up support programmes, cooper- ation with international and local sec- toral organisations, supplier-focused innovation studies, supplier diversity and development, risk and sustainability analysis studies. As every year, we held the Turkcell Sup- plier Summit event in 2023, where we physically came together with our sup- plier ecosystem with the participation of our suppliers. As part of the event, we Supplier-Oriented Innovation Projects The Supplier-Oriented Innovation Pro- gramme, which was launched in 2020 to encourage innovation in the supplier ecosystem, projects innovative ideas from suppliers with contributions from the relevant business units and pur- chasing managers. The projects are presented to the Supplier-Oriented Innovation and Localisation Commit- includes Turkcell’s senior tee, which jurors, with a management teamas presentation that includes additional savings, process and quality improve- ment, revenue potential and sustaina- bility contributions. Efforts are made to implement the successful projects. Examples of some of the projects ap- proved by the committee include the development of a low-cost domestic network inventory management sys- tem, the development of access and security services as a single package with our local company and the pro- vision of this service to our customers who normally cannot receive security services, the rebuilding and author- isation of our common area and the development of an active directory management application and product partnership, The use of solar panels for the energy needs of field equipment, the production of composite manholes for fiber optic boxes that are less costly and pose fewer health and safety risks, the development of nano-trenching vehicles that increase operational ef- ficiency with shorter excavation sec- tions and cause the least disturbance to the environment, the use of mobile caravans instead of mobile vehicles to provide shooting support to regions for uninterrupted communications. By the end of 2023, the programme will have evaluated 100 ideas, submitted 14 to the committee and approved and implemented 11. Thanks to the composite manholes de- veloped and used in our fields within the framework of Supplier Axis Innova- tion, we have been able to manage our operations in a more environmentally friendly and faster way by avoiding the use of cranes. In 2023, our localisation rate with our main suppliers, which represents approximately procurement volume, was 90%of our total 64% In 2020, within the framework of the new procurement model we developed, we continue to visit technoparks and support their promotion in order to support start-up companies. With the My Principal Partner Programme developed in this context, as of the end of 2023, we concluded 48 business agreements with 36 companies affiliated with 20 technoparks in 12 provinces and created a transaction volume of TRY 28.8 million. 168 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 169 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL environmental issues, have strong com- munication skills and use technology. In this context, the activities and events we carried out in 2023 prioritised projects with a focus on helping the victims of the February 6 earthquake. The Digital Spring Project We have not forgotten our elderly people living in nursing homes and have set up Digital Spring Technol- ogy Rooms where they can experi- ence technology to make them more connected to life with our technology. Thanks to Turkcell's digital applications, elderly people living in nursing homes can watch TV, listen to music, make video calls with their relatives, make transactions through e-government, play digital games and experience dif- ferent beauties of our country in a vir- tual environment with VR glasses. With this project, we opened Digital Spring technology halls in Osmaniye, Adana, Aydın, Samsun and Erzincan in 2023. We continued to bring our elders together with technology by reaching a total of 10 nursing homes in Ankara, Bursa, Izmir, Osmaniye, and İstanbul that were pre- viously included in our project. Digital Literacy Programme We are expanding our digital litera- cy training and supporting it through various channels to meet the grow- ing need for digitalisation, which is in- creasing day by day as the pandemic progresses, and the growing needs of women and middle-aged people who have not yet been exposed to these applications. With our Digital Spring project, we are ensuring that our el- derly can safely encounter the online world with these trainings in the tech- nology classes we have set up in nurs- ing homes. Equality of Digital and Social Opportunity As Turkcell, with the restorative and equalising power of technology, we provide equal access to information for children, women, the disabled, the elderly and people with low incomes, "leaving no one behind", and we strive to inspire and unlock potential. Through our projects, sponsorships and events across many sectors, we transform the power of technology into benefits for all, with an inclusive and sustainable approach. Accessibility in Service Processes We have prepared sign lan- guage and audio narrated ver- sions of information packages such as payment service agree- ments, resolution of various dis- putes, product usage and sim- ilar information packages that directly affect customers but are not easily accessible to our visually and hearing-impaired customers and made them available on our corporate website. Our customers can now re- language video ceive sign service every day of the week between 10:00 am and 1:45 am by accessing our face-to-face customer service through the Turkcell mobile application, My Sign Language and BiP appli- cations, and at Turkcell and Su- peronline stores. With this ser- vice model, which is free for our customers, hearing-impaired outgoing and return calls can be made to our customers. If our customers wish, they can reach our call centre by clicking on the link in the message that follows the SMS sent to them. We serve approximately 3,000 hearing impaired customers per month through our video call centre. Social Investment and Sponsorship Projects We have believed in the levelling power of technology since the day we were founded, and in all of our social respon- sibility projects and access to informa- tion, we aim to ensure that everyone can participate equally in life, leaving no one behind, and we carry out our social inclusion projects in this direction. By allocating up to 1% of our turnover each year to social investment projects, we are making a difference in society, with the aim of contributing to the cre- ation of a more livable world, and we strive to ensure social development and environmental sustainability in all our activities. We strive to make sport, culture and the arts equally accessible to all. We provide sponsorship to ensure that all sports, cultural and artistic activities are accessible to women and men, chil- dren and the elderly, and people with disabilities. For many years, we have continued our pioneering efforts for the development of culture, arts and sports in Türkiye, and for our artists and athletes to be praised in the national and international arena. We continue to contribute to our coun- try by supporting congresses, confer- ences and events in many fields such as technology, health, environment, energy, economics, marketing and in- formation technology, as well as sports, culture and the arts. Turkcell Foundation We continue to execute projects that serve both our country and all humani- ty with the Turkcell Foundation, which is backed by the strength and trust of the Turkcell brand. Turkcell Volunteers Turkcell Volunteers, which was estab- lished by our employees coming to- gether to create social benefit and awareness, continued to create value in 2023. Through Turkcell Volunteers, which is entirely funded by donations from Turkcell Group employees, we carry out voluntary social benefit projects with participants who are interested in de- veloping projects related to social and Galakcell While the Internet provides equal access to information for everyone, it also opens the door to a world with- out boundaries. One of the most im- portant ways for parents to protect their children from the dangers they may not be aware of is to prepare them for the Internet. As Türkiye's Turk- cell, we have taken another step to prevent the risks that the digital world can bring, while strengthening equal opportunities with the services we offer. We developed the Galakcell game, which aims to teach children about information security in the dig- ital world through an educational game, and made it available free of charge from August 2023. Galakcell addresses many issues, from cyberbullying to information se- curity, from website safety to setting personal boundaries. The project will ensure that children learn about these difficult topics in a fun, playful way. As well as teaching children how to use technology properly, the project also aims to raise awareness among identify parents. The the children's strengths in the area of digital information security and the areas in which they need to improve. In the report section, parents can fol- low their children's development. In this way, parents can check whether their children, who have acquired ba- sic and safe information about digital footprint and digital citizenship, are ready for the online world. In addition, Turkcell Kids users can play Galakcell without using their data. in-game tests important Close to Life Project We are meeting the counselling and psychological needs of children with autism and through the Close to Life Project, which we launched in partnership with the To- hum Autism Foundation to support children with autism and their families across Türkiye. families their With BiP, the communication and life platform that uses technology to over- come barriers, we have created a communication channel where fam- ilies of children with autism can find answers to their questions about au- tism and special education from expert doctors and teachers. Whiz Kids Project Turkcell's Whiz Kids project, in cooperation with the Ministry of National Education, aims to introduce Türkiye's talented students to technology and help them discover and develop their talents at an early age. At Whiz Kids Technology Laboratories, which we have established in Science and Art Centres (BİLSEM) across Türkiye, we provide our students with opportu- nities such as laptops, 3D printers, electronic and robotic coding kits and toolkits; we ensure that children receive training in artificial intelligence, coding, space science, robotics, smart home and cloud technologies, and support them in developing projects in these areas. Under the Turkcell Whiz Kids Project, we have reached a total of 76 lab- oratories in 48 cities. Through the project, we also organise face-to-face technology workshops for students to understand basic coding logic. As part of this, we provided basic algorithm and coding training to more than 1,000 students at Teknofest Ankara and Istanbul events this year. In the Zekathon Tournament organised as part of the project in cooper- ation with the Ministry of National Education, talented students studying at Science and Art Centres (BİLSEM) developed project ideas by finding solutions to problems related to the environment and sustainability. In the tournament, which was attended by 163 school teams from all over Türkiye, students developed project proposals on topics ranging from an artificially intelligent recycling box to a smart manhole cover, from a disaster search and rescue robot to Turkcell's energy system project for drying fruits and vegetables in high-humidity areas. Following the earthquakes on February 6, 2023, we established and launched the BİLSEM Technology and Education Room container in Kırıkhan, Hatay, in cooperation with the Ministry of National Education, to provide psychosocial support to children in the disaster area and contrib- ute to their social development. In the container, which can be used by chil- dren between the ages of 6 and 18, experienced teachers from the Ministry of National Education organise workshops for children on robot coding, astronomy, educational games, sports, music, painting, and art. The BİLSEM Technology and Education Room has a library for children's development, as well as computers, tablets, TVs and projectors for training. For outdoor activities, there is equipment that facilitates physical conditions such as awnings and sinks. 170 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 171 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Sports Sponsorships National Football A Team Sponsorship Since 2005, we have been the main sponsor of the men's and women's na- tional A football teams, which we start- ed in 2002 as "Official Communications Sponsor". After more than 20 years of proud support, our Men's National A Football Team qualified for the Europe- an Football Championship in Germa- ny in June 2024 following their success in qualifying. Our women's A nation- al football team, competing in UEFA Nations C League Group 2, defeated Georgia in December and finished the group matches with 18 full points, mak- ing 6 out of 6. We continue to support our men's and women's national foot- ball teams in international tournaments for the development of national foot- ball. We believe that they will make our country proud with new achievements in these tournaments. Turkcell Women's Football Super League With an understanding of equal ac- cess to sport, we are taking steps to develop the rapidly developing and growing women's football sector in our country. We continue to work to bring the Turkcell Women's Football Super League, of which we are the main sponsor, to a wider audience and to raise awareness of women's football. We ensured that the play- offs and finals of the Turkcell Wom- en's Football Super League, which has seen rapidly growing interest over the past three seasons, were broadcast on TV channels and digital channels for the first time. Turkcell Super Cup Within the scope of our agreement with the Turkish Football Federation, we continue our sponsorship support in the field of football with the Turkcell Super Cup, which brings together the champion teams of the Super League and the Turkish Cup, which we have supported in previous years. e-National Teams Sponsorship In 2021, we expanded our cooperation with the Turkish Football Federation in the field of digital games and be- came the name sponsor of the player selection process for the newly es- tablished e-National Teams in FIFA and PES games. We also became the main sponsor of the e-National Teams, where we held a selection period un- der the name Turkcell e-National Team Selection. We believe that our national teams will successfully represent our in these newly established country branches. Athletics National Team Sponsorship As Turkcell, we attach importance to all sports and do our best to develop them. We are continuing the Athlet- ics Project that we launched in 2013 in cooperation with the Turkish Athletics Federation. Through this project, we are providing the largest and long- est-term support to amateur sport in Türkiye to date. We support the expan- sion of sport in our country by working with federations to implement innova- tive and modern management models, expand the pool of young athletes, en- sure the continuity of athlete develop- ment in the elite category, and institu- tional and technological development. Under the main sponsorship of Turk- cell, our country continued its success in athletics in the 2023 season. Our athletes won a total of 197 medals in international athletics tournaments. In addition to these achievements, the number of active athletes reached 52 thousand and the number of licensed athletes reached 341 thousand in 2023. The number of active athletes reached 52 thousand and the number of licensed athletes reached 341 thousand in 2023. Turkish Sports Federation for the Physically Disabled We expanded our cooperation, which started in 2016 with the football branch of the Turkish Sports Federation for the Physically Disabled, to 18 different dis- abled sports branches (amputee foot- ball, basketball, shooting, arm wres- tling, archery, swimming, sailing, tennis, badminton, athletics, sitting volleyball, table tennis, weightlifting, boccia, ski- ing, dance, curling, fencing). With this sponsorship, we have supported more than 2,800 licensed athletes, both men and women, in all branches. Our Am- putee National Football Team, which is the European Champion and World Champion twice in a row, will represent our country at the European World Championships in France in 2024. Turkish Federation of Traditional Sport Branches By becoming the main sponsor of the Turkish Federation of Traditional Sports Branches to support traditional sports in our country, we aim to promote and make our ancestral sports successful at the national and international level in 9 sports branches, namely Jereed, Ambling Gait, Horseback Archery, Aba Wrestling, Salwar Wrestling, Belt Wres- tling, Traditional Sleigh, Sleigh and Kok- boru, with 247 clubs, more than 20,000 athletes, 351 coaches and 1,700 referees in 64 provinces. In order to enhance the reputation of our traditional sports and ensure their future success, we are cre- ating opportunities for these culturally specific sports to become more wide- spread and are encouraging young people to take up these sports as part of their healthy, active and successful upbringing. Türkiye Athletic Talent Screening and Orientation to Sports Project We were the Official Sponsor from 2018 to March 2023 of the Türkiye Athletic Talent Screening and Orientation to Sports Project, jointly initiated by the Ministry of Youth and Sports and the Ministry of National Education. Our aim was to involve at least 1 million primary school pupils in the project each year. Through the project, we ensured that 4,000 students were recruited into the professional athlete pool each year, and we encouraged children who did not make it into the athlete pool to con- tinue their sports activities by directing them to provincial sports centres. With this project, which was initiated with the aim of revealing Türkiye's young talents, we were deemed worthy of an award in the Sponsorship Communica- tion - Sports category in 2019. Turkcell Granfondo Cycling Race In 2023, our physically disabled athletes, who participated in World Championships, European Championships and international tournaments with Turkcell sponsorship, achieved the following successes. Sport Division Gold Silver Bronze Total Athletics Arm Wrestling Badminton Ts Tennis Ts Dance Swimming General Total 10 18 7 8 3 - 46 3 12 5 3 2 - 25 - 3 16 - - 2 21 13 33 28 11 5 2 92 Istanbul, inTürkiye To increase awareness of bicycle use for a sustainable environment and to support bicycle usage in Türkiye, we initiated the road bike race, Turkcell GranFondo Istan- bul-Beykoz in 2023. Nearly 2,000 am- ateur and professional cyclists from 38 international countries national and took part in the race, which was started by the Minister of Youth and Sports, Os- man Aşkın Bak. We participated in the event with our brands Paycell, Pasaj, fizy, BiP, GAME+ and Lifebox. 172 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 173 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Zorlu PSM (Performing Arts Centre) Since 2018, Zorlu Performing Arts Centre's (PSM) main drama stage, which is our venue sponsor un- der the name "Turkcell Stage", has been hosting world-renowned shows and performances. In ad- dition, Zorlu PSM's theatre stage continues to welcome art lovers as "Turkcell Platinum Stage". All cultural and artistic events such as musicals, concerts and plays are held on Turkcell stages. As part of the cooperation with Zorlu PSM, we have hosted near- ly 2 million visitors in nearly 2,000 events since 2018. As part of our accessibility approach, we have hosted visually impaired art lov- ers at events such as theatre and musicals held on the Zorlu PSM Turkcell Platinum Stage with My Dream Partner live description technology. Our Other Sponsorship Projects Turkcell Platinum Park With Turkcell Platinum Park, which was opened on 200 acres of land in Maslak, we offer our customers and society the opportunity to escape the monot- ony of city life. Since 2018, the number of visitors to Turkcell Platinum Park has exceeded 1 million. In addition, Turkcell Platinum Park, which brings together off-road enthusiasts, is located both in the centre of Istanbul and in the middle of nature, while offering many experi- ences with special benefits to its cus- tomers. Our Turkcell Platinum custom- ers can enjoy many outdoor activities such as off-road, archery, jungle run and open-air cinema at the same time. The outdoor activities at Turkcell Plat- inum Park, where families can come and spend a pleasant time with their children, teach children at a young age about life in nature in a fun way. With the 4th annual Offroad Challenge Race in 2023, we enhance our messaging to supports both the venue and the Plati- num brand image. Summer and Winter Locations As Turkcell, we continue to offer Plati- num advantages to our customers in Kartalkaya, one of the most important ski resorts of our country, which has been visited by more than 500 thou- sand people in the season since 2014. In addition, we provide special privileges and advantages to our subscribers by integrating our different brands at ex- clusive beaches in Çeşme and Bodrum in summer. TEKNOFEST Aviation, Space and Technology Festival A total of 4.6 million people attended TEKNOFEST, the Aerospace and Tech- nology Festival held in Istanbul, Ankara, and İzmir on the occasion of the 100th anniversary of the Republic. The fes- tival was watched from many regions of our country and the world thanks to broadcasts on television screens and digital platforms. With its technol- ogy competitions, entrepreneurship programme, breathtaking air shows, award ceremonies, your stage, edu- cational workshops, exhibitions, stage games, special flight experiences for children, TEKNOFEST provided visi- tors with unforgettable moments full of science and technology in our three major cities in 2023. As Turkcell, we also participated in these festivals with our products and services. By providing coding training for children, we helped them feel safe in the online world. Sectoral Supports As Turkcell, we aim to extend our lead- ing position in the telecommunications sector to different sectors, adopt in- novative approaches and contribute to the development of the respective sector. In this direction, we sponsor congresses and conferences on many topics ranging from HR applications to digital marketing, from supply chain management to aerospace technol- ogies, from cybersecurity to techfin solutions. Through our sponsorships, we bring together diverse audiences such as entrepreneurs, students, investors, NGO and public sector representa- tives, academics, employees, middle and senior managers of companies. We have reached hundreds of thou- sands of people and had the oppor- tunity to convey our messages through over 50 congresses and conferences organized throughout the year. Our Culture and Arts Sponsorships Turkcell Vadi Turkcell Vadi, Türkiye's newest open-air stage, which we launched to support the world of culture and art, one of the most negatively affected sectors dur- ing the pandemic, opened its doors to art lovers for the new season on 15 April 2023. Winner of 3 gold awards at the IPRA Golden World Awards in 2022, many local and foreign artists took the stage at our open-air events in Turk- cell Valley between April and October. More than 150,000 spectators visit- ed the venue, which hosted 50 events from concerts to theatre performances throughout the season. Turkcell Vadi, which attracts attention with its sustainable and accessible na- ture, stood out with content such as re- cycling, sapling donation, transforming collected techno waste into education, prioritising access for visitors with disa- bilities and creating a special viewing area. Over 50,000 Turkcell customers benefited from our Platinum Black entry gate, VIP lounge and discounted ticket privileges at the events. Turkcell Starry Nights Turkcell Starry Nights, which has be- come an entertaining classic, brought music lovers together in a magnificent summer concert series. The Turkcell Starry Nights event, which consisted of 10 concerts within the Turkcell Vadi events, was attended by 30 thousand people this year. Turkcell Starry Nights continued in 2023 the project we start- ed in 2021 of translating concerts from the stage with sign language and bringing them together with hear- ing-impaired audiences. 174 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 175 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Support Activities for February 6th Earthquake On February 6, 2023, a devastating earthquake struck a wide region including 11 provinces, with its epicenter in Kah- ramanmaraş. At Turkcell, we stood by those affected and our country with all our resources. We worked tirelessly to ensure uninterrupted communication in the region and to support the urgent needs of our citizens impacted by the earthquake. In this context, as Turkcell; 䩉In response to the interruptions caused by demolition, energy and transmission, we worked to restore the service of our network with intensive interventions made by more than 1,200 technical teams and regional employees from all over Türkiye. 䩉We aimed to ensure the continuity of communication by directing a total of 3,500 batteries, 1,400 generators, and over 280 mobile base stations, caravans and new base stations from different parts of Türkiye and neighboring provinces to the disaster-affected provinces. We shared these resources with other operators at the locations we used. 䩉Despite all these painful conditions, including the inability to provide energy and loss of lives of our colleagues and their families in the region, we mobilised all our facilities and human resources for the region. We repaired and re- activated these damaged areas in the fastest way possible. We managed to active 80% of the 1,598 base stations that experienced service interruptions in the first two days and 98% on the fifth day. We achieved 100% within a week. 䩉In addition to the repairs, Thanks to more than 280 mobile and new base stations, our number of active sites ex- ceeded the number of sites that were in service before the earthquake. 䩉From the very first moment on the first day of the earthquake, we opened the closed or restricted lines of our cus- tomers in the region to meet their urgent communication needs. Customers' requests for line freeze-number change, sim card change and transfer were met free of charge. Transactions that would be charged to the customer were made free of charge for the region. 䩉We implemented over 90 million Emergency Communication Packages, Hero Packages and Rescuer Packages, which include free calls, SMS and internet with new top-ups to the lines of more than 6 million users in the region. 䩉All electronic communication service charges in the 1-month bills of our customers in the earthquake region were undertaken by our company and deleted from the bills. 䩉We made emergency arrangements to ensure continuity of service in our regional stores. To support communica- tion in the disaster zone, we have deployed nearly 100 multi-charging units and more than 30,000 mobile chargers (power banks) to the region. 䩉We opened our Turkcell offices in the earthquake zone for the use of our employees in the region 24/7. 䩉As Turkcell Volunteers, we launched a financial aid campaign with the participation of our employees, and we delivered more than TRY 2 million in cash aid to the region with the prioritised products. 䩉Within the scope of the Earthquake Relief Mobilisation initiated by the Ministry of Trade, the products purchased from Turkcell Pasaj were delivered under the coordination of AFAD, and in addition to this, we have transformed 277 dealers in Istanbul into Emergency Collection Centres and we have been instrumental in collecting the aid of our citizens. 䩉We sent children's coats and boots, sleeping bags and rations to be delivered to the Disaster Coordination Centre, as well as adult clothes and blankets to support the needs of our personnel and their families who are accommo- dated in Turkcell Global Bilgi Diyarbakır building. 䩉On February 15th, Turkcell supported the Türkiye One Heart campaign, which was organised with the joint broad- cast of all TV channels, with a donation commitment of TRY 3.5 billion. 䩉In addition, Aksungur UAV, which was produced by TAI and integrated with a base station in cooperation with Turkcell, provided nearly 50 hours of service in the Antakya, Adıyaman and Kırıkhan region for the first time in this disaster. With Turkcell Gönül Bağı Projects, which we launched in April, we continue to create employment for our people in the region, support local businesses and organise different sociocultural activities. In this difficult period, we continue to mobilise all the means at our disposal to support our citizens in the region and to heal the wounds of the earth- quake in the region. 176 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALNATURAL CAPITALAPPENDICESSTRONG CORPORATE GOVERNANCEABOUT TURKCELL Natural Capital With the Positive Imprint to the Environment strategy, we aim to reduce the impact of Turkcell operations, support the reduction of environmental impact of customers with digital technology applications and services, and become a pioneer in combating environmental challenges and a leading digital operator with its environmental performance. Environmental Management Turkcell's Board of Directors is the high- est-level management body responsible for the business processes carried out within the scope of the Positive Imprint to Environment strategy. The Integrated Val- ue Creation Committee and the Sustain- ability Committee are also responsible for the management of environmental sus- tainability business processes on a strate- gic and planning scale, and for evaluating and reporting the performance results to the Board of Directors and to all our stake- holders through the Integrated Annual Report. The Sustainability and Corporate Social Responsibility Department carries out coordination and planning activities in the management of our environmental impacts, particularly climate change. Per- formance-enhancing and environmental impact reduction activities are carried out by the units responsible for the manage- ment of business processes and assets where the impact occurs. All senior exec- utives have individual targets in the fields of environment and climate, and these targets are monitored on the basis of KPIs. Environmental management through- out the company is carried out within the framework of the principles set out 􀎲 Turkcell's environmental in policy Among these principles, the re- quirement to comply with all legal reg- ulations binding on Turkcell constitutes the minimum working norm. In 2023, there were no incidents of non-compli- ance with environmental regulations as a result of the Company's activities and savings, no complaints were submitted to the Company's management in this regard and no financial or non-cash penalties were incurred as a result of non-compliance. Main Objectives Short Term Target Medium Term Target Long Term Target 2022 Performance 2023 Performance Target Current Situation Periodic information provisions Meeting the electricity demand from renewable sources Renewable energy investments Achieving Net Zero operation level Reducing greenhouse gas emissions - - - - Recycling of all waste 100% - 100% (in 2030) 100% 100% 300 MW SPP, 9.6 MW WPP Installed Power Investment (2023-2025) 300 MW SPP, 27.6 MW WPP Installed Power Investment (2026) 19.5 MW Installed Power 49.5 MW Installed Power - - - 100% (in 2050) - 55% (in 2030) 414,911 tons of CO2e emission reduction 40,267.93 tons of CO2e emission reduction - Completed Positive Development Negative Direction Ongoing Board of Directors Final decision making body for climate change related issues 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 envionmental 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 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY DEPARTMENT RISK DIRECTORATE Conducts environmental and climate related corporate engagements Conducts environmental and climate risks and opportunities 178 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 179 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES ISO 14001 Environmental Management ISO 50001 Energy System Standard, Management System Standard and ISO14064 Greenhouse Gas Calcula- tion, Reporting and Verification System Standard are followed in environmental management processes. Certification studies are carried out as a result of pe- riodic independent audits to ensure sys- tem reliability and continuity. Turkcell's value chain, which has a wide operational structure, has a large num- ber of assets and business processes where environmental impact occurs. The management of environmental im- pacts, performance improvement and control activities across these process- es and assets require significant finan- cial resources. Various training activities are carried out to strengthen the knowledge, ex- perience and awareness of the com- pany's employees on environmental impact management. In this context, all Turkcell employees will receive en- vironmental and sustainability training by 2023. for the Certificates we follow are available on standards the 􀎲 company website. The greenhouse gas verification process for the period from 1 January 2023 to 31 December 2023 is ongoing, and when the process is complete the verifica- tion statement will be published on the certificates section of the corporate website. Environmental management processes are carried out using a risk and oppor- tunity-based approach. Environmen- tal risks identified as part of corporate risk management include risk factors that may arise from our operations, in particular climate change, or that may negatively affect our business perfor- mance. Identified risks and opportuni- ties are managed by translating them into performance and time-based SMART objectives within the integrated value creation model and sustainability strategy. During the last reporting peri- od, KPIs were defined and assigned to all employees in the company, includ- ing our CEO, and are followed up on a regular basis, at least once a year, depending on the issue. The activities carried out in accordance with the environmental strategy and the results achieved are evaluated from a finan- cial, operational, legal compliance and environmental point of view, and are also reviewed as part of the internal audit activities. Climate Change Climate change, considered one of today’s most pressing issues due to its numerous acute and chronic risks to the physical, social, and economic environment and global business life worldwide, is also the most funda- mental element of the Positive Impact on the Environment strategy, as it rep- resents the most important part of the impacts resulting from Turkcell's oper- ations. Almost all of our environmental management activities are directly or indirectly related to climate change. within the framework of the Borsa Is- tanbul Sustainability Index and the MSCI ESG Index. In 2023, Turkcell was included in the BIST 25 Sustainability Index, rank- ing among the top 25 companies with the best sustainability performance among listed companies in Türkiye. We participate in efforts to combat climate change through internation- al initiatives. In this sense, Turkcell was among the first 8 operators in the world to join the GSMA Mobile Net Zero initia- tive, which was established to achieve a net zero target in the telecommuni- cations sector, and was the first GSM operator to represent Türkiye in this initiative. Another action that supports our Net Zero goal is our effort to trans- form our emissions targets into a Sci- ence Based Target system. Our net zero target plan, which we applied for in the previous period, was approved by the Science Based Targets Initiative (SBTi) in 2023. As part of this, we will reduce our absolute Scope 1 and 2 green- house gas emissions by 50% by 2030, compared to our base year emissions in 2020. We will reduce our absolute Scope 3 greenhouse gas emissions by 25% compared to the 2020 baseline. We are also the first and only company in the telecommunications and tech- nology sector in Türkiye to have its SBTi target approved. We also report annu- ally to the Climate Change Programme of the Carbon Disclosure Project (CDP), an initiative, which assesses our efforts to combat climate change across a wide range of areas, including governance structure, risk/opportunity system, improvement efforts and performance. According to the results of the 2023 reporting, Turk- cell's CDP Climate Change Programme Score was rated A and became the sector leader in Türkiye. In addition, our environmental and climate perfor- mance is assessed in various aspects international investor Management of Climate Risks and Opportunities The risks of climate change directly affect Turkcell's op- erations. Measures are taken against the risks of extreme weather events and natural disasters caused by climate change, and studies are con- ducted in anticipation of a long- term in average air temperatures. The impact and consequences of the opportu- nities and risks posed by climate change are addressed and monitored through the Group's risk management framework. increase Recognising the need to be resilient to the risks of climate change and the severe energy crisis we may face in order to lead our business into the future, we have identified our climate change risks and opportunities using the recommendations of the Task Force on Climate Relat- ed Financial Disclosures (TCFD). This study enables us to assess our investments in a holistic way, highlighting our areas of devel- opment and the opportunities we can focus on 􀎲 Turkcell TCFD Report is available on our corporate website. 180 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 181 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Greenhouse Gas Emissions Greenhouse gas emissions from our op- erations are comprehensively mapped and calculated in accordance with the ISO 14064 standard. Greenhouse Gas Emissions (Tonnes CO2e) Category 1 Category 2 Category 3-6 5 2 2 2 2 1 , 8 7 1 , 6 1 1 4 9 2 1 , 6 9 9 4 , 6 9 6 2 1 , , 0 9 0 3 3 3 , 1 2 1 4 , 1 5 2 , 1 2021 2022 2023 Relative Greenhouse Gas Emissions 4.643 3.602 4.788 0.499 0.0005 0.0004 0.300 0.0006 0.299 2021 2022 2023 Greenhouse gas emissions per net income (tonnes CO2e/TRY Million) Greenhouse gas emissions per data usage (tonnes CO2e/Petabyte) Greenhouse gas emissions per subscriber (tonnes CO2e/subscriber) the reporting period, During total greenhouse gas emissions amount- ed to 1,723,910.65 Tonnes CO2e. Of this amount, 12,696.38 Tonnes CO2e consists of direct emissions from fuel (Category 1), 0 Tonnes CO2e consists of indirect emissions from electricity consumption (Category 2) and 1,251,412 Tonnes CO2e consists of other indirect emissions (Categories 3-6). On the other hand, according to the relative emission amount assessment made by including Category 1 and Cat- egory 2 class emissions, the amount of emission per data usage in 2023 is 4,788 tonnes CO2e/Petabyte and the amount of emission per net revenue is 0,299 tonnes CO2e/TRY thousand. During the reporting period, a total of 459,801.76 tonnes of CO2e of the car- bon emissions generated from our op- erations were offset with carbon certif- icates created in YEK-G Standard. During the reporting period, a total of 459,801.76 tonnes of CO2e of the carbon emissions generated from our operations were offset with carbon certificates created in YEK-G Standard. Energy Management Total Energy Consumption (GJ) On the other hand, according to the relative energy consumption amount evaluation, en- ergy consumption per data usage in 2023 is realised as 726.81 GJ/Petabyte and energy consumption per net income is realised as 45.3 GJ/TRY million. We carefully manage energy consump- tion, which constitutes a significant part of our environmental impact portfolio, particularly greenhouse gas emissions, in accordance with ISO 50001 Energy Management System Standard. The two main focal points of our energy management efforts are efficiency ef- forts to reduce total and relative con- sumption and electricity generation ac- tivities from renewable resources. Our energy-focused activities are orientated towards environmentally friendly green energy sources within the framework of the UN's Sustainable Development Goals. In order to man- age energy consumption from our own resources, we aim to meet 100% of our energy needs from renewable sources by 2030. During the reporting period, Turkcell operations 3,914,342.45 consumed GJ of energy in total. Of this amount, 269,746 GJ consists of fuel consumption, 3,420,000 GJ consists of purchased electricity consumption and 224,596.45 GJ consists of renewable energy gen- erated. Since 2021, all of the purchased electrical energy (i-REC, YEK-G) has been supplied from certified renewa- ble energy producers. . 7 0 3 7 9 3 2 7 3 , , . 0 3 6 7 8 0 0 1 , 4 , . 5 4 2 4 3 4 1 9 3 , , 2021 2022 2023 Relative Energy Consumption 964 103.7 0.072 2021 791.9 76.1 0.066 726.8 45.3 0.092 2022 2023 Greenhouse gas emissions per net income (tonnes CO2e/TRY million) Greenhouse gas emissions per data usage (tonnes CO2e/Petabyte) Greenhouse gas emissions per subscriber (tonnes CO2e/subscriber) Total Energy Consumption by Source (GJ) Fuel Consumption 2021 324,845 Natural Gas 66,365 Gasoline 44,087 Diesel 214,393 Renewable Energy Generated 99,264.71 Solar Energy 2,350.89 Wind Energy 96,913.81 Purchased Renewable Energy - Electricity Total 3,342,897.36 3,723,973.07 2022 266,378 29,567 33,661 203,150 267,355.30 3,014.55 264,340.80 3,600,000.00 4,100,876.30 2023 269,746 22,395 42,569 204,782 224,596.45 3,038.40 221,558.05 3,420,000.00 3,914,342.45 182 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 183 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell Energy Solutions In 2017, we established Turkcell Enerji Çözümleri A.Ş. to reduce energy sup- ply costs and ensure supply security, in addition to mitigating the effects of cli- mate change. Since its establishment, our subsidiary has increased its invest- ments in renewable energy to increase its installed capacity every year, reach- ing an installed capacity of 1.5 MW in 2023. With these investments, we made significant progress during the period in line with our strategy to transform from a 100% renewable energy user to a digital operator that generates its own elec- tricity. The amount of renewable energy we produced in 2023 was equivalent to the electricity consumption of 41 thou- sand households for one year. We also produced enough energy to power 2,750 base stations for one year. With our first solar power plant in the Turkish Republic of Northern Cyprus (Vadili region), we generate 1.7 million kWh of electricity annually, alleviate the demand load on the Cyprus Turk- ish Electricity Authority (KIB-TEK) grid and contribute to the digital infrastruc- ture of the electricity grid. In addition, the power plant will prevent the emis- sion of 822.8 tonnes of CO2e into the atmosphere. Our Ankara Data Centre is the first in Türkiye to generate data centre its own electricity using solar panels. With the new generation of solar pan- els installed above the car park of our headquarters building, we are able to generate a portion of the electricity we consume from renewable sources. Our data centre building, which generates 408 thousand kWh of electricity per year, also avoids 226 tonnes of CO2e greenhouse gas emissions per year. In 2018, our Gebze Data Centre became the first in Türkiye to achieve the Uptime OS Operational Sustainability Gold certificate. With the addition of our Ankara Data Centre, we became the only operator in Türkiye with two data centres meeting these standardsTürki- yeTürkiye. The solar power plant (SPP) at the Ankara data centre site, which will be commissioned in October 2023, uses solar tracking and double-sided panel technologies. This allows the solar pan- els to position themselves to receive the sun's rays at the steepest angle during the day, and also to use the rays reflect- ed from the surface to generate ener- gy. This system, which is based on the self-consumption model, is one of the rare examples in Türkiye in terms of the technology used. With the solar energy project on the roof of Turkcell Adana Plaza building, we generate electricity from renew- able energy and use the energy gen- erated on the roof with this self-con- sumption model to meet the electricity needs of our Adana Plaza building. An- nually, we generate 63.5 thousand kWh of electricity, saving approximately 30.73 tonnes of CO2e greenhouse gas emissions. By the end of 2023, we have increased the number of sites with solar pan- els (green fields) to 1,400. In addition, with 15 Portable Solar Field solutions, a product of our innovative efforts, we meet the needs of regions experienc- ing seasonal population increases and 2,750 base stations' annual energy needs are met from renewable energy. By the end of 2023, we reached 1,400 fields (green fields) with solar panels. Our data centre building generates 408 thousand kWh of electricity per year and at the same time we prevent 226 tonnes of CO2e GHG emission per year. With energy-efficient network equip- ment, air-conditioning units in data cen- tre system rooms and our state-of-the- art technology products, we are using our existing energy resources wisely and saving energy by creating a more efficient energy infrastructure. We de- sign our buildings to maximise the use of daylight, and we use less energy to heat and cool our buildings through thermal insulation details such as insulated wall materials and exterior cladding. We reduce our emission values per kilometre with the preference of using hybrid vehicles in our company fleet. With the hybrid vehicle conversion, we carried out in the past years, we re- duced the emission level from 12.7 g/km to 9.1 g/km. We continue to maintain this level since no new vehicles joined our fleet in 2023. Energy Savings (GJ) 2019 2020 2021 2022 2023 151,143 110,304 193,414 227,592 76,258 With our Turkcell Kopilot ap- plication, which brings a new dimension to the driving experi- ence in the car with its superior features, we provide fuel con- sumption, travel and user anal- yses and indirectly reduce fuel consumption. Thanks to this ap- plication, we contribute to the transformation of companies' fleet management into a model that emits less emissions. limited access to energy resources. The environmentally friendly nature of these communication stations, which we have installed in various locations, contributes to our sustainability goals. 54 MW of our onshore SPP investments, which we started in 2023, have been tendered and our field installations continue. We aim to add 300 MW of installed capacity by 2025. Once these investments are completed, we aim to meet 65% of Turkcell Group's electricity consumption from our own generation by 2026. In this way, our energy needs will be largely covered by renewable sources, while at the same time pro- viding security against cost and supply risks arising from the energy market. Energy Efficiency We aim to reduce our environmental impact and energy costs by minimising our energy consumption. The efficien- cy studies we conduct for this purpose include the use of energy-efficient equipment and behavioural efficiency practices for consumption patterns. We also continued to renew energy efficient equipment and network effi- ciency practices, which are an impor- tant part of our efficiency efforts. 21.2 GWh of savings were achieved by analysing and implementing studies to ensure energy efficiency and savings in our network. Efforts have been made to replace equipment with high ener- gy consumption with new technology equipment with low energy consump- tion and to reduce energy consump- tion by turning off equipment that is no longer in use. We already require the provision of eco-design criteria in the air condition- ing units we use and the current regu- lations specific to the unit, although this is not yet mandatory in Türkiye. In this way, we aim to increase energy effi- ciency by ensuring the use of A-rated products. 184 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 185 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Water Management The efficient use of water, a vital natu- ral resource, is among the impact areas we follow in line with our environmental strategy. While developing our prod- ucts and services, we do not use water resources directly. Nevertheless, as a responsible company in resource utili- sation, we disclose the amount of wa- ter we use through our annual reports. The main characteristic of our water use is the consumption arising from the daily needs of our employees and met with municipal water. During the peri- od, a total of 196,300 m3 of water was consumed. We endeavour to reduce this amount with efficient fixtures and consumption practices. As part of the GEM4 project we carried out in the last period, we had achieved a 40% saving in water consumption on a module basis by changing the cool- ing equipment. We purified the wa- ter we took from the mains by putting it through a reverse osmosis process and using it in the equipment. However, at the end of this process, 40% of the mains water was discharged as waste. The changes we made to the machine eliminated the need for the reverse os- mosis process and eliminated waste water. The same system was used in the GEM5 project, which we devel- oped, and waste water production was eliminated. The project design of the reverse os- mosis system in our Ankara Data Cen- tre has been completed to recycle the waste water from the reverse osmosis system back into the building by pass- ing it through a second reverse osmo- sis system. With this project, we aim to reduce the building's waste water rate from 40% to 16%. With the installation of a second re- verse osmosis unit at the Izmir Data Centre and the completed projects at the Gebze Data Centre, where the ef- fluent from the 2nd and 3rd module re- verse osmosis units is passed through the 1st module reverse osmosis unit, 60% of the effluent in these buildings has been recycled. Total Water Consumption (m3) , 7 5 3 6 3 2 7 5 0 4 5 1 , 4 3 6 4 3 1 , 2 3 8 5 4 1 , 0 0 3 6 9 1 , 2019 2020 2021 2022 2023 While striving to reduce and recycle our water consumption as part of our operations, we also help our customers improve their water use through the services we provide. With our Smart Water Me- ter application, water consumption is controlled and natural resources are protected by remotely reading meters using IoT technologies, opening and closing valves and instantly monitoring usage. Turkcell data centres have a PUE design value of 1.3, well below the global average of 1.55. The WUE value, which was targeted to be reduced below 1.8 for 2023, was realised as 1.74. Efficiency in Data Centres We prioritise energy and water efficiency in the design of Turk- cell data centres. In this context, we work for reducing the PUE value reflecting energy efficiency and the WUE value reflecting water usage efficiency. Turkcell data centres have a PUE design value of 1.3, well below the global average of 1.55. The WUE val- ue, which was targeted to be reduced below 1.8 for 2023, was realised as 1.74. Since we meet the electricity consumption of out data centers, which constitutes the most important impact factor i, with re- newable energy obtained through self-generation as well as purchased iREC certified (I-REC, YEK-G) renewable energy sources, the emission values of our data centre operations are considerably lower compared to their counterparts. In our data centres, we reuse rainwater in domestic consump- tion as grey water with various filtration processes, and we continue our efforts for the recovery and use of our wastewater in different areas. In this context, we have initiated the neces- sary work to realise projects such as reprocessing the wastes of reverse osmosis devices and using the wastewater of these devices in garden irrigation. In addition to energy and water ef- ficiencies, we continue to work on thermal recycling. All these environmental impact management activities in our data centres generate two different positive values. Firstly, these efforts, we significantly reduce the environmental im- pacts resulting from Turkcell’s operations, and secondly, we also gain cost advantage with the savings we achieve. On the oth- er hand, we enable our customers to significantly reduce their indirect environmental impacts, particularly greenhouse gas emissions. Consequently, we offer a local and environmentally friendly alternative to our customers who have highly sensitive to environmental impact management and pursue sustainable business models in their data centre service needs. 186 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 187 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Industrialists (TÜBİSAD), the authorised organisation in this field. All proceeds from the recycling are donated to the Educational Volunteers Foundation of Türkiye (TEGV) to be used for the high-quality education of children. Turkcell has recycled approximately 34 tonnes of electronic waste through this project since November 2019, when the project was launched, and 4.2 tonnes in 2023. It has contributed to the high-quality education of 404 children by donating all the generated income to TEGV for the quality education of children. From October 25 to Novem- ber 8, 2023, Turkcell gave TRY 200 gift vouchers, valid in stores and Pasaj, to everyone who brought their e-waste to the recycling bins in its stores to en- courage consumers in this regard. Total Waste Amount (tonnes) 2019 2020 2021 2022 2023 Hazardous Waste Non-Hazardous Waste Disposed 0 Recycling 3,567 Disposed 0 Recycling 1,518 0 2,745 0 953 Total 5,085 3,698 0 2,158 0 1,342 3,500 0 1,609 0 1,042 2,651 0 6,940 0 6,880 13,820 2019 2020 2021 2022 2023 Secondhand sales and discarded units sale amount* (tonnes) 5,599.89 4,220.18 3,691.52 3,088.27 3,686.47 * We aim to utilize 100% of network related wastes as discards or with secondhand sales. In 2023, a total of 3,686 tonnes of e-waste was successfully recycled, achieving a 100% recycling rate. Waste Management We adopt a 'minimise waste, maximise recovery' approach to the manage- ment of waste from our operations. We carry out waste management activi- ties in accordance with the methods and practices prescribed by law. We reduce the amount of waste we gen- erate by ensuring efficient use of ma- terials, particularly paper, toner and plastic, and by separating the waste we generate and recycling it through licensed facilities. We collect used batteries separately and recycle them through local authorities or the Port- able Battery Manufacturers and Im- porters Association, depending on the location. We were the first non-manu- facturing company to be awarded the Basic Level Zero Waste Certificate for our past studies. Thanks to the waste management centre we have set up, we ensure that the solid food waste collected in the cafeteria and offices is processed on site using a composting machine, and we obtain soil-improving organic fertiliser. We dispose of hazardous waste such as batteries, toner, electronics, cables and consumables generated by our activities through licensed and compe- tent recycling companies, thus prevent- ing the interaction of hazardous waste with the environment. On the other hand, we prevent oil waste generated in our offices from mixing with domestic wastewater by collecting it with oil trap systems. contribute to the circular economy sys- tem, where resources are not unnec- essarily extracted, wasted and recov- ered. In 2019, we launched the Modem Renewal Project, whereby we renew or repair our modem group products that are not used by our customers and make them available to our customers who request modems. As part of this project, 58 thousand set-top boxes, 106 thousand superbox products, 58 thou- sand optical network terminals (ONT) and 182 thousand modems will be re- newed in 2023. In 2023, 22% of fiber mo- dems and 20% of ADSL modems will be covered by modems renewed in 2023. In addition, 14% of the renewed STBs, 18% of the ONTs and 44% of the Super- boxes will be used and offered to our customers in the same year. We are well aware of the negative impact on the ecosystem caused by electronic products that have com- pleted the end of their lifecycle due to improper management, and we car- ry out our work in this area with great care. In order to turn this situation into an opportunity, we are evaluating electronic waste products, which are rich in raw materials and content suit- able for reuse, within the framework of the circular economy, thus achieving both financial savings and efficient use of limited resources. In 2023, a total of 3,686 tonnes of e-waste was success- fully recycled, achieving a 100% recy- cling rate. Recycle into Education We enable the reuse of products by selling second-hand and other dis- carded items to companies use old technology. We aim to recover 100% of network infrastructure equipment through these sales. In this way, we The e-waste (mobile phones, com- puters, tablets and accessories, etc.) brought to the recycling bins in Turkcell stores as part of the Recycle into Edu- cation project is recycled in coopera- tion with the Association of Informatics 188 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 189 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES APPENDIX-1: Awards received by Turkcell in 2023 Our works in 2023 have also received the appreciation of our stakeholders. The projects and applications, we have accomplished within the year were deemed worthy of reward by many institutions. Golden Compass : At the 21st Golden Compass Awards, hosted by the Public Relations Association of Türkiye, our company was honored Türkiye with 3 awards. T.Life won the "Best Internal award, Communication "Sponsorship GNÇ SporFest won Communication - Other" award and Women Writing the Future Climate Idea Marathon won the "TÜHİD - KAGİDER 1e1 Gender Equality Award" award. Project" the IDC DX Summit 2023: Our RPA Marathon Programme, which has been running since 2022, was awarded the first prize in the Future Enterprise of the Year category at IDC DX Summit 2023. 13. GLOBEE® International Business Awards: Achievement in Best Use of Tech- nology and Best Use of Technology in Cus- tomer Services categories with the "Emer- gency Robot" project created by our NT, CEM and Global Bilgi teams. Best Mobile App Awards: İşTurkcell Online won an award at the Best Mobile App Awards. İşTurkcell Online mobile applica- tion, where company officials can easily manage their corporate mobile lines, re- ceived a Silver award from the Best Mo- bile App Awards. Employer Brand Stars: Our Human Re- sources team returned from the Employer Brand Stars competition with 4 awards. GNÇYTNK/Graduate Recruitment Pro- gramme won Gold, T.Life/Use of Digital Programme won Gold, T.Life/Employer Brand Strategy won Silver and T.Life/In- ternal Communication Programme won Bronze. Brandon Hall Excellence Awards: Our Hu- man Resources team returned from Bran- don Hall with 4 awards. GNÇYTNK was awarded Gold for Best Unique or Innovative Talent Acqusition Programme, Gold for Future of Leader- ship Masters/Best Advance in Competen- cies and Skill Development, Bronze for In- clusive and Effective Benefits Supporting Flexible Working Model/Best Advance in Benefits Strategy and Administration and Bronze for Superwomen of Cyber Secu- rity/Best Unique or Innovative Learning and Development Programme. Turkcell Global Bilgi was awarded the first prize by Brandon Hall Group Award Excellence in 2023 for its "Harmony" and "Coaching Office" Human Resources practices. Association for Talent Development: We achieved another success with our RPA Training and Development Programme and returned with an award from ATD, one of the most prestigious institutions in the world of education. We received the award in the Talent Development Inno- vation category with our holistic devel- opment programme that brings togeth- er our company strategies and future competencies. Happy Place to Work: We were select- ed among 303 companies in the Türkiye's Happiest Workplaces Survey planned by Happy Place to Work, a platform es- tablished by academics and consultants to support companies in their journey to create a happy workplace culture. Stevie 2023 The International Business Awards: Our Contact Risk-Scoring Sys- tem, one of the many projects developed within our company in the field of Legal Technologies (LegalTech), was award- ed the Bronze Stevie award in the "New Product Awards - Legal Solution" cate- gory at the Stevie 2023 The International Business Awards competition. Brandverse Awards: Our company re- turned with 4 awards from Brandverse Awards, one of the marketing and com- munication awards that offers a 360-de- gree comprehensive view of the world of brands with marketing, communication and advertising works. Silver award in the "Social Responsibility and Sustainability" category with the "Te- kno Waste" project, Pasaj won the Silver award in the "Media/ Sectoral: E-commerce" category, Paycell won the Bronze award in the "Me- dia/Sectoral: Finance" category, Turkcell Store won the Bronze award in the "Media/Outdoor" category with the "Geforce Now Mall IQ" project. MIXX (Marketing and Interactive Excel- lence) Awards: We received the special award with the TV+ "Sahibinden F1 Viral" project at the thirteenth MIXX (Market- ing and Interactive Excellence) Awards, which evaluates and rewards digital ad- vertisements with all layers from strategy to creative work and implementation, from media planning to integration, from efficiency to return on investment. International Loyalty Awards: With our 103 stores in 81 provinces, we were awarded the first prize in the Best Cus- tomer Experience category at the Inter- national Loyalty Awards, one of London's prestigious awards, with our Barrier-Free stores, which is our social responsibility project on our way to equal and acces- sible service for our customers in all disa- bility groups. Best Innovative Service Provider of the Year: Our Company won the "Best In- novative Service Provider of the Year" award with our Turkcell Transport Net- work at the NGON (New Generation Optical Networking) Awards, one of the most important events of the telecommu- nications industry, which brings together the entire Optical Networking Industry worldwide. Data Centre ICT Management Innova- tion of the Year: At the DCS Awards held globally in the Data Centre sector, our "DCMAN" application, which we devel- oped in-house as Turkcell and used in our Data Centre White Space operation pro- cesses, won 2nd place in the "Data Centre ICT Management (DCIM) Innovation of the Year" category. Web Excellence Awards: İşTurkcell On- line, where the authorities of our corpo- rate mobile customers can easily man- age their company lines, was awarded in the Best in Mobile App and Best in Website categories for both mobile ap- plication and website. Our analytical platform "Corporate Compass", which provides a great digital transformation in the business processes of our Corpo- rate Sales and DBS Teams, guides them in operational efficiency and strategic guidance, makes corporate memory sus- tainable and provides operational effi- ciency, was awarded in the Corporate & B2B category. IDC CIO Awards: Turkcell Omnichannel project, in which we make our custom- ers feel "Safe, Valuable and Happy" by making them experience the Single Turk- cell perception in all our channels, won 3rd place in the Change Management category. Green All-optical Network Forum 2023: With our super wi-fi project, our company added a new power to our light-speed fiber internet, and within the scope of the project, we broke new ground in Türkiye by offering Wi-Fi 6 technology to our fib- er customers. With this success, we were awarded the Great Advencement of Smart Home Service award by IDATE at the Green All-optical Network Forum 2023. Stevie Awards: Our Turkcell Market In- stant Store Stock Display project, which we implemented on B2B Portal, the prod- uct supply platform of sales channels, was awarded the "Award for Innovation in Sales - Technology Industries" catego- ry, and our Atmosfer application, which allows our field employees to easily and quickly access all the information they need on a single platform, was award- ed the "Gold Stevie" award in the "Sales & Marketing Mobile Application" category. Achievement in Customer Excellence Awards: As a result of our efforts to make our customers feel safe, valuable and happy at all times, we returned with 4 awards from the 8th Achievement in Cus- tomer Excellence Awards organised by Şikayetvar.com this year. We received the Diamond Award with Turkcell (GSM) in the Communication Category, the Gold Award with TV+ in the Digital Platform Category, the Silver Award with Turkcell Superonline in the Internet Service Providers Category and the Silver Award with Paycell in the Elec- tronic Money Applications Category. MarTech Awards: Our company returned with 5 awards from the MarTech Awards, which was organised for the sixth time this year, rewarding the most successful use of marketing technologies to set an example for the sector. The Corporate Social Responsibility team won the first prize in the "Wonders Creat- ed with Low Budgets" category with the " Fleeing Eyes " project, and Paycell won the first prize in the "Best Marketing Au- tomation Technology" category with the "Feed Integrations" project, Tv+ won the first prize in the "Best Media Technology" category with the "TV+ Dynamic Stream- ing Ads" project, Fizy won the first prize in the "Best Use of Technology in Content Marketing" category with the "Decibel- meter" project and Fizy won the first prize in the "Best Use of Technology in Mobile Applications" category with the "Mood- meter" project. Felis Awards: We won a total of 8 awards at the 2023 Felis Awards, where creative communication works are recognised. Our "Google Hack" project received 5 Fe- lis and 1 Achievement award, our "Burnout Syndrome" film received Curious Felis, and our "T.Life is 1 Year Old" project received Achievement award. LegalTech Breakthrough Awards: Our Contact Risk-Scoring System, one of the many projects developed within our company in the field of Legal Technolo- gies (LegalTech), won an award at the LegalTech Breakthrough Awards 2023, where it competed in the Overall Legal Analytics Innovation of the Year category. Secret CV HR Stars: Our internal commu- nication and Employer Branding umbrella strategy T.Life was selected as the "Best Employer Brand of 2023" at the Secret CV HR Stars Awards. YTU Business World Awards: T.Life, our internal communication and Employer Branding roof strategy, received the "Best Social Responsibility Project selected by students" award at Yıldız Technical Uni- versity Business World Awards with our Step into the Future project. Boğaziçi University Business World Awards: T.Life, our internal communica- tion and Employer Branding framework strategy, was named "Technology Com- pany of the Year" at the Boğaziçi Universi- ty Business World Awards. Future of Cloud & AI: Our company re- turned with 2 awards from the "Future of Cloud & AI" event organised by CXO Me- dya. Cost Efficiency, "Robotic Device Re- quirement and Order Management, Ro- botic Process Automation, "Turkcell Data Centre Energy Saving with Reinforcement Learning" projects won the award. RDCNOF 2023: Paycell won the third prize for The Best Agile Project paper in all industries with the Vitrin project at the International conference on design re- search and development. BOSPHORUS ENVIRONMENT AWARDS: Recycling Project of the Year Award was given to Turkcell Transform into Education Project. Bonds & Loans 2023: Our TRY 200 million Sukuk transaction, which we issued to Paycell in August, won the first place in the "Islamic Capital Markets Deal of the Year" category at Bonds & Loans. Next Generation Optical Networks (NGON) Awards: At the NGON 2023 event, which is organised worldwide every year, attended by the entire optical network industry and is the largest event for op- tical network technologies, the "Core Transport Network" team received the "Best Innovative Service Provider of the year" award for their new applications in the network with a focus on leadership in technology. 5G Core Summit Awards: At the 5G Core Summit event attended by global and lo- cal operators, the "Broadband Network & Enhanced Voice Services" teams won the "Best Network Reliability Solution" award for their redundancy and robust- ness practices in the Turkcel Packet and Voice Network with a focus on technolo- gy leadership. SDC Awards 2023: Our RPA Marathon Programme, which has been running since 2022, was awarded in 2 categories; Intelligent Automation Project of the Year - WINNER and Company Culture Initiative - RUNNER UP. (Payment PSM System Magazine) Awards: Paycell Showcase - RPA Robot project developed within the scope of the RPA Marathon programme won the Golden PSM in the "Internal Innovation" category. APPENDIX-2: Turkcell ISO Certificates 䩉ISO 9001 Quality Management System 䩉ISO 10002 Customer Satisfaction Management System 䩉ISO 14001 Environmental Management System 䩉ISO 20000 Information Technology Service Management System 䩉ISO 22301 Business Continuity Management System 䩉ISO 27001 Information Security Management System 䩉ISO 27017 Information Security Management System in Cloud Services 䩉ISO 45001 Occupational Health and Safety Management System 䩉ISO 50001 Energy Management System 190 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 191 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES APPENDIX-3: Cooperated National, International and Non-Governmental Organizations APPENDIX-4: GRI Content Index Level of Engagement Membership Membership Membership Board Member (Tümay Ünal) Membership Membership Membership Membership Membership Membership Membership Membership Membership Membership Membership Membership Membership Membership Membership Organisation Name 3GPP AUSDER BCTR BGD The 3rd Generation Partnership Project Intelligent Transport Systems Association Blockchain Türkiye Platform Information Security Association BUSIAD Bursa Industry and Businessmen Association DEIK ECTA Foreign Economic Relations Board of Türkiye European Competitive Telecommunications Association EDIDER Digitalisation in Energy Association ENDAVOUR Association for Supporting Active Entrepreneurs ESB ETID ETSI HIB FKB GSMA GTI IAPP IIC IPTV ASSOCIATION ITU Access Providers Association Electronic Commerce Operators Association European Telecommunications Standards Institute Service Exporters Association Financial Institutions Union Global System for Mobile Communications Association Global TD-LTE Initiative International Association of Privacy Professionals International Institute of Communication Internet Based Television Technologies Association International Telecommunication Union m-TOD Mobile Telecommunication Operators Association MMA Türkiye Mobile Marketing Association MOBISAD MUSIAD NGMN PERYÖN SKD RVD Mobile Communication Tools and Information Technologies Businessmen Association Independent Industrialists and Businessmen Association Next Generation Mobile Networks Human Management Association of Türkiye Business and Sustainable Development Association Advertisers Association TELKODER Turkish Competitive Telco Operators’ Association The Union of Chambers and Commodity Exchanges of Türkiye Membership Telecommunication Satellite and Broadcasting Business Association Informatics Industry Association Membership Membership TOBB TUYAD TÜBİSAD TUSIAD TUYID UN Global Compact WTECH Turkish Industry and Business Association Turkish Investor Relations Association United Nations Global Compact Women’s Association in Technology YASED International Investors Association 192 | TURKCELL 2023 INTEGRATED ANNUAL REPORT Membership Membership Membership Membership Membership Membership Board Membership (Ali Taha Koç, PhD, Ali Uysal, Prof. Dr Vehbi Çağrı Güngör) Membership GRI 2: General Disclosures 2021 Membership Membership Membership Membership Membership Membership Membership Statement of use Standards for the period 01 January 2023-31 December 2023. :Turkcell İletişim Hizmetleri A.Ş. has reported in accordance with the GRI GRI 1 used : GRI 1: Foundation 2021 Applicable GRI Sector Standard(s) : N/A GRI Standard Disclosure General Disclosures 2-1 Organizational details 2-2 Entities included in the organization's sustainability reporting 2-3 Reporting period, frequency and contact point 2-4 Restatements of information 2-5 External assurance 2-6 Activities, value chain and other business relationships 2-7 Employees 2-8 Workers who are not employees 2-9 Governance structure and composition 2-10 Nomination and selection of the highest governance body 2-11 Chair of the highest governance body 2-12 Role of the highest governance body in overseeing the management of impacts 2-13 Delegation of responsibility for managing impacts 2-14 Role of the highest governance body in sustainability reporting 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 2-19 Remuneration policies 2-20 Process to determine remuneration 2-21 Annual total compensation ratio Omission Requirement(s) Omitted Reason Explanation Location Turkcell at a Glance (p.30-32) About the Report (p.28) Our Offices (p.336) About the Report (p.28) About the Report (p.28) No such restatement has been made Independent Assurance Report (p.230-234) Turkcell Value Creaiton Process (p.58); Our Strategic Focuses, Initiatives and Opportunities (p.62); Value-oriented and Responsible Supply Chain Management (p.166-169) Employee Demographics in 2023 (p.109) 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. Board of Directors Structure (p.71-72) Board of Directors Structure (p.71-72) Board of Directors Structure (p.71-72) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Board of Directors Structure (p.71-72) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Board of Directors Structure (p.71-72) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Board of Directors Structure (p.71-72) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Board of Directors Structure (p.71-72) Our Human Capital (p.109) Confidentiality Constraints Data regarding re- muneration is considered as confidential. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 193 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES GRI Standard Disclosure Location Omission Requirement(s) Omitted Reason Explanation GRI 2: General Disclosures 2021 2-22 Statement on sustainable development strategy 2-23 Policy commitments 2-24 Embedding policy commitments Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.50) Human Rights, Business Ethics and Common Values (p.74) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Environmental Management (p.179-180) 2-25 Processes to remediate negative impacts Turkcell Value Creation Process (p.58-59) Turkcell Sustainability Priorities (p.48-49); 2-26 Mechanisms for seeking advice and Interactions with Our Stakeholders (p.54-55) raising concerns Competition Management (p.76) 2-27 Compliance with laws and regulations Turkcell’s Sustainability Initiative Memberships (p.56-57); Cooperated National, International and Non-Governmental Organizations (p.192) 2-28 Membership associations 2-29 Approach to stakeholder engagement Interactions with Our Stakeholders (p.54-55) 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.48-49) 3-2 List of material topics Turkcell Sustainability Priorities (p.48-49) GRI 302: Energy 2016 GRI 303: Water and Effluents 2018 GRI 305: Emissions 2016 3-3 Management of material topics Decarbonisation and Renewable Energy GRI 3: Material Topics 2021 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 302-3 Energy intensity 302-4 Reduction of energy consumption Climate Crisis (p.80); Climate Change (p.181); Our Natural Capital (p.178-189) Climate Crisis (p.80); Climate Change (p.98); Our Natural Capital (p.178-189) CDP Report 2023 Our Natural Capital (p.183) Our Natural Capital (p.183) Our Natural Capital (p.185) 303-3 Water withdrawal Our Natural Capital (p.186) 305-1 Direct (Scope 1) GHG emissions 305-2 Energy indirect (Scope 2) GHG emissions 305-3 Other indirect (Scope 3) GHG emissions Our Natural Capital (p.182) Our Natural Capital (p.182) 305-4 GHG emissions intensity Our Natural Capital (p.182) 305-5 Reduction of GHG emissions Our Natural Capital (p.182) Our Natural Capital (p.182) Circular Conduct GRI 3: Material Topics 2021 3-3 Management of material topics Our Natural Capital (s.178-189) GRI 306: Waste 2020 306-1 Waste generation and significant waste- related impacts 306-2 Management of significant wasterelated impacts 306-3 Waste generated Our Natural Capital (p.188) Our Natural Capital (p.188) Our Natural Capital (p.189) 306-4 Waste diverted from disposal Our Natural Capital (p.188) 306-5 Waste directed to disposal Our Natural Capital (p.189) Efficient Technology Solutions GRI 3: Material Topics 2021 3-3 Management of material topics Our Manufactured Capital (p.124-131); Our Intellectual Capital (p.132-147); Our Social Capital (p.148-176) GRI Standard GRI 203: Indirect Economic Impacts 2016 Disclosure Location 203-1 Infrastructure investments and services supported 203-2 Significant indirect economic impacts Our Manufactured Capital (p.131); Our Social Capital (p.148-176) Our Manufactured Capital (p.124-131); Our Intellectual Capital (p.132-147) Omission Requirement(s) Omitted Reason Explanation GRI 413: Local Communities 2016 GRI 416: Customer Health and Safety 2016 413-1 Operations with local community engagement, impact assessments, and development programs 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 Digital Security and Wellbeing GRI 3: Material Topics 2021 GRI 203: Indirect Economic Impacts 2016 GRI 413: Local Communities 2016 413-2 Operations with significant actual and potential negative impacts on local communities 203-2 Significant indirect economic impacts 3-3 Management of material topics Our Social Capital (p.148-175) Our Manufactured Capital (p.124-126) Our Manufactured Capital (p.124-126) Digital Security and Wellbeing (p.143) Digital Security and Wellbeing (p.143) Our Manufactured Capital (p.126) Human-Oriented Turkcell Culture 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 3-3 Management of material topics Human Rights, Business Ethics and Common Values (p.74); Our Human Capital (p.106-123); Equality of Digital and Social Opportunity (p.170) 401-1 New employee hires and employee turnover 401-3 Parental Leave Our Human Capital (p.110) Our Human Capital (p.106) 402-1 Minimum notice periods regarding operational changes Our Human Capital (p.107) 403-1 Occupational health and safety management system 403-2 Hazard identification, risk assessment, and incident investigation 403-3 Occupational health services 403-4 Worker participation, consultation, and communication on occupational health and safety 403-5 Worker training on occupational health and safety 403-6 Promotion of worker health 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 404-3 Percentage of employees receiving regular performance and career development reviews Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.122-123) Our Human Capital (p.116) Our Human Capital (p.116-121) Our Human Capital (p.114) 194 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 195 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES APPENDIX-5: UNGC Progress Chart 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-Oriented and Responsible Supply Chain Management Strong Corporate Governance, Our Human Capital, Value-Oriented and 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 Our Human Capital, Value-Oriented and Responsible Supply Chain Management Principle 5: the effective abolition of child labour Our Human Capital, Value-Oriented and Responsible Supply Chain Management Principle 6: the elimination of discrimination in respect of employment and occupation Our Human Capital Principle 7: Businesses should support a precautionary approach to environmental challenges Our Natural Capital Environment Principle 8: undertake initiatives to promote greater environmental responsibility Our Natural Capital Principle 9: encourage the development and diffusion of environmentally 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 GRI Standard Disclosure Location Omission Requirement(s) Omitted Reason Explanation GRI 405: Diversity and Equal Opportunity 2016 GRI 406: Non- discrimination 2016 GRI 407: Freedom of Association and Collective Bargaining 2016 405-1 Diversity of governance bodies and employees Our Human Capital (p.106) 405-2 Ratio of basic salary and remuneration of women to men Our Human Capital (p.109) 406-1 Incidents of discrimination and corrective actions taken Our Human Capital (p.108-110) 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-oriented and Responsible Supply Chain Management (p.166) GRI 409: Forced or Compulsory Labor 2016 Ethical Conduct 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-oriented and Responsible Supply Chain Management (p.166) GRI 3: Material Topics 2021 3-3 Management of material topics 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 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices Equality of Digital and Social Opportunity GRI 3: Material Topics 2021 3-3 Management of material topics GRI 203: Indirect Economic Impacts 2016 Responsible Value Chain 203-2 Significant indirect economic impacts Turkcell Sustainability Management and Involvement of Senior Management (p.47); Human Rights, Business Ethics and Common Values (p.74); Anti-Bribery and Corruption, Compliance with International Capital Markets and Economic & Trade Sanctions and Export Controls (p.75); Competition Management (p.76); Artificial Intelligence (p.104); Value-oriented and Responsible Supply Chain Management (p.166) Anti-Bribery and Corruption, Compliance with International Capital Markets and Economic & Trade Sanctions and Export Controls (p.75) Human Rights, Business Ethics and Common Values (p.74) Competition Management (p.76) Our Strategic Focuses, Initiatives and Opportunities (p.62); Data Center (p.131); Equality of Digital and Social Opportunity (p.170) Data Center (p.131); Equality of Digital and Social Opportunity (p.170) GRI 3: Material Topics 2021 3-3 Management of material topics Our Strategic Focuses, Initiatives and Opportunities (p.62); Localization Efforts (p.168) 203-2 Significant indirect economic impacts GRI 203: Indirect Economic Impacts 2016 GRI 204: Procurement Practices 2016 Transparency and Accountability 204-1 Proportion of spending on local suppliers Localization Efforts (p.168) Localization Efforts (p.168) GRI 3: Material Topics 2021 3-3 Management of material topics Interactions with Our Stakeholders (p.54- 55); Our Strategic Focuses, Initiatives and Opportunities (p.62); Our Financial Capital (p.91) 196 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 197 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES APPENDIX-6: Sustainability Principles Compliance Framework Table COMPLIANCE STATUS COMPLIANCE STATUS YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK 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 environmental, social and governance (ESG) material issues, risks and opportunities. A1.1 The Board of Directors determines and publicly 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 A2.1 The Partnership determines and publicly discloses 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. X X X X X A2.2 The Partnership develops and publicly discloses implementation and action plans in line with the short- and long-term ESG goals. X 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 sustainability performance improvement activities regarding business processes or products and services. A3. Reporting A3.1 The Partnership discloses information on sustainability performance, goals and actions within the annual report in a clear, accurate and complete manner. A3.2 A3.3 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 X X X X X Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Priorities (p.49) Operational Risks (p.79-80) Climate Change (p.100) Turkcell Sustainability Management and Involvement of Senior Management (p.47) www.turkcell.com.tr/en/aboutus/ corporate-social-responsibility/ sustainability Our Human Capital (p.106) Our Intellectual Capital (p.132) Our Social Capital (p.148) Our Natural Capital (p.178) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Management and Involvement of Senior Management (p.47) Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.50) Our Human Capital (p.106) Our Intellectual Capital (p.132) Our Social Capital (p.148) Our Natural Capital (p.178) Our Human Capital (p.106) Our Intellectual Capital (p.132) Our Social Capital (p.148) Our Natural Capital (p.178) Our Human Capital (p.106-123) Our Intellectual Capital (p.132-147) Our Social Capital (p.148-175) Our Natural Capital (p.178-189) Turkcell Sustainability Strategy: Positive Imprint in Sustainability (p.50) Turkcell Value Creation Process (p.58-59) Our Human Capital (p.106-107) Our Manufactured Capital (p.124) Our Intellectual Capital (p.132) Our Natural Capital (p.178-180) Sustainable Development Objectives Supported (p.52-53) Competition Management (p.76) Consolidated Financial Chart Footnotes (p.230) A4. Verification A4.1 Partnership’s ESG Key Performance measurements are verified by an independent third party and publicly disclosed. X B. Environmental Principals B1 B2 The partnership publicly discloses policies and practices, action plans regarding Environmental Management and Environmental Management 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. B3 Disclosed in A2.1. B4 B5 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 prioritized environmental issues have been integrated into business objectives and strategies. B6 Disclosed in A2.4. B7 B8 B9 B10 B11 B12 The Partnership publicly discloses how environmental issues are managed and integrated 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 involvement 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 emissions (Scope-1 (Direct), Scope-2 (Energy indirect), Scope-3 (Other indirect) ), air quality, energy management, 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 reporting 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 comparison with goals set for the previous years. X X X X X X X X X X The GHG verification process for the period between 01 January 2023 and 31 December 2023 is ongoing, and when the process is completed, the statement regarding the verification will be shared in the certificates section on the corporate website. Environmental Management (p.179) About the Report (p.28) Environmental Management (p.179-180) Environmental Value-oriented and Responsible Supply Chain Management (p.166-167) Environmental Value-oriented and Responsible Supply Chain Management (p.166-167) Climate Change (p.181) Our Natural Capital (p.182-189) Our Natural Capital (p.178-189) Our Natural Capital (p.178-189) Our Natural Capital (p.178) 198 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 199 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES COMPLIANCE STATUS COMPLIANCE STATUS YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK YES NO PARTIAL NOT RELEVANT DESCRIPTION REPORTING INFORMATION REGARDING PUBLICLY DISCLOSED DATA /LINK B13 The partnership set a strategy for fighting with climate crisis and publicly discloses actions planned. B14 B15 B16 B17 B18 B19 B20 B21 B22 B23 B24 B25 C1.1 C1.2 The Partnership establishes and publicly discloses 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, contractors, dealers, etc) decrease their GHG emissions. 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 generated 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 efficiency 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 platforms 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 Türkiye has approved, and other relevant legal regulations; determines individuals responsible for application of the policy, and publicly discloses policy and people responsible for its practice. The Partnership includes subjects such as fair workforce, improvement of working standards, female employment and inclusivity (such as no discrimination based on gender, race, religion, language, marital status, ethnic identity, sexual orientation, gender identity, family responsibilities, trade union activities, political views, disabilities, social and cultural differences, etc.) in its Labour Rights Policy considering also supply and value chain impacts. X X X X X X X X X X X X X X X X Our Natural Capital (p.181-185) Turkcell Energy Solutions (p.184-185) Environmental Value-oriented and Responsible Supply Chain Management (p.166-167) Energy Efficiency (p.185) 2023 CDP Report GHG Emissions (p.182) Energy Management (p.183) Turkcell Energy Solutions (p.184-185) Turkcell Energy Solutions (p.184-185) Energy Efficiency (p.185) Water Management (p.186) 2023 CDP Report GHG Emissions (p.182) 2023 CDP Report 2023 CDP Report Diversity, Inclusion, and Equal Opportunity (p.108-109) Diversity, Inclusion, and Equal Opportunity (p. 108-109) Environmental Value-oriented and Responsible Supply Chain Management (p.166-167) Diversity, Inclusion, and Equal Opportunity (p.108-109) C1.3 C1.4 The Partnership publicly discloses measures taken to respect the rights of specific economically, environmentally, and socially vulnerable groups (such as low-income groups, women, etc.) or minority rights/ equal opportunities along the value chain. The Partnership publicly discloses developments 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 complaints and disputes have been established, and processes for resolving disputes. The Partnership publicly discloses activities conducted during the reporting year in order to ensure employee satisfaction. The Partnership establishes and publicly discloses its OHS Policy. The Partnership publicly discloses precautions taken to prevent occupational accidents and to protect health and accident statistics. The Partnership establishes and publicly discloses its policies on protection of personal data and data security. C1.6 C1.7 C1.8 The Partnership establishes and publicly discloses its Code of Ethics. C1.9 The Partnership discloses its activities on community investments, social responsibility, financial inclusion and access to financing. C1.10 The Partnership organizes briefings and trainings programs on ESG policies and practices for employees. X X X X X X X X X X X C2. Stakeholders, International Standards and Initiatives C2.1 C2.2 The Partnership establishes and publicly discloses a customer satisfaction policy regarding management 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 adopted in reporting have been disclosed. C2.4 C2.5 D1 D2 The Partnership publicly discloses sustainability 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 international 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 awareness about the subject of sustainability and its importance through social responsibility projects, awareness events, and trainings. X X X X X X X Diversity, Inclusion, and Equal Opportunity (p.108-109) Diversity, Inclusion, and Equal Opportunity (p.108-109) Environmental Value-oriented and Responsible Supply Chain Management (p.166-167) Human Rights, Business Ethics and Common Values (p.74) Our Human Capital (p.109) Training and Development Our Approach (p.116) Human Rights, Business Ethics and Common Values (p.74) Employee Loyalty and Happiness (p.112) Safe and Healthy Work Environment (p.122-123) Safe and Healthy Work Environment (p.122-123) Digital Security and Wellbeing (p.143) www.turkcell.com.tr/tr/gizlilik-ve- guvenlik?page=kisisel-verilerin-korunmasi Human Rights, Business Ethics and Common Values (p.74) www.turkcell.com.tr/todiek Digital Financial Services (p.68-69) Social Investment and Sponsorship Projects (p.170-175) Environmental Management (p.180) Customer Satisfaction Management (p.163) Interactions with Our Stakeholders (p.54-55) About the Report (p.28) Cooperated National, International and Non-Governmental Organizations (p.192) Sustainability Indices and Performance Indicators (p.92-93) Turkcell Sustainability Priorities (p.48-49) Interactions with Our Stakeholders (p.54-55) Social Investment and Sponsorship Projects (p.170-175) 200 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 201 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Group Companies and Other Information on Corporate Governance Our Subsidiaries18 lifecell19 lifecell launched operations in Ukraine in February 2005. The quarterly active sub- scriber base increased by 1.5 million to 9.9 million in 2023. Lifecell maintains its lead- ing position in Ukraine in this area, with smartphone penetration reaching 83.5% by the end of 2023. By the end of 2023, lifecell's 4G network will cover a population of more than 31.5 million and more than 17,000 settlements in Ukraine. lifecell's 3G and 4.5G networks cover 78.7% of Ukraine's population and 61.7% of its territory. lifecell's total number of subscribers in- creased to 11.7 million in 2023. lifecell’s rev- enues in local currency terms increased 24.4%, while its EBITDA rose 25.0% resulting in an EBITDA margin of 58.1% for the full year. In TRY terms, lifecell’s revenue declined by 2.7% with an EBITDA margin of 58.0% for the full year. In March 2023, lifecell won the Operator's Work Under Fire award in the Best Mo- bile Innovation Supporting Emergency or Humanitarian Situations category at the Glomo Awards, the telecoms industry's most prestigious global awards. Lifecell was recognised for supporting its network and subscribers with exceptional techno- logical and digital solutions during the war, highlighting the heroism and dedication of the lifecell engineering team. In May, lifecell enabled its subscribers to use 5G while roaming in a number of countries. 18 Not all our subsidiaries are 􀕬 included in our Subsidiaries section. You can find the list of subsidiaries under note 39 of IFRS report which is attached to our Integrated Annual Report. 19 As per our Company's Board of Directors’ decision dated December 20, 2023; a share transfer agreement was signed on December 29, 2023 for the transfer of all shares, along with all rights and debts, of lifecell LLC, LLC Global Bilgi, and LLC Ukrtower, which are Turkcell's subsidiaries operating in Ukraine, to NJJ Capital. The sale of the Ukrainian assets remains subject to the completion of closing conditions. As of December 31, 2023, lifecell LLC, LLC Global Bilgi and LLC UkrTower have been classified as a disposal group held for sale and as discontinued operations. BeST After joining Turkcell Group in July 2008, BeST (Belarusian Telecommunications Network) became the first mobile op- erator to offer 3G services in Belarus in November 2009. As of 31 December 2009, BeST provided 2G and 3G services in all cities with more than 10,000 inhabitants and 2G services on all major intercity mo- torways and highways in the Republic of Belarus, achieving a population cover- age of approximately 99.8% and a geo- graphical coverage of 93.1% in Belarus. In August 2016, BeST became one of the first two operators to offer 4G services using LTE infrastructure installed by be- Cloud. BeST offers 4G LTE services in all regions and major cities of Belarus, with 4G geographical coverage of 89.2% and population coverage of 98.2%. The share of 4G subscribers reached 82% of the 3-month active data subscriber base in 2023. Increasing penetration of 4G ser- vices resulted in average monthly data consumption per user reaching 19.2 GB. The 4G network will carry 85% of total data traffic by 2023. increasing BeST continues its transformation from a communications service provider to a digital operator, converting its subscrib- ers into 4G users. Accelerating digital subscriptions and its share of subscriber acquisition, enhancing self-service capabilities through mo- bile applications and web channels, expanding digital service portfolio and penetration are the key initiatives that will continue the digitalisation journey in 2023. By bringing together connectivity and content to enrich customers' digital experience, BeST is driving ARPU growth through data services and a diversified digital services portfolio in line with Turk- cell's strategy. Accordingly, BeST added BiP, fizy, lifebox, magazines, TV+, games and digital book, digital education plat- forms to its digital services portfolio. By the end of 2023, 52.3% of 3-month active subscribers are using at least one digital service and solution. BeST continues to develop its self-service mobile application with new services and features. The mobile application al- lows customers to make payments and transfers using their mobile balance. In addition, BeST launched an insurance service on its self-service mobile applica- tion in 2023, allowing customers to sign up for various insurance policies. These new services enhance the seamless digital experience for customers, and increase customer engagement and loyalty. BeST is the first mobile operator in Bela- rus to launch a digital SIM card activation service via a mobile application using facial recognition technology based on machine learning algorithms in 2020. The service has been successfully developed by Lifetech, a wholly owned subsidiary of BeST. Lifetech was established in 2012 to provide services in telecommunications and infrastructure solutions, information and communication technologies, soft- ware development and security systems. Lifetech successfully provides IT-based solutions to Turkcell Group and other clients, and carries out software devel- opment projects both in Belarus and abroad. Kuzey Kıbrıs Turkcell Established in 1999 as a wholly-owned subsidiary of Turkcell, Kuzey Kıbrıs Turkcell continues its operations as the leading operator in the TRNC with an infrastruc- ture covering almost the entire popu- lation and an active subscriber market share of 62% excluding telemetry ac- cording to the third quarter data of 2023 released by the Information and Commu- nication Technologies Authority20. Lifecell Digital LTD., which entered the fixed internet market in the TRNC in 2018, continues its services with the success it has achieved in this field. Kuzey Kıbrıs Turkcell became the first operator to launch 4.5G in the Turkish Republic of Northern Cyprus on 7 Sep- tember 2023 by receiving the widest fre- quency band in the 4G/5G tender. Thus, with 99.6% population coverage, Turkcell launched this service in Northern Cy- prus within 10 months, providing its cus- tomers with up to 10 times faster internet infrastructure. Kuzey Kıbrıs Turkcell's 2023 revenues in- creased by 20.4% to TRY 1.1 billion. Turkcell Global Bilgi Turkcell Global Bilgi offers a new gener- ation of creative solutions by combining 24 years of experience in customer ex- perience with digital transformation. As a strategic business partner to brands, increase Turkcell Global Bilgi aims to customer loyalty and brand revenue by creating customised solutions to meet the needs of more than 100 companies, including Turkcell. Operating in Türkiye and Ukraine, Turkcell Global Bilgi is the first Turkish customer experience centre to operate abroad with its investment in Ukraine. With 16,657 employees, Turkcell Global Bilgi creates value by leading the sector with 11,656 fe- male employees, who make up 70% of the total workforce. Ranked among the top 500 IT companies in Türkiye, Turkcell Global Bilgi provides research management, customer expe- rience design, social media management and technology support services in addi- tion to call centre services. By implement- ing its own digital platforms in its R&D centre, Turkcell Global Bilgi offers digital services such as robotic process auto- mation (RPA), cloud-based switchboard infrastructure, digital assistant, video call- ing, etc. to businesses. Global Tower Global Tower, Türkiye's leading tow- er company, currently operates in four countries. Providing tower leasing, tower build-sell, tower maintenance and con- tract management services to telecom operators, broadcasters, internet service providers, energy companies and public institutions, Global Tower has started to offer satellite services solutions to its cus- tomers as part of its end-to-end service approach. Global Tower currently pro- vides closed-circuit satellite services to over two thousand points through its own geographically redundant infrastructure, and aims to expand its product range and service diversity by following the trends in the satellite industry. The breakdown of Global Tower's tower portfolio of 11,152 towers as of the end of Q4 2023 is as follows 䩉Türkiye: 9,163 (owned: 4,737, right of use: 2,189, contract management: 2,237) 䩉Ukraine: 1,038 (owned) 䩉Belarus 836 (right of use) 䩉TRNC: 115 (right of use) Superonline İletişim Hizmetleri A.Ş. Turkcell Superonline was established in 2009 through the merger of our subsidi- ary Tellcom (established in 2004 as Bilişim Telekomunikasyon and became Tellcom in 2006) and Superonline acquired from Çukurova Group. It provides telecommu- nications services to individual, corporate and carrier customers under the Turkcell Superonline brand. It is authorised by the Information and Communication Tech- nologies Authority (ICTA) to provide inter- net service provider, fixed-line telephony service, infrastructure operation service, satellite communication service, cable broadcasting service and mobile virtual network service. Within the framework of these authorizations, Turkcell Super- online's 2023 revenue was TRY 18.5 billion and EBITDA was TRY 7.0 billion . As of the end of 2023, Turkcell Superonline have 3.1 million broadband internet cus- tomers, of which 2.3 million are on its own fiber infrastructure, and 1.4 million IPTV customers under the TV+ brand. As of the same date, Turkcell Superonline pro- vides fiber access with speeds of up to 10 Gbps to 5.8 million households in 28 cities with a fiber length of 62,000 km. In addi- tion, Turkcell Superonline provides fixed broadband internet services to more households through contracts signed with other in the sector, while some operators ena- ble broadband internet services to their customers through Turkcell Superonline's infrastructure. Turkcell Superonline offers voice transport and termination, Internet, infrastructure operators point-to-point data connections, net- work security solutions, server hosting in 8 data centres, 4 of which are new gen- eration, and cloud services to corporate and operator customers. In line with its vision of transforming the Silk Road into the Fiber Road and making Türkiye an In- ternet hub, which it has been implement- ing since 2008, the company carried more than 23TB of capacity with 11 border con- nection points in 2023. Turkcell Finansman A.Ş. - Financell Turkcell Finansman A.Ş., one of the key players in the Turkish financial sector, provides financial loan solutions in areas such as GES loans (solar energy system fi- nancing loans), used cars, furniture, white goods, and technology products and services to corporate and individual cus- tomers under the "Financell" brand. Offering its services in around 1,085 Turk- cell stores, 2,307 DSN+ (Digital Point of Sale) stores and digital distribution channels across Türkiye, Financell has maintained its leading position in the non-banking fi- nancial sector with the highest number of customers for years. Turkcell Finansman A.Ş. has disbursed ap- proximately 17 million loans worth TRY 40 billion and entered the corporate lending segment with the digital transformation loan in 2021. On the other hand, the com- pany continues to successfully manage its credit risk thanks to the credit risk in- frastructure and digital transformation projects implemented in 2021. Financell started to provide financing services to corporate and superonline customers in 2021, and started to operate in non-Turk- cell channels with new products such as digital holiday loans and vehicle loans in 2022. In 2023, Financell focused on green energy financing, offering favour- able loans for SPP projects, especially for the sustainability of rehabilitation in the earthquake zone. In addition, Financell deepened the business of used car loans, corporate loans, which it started in 2022. Finally, in 2023, Financell launched a new model offering supplier financing to companies. loans and shopping 20 Active subscriber market 􀕬 share excluding telemetry 202 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 203 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell Dijital Sigorta A.Ş. Turkcell Dijital Sigorta A.Ş. was established with 100% Turkcell Finansman A.Ş. capital to carry out insurance activities based on digital and innovative technologies in non-life insurance branches. In 2023, Turkcell Dijital Sigorta A.Ş.'s li- cence applications in Accident, Sickness / Health, General Damages, General Li- ability, Financial Losses, Legal Protection, Fire and Natural Disasters branches were registered with the Insurance and Private Pension Regulatory and Supervisory Au- thority (SEDDK), Hazir started its opera- tions with the Financell Kredim Güvende credit protection insurance product un- der the "Wiyo" brand in 2023, continued with the Cyber Security Insurance prod- uct that secures Turkcell group compa- nies, and continued its activities with the Wiyo Healthy Life and Wiyo Home Life personal accident insurance package products launched in November 2023. Turkcell Sigorta Aracılık Hizmetleri A.Ş. Turkcell Sigorta Aracılık Hizmetleri A.Ş. aims to provide solutions in risk management of customers with individual products. Turkcell Sigorta Aracılık Hizmetleri A.Ş. meets the insurance needs of individual customers as an agency by offering de- vice insurance, invoice protection and travel health insurance, and provides cor- porate insurance services with "Executive and Manager Liability Insurance" cover- ing the liabilities of Turkcell Group execu- tives in connection with the performance of their duties, and "Elementary Group Policies" covering the assets of Turkcell and its group companies against risks and liabilities such as fire, earthquake, flood and storm. Turkcell Ödeme ve Elektronik Para Hiz- metleri A.Ş. - Paycell In 2017, Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. (TÖHAŞ) added E-Money licence to the payment services licence it obtained from the BRSA in 2016. While a rapid techfin transformation has been taking place in the world over the past 10 years, the Turkish market also shows a high potential for the expansion of techfin ser- vices with its attractive internal dynamics. In particular, the high rate of young popu- lation, high rate of smart device usage, ap- proximately 30 million potential users with- out a bank account, still high rate of cash usage in shopping and rising e-commerce volume stand out as factors that will sup- port the rapid increase in the usage rate of solutions in the techfin field. Since early 2020, this transformation has accelerat- ed considerably with the impact of the COVID-19 pandemic that has affected the world. In particular, changing living conditions and needs have led customers to show more interest in digital platforms. One of the most positively affected sec- tors was e-commerce. In line with all these needs and changing habits, our vision with Paycell was to enable more users to easily benefit from financial services with the fast and secure payment solutions we created by combining technology and fi- nancial services. We continue to lead the techfin sector by reaching record transaction volumes in many products. In 2023, the number of Paycell customers reached 8.0 million, while the number of Paycell application downloads exceeded 25.3 million with the new functions added. The total trans- action volume through Paycell reached TRY 65.6 billion by the end of 2023. Sofra Kurumsal ve Ödüllendirme Hiz- metleri A.Ş.* Sofra Kurumsal ve Ödüllendirme Hiz- metleri A.Ş., which provides services in the field of meal cards, is a meal card company established in 2018 in partner- ship with Turkcell, BELBİM A.Ş. and PTT. It serves under the Paye Kart brand. It has reached more than 16 thousand member workplaces across Türkiye. Paye meal card is the first meal card that provides the option to be used in trans- portation. Paye Card, which is a contact- less card, can be used in transportation in Istanbul and at all points where Istanbul Card is valid. It offers an easy payment service with its contactless payment feature that saves time while making meal payments of the personnel. Paye Card also offers fast and easy payment via QR method at con- tracted merchants and market chains with Paycell QR payment infrastructure. At the same time, Paye Kart Online pay- ment option provides convenience and time saving with home delivery of pur- chases made over the internet from con- tracted points. 䩉*We have a shareholding of 66.6%. Turkcell Geliştirme A.Ş. Teknoloji Araştırma ve leading Since 2007, Turkcell Teknoloji has been contributing to the development of the technological infrastructure of Turkcell, Türkiye's telecommunications company, with the strategy of expanding its products and services to international markets and providing its unique solutions to operators abroad. Accordingly, Turk- cell Teknoloji aims to develop new digital and ICT services on a global scale in line with the latest technology and market re- quirements, and to expand the regions in which the Turkcell Group provides servic- es. The products and services developed by Turkcell Teknoloji today serve more than 100 million users in 15 countries. Turkcell continues to rapidly expand its position in technological studies. With the motivation to break new ground in Türkiye and the world, Turkcell Technology con- tinues to develop as Türkiye's largest and most competitive R&D organisation with 992 research engineers by 2023. Turkcell Technology's goal is to "develop innova- tive technologies in the field of communi- cation and impact" and to "be a pioneer, leader and example by making the best use of the local workforce" in R&D. The company is broadening its scope from a technology-oriented network provider to a service-oriented experience provid- er and is becoming an R&D centre in do- mestic and international markets with the innovative solutions it develops. Turkcell Teknoloji's focus areas include big data processing, business intelli- gence applications, intelligent cloud platform and solutions developed on the platform, location-based services and platforms, geographical information sys- tems, customer relationship management and solutions, network management solutions, next generation value-added services, mobile financial systems, music and entertainment services, IPTV servic- es, mobile marketing solutions, projects for 5G and beyond infrastructure, mo- bile communication solutions, campaign management systems, smart SIM card solutions, digital identity technologies, image and video processing, text and natural language processing (NLP), rec- ommendation engines, speech analyt- ics, robotic assistants, robotic process automation, mobile analytics platforms, hospital management solutions, artificial intelligence in healthcare, business ap- plication solutions, content delivery net- work (CDN) solutions, over-the-top (OTT), AIOPS/devops and blockchain solutions. Since 2007, Turkcell Technology has be- come the leader in its sector in Türkiye with 4,114 national and 247 international patent applications and 1,019 registered patents. As a pioneer in the production of new technologies, Turkcell Technol- ogy has played an important role in the dissemination of technology by produc- ing 40 academic and 297 technical pub- lications on national and international platforms in 2023. In addition, the com- pany continued to intensify its product promotion, conference participation and training activities in many channels to in- crease the technology experience of the ecosystem. Lifecell Ventures communications, The mission of Lifecell Ventures, a whol- ly-owned subsidiary of Turkcell estab- lished in the Netherlands, is to offer dig- content-based ital entertainment, music, TV applications and many technology solutions devel- oped by Turkcell Group companies and technology business partners, such as performance and network monitoring tools, customer value management plat- form, to the global market. In 2017, the company launched its first internation- al digital solutions partnership with the revenue sharing model in Moldcell, an Eastern European operator, with 'BiP' and 'lifebox' products. Turkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.Ş. (Turkcell Energy Solutions) In addition to the telecommunications sector, Turkcell Enerji Çözümleri ve Elek- trik Satış Ticaret A.Ş., which started oper- ations in 2018 under the "Enerjicell" brand, is responsible for managing energy costs and coordinating operations to provide the most advantageous electricity supply to Turkcell Group companies. Turkcell En- ergy Solutions is expanding its portfolio in the energy sector with its investments and projects in the field of renewable energy generation and aims to increase its share in the sector both in terms of generation and supply. As part of these activities, the company pioneered the implemen- tation of renewable energy investments with a self-consumption model in Turk- cell-owned buildings and completed rooftop solar energy projects, particular- ly in the newly established Ankara Data Centre. Turkcell Energy Solutions, which recently added an 18 MW wind power plant to its portfolio in 2021, aims to con- tinue its renewable energy investments in the coming periods and transform Turk- cell into a company that supplies and generates electricity from environmen- tally friendly sources with zero carbon emissions. In addition, by achieving I-REC and YEK-G certified sales of the renew- able energy it provides from 2021, it has increased the practices and incentives of its business partners in this field. Turkcell Dijital İş Servisleri A.Ş. (DBS) As one of the companies that invests the most in human resources and technology in Türkiye, our main goal is to be a reliable technology partner that provides end- to-end turnkey solutions to our customers. Turkcell Dijital İş Servisleri A.Ş. was estab- lished to be part of our customers' digital transformation journey and to lead them as a strategic technology partner in this area. We enable our customers to move forward with the most appropriate finan- cial model in their new technology invest- ment plans, and focus more on their own business. Türkiye'nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş. (Togg) The relationship between Türkiye's Au- tomobile Initiative Group Industry and Trade Inc. (Togg) and Turkcell continues to strengthen in light of recent develop- ments. Turkcell is actively enhancing vehi- cle and fleet safety through the provision of advanced e-mobility solutions as part of its digital business services. Holding a 23% stake in Togg, started mass produc- tion of its C-segment SUV model T10X at the Gemlik Togg Technology Campus in 2022. So far, there are more than 15,000 T10Xs on Turkish roads and this number is expected to increase by the end of the year. Within the ecosystem that will be created around the smart and con- nected device, new services, new user experiences and new business models in mobility will be developed. To this end, a strategic cooperation agreement was signed with Paycell in 2022 to integrate innovative payment systems and digital financial solutions into the mobility eco- system. In 2023, Togg's cooperation with fizy, our digital music platform, will bring Togg users together with music. This co- operation enriches the driving experi- ence of Togg users and enables them to spend more enjoyable time in the car. At Turkcell, we play a pivotal role in pro- viding essential traffic planning insights to municipalities and airlines. With the trans- port data matrices we provide to munici- palities, we support urban traffic planning and enable citizens to use public trans- port systems more efficiently. At the same time, we help reduce carbon emissions by reducing traffic density. The data we provide to airlines enables them to better analyse passenger flows between cit- ies and assess seasonal effects. We also contribute to effective transport planning in terms of energy efficiency and savings. Atmosware Technology Training and Consultancy Inc. Atmosware was established in 2021 to develop software products and services, to train software developers for this pur- pose, to provide services to our company, its subsidiaries and other parties inside and outside the country within this scope and/or to operate in other areas permit- ted by law. Since its establishment, Turkcell Academy has been a key partner in the "Investing in Youth, Software for the Future" project organised in partnership with the Ministry of National Education. Through this pro- ject, the company has recruited nearly 150 software developers from the partic- ipants who completed 6 months of vo- cational training and field experience. By closely following the master-apprentice relationship and balance, the company has also hired experienced software de- velopers, bringing the total number of in- formation technology employees to over 300. Atmosware’s IT team provide software product development services both to our company and to other companies in the ecosystem. Atmosware, which follows the principle of remote working, has em- ployees in 46 different cities. Under the vision of "81 employees in 81 provinces", At- mosware aims to spread the employment in the field of activity all over Türkiye. 204 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 205 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Statement Of Compliance With Corporate Governance Principles Turkcell İletişim Hizmetleri A.Ş. (“Turkcell” or the “Company”) is aware of its responsibili- ties towards its stakeholders, with the belief that high standards of corporate govern- ance are key to maintain successful business practices and to provide long-term eco- nomic value to the company’s shareholders. Within this framework, having adopted the principles of “equality,” “transparency,” “ac- countability” and “responsibility” that con- stitute 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 be- ing implemented in line with the corporate governance principles. Turkcell İletişim Hizmetleri A.Ş. places a great importance on the full compliance with Cor- porate Governance Principles. Although full compliance with non-mandatory corporate governance principles provided in the rel- evant legislation is aimed, it has yet to be achieved due to the challenges in the imple- mentation of certain principles, the incom- patibilities 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 2023, 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 ex- planations given for the principles that are yet to complied with: (i) the Corporate Gov- ernance Compliance Report (“CGCR”) and (ii) the Corporate Governance Fact Sheet (“CGFS”) and (iii) other relevant sections. 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 de- signed by the Corporate Governance and Capital Markets Compliance Directorate within the recommendation of the Corpo- rate Governance Committee and with the guidance of Board of Directors., According- ly, each Board member had completed “the Board of Directors Performance Evaluation” for the year 2021 and 2022: 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 ques- tion contained in this section addresses issues such as whether there was time- ly, clear and comprehensive information regarding the meeting agenda items, whether financial information highlights important issues and trends, and the effec- tiveness and impartiality of the meetings. b. Board Composition and Function: The set of question contained in this section ad- dresses issues such as whether the mem- bers have the necessary qualifications, experience and skills, whether a sufficient number of meetings are held, and the functioning of the committees. c. Board Dynamics: The set of question con- tained 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. d. Board Members’ standards of conduct: The set of question contained in this sec- tion 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 In line with the aim of using the improvement identified after the performance areas evaluation process as the basis for ad- vanced corporate governance practices, a number of actions were taken at corpo- rate level in 2022, including but not limited to the implementation of a new platform that ensures the digitalization of access to the Board of Directors meeting documentation, the transfer of documentation to a secure platform and continuous access to the rele- vant documentation and, Strategy and Dig- italization Committee was established. In 2023, improvement areas were identified from the outputs of performance evalu- ation process carried out by the Board of Directors for the year 2022 and focus areas relating to corporate governance practic- es were determined with relevant depart- ments within the Company by conducting a gap analysis for the issues communicated to our Company both from our shareholders and from all other corporate governance stakeholder. In this context, the structure of the Eth- ics Committee was reorganized with the amendments adopted by Board of Direc- tors to ensure senior management’s the oversight of ethical policies, and an internal audit was conducted regarding awareness of Turkcell Common Values and Code of Business Ethics for 2023. Within the scope of NYSE’s listing rules re- garding clawback policy that are appli- cable to our company, which entered into force on 2 October 2023, it was obligated for public companies to recoup/recover erroneously awarded performance based compensations from defined executive per- sons (if any) under certain criteria if the Com- pany is required to prepare a restatement of incomplete, inaccurate or misleading finan- cial tables. In this context, our Company’s Board of Directors adopted Clawback Poli- cy with a resolution dated 7 November, 2023. Audit Committee, consisting of independent members, is designated for the administra- tion of the Clawback Policy. Disclosures regarding other issues, within the framework of the relevant legislation, particularly CMB legislation and Turkish Commercial Code are given below: 䩉 No extraordinary general assembly was held in 2023. 䩉 No administrative or judicial sanctions were imposed on our Company’s upper management. 䩉 Explanations regarding the amendment of the Company's Articles of Associa- tion in 2023, are included in the ordinary general assembly meeting minutes, which was held on September 13, 2023 􀎲 (minutes) 䩉 Turkish Commercial Code Article 376 is not applicable as the Company made profits in 2023. 䩉 There are no cross-ownership subsidiary in which the direct contribution to the capital exceeds 5%. 䩉 Information regarding the changes in the Board of Directors in 2023 is included in the ordinary general assembly meeting min- utes, which was held on 13 September 2023. Considering the developments and best practices, studies will be carried out to im- prove our corporate governance practices and ensure better operation of the mech- anisms 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. Corporate Governance Principles Compliance Report Compliance Status Yes Partial No Ex- empted Not Ap- plicable 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. General Assembly 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, without 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 twenthieth 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 allocations, 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. X X X X X X X X X X X X X X No information regarding this kind of activities were received from such person following the routine information requests made before the general assembly meetings. Donations and charities are included seperately on the general assembly agenda; but information regarding 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-iliskileri/documents/pdf/Turkcell-Genel-Kurul- Bilgilendirme-Dokumani.pdf X There are no mutual participation. Tresholds determined by the respective legislation are in effect. X Turkcell distributed dividend in 2023. 206 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 207 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Compliance Status Yes Partial No Ex- empted Not Ap- plicable Explanation Compliance Status Yes Partial No Ex- empted Not Ap- plicable Explanation X X 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 X 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 selected 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 pursuant 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 reporting legal and ethical issues. 3.1.5 - The company addresses conflicts of interest among stakeholders in a balanced manner. X X X X X X 3.2. Supporting The Participation of The Stakeholders in The Corporation’s Management 3.2.1 - The Articles of Association, or the internal regulations (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 employees on the financial status of the company, remuneration, 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. X X X X X X X X Without prejudice to 137/3, due to Article 7.5 of the AoA we ticked the "Partial" box X 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 facilitated through internal regulations of the company and various company practices. Our employees' rights to 'Assembly, Freedom of Association, and Unionizing' as expressed in the Constitution of the Republic of Türkiye are respected. In addition to this, as of 2023, there has been no written application made to Turkcell by any authorized labour union. 3.3.7 - Measures (procedures, trainings, raising awareness, goals, monitoring, complaint mechanisms) have been taken to prevent discrimination, and to protect employees against any physical, mental, and emotional 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 standards 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 approved 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. X X X X X X X X X X X X X X X X X X 208 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 209 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Compliance Status Yes Partial No Ex- empted Not Ap- plicable Explanation 1. SHAREHOLDERS 1.1. Facilitating the Exercise of Shareholders Rights Corporate Governance Information Form X X X 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 written 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 board 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 provided guarantees such as surety in favour of them. X X X X X X X X X X X 4.6.5 - The individual remuneration of board members and executives is disclosed in the annual report. X Within the framework of Board Diversity Policy, the target of having at least two female board members was achieved. 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. X No service has been received from an outside counsel in 2023. Information regarding Board of Directors' performance evaluation can be found in the annual report. In the Ordinary General Assembly Dated 13 September 2023, it was decided that the Chairman and each member of the Board of Directors have a monthly compensation of TRY 100 thousand during the term of office. In parallel with the common practice, aggregate amount of the executive remuneration is disclosed in the annual report. The number of investor meetings (conference, seminar/etc.) organised by the company during the year In 2023, Investor Relations Department attended 9 investor conferences and 2 roadshow meetings, conducted a total of 258 one-on-one meetings. 1.2. Right to Obtain and Examine Information The number of special audit request(s) The number of special audit requests that were accepted at the General Shareholders' Meeting 1.3. General Assembly 0 0 Link to the PDP announcement that demonstrates the information requested by Principle 1.3.1. (a-d) https://www.kap.org.tr/en/Bildirim/1180053 Whether the company provides materials for the General Shareholders' Meeting in English and Turkish at the same time 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 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) The links to the PDP announcements associated with common and continuous transactions in the context of Article 10 of the Communique on Corporate Governance (II-17.1) The name of the section on the corporate website that demonstrates the donation policy of the company The relevant link to the PDP with minute of the General Shareholders' Meeting where the donation policy has been approved The number of the provisions of the articles of association that discuss the participation of stakeholders to the General Shareholders' Meeting Provided in English as well. No transaction has been executed in the context of Principle 1.3.9 No related party transactions has been executed above the tresholds. No related party transactions has been executed above the treshold. https://www.turkcell.com.tr/en/aboutus/investor-relations/ corporate-governance/donation-policy https://kap.org.tr/en/Bildirim/517918 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://s.turkcell.com.tr/ SiteAssets/Hakkimizda/yatirimci-iliskileri/documents/pdf/ Turkcell-Genel-Kurul-Bilgilendirme-Dokumani.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 distribution 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 information as to use of the dividend. PDP link to the related general shareholder meeting minutes in case the board of directors proposed to the general assembly not to distribute dividends Dividends are distributed in 2023. Dividends are distributed in 2023. General Assembly Meetings General Meeting Date The number of information requests received by the company regarding the clarification of the agenda of the General Shareholders' Meeting Shareholder participation rate to the General Shareholders' Meeting Percentage of shares directly present at the GSM Percentage of shares represented by proxy 13.09.2023 0 70.80% 4.91% 65.89% 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 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 The number of the relevant item or paragraph of General Shareholders' Meeting minutes in relation to related party transactions https://www.turkcell.com.tr/en/aboutus/ investor-relations/corporate-governance/ general-assembly-information https://ffo3gv1cf3ir.merlincdn.net/SiteAssets/Hakkimizda/ yatirimci-iliskileri/documents/pdf/2022-GK-Minutes.pdf 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/1194650 210 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 211 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES 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. If applicable, specify the name of the sections of the website providing the list of shareholders (ultimate beneficiaries) who directly or indirectly own more than 5% of the shares. https://www.turkcell.com.tr/en/aboutus/ investor-relations 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 demonstrate 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 b) The page numbers and/or name of the sections in the Annual Report that demonstrate the information on committees formed within the board structure c) The page numbers and/or name of the sections in the Annual Report that demonstrate 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 demonstrate 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 demonstrate 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 demonstrate the information on the conflicts of interest of the corporation among the institutions 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 demonstrate 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 demonstrate 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 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. 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 37 of IFRS 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 39 of IFRS 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 The number of definitive convictions the company was subject to in relation to breach of employee rights It is not disclosed in the website of the Company. 20 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 regulation 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 summary of relevant parts of the human resource policy. Board of Directors, when necessary, get involved in the procees through Nomination Committee within the framework of the Committee's roles&responsibilities. https://ffo3gv1cf3ir.merlincdn.net/SiteAssets/Hakkimizda/ yatirimci-iliskileri/documents/pdf/Nomination-Committe-Charter.pdf Turkcell is an equal opportunity employer and considers all qualified applicants for employment regardless of disability, race, color, religion, 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 Türkiye b.Not to be deprived from civil rights c.Not to have a disease that will prevent him/her from working or pose a threat to the environment d.Not to be sentenced for an infamous crime e.Not under obligation of an involuntary servitude f.To have a graduate degree g.To have required skills determined specifically to the title and role (such as experience, field of graduation, certificate etc.) h.”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 The link to the relevant section on equal opportunities on the corporate website is as follows (in Turkish): https://www.turkcell.com.tr/tr/hakkimizda/ insan-kaynaklari/firsat-esitligi-politikamiz Information for all career opportunities, including positions and recruitment criteria, are publicly available in the following link (in Turkish): https://kariyerim. turkcell.com.tr/kariyer-firsatlari 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 With respect to work accident cases, there are no final court decision which are against our Company. 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. Any measures combating any kind of corruption including embezzlement and bribery https://www.turkcell.com.tr/en/aboutus/corporate-social-responsibility/ sustainability 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 international 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-relations/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. 212 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 213 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES https://www.kap.org.tr/en/Bildirim/1121320 Composition of Board Committees-I 4. BOARD OF DIRECTORS -I 4.2. Activity of the Board of Directors Date of the last board evaluation conducted Whether the board evaluation was externally facilitated Whether all board members released from their duties at the GSM Name(s) of the board member(s) with specific delegated duties and authorities, and descriptions of such duties Number of reports presented by internal auditors to the audit committee or any relevant committee to the board 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 The performance evaluation made with the coordination of Corporate Governance & Capital Markets Compliance unit is concluded in December 2023 upon Board Members' fulfillment of the evaluation forms. No Yes There is no executive member within the Board of Directors 20 Information provided in the Annual Report under Effective Risk and Crisis Management section. Name of the Chairman Name of the CEO Şenol Kazancı Ali Taha Koç CEO and Chair functions are not combined. If the CEO and Chair functions are combined: provide the link to the relevant PDP annoucement 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 Board of Directors Diversity Policy was adopted. https://ffo3gv1cf3ir.merlincdn.net/DeviceDocumentLibrary/bireysel/Diger/yonetim- kurulu-cesitlilik-politikasi.pdf The number and ratio of female directors within the Board of Directors There are 2 members. Ratio to the total number of members is 22.22%. 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 Şenol Kazancı Serdar Çetin Afif Demirkıran Nail Olpak Hüseyin Arslan Figen Kılıç Julian Horn Smith Ayşe Nur Bahçekapılı Melikşah Yasin Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Non-Executive Board Member Not An Independent Board Member Independent Board Member Independent Board Member Not An Independent Board Member Independent Board Member Not An Independent Board Member Not An Independent Board Member Not An Independent Board Member Not An Independent Board Member April 15, 2021 Not Considered. No June 16, 2022 March 6, 2020 https://www.kap.org. tr/en/Bildirim/1037312 https://www.kap.org. tr/en/Bildirim/928569 Considered. No Considered. No March 6, 2020 Not Considered. No April 15, 2021 https://www.kap.org. tr/en/Bildirim/928569 Considered. No January 29, 2021 Not Considered. No April 15, 2021 Not Considered. No September 14, 2023 September 13, 2023 Not Considered. No Not Considered. No No Yes No Yes Yes No Yes No No 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 8 Director average attendance rate at board meetings 100.00% Whether the board uses an electronic portal to support its work or not Yes Number of minimum days ahead of the board meeting to provide information to directors, as per the board charter The name of the section on the corporate website that demonstrates information about the board charter Number of maximum external commitments for board members as per the policy covering the number of external duties held by directors 4.5. Board Committees Page numbers or section names of the annual report where information about the board committees are presented Link(s) to the PDP announcement(s) with the board committee charters Within the framework of our actions to enhance Corporate Governance practices and improve the board of directors' access to information, the previous deadline of "5 days before the meeting" has been updated as "reasonable time". We do not disclose the charter in the company's website. We do not have such policy. 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.kap.org.tr/en/Bildirim/1215095 https://www.kap.org.tr/en/Bildirim/1186832 Names Of The Board Committees Name-Surname of Committee Members Whether Committee Chair Or Not Whether Board Member Or Not Audit Committee Audit Committee Audit Committee Serdar Çetin Afif Demirkıran Hüseyin Arslan Corporate Governance Committee Serdar Çetin Corporate Governance Committee Melikşah Yasin Corporate Governance Committee Özlem Yardım Corporate Governance Committee Emre Alpman Nomination Committee Nomination Committee Nomination Committee Hüseyin Arslan Şenol Kazancı Melikşah Yasin Early Detection of Risk Committee Afif Demirkıran Early Detection of Risk Committee Figen Kılıç Early Detection of Risk Committee Ayşe Nur Bahçekapılı Remuneration Committee Remuneration Committee Hüseyin Arslan Şenol Kazancı Remuneration Committee Nail Olpak Strategy and Digitalization Commiittee Strategy and Digitalization Commiittee Strategy and Digitalization Commiittee Strategy and Digitalization Commiittee Strategy and Digitalization Commiittee Afif Demirkıran Şenol Kazancı Serdar Çetin Tolga Kılıç Mustafa Demirhan 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 214 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 215 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES 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 presented in your annual report (Page number or section name in the annual report) Information provided in the Annual Report under Turkcell Group: 2023 Financial & Operational Review section. Specify the section of website where remuneration policy for executive and non executive 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 38 of IFRS 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 Audit Committee Corporate Governance Committee Nomination Committee Early Detection of Risk Committee 100% 50% 100% 100% Remuneration Committee 100% Strategy and Digitalization Committee 40% 100% 25% 33% 33% 33% 40% 8 3 0 5 5 3 8 3 1 6 5 3 Roles of Turkcell Board Members at Other Companies Duties Outside the Group: Company Name Duties Outside the Group: Title/ Position Still Working in the Related Company? Board Member Name-Surname Şenol Kazancı Nail Olpak - Pak Yatırım İnşaat Sanayi ve Ticaret A.Ş. NORA Elektrik Malzemeleri Sanayi ve Ticaret A.Ş. ANDEVA Özel Eğitim Inşaat ve Özel Sağlık Hizmetleri A.Ş. Girişim Kitle Fonlama Platformu A.Ş. Avrupa Otoyolu Yatırım ve İşletme A.Ş. KMO Anadolu Otoyol İşletmesi A.Ş. Marmara Otoyolu Yatırım ve İşletme A.Ş. Marmara Otoyol İnşaatı Adi Ortaklığı Ticari İşletmesi KRP Otoyol Inşaati Adi Ortaklığı Ticari İşletmesi NARKARA Elektrik Üretim Sanayi ve Ticaret A.Ş. HMN İnşaat Enerji Sanayi ve Ticaret A.Ş. Pak Yatırım Ventures Teknoloji Yatırımları San. ve Tic. A.Ş. Pak Yatırım Enerji Sanayi ve Ticaret A.Ş. Pak Yatırım Tarım Hayvancılık Sanayi ve Ticaret A.Ş. STARTUP A.Ş. TÜRK EXİMBANK A.Ş. - Melikşah Yasin Ayşe Nur Bahçekapılı Presidential Legal Policies Board Afif Demirkıran Figen Kılıç Hüseyin Arslan Serdar Çetin Sir Julian Horn-Smith - Istanbul Chamber of Commerce Teknopark Istanbul Istanbul Medipol University Purple Crest Investments LLP Pambridge LTD AlixPartners (Global) Digicel Group (Bermuda) eBuilder (Swedish Tech/Software Company based in Stock- holm, Sweden) Cybereason (USA) Viasat (USA) - Chairman of the Board Chairman of the Board No No Member of the Board Member of the Board Member of the Board Member of the Board Member of the Board Member of the Board No No No No No Member of the Board - Member - Member of the Assembly Member of the Board Professor / Dean Partner Director Senior Advisor Director Director Director Senior Advisor - Yes Yes No No Yes Yes Yes Yes Yes Yes No No No No No Yes - Yes - Yes Yes Yes Yes Yes Yes No Yes Yes Yes Conclusion of the Subsidiary Report 01.01.2023 - 31.12.2023 Fiscal Year Conclusion of the Report on the relationship among the Parent Company and the subsidiaries 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 2023 are given in the above tables. There is nei- ther 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 conformity with the market during the fiscal year 2023 are included in this Report. 216 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 217 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell Group: 2023 Financial & Operational Review Our annual consolidated financial statements including our consolidated statements of financial position as of December 31, 2023 and 2022 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, 2023 and the related notes included in this annual report have been pre- pared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Report”). The following financial and operational overview focuses principally on the developments and trends in our business in the full year 2023 and should be read in conjunction with the IFRS report. This consolidated financial statement contains the Company’s financial information prepared in accordance with International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS29"). This release includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, Section 21E of the U.S. Securities Exchange Act of 1934 and the Safe Harbor pro- visions of the U.S. Private Securities Litigation Reform Act of 1995. This includes, in particular, our targets for revenue, EBITDA margin and operational capex for 2024. 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 2023 refer to the same item for the year end of 2022 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 Administrative expenses/Revenue Selling and marketing expenses/Revenue Net impairment losses on financial and contract assets EBITDA2 EBITDA Margin Depreciation and amortization EBIT3 EBIT Margin Net finance income / (costs) Finance income Finance costs Monetary gain / (loss) Other income / (expenses) Non-controlling interests Share of profit of equity accounted investees Income tax income/(expense) Profit /(loss) from discontinued operations Net Income FY22 93,486.8 (49,084.9) 47.5% (2,579.4) (2.8%) (4.9%) (622.0) 36,607.7 39.2% (32,596.0) 4,011.7 4.3% (224.4) 3,957.7 (11,949.2) 7,767.1 (1,058.4) 1.6 522.2 2,785.3 842.4 6,880.4 Year FY23 107,116.2 (53,119.0) 50.4% (3,429.5) (3.2%) (5.3%) (1,008.2) 43,877.1 41.0% (31,299.0) 12,578.1 11.7% (3,451.1) 12,663.7 (19,931.6) 3,816.9 (4,765.6) 21.8 1,525.2 4,675.9 1,969.7 12,554.0 y/y% 14.6% 8.2% 2.9pp 33.0% (0.4pp) (0.4pp) 62.1% 19.9% 1.8pp (4.0%) 213.5% 7.4pp 1,437.9% 220.0% 66.8% (50.9%) 350.3% 1,262.5% 192.1% 67.9% 133.8% 82.5% (1) Excluding depreciation and amortization expenses. (2) EBITDA is a non-GAAP financial measure. See page 16 on our FY2023 Press Release for the explanation of how we calculate Adjusted EBITDA and its reconciliation to net income. (3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses. Consolidated Balance Sheet Data (at period end) (million TRY) 2022 Cash and cash equivalents Total assets Long term debt Total debt Total liabilities Total shareholders’ equity / Net Assets 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 Margin1 EBITDA Margin EBIT Margin Net Profit Margin Total Liability / Equity Ratio Net Debt / EBITDA Multiple2 42,776.2 234,989.2 61,185.3 88,737.4 125,611.2 109,377.9 2022 42,281.1 (31,712.1) 3,388.4 (21,614.0) 42,742.2 2022 47.5% 39.2% 4.3% 7.4% 114.8% 0.9x 2023 49,978.7 247,083.3 57,946.6 84,084.2 124,848.5 122,234.9 2023 41,721.5 (20,905.8) 6,769.3 (16,502.4) 53,824.9 2023 50.4% 41.0% 11.7% 11.7% 102.1% 0.5x Change% 16.8% 5.1% (5.3%) (5.2%) (0.6%) 11.8% Change% (1.3%) (34.1%) 99.8% (23.6%) 25.9% Change% 2.9pp 1.8pp 7.4pp 4.3pp (12.7pp) (0.4x) (1) Excluding depreciation and amortization expenses. (2) 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. Explanations: Revenue: of the Group grew by 14.6% year-on-year in FY23. This growth is attributable to the expanding customer base of Turkcell Türkiye driven by the postpaid subscriber base, and price adjustments. Additionally, revenue growth was supported by our techfin business and digital services. For the full year, Turkcell Türkiye revenues, comprising 86% of Group revenues, grew 18.0% to TRY91,953 million (TRY77,952 million). 䩉Consumer business4 rose 18.7% driven mainly by subscriber net additions both in mobile and fixed segments, price adjust- ments and upsell efforts. 䩉Corporate revenues4 rose 20.3% mainly supported by digital business services revenue growth of 23.0%. 䩉Standalone digital services revenues from consumer and corporate segments grew 19.4% driven mainly by an expanding standalone paid user base. 䩉Wholesale revenues grew 3.3% to TRY6,475 million (TRY6,269 million). 􀕬 (4) Following the change in the organizational structure, the revenues from sole proprietorship subscribers that we define as Merchant, which were previously managed under the Corporate segment, are being reported under the Consumer segment as of and from the third quarter of 2023. Within this scope, past data has been revised for comparative purposes. 218 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 219 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Turkcell International revenues (excl. Ukraine operations), comprising 2% of Group revenues decreased by 1.8% to TRY2,626 million (TRY2,673 million). Net income of the Group increased by 82.5% to TRY12.6 billion (TRY6.9 billion) in FY23. This resulted mainly from strong perfor- mance at the revenue and EBITDA levels and the positive impact of deferred income tax expense. Techfin segment revenues, comprising 4% of Group revenues, increased by 28.9% to TRY4,569 million (TRY3,545 million). This was driven by a 28.6% rise in Paycell revenues and 27.7% growth in Financell revenues. Please refer to the Techfin section for details. Other subsidiaries’ revenues, at 7% of Group revenues, including mainly consumer electronics sales revenues, and non-group energy business revenues decreased by 14.5% to TRY7,969 million (TRY9,317 million). Cost of revenue (excluding depreciation and amortization) decreased to 49.6% (52.5%) as a percentage of revenues for the full year of 2023. This was driven mainly by the decline in interconnection cost (1.9pp), energy cost (1.5pp), and cost of goods sold (1.5pp), despite the increase in personnel expenses (1.5pp), and other cost items (0.5pp) as a percentage of revenues for the full year. Administrative expenses increased to 3.2% (2.8%) as a percentage of revenues for the full year. This was mainly due to in- creased personnel expenses.. Selling and marketing expenses increased to 5.3% (4.9%) as a percentage of revenues in FY23. This was driven by the increase in personnel expenses (0.7pp), despite the decline in marketing expenses (0.1pp) and other expenses (0.2pp) as a percentage of revenues in FY23. Net impairment losses on financial and contract assets was at 0.9% (0.7%) as a percentage of revenues in FY23. EBITDA1 rose by 19.9% year-on-year in FY23 leading to an EBITDA margin of 41.0% with a 1.8pp improvement (39.2%). 䩉Turkcell Türkiye’s EBITDA rose 24.1% to TRY40,663 million (TRY32,771 million) leading to an EBITDA margin of 44.2% (42.0%). 䩉Turkcell International (excl. Ukraine operations) EBITDA increased 9.2% to TRY973 million (TRY891 million) driving an EBITDA margin of 37.1% (33.3%) on 3.8pp improvement. 䩉Techfin segment EBITDA declined by 8.1% to TRY1,608 million (TRY1,750 million) with an EBITDA margin of 35.2% (49.3%). The key factor behind the year-on-year decline in EBITDA margin was the rise in funding cost for Financell compared to the previous year. 䩉The EBITDA of other subsidiaries declined by 47% to TRY633 million for the full year (TRY1,196 million). Depreciation and amortization expenses decreased by 4.0% year-on-year for the full year. Net finance costs, increased to TRY3,451 million (TRY224 million) in FY23. This was driven mainly by higher FX losses which were partially offset by derivative gains, and the fair value gains registered on currency-protected time deposits. Additionally, high- er interest expenses limited the positive impact. Other expenses, increased to TRY4,766 million (TRY1,058 million) for the full year mainly due to donation and litigation expenses. Income tax income/(expense), Tax income of TRY4,676 million (TRY2,785 million) was reported, mainly due to an increase in deferred tax income triggered by the implementation of inflationary accounting in statutory accounts. Total cash & debt: Consolidated cash as of December 31, 2023, increased to TRY49,979 million compared to TRY42,776 million as of December 31, 2022. This was driven mainly by the positive impact of currency movements. Excluding FX swap transactions, 53% of our cash is in US$, 20% in EUR, 2% CNY, and 25% in TRY. Consolidated debt as of December 31, 2023, decreased to TRY84,084 million from TRY88,737 million as of December 31, 2022 due mainly to the impact of currency movements. Please note that TRY2,428 million of our consolidated debt is comprised of lease obligations. Please note that 45% of our consolidated debt is in US$, 32% in EUR, 3% in CNY, 1% in BYN, and 20% in TRY. Net debt1 as of December 31, 2023, was at TRY23,803 million with a net debt to EBITDA ratio of 0.5x times. Turkcell Group had a long FX position of US$22 million at the end of the year (Please note that this figure takes hedging port- folio and advance payments into account). The long FX position of US$22 million is in line with our FX neutral definition, which is between -US$200 million and +US$200 million. Capital expenditures: Capital expenditures, including non-operational items were at TRY33,950 million in FY23. For the full year, operational capital expenditures (excluding license fees) at the Group level were at 20.0% of total revenues. Capital expenditures (million TRY) Operational Capex License and Related Costs Non-operational Capex (Including IFRS15 & IFRS16) Total Capex FY222 19,533.1 536.8 9,815.8 29,885.6 Year FY233 21,430.3 3,632.9 8,886.9 33,950.0 The actual impact of the earthquakes was in line with our initial assessment, which we have communicated in our Q422 results. 􀕬(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. (2) Including Ukraine operations (3) Excluding Ukraine operations 􀕬 adjusted EBITDA and its reconciliation to net income. (1) EBITDA is a non-GAAP financial measure. See page 16 on our FY2023 Press Release for the explanation of how we calculate 220 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 221 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Operational Review of Turkcell Türkiye Summary of Operational Data Number of subscribers2 (million) Mobile Postpaid (million) Mobile M2M (million) Mobile Prepaid (million) Fiber (thousand) ADSL (thousand) Superbox (thousand)2 Cable (thousand) IPTV (thousand) Churn (%)3 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) 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% 133.5 146.9 161.6 187.7 77.0 190.0 190.8 14.7 FY23 42,5 27.2 4.5 10.8 2,291.0 760.7 719.9 38.5 1,409.2 2.0% 1.5% 155.6 174.0 181.7 214.7 96.0 190.0 192.1 17.0 Year y/y % 2024 GUIDANCE1 Revenue Growth High-single-digit EBITDA Margin ~42% Op.Capex/ Sales(2) ~23% 􀕬 (1) The guidance for the year 2024 includes the effects of implementing inflation accounting in accordance with IAS 29. Our 2024 guidance has been established using a certain number of assumptions regarding factors beyond our control, including in relation to macroeconomic indicators such as expected inflation levels. In particular, our 2024 guidance is based on an assumed annual inflation rate of 37%, applied on a monthly basis. Please note that this paragraph contains forward-looking statements based on our current estimates and expectations regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual Report on Form 20-F for 2022 filed with the U.S. Securities and Exchange Commission, and in particular, the risk factor section therein. (2) Excluding license fee %1,9 6.3% 12.5% (10.0%) 8.0% 1.2% 7.3% (12.3%) 9.9% - 0.1pp 16.6% 18.4% 12.4% 14.4% 24.7% - 0.7% 15.6% (1) Including mobile, fixed broadband, IPTV, and wholesale (MVNO&FVNO) subscribers (2) Superbox subscribers are included in mobile subscribers. (3) Churn figures represent average monthly churn figures for the respective years. Turkcell Türkiye subscriber base grew by 799 thousand net additions in FY23 to 42.5 million. In addition, we have achieved 5.8 million net sub- scriber additions in the last 3 years thanks to our wide range of solutions tailored to customer preferences, our pioneering campaigns de- signed to simplify their lives, our superior infrastructure, a unique customer experience and our analytical capabilities. On the mobile front, our subscriber base expanded to 38.0 million on 493 thousand net annual additions in FY23. This was driven by 1.6 million net additions from the postpaid subscriber base, which reached 71.5% (68.1%) of total mobile subscribers. We had 476 thousand quarterly postpaid subscriber net additions in Q423. We experienced a net decline of 708 thousand in our prepaid subscriber base quarter-on-quarter, primarily attributed to the disconnection of 297 thousand inactive prepaid accounts over the quarter, as per our customer churn policy. On the fixed front, we saw a net increase of 169 thousand fiber subscribers in FY23, attributable to our investments in fiber networks, and the robust demand for high-speed, and quality broadband services. Total fixed subscribers reached 3.1 million on 38 thousand quarterly and 173 thousand annual net additions. Meanwhile, IPTV customers exceeded 1.4 million on 34 thousand quarterly and 127 thousand annual net additions. The average yearly mobile churn rate was at 2.0% and the fixed churn rate at 1.5% in FY23, both parallel to the long-term healthy level of 2%. On an inflation adjusted basis, our mobile ARPU (excluding M2M) rose 18.4% year-on-year in FY23 driven mainly by price adjustments to reflect inflationary impacts and upsell to higher tariffs, as well as a larger postpaid subscriber base. Meanwhile, our residential fiber ARPU remained almost the same year-on-year in FY23. Average monthly mobile data usage per user rose 15.6% year-on-year to 17.0 GB, with the increasing number and data consumption of 4.5G users in FY23. Accordingly, the average mobile data usage of 4.5G users reached 18.2 GB in FY23. Total smartphone penetration on our network reached 90% in Q423. 94% of those smartphones were 4.5G compatible. 222 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 223 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Our Companies and Sector Developments Developments in Our Sector ELECTRONIC COMMUNICATION SECTOR IN TÜRKIYE According to the Q3 2023 Market Data Report published by the Information and Communication Technologies Au- thority (ICTA), the regulatory authority of our sector, the number of opera- tors operating in the Turkish electronic communications sector is 471 and the number of authorisations granted to these operators is 854. In the first three quarters of 2023, the total net sales revenues of mobile op- erators Turkcell İletişim Hizmetleri A.Ş. (Turkcell), Vodafone Telekomünikasyon A.Ş. (Vodafone), TT Mobil İletişim Hiz- metleri A.Ş. (TT Mobil) and Türk Tel- (Türk Telekom) ekomünikasyon A.Ş. amounted to approximately TRY 117.2 billion, while the net sales revenues of other operators totalled TRY 37.2 billion. In the same period, total investments made by Turkcell, Türk Telekom, TT Mo- bil and Vodafone amounted to TRY 24.8 billion. Mobile Market As of Q3 2023, there were 92.8 million mobile subscribers in Türkiye, cor- responding to a penetration rate of 108.8% (mobile penetration rate ex- cluding M2M and population aged 0-9 years: 114.8%). In the third quarter of 2023, the number of 4.5G subscribers was 85.4 million, while the number of 3G subscribers was 5.1 million. With 3G and 4.5G servic- es, the number of mobile broadband subscribers receiving internet servic- es from mobile computers and mobile phones increased to 74.8 million. In Q3 2023, 72.1% of mobile subscribers were on postpaid tariffs, while 27.9% were on prepaid tariffs. The number of prepaid and postpaid mobile broad- band subscribers reached 19 million and 54.6 million respectively, while the number of M2M subscribers reached 9 million. The number of mobile numbers ported reached 7.2 million in the first 3 quar- ters of 2023. A total of 174 million mobile number porting transactions will have been carried out as of September 30, 2023. Based on number of subscribers, Turk- cell, Vodafone and TT Mobil had a market share of 41.2%, 30.6% and 28.2% respectively. In terms of subscriber revenues, Turkcell's market share was 46.5%, Vodafone's was 29.1% and TT Mobil's was 24.4%. About 83.8% of mo- bile subscribers are residential and 16.2% are business subscribers. Average monthly mobile broadband data usage was 17.4 GB. Total mobile voice traffic grew by 2.4% yoy to 82.5 billion minutes in 3Q03. Broadband Internet Market The number of broadband internet subscribers, which was around 6 million in 2008, reached 94.3 million as of the end of Q3 2023 (19.5 million fixed broad- band and 74.8 million mobile broad- band subscribers). The total number of internet subscribers increased by 3.2% year-on-year. xDSL subscribers reached 10.9 million, while the number of fiber subscribers reached 6.5 million. Total fiber length of operators exceed- ed 549 thousand km. In the first 3 quarters of 2023, the total revenues of internet service providers reached TRY 23.7 billion. The average monthly data usage of fixed broad- band internet subscribers reached 250 GB. About 56% of fixed broadband subscribers prefer packages with 16- 50 Mbps connection speed. TV market There are 16 operators authorised to provide Ccable Bbroadcasting Sser- vices (CBS). Türksat has 1.4 million cable TV subscribers, while Superonline (TV+) and TTNet (Tivibu) have 1,374 thou- sand and 971 thousand subscribers respectively. Among the operators licensed to pro- vide satellite platform services, Dig- ital Platform Teknoloji Hizmetleri A.Ş. (Digitürk), Andromeda TV Dijital Plat- form İşletmeciliği A.Ş. (DSmart) and TTNET A.Ş. (Tivibu) continue to operate actively. Fixed Voice Market As of the end of the 3rd quarter of 2023, there were 10.3 million fixed voice sub- scribers in Türkiye, and the penetration rate of this service was approximately 12.2%. Legal and Regulatory Developments Relevant to Our Sector and Companies Extension of the Term of Turkcell's 2G Concession Agreement Following the request of our compa- ny to extend the term of the GSM (2G) concession agreement signed with the Information and Communication Tech- nologies Authority (ICTA), which is valid until April 27, 2023, our company has been informed that it has been decid- ed to extend the term of the GSM con- cession agreement until April 30, 2029 and to continue to use the frequencies allocated to Turkcell in the 900 MHz band within the framework of the "Pro- cedures and Principles for Determining the Term Extension Conditions of GSM Concession Agreements and GSM 1800 Concession Agreement". Board Decision on Measures to be Taken Due to the Earthquake Disaster With the Board Decision of ICTA dat- ed 14.02.2023 and numbered 2023/DK- THD/66, "Measures to be taken due to the Earthquake Disaster" was published. In this context, it has been notified by the Board Decision that the following are required during the periods speci- fied by the relevant Board Decision: 䩉On 06.02.2023; for subscribers whose subscription address or fixed service facility address registered with the op- erator is in the provinces where a state of emergency has been declared or who receive services in these prov- inces on the said date, without preju- dice to the provisions of the relevant legislation, providing free services and additional benefits, postponing invoices, SIM card replacement, trans- fer, line freezing and transfer requests and on-off switching fees, not charg- ing TRY or not restricting and stopping services due to debt, not transmitting Invoice Upper Limit SMS, 䩉Temporary change of subscription processes such as SIM card change, transfer and number porting etc. ac- cording to the conditions of the SoE. Presidential Decree on the Electronic Communication Area under the State of Emergency 06.04.2023 dated, "Presidential Decree on Electronic Communication Area and Water Structures Inspection Ser- vices under the State of Emergency" was published in the Official Gazette. The following measures have been taken by Decree with an effective date of 06.02.2023; 䩉During the state of emergency, the first establishment SCT will not be charged for one new mobile sub- scription to be established for in- dividuals who document that they have been affected by the earthquake, 䩉Within 24 hours prior to 06.02.2023, the existing subscriptions of sub- scribers who receive service in the provinces of the SoE / whose address is in the provinces of the SoE shall not be charged for a 3-month periodic radio licence and usage fee, 䩉The communication infrastructures to be established by the operators in the State of Emergency provinces during the State of Emergency can be established without requiring any other document other than the site selection certificate to be issued free of charge by the Ministry of En- vironment, Urbanisation and Climate Change and the permit to be issued by the local administrative authority, 䩉During the State of Emergency, no Space Usage Fee and Right of Way Fee shall be charged at the loca- tions belonging to public institutions and organisations, and if such infra- structures continue to be used, the conditions shall be fulfilled accord- ing to the relevant legislation within 2 months following the end of the State of Emergency. Türk Telekom Reference IP VAE Offer Published Updating Fixed Interconnection Charges As a result of the Wholesale Fixed Lo- cal and Central Access Market Analysis conducted by the ICTA in 2019, Türk Tel- ekom was obliged to provide access through its copper and fiber networks. Türk Telekom's Reference Offer cover- ing Data Flow Access (VAE) services at IP level on copper and fiber networks was published on Türk Telekom's web- site with the ICTA Board Decision dat- ed 20.06.2023 and numbered 2023/DK- ETD/191; Türk Telekom was given until 31.12.2023 to make the necessary system improvements. Removal of Asymmetry in Mobile Interconnection Charges With the Board Decision dated June 2021, the ICTA decided to update the Mobile Call Termination Charges and to completely remove the asymmetry in the charges as of 1 January 2024. Pursuant to the Board Decision, Mobile Call Termination Charges were applied as 2.39 kr/min for Turkcell as of 1 Janu- ary 2022 and 2.25 kr/min as of 1 January 2023. As of 1 January 2024, mobile call termination rates were equalised at 2.1 kr/min for all operators, thus ending the asymmetric practice in mobile call ter- mination rates, which has been against Turkcell since 2006. Removal of the Obligation to Set Cost- Based Tariffs for SMS Termination Services Within the scope of the Market Anal- ysis published with the Board Deci- sion dated 08.09.2020 and numbered 2020/IK-SRD/258, the ICTA decided to remove the obligation to be subject to tariff control (cost-based tariff setting) for SMS call termination services as of 01.10.2021. With the Board Decision dat- ed 12.12.2021 and numbered 2021/UK- ETD/390, the SMS call termination fees of mobile operators were set as 0.80 Kr/per SMS as of 01.04.2022, 1.00 Kr/per SMS as of 01.01.2023 and 1.20 r/per SMS as of 01.01.2024. With the Board Decision dated Decem- ber 14, 2021, ICTA decided to adopt a single-tier fee structure for Fixed Call Termination Charges as of 1 January 2022, in line with the transition to IP in- terconnection technology. As of 1 Jan- uary 2022, the relevant rates for Super- online were 2.8 kr/min and 2.2 kr/min as of 1 January 2023. As of January 1, 2024, it was decided to equalise the termina- tion fees of all operators at 1.47 kr/min and to completely eliminate the asym- metry in the sector. Maximum Fee Tariff for Mobile Electronic Communication Services The maximum prices of the services (domestic/overseas voice and SMS, name/title change, line transfer, number change, SIM card change, switching, detailed invoice, unknown numbers ser- vice, etc.) included in the Maximum Fee Tariff for Mobile Electronic Communica- tion Services published by ICTA are up- dated every six months. As of 01.04.2023, the fees in the tariff were increased by approximately 21.4%. On 10.07.2023, the increase in Value Added Tax (from 18% to 20%) was reflected in the fees in the relevant tariffs. In addition, the fees in the tariffs were increased by approximately 29% as of 01.10.2023. Refurbished Device Sales Instalment Arrangements With the "Decision of the Banking Reg- ulation and Supervision Board num- bered 10479" published on the website of the Banking Regulation and Supervi- sion Agency on 05.01.2023; 䩉Pursuant to the Regulation on the Sale of Refurbished Products, the instal- ment period has been set as 12 months for credit card purchases of mobile phones that are "refurbished prod- ucts" provided that they are "refurbish- ment centres" or "authorised dealers". 䩉The maturity limit for consumer loans extended for the purchase of mobile phones (including refurbished prod- ucts) is set as 12 months for mobile phones with a price of 12,000 Turkish Liras or less, and 3 months for mobile phones with a price above 12,000 Turkish Liras. 224 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 225 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Corporate Law Developments Concerning Our Company And Its Subsidiaries Transfer of Shares of Lifecell LLC, Ukrtower LLC and Global Bilgi LLC As per our Company's Board of Di- rectors' decision dated 20 December 2023; a share transfer agreement was signed on 29 December 2023 between Global Bilgi Pazarlama Danışmanlık ve Çağrı Servisi Hizmetleri A.Ş., Kule Hizmet ve İşletmecilik A.Ş., Lifecell Ventures B.V. and NJJ Capital for the transfer of all shares, along with all rights and debts, of (i) Lifecell LLC, which is wholly owned by Lifecell Ventures B.V., (ii) Global Bilgi LLC, which is wholly owned by Global Bilgi Pazarlama Danışmanlık ve Çağrı Servis Hizmetleri A.Ş. and (iii) Ukrtower LLC, which is wholly owned by Kule Hiz- met ve İşletmecilik A.Ş., to NJJ Capital, a company located in France. Transfer of Data Center Assets and Lifecell TV Shares of Turkcell Gayrimenkul to Superonline through Partial Demerger Procedure Due to Turkcell Gayrimenkul’s increas- ing data center investments, business volume and the continuation of the data center operations in an integrated manner with Superonline, the separa- tion of the business from Turkcell Gay- rimenkul and its transfer to Superonline through a partial demerger by way of transfer of Lifecell TV shares owned by Lifecell Dijital to Superonline and the transfer of Turkcell Gayrimenkul's data center services business (buildings, equipment, advances, debts, receiva- bles, etc.) from Turkcell Gayrimenkul to Superonline was completed and the transaction was registered before the Trade Registry as of 10 July, 2023 and the title deed transfer processes of the data centers were completed. Merger of Turkcell and Beltel In order to simplify the corporate structure, Beltel Telekomünikasyon Hiz- metleri A.Ş., one of our group compa- nies, has merged with Turkcell İletişim Hizmetleri A.Ş. through a facilitated procedure and dissolved without liqui- dation. The approvals and procedures of the Capital Markets Board, the Infor- mation and Communication Technolo- gies Authority and the Trade Registry were completed and the merger was registered on 23 August 2023. Accord- ingly, the Share Sale and Purchase Agreement signed between Beltel, the State of Belarus and Turkcell on July 29, 2008 was terminated with all rights and obligations by signing a separate ter- mination agreement. Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş.'s Acquisition of 33.3% of BELBİM's Shares in Sofra BELBİM Elektronik Para ve Ödeme Hiz- metleri A.Ş.'s 33,3% shares in Sofra Ku- rumsal ve Ödüllendirme Hizmetleri A.Ş. were acquired by Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. for TRY 762.690 by exercising the pre-emptive right in accordance with the existing shareholders agreement. Within the scope of the Regulation on the Amendment of the Regulation on the Principles and Rules to be Applied in Retail Trade, the maturity limit for the sales of mobile phones on assignment with a price above TRY 12,000, except for the sales of mobile phones in the form of refurbished products carried out by refurbishment centres or author- ised dealers in accordance with the Regulation on the Sale of Refurbished Products, has been set as 3 months, and the maturity limit for the sales of mobile phones on assignment, regardless of whether the price is above or below TRY 12,000, has been set as 12 months for the purchase of mobile phones in the form of refurbished products. Procedures and Principles on Confirmation Procedures Prior to Individual New Subscription Establishment for Internet/TV and Fixed Telephone Services With the Board Decision of the ICTA dated 05.09.2023 and numbered 2023/ DK-THD/263, the procedures and prin- ciples determining the procedures regarding the confirmation to be re- ceived from the subscriber before the establishment of a new individual sub- scription for Internet, TV and Fixed Tele- phone Services were published and it was decided that the regulation will enter into force 6 months after the date of its publication in the Official Gazette. With these procedures and principles; it has been determined that the sub- scriber must be called to confirm the accuracy of the subscription request before the establishment of a new in- dividual subscription, the information that must be provided to the subscriber during this call and the conditions re- quired for the subscription request to be processed. Amendments on the Registration of Devices with Electronic Identity Information The "Regulation Amending the Regula- tion on the Registration of Devices with Electronic Identity Information" and the "Communiqué Amending the Commu- niqué on the Registration of Devices with Electronic Information" were published in the Official Gazette Identity dated 12.10.2023 and numbered 32337. In this context, the period of 7 years, which was set as 7 years with the pre- vious regulation, has been updated as 1 year and it has been decided to delete the IMEI registration of the phones that cannot receive uninterrupted signal for 1 year. The effective date of these regulations has been determined as 01.01.2024. Kahramanmaraş Earthquake In- Depth Investigation An investigation was initiated by the ICTA against our Company following in Kahramanmaraş the earthquakes and Pazarcık on February 6, 2023. Within the scope of the initiated inves- tigation, the investigation report of the supervisory board including the viola- tion determinations was notified and our written defences regarding the violation determinations were submit- ted to the ICTA. The said investigation is ongoing. Litigation Procedures Regarding the Rejection of Domestic Goods Obligation Exemption Requests and ICTA's R&D SME Investigation regarding The exemption applications made by our Company for the period 27.10.2015- 26.10.2019 and the exemption appli- cation for the average of the first four-year period covering the years the domestic 2015-2019 goods includ- investment obligation ed in the IMT Authorisation Certificate were rejected. As a result of the inves- tigation conducted by ICTA for the pe- riod 2013-2017, administrative sanctions were imposed on our Company. Our Company has filed a lawsuit for the cancellation of the aforementioned Board Decisions and related transac- tions and the legal process is ongoing. In addition, the application made in 2022 with the request to revoke the de- cisions regarding the rejection of the exemption request regarding the ob- ligation to use domestic goods for the 2019-2020 and 2020-2021 investment periods was implicitly rejected. Our Company filed a lawsuit for the can- cellation of the aforementioned Board Decision and related transactions and the legal process is ongoing. Litigation Process Regarding the Amendment to the Procedures and Principles Regarding the Examination and Audit of R&D Investments With the Decision of the Information and Communication Technologies Au- thority dated 16.11.2021 and numbered 2021/DK-YED/361, the "Procedures and Principles Regarding the Examination and Inspection of Hardware and Soft- ware Investments to be Used in Opera- tors' Networks" were updated. The new regulation includes issues such as not exceeding 50% of the total investments per supplier in an investment period, informing the ICTA before the invest- ments to be made in critical network elements and complying with a possi- ble notification, defining the national product, and introducing obligations regarding R&D projects carried out in R&D centres. Our Company's applica- tion for the revocation of the relevant Board Decision in 2022 was rejected and a lawsuit was filed by our Compa- ny for the cancellation of the relevant transactions and the legal process is ongoing. Lawsuit issued by TT Mobil and our Company intervened regarding the “Multiplying Campaign” administrative fine applied to our Company fine of The administrative TRY 25,245,56.18 imposed by the 1st, 2nd, 3rd and 4th articles of the ICTA's decision dated 16.03.2021 and numbered 2021/ İK-THD/76 due to our Company's appli- cation under the name of "Multiplying Campaign" was paid by our Company with a discount (TRY 18,934,173.9). During the process, an application was made by TT Mobil requesting that the amount of the administrative fine imposed by the ICTA decision on our Company be increased and that the said decision be amended to include a refund to subscribers, and upon the implicit re- jection of this request, a lawsuit was filed against the ICTA for the cancel- lation of the said implicit rejection. Our Company is an intervener in this lawsuit alongside ICTA. The legal process is ongoing. 226 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 227 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Subsequent Events After the Reporting Period 19.01.2024 Announcement Regarding the Capital Increase in BeST The capital of our Company's subsid- iary CJSC Belarusian Telecommuni- cations Network ("BeST") is increased by BYN 47,938,990 to BYN 1,322,959,530 from BYN 1,275,020,540. Our Company's pre-emption rights with respect to the capital increase is fully paid. 29.01.2024 Announcement Regarding the Estab- lishment of the Data Center Company Our Company's Board of Directors has decided to establish a data center company with a focus on efficient management of company process- es. This new Company, which will be wholly owned by our Company, will operate in the areas of data process- ing, data analysis, data storage, server hosting, server leasing, and computer programming with cloud solutions. The initial capital will be TRY 250,000. All data center operations will be trans- ferred to this newly established data center company from our Company by demerger. 29.01.2024 Announcement Regarding the Amendment of Articles of Association Our Company's Board of Directors has decided that necessary actions will be taken to obtain the approval of the Capital Markets Board and the Ministry of Trade, for amendment of the Articles of Association as attached, in accord- ance with the principles of Capital Mar- kets Law, the Turkish Commercial Code, and related legislation. Amendment of Articles of Association is subject to ap- proval of the General Assembly. 30.01.2024 Announcement Regarding the News in the Media - Sale of Ukrainian Assets In certain media channels, there have been some news regarding the sale process of lifecell LLC, LLC Global Bilgi, and LLC Ukrtower, which are Turkcell's subsidiaries operating in Ukraine. The process is expected to be completed after obtaining the regulatory approv- als. The enterprise value to be taken into account at the closing date for the respective sale transaction is USD 525 million, and the final sale value will be determined within the framework of adjustments to be made including cash and debts after the closing. Due to the uncertainty involved in the sale value as of the decision date, the disclosure of the respective informa- tion was postponed by the Board of Directors' decision dated December 20, 2023, as per the Article-6 of the Capital Markets Board's Communiqué on Ma- terial Events Disclosure, as it may im- pact the investors' investment decision and share value. 30.01.2024 Board Resolution Regarding the Renewal of the Registered Capital Ceiling Validity Period Our Company's Board of Directors has decided that necessary actions will be taken to obtain the approval of the Capital Markets Board and the Min- istry of Trade, for amendment of the Articles of Association as attached, in accordance with the principles of Capital Markets Law, the Turkish Com- mercial Code, and related legislation. Amendment of Articles of Association is subject to approval of the General Assembly. 31.01.2024 Announcement Regarding the Re- demption of the Bond with ISIN Code TRFTCEL12410 Within the scope of our Company's an- nouncement dated August 1, 2023, the redemption payment of the financing bond with ISIN code TRFTCEL12410 with a nominal amount of TRY 500,000,000, a maturity of 183 days and an annual simple interest of 29.50% was made on January 31, 2024 (today). 31.01.2024 Announcement Regarding the Financ- ing Bond Issuance Within the scope of the issue limit of TRY 8,000,000,000 approved by the Capital Markets Board; the book build- ing of the financing bond issuance of our Company with a maturity date of 12.07.2024, an annual simple interest of 47.00%, and a nominal amount of TRY 2,500,000,000 to qualified investors within Turkey, without public place- ment was completed, and the securi- ties will be transferred to the investor accounts on 31.01.2024 (today). The is- suance was advised by Ziraat Yatırım Menkul Değerler A.Ş.. 08.02.2024 Announcement Regarding the Financ- ing Bond Issuance Within the scope of the issue limit of TRY 8,000,000,000 approved by the Capital Markets Board; the book build- ing of the financing bond issuance of our Company with a maturity date of 02.08.2024, an annual simple interest of 47.00%, and a nominal amount of TRY 250,000,000 to qualified investors within Türkiye, without public place- ment was completed, and the securi- ties will be transferred to the investor accounts on 08.02.2024 (today). The issuance was advised by Ziraat Yatırım Menkul Değerler A.Ş.. 08.02.2024 Announcement Regarding the Re- demption of the Bond with ISIN Code TRFTCEL22419 Within the scope of our Company's an- nouncement dated August 9, 2023, the redemption payment of the financing bond with ISIN code TRFTCEL22419 with a nominal amount of TRY 530,000,000, a maturity of 183 days and an annual simple interest of 31.00% was made on February 8, 2024 (today). 09.02.2024 Announcement Regarding the Financ- ing Bond Issuance Within the scope of the issue limit of TRY 8,000,000,000 approved by the Capital Markets Board; the book build- ing of the financing bond issuance of our Company with a maturity date of 06.08.2024, an annual simple interest of 47.50%, and a nominal amount of TRY 800,000,000 to qualified investors within Türkiye, without public place- ment was completed, and the securi- ties will be transferred to the investor accounts on 09.02.2024 (today). The issuance was advised by Ziraat Yatırım Menkul Değerler A.Ş.. 09.02.2024 Announcement Regarding the Re- demption of the Bond with ISIN Code TRFTCEL22427 Within the scope of our Company's an- nouncement dated August 11, 2023, the redemption payment of the financing bond with ISIN code TRFTCEL22427 with a nominal amount of TRY 700,000,000, a maturity of 182 days and an annual simple interest of 31.50% was made on February 9, 2024 (today). 23.02.2024 Announcement Regarding the Amendment of Articles of Association Approval by the CMB The application regarding the Amend- ment of Articles of Association, sub- mitted to the Capital Markets Board ("CMB") on February 8, 2024, has been approved by the CMB in the attached form. 08.03.2024 Announcement Regarding a Ruling Received from Ukrainian Court Our Company has been informed through its Ukrainian subsidiary that they have received an official ruling from a Ukrainian court on March 5, 2024, ordering the seizure of 19.8% of the corporate rights of lifecell LLC, and 100% of the corporate rights of Ukrtow- er LLC and Paycell LLC, within the crim- inal proceedings related to suspicions involving Mikhail Fridman. We would like to emphasize that we believe that the aforementioned per- son has no control or influence over our Ukrainian subsidiaries. This ruling has not had any significant impact on the daily operations of these Ukrainian subsidiaries. An appeal to the related court sub- mitted on March 7, 2024 with an aim to cancel the seizures and our subsidiar- ies vigorously contest this decision. Completion of conditions precedent, including this ruling being lifted, for closing regarding the sale of Ukraini- an assets to NJJ Capital, announced on December 29, 2023 and January 30, 2024, are continuing. 18.03.2024 Announcement Regarding the Capital Increase in Kıbrıs Telekom The capital of our Company's whol- ly-owned subsidiary Kıbrıs Mobile Tele- komünikasyon Limited ("Kıbrıs Telekom") is increased by TRY 250,000,000 to TRY 322,724,863. Our Company's pre-emp- tion rights with respect to the capital increase is fully paid. 18.03.2024 Announcement Regarding Fitch Rat- ings' Credit Rating International credit rating agency Fitch Ratings has raised our Company's cred- it rating from "B" to "B+", and has revised the outlook of the rating from "Stable" to "Positive". 20.03.2024 Announcement Regarding the Deci- sion to Issue Debt Instruments Our Company's Board of Directors re- solved that our wholly-owned sub- sidiary, Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. shall issue debt instruments. The issuance shall be at a nominal value of up to TRY 1 billion, with debt instruments to be determined ac- cording to market conditions and vari- ous maturities up to one-year, in Turkish Lira terms, in the domestic market, in one or more tranches, without a public offering, as a private placement and/or to be sold to institutional investors. The respective issuances are subject to ap- proval of the Capital Markets Board. 02.04.2024 Announcement Regarding the Liqui- dation of Rehberlik Hizmetleri Servisi A.Ş. It has been decided to liquidate Reh- berlik Hizmetleri Servisi A.Ş. ("Rehberlik"), a wholly owned subsidiary of our Com- pany, due to market contraction, new technologies offering alternative solu- tions, and the lack of remaining sources of revenue. 228 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 229 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 31 December Notes 2023 31 December 2022 Assets Property, plant and equipment Right-of-use assets Intangible assets Investment properties Trade receivables Receivables from financial services Contract assets Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Deferred tax assets Investments in equity accounted associate and joint venture Other non-current assets Total non-current assets Inventories Trade receivables Due from related parties Receivables from financial services Contract assets Derivative financial instruments Financial assets at amortized cost Financial assets at fair value through profit or loss Cash and cash equivalents Other current assets Subtotal Assets held for sale Total current assets 12 16 13 15 19 20 21 24 24 18 40 17 22 19 20 21 34 24 24 23 17 41 66,650,246 6,136,092 58,511,397 142,365 325,862 593,550 101,281 106,023 541,490 1,128,749 5,869,618 4,430,424 144,537,097 540,507 10,925,645 171,373 5,842,112 3,191,739 2,044,765 - 8,869,828 49,978,716 3,875,773 85,440,458 17,105,770 102,546,228 71,494,396 8,054,305 61,498,735 179,085 492,274 469,830 110,487 3,049,667 426,147 2,732,413 3,801,087 5,368,170 157,676,596 494,988 10,982,217 125,967 5,399,259 3,112,465 3,348,871 1,233,597 6,648,418 42,776,160 3,190,642 77,312,584 - 77,312,584 Total assets 247,083,325 234,989,180 Notes 31 December 2023 31 December 2022 Equity Share capital Share premium Treasury shares Reserves Remeasurements of defined benefit plans Retained earnings Total equity attributable to equity holders of Turkcell Iletisim Hizmetleri A.S. (“the Company”) Non-controlling interests Total equity Liabilities Borrowings Trade and other payables Due to related parties Employee benefit obligations Provisions Deferred tax liabilities Contract liabilities Other non-current liabilities Total non-current liabilities Borrowings Current tax liabilities Trade and other payables Due to related parties Deferred revenue Provisions Contract liabilities Derivative financial instruments Subtotal Liabilities directly associated with the assets held for sale Total current liabilities Total liabilities Total equity and liabilities 25 25 28 29 32 18 31 27 28 33 30 32 31 34 41 32,334,546 7,683 (741,311) 5,574,979 (2,047,211) 87,119,133 32,334,546 7,683 (710,768) 2,403,426 (2,049,632) 77,386,263 122,247,819 (12,954) 122,234,865 109,371,518 6,421 109,377,939 57,946,648 1,110,700 38,337 2,052,325 1,379,435 2,286,164 1,193,665 1,113,468 67,120,742 26,137,561 213,374 20,606,224 552,448 248,003 1,975,543 1,312,519 354,370 51,400,042 6,327,676 57,727,718 61,185,299 56,550 1,546 2,949,486 1,596,203 8,991,083 1,248,479 1,106,591 77,135,237 27,552,086 401,197 17,018,441 397,610 214,040 1,242,279 1,401,669 248,682 48,476,004 - 48,476,004 124,848,460 125,611,241 247,083,325 234,989,180 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 230 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 231 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 1 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 2 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Notes 31 December 31 December 2023 2022 Represented (*) Revenue Revenue from financial services Total revenue Cost of revenue Cost of revenue from financial services Total cost of revenue Gross profit Gross profit from financial services Total gross profit Other income Selling and marketing expenses Administrative expenses Net impairment losses on financial and contract assets Other expenses Operating profit Finance income Finance costs Monetary gain (loss) Net finance costs / income Share of profit of an associate and a joint venture Profit before income tax from continuing operations Income tax income/ (expense) Profit for the year from continuing operations 6 6 11 11 7 11 11 11 7 9 9 9 40 10 Represented (*) 31 December 2021 105,251,583 3,348,061 108,599,644 (85,135,182) (1,002,885) (86,138,067) 20,116,401 2,345,176 22,461,577 356,404 (5,201,034) (2,658,343) (847,035) (2,010,123) 12,101,446 102,962,781 4,153,403 107,116,184 90,206,307 3,280,539 93,486,846 (82,240,256) (2,177,779) (84,418,035) (80,360,678) (1,320,251) (81,680,929) 20,722,525 1,975,624 22,698,149 9,845,629 1,960,288 11,805,917 882,782 (5,682,346) (3,429,518) 348,611 (4,592,793) (2,579,411) (1,008,164) (5,648,334) 7,812,569 (621,978) (1,406,976) 2,953,370 12,663,682 (19,931,617) 3,816,872 (3,451,063) 3,957,684 (11,949,156) 7,767,102 (224,370) 11,527,996 (21,308,035) 4,804,527 (4,975,512) 1,525,175 522,221 191,303 5,886,681 3,251,221 7,317,237 4,675,891 2,785,265 (900,339) 10,562,572 6,036,486 6,416,898 Profit /(loss) from discontinued operations 41 1,969,674 842,370 718,727 Profit for the year 12,532,246 6,878,856 7,135,625 Profit for the year is attributable to: Owners of the Company Non-controlling interests Total Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL) Basic and diluted earnings per share for profit from continuing operations attributable to owners of the Company (in full TL) 26 26 12,553,996 (21,750) 12,532,246 6,880,436 (1,580) 6,878,856 7,135,436 189 7,135,625 5.75 3.15 4.85 2.77 3.27 2.94 *Please refer to Note 2 (b) Restatement of financial statements during the hyperinflationary periods and Note 41 Discontinued operations The above consolidated statement of financial position should be read in conjunction with the accompanying notes. The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes. 3 232 | TURKCELL 2023 INTEGRATED ANNUAL REPORT CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME For the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Profit for the period Items that will not be reclassified to profit or loss: Remeasurements of defined benefit plans Income tax relating to remeasurements of defined benefit plans Other comprehensive income/(expense): Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations Gain on financial assets measured at fair value through other comprehensive income Cash flow hedges - effective portion of changes in fair value Cash flow hedges - reclassified to profit or loss Cost of hedging reserve - changes in fair value Cost of hedging reserve - reclassified to profit or loss Loss on hedges of net investments in foreign operations Income tax relating to these items - Income tax relating to exchange differences - Income tax relating to cash flow hedges - Income tax relating to cost of hedging reserve - Income tax relating to financial assets measured at fair value - Income tax relating to hedges of net investments Other comprehensive income/(loss) for the year, net of income tax 31 December 31 December Notes 2023 2022 31 December 2021 12,532,246 6,878,856 7,135,625 29 (149,757) (1,824,873) (541,628) 152,178 2,421 363,876 (1,460,997) 108,418 (433,210) 34 10 34 2,860,231 (748,669) 7,164,377 149,602 (121,999) (192,475) 5,256,277 (3,683,081) (784,883) 9,415,938 (7,129,115) (3,046,104) 7,243,111 (6,255,142) (4,302,532) 395,519 875,435 423,428 (2,342,679) 984,420 (491,059) 25,502 274,034 (520,930) (66,764) (887,185) (89,836) 434,134 (3,886,535) (760,237) (2,330,871) (86,967) 775,821 (5,514) 1,181,457 35,988 440,135 38,164 843,616 2,835,406 (1,342,208) (566,005) 2,837,827 (2,803,205) (999,215) Total comprehensive income for the year 15,370,073 4,075,651 6,136,410 Total comprehensive income for the year is attributable to: Owners of the Company Non-controlling interests Total 15,391,823 (21,750) 15,370,073 4,077,231 (1,580) 4,075,651 6,136,221 189 6,136,410 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 233 The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes. 4 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Share capital Treasury shares Additional paid-in capital Share premium Legal reserves (*) Hedges of net investments in foreign operations (*) Fair value reserve (*) Hedging reserve (*) Cost of hedging reserve (*) Foreign currency translation reserve (*) Remeasure ment of defined benefit plans Reserve of disposal group held for sale Retained earnings Non- controlling interests Total Balance at 1 January 2021 Profit/ (loss) for the year Other comprehensive income, net of income tax Total comprehensive income Transfers to legal reserves Dividend paid (Note 25) Other Balance at 31 December 2021 Balance at 1 January 2022 Profit/ (loss) for the year Other comprehensive income, net of income tax Total comprehensive income Transfers to legal reserves Dividend paid (Note 25) Other Balance at 31 December 2022 32,334,546 - (798,490) - - - - - - - - - 69,360 - 129,465 - - - - - (34,327) 7,683 - 21,733,847 - 6,221 - (1,250,417) - (471,562) - (2,457,266) - (15,900,121) - (155,425) - 77,387,034 7,135,436 - - - - - - (154,311) (3,042,919) 901,002 (3,103,283) 4,833,506 (433,210) - - 1,941,748 - - (154,311) - - - (3,042,919) - - - 901,002 - - - (3,103,283) - - - 4,833,506 - - - (433,210) - - - 7,135,436 (1,941,748) (9,032,088) - 32,334,546 (729,130) 95,138 7,683 23,675,595 (148,090) (4,293,336) 429,440 (5,560,549) (11,066,615) (588,635) 73,548,634 32,334,546 - (729,130) - - - - - - - - - 18,362 - 95,138 - - - - - (95,138) 7,683 - 23,675,595 - (148,090) (4,293,336) 429,440 (5,560,549) (11,066,615) - (588,635) - 73,548,634 6,880,436 - - - - - - (86,011) (80,795) 2,196,987 (1,736,535) (1,635,854) (1,460,997) - - 709,189 - - (86,011) - - - (80,795) - - - 2,196,987 - - - (1,736,535) - - - (1,635,854) - - - (1,460,997) - - - 6,880,436 (709,189) (2,391,534) 57,916 32,334,546 (710,768) - 7,683 24,384,784 (234,101) (4,374,131) 2,626,427 (7,297,084) (12,702,469) (2,049,632) 77,386,263 - - - 7,683 - (710,768) - 32,334,546 - Balance at 1 January 2023 Profit/ (loss) for the year Other comprehensive income, net of income tax Total comprehensive income Transfers to legal reserves Dividend paid (Note 25) Discontinued operations (Note 41) Other Balance at 31 December 2023 (*) Included in Reserves in the consolidated statement of financial position. - - 20,212 - (50,755) 32,334,546 (741,311) 7,683 - - - - - - - - - - - - - - - - 24,384,784 - (234,101) (4,374,131) 2,626,427 (7,297,084) (12,702,469) - 144,088 (1,161,222) 1,598,698 (115,330) 2,369,172 - 336,147 - 144,088 - - (1,161,222) - - 1,598,698 - - (115,330) - - 2,369,172 - - (2,049,632) - 77,386,263 12,553,996 2,421 2,421 - - - 12,553,996 (336,147) (2,484,979) - - - - - (6,140,191) 6,140,191 24,720,931 (90,013) (5,535,353) 4,225,125 (7,412,414) (16,473,488) (2,047,211) 87,119,133 6,140,191 122,247,819 (12,954) 122,234,865 - - - - - - - - - - - - - - - - - - 110,565,515 7,135,436 (999,215) 6,136,221 - (8,962,728) (34,327) 114 189 - 189 - - (858) Total equity 110,565,629 7,135,625 (999,215) 6,136,410 - (8,962,728) (35,185) 107,704,681 (555) 107,704,126 107,704,681 6,880,436 (2,803,205) 4,077,231 - (2,373,172) (37,222) (555) (1,580) 107,704,126 6,878,856 - (2,803,205) (1,580) - - 8,556 4,075,651 - (2,373,172) (28,666) 109,371,518 6,421 109,377,939 109,371,518 12,553,996 2,837,827 15,391,823 - (2,464,767) - (50,755) 6,421 (21,750) 109,377,939 12,532,246 - 2,837,827 (21,750) - - 2,375 15,370,073 - (2,464,767) - (48,380) The above consolidated statement of financial position should be read in conjunction with the accompanying notes. The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 5 234 | TURKCELL 2023 INTEGRATED ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Cash flows from operating activities: Profit for the year from continuing operations Discontinued operations Profit for the year Adjustments for: Depreciation and impairment of property, plant and equipment and investment properties Amortization of intangible assets and right-of-use assets Impairment on property, plant and equipment and intangible asset Net finance expense Fair value adjustments to derivatives Income tax expense Gain on sale of property, plant and equipment Effects of exchange rate changes and inflation adjustments Provisions Share of (profit)/loss of associates and joint ventures Fair value adjustments to financial assets through profit or loss Non-cash other adjustments Change in operating assets/liabilities Change in trade receivables Change in due from related parties Change in receivables from financial services Change in inventories Change in other current assets Change in other non-current assets Change in due to related parties Change in trade and other payables Change in other non-current liabilities Change in employee benefit obligations Change in short term contract asset Change in long term contract asset Change in deferred revenue Change in short term contract liability Change in long term contract liability Changes in other working capital Cash generated from operations Interest paid Income tax paid Net cash inflow from operating activities Cash flows from investing activities: Acquisition of property, plant and equipment Acquisition of intangible assets Proceeds from sale of property, plant and equipment Payment for acquisition of subsidiary, net of cash acquired Payments for advances given for acquisition of property, plant and equipment Contribution of increase of share capital in joint ventures/associates Cash inflows from sale of shares or borrowing instruments of other enterprises or funds Cash outflows from purchase of shares or borrowing instruments of other enterprises or funds Cash (outflows)/inflows from financial assets at amortized cost Cash outflows from financial assets at fair value through profit or loss Interest received Net cash outflow from investing activities Cash flows from financing activities: Proceeds from derivative instruments Repayments of derivative instruments Proceeds from issues of loans and borrowings Proceeds from issues of bonds Repayments of borrowings Repayments of bonds Dividends paid to shareholders Dividends paid to non-controlling interest in subsidiaries Payments of lease liabilities Net cash outflow from financing activities Net increase in cash and cash equivalents Note 31 December 2023 31 December 2022 31 December 2021 10,562,572 1,969,674 12,532,246 6,036,486 842,370 6,878,856 6,416,898 718,727 7,135,625 12-15 13-16 12-13 10 19 38 20 22 17 17 38 33 27 29 21 21 30 31 31 12 13 3 11,971,461 21,495,684 (1,421) 2,705,359 (1,313,993) (4,383,918) 15,979 10,470,553 4,699,380 (1,525,175) (4,604,960) 3,712 52,064,907 (139,488) (39,338) (572,122) (98,561) (1,243,350) 785,975 (387,619) 935,945 42,319 (564,023) (70,561) 9,206 129,985 (89,150) 405,430 (1,528,600) 49,640,955 (7,356,137) (563,330) 41,721,488 (14,216,712) (15,287,059) 338,387 - - (543,356) 15,307,389 (16,115,347) 14,043,065 (10,257,554) 5,825,402 (20,905,785) 7,749,663 (4,756,730) 62,689,793 7,824,254 (54,790,770) (5,289,151) (2,484,979) (50,755) (4,121,990) 6,769,335 15,034,317 20,160,690 391,616 3,424,909 2,427,062 (2,661,572) 35,502 5,783,400 2,757,078 (522,221) (1,738,728) 198,772 52,169,681 695,393 348,368 (3,562) 260,863 (144,637) (107,361) (319,015) (1,758,710) 43,561 (111,268) 86,892 72,230 (139,688) (106,319) 44,293 (1,470,725) 49,559,996 (5,943,326) (1,335,544) 42,281,126 (15,381,134) (11,152,761) 1,160,686 - (1,744,603) (1,014,279) 2,158,111 (3,560,647) (1,592) (6,162,440) 3,986,591 (31,712,068) 5,961,522 (5,264,741) 53,139,280 4,472,292 (44,653,449) (3,564,408) (2,391,534) - (4,310,581) 3,388,381 14,171,912 19,698,077 32,204 2,698,761 (7,509,357) 900,339 (98,440) (3,096,843) 4,088,441 (191,303) - 147,960 37,977,376 1,574,713 (410,728) 1,479,545 19,578 104,128 317,001 17,709 (1,361,918) 1,207,414 (169,308) 388,238 289,169 (98,232) 98,261 (7,448) (3,280,191) 38,145,307 (6,053,353) (2,276,959) 29,814,995 (18,058,499) (13,435,350) 683,346 (234,680) (348,938) (1,614,614) 2,295,452 (3,428,074) 789,278 - 4,342,451 (29,009,628) 5,987,453 (5,715,348) 43,150,810 636,194 (41,372,286) (470,654) (8,962,728) (858) (3,129,580) (9,876,997) 27,585,038 13,957,439 (9,071,630) Cash and cash equivalents at 1 January 42,742,204 50,398,771 43,662,519 Effects of exchange rate changes and inflation adjustments on cash and cash equivalents (16,502,367) (21,614,006) 15,807,882 Cash and cash equivalents at 31 December 23 53,824,875 42,742,204 50,398,771 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 6 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 235 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Notes to the consolidated financial statements Page Financial risk management Segment information Intangible assets Impairment of non-financial assets Investment properties 1. Reporting entity 2. Basis of preparation and summary of material accounting policies 3. Business combinations 4. 5. 6. Revenue 7. Other income and expense 8. Employee benefit expenses Finance income and costs 9. 10. Income tax expense 11. Expenses by nature 12. Property, plant and equipment 13. 14. 15. 16. Right-of-use assets 17. Other assets 18. Deferred tax assets and liabilities 19. Trade receivables 20. Receivables from financial services 21. Contract assets Inventories 22. 23. Cash and cash equivalents 24. Financial assets 25. Equity 26. Earnings per share 27. Other non-current liabilities 28. Loans and borrowings 29. Employee benefits 30. Deferred revenue 31. Contract liabilities 32. Provisions 33. Trade and other payables 34. Derivative financial instruments 35. Financial instruments 36. Guarantees and purchase obligations 37. Commitments and Contingencies 38. Related parties 39. Subsidiaries 40. 41. Discontinued operations 42. Cash flow information 43. Subsequent events Investments accounted for using the equity method 8 9 38 38 41 44 46 46 47 48 51 53 55 57 58 60 61 62 63 63 64 64 64 65 67 68 69 69 72 73 73 73 75 75 82 92 92 99 103 104 104 106 106 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 1. Reporting entity Turkcell Iletisim Hizmetleri Anonim Sirketi (the “Company” or “Turkcell”) was incorporated in Turkiye on 5 October 1993 and commenced its operations in 1994. The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark/Istanbul. It is engaged in establishing and operating a Global System for Mobile Communications (“GSM”) network in Turkiye and regional states. In April 1998, the Company signed a license agreement (the “2G License”) with the Ministry of Transport and Infrastructure of Turkiye (the “Turkish Ministry”), under which it was granted a 25-year GSM license in exchange for a license fee of USD 500,000. The License permits the Company to operate as a stand-alone GSM operator and releases it from some of the operating constraints in the Revenue Sharing Agreement, which was in effect prior to the 2G License. Under 2G license, the Company pays in cash the Undersecretariat of the Treasury (the “Turkish Treasury”) a monthly tax levy, namely a 'treasury share' equal to 15% of the Company's gross revenue from Turkish GSM operations. The Company continues to build and operate its GSM network and is authorized to, among other things, set its own tariffs within certain limits, charge peak and off-peak rates, offer a variety of service and pricing packages, issue invoices directly to subscribers, collect payments and deal directly with subscribers. Following the 3G tender held by the Information Technologies and Communications Authority (“ICTA”) regarding the authorization for providing IMT-2000/UMTS services and infrastructure, the Company has been granted the A-Type license (the “3G License”) providing the widest frequency band, at a consideration of EUR 358,000 (excluding Value Added Tax (“VAT”)). Payment of the 3G license was made in cash, following the necessary approvals, on 30 April 2009. On 26 August 2015, “Authorization Tender on IMT Services and Infrastructure” publicly known as “4.5G license” tender, was held by the ICTA and the Company was awarded with a total frequency band of 172.4 MHz for 13 years. The tender price is EUR 1,623,460 (excluding VAT of 18%). IMT authorization period expires on 30 April 2029 and operators were able to commence service delivery for 4.5G starting from 1 April 2016. 2x1.4 MHz frequency band in 900MHz spectrum and 2 units of 2x5 MHz frequency bands in 2100 MHz spectrum were commenced on 1 December 2015, while remaining packages were commenced on 1 April 2016. The Company is obliged to pay the ICTA a monthly treasury shares equal to 90% of 15% of gross revenue and 10% is paid for a universal service fund. In addition, the Company pays annual contributions in an amount equal to 0.35% of net revenue to the ICTA’s expenses and 5% of net revenue to ICTA as a frequency fee (TRx). As of 31 December 2023, the capital shares and voting rights of TVF Bilgi Teknolojileri Iletisim Hizmetleri Yatırım Sanayi ve Ticaret Anonim Sirketi (“TVF BTIH”) and IMTIS Holdings S.a r l. (“IMTIS Holdings”) in the Company are 26.2% and 19.8%, respectively since 22 October 2020. The proportion of the Company’s shares that are traded in domestic and foreign stock exchanges are 53.95% (Note 25). The Group’s immediate and ultimate parents are TVF BTIH, wholly owned by Turkiye Varlik Fonu (“TVF”), and TVF respectively as of 31 December 2023. TVF has been established with the Law No. 6741 and 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”); 236 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 237 8 7 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 1. Reporting entity (continued) (i) A nomination privilege has been created on the Group A Shares, allowing the holders thereof to nominate four candidates for appointment of five members of the board of directors of the Company; a voting privilege has been created on the Group A Shares, allowing the holders thereof to cast six votes for each Group A Share in respect of the appointment of NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (a) Compliance with IFRS (continued) The General Assembly has the power to amend and reissue the financial statements. The consolidated financial statements as at and for the year ended 31 December 2023 were authorized for issue by the Board of Directors on 20 March 2024. a. five members of the board of directors of the Company, and (b) Restatement of financial statements during the hyperinflationary periods (ii) (iii) (iv) (v) b. the chairman of the presiding committee of the general assembly of shareholders; 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 Turkcell’s shareholders, including the appointment of the residual four members of the board of directors of Turkcell (including independent ones); 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; The meeting quorum requirement of the board of directors requires five members constituting the majority of full number of its members, and the decision quorum requires the affirmative vote of at least five members present in the meeting; and So long as the above mentioned privileges are in effect, unlimited authority to represent and bind Turkcell regulated under Article 370 of Turkish Commercial Code shall be exercised by two members of the board of directors of the Company, including at least one member of the board of directors of the Company appointed through the exercise of the said privileges by the holders of Group A Shares. The Company’s board of directors consists of a total of nine non-executive members including three independent members as of 31 December 2023. The consolidated financial statements of the Company as at and for the year ended 31 December 2023 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associate and a joint venture. Subsidiaries of the Company, their locations and their nature of operations are disclosed in Note 39. The Company’s and each of its subsidiaries’, associate’s and joint venture’s financial statements are prepared as at and for the year ended 31 December 2023. 2. Basis of preparation and summary of material accounting policies This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not already been disclosed in the other notes below. These policies have been consistently applied to all the years presented, unless otherwise stated. The consolidated financial statements are for the Group consisting of the Company and its subsidiaries and the Group’s interest in an associate and a joint venture. (a) Compliance with IFRS The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRICs”) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”). The accounting policies, presentation and methods of computation are consistent with those of the previous financial year and corresponding reporting period, unless otherwise stated. 238 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 9 The financial statements of the Company and those of the subsidiaries, associates and joint ventures located in Turkiye and Turkish Republic of Northern Cyprus for the year ended 31 December 2023 were restated for the changes in the general purchasing power of Turkish Lira, which is their functional currency, based on International Accounting Standard No. 29 (“IAS 29”) “Financial Reporting in Hyperinflationary Economies”. IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date and that corresponding figures for previous periods be restated in the same terms. One characteristic that necessitates the application of IAS 29 is a cumulative three-year inflation rate approaching or exceeding 100%. Cumulative three-year inflation rate in Turkiye reached 268.3% as at 31 December 2023, based on the Turkish nation-wide Consumer Price Index (“CPI”) announced by the Turkish Statistical Institute (“TSI”). However, IAS 29 does not establish the rate of 100% as an absolute rate at which hyperinflation is deemed to arise. It is a matter of judgment when restatement of financial statements in accordance with IAS 29 becomes necessary. Moreover, hyperinflation is also indicated by characteristics of the economic environment of a country. The table below shows the evolution of CPI in the last three years and as of 31 December 2023: Annual Index Average Index 2023 1,859.38 1,488.91 2022 1,128.45 967.71 2021 686.95 561.61 2020 504.81 469.59 64.8% 268.3% Yearly Inflation Cumulative Inflation (last three years) In a period of inflation, an entity holding an excess of monetary assets over monetary liabilities loses purchasing power and an entity with an excess of monetary liabilities over monetary assets gains purchasing power to the extent the assets and liabilities are not linked to a price level. The gain or loss on the net monetary position is included in the statement of profit or loss as monetary gain (loss) item. The Company restated all the non-monetary items in order to reflect the impact of the inflation restatement reporting in terms of the measuring unit current as of 31 December 2023. Consequently, the main items restated were Property, Plant and Equipment, Intangible assets, Right-of-Use Assets, Inventories, Investments in Equity Accounted Associate and Joint Venture and the Equity items. 64.3% 156.2% 36.1% 74.4% 14.6% 54.2% Monetary items have not been restated because they are stated in terms of the measuring unit current as of 31 December 2023. Comparative figures must also be presented in the current currency of 31 December 2023 and are restated using the general price index of the current year. Therefore, all comparative figures for the previous reporting periods have been restated, including foreign subsidiaries, by applying a general price index, so that the resulting comparative financial statements are presented in terms of the current unit of measurement as of the closing date of the reporting period. In the statement of profit or loss, except for depreciation and amortization which is calculated using inflation adjusted asset basis, items are restated from the dates when the items of income and expense were initially recorded. The Group uses monthly general price index for this purpose. 10 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 239 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) 2. (b) Restatement of financial statements during the hyperinflationary periods (continued) Similar to statement of profit or loss, all items in the statement of other comprehensive income are expressed in terms of the measuring unit current at balance sheet date. Therefore, all amounts are restated by applying the change in the general price index from the dates when the items of income and expenses were initially recorded in the financial statements. All items in the statement of cash flows are expressed in a measuring unit current at the balance sheet date. The subsidiaries that use functional currencies other than Turkish Lira (foreign companies with economies that are not considered to be hyperinflationary), do not restate their financial statements for inflation (except for comparative presentation), in accordance with IAS 29. The initial items of the statement of changes in equity are reported at the closing rate without modifying its total amount due to the fact that it is translated into the closing exchange rate, which implies that a translation adjustment is recognized under retained earnings and other comprehensive results. The accompanying consolidated financial statements are based on the statutory records, with adjustments and reclassifications for the purpose of fair presentation in accordance with IFRS as issued by the IASB. The financial statements have been prepared on a historical cost basis, except for the following measured at fair value: - Derivative financial instruments, - Financial asset at fair value through profit or loss and other comprehensive income. (c) Functional and presentation currency (i) Transactions and balances Transactions denominated in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency using the exchange rates at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as assets held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on assets classified as at fair value through other comprehensive income are recognized in other comprehensive income. Foreign exchange gains and losses are recognized in profit or loss, except: • For capitalized foreign exchange differences relating to borrowings to the extent that they are regarded as an adjustment to interest costs eligible for capitalization. Foreign exchange differences are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within finance income or finance costs. (ii) Foreign operations The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet, • Equity for each balance sheet presented is translated at historic cost at the date of transaction, 240 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (c) Functional and presentation currency (continued) (ii) Foreign operations (continued) • Income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average monthly exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions) and • All resulting exchange differences are recognized in other comprehensive income and accumulated in the foreign currency translation reserve, in equity. On consolidation, exchange differences arising from the translation of borrowings designated as hedges of any net investment in foreign entities are recognized in other comprehensive income. When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. (d) Use of estimates and judgments The preparation of the consolidated financial statements requires the use of accounting estimates. Management also needs to exercise judgment in applying the Group’s accounting policies. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Alterations to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are described below: Allowance for doubtful receivables For trade receivables, other receivables, other assets and contract assets the Group applies the simplified approach to providing for expected credit losses (ECL) prescribed in IFRS 9, which requires the use of the lifetime expected loss provision. The Group performed the calculation of ECL rates separately for individual, corporate and wholesale customers. The ECLs were calculated based on actual credit loss experience over the past years. Exposures within each group were segmented based on common credit risk characteristics such as delinquency status. Future collection performance of receivables is estimated by considering general economic conditions to incorporate forward looking information to the expected credit loss calculations. The Group also applies the general approach defined in IFRS 9 for the recognition of impairment losses on receivables from financial services, carried at amortized cost. Group appropriately classifies its financial instruments considering common risk factors (such as the type of the instrument, credit risk rating, guarantees, time to maturity and sector) to determine whether the credit risk on a financial instrument has increased significantly and to account appropriate amount of credit losses in the consolidated financial statements. 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. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 241 12 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (d) Use of estimates and judgments (continued) Capitalization and useful lives of assets (continued) 2. Basis of preparation and summary of material accounting policies (continued) (d) Use of estimates and judgments (continued) Income taxes The useful lives and residual values of the Group’s assets are estimated by management at the time the asset is acquired and regularly reviewed for appropriateness. The Group defines useful lives of its assets in terms of the assets’ expected utility to the Group. This judgment is based on the experience of the Group with similar assets. In determining the useful life of an asset, the Group also follows technical and/or commercial obsolescence arising on changes or improvements from a change in the market. The useful lives of the telecommunication licenses are based on the duration of the license agreements. Gross versus 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. Whether the Group is considered to be acting as principal or agent in the transaction depends on management’s analysis described below and such judgments impact the amount of reported revenue and operating costs but do not impact reported assets, liabilities or cash flows: Indicators that an entity is a principal: • The entity is primarily responsible for fulfilling the promise to provide the specified good or service, • The entity has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer, • The entity has discretion in establishing the price for the specified good or service. Contracted handset sales The Company, the distributors and dealers offer joint campaigns to the subscribers which may include the sale of device by the dealer and/or distributor and a communication service to be provided by the Company. The Company recognizes revenue on net basis, representing the net margin earned, for the device in these transactions by considering the factors below: - The Company is not the primary obligor for the sale of handset, - The Company does not have control over the sale prices of handsets, - The Company has no inventory risk. In all other cases, where above factors do not exist, the Company recognizes revenue gross. Multiple performance obligations and price allocation In arrangements which include multiple elements where the Group acts as principal, the Group considers that a good or service is distinct if both of the following criteria are met: • The good or service is capable of being distinct, which is considered present if it is frequently sold on standalone basis by the Group or other third parties, • The promise to transfer the good or service is distinct within the context of the contract, which is considered present if there is no significant integration that combines the goods or services. Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation. The transaction price is allocated between the identified obligations according to the relative standalone selling prices of the obligations. The determination of standalone selling prices for the telecommunications services that are regularly sold on an individual basis by the Group, are not considered to be a critical accounting judgement since the Group uses the actual standalone price of similar services sold by itself in similar circumstances. However, in cases where the identical goods or services are not sold by the Group, stand-alone selling prices for similar goods and services sold by third parties are observed for the estimation purpose. The calculation of income taxes involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through formal legal process. As part of the process of preparing the consolidated financial statements, the Group is required to estimate the income taxes in each of the jurisdictions and countries in which it operates. This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue and reserves for tax and accounting purposes. The recognition of deferred tax assets is based upon whether it is probable that future taxable profits will be available against which unrecognized tax losses and temporary differences can be utilized. Recognition, therefore, involves judgment regarding the future financial performance of the particular legal entity in which the deferred tax asset has been recognized. Provisions, contingent liabilities and contingent assets As detailed and disclosed in Note 38, the Group is involved in a number of investigations and legal proceedings (both as a plaintiff and as a defendant) arising in the ordinary course of business. All these investigations and litigations are evaluated by the Group Management and when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation, they are accounted for in the consolidated financial statements. For ongoing investigations, Group Management considers the following in determining if a provision should be recognized and the amount of provision needed; i) actual results of investigations in similar nature, ii) information gathered from investigating regulators during oral defense or other meetings, iii) publicly available information about developments at similar investigations completed by the investigating authority. Future results or outcome of these investigations and litigations might differ from these Group Management’s expectations. All investigations and litigations are disclosed unless possibility of outflow is considered remote (and where information concerning provisions are very sensitive, and full disclosure could prejudice the outcome of cases). As at the reporting date, the Group Management believes that appropriate recognition criteria and measurement basis are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount by considering current conditions and circumstances. Asset Retirement Obligation The Group recognize dismantling cost for towers and base stations and provision for site restoration in the cost of an item of property, plant and equipment where the company has such a legal or constructive obligation. The dismantling costs are calculated according to best estimate of future expected payments discounted at a discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. Net present value of dismantling cost is recognized as cost of the item of property, plant and equipment in non-current assets and as a long-term provision in non-current liability. Depreciation is calculated by using the same useful life relating to that asset and discount interest expense is recognized under finance cost in the statement of profit or loss. The Group expects that the obligations for dismantling, removing and site restoration will not be realized before the associated assets’ end of useful life. Obligations for dismantling, removing and site restoration are discounted using a discount rate of 11.5% –29.6% at 31 December 2023 (31 December 2022: 11.2% –23.9%) 242 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 13 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 243 14 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (d) Use of estimates and judgments (continued) Floating rate loans and borrowings For floating–rate loans and borrowings, The Group calculates the effective interest rate(“EIR”) based on a market–derived yield curve applicable for the entire life of the instrument. While applying this approach, the calculated EIR is applied until estimated future cash flows are revised, at which point a new EIR is calculated based on the revised cash flow expectations and the current carrying amount. (e) Changes in accounting policies Other than the adoption of the new and revised standards as explained in Note 2(z), the Group did not make any significant changes to its accounting policies during the current year. (f) Changes in accounting estimates If the application of changes in the accounting estimates affects the financial results of a specific period, the changes in the accounting estimates are applied in that specific period, if they affect the financial results of current and following periods; the accounting estimate is applied prospectively in the period in which such change is made. A change in the measurement basis applied is a change in an accounting policy, and is not a change in an accounting estimate. The Company does not have significant changes in accounting estimates during the year. (g) 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. The Company has classified current trade payables amounting to 2,190,434 TL as due to related parties as of 31 December 2022. The reclassification has no effect on the consolidated statement of profit or loss. (h) Principles of consolidation and equity accounting (i) Business combinations Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination comprises: • The fair value of the assets transferred, • Liabilities incurred to the former owners of the acquired business, • Equity interests issued by the Group, • The fair value of any asset or liability resulting from a contingent consideration arrangement, and • The fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests, and acquisition-date fair value of any previously held equity interest in the acquired entity over the fair value of the net identifiable assets acquired. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in profit or loss as a bargain purchase. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (h) Principles of consolidation and equity accounting (continued) (i) Business combinations (continued) Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognized in profit or loss. Contingent consideration classified as equity is not subject to remeasurement. Instead, any gain or loss at settlement is recorded as an adjustment to equity through other comprehensive income. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognized in profit or loss. (ii) Subsidiaries Subsidiaries comprise all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of financial position, respectively. (iii) Changes in ownership interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to the non-controlling and any consideration paid or received is recognized in a separate reserve within equity attributable to owners of the Company. When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognized in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss. 244 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 15 16 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 245 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (h) Principles of consolidation and equity accounting (continued) (iii) Changes in ownership interests (continued) If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate. (iv) Business combinations under common control Business combinations between entities or businesses under common control are excluded from the scope of IFRS 3. In a business combination under common control, assets and liabilities of the acquired entity are stated at predecessor carrying values. Any difference between the consideration given and the aggregate book value of the assets and liabilities of the acquired entity at the date of the transaction is recognized in equity. The acquired entity’s results and financial position are incorporated as if both entities (acquirer and acquiree) had always been combined, or using the results from the date when either entity joined the Group, where such a date is later. (v) Investments in associates and joint ventures An associate is an entity over which the Group has significant influence, but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Investments in associates and joint ventures are accounted for using the equity method of accounting after initially being recognized at cost. The group holds an interest in a joint venture, Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş.(“Sofra”), and an interest in an associate, Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş(“TOGG”). The financial statements of Sofra and TOGG are prepared for the same reporting period as the Group. The accounting policies of both companies are aligned with those of the Group. Therefore, no adjustments are made when measuring and recognizing the Group’s share of the profit or loss of the investees after the date of acquisition. There is no significant goodwill included the carrying value of associate or joint venture. Under the equity method of accounting, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. The carrying amount of equity-accounted investments is tested for impairment if impairment indicators exist. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 2. (i) Financial Assets The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. i) Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Financial assets at amortized cost (debt instruments) • Financial assets at fair value through other comprehensive income with recycling of cumulative gains and losses (debt instruments) • Financial assets designated at fair value through other comprehensive income with no recycling of cumulative gains and losses upon derecognition (equity instruments) • Financial assets at fair value through profit or loss (ii) Financial assets at amortized cost (debt instruments) Financial assets at amortized cost are subsequently measured using EIR method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Group’s financial assets at amortized cost includes time deposits with maturity more than three months. For more information, refer to Note 24. (iii) Financial assets at fair value through other comprehensive income (debt instruments) For debt instruments at fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the statement of profit or loss and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to profit or loss. The Group’s debt instruments at fair value through other comprehensive income includes investments in listed debt securities. For more information, refer to Note 24. 246 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 17 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 247 18 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (i) Financial instruments (continued) Financial Assets (continued) (iv) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss. This category includes investment funds, and currency protected time deposits which the Group were irrevocably designated at fair value through OCI as the Group considers these investments to be strategic in nature. When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture capital organization, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure that investment at fair value through profit or loss in accordance with IFRS 9.Thus, the Group elect to measure the investments held by RE-PIE Portfoy Yonetim A.S Turkcell Yeni Teknolojiler Girisim Sermayesi (“Turkcell GSYF”) at fair value through profit or loss. For more information, refer to Note 24. Impairment (v) The Group assesses on a forward-looking basis ECL associated with its debt instruments carried at amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Loss allowances are measured on either of the following bases. • 12 month expected credit losses (ECLs): these are ECLs that result from possible default events within the 12 months after the reporting date and • Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument. The Group applies simplified lifetime ECL measurement for all group companies except Turkcell Finansman which applies both 12 month and lifetime ECL (general approach). Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (i) Sale and Repurchase Agreements Securities sold under repurchase agreements (“Repo”) are classified in the Company portfolio as fair value through profit or loss, fair value through other comprehensive income or amortized cost portfolios and valued according to relevant portfolio basis. Securities purchased under agreements to resell (“Reverse Repo”) are recognized as cash and cash equivalents in the consolidated statement of financial position. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) Financial instruments (continued) Trade receivables 2. (i) Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection of the amounts is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Current trade receivables that do not contain a significant financing component are measured at the transaction price, less provision for impairment. However, non-current trade receivables are recognized initially at fair value and subsequently measured at amortized cost using EIR method, less provision for impairment. See Note 35 for a description of the Group’s impairment policies. Financial liabilities All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings, and derivative financial instruments. (i) Subsequent measurement For purposes of subsequent measurement, financial liabilities are classified in two categories: • Financial liabilities at fair value through profit or loss • Financial liabilities at amortized cost (loans and borrowings) (ii) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. (iii) Financial liabilities at amortized cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss. For more information, refer to Note 28. (iv) Derecognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss. 248 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 19 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 249 20 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) Financial instruments (continued) Offsetting financial assets and financial liabilities 2. (i) Financial assets and liabilities are offset and the net amount presented in the statement of financial position where the Group has a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis or to realize the asset and settle the liability simultaneously. (j) Derivative financial instruments and hedge accounting Derivative instruments are initially recognized at the acquisition cost reflecting the fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. The derivative instruments of the Group mainly consist of participating cross currency swap contracts which a cross-currency swap product featuring both buy and sell option structures, cross currency /interest rate swap contracts, foreign currency swap contracts and currency forward contracts instruments. These derivative transactions, even though providing effective economic hedges under the Group risk management position, do not generally qualify for hedge accounting under the specific rules and are therefore treated as derivatives held for trading in the consolidated financial statements. The fair value changes for these derivatives are recognized in the consolidated income statement. Fair values of foreign exchange forwards, interest rate and foreign exchange swaps (IRS, Cross Currency Swaps etc.) and options are calculated with market levels of interest rates and Central Bank of Republic of Turkiye (“CBRT”) exchange rates via valuation methods and pricing instruments correspondent with market standards. If market levels are not available for valuation date, fair value for forward contracts will be the value of the discounted future value of the difference between contract price level and forward value of CBRT exchange rate with risk free rates for the period. Interest rate and currency swaps will be valued with the difference of the discounted cash flows of each leg of the swaps using risk free rates and CBRT exchange rates. Option transactions will be valued with option pricing models using risk free rates and CBRT exchange rates. At inception of the hedge 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 hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions. The hedging transactions of the Group that qualify for hedge accounting are accounted for as follows: (i) Fair value hedge Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of hedged asset or liability attributable to the hedged risk is recorded as part of the carrying value of the hedged asset or liability during the effective hedging relationship. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item, for which the effective interest method is used, is amortized using a recalculated effective interest rate. 250 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) 2. (j) Derivative financial instruments and hedging accounting (continued) (ii) Cash flow hedge Hedges of exposures to variability in cash flows that are attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction and could affect profit and loss are designated as cash flow hedges by the Group in accordance with IFRS 9 hedge accounting requirement. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in the cash flow hedge reserve within equity. The changes in the time value of the options that relate to the hedged item (“aligned time value”) are recognized within other comprehensive income in the costs of hedging reserve within equity. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows: - Where the hedged item subsequently results in the recognition of a non-financial asset, both the deferred hedging gains and losses and the deferred time value of the option contracts or deferred forward points, if any, are included within the initial cost of the asset. The deferred amounts are ultimately recognized in profit or loss as the hedged item affects profit or loss. - The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognized in profit or loss within finance cost at the same time as the interest expense on the hedged borrowings. The new effectiveness test model may be qualitative depending on the complexity of hedging relationship provided that it is prospective only. The 80-125% range in IAS 39 is replaced by an objectives-based test that focuses on the economic relationship between the hedged item and the hedging instrument, and the effect of credit risk on that economic relationship. Under IFRS 9, at inception of the hedge 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 hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions. Under IFRS 9, a hedging relationship is discontinued in its entirety when as a whole it ceases to meet the qualifying criteria after considering the rebalancing of the hedging relationship. Voluntary discontinuation when the qualifying criteria are met is prohibited. Hedge accounting is discontinued when the risk management objective for the hedging relationship has changed, the hedging instrument expires or is sold, terminated or exercised, there is no longer an economic relationship between the hedged item and hedging instrument or when the effect of credit risk starts dominating the value changes that result from the economic relationship. When the Group discontinues hedge accounting for a cash flow hedge it shall account for the amount that has been accumulated in the cash flow hedge reserve in accordance as follows; -If the hedged future cash flows are still expected to occur, that amount shall remain in the cash flow hedge reserve until the future cash flows occur. -When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 251 22 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) 2. Basis of preparation and summary of material accounting policies (continued) Derivative financial instruments and hedging accounting (continued) ((iii) Foreign currency hedge of net investments in foreign operations Foreign exchange gains or losses on the hedging instrument relating to the effective portion of the foreign currency hedge of net investments in foreign operations are recognized in other comprehensive income while any gains or losses relating to the ineffective portion is recognized in the income statement. Tax effects of foreign exchange gains or losses on the hedging instrument relating to the effective portion of the foreign currency hedge of net investments in foreign operations is recognized under other comprehensive income as well (Note 34). (k) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are stated at historical cost adjusted for the effects of inflation during the hyperinflationary period, where applicable, less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling and removing the items and restoring the site on which they are located, if any. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in profit or loss. Changes in the obligation to dismantle, remove assets on sites and to restore sites on which they are located, other than changes deriving from the passing of time, are added or deducted from the cost of the assets in the period in which they occur. The amount deducted from the cost of the asset shall not exceed the balance of the carrying amount on the date of change, and any excess balance is recognized immediately in profit or loss. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. (ii) Subsequent costs Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. (iii) Depreciation Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives. Land is not depreciated. (k) Property, plant and equipment (continued) (iii) Depreciation (continued) The ranges of estimated useful lives 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. (iv) Borrowing costs General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred. (l) (i) Intangible assets Telecommunication licenses Separately acquired telecommunication licenses are stated at historical cost adjusted for the effects of inflation during the hyperinflationary period, where applicable, less amortization and impairment losses. Amortization Amortization is recognized in the statement of profit or loss on a straight-line basis by reference to the license period. The range of estimated useful life for telecommunication licenses are as follows: Telecommunications licenses 3 – 25 years The Company has been granted the 2G, 3G and 4.5G licenses on 27 April 1998 (The 2G license has been extended until 30 April 2029 on 7 April 2023) 30 July 2009 and 26 August 2015, respectively. The licenses are effective for 31, 20 and 13 years, respectively. (ii) Computer software Acquired computer software licenses are stated at historical cost adjusted for the effects of inflation during the hyperinflationary period, where applicable, less amortization and impairment losses. Acquired computer software licenses are capitalized based on the costs incurred to acquire and bring to use the specific software. Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met: • It is technically feasible to complete the software such that it will be available for use, • Management intends to complete the software and use or sell it, 252 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 23 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 253 24 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (I) Intangible assets (continued) (ii) Computer software (continued) • There is an ability to use or sell the software, • It can be demonstrated how the software will generate probable future economic benefits, • Adequate technical, financial and other resources to complete the development and to use or sell the software are available and • The expenditure attributable to the software during its development can be reliably measured. Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads. Research expenditure and development expenditure that do not meet the criteria above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is ready for use. Amortization Amortization is recognized in the statement of profit or loss on a straight-line basis over the estimated useful lives. The range of estimated useful life for computer software are as follows: Computer software 3 – 8 years Amortization methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. (iii) Other intangible assets Other intangible assets that are acquired by the Group which have finite useful lives are stated at historical cost adjusted for the effects of inflation during the hyperinflationary period, where applicable, less amortization and impairment losses. Indefeasible Rights of Use (“IRU”) are rights to use a portion of an asset’s capacity granted for a fixed period of time. IRUs are recognized as intangible asset when the Group has specific indefeasible rights to use an identified portion of an underlying asset and the duration of the right is for the major part of the underlying asset's useful economic life. IRUs are amortized over the shorter of the underlying asset's useful economic life and the contract term. Amortiation Amortization is recognized in the statement of profit or loss on a straight-line basis over the estimated useful lives. The ranges of the estimated useful lives for computer software are as follows: Indefeasible right-of-use Transmission line software Brand name Customer base Subscriber acquisition cost Electricity production license 15 years 5–10 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. 254 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) Intangible assets (continued) Goodwill 2. (I) Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. (m) Investment properties Recognition and measurement Investment properties are properties held for rental yields and/or for capital appreciation (including property under construction for such purposes). Investment properties are stated at historical cost adjusted for the effects of inflation during the hyperinflationary period, where applicable, less depreciation and impairment losses. An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized. Depreciation Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives. The ranges of estimated useful lives are as follows: Investment Property 25-45 years Depreciation methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. (n) Inventories Inventories are stated at the lower of cost, which is adjusted for the effects of inflation during the hyperinflationary period, where applicable, and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale. Cost of inventory is determined using the weighted average method and comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. At 31 December 2023 and 2022, inventories mainly consisted of mobile phone and its accessories, tablet, sim-cards, tower construction materials and other electronic products. (o) Impairment of non-financial assets The Group assesses, at each reporting period, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (“CGU”) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 255 26 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) 2. Basis of preparation and summary of material accounting policies (continued) (o) Impairment of non-financial assets (continued) (q) Provisions For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. As of 31 December 2023, no indication of impairment was found in any CGU of the Group and no impairment test was performed. As of 31 December 2022, due to ongoing war in Ukraine, impairment test of Lifecell’s tangible and intangible assets was performed (Note 14). (p) Employee benefits (i) Short-term obligations Liabilities for salaries including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as employee benefit obligations in the statement of financial position. (ii) Post-employment benefits In accordance with the labor law in Turkiye, the Company and its subsidiaries in Turkiye are required to make lump-sum payments to employees who have completed one year of service and whose employment is terminated without cause or who retire, are called up for military service or die. Such payments are considered as being part of defined benefit plans in accordance with IAS 19 Employee Benefits (“IAS 19”). Thus, the Group has recognized the retirement pay liability provision which is calculated by estimating the present value of future probable obligation of the Company and its subsidiariesin Turkiye arising from retirement of employees. Provision for retirement pay liability is calculated by independent actuaries using the projected unit credit method. The calculated actuarial gains and losses are all recognized in other comprehensive income. For Turkish legal entities, the provision is calculated based on 30 days' pay up to a of maximum full TL 23.5 as at 31 December 2023 (31 December 2022: TL 15.4), per year of employment at the rate of pay applicable at the date of retirement. Discount rate used for calculating retirement pay liability as of 31 December 2023 is 2.5% (31 December 2022: 0.6%). (iii) Share-based payments The Group provides a cash-settled share-based payment plan for selected employees in return for their services. For cash-settled share-based payment transactions, the Group measures services received and the liability incurred at the fair value of the liability. Liabilities for cash-settled share-based payment plan are recognized as employee benefit expense over the relevant service period. The fair value of the liability is re-measured at each reporting date and at the settlement date. Any changes in fair value are recognized in profit or loss for the period. (iv) Personnel bonus Provision for bonus is provided when the bonus is a legal obligation, or past practice would make the bonus a constructive obligation and the Group is able to make a reliable estimate of the obligation. (v) Defined contribution plans For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of resources will be required to settle the obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the outflow required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense. Onerous contracts Present obligation arising under an onerous contract is recognized and measured as a provision. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. Dismantling, removal and restoring sites obligation The Group is required to incur certain costs in respect of a liability to dismantle and remove assets and to restore sites on which the assets were located. The dismantling costs are calculated according to best estimate of future expected payments discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. (r) Revenue Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. Revenue is recognized when control is transferred to the customer. Revenue from telecommunication services includes postpaid and prepaid revenue from voice, data, messaging and value-added services, fixed internet services, interconnect revenue, and roaming revenue. The Group generally recognizes telecommunication revenue over time as it performs because the subscriber simultaneously receives and consumes the benefits provided by the Group, as the Group performs. At some of the contracts, the Group recognizes revenue for the products and services early within the contract term, where the collection is made in deferred terms. Collection under these contracts, are considered probable as the Group has contractual right to collect, it has a firm policy and practice to enforce its contractual rights and has a historic pattern of collection. With respect to prepaid revenue, the Group generally collects cash in advance by selling prepaid top up to distributors. In such cases, the Group does not recognize revenue until subscribers use the telecommunication services. Services may be bundled with other products and services and these bundled elements involve consideration in the form of a fixed fee or a fixed fee coupled with a continuing payment stream. A good or service is distinct if both of the following criteria are met: • The good or service is capable of being distinct, which is considered present if it is frequently sold on standalone basis by the Group or other third parties, • The promise to transfer the good or service is distinct within the context of the contract, which is considered present if there is no significant integration that combines the goods or services. 256 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 27 28 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 257 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) 2. Basis of preparation and summary of material accounting policies (continued) (r) Revenue (continued) (s) Income taxes The arrangement consideration is allocated to each performance obligation identified in the contract on a relative standalone selling price. If an element of a transaction is not distinct, then it is accounted for as an integral part of the remaining elements of the transaction. Revenue from device sales is recognized when control of the device has been transferred, being the time when delivered to the end customer. For device sales made to intermediaries, revenue is recognized at the time when control of the device has been transferred, being when the products are delivered to the intermediary. The Group, its distributors and dealers offer joint campaigns to subscribers (mainly corporate 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 sales to the subscribers with deferred payment terms. Instalment of these handset sales are collected by the Group through letters of undertaking (a formal document transferring right to collect) signed by all parties. The Group pays the distributor the net present value of the instalments to be collected from the subscribers and recognizes “contracted receivables” (those that are transferred by the dealers/distributors) in its statement of financial position. The undue (not collected) portion of these contracted receivables which were paid upfront to the distributors/dealers by the Group is classified as “undue assigned contracted receivables” in trade receivables (Note 19). When monthly installment is invoiced to the subscriber, related portion is reclassified 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, unless the gross versus net presentation criteria explained at note (d) are met. The Group and distributors offer subscribers 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. This is classified as revenue from financial services and it represents interest income generated from consumer financing activities. Interest income is recognized as it accrues, using the effective interest method. The Group also generate revenue from mobile payment services, classified as revenue from financial services, provided by Turkcell Odeme. The revenue mainly consists of commission income from mobile payment activities, and recognized when customers use the service, make transactions and the service provided. 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. Monthly fixed fees are included in telecommunication services revenues. Call center revenues are recognized at the time services are rendered during the contractual period. The revenue recognition policy for other revenues is to recognize revenue as services are provided. Contract costs eligible for capitalization as incremental costs of obtaining a contract comprise commission on sale relating to prepaid and postpaid contracts with acquired or retained subscribers. Contract costs are capitalized in the month of service activation if the Group expects to recover those costs. Contract costs comprise sales commissions to dealers and to own salesforce which can be directly attributed to an acquired or retained contract. Contract costs are classified as intangible assets in the consolidated financial statements. The asset is amortized on a straight-line basis over the customer lifetime, consistent with the pattern of recognition of the associated revenue. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Income tax expense is recognized in the statement of profit or loss, except to the extent that it relates to items 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 current income tax charge is calculated based on the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, based on amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and tax losses. Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets or in relation to qualifying expenditure (e.g., the Research and Development Tax Incentive regime in Turkiye or other investment allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A deferred tax asset is recognized for unclaimed tax credits that are carried forward as deferred tax assets. 258 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 29 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 259 30 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) 2. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) 2. (t) Earnings per share (w) Dividends Liability is recognized for any dividend declared, being appropriately authorized and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period. (x) 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: - The contract involved the use of an identified asset - this may be specified explicitly or implicitly; - The asset should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, the asset is not identified; - The Group has the right to obtain substantially all of the economic benefits from the use of an asset throughout the period of use and - The Group has the right to direct use of the asset. The Group has the right when it has the decision-making rights that are most relevant to changing the how and for what purpose the asset is used. 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. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. The Group does not have any potential ordinary shares in issue, therefore basic and diluted earnings per share (“EPS”) are equal. Since basic and diluted EPS are equal, the Group presents both basic and diluted EPS on one line described as “Basic and diluted EPS”. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted-average number of ordinary shares outstanding during the financial year, excluding treasury shares. In Türkiye, entities can increase their share capital by distributing “Bonus share” to shareholders from retained earnings. In computing earnings per share, such “Bonus share” distributions are treated as issued shares. Accordingly, the retrospective effect for such share distributions is taken into consideration when determining the weighted-average number of shares outstanding. (u) Non-current assets held for sale and discontinued operations On 29 December 2023, the Group publicly announced the decision of its Board of Directors to sell Lifecell, UkrTower and Global LLC, which as whole represent Ukrainian geography operations. The sale of Ukrainian operations is expected to be completed within a year from the reporting date. The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Assets and liabilities of Ukrainian operations are presented at carrying amounts, as carrying amount is lower than fair value less costs to sell. The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position. Ukrainian operations are presented as a discontinued operation because it is classified as held for sale and it represents a separate major geographical area of operations. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss. Additional disclosures are provided in Note 41. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise. (v) Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company’s equity instruments, for example as the result of a share buy-back plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Company (Note 25). 260 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 31 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 261 32 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (y) Leases (continued) Right-of-use asset The Group recognizes a right-of use asset and a lease liability at the lease commencement date. The right-of-use asset is initially recognized at cost which is adjusted for the effects of inflation during the hyperinflationary period, where applicable, comprising of: - Amount of the initial measurement of the lease liability, - Any lease payments made at or before the commencement date, less any lease incentives received, - Any initial direct costs incurred by the Group and - 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. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end date of the useful life of the right-of-use asset or the end date of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability (Note 16). Lease Liability The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The Group uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the following: - Fixed payments, including in-substance fixed payments, - Variable lease payments that depend on an index or a rate, initially measured using the index or rate at the commencement date, - Amounts expected to be payable under a residual value guarantee and - The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewable period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease if the Group is reasonably certain to terminate early. After initial recognition, the lease liability is measured (a) increasing the carrying amount to reflect interest on lease liability; (b) reducing the carrying amount to reflect the lease payments made, and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. Where, (a) there is a change in the lease term as a result of reassessment of certainty to exercise an extension option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Group remeasures the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. The Group determines the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, or the its incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (x) Leases (continued) Where, (a) there is a change in the amounts expected to be payable under a residual value guarantee; or (b) there is a change in the future lease payments resulting from a change in an index or a rate used to determine those payments, including change to reflect changes in market rental rates following a market rent review, the Group remeasures the lease liabilities by discounting the revised lease payments using an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In such case, the Group uses the revised discount rate that reflects changes in the interest rate. The Group recognizes the amount of the remeasurement of lease liability as an adjustment to the right-of- use asset. Where the carrying amount of the right-of-use asset is reduced zero and there is further reduction in the measurement of the lease liability, the Group recognizes any remaining amount of the remeasurement in profit or loss. The Group accounts for a lease modification as a separate lease if both: - The modification increases the scope of the lease by adding the right to use one or more underlying assets and - The consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract. The Group as a Lessor When the Group acts an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use-asset arising from the head lease, not with reference to the underlying asset. If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract. (y) New standards and interpretations i) Standards, amendments and interpretations applicable as at 31 December 2023: IFRS 17 - The new Standard for insurance contracts IASB issued IFRS 17, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. IFRS 17 model combines a current balance sheet measurement of insurance contract liabilities with the recognition of profit over the period that services are provided. Certain changes in the estimates of future cash flows and the risk adjustment are also recognized over the period that services are provided. Entities have an option to present the effect of changes in discount rates either in profit and loss or in other comprehensive income. The standard includes specific guidance on measurement and presentation for insurance contracts with participation features. The standard did not have a significant impact on the financial position or performance of the Group. Amendments to IAS 8 - Definition of Accounting Estimates In February 2021, the Board issued amendments to IAS 8, in which it introduces a new definition of “accounting estimates”. The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, the amended standard clarifies that the effects on an accounting estimate of a change in an input or a change in a measurement technique are changes in accounting estimates if they do not result from the correction of prior period errors. 262 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 33 34 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 263 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (y) New standards and interpretations (continued) i) Standards, amendments and interpretations applicable as at 31 December 2023: Amendments to IAS 8 - Definition of Accounting Estimates (continued) The previous definition of a change in accounting estimate specified that changes in accounting estimates may result from new information or new developments. Therefore, such changes are not corrections of errors. This aspect of the definition was retained by the Board. The amendments apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of the effective date. The amendments did not have a significant impact on the financial position or performance of the Group. Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments have had some impact on the Group’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Group’s financial statements. Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exception under IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. The amendments clarify that where payments that settle a liability are deductible for tax purposes, it is a matter of judgement (having considered the applicable tax law) whether such deductions are attributable for tax purposes to the liability recognized in the financial statements (and interest expense) or to the related asset component (and interest expense). This judgement is important in determining whether any temporary differences exist on initial recognition of the asset and liability. The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability for all deductible and taxable temporary differences associated with leases and decommissioning obligations should be recognized. The standard did not have a significant impact on the financial position or performance of the Group. Amendments to IAS 12 - International Tax Reform – Pillar Two Model Rules In May 2023, the Board issued amendments to IAS 12, which introduce a mandatory exception in IAS 12 from recognizing and disclosing deferred tax assets and liabilities related to Pillar Two income taxes. The amendments clarify that IAS 12 applies to income taxes arising from tax laws enacted or substantively enacted to implement the Pillar Two Model Rules published by the Organization for Economic Cooperation and Development (OECD). The amendments also introduced targeted disclosure requirements for entities affected by the tax laws. The temporary exception from recognition and disclosure of information about deferred taxes and the requirement to disclose the application of the exception apply immediately and retrospectively upon issue of the amendments. However, certain disclosure requirements are not required to be applied for any period ending on or before 31 December 2023. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 2. Basis of preparation and summary of material accounting policies (continued) (z) New standards and interpretations (continued) i) Standards, amendments and interpretations applicable as at 31 December 2023 (continued): Amendments to IAS 12 - International Tax Reform – Pillar Two Model Rules (continued) Based on management’s preliminary assessments, Group management does not expect significant impact on it’s consolidated financial statements due to Pillar Two amendmentds. However, the Company will continue to monitoring upcoming legislation changes on this matter, in Turkey and in other countires that the Group operates. ii) Standards, amendments and interpretations that are issued but not effective as at 31 December 2023: Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the consolidated financial statements are as follows. the Group will make the necessary changes if not indicated otherwise, which will be affecting the consolidated financial statements and disclosures, when the new standards and interpretations become effective. Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture In December 2015, IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. Early application of the amendments is still permitted. The Group will wait until the final amendment to assess the impacts of the changes. Amendments to IAS 1- Classification of Liabilities as Current and Non-Current Liabilities In January 2020 and October 2022, IASB issued amendments to IAS 1 to specify the requirements for classifying liabilities as current or non-current. According to the amendments made in October 2022 if an entity’s right to defer settlement of a liability is subject to the entity complying with the required covenants at a date subsequent to the reporting period (“future covenants”), the entity has a right to defer settlement of the liability even if it does not comply with those covenants at the end of the reporting period. In addition, October 2022 amendments require an entity to provide disclosure when a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months. This disclosure must include information about the covenants and the related liabilities. The amendments clarified that the classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability for at least twelve months after the reporting period. The amendments are effective for periods beginning on or after 1 January 2024. The amendments must be applied retrospectively in accordance with IAS 8. Early application is permitted. However, an entity that applies the 2020 amendments early is also required to apply the 2022 amendments, and vice versa. The Group expects no significant impact on its balance sheet and equity. Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback In September 2022, the Board issued amendments to IFRS 16. The amendments specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right-of-use it retains. In applying requirements of IFRS 16 under “Subsequent measurement of the lease liability” heading after the commencement date in a sale and leaseback transaction, the seller lessee determines ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not recognize any amount of the gain or loss that relates to the right-of-use retained by the seller-lessee. 264 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 35 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 265 36 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Basis of preparation and summary of material accounting policies (continued) 2. (z) New standards and interpretations (continued) ii) Standards, amendments and interpretations that are issued but not effective as at 31 December 2023 (continued): Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback (continued) The amendments do not prescribe specific measurement requirements for lease liabilities arising from a leaseback. The initial measurement of the lease liability arising from a leaseback may result in a seller-lessee determining ‘lease payments’ that are different from the general definition of lease payments in IFRS 16. The seller-lessee will need to develop and apply an accounting policy that results in information that is relevant and reliable in accordance with IAS 8. A seller-lessee applies the amendments to annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted. A seller-lessee applies the amendments retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date of initial application of IFRS 16. The Group does not expect significant impact of the amendments on financial position or performance of the Group. Amendments to IAS 7 and IFRS 7 - Disclosures: Supplier Finance Arrangements The amendments issued in May 2023 specify disclosure requirements to enhance the current requirements, which are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. Supplier finance arrangements are characterized by one or more finance providers offering to pay amounts an entity owes its suppliers and the entity agreeing to pay according to the terms and conditions of the arrangements at the same date as, or a date later than, suppliers are paid. The amendments require an entity to provide information about terms and conditions of those arrangements, quantitative information on liabilities related to those arrangements as at the beginning and end of the reporting period and the type and effect of non-cash changes in the carrying amounts of those liabilities. In the context of quantitative liquidity risk disclosures required by IFRS 7, supplier finance arrangements are also included as an example of other factors that might be relevant to disclose. The amendments will be effective for annual reporting periods beginning on or after 1 January 2024. Early adoption is permitted but will need to be disclosed. The Group is in the process of assessing the impact of the amendments on financial position or performance of the Group. Amendments to IAS 21 - Lack of exchangeability In August 2023, the Board issued amendments to IAS 21. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. When an entity estimates a spot exchange rate because a currency is not exchangeable into another currency, it discloses information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows. The amendments will be effective for annual reporting periods beginning on or after 1 January 2025. Early adoption is permitted but will need to be disclosed. When applying the amendments, an entity cannot restate comparative information. The Group is in the process of assessing the impact of the amendments on financial position or performance of the Group. 266 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 3. Business combinations The Company's 100% owned subsidiary Turkcell Enerji has signed a Share Transfer Agreement to acquire the entire shares of Boyut Grup 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 USD 29,600. After adjusting for the net debt of Boyut Enerji, the Group made a payment of USD 10,972. USD 500 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 IFRS 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 Net assets acquired Goodwill 258,584 249,719 8,865 (230,835) 27,749 The fair values of identifiable assets and liabilities in accordance with IFRS 3 arising from the acquisition are as follows: Cash and cash equivalents Other current assets Property, plant and equipment Intangible assets Other non-current assets Borrowings Trade and other payables Due to related parties Provisions Employee benefit obligations Deferred tax liabilities 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. Financial risk management 15,039 15,528 342,889 631,093 449 (411,129) (21,326) (6,794) (100) (208) (131,966) (202,640) 230,835 249,719 (15,039) 234,680 This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance. Current year profit and loss information has been included where relevant to add further context. The Group’s risk management policies are set to determine and analyze the risks faced, to establish the appropriate risk limits and to observe the commitment to those limits. These policies are constantly reviewed to make sure they reflect the Group’s operations and the changes in market conditions. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 267 38 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Financial risk management (continued) Market risk (continued) 4. (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR and RMB. Foreign exchange risk arises from recognized assets and liabilities denominated in a currency that is not the functional currency of the relevant Group entity. The Group holds a significant portion of its cash and cash equivalent in foreign currencies in order to manage foreign exchange risk. In addition, derivative financial instruments are used to manage exposure to fluctuations in foreign exchange rates and since 1 July 2018 the Company applies hedge accounting. Details of the Company’s foreign exchange risk is disclosed in Note 35. (ii) Interest rate risk The Group’s exposure to interest rate risk is related to its financial assets and liabilities. The Group manage its financial liabilities by providing an appropriate distribution between fixed and floating rate loans. Floating rate exposures can be changed to fixed rate exposures based on short-term and long-term market expectations via financial derivatives. The use of financial derivatives is governed by the Group Treasury’s policies approved by the Audit Committee, which provide written principles on the use of derivatives. The Group’s borrowings and receivables are carried at amortized cost. The borrowings are periodically contractually repriced (Note 35) and are also exposed to the risk of future changes in market interest rates. The Group's transition from USD LIBOR to SOFR was completed as of June 30, 2023. In calculating the change in fair value attributable to the hedged risk of the floating-rate debt, the Group has made the following assumptions that reflect its current expectations: - Considering the Group's 'Possible' requirements, the USD LIBOR interest rate on which its hedging liabilities are based has not changed as a result of the IBOR reform. - As a result of the IBOR reform, the USD LIBOR interest rate, on which the cash flows of the debt for hedging purposes are carried out, and the swap interest rate on which the hedging transactions are based, have not changed as a result of the IBOR reform. - The group has not retroactively changed its cash flow hedging reserve for the period expected for the implementation of the reforms. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Financial risk management (continued) 4. Credit risk At the reporting date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents, financial asset at fair value through other comprehensive income, financial asset at fair value through profit or loss, financial asset at amortize cost, derivative financial instruments, contract assets, trade receivables, receivables from financial services, due from related parties and other current and non-current assets (Note 35). Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group may require collateral in respect of financial assets. Also, the Group may demand letters of guarantee from third parties related to certain projects or contracts. The Group may also demand certain pledges from counterparties, if necessary, in return for the credit support it gives related to certain financings (Note 19). In monitoring customer credit risk, customers are grouped according to whether they are subscribers, financial services customers, other corporate customers and aging profile, maturity and existence of previous financial difficulties. Trade receivables and contract assets are mainly related to the Group’s subscribers. The Group’s exposure to credit risk on trade receivables and contract assets is influenced mainly by the individual payment characteristics of postpaid subscribers. The Group establishes a provision for impairment losses based on its historical events and future expectations in respect of trade receivables and contract assets. Investments are preferred to be in liquid securities. The counterparty limits are set monthly depending on their ratings from the most credible rating agencies and the amount of their paid-in capital and/or shareholders equity. Policies are in place to review the paid-in capital and rating of counterparties periodically to ensure credit worthiness. The Group signs local and international derivate agreements in order to be able to execute financial derivative transactions with financial institutions that are believed to have sufficient credit ratings. The Group’s policy is to provide financial guarantees only to subsidiaries and distributors. At 31 December 2023, guarantees of TL8,836,805 were outstanding (31 December 2022: TL 6,513,114). Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. At the end of the reporting period the Group held demand deposits of TL 4,215,677 (31 December 2022: TL 3,598,726) that are expected to readily generate cash inflows for managing liquidity risk. Due to the dynamic nature of the underlying businesses, the Group Treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Group’s liquidity reserve (Note 35) and cash and cash equivalents (Note 23) on the basis of expected cash flows. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. The Group uses derivatives in order to manage market risks. All such transactions are carried at within the guidelines set by the Group Treasury. 268 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 39 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 269 40 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 5. Segment information (continued) Turkcell Turkiye 2023 91,952,843 (782,421) 2022 77,951,747 (415,145) Turkcell International 2022 2,673,057 (238,906) 2023 2,625,686 (151,112) Techfin Other 2023 4,568,674 (415,271) 2022 3,545,379 (264,840) 2023 10,161,753 (843,968) 2022 13,558,486 (3,322,932) Intersegment Eliminations 2023 (2,192,772) 2,192,772 2022 (4,241,823) 4,241,823 Consolidated 2023 107,116,184 - 2022 93,486,846 - 91,170,422 40,663,472 77,536,602 32,770,610 2,474,574 972,856 2,434,151 891,194 4,153,403 1,607,534 3,280,539 1,749,526 9,317,785 887,860 10,235,554 1,298,333 - (254,608) - (101,932) 107,116,184 43,877,114 93,486,846 36,607,731 (920,417) (557,550) (6,055) (5,003) (81,981) (57,339) 289 (2,086) - - (1,008,164) (621,978) Turkcell Turkiye 2022 77,951,747 (415,145) 2021 90,008,603 (580,385) Turkcell International 2021 2,667,171 (278,079) 2022 2,673,057 (238,906) Techfin Other 2022 3,545,379 (264,840) 2021 3,550,776 (202,695) 2022 13,558,486 (3,322,932) 2021 15,775,237 (2,340,984) Intersegment Eliminations 2022 (4,241,823) 4,241,823 2021 (3,402,143) 3,402,143 Consolidated 2022 93,486,846 - 2021 108,599,644 - 77,536,602 89,428,218 2,434,151 2,389,092 3,280,539 3,348,081 10,235,554 13,434,253 - - 93,486,846 108,599,644 32,770,610 40,815,431 891,194 859,130 1,749,526 2,119,639 1,298,333 1,305,889 (101,932) (156,908) 36,607,731 44,943,181 (557,550) (803,560) (5,003) (8,632) (57,339) (31,771) (2,086) (3,072) - - (621,978) (847,035) Total segment revenue Inter-segment revenue Revenues from external customers Adjusted EBITDA IFRS 9 impairment loss provision Total segment revenue Inter-segment revenue Revenues from external customers Adjusted EBITDA IFRS 9 impairment loss provision 42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Segment information 5. In accordance with its integrated communication and technology services strategy, Group has reportable segments which are Turkcell Turkiye, Turkcell International and Techfin. While some of these strategic segments offer the same types of services, they are managed separately because they operate in different geographical locations and are affected by different economic conditions. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. 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 Turkiye reportable segment includes mobile, fixed telecom, digital services and digital business services operations of Turkcell, Turkcell Superonline Iletisim Hizmetleri A.S. (“Turkcell Superonline”), Turkcell Satis ve Dijital Is Servisleri Hizmetleri A.S’s (“Turkcell Satis”) digital business services, Turkcell Dijital Is Servisleri A.S. (“Turkcell Dijital”), group call center operations of Global Bilgi Pazarlama Danismanlik ve Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Atmosware Teknoloji Egitim ve Danismanlik A.S (“Atmosware Teknoloji”), Turkcell Teknoloji Arastirma ve Gelistirme A.S. (“Turkcell Teknoloji”), Ultia Teknoloji Yazilim ve Uygulama Gelistirme Ticaret A.S. (“Ultia”), Kule Hizmet ve Isletmecilik A.S. (“Global Tower”), Rehberlik Hizmetleri Servisi A.S. (“Rehberlik”), Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”), Lifecell Dijital Servisler ve Cozumler A.S. (“Lifecell Dijital Servisler”), Lifecell Bulut Cozumleri A.S. (“Lifecell Bulut”), Lifecell TV Yayin ve Icerik Hizmetleri A.S. (“Lifecell TV”), Lifecell Muzik Yayin ve Iletim A.S. (“Lifecell Muzik”) and BiP Iletisim Teknolojileri ve Dijital Servisler A.S. (“BiP A.S.”). Turkcell International reportable segment includes telecom and digital services related operations of CJSC Belarusian Telecommunications Network (“BeST”), Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), East Asian Consortium B.V. (“Eastasia”), Lifecell Ventures Cooperatief U.A (“Lifecell Ventures”), Beltel Telekomunikasyon Hizmetleri A.S. (“Beltel”), Lifetech LLC (“Lifetech”), Beltower LLC (“Beltower”), Lifecell Digital Limited (“Lifecell Digital”), Yaani Digital BV (“Yaani”) and BiP Digital Communication Technologies B.V (“BiP B.V.”). Techfin reportable segment includes all financial services operations of Turkcell Finansman, Turkcell Odeme, Paycell, Paycell Europe, Turkcell Sigorta and Turkcell Dijital Sigorta. The operations of these legal entities aggregated into one reportable segment as the nature of services are similar and most of them share similar economic characteristics. Other reportable segment mainly comprises of non-group call center operations of Turkcell Global Bilgi, Turkcell Enerji, Boyut Enerji, Turkcell GSYF, Turkcell Dijital Egitim Teknolojileri A.S. (“Dijital Egitim”). W3 Labs Yeni Teknolojiler A.S. ("W3") and Turkcell Satis’s other operations. The Board primarily uses adjusted EBITDA to assess the performance of the operating segments. Adjusted EBITDA definition includes revenue, cost of revenue excluding depreciation and amortization, selling and marketing expenses and administrative expenses. Adjusted EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and may not be comparable to other similarly-titled indicators used by other companies. Reconciliation of Adjusted EBITDA to the consolidated profit for the year is included in the accompanying notes. 270 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 271 41 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 5. Segment information (continued) Profit for the period Add/(Less): Income tax expense Finance income Finance costs Other income Other expenses Monetary (gain) loss Depreciation and amortization Share of loss/(gain) of equity accounted investees Consolidated adjusted EBITDA Geographical information 31 December 2023 10,562,572 31 December 2022 6,036,486 31 December 2021 6,416,898 (4,675,891) (12,663,682) 19,931,617 (882,782) 5,648,334 (3,816,872) 31,298,993 (1,525,175) 43,877,114 (2,785,265) (3,957,684) 11,949,156 (348,611) 1,406,976 (7,767,102) 32,595,996 (522,221) 36,607,731 900,339 (11,527,996) 21,308,035 (356,404) 2,010,123 (4,804,527) 31,188,016 (191,303) 44,943,181 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 6. Revenue Telecommunication services Equipment revenues Revenue from financial services Other Total Telecommunication services Equipment revenues Revenue from financial services Other Total Turkcell Turkiye 2023 Turkcell International 2022 2023 2022 Techfin 2023 2022 Other 2023 2022 Intersegment Eliminations 2023 2022 Consolidated 2023 2022 86,033,365 4,981,916 73,395,928 4,119,171 2,285,955 183,095 2,276,114 177,001 - - - - - 6,315,781 - 6,886,804 (200,732) (86,055) (171,130) (38,758) 88,118,588 11,394,737 75,500,912 11,144,218 - 937,562 91,952,843 - 436,648 77,951,747 - 156,636 2,625,686 - 219,942 2,673,057 4,568,674 - 4,568,674 3,545,379 - 3,545,379 - 3,845,972 10,161,753 - 6,671,682 13,558,486 (415,271) (1,490,714) (2,192,772) (264,840) (3,767,095) (4,241,823) 4,153,403 3,449,456 107,116,184 3,280,539 3,561,177 93,486,846 Turkcell Turkiye 2022 Turkcell International 2021 2022 2021 Techfin 2022 2021 Other 2022 2021 Intersegment Eliminations 2022 2021 Consolidated 2022 2021 73,395,928 4,119,171 85,301,533 4,111,543 2,276,114 177,001 2,101,368 299,230 - - - - - 6,886,804 - 9,496,810 (171,130) (38,758) (210,861) (164,771) 75,500,912 11,144,218 87,192,040 13,742,812 - 436,648 77,951,747 - 595,527 90,008,603 - 219,942 2,673,057 - 266,573 2,667,171 3,545,379 - 3,545,379 3,550,776 - 3,550,776 - 6,671,682 13,558,486 - 6,278,427 15,775,237 (264,840) (3,767,095) (4,241,823) (202,715) (2,823,796) (3,402,143) 3,280,539 3,561,177 93,486,846 3,348,061 4,316,731 108,599,644 Revenue from financial services comprise of interest income generated from consumer financing activities, The Group has interest income amounting to TL 2,023,862, TL 1,546,463 and TL 1,611,840, for the years ended 31 December 2023, 2022 and 2021, respectively. In presenting the information based on geographical segments, segment revenue is based on the geographical location of operations and segment assets are based on the geographical location of the assets. 44 Revenues Turkiye Belarus Turkish Republic of Northern Cyprus Netherlands Non-current assets Turkiye Ukraine Belarus Turkish Republic of Northern Cyprus Unallocated non-current assets 31 December 2023 31 December 2022 31 December 2021 104,641,610 1,384,585 1,058,155 31,834 107,116,184 140,298,871 - 746,265 3,047,815 444,146 144,537,097 91,052,696 1,540,091 855,064 38,995 93,486,846 141,507,693 12,651,476 1,229,643 1,626,546 661,238 157,676,596 106,210,552 1,375,795 959,667 53,630 108,599,644 145,592,071 21,001,550 1,334,989 1,193,525 152,557 169,274,692 272 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 273 43 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Revenue (continued) 6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 31 December 2023 Techfin Other Intersegment eliminations Consolidated 7. Other income and expense Recognized in the statement of profit or loss: 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 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 - - - - - 937,562 376 937,186 91,952,843 5,925,327 86,027,516 Turkcell Turkiye 73,395,928 631,113 72,764,815 4,119,171 3,677,042 442,129 - - - - - 436,648 11,844 424,804 77,951,747 4,319,999 73,631,748 Turkcell Turkiye 85,301,533 863,151 84,438,382 4,111,543 3,332,725 778,818 - - - - - - 595,527 18,547 576,980 90,008,603 4,214,423 85,794,180 Turkcell Turkiye 86,033,365 1,456,376 84,576,989 4,981,916 4,468,575 513,341 Turkcell International 2,285,955 66,933 2,219,022 183,095 183,095 - - - - - - - - - - 6,315,781 6,315,781 - - - - - - - 3,845,972 116,102 3,729,870 10,161,753 6,431,883 3,729,870 (200,732) (105) (200,627) (86,055) (86,055) - (415,271) (376,108) (39,163) - - - (1,490,714) (52) (1,490,662) (2,192,772) (462,320) (1,730,452) 88,118,588 1,523,204 86,595,384 11,394,737 10,881,396 513,341 4,153,403 1,848,418 2,304,985 - - - 3,449,456 147,603 3,301,853 107,116,184 14,400,621 92,715,563 - - - - - - 156,636 31,177 125,459 2,625,686 281,205 2,344,481 4,568,674 2,224,526 2,344,148 - - - - - - 4,568,674 2,224,526 2,344,148 31 December 2022 Techfin Other Intersegment eliminations Consolidated Turkcell International 2,276,114 78,495 2,197,619 177,001 177,001 - - - - - - 219,942 6,718 213,224 2,673,057 262,214 2,410,843 Turkcell International 2,101,368 70,605 2,030,763 299,230 299,230 - - - - - - - - - - 6,886,804 6,886,804 - 3,545,379 1,621,746 1,923,633 - - - - - - 3,545,379 1,621,746 1,923,633 - - - - - 6,671,682 66,890 6,604,792 13,558,486 6,953,694 6,604,792 31 December 2021 Techfin Other - - - - - - - - - 9,496,810 9,496,810 - - - - - - 266,573 950 265,623 2,667,171 370,785 2,296,386 3,550,776 1,389,624 2,161,152 - - - - - - 3,550,776 1,389,624 2,161,152 45 - - - - - 6,278,427 151,371 6,127,056 15,775,237 9,648,181 6,127,056 (171,130) (229) (170,901) (38,758) (38,758) - (264,840) (264,832) (8) - - (3,767,095) (9,103) (3,757,992) (4,241,823) (312,922) (3,928,901) 75,500,912 709,379 74,791,533 11,144,218 10,702,089 442,129 3,280,539 1,356,914 1,923,625 - - - 3,561,177 76,349 3,484,828 93,486,846 12,844,731 80,642,115 Intersegment eliminations Consolidated (210,861) (3) (210,858) (164,771) (164,771) - (202,715) (202,715) - - - (2,823,796) (9,939) (2,813,857) (3,402,143) (377,428) (3,024,715) 87,192,040 933,753 86,258,287 13,742,812 12,963,994 778,818 3,348,061 1,186,909 2,161,152 - - - 4,316,731 160,929 4,155,802 108,599,644 15,245,585 93,354,059 Depositary reimbursement Insurance compensation Income from equipment donations Rent income Non-interest income from banks Other Other income Revaluation tax expense (*) Donation expenses Litigation expenses Loss on modification of lease contract Loss on sale of fixed assets Restructuring cost Other Other expense 31 December 2023 108,861 273,843 205,045 26,507 891 267,633 882,782 - (3,919,569) (738,697) (143,842) (15,981) (462,741) (367,506) (5,648,334) 31 December 2022 104,532 - - 38,740 17,194 188,145 348,611 (415,341) (267,861) (156,018) (172,408) (35,502) (12,116) (347,730) (1,406,976) 31 December 2021 139,732 - - 37,350 28,062 151,260 356,404 - (278,463) (1,124,058) (147,959) 98,440 - (558,084) (2,010,123) (*) It consists of 2% tax expense paid over the value increase resulting from the revaluation of the properties and depreciable economic assets in the statutory books. 8. Employee benefit expenses Wages and salaries (*) Defined benefit plans (**) Defined contribution plans 31 December 2023 13,836,698 306,677 75,500 14,218,875 31 December 2022 9,691,385 138,841 105,964 9,936,190 31 December 2021 10,477,300 163,294 109,411 10,750,005 (*) Wages and salaries include compulsory social security contributions, bonuses and share based payments. (**) Remeasurements of defined benefit plans for the years ended 31 December 2023, 2022 and 2021 amounting to TL 149,757, TL 1,824,873 and TL 541,628 respectively are reflected in other comprehensive income. Employee benefit expenses are recognized in cost of revenue, selling and marketing expenses and administrative expenses. 274 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 275 46 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) Finance income and costs 9. Recognized in the statement of profit or loss: Interest income Income from financial assetes carried at fair value Cash flow hedges – reclassified to profit or loss Net fair value gains on derivative financial instruments and interest Other Finance income Net foreign exchange losses Net interest expenses for financial assets and liabilities measured at amortized cost Net fair value losses on derivative financial instruments and interest Cash flow hedges – reclassified to profit or loss Other Finance costs Monetary gain (loss) Net finance costs 31 December 31 December 2023 3,118,511 2022 2,126,478 31 December 2021 2,211,740 4,604,960 3,287,562 1,144,406 508,243 12,663,682 1,738,728 - - 92,478 3,957,684 - 5,831,713 3,361,847 122,696 11,527,996 (14,016,423) (7,155,055) (18,399,847) (5,837,283) (4,269,930) (2,817,322) - - (77,911) (19,931,617) (6,580,717) 6,253,679 (197,133) (11,949,156) - - (90,866) (21,308,035) 3,816,872 7,767,102 4,804,527 (3,451,063) (224,370) (4,975,512) Net foreign exchange losses mainly include foreign exchange losses on borrowings, bonds issued and foreign exchange gains on cash and cash equivalents. Interest income and expense on financial assets measured at amortized cost are shown as netted of on consolidated statement of profit or loss. The Company has gross interest income and expense on financial assets at amortized cost amounting to TL 773,611, TL (6,610,894), TL 1,224,264, TL (5,494,195), and TL 1,294,283, TL (4,111,605) for the years ended 31 December 2023, 2022 and 2021, respectively. Foreign exchange gains and losses are shown as netted of on consolidated statement of profit or loss. The company has gross foreign exchange gains and losses amounting to TL 21,087,243, TL (35,103,667), TL 15,782,024, TL (22,937,079) and TL 28,279,084, TL (46,678,932) for the years ended 31 December 2023, 2022 and 2021, respectively. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 10. Income tax expense Current income tax expense Deferred income tax income Total income tax income/ (expense) 31 December 31 December 2023 2022 (683,059) 5,358,950 4,675,891 (864,540) 3,649,805 2,785,265 31 December 2021 (1,931,842) 1,031,503 (900,339) Income tax relating to each component of other comprehensive income 31 December 2023 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 defined benefit plans 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 defined benefit plans 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 defined benefit plans Before tax 2,860,231 1,573,196 (389,364) 149,602 (2,342,679) (149,757) 1,701,229 Before tax (748,669) 2,286,823 (2,170,669) (121,999) (520,930) (1,824,873) (3,100,317) Before tax 7,164,377 987,969 (3,879,104) (192,475) (3,886,535) (541,628) (347,396) Tax (expense) / benefit (491,059) 25,502 274,034 (5,514) 1,181,457 152,178 1,136,598 Tax (expense) / benefit (887,185) (89,836) 434,134 35,988 440,135 363,876 297,112 Tax (expense) / benefit (2,330,871) (86,967) 775,821 38,164 843,616 108,418 (651,819) Net of tax 2,369,172 1,598,698 (115,330) 144,088 (1,161,222) 2,421 2,837,827 Net of tax (1,635,854) 2,196,987 (1,736,535) (86,011) (80,795) (1,460,997) (2,803,205) Net of tax 4,833,506 901,002 (3,103,283) (154,311) (3,042,919) (433,210) (999,215) 276 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 47 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 277 48 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 10. Income tax expense (continued) Reconciliation of income tax expense Profit from continuing operations before income tax expense Profit before income tax expense Tax at the Turkiye’s tax rate Difference in overseas tax rates Effect of exemptions (*) Effect of permanent differences Change in unrecognized deferred tax assets Adjustments for current tax of prior years Effect of increase in corporate tax rate in Turkiye Tax effect of investment in associate and joint venture Tax effect of Law No. 7440 (**) Inflation adjustments Other Total income tax expense 31 December 31 December 2023 2022 31 December 2021 5,886,681 5,886,681 (1,471,670) 156,824 1,973,510 (618,073) 308,452 83,383 2,723,722 (324,593) (282,582) 2,123,280 3,638 4,675,891 3,251,221 3,251,221 (747,781) 146,513 1,242,440 (438,771) (333,765) 15,957 388,104 (78,213) - 2,593,980 (3,199) 2,785,265 7,317,237 7,317,237 (1,829,309) (10,798) 595,597 (1,327,320) (17,970) (13,845) 709,471 (28,729) - 1,016,811 5,753 (900,339) (*) Effect of exemptions mainly consist of R&D discounts. (**) In accordance with the Law No. 7440 on the “Restructuring of Certain Receivables and Amending Certain Laws” published in the Official Gazette on 12 March 2023, it has been decided that an additional tax of 10% should be calculated over the deduction amounts (included in 2022 tax returns) and tax bases subject to reduced corporate tax. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 10. Income tax expense (continued) An amendment to Turkey's Corporate Tax Law (No. 5520) was submitted on July 5, 2023, and published in the Official Gazette on July 15, 2023. According to this; the corporate tax rate has been increased from 20% to 25% for companies, 25% to 30% for banks, and companies within the scope of Law No. 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies and starting from the declarations that will be submitted as of 1 October 2023. With the publication of the Law No. 7394 in the Official Gazette dated 15 April 2022, the corporate tax rate has been permanently increased to %23, and this change was valid between 1 July 2022 and year end. In accordance with the "General Communiqué on Tax Procedure Law No: 555" published in the Official Gazette dated 30 December 2023 and numbered 32415 and the repeated article 298 of the Tax Procedure Law No: 213, it is declared that the financial statements of the entities operating in Turkey for the 2023 accounting period are subject to inflation adjustment. The inflation adjusted financial statements will constitute an opening balance sheet base in the tax returns to be prepared as of 1 January 2024 and opening inflation effects will not be taken into consideration in the calculation of the period tax for 2023. The tax effects arising from the inflation adjustment calculated as per Tax Procedural Law has been included in the deferred tax calculation as of 31 December 2023 and a net deferred tax asset at the amount of TL 13,726,600 has been recognized as of 31 December 2023. In Turkiye, 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. 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. On the other hand, dividend payments made to Turkish resident companies are not subject to withholding tax. 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. 278 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 49 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 279 50 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 11. Expenses by nature Breakdown of expenses by nature for the years ended 31 December 2023, 2022 and 2021 is as follows: Cost of revenue: Depreciation and amortization (*) Cost of goods sold Share of Turkish Treasury Employee benefit expenses Interconnection and termination expenses Energy expenses Radio expenses Frequency expenses Transmission expenses Roaming expenses Universal service fund Cost of revenue from financial services (**) Internet expenses Other 31 December 31 December 2023 (31,298,993) (10,695,191) (9,290,270) (8,447,593) (3,955,527) (3,676,829) (1,368,805) (3,424,766) (1,465,349) (1,134,820) (1,242,404) (1,850,910) (1,186,248) (5,380,330) (84,418,035) 2022 (32,595,996) (10,782,150) (7,790,546) (6,005,316) (5,191,849) (4,654,112) (924,245) (2,855,179) (1,535,063) (1,097,382) (1,085,290) (1,065,549) (1,252,704) (4,845,548) (81,680,929) 31 December 2021 (31,188,016) (13,965,878) (9,322,838) (6,613,847) (7,236,584) (3,001,766) (67,103) (3,417,467) (1,659,329) (1,023,156) (1,283,039) (732,206) (1,140,267) (5,486,571) (86,138,067) (*) As at 31 December 2023, depreciation and amortization expenses include depreciation and amortization expenses related to the financial services amounting to TL 326,869 (31 December 2022: TL 254,701 and 31 December 2021: TL 270,680). (**) As at 31 December 2023, cost of revenue from financial services includes employee benefit expenses related to the financial services amounting to TL 186,363 (31 December 2022: TL 132,286 and 31 December 2021: TL 103,546). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 11. Expense by nature (continued) Selling and marketing expenses: Employee benefit expenses Marketing expenses Selling expenses Other Administrative expenses: Employee benefit expenses Consultancy expenses Service expenses Maintenance and repair expenses Collection expenses Travel and entertainment expenses Utility expenses Other 31 December 31 December 2023 (3,139,523) (1,969,736) (306,716) (266,371) (5,682,346) 2022 (2,109,509) (1,799,885) (363,264) (320,135) (4,592,793) 31 December 31 December 2023 (2,445,396) (206,083) (157,661) (71,752) (128,861) (83,402) (8,006) (328,357) (3,429,518) 2022 (1,689,078) (227,975) (137,727) (87,404) (90,042) (62,856) (39,407) (244,922) (2,579,411) 31 December 2021 (2,282,240) (2,164,820) (444,519) (309,455) (5,201,034) 31 December 2021 (1,750,372) (286,278) (127,040) (88,217) (123,873) (50,361) (23,611) (208,591) (2,658,343) Net impairment losses on financial and contract assets: Net impairment losses on financial and contract assets 31 December 31 December 2023 (1,008,164) (1,008,164) 2022 (621,978) (621,978) 31 December 2021 (847,035) (847,035) 280 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 51 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 281 52 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 12. Property, plant and equipment 13. Intangible assets Cost Network infrastructure (All operational) Land and buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant Construction in progress Total Accumulated depreciation Network infrastructure (All operational) Land and buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant Total Balance at 1 January 2023 188,873,033 10,002,000 11,305,347 173,393 3,741,428 339,138 3,820,328 218,254,667 130,110,166 1,981,910 11,097,747 161,429 3,384,838 24,181 146,760,271 Additions 5,407,763 1,505,727 1,173,745 30,696 70,672 - 7,215,635 15,404,238 9,081,063 678,931 2,117,619 31,412 36,514 17,093 11,962,632 Disposals (2,745,510) (22,560) (178,394) (8,342) (546) - (92,076) (3,047,428) Transfers 7,440,574 52,430 322,061 204 (3) - (8,338,415) (523,149) (2,719,073) (8,244) (127,038) (7,915) - - (2,862,270) - - - - - - - Assets held for sale (14,934,868) (99,423) (172,585) (2,474) (25,188) - (366,813) (15,601,351) (9,582,040) (70,158) (126,994) (2,057) (22,211) - (9,803,460) Impairmen t expenses/ (reversals) - - - - - - 874 874 (23,686) (219) (14) - - - (23,919) Transfer to investment property - 141,411 - - - - - 141,411 Effects of movements in exchange rates (2,210,749) (113,337) (480,268) (5,021) (2,133) - 198,860 (2,612,648) Balance at 31 December 2023 181,830,243 11,466,248 11,969,906 188,456 3,784,230 339,138 2,438,393 212,016,614 - 113,520 - - - - 113,520 (87,384) 163,255 (825,232) (4,811) (1,471) (24,763) (780,406) 126,779,046 2,858,995 12,136,088 178,058 3,397,670 16,511 145,366,368 3,441,606 71,494,396 TURKCELL ILETISIM HIZMETLERI AS Net book value 66,650,246 Depreciation expenses for the years ended 31 December 2023, 2022 amounting to TL 11,937,839, TL 15,305,789 respectively include impairment losses and 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 2023 are TL 24,793 and are recognized under depreciation expenses (31 December 2022: TL 305,900) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) (5,797,891) (1,832,242) (185,158) (523,149) 24,793 27,891 12. Property, plant and equipment (continued) 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 Total Accumulated depreciation Network infrastructure (All operational) Land and buildings Equipment, fixtures and fittings Motor vehicles Leasehold improvements Electricity production power plant (Note 3) Total Balance at 1 January 2022 188,204,239 10,729,703 10,962,783 182,643 3,749,640 342,283 3,421,878 217,593,169 124,789,832 2,543,152 10,429,522 159,896 3,405,584 6,394 141,334,380 Additions 6,055,634 554,894 1,178,734 - 48,300 - 7,775,969 15,613,531 12,829,570 381,603 1,729,653 11,534 30,302 17,227 14,999,889 53 Disposals (3,210,322) (3,045) (510,040) (2,150) (37,712) - (60,327) (3,823,596) (2,317,913) - (372,532) (2,154) (36,420) - (2,729,019) Net book value 76,258,789 613,642 (1,094,577) Transfers 7,011,308 3,490 115,030 938 1,064 - (7,131,830) - - - - - - - - - Impairment expenses/ (reversals) - - - - - - 11,621 11,621 303,986 348 13,146 - 41 - 317,521 Transfer to investment property - (849,429) - - - - - (849,429) - (731,185) - - - - (731,185) Effects of movements in exchange rates (9,187,826) (433,613) (441,160) (8,038) (19,864) (3,145) (196,983) (10,290,629) Balance at 31 December 2022 188,873,033 10,002,000 11,305,347 173,393 3,741,428 339,138 3,820,328 218,254,667 (5,495,309) (212,008) (702,042) (7,847) (14,669) 560 (6,431,315) 130,110,166 1,981,910 11,097,747 161,429 3,384,838 24,181 146,760,271 (305,900) (118,244) (3,859,314) 71,494,396 Cost Telecommunication licenses Computer software Transmission line software Indefeasible right of usage Brand name Customer base Goodwill Subscriber acquisition cost Electricity production license Others Construction in progress Total Accumulated amortization Telecommunication licenses Computer software Transmission line software Indefeasible right of usage Brand name Customer base Disposals Transfers Impairment expenses/ (reversals) Effects of movements in exchange rates Balance at 31 December 2023 Balance at 1 January 2023 70,152,194 95,767,623 1,030,729 1,012,694 11,292 48,967 419,754 Additions 3,613,018 7,908,723 972 2,943 53 - - (59,797) (173,279) (3,688) - (49) - - 34,103,021 5,031,195 (125,098) 709,869 1,118,057 75,914 - 164,935 371,418 204,450,114 17,093,257 47,255,448 72,926,450 1,015,248 579,827 16,512 35,051 4,275,416 6,425,747 26,303 63,302 65 2,005 - 10,333 (144,140) (495,718) (4,766) (135,165) (3,688) - (21) - Asset held for Sale (5,149,479) (1,359,776) - - (614) - - (575,070) - (161) (869) 181,814 453,280 - - 188 - - - - (23,060) (89,073) 523,149 - - - - - - (7,176) - - - - (7,085,969) (7,176) - - - - - - - (3,194,034) (135,290) 9,931 (501) (7,380) (9,596) (387,076) 3 15,716 - - - - - (430,834) 1,087,039 25,231 - (102) (9,872) (4,649) 84,049 (41,875) (11,527) 37,781 735,241 (244,068) 980,719 5,381 (454) (6,401) (8,714) 68,306,916 103,683,610 1,053,244 1,015,637 10,768 39,095 407,929 38,518,097 667,994 1,258,577 251,031 215,212,898 48,087,999 80,078,177 1,053,175 642,174 2,775 18,746 (267,239) 25,971,035 Subscriber acquisition cost 20,368,047 6,382,401 (125,098) 9,938 Electricity production license TURKCELL ILETISIM HIZMETLERI AS Others Total (269,559) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Net book value (226,159) As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 142,951,379 156,701,501 (3,786,164) (3,299,805) 61,498,735 58,511,397 17,336,215 (242,958) (23,372) (18,128) (52,694) 847,671 453,434 281,807 744,858 523,149 130,809 (9,524) 12,338 16,196 30,167 (821) (251) 477 - - - - - 13. Intangible assets (continued) Cost Telecommunication licenses Computer software Transmission line software Indefeasible right of usage Brand name Customer base Goodwill Subscriber acquisition cost Electricity production license (Note 3) Others Construction in progress Total Accumulated amortization Telecommunication licenses Computer software Transmission line software Indefeasible right of usage Brand name Customer base Subscriber acquisition cost Electricity production license (Note 3) Others Total Balance at 1 January 2022 73,385,234 89,532,740 988,369 1,012,694 13,996 65,107 427,353 29,629,666 778,332 935,930 127,424 196,896,845 44,068,178 66,868,545 1,001,840 522,256 27,544 49,300 15,840,829 9,154 591,074 128,978,720 Additions 1,664 5,779,710 1,112 - 611 - - 4,875,036 - 200,535 294,093 11,152,761 4,523,381 5,737,378 31,887 58,315 117 - 5,010,502 - 156,050 15,517,630 55 Disposals (57,933) (280,355) - - (545) - - (111,624) - (733) (590) (451,780) (3,162) (272,867) - - (394) - (111,624) - (733) (388,780) Net book value 67,918,125 (4,364,869) (63,000) Transfers 1,504 340,680 - - 124 - - - - 3 (342,311) - - - - - - - - - - - - Impairment expenses/ (reversals) - - - - - - - - - - - - 506 101,269 (16,604) - - - - - 545 85,716 Effects of movements in exchange rates (3,178,275) 394,848 41,248 - (2,894) (16,140) (7,599) (290,057) (68,463) (17,678) (2,702) (3,147,712) (1,333,455) 492,125 (1,875) (744) (10,755) (14,249) (371,660) 784 (2,078) (1,241,907) Balance at 31 December 2022 70,152,194 95,767,623 1,030,729 1,012,694 11,292 48,967 419,754 34,103,021 709,869 1,118,057 75,914 204,450,114 47,255,448 72,926,450 1,015,248 579,827 16,512 35,051 20,368,047 9,938 744,858 142,951,379 (85,716) (1,905,805) 61,498,735 54 56 282 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 283 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 13. Intangible assets (continued) 15. Investment properties to Amortization expenses for TL 17,352,411, TL 15,603,346, respectively include impairment losses and are recognized in cost of revenue. Impairment losses on intangible assets for the years ended 31 December 2023, 2022 and 2021 are TL 23,372, TL 85,716 and none, respectively and are recognized in amortization expenses. the years ended 31 December 2023 and 2022 amounting Computer software includes capitalized software development costs that meet the definition of an intangible asset. The amount of capitalized development costs is TL 1,316,201 for the year ended 31 December 2023 (31 December 2022: TL 900,089). Research and development expenses for the years ended 31 December 2023, 2022 amounting to TL 132,635 and TL 129,078, respectively are recognized in cost of revenue. Turkcell The carrying amounts of 2G, 3G and 4.5G licenses are TL 3,221,124, TL 2,268,481 and TL 14,195,189, respectively (31 December 2022: TL 174,274, TL 2,722,179 and TL 17,038,518, respectively). 14. Impairment of non-financial 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-generating unit (“CGU”) to which the asset belongs exceeds its carrying amount, no impairment loss is recognized. As of 31 December 2023, no indication of impairment was found in any CGU of the Group and no impairment test was performed. 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. 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. Cost Opening balance Disposal Transfer from property, plant and equipment Closing balance Accumulated depreciation Opening balance Transfer from property, plant and equipment Depreciation and impairment charges during the year Disposal Closing balance 31 December 2023 31 December 2022 1,329,958 - (141,411) 1,188,547 1,150,873 (113,520) 8,829 - 1,046,182 737,031 (256,502) 849,429 1,329,958 555,938 731,185 34,428 (170,678) 1,150,873 Net book value 142,365 179,085 Depreciation expenses amounting 8.829 TL for the year ended 31 December 2023 (31 December 2022: 34,428) TL) are recognized under cost of revenue. Determination of the fair values of the Group’s investment properties. The Group engages qualified external experts, authorized by the Capital Markets Board of Turkiye, to perform the valuation of investment properties. Management works closely with the qualified external experts to establish the appropriate valuation techniques and inputs to the model. The fair values of these investment properties were determined using a variety of valuation methods: income capitalization approach and market approach. 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 2023 is TL 24,066 (31 December 2022: TL 24,205). There are no direct operating expenses for investment properties during the year ended 31 December 2023 (31 December 2022: None). 284 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 285 57 58 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 15. Investment properties (continued) The Group’s investment properties and their fair values at 31 December 2023 and 2022 are as follows: 31 December 2023 Level 1 Level 2 Level 3 Valuation Method Investment properties in Gebze free zone - - 164,000 Discounted cash flow Investment properties in Ankara - 96,700 - Market approach Investment properties in Adana - 24,500 - Market approach Investment properties in Aydın - 16,000 - Market approach Total - 137,200 164,000 31 December 2022 Level 1 Level 2 Level 3 Valuation Method NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 16. Right-of-use assets Closing balances of right-of-use assets as of 31 December 2023 and 31 December 2022 and depreciation and amortization expenses for the years ended 31 December 2023 and 31 December 2022 are as follows: Balance at 1 January 2023 Depreciation and amortization charge for the year Balance at 31 December 2023 Balance at 1 January 2022 Depreciation and amortization charge for the year Balance at 31 December 2022 Building 1,141,005 Tangible Network equipment 226,757 Vehicles 300,524 Other 336,252 Tangible Total 6,647,366 Right of way 360,474 Intangible License 1,046,465 Intangible Total 1,406,939 Total 8,054,305 (314,369) (1,007,606) (178,464) (277,450) (3,910,102) (79,859) (169,508) (249,367) (4,159,469) Site Rent 4,642,828 (2,132,213) 3,865,774 1,273,779 205,097 144,619 224,488 5,713,757 421,586 749 422,335 6,136,092 Site Rent 5,545,497 (2,487,303) Building 1,150,710 Tangible Network equipment 907,565 Vehicles 499,852 Other 378,787 Tangible Total 8,482,411 Right of way 167,881 Intangible License 1,709,644 Intangible Total 1,877,525 Total 10,359,936 (276,268) (1,081,663) (187,731) (327,661) (4,360,626) (86,992) (195,442) (282,434) (4,643,060) 4,642,828 1,141,005 226,757 300,524 336,252 6,647,366 360,474 1,046,465 1,406,939 8,054,305 As at 31 December 2023, the Company has additions to right-of-use assets amounting to TL 3,990,614 (31 December 2022: TL 3,814,556) and interest expense on lease liabilities amounting to TL 831,599 (31 December 2022: TL 911,081). Depreciation and amortization expenses amounting to TL 4,159,469 (31 December 2022: TL 4,643,060) are recognized in cost of revenues. As at 31 December 2023, a right of use assets amounting to 1,327,438 TL has been classified as assets held for sale. (Note 41) Investment properties in Gebze free zone - - 162,895 Discounted cash flow 60 Investment properties in Ankara - 96,392 - Market approach Investment properties in Adana - 21,420 - Market approach Investment properties in Istanbul - 10,710 - Market approach Investment properties in Aydın - 14,253 - Market approach Total - 142,775 162,895 Significant unobservable inputs and sensitivity of fair values of respective investment properties are as follows: In the “income capitalization” approach, a significant increase/(decrease) in rentals will cause a significant increase/(decrease) in the fair value. In addition, a slight decrease/(increase) in risk premium and discount rate which are calculated by considering 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. 286 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 287 59 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 17. Other assets Other non-current assets Advances given for property, plant and equipment Deposits and guarantees given Prepaid expenses VAT receivable Others Other current assets VAT receivable Prepaid expenses Prepaid taxes Blocked deposits Receivables from the Ministry of Transport and Infrastructure of Turkiye Advances given to suppliers Receivables from tax office Others 31 December 2023 3,377,893 599,170 373,192 80,015 154 4,430,424 31 December 2023 1,230,366 1,070,710 393,101 784,789 75,895 100,233 116,912 103,767 3,875,773 31 December 2022 4,166,670 616,999 441,306 83,484 59,711 5,368,170 31 December 2022 964,020 753,825 736,357 267,909 226,948 185,518 3,137 52,928 3,190,642 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 18. Deferred tax assets and liabilities Recognized deferred tax assets and liabilities Deferred tax assets and liabilities at 31 December 2023 and 2022 are attributable to the following: Property, plant and equipment and intangible assets Derivative instruments Reserve for defined benefit plans and provisions Tax losses carried forward Tax allowances Other assets and liabilities (*) Deferred tax assets/(liabilities) Offsetting Net deferred tax assets/(liabilities) Assets Liabilities Net 2023 2022 2023 2022 2023 2022 1,352,654 1,081,120 (7,085,009) (12,513,875) (5,732,355) (11,432,755) 38,805 49,808 (617,192) (902,064) (578,387) (852,256) 1,413,779 1,638,003 750,939 3,812,018 577,944 159,793 (29,350) (12,763) - - 1,384,429 1,638,003 - (1,089) 577,944 738,176 3,812,018 158,704 1,718,830 1,713,733 (165,879) (396,290) 1,552,951 1,317,443 6,740,015 7,567,411 (7,897,430) (13,826,081) (1,157,415) (6,258,670) (5,611,266) (4,834,998) 5,611,266 4,834,998 - - 1,128,749 2,732,413 (2,286,164) (8,991,083) (1,157,415) (6,258,670) (*) Mainly comprises of loans, bonds, prepaid expenses and lease liabilities’ deferred tax effects. Movement in deferred tax assets/ (liabilities) for the years ended 31 December 2023 and 2022 were as follows: Opening balance, net Income statement charge Tax charge relating to components of other comprehensive income Transferred to assets held for sale (Note 41) Exchange differences Closing balance, net 2023 (6,258,670) 5,358,950 1,136,598 (1,315,876) (78,417) (1,157,415) 2022 (9,005,440) 3.649.805 297,112 - (1.200.147) (6,258,670) The Group did not recognize deferred income tax assets of TL 8,533,187 (31 December 2022: TL 11,979,388) in respect of tax losses amounting to TL 1,815,562 (31 December 2022: TL 2,304,900) that can be carried forward against future taxable income. The unused tax losses were incurred mainly by BeST. Unused tax losses will expire at the following dates: Expiration Date 2024 2025 2026 2027 2028 2030 2031 Indefinite Total Amount 1,120,896 3,893,414 153,032 2,181,097 595,424 247,881 308,009 33,434 8,533,187 288 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 289 61 62 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 19. Trade receivables Receivables from subscribers Undue assigned contracted receivables Accounts and notes receivable 31 December 2023 6,950,428 624,799 3,350,418 10,925,645 31 December 2022 6,422,491 856,167 3,703,559 10,982,217 Trade receivables are shown net of provision for impairment amounting to TL 557,641 as at 31 December 2023 (31 December 2022: TL 1,021,775). Movements in provision for impairment of trade receivables and due from related parties are disclosed in Note 35. The accounts and notes receivable represent receivables from distributors and roaming receivables. The Group’s exposure to currency risk and credit risk arising from trade receivables are disclosed in Note 35. Letters of guarantee received with respect to the accounts and notes receivable amounted to TL 1,027,834 and TL 729,153 at 31 December 2023 and 2022, respectively. The undue assigned contracted receivables are the remaining portion of the assigned receivables from the distributors related to the handset campaigns which will be collected from subscribers by the Company in instalments. When the monthly instalment is billed to the subscriber, that portion is transferred to “Receivables from subscribers”. The Company measures the undue assigned contracted receivables at amortized cost, bears the credit risk and recognizes interest income throughout the contract period. The undue assigned contracted receivables related to handset campaigns, which will be billed after one year amounted to TL 233,429 (31 December 2022: TL 327,285) is presented under non-current trade receivable amounted to TL 325,862 (31 December 2022: TL 492,274). 20. Receivables from financial services Non-current receivables from financial services Current receivables from financial services 31 December 2023 593,550 5,842,112 6,435,662 31 December 2022 469,830 5,399,259 5,869,089 Movements in provision for impairment of receivables from financial services are disclosed in Note 35. The Group and its distributors have offered handset campaigns where subscribers can buy handsets using loans placed by Turkcell Finansman. The Group assumes credit risk in these transactions. Turkcell Finansman collects the loan from the subscriber during the contract period and the Group does not recognize handset revenue unless it is acting as principal in the handset sale. 21. Contract assets Non-current contract assets Current contract assets 31 December 2023 101,281 3,191,739 3,293,020 31 December 2022 110,487 3,112,465 3,222,952 The contract assets represent contract assets from subscribers. Contract asset is recorded when revenue is recognized in advance of the Group’s right to bill and receive consideration. The contract asset will decrease as services are provided and billed. Contract assets also include contracted receivables related to handset campaigns, and the portion which will be billed after one year is presented under non-current contract assets. 22. Inventories As of 31 December 2023, inventories amounting to TL 540,507 which consist of mainly mobile phone and its accessories, tablet, sim-cards, tower construction materials and other electronic products (31 December 2022: TL 494,988). 23. Cash and cash equivalents Cash in hand Banks - Demand deposits - Time deposits - Receivables from reverse repo Impairment loss provision 31 December 2023 335 50,025,071 4,215,677 45,809,394 - (46,690) 49,978,716 31 December 2022 591 42,823,111 3,598,726 33,120,932 6,103,453 (47,542) 42,776,160 As of 31 December 2023, the average effective interest rates of TL, USD, EUR and RMB time deposits are 42,2%, 4,1%, 3,7% and 0,7% (31 December 2022: 22.8%, 2.4%, 2.6% and 0.3%) respectively. As of 31 December 2023, average maturity of time deposits is 39 days (31 December 2022: 22 days). As of 31 December 2023, there is no receivables from reverse repo. As of 31 December 2022, the effective interest rates of USD and EUR receivables from reverse repo are 3.0% and 2.8% respectively and average maturity of receivables from reverse repo is 23 days. Reconciliation of cash and cash equivalents in consolidated statement of cash flows: Cash and cash equivalents Interest accrual of cash and cash equivalents Asset held for sale Total 31 December 2023 49,978,716 (171,284) 4,017,443 53,824,875 31 December 2022 42,776,160 (33,956) - 42,742,204 290 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 291 63 64 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 24. Financial assets The details of financial assets as of 31 December 2023 and 2022 are as follows: Amortized cost - Time deposits with maturity of more than three months Fair value through profit or loss - Currency protected time deposits (**) - Investment funds (***) Fair value through other comprehensive income - Listed debt securities (*) 31 December 2023 31 December 2022 Non- current - - 541,490 - 541,490 106,023 106,023 647,513 Current - - 8,869,828 8,869,828 - Non- current - - 426,147 - 426,147 - - 8,869,828 3,049,667 3,049,667 3,475,814 Current 1,233,597 1,233,597 6,648,418 6,648,418 - - - 7,882,015 (*) Listed debt securities are classified as financial assets at fair value through other comprehensive income. (**) In order to prioritize the TL in deposit preferences of savers and to increase the share of TL in banks’ balance sheets, the foreign currency protected deposit and participation account (“CPTD”) scheme was introduced in December 2021 by Ministry of Treasury and Finance of Turkiye (“MoTF”). The CPTD scheme consists of TL accounts to be opened under the support of the MoTF and conversions from foreign currency (FX) deposits to TL accounts to be supported by the CBRT. Savings of TL depositors are hedged against the exchange rate risk with the CPTD scheme supported by the MoTF. The CBRT-supported scheme enables FX deposit account holders to switch to TL deposit accounts. Depositors switching to TL accounts from their foreign currency accounts under the support of the CBRT will be able to continue to hedge their savings against the exchange rate risk by using the MoTF supported scheme at the end of the maturity period. 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 USD 190,356 and EUR 85,000 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. Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Fair Values 31 December 31 December 2023 2022 Fair value hierarchy 106,023 3,049,667 Level 1 82,311 32,925 Level 1 8,869,828 6,648,418 Level 2 459,179 9,517,341 393,222 10,124,232 Level 3 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 reporting date Pricing models based on discounted cash flow 292 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 24. Financial assets (continued) As of 31 December 2023, and 2022, the notional and fair value amounts of listed debt securities are as follows: Currency TL Total listed debt securities Currency EUR EUR EUR USD USD USD USD USD USD USD Total listed debt securities 31 December 2023 Notional amount (original currency) 73,426 31 December 2022 Notional amount (original currency) 24,000 15,000 5,000 3,700 21,000 18,000 5,000 3,000 1,000 50,000 Fair value (in TL) 106,023 106,023 Fair value (in TL) 777,764 459,852 164,732 120,802 644,610 508,090 161,123 92,001 30,549 90,144 3,049,667 Maturity Indefinite 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 As of 31 December 2023 and 2022, the notional and fair value amounts of currency protected time deposits are as follows: Currency TL TL TL TL TL TL TL TL TL TL TL TL TL TL Total currency protected time deposits 31 December 2023 Notional amount (original currency) 1,191,635 1,071,635 955,742 599,368 972,020 207,853 700,000 428,045 269,857 274,462 229,780 140,639 94,501 94,501 Fair value (in TL) 1,732,409 1,722,282 1,155,750 715,056 499,665 418,545 778,068 474,316 325,875 323,482 253,153 170,242 150,592 150,393 8,869,828 Maturity 22 February 2024 26 February 2024 27 February 2024 26 April 2024 10 May 2024 12 February 2024 28 February 2024 31 July 2024 16 August 2024 28 August 2024 02 October 2024 01 April 2024 15 April 2024 24 October 2024 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 293 66 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 24. Financial assets (continued) Currency TL TL TL TL TL TL Total currency protected time deposits 31 December 2022 Notional amount (original currency) 1,564,478 1,160,181 1,155,113 719,717 379,577 305,578 Fair value (in TL) 2,037,015 1,565,557 1,351,781 842,611 493,978 357,476 6,648,418 Maturity 10 May 2023 27 February 2023 15 August 2023 16 August 2023 11 May 2023 02 October 2023 During the year, the following gains (losses) were recognized in other comprehensive income. Gains / (Losses) recognized in other comprehensive income Related to financial assets Related to financial assets, tax effect 31 December 31 December 2023 2022 31 December 2021 149,602 (5,514) 144,088 (121,999) 35,988 (86,011) (192,475) 38,164 (154,309) 25. Equity Share capital As at 31 December 2023, share capital represents 2,200,000,000 (31 December 2022: 2,200,000,000) authorized, issued and fully paid shares with a par value of TL 1 each. In this respect, share capital presented in the consolidated financial statements refers to nominal amount of registered share capital. Each holder of shares is entitled to receive dividends as declared and their vote entitlements are determined as explained in Note 1. Companies with their shareholding percentage are as follows: 31 December 2023 31 December 2022 Public Share TVF BTIH IMTIS Holdings Other Total Inflation adjustment to share capital Inflation adjusted capital (%) 53.95 26.20 19.80 0.05 100 (%) 53.95 26.20 19.80 0.05 100 TL 1,187,004 576,400 435,600 996 2,200,000 30,134,546 32,334,546 TL 1,187,004 576,400 435,600 996 2,200,000 30,134,546 32,334,546 As at 31 December 2023, total number of shares pledged as security is 995,509 (2022: 995,509). Legal reserves The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code (“TCC”). 25. Equity (continued) Legal reserves (continued) The TCC stipulates that the first 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 share capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash dividends in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can only be used to offset losses and are not available for any other usage unless they exceed 50% of paid-in share capital. Treasury shares During 2023, the Company purchased 1,000,000 of its shares on-market with prices ranging from full TL 33.46 to full TL 34.00. The buyback was approved by the Board of Directors on 27 July 2016 and 30 January 2017. Treasury shares are recognized by deducting from equity. Dividends Turkcell: At the General Assembly held on 13 September 2023, it was decided to distribute gross TL (2,484,979) part of the distributable profit of the Company for the year ended 31 December 2022 to the shareholders on 20 December 2023 in cash, as 1.0272 gross for each share with a nominal value of 1 TL. The amount was paid to the shareholders on the relevant date (31 December 2022: TL (2,391,534)). 26. Earnings per share Numerator: Profit attributable to owners of the Company Denominator: Weighted average number of shares (*) Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL) 2023 2022 2021 12,553,996 6,880,436 7,135,436 2,183,106,193 2,183,106,193 2,183,106,193 5.75 3.15 3.27 Numerator: Profit from continuing operations attributable to owners of the Company Denominator: Weighted average number of shares (*) Basic and diluted earnings per share for profit from continuing operations attributable to owners of the Company (in full TL) Numerator: Profit attributable to owners of the Company Denominator: Weighted average number of shares (*) Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL) (*) Refer to Note 25 - Treasury shares 10,584,322 6,038,066 6,416,709 2,183,106,193 2,183,106,193 2,183,106,193 4.85 2.77 2.94 2023 2022 2021 1,969,674 842,370 718,727 2,183,106,193 2,183,106,193 2,183,106,193 0.90 0.39 0.33 294 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 67 68 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 295 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 27. Other non-current liabilities 28. Loans and borrowings (continued) Turkcell Ödeme has issued management agreement based lease certificates, each with a maturity of between 3 and 4 months, for a total amount of 1,680,000 TL on various dates between February 2023 and December 2023. Within the scope of the approval Turkcell Superonline received from the CMB on 25 August 2022, for the issuance of lease certificates up to TL 1,000,000, in addition to the TL 400,000 issued in 2022, through Halk Varlık Kiralama on various dates between January 2023 and May 2023. A total of TL 600,000 worth of lease certificates were issued, each with a maturity of 3 months. All of these issued lease certificates have been repaid as of 30 September 2023. In addition, on 21 June 2023, Turkcell Superonline, within the framework of the capital markets legislation, rented up to 1,000,000 TL, in Turkish Lira, based on a management contract, to be sold to private and/or qualified investors without public offering, domestically, in different amounts and time periods. It received CMB approval again for the issuance of certificates, valid for 1 year. Within the scope of the said approval, a total of 1,000,000 TL worth of lease certificates, each with a maturity of 3/4 months, were issued through Halk Varlık Kiralama on various dates between July 2023 and December 2023. On 21 December 2023, within the framework of capital markets legislation, 1 year for the issuance of lease certificates based on management contracts, up to 3,000,000 TL, in Turkish Lira, to be sold domestically, in different amounts and time periods, to private and/or qualified investors without public offering. It received CMB approval again, valid for a period of time. Turkcell Finansman A.S issued a total of TL 925,000 corporate bonds, with maturities between 91 and 182 days on various dates between March and December. As of 31.12.2023, TL 825,000 issuance limit remained from the TL 1,000,000 limit in December. Liabilities to BeST investment agreement (*) Consideration payable in relation to the acquisition of Boyut Enerji Deferred revenue 31 December 2023 1,027,057 - 86,411 1,113,468 31 December 2022 1,093,001 5,396 8,194 1,106,591 (*) 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 USD 100,000 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 USD 100,000 (equivalent to TL 2,943,820 as of 31 December 2023) 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- 2032. 28. Loans and borrowings Long-term borrowings Unsecured bank loans Secured bank loans Lease liabilities Debt securities issued Short-term borrowings Unsecured bank loans Secured bank loans Lease liabilities Debt securities issued 31 December 2023 25,494,990 3,950,491 1,655,783 26,845,384 57,946,648 19,569,422 773,762 771,805 5,022,572 26,137,561 31 December 2022 25,793,259 3,775,341 3,595,270 28,021,429 61,185,299 21,207,113 1,393,368 1,438,923 3,512,682 27,552,086 The Company has used loans in accordance with the loan agreement previously signed with ING Bank N.V. and AB Svensk Export kredit under the Swedish Export Credit Organization (“EKN”) insurance on 18 December 2020. Under this agreement as of 31 December 2023, the Company has used loans of USD 4,819, USD 25,889 and USD 9,110 on 24 February 2023, 22 May 2023, and 7 September 2023, respectively, at a fixed annual 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, and extended on 7 August 2023. As of 31 December 2023, under this agreement, the Company has used EUR 28,900, EUR 36,603, EUR 26,854, and EUR 40,675 loans on 8 February 2023, 29 May 2023, 21 June 2023, 6 September 2023, 25 October 2023, 28 November 2023, and 27 December 2023, respectively, with an interest rate of 6M Euribor+2.29%, and CNY 42,073, CNY 47,600, and CNY 36,000 loans on 6 September 2023, 25 October 2023, and 28 November 2023, respectively, with an annual interest rate of 5.15%. Under CMB approval taken by The Company on 28 April 2023 for issuance of debt securities to TL 8,000,000, the Company has issued debt securities on 8 May 2023, 1 August 2023, 9 August 2023, and 11 August 2023, respectively, amounting 330,000 TL, 500.000 TL, 530.000 TL and 700.000 TL with the maturity of 9 August 2023, 31 January 2024, 8 February 2024, and 9 February 2024. As of 31 December 2023, the remained limit is 5,939,680 TL from 8,000,000 TL specified total limit. 296 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 297 69 70 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 28. Loans and borrowings (continued) Terms and conditions of outstanding loans are as follows: Currency Interest rate type Payment period Unsecured Bank Loans Unsecured Bank Loans Unsecured Bank Loans Unsecured Bank Loans Unsecured Bank Loans Unsecured Bank Loans Unsecured Bank Loans Unsecured Bank Loans Secured bank loans Secured bank loans Secured bank loans Debt securities issued Debt securities issued Lease liabilities Lease liabilities Lease liabilities Lease liabilities Lease liabilities EUR TRY USD UAH CNY EUR USD BYR USD USD UAH USD TRY TRY UAH EUR BYN USD Floating Fixed Floating Fixed Fixed Fixed Fixed Fixed Fixed Floating Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed 2024-2028 2024-2025 2024-2028 - 2024-2028 2024 2024-2026 2024 2024-2033 2024-2028 - 2024-2028 2024 2024-2057 - 2024-2034 2024-2037 2024-2052 Carrying amount Payment period Nominal interest rate Carrying amount 31 December 2022 2023-2028 2023 2023-2026 2023-2024 2023-2028 - 2023-2026 - 2023-2032 2023-2028 2023 2023-2028 2023 2023-2048 2023-2071 2023-2034 2023-2037 2023-2052 25,815,920 11,942,103 4,483,145 - 2,261,585 345,431 200,371 15,857 3,872,474 851,779 - 28,430,710 3,437,246 1,569,795 - 407,907 415,560 34,326 84,084,209 Euribor+2.0%- Euribor+2.3% 12.4%-38.0% Libor+1.7%- Libor+2.2% 10.0%-21.0% 3.7%-5.5% - 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% 22,530,691 12,822,981 6,561,767 2,354,892 2,446,988 - 283,053 - 3,491,611 1,075,688 601,410 29,680,889 1,853,222 1,989,791 1,892,521 510,252 509,575 132,054 88,737,385 31 December 2023 Nominal interest rate Euribor+2.0%- Euribor+4.0% 11.5%-58.9% Sofr 2.2% - 5.2%-5.5% 6.0% 2.6% 14.0% 1.5%-3.8% Sofr+0.6% & Libor+1.6% - 5.8% 29.5%-45.0% 9.8%-45.0% - 1,0%-11,0% 10,8%-20,0% 3,9%-11,6% 71 TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 29. Employee benefits Defined benefit plans provision Unused vacation provision Provision for defined benefit plans Movements in provision for retirement pay liability are as follows: Balance at 1 January Service cost Past service cost Remeasurements Interest expense Benefit payments Inflation adjustment Balance at 31 December 31 December 2023 1,684,487 367,838 2,052,325 31 December 2022 2,621,135 328,351 2,949,486 2023 2,621,135 352.454 3,821 149,757 162,917 (564,023) (1,041,575) 1,684,487 2022 1,391,572 164.086 3,574 1,824,873 185,615 (111,268) (837,317) 2,621,135 The sensitivity of provision for retirement pay liability to changes in the significant actuarial assumptions is: 31 December 2023 Sensitivity Level Change in assumption Impact on provision for defined benefit plans Interest Rate 1% increase (14.1%) (237,007) 1% decrease 17.0% 286,194 Inflation Rate 1% increase 17.2% 290,406 1% decrease (14.4) % (243,240) 31 December 2022 Sensitivity Level Change in assumption Impact on provision for defined benefit plans Interest Rate 1% increase (13.4%) (403,655) 1% decrease 16.3% 498,016 Inflation Rate 1% increase 16.5% 495,395 1% decrease (13.8%) 408,897 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 TL 75,500 and TL 105,964 in relation to the defined contribution retirement plan for the years ended 31 December 2023 and 2022 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 2023, the Group recognized expenses of TL 201,136 regarding this plan (31 December 2022: None) 298 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 299 72 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 30. Deferred revenue 32. Provisions (continued) Deferred revenue primarily consists of rent income that are accounted with the scope of IFRS 16 and it is classified as current at 31 December 2023 and 2022. The amount of deferred revenue is TL 248,003 and TL 214,040 as at 31 December 2023 and 2022, respectively. 31. Contract liabilities Long-term contract liabilities Short-term contract liabilities 31 December 2023 1,193,665 1,312,519 2,506,184 31 December 2022 1,248,479 1,401,669 2,650,148 Contract liabilities primarily consists 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 TL 1,401,669 (2022: TL 1,507,988). The following table shows unsatisfied performance obligation result as of 31 December 2023; Telecommunications service Equipment revenues 31 December 2023 1,844,463 849,574 2,694,037 31 December 2022 2,448,063 1,748,473 4,196,536 Management expects that 52% of the transaction price allocated to the unsatisfied contracts as of 31 December 2023 will be remaining 48% will be recognized in next years. revenue during 2024. The recognized as 32. Provisions Non-current provisions: Balance at 1 January 2023 Provisions recognized Payments Unwinding of discount Transfers to current provisions Remeasurements Effect of changes in exchange rates Transfers to asset held for sale Inflation adjustment Balance at 31 December 2023 Obligations for dismantling, removing and site Legal claims 78,585 124,582 - - (46,026) - - - (46,544) 110,597 restoration 1.517.618 72.557 (22.631) 110.868 - 272.955 204.532 (204.056) (683.005) 1.268.838 Total 1,596,203 197.139 (22.631) 110.868 (46.026) 272.955 204.532 (204.056) (729.549) 1.379.435 300 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 73 Obligations for dismantling, removing and site Balance at 1 January 2022 Provisions recognized Payments Unwinding of discount Transfers to current provisions Remeasurements Effect of changes in exchange rates Inflation adjustment Balance at 31 December 2022 Legal claims 53,219 88,180 - - (34,320) - - (28,494) 78,585 restoration Total 1,613,569 1,666,788 107,915 (11,732) 133,295 (34,320) 401,443 42,431 (681,123) (709,617) 1,517,618 1,596,203 19,735 (11,732) 133,295 - 401,443 42,431 Provision for legal claims is recognized for the probable cash outflows related to legal disputes. Refer to Note 37. The Group is required to incur certain costs in respect of a liability to dismantle and remove assets and to restore sites on which the assets were located. The dismantling costs are calculated according to best estimate of future expected payments discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. Current provisions: Balance at 1 January 2023 Provisions recognized Payments Transfers from non-current provisions Transfers to asset held for sale Effect of changes in exchange rates Inflation adjustment Balance at 31 December 2023 Balance at 1 January 2022 Provisions recognized Payments Transfers from non-current provisions Remeasurements Effect of changes in exchange rates Inflation adjustment Balance at 31 December 2022 (*) Includes share-based payment (Note 29). (**) Refer to Note 37. Legal claims (**) 52,515 512,039 (23,591) 46,026 (10,015) 91 (127,135) 449,930 Legal claims (**) 181,407 (173) (101,687) 34,320 - - (61,352) 52,515 Bonus (*) 1,189,764 2,657,049 (1,482,378) - (175,440) 38,274 (701,656) 1,525,613 Bonus (*) 1,371,334 1,767,229 (1,357,306) - - 3,995 (595,488) 1,189,764 Total 1,242,279 3,169,088 (1,505,969) 46,026 (185,455) 38,365 (828,791) 1,975,543 Total 1,552,741 1,767,056 (1,458,993) 34,320 - 3,995 (656,840) 1,242,279 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 301 74 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 33. Trade and other payables Short-term trade and other payables Payables to suppliers Taxes payable Accrued treasury share, universal service fund contribution and contributions to the ICTA’s expenses Accrued selling and marketing expenses Payables related with donation Others 31 December 2023 12,675,253 2,730,809 31 December 2022 11,366,718 2,649,751 1,760,603 166,799 1,750,000 1,522,760 20,606,224 1,625,498 317,188 - 1,059,286 17,018,441 Payable to suppliers arises in the ordinary course of business. Taxes payables include VAT payables, special communications taxes payable, frequency usage fees payable to the ICTA and personnel income taxes payable. Accrued selling and marketing expenses mainly result from services received from third parties related to the marketing activities of the Group, but not yet invoiced. 34. Derivative financial instruments The fair value of derivative financial instruments at 31 December 2023 and 2022 are attributable to the following: 31 December 2023 Assets Liabilities 31 December 2022 Assets Liabilities Held for trading Derivatives used for hedge accounting Total 607,509 1,305,395 1,912,904 313,805 48,609 362,414 1,308,954 1,977,016 3,285,970 215,974 35,314 251,288 At 31 December 2023, short-term derivative assets of TL 2,044,765 also include a net accrued interest income of TL 131,860 and the short-term derivative liabilities of TL 354,370 also includes a net accrued interest expense of TL 8,044. At 31 December 2022, the short-term derivative assets of TL 3,348,871 also include a net accrued interest expense of TL 62,901 and the short-term derivative liabilities of TL 253,894 also includes a net accrued interest income of TL 2,606. TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 34. Derivative financial instruments (continued) Derivatives used for hedging The notional amount and the fair value of derivatives used for hedging contracts at 31 December 2023 and 2022 are as follows: 31 December 2023 31 December 2022 Currency Participating cross currency swap contracts Notional value in original currency Notional value in original currency Fair value Fair value Maturity date Hedge ratio Change in intrinsic value of outstanding hedging instruments since 1 January 2023 Change in intrinsic value of outstanding hedging instruments since 1 January 2022 EUR Contracts EUR Contracts USD Contracts 167,000 38,057 124,186 259,289 24,514 566,902 233,600 50,711 165,478 334,517 October 2025 April 2026 April 2026 88,338 924,346 01:01 01:01 01:01 (4,216) (192) (672) (12,009) (288) 16,578 Cross currency swap contracts TURKCELL ILETISIM HIZMETLERI AS Interest rate swap contracts RMB Contracts 81,162 309,793 108,148 423,372 April 2026 01:01 132,184 121,601 USD Contracts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Derivatives used for hedge accounting As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing EUR 191,036 (2022: EUR 269,624) participating cross currency swap contracts includes TL 998,716 (2022: TL 1,967,883) guarantees after the CSA agreement. power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 171,129 1,941,702 96,288 1,256,786 April 2026 120,105 90,135 01:01 - - 34. Derivative financial instruments (continued) Held for trading The notional amount and the fair value of derivatives used held for trading contracts at 31 December 2023 and 2022 are as follows: Currency Cross currency swap contracts 31 December 2023 76 31 December 2022 Notional value in original currency Fair value Maturity Notional value in original currency Fair value Maturity USD Contracts RMB Contracts 8,000 19,425 185,107 71,036 November 2025 April 2026 Currency forward contracts USD Contracts EUR Contracts 334,900 10,000 (123,348) (19,906) March 2024 January 2024 FX swap contracts USD Contracts RMB Contracts 353,972 - (148,612) - February 2024 - Participating cross currency swap contracts USD Contracts EUR Contracts 18,000 40,060 72,504 251,073 November 2025 April 2026 Interest rate swap contracts USD Contracts TL Contracts Derivatives held for trading 64,655 600,000 23,711 (17,861) 293,704 April 2026 October 2026 18,858 25,883 377,435 26,900 357,451 148,422 27,000 53,380 53,380 - 400,871 94,715 March 2023 - November 2025 April 2026 12,643 47,288 January 2022 - March 2022 February 2023 - April 2023 (6,558) 3,071 123,664 418,589 (1,303) - 1,092,980 January 2023 January 2023 November 2025 April 2026 April 2026 - 77 302 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 303 75 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 34. Derivative financial instruments (continued) Fair value of derivative instruments and risk management Fair value This section explains the judgments and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value in the financial statements. To provide an indication of the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level is as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; • Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and • Level 3 inputs are unobservable inputs for the asset or liability. a) Participating cross currency swap contracts Fair Value hierarchy Level 2 b) FX swap, currency, interest swap and option contracts c) Currency forward contracts Level 2 Level 2 Valuation Techniques Pricing models based on discounted cash present value of the estimated future cash flows based on observable yield curves and end period FX rates Present value of the estimated future cash flows based on observable yield curves and end period FX rates Forward exchange rates at the balance sheet date Since the bid-ask spread is observable input; in the valuation of participating cross currency swap contracts, bid prices in the bid- ask price range that were considered the most appropriate were used instead of mid prices. Using bid prices instead of mid ranges, has no impact on carried values as of 31 December 2023. 304 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 78 34. Derivative financial instruments (continued) Fair value of derivative instruments and risk management (continued) Fair value (continued) Movements in the participating cross currency swap contracts for the years ended 31 December 2023 and 2022 are stated below, and participating cross currency swap contracts are transferred to level 2 as of 31 December 2023. Opening balance Cash flow effect Total gain/loss: 31 December 2023 1,889,454 (2,206,436) 31 December 2022 2,839,699 (2,203,493) Gains recognized in profit or loss Inflation adjustments Transferred to Level 2 Closing balance 2,362,553 (1,109,305) - 1,889,454 As of 31 December 2023, the Company has no financial assets and liabilities carried at fair value on a non-recurring basis. 2,275,339 (784,075) (1,174,282) - Net off / Offset The Company signed a Credit Support Annex (CSA) against the default risk of parties in respect of a EUR 167,000 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 EUR 24,036 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 EUR 1,000. Following the execution of CSA, the bank transferred to the Company EUR 340,544 as collateral (31 December 2022: TL 11,092,846) which was the amount exceeding the threshold (EUR 10,000) and the Company transferred EUR 309,884 as collateral to the bank (31 December 2022: TL 10,094,130) which was the amount exceeding the threshold (EUR 10,000). The Company clarified this with the derivative assets included in the statement of financial position because it has the legal right to offset the collateral amount TL 998,716 (31 December 2022: 1,967,883) 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 2023, if this transaction was not conducted, derivative financial instruments assets, liabilities and borrowings would have been TL 2,870,371 (31 December 2022: TL 5,062,399), TL 181,260 (31 December 2022: TL (5,674) and TL 30,371,295 (31 December 2022: TL 29,519,970) respectively. 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. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 305 79 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 34. Derivative financial instruments (continued) Fair value of derivative instruments and risk management (continued) 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 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 IFRS 9 hedge accounting requirement. The Group designates the hedge ratio, between the amount of the hedged item and the hedging instrument is 1:1 to hedge its currency risk. 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. The Company’s bank loans are designated as hedging instruments against the spot foreign exchange rate risk (USD/TL) associated with highly probable electricity sales. In this context, the Group started to apply cash flow hedge accounting effective from 10 September 2021. The amount of loans associated within this scope amounted to USD 10,097 as of 31 December 2023. The after tax foreign exchange gain and loss recognized under “cash flow hedges” in the 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 EUR 9,882 as of 31 December 2023. The after tax foreign exchange gain and loss recognized under “cash flow hedges” in the statement of other comprehensive income of 2022. 34. Derivative financial instruments (continued) Fair value of derivative instruments and risk management (continued) Currency risk (continued) The Company designated EUR 320,008 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 recognized under “hedges of net investments in foreign operation” in the statement of other comprehensive income of 2022 in the scope of net investment hedge amounted to TL (1,161,222) (2022: TL (80,795)) 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; 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 2023 Participating cross currency swap contracts Cross currency swap contracts Cash Flow sensitivity (net) 31 December 2022 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 (51,444) 138,039 86,595 12,874 129,023 141,897 555,829 (7,670) 548,159 572,421 (8,685) 563,736 (61.841) 106.742 44,701 (41.299) 389.418 348,119 1.245.373 1.297.102 339.632 1,639,960 1,636,734 389.587 306 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 80 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 307 81 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments Credit risk Exposure to credit risk: The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is: Trade receivables Contract assets Receivables from financial services Cash and cash equivalents (*) Derivative financial instruments Other current & non-current assets (**) Financial assets at amortized cost Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Due from related parties Notes 19 21 20 23 34 17 24 24 24 31 December 2023 11,251,507 3,293,020 6,435,662 49,978,381 2,044,765 703,180 - 9,411,318 106,023 171,373 83,395,229 31 December 2022 11,474,491 3,222,952 5,869,089 42,775,569 3,348,871 694,136 1,233,597 7,074,565 3,049,667 125,967 78,868,904 (*) Cash in hand is excluded from cash and cash equivalents. (**) Prepaid expenses, VAT receivable, receivable from the Ministry of Transport and Infrastructure of Turkiye and advances given are excluded from other current assets and other non-current assets. TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Credit risk (continued) Credit quality: The maximum exposure to credit risk for trade and subscriber receivables, other assets and cash and cash equivalent arising from sales transactions, including those classified as due from related parties at the reporting date by type of customer is: Other assets at 31 December 2023 (*) Gross Carrying Amount Loss Allowance Less Than 30 Days Past Due Less Than 60 Days Past Due 834,801 194,114 8,940 14,424 Less Than 90 Days Past Due 129,960 6,611 Not Due 71,631,176 79,942 Less Than 120 Days Past Due Less Than 150 Days Past Due 94,004 6,789 74,345 7,294 Less Than 3 years Past Due 859,148 184,182 Less Than 4 years Past Due 293,438 208,805 Less Than 5 years Past Due 160,786 88,238 Total 74,271,772 605,225 (*) Other Assets includes trade receivables, subscriber receivables, derivative financial instruments, financial assets, other assets, cash and cash equivalent and due from related parties, As of 31 December 2023, the total amount of derivative financial instruments, financial assets, other assets and cash and cash equivalent included in gross carrying amount is TL 58,761,624. TL 58,617,700 of the balance is included within not due total with a total loss allowance of TL 34.610. Total overdue balance associated with these assets amounts to TL 143,924. Contract assets at 31 December 2023 Gross Carrying Amount Loss Allowance Less Than 30 Days Past Due Less Than 60 Days Past Due - - - - Not Due 3,296,409 3,389 Other assets from financial services at 31 December 2023 (**) Gross Carrying Amount Loss Allowance Less Than 30 Days Past Due Less Than 60 Days Past Due 451,234 3,480 83,488 1,290 Not Due 5,869,236 33,483 Less Than 90 Days Past Due - - Less Than 90 Days Past Due 21,403 1,491 (**) Other Assets includes trade receivables and subscriber receivables from financial services, Less Than 120 Days Past Due Less Than 150 Days Past Due Less Than 3 years Past Due Less Than 4 years Past Due Less Than 5 years Past Due - - - - - - - - - - Less Than 120 Days Past Due Less Than 150 Days Past Due Less Than 3 years Past Due Less Than 4 years Past Due Less Than 5 years Past Due 26,123 10,315 9,133 4,721 113,693 83,877 2,070 2,063 6,234 6,232 Total 3,296,409 3,389 Total 6,582,614 146,952 83 308 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 309 82 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Credit risk (continued) Credit quality (continued): Other assets at 31 December 2022 (*) Gross Carrying Amount Loss Allowance Not Due 67,227,170 217,408 Less Than 30 Days Past Due Less Than 60 Days Past Due Less Than 90 Days Past Due 620,561 9,277 293,019 9,028 141,299 7,846 Less Than 120 Days Past Due 119,245 9,679 Less Than 150 Days Past Due 154,017 12,671 Less Than 3 years Past Due 1,358,963 320,263 Less Than 4 years Past Due 572,029 316,400 Less Than 5 years Past Due 381,413 188,281 Total 70,867,716 1,090,853 (*) Other Assets includes trade receivables, subscriber receivables, derivative financial instruments, financial assets, other assets, cash and cash equivalent and due from related parties, Contract assets at 31 December 2022 Gross Carrying Amount Loss Allowance Not Due 3,235,056 12,104 Less Than 30 Days Past Due Less Than 60 Days Past Due Less Than 90 Days Past Due Less Than 120 Days Past Due Less Than 150 Days Past Due Less Than 3 years Past Due Less Than 4 years Past Due Less Than 5 years Past Due Total - - - - - - - - - - - - - - - - 3,235,056 12,104 Other assets from financial services at 31 December 2022 (**) Gross Carrying Amount Loss Allowance Less Than 30 Days Past Due Less Than 60 Days Past Due Less Than 90 Days Past Due Not Due 5,478,565 297,465 52,668 20,849 33,009 2,969 603 323 Less Than 120 Days Past Due 28,344 11,610 Less Than 150 Days Past Due 11,305 5,938 Less Than 3 years Past Due Less Than 4 years Past Due Less Than 5 years Past Due 115,498 81,167 3,627 3,612 8,927 8,928 Total 6,017,248 148,159 (**) Other Assets includes trade receivables and subscriber receivables from financial services. 84 TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Impairment losses Movements in the provision for trade receivables, contract assets, other assets and due from related parties are as follows: Opening balance Provision for impairment recognized during the year Amounts collected Receivables written off during the year as uncollectible Assets held for sale Effect of changes in exchange rates Inflation adjustment Closing balance Opening balance Provision for impairment recognized during the year Amounts collected Receivables written off during the year as uncollectible Effect of changes in exchange rates Inflation adjustment Closing balance 31 December 2023 Contract Assets 12,104 4,942 - - (13,657) 3,389 Other Assets 1,090,853 1,194,467 (291,843) (952,307) (89,251) 72,226 (418,920) 605,225 31 December 2022 Contract Assets 16,893 2,123 - - - (6,912) 12,104 Other Assets 1,725,936 1,006,101 (383,034) (654,365) 40,674 (644,459) 1,090,853 Movements in the provision for impairment of trade receivables, subscriber receivables, other assets and cash and cash equivalents from financial services are as follows: Opening balance Provision for impairment recognized during the year Amounts collected Receivables transferred with receivables transfer contract (*) Inflation adjustment Closing balance 31 December 2023 148,159 161,574 (83,591) (6,755) (72,435) 146,952 31 December 2022 249,272 169,873 (113,112) (60,942) (96,932) 148,159 (*) Turkcell Finansman signed a transfer of claim agreement with a debt management company to transfer some of its doubtful receivables stemming from the years 2016 and 2022. Transferred doubtful receivables comprise of balances that Turkcell Finansman started legal proceedings for. 310 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 311 85 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Liquidity risk The table below analyses the Group’s financial liabilities by considering relevant maturity groupings based on their contractual maturities for: - - all non-derivative financial liabilities, and gross settled derivative financial instruments for which contractual maturities are essential for an understanding of the timing of the cash flows, Carrying Amount Contractual cash flows 6 months or less 31 December 2023 6-12 Months 1-2 years 2-5 years More than 5 Years Carrying Amount Contractual cash flows 6 months or less 6-12 months 1-2 years 2-5 years More than 5 Years 31 December 2022 4,724,253 45,064,412 31,867,956 2,427,588 13,785,953 590,785 (6,237,895) (49,785,432) (37,314,608) (4,225,712) (1,147,106) (13,743,381) (4,408,598) (669,746) (436,679) (7,383,064) (818,467) (544,316) (13,840,042) (852,565) (12,622,496) (814,228) (852,531) (11,507,099) (15,436,413) (693,147) (990,527) (38,337) - - - (2,356,083) (17,151,888) (16,651,130) (1,292,253) (1,445,496) - - (1,026,250) 5,168,709 47,000,370 31,534,111 5,034,195 (5,974,716) (51,443,715) (38,976,944) (8,545,826) (1,015,215) (14,624,311) (2,824,636) (1,273,149) (400,352) (8,071,932) (856,600) (960,925) (783,620) (7,441,277) (1,713,198) (1,513,561) (2,171,728) (18,517,855) (17,921,121) (2,403,083) (1,603,801) (2,788,340) (15,661,389) (2,395,108) - - (227,019) - 11,423,268 399,156 (11,918,822) (551,742) (11,681,227) (551,742) - - - - - - - (237,595) - (15,370) (179,204) (2,901,769) 1,027,057 (2,958,394) - (14,574) (287,636) (2,656,184) 1,098,399 (3,096,343) - Non-derivative financial liabilities Secured bank loans Unsecured bank loans Debt securities issued Lease liabilities Trade and other payables (*) Due to related parties Consideration payable in relation to acquisition of BeST and Boyut Enerji (Note 27) Derivative financial liabilities Participating Cross Currency Swap and FX swap contracts 354,370 (180,189) 293,138 (54,216) (160,366) (258,745) Buy Sell - - (24,379,548) (22,325,369) (191,680) (351,830) (1,510,669) 24,199,359 22,618,507 137,464 191,464 1,251,924 - - - 248,682 575,387 111,291 103,870 157,201 203,595 (570) - - (18,318,639) (17,168,992) (1,549,824) 192,527 222,079 (14,429) 18,894,026 17,280,283 1,653,694 (35,326) (18,484) 13,859 TOTAL 99,842,374 (115,394,837) (33,112,417) (9,236,742) (29,692,994) (37,997,735) (5,354,949) 101,906,890 (119,932,721) (31,858,989) (10,185,939) (11,309,825) (40,989,396) (25,588,572) (*) Advances received, license fee accruals, taxes and withholding taxes payable are excluded from trade and other payables. 86 TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Foreign exchange risk The Group’s exposure to foreign exchange risk at the end of the reporting period, based on notional amounts, was as follows: Foreign currency denominated assets Other non-current assets Financial asset at fair value through other comprehensive income Due from related parties - current Trade receivables and contract assets Other current assets Cash and cash equivalents Foreign currency denominated liabilities Loans and borrowings - non-current Debt securities issued - non-current Lease obligations - non-current Other non-current liabilities Loans and borrowings - current Debt securities issued - current Lease obligations - current Other current liabilities Trade and other payables - current Due to related parties 31 December 2023 EUR USD 69 11 156,278 1,059 11,566 2,340 534,318 705,630 (234,458) (911,923) (1,063) (34,889) (85,119) (53,853) (103) (848) (134,540) 75,622 - 15,857 3,184 639,362 734,036 (631,844) - (9,425) - (201,955) - (3,097) (2,160) (87,414) (5,870) (1,462,666) - (935,895) RMB - - - - 56 257,156 257,212 (473,134) - - - (75,635) - - - (323,677) - (872,446) Financial liabilities defined as hedging instruments Exposure related to derivative instruments Participating cross currency swap and FX swap contracts Currency forward contracts Net exposure 10,097 329,890 - 361,971 601,360 216,392 (325,000) 10,000 (186,969) 100,586 - (514,648) 312 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 313 87 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Foreign exchange risk (continued) Foreign currency denominated assets Other non-current assets Financial asset at fair value through other comprehensive income Due from related parties - current Trade receivables and contract assets Other current assets Cash and cash equivalents Foreign currency denominated liabilities Loans and borrowings - non-current Debt securities issued - non-current Lease obligations - non-current Other non-current liabilities Loans and borrowings - current Debt securities issued - current Lease obligations - current Other current liabilities Trade and other payables - current 31 December 2022 USD 69 167,157 71 25,125 14,580 393,932 600,934 (275,615) (909,499) (1,210) (35,476) (94,765) (53,862) (3,076) (886) (109,401) (1.483.790) EUR 11 115,995 - 22,977 6,455 557,380 702,818 (565,765) - (12,474) - (180,091) - (3,060) (5,156) (17,514) (784.060) RMB - - - - 9,057 194,430 203,487 (404,695) - - - (149,310) - - - (369,627) (923.632) Financial liabilities defined as hedging instruments Exposure related to derivative instruments Participating cross currency swap and FX swap contracts Currency forward contracts Net exposure 13,763 302,482 - 376,307 539,263 46,477 (355,000) (150) (133,910) 282,453 - (437,692) 35. Financial instruments (continued) Exposure to currency risk Sensitivity analysis The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The aggregate foreign exchange exposure is composed of all assets and liabilities denominated in foreign currencies; the analysis excludes net foreign currency investments. A 10% strengthening/weakening of the TL, UAH, BYN, EUR against the following currencies as at 31 December 2023 and 31 December 2022 would have increased/(decreased) profit or loss before by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Sensitivity analysis 1- USD net asset/liability 2- Hedged portion of USD risk (-) 3- USD net effect (1+2) 4- EUR net asset/liability 5- Hedged portion of EUR risk (-) 6- EUR net effect (4+5) 7- Other foreign currency net asset/liability (RMB) 8- Hedged portion of other foreign currency risk (-) (RMB) 9- Other foreign currency net effect (7+8) Total (3+6+9) Sensitivity analysis 1- USD net asset/liability 2- Hedged portion of USD risk (-) 3- USD net effect (1+2) 4- EUR net asset/liability 5- Hedged portion of EUR risk (-) 6- EUR net effect (4+5) 7- Other foreign currency net asset/liability (RMB) 8- Hedged portion of other foreign currency risk (-) (RMB) 9- Other foreign currency net effect (7+8) Total (3+6+9) 31 December 2023 Profit/(Loss) Equity Appreciation of foreign currency Depreciation of foreign currency Appreciation of foreign currency Depreciation of foreign currency 632,650 - 632,650 (611,666) - (611,666) (632,650) - (632,650) 611,666 - 611,666 - (29,724) (29,724) - (32,190) (32,190) (212,097) 212,097 - - (212,097) (191,113) - 212,097 191,113 1,477 1,477 (60,437) - 29,724 29,724 - 32,190 32,190 - (1,477) (1,477) 60,437 31 December 2022 Profit/(Loss) Equity Appreciation of foreign currency Depreciation of foreign currency Appreciation of foreign currency Depreciation of foreign currency 143,194 - 143,194 (439,858) - (439,858) (143,194) - (143,194) 439,858 - 439,858 - (41,745) (41,745) - (42,380) (42,380) (193,324) 193,324 - - 193,324 489,988 2,636 2,636 (81,488) - (193,324) (489,988) 89 - 41,745 41,745 - 42,380 42,380 - (2,636) (2,636) 81,488 314 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 315 88 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Interest rate risk As at 31 December 2023 and 2022 the interest rate profile of the Group’s variable rate interest-bearing financial instruments are as follows: 31 December 2023 31 December 2022 Effective Interest Note Rate Effective interest Carrying Amount rate 3.2% 2.2% Carrying Amount (7,637,455) (22,530,691) Variable rate instruments USD floating rate loans 28 EUR floating rate loans 28 3.9% 2.1% (5,334,924) (25,815,920) Sensitivity analysis Cash flow sensitivity analysis for variable rate instruments: An increase/decrease of interest rates by 100 basis points would have (decreased)/increased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant. The analysis is performed on the same basis at 31 December 2023 and 2022: Profit or (loss) Equity 100 bps increase 100 bps decrease 100 bps increase 100 bps decrease 3,785,019 3,785,019 (3,785,019) (3,785,019) (519,385) (519,385) 519,385 519,385 - - - - - - - - 31 December 2023 Variable rate instruments (financial liability) Cash flow sensitivity (net) 31 December 2022 Variable rate instruments (financial liability) Cash flow sensitivity (net) Fair value Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis. The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurement of contingent consideration. 316 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 90 35. Financial instruments (continued) Fair values (continued) Valuation inputs and relationships to fair value Fair value at 31 December 2023 31 December 2022 Unobservable Inputs Contingent consideration - 1,249,409 Risk-adjusted discount rate Inputs 31 December 2023 31 December 2022 - 6.8%-8.0% Expected settlement date - in instalments between 2026-2032 Relationship of unobservable inputs to fair value An increase/decrease in the discount rate by 100 bps would change FV by TL (51,092) and TL 55,485, respectively. If expected settlement date extended/shortened by 1- year, FV would change by TL (53,167) and TL 57,145, respectively. Changes in the consideration payable in relation to acquisition of BeST for the years ended 31 December 2023 and 31 December 2022 are stated below: Opening balance Losses recognized in profit or loss Inflation adjustment Closing balance Financial assets: 31 December 2023 - - - - 31 December 2022 2,052,399 (1,249,409) (802,990) - 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 24. Financial liabilities: As at 31 December 2023 and 31 December 2022; for the majority of the borrowings, the fair values are not materially different to 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: As at 31 December 2023: Bank loans Debt securities As at 31 December 2022: Bank loans Debt securities Carrying amount Fair value 37,558,519 28,430,710 35,724,400 27,828,939 Carrying amount Fair value 37,733,566 29,680,889 35,349,818 27,307,857 91 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 317 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 35. Financial instruments (continued) Fair values (continued) 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. 36. Guarantees and purchase obligations At 31 December 2023, outstanding purchase commitments with respect to property, plant and equipment, inventory, advertising and sponsorship amount to TL 5,059,847 (31 December 2022: TL 6,471,418). Payments for these commitments will be made within 4 years. The Group is contingently liable in respect of letters of guarantee obtained from banks and given to public institutions and private entities, and financial guarantees provided to subsidiaries amounting to TL 17,891,113 at 31 December 2023 (31 December 2022: TL 16.187.804). BeST has an investment commitment covers the years 2022-2032 with a total investment amount of not less than USD 100,000 equivalent to TL 2,943,820 in accordance with the agreement which signed between the Republic of Belarus, BeST and the Company on 30 November 2022. As of 31 December 2023, the remaining investment commitment is amounting to USD 93,376 (TL equivalent of 2,748,824). no The Company as of 31 December 2023 (31 December 2022: 6,103,453). commitment regarding reverse resale repo has to receivables 37. Commitments and Contingencies The amounts related to the investigations, lawsuits, and inquiries shared below are disclosed with their nominal values as of December 31, 2023. Disputes on Special Communication Tax Restructuring Act Compensation Lawsuit regarding the SCT for the term 2011 The Large Taxpayers Office levied Special Communication Tax (SCT) and tax penalty on the Company for the term 2011, the Company filed application for restructuring the tax assessment as per Law no. 6736, the application has rejected. The Company filed a case for the cancellation of aforementioned rejection act, this case was finalized in favor of the Company. Thereupon the Company, filed a lawsuit for the collection of TL 47,405 principal receivable and TL 36,000 damage accrued with a deferment interest. The Court decided to return TL 47,269 principal receivable together with the deferred interest to be calculated as of the collection date. Regional Administrative Court rejected the appeal requests. The lawsuit is ongoing in the appeal stage. Disputes regarding the Law on the Protection of Competition The Competition Board decided to apply administrative fine on the Company amounting to TL 91,942, on the ground that the Company violated Article 6 of Law No. 4054, but not violated Article 4, due to its actions in the distribution network. The Company filed a lawsuit for the cancellation of the Board decision regarding the parts against itself and the case which was investigated by the first instance court and the appeal was finalized against it. 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 filed a lawsuit for the cancellation of the payment order but that case also was finalized against the Company. TL 47,780 part of the administrative fine amounting to 91,942 TL has been deducted from the receivables that the Company has earned due to application for restructuring the 2011 SCT assessment within the scope of Law No. 6736 in 2021. The remaining TL 44,162 part of the administrative fine was paid in April 2022. 318 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 92 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 37. Commitments and Contingencies (continued) Disputes regarding the Law on the Protection of Competition (continued) On the other hand, three private companies filed a lawsuit against the Company in relation with this case claiming in total of TL 112,084 together with up to three 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 TL 110,484 material damages together with compensation amounting to three times of the damage and interest, the first instance court decided to reject the case in favor of the Company. 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. After the annulment decision, the court partially accepted the case and ruled reimbursement of TL 215,555 (three times of the actual damage of TL 71,851). As a result of the appeal, which made by the both parties, examination made by the Regional Court of Appeal, the Company'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. In line with the objections of the parties, the court decided to obtain an additional expert report from the same expert committee in the file. The expert additional report has been submitted to the file. The company objected to the both reports in due time. Case is pending. Among these cases, in the case filed for the compensation of total TL 500 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 court decided to obtain an expert report from a new expert committee in accordance with both parties objections, The expert review is still ongoing. The other case is also 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 did not violated Article 4 of the Law. 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 additional administrative fine amounting to TL 91,942 on the Company for 2019. Afterwards, The Competition Authority accepted some of the objections of the Company and reduced the administrative fine to TL 61,294 with its decision. The aforementioned fine that amount of TL 61,294 was paid discount, in the amount of TL 45,971. Then, a lawsuit was filed on for cancellation of the aforementioned administrative fine. A decision was made against the Company at the first instance and appeal stages. The appeal process is pending. Disputes regarding the Law on the Protection of Competition – Investigation on gentleman's agreements for the labour market On 7 May 2023, the Company received the Investigation Report concerning an inquiry by the Competition Authority to determine if there has been a breach of Article 4 of Law No. 4054 on the Protection of Competition, regarding any gentlemen's agreements for the labor market. The report, which includes the viewpoints and findings of the Investigation Panel is non-binding and doesn't predetermine the Competition Board's final decision. The Company has already submitted its second written pleas addressing the findings noted in the Investigation Report to the Authority. Subsequently, a verbal defense meeting was held on 13 February 2024. The short decision was notified and the Competition Board decided to impose an administrative fine of TRY 57,301 Our payment obligation will arise after the reasoned decision of the Competition Board is written and notified to our Company. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 319 93 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 37. Commitments and Contingencies (continued) ICTA Investigation Regarding the R&D Obligations 37. Commitments and Contingencies (continued) ICTA – Inspection on Service Quality (2020 Q2) The ICTA has initiated various investigations and may initiate new investigations to examine whether the obligations arising from the relevant legislation regarding the procurement of a certain portion of the investments related to the electronic communication network and communication services from suppliers with R&D centers in Turkey, a certain portion from products manufactured in Turkey by SMEs established to develop products/systems in Turkey, and a certain portion from products determined to be domestic goods certified are fulfilled. As a result of the first investigations on the subject, ICTA decided to impose a total administrative fine of 49,170 TL for the 2013-2016/2016-2017 reporting periods. The aforementioned administrative fines were paid in 2021 with a discount of TL 36,877 (1/4) by taking advantage of the early payment discount, but several lawsuits were filed for the cancellation of the fines. All of the lawsuits were finalized against the Company at the first instance court, but the Company appealed within the time limit. For the following period between 27 October 2017-26 October 2018, the ICTA initiated an investigation to examine whether our obligations regarding R&D, SME and/or domestic goods investments, R&D Center, R&D Projects and SMEs were fulfilled and as a result of this investigation, the ICTA decided to impose a total administrative fine of TL 46,317 on the Company. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 34,738 (with 1/4 discount) by taking advantage of the early payment discount. In addition, an application has been made to the ICTA for the revocation of the decision. In addition, ICTA initiated an investigation on Our Company for the periods 27 October 2019-26 October 2020 (5th Period) and 27 October 2020-26 October 2021 (6th Period) in order to examine whether our obligations regarding R&D, SME and/or domestic goods investment obligations and criteria for SMEs in the 3G Concession Agreement and 4.5G Authorisation Certificate have been fulfilled. The ICTA also decided to conduct the said inspection by merging it with the inspection previously initiated for 27 October 2018-26 October 2019 (4th Period). The information and documents requested within the scope of the investigation were submitted to the ICTA. Subsequently, penalty evaluations were made in the Investigation Report prepared by the Supervisory Board. Our written defenses regarding the Investigation Report were submitted to the ICTA on 19 January 2023. Within the scope of the investigation, a verbal defense meeting was held on 13 June 2023. ICTA – Investigation on 3G and 4.5G Service Quality Obligations ICTA 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 ICTA has decided to impose an administrative fine of TL 3,622 to the Company. The administrative fine notified to the Company on 20 January 2022 and was paid on 17 March 2022 as TL 2,716 with taking on the account the early payment discount (1/4). After notification of the Board Decision to the Company, the Company applied to ICTA with the demand of withdraw of the Board Decision. The application of the Company was tacitly rejected by ICTA. The Company filed five separate lawsuits in total for the cancellation of the related transactions and administrative fines. The cases are pending. The investigation process of a similar issue regarding Turkcell is currently ongoing. 320 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 94 ICTA 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 ICTA has decided to impose an administrative fine of TL 568 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 ICTA with the demand of withdraw of the Board Decision. The application of the Company was tacitly rejected by ICTA. The Company filed a lawsuit for the cancellation of the related transaction and administrative fine. The Court rejected the case. The Company appealed the decision before Regional Administrative Court in due time. The Regional Administrative Court rejected the appeal request. The Company appealed the decision in due time. The appeal process is pending. The investigation processes of Turkcell 3N Mobile Service Quality (3rd and 4th Term of 2020) and 3N Mobile Service Quality (1st and 3rd Term of 2021) which are similar to this investigation is currently ongoing. 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 March 2018 and numbered 2018/DK-THD/58(Board Decision on Refunds to Subscribers), dated 12 April 2018 and numbered 2018/DK-THD/116(Refund/Use of Remaining Amount on Prepaid Lines) and dated 16 April 2018 and numbered 2018/DK- THD/123(Transferring Non-refundable Amounts on Prepaid Lines as Universal Service Contribution), (i) The ICTA has decided that the unpaid TL 412 will be transferred to the Ministry, along with the late fee from April 14, 2020 and inform the ICTA about this transfer. (ii) The ICTA has decided to transfer the TL 161 that could not be refunded to subscribers regarding the period between 27 April 2017-31 May 2018, which were not fully paid to the Ministry. The ICTA has also decided to transfer the refund amounts related to the period between 1 April 2010- 27 April 2017 -along with the late fee from July 28, 2020- and to inform the ICTA about this matter. (iii) The ICTA has decided to impose an administrative fine of TL 5,680 in total. The fine, which was notified to the Company on 2 January 2023, was paid as TL 4,260 (1/4 discounted) on 31 January 2023 by taking advantage of the early payment discount. Additionally, an application (İYUK 11) was made to the ICTA with request for re-evalutaion and revocation of the decison and tacitly rejected by not responding in due time by ICTA. The Company filed two separate lawsuits for the cancellation of the related transaction and administrative fine. The cases are pending. On the other hand, the amount stated to have been underpaid in the Board Decision was deposited to the Ministry's account with reservation on 18 May 2023 with a total amount of 98,333 TL together with default interest and the ICTA was informed about the payment. The investigation processes of the Turkcell and Superonline Refunds Investigations and Turkcell Refund Investigation Regarding Prepaid Lines which are similar to this investigation is currently ongoing. Sub-Agency/Dealership Investigation As a result of examinations carried out by the ICTA due to large number of complaints from consumers who were victimized by being called illegally, the ICTA started an investigation to determine whether sub-dealers were used. As a result of the investigation, the ICTA decided to impose a TL 834 administrative fine on the Company. TURKCELL 2023 INTEGRATED ANNUAL REPORT | 321 95 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 37. Commitments and Contingencies (continued) Sub-Agency/Dealership Investigation (continued) 37. Commitments and Contingencies (continued) Investigation on Value Added Services (continued) Additionally, an application (IYUK 11) was made to the ICTA with request for re-evaluation and revocation of the decision and tacitly rejected by not responding in due time by ICTA. The Company filed a lawsuit for the cancellation of the related transaction and administrative fine. The Court rejected the case. The Company appealed the decision before Regional Administrative Court in due time. The Regional Administrative Court rejected the appeal request. The Company will appeal the decision in due time. Fizy Service Investigation The ICTA 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 ICTA has decided to impose an administrative fine of TL 1,682 on the Company, (ii) the ICTA has decided to give a warning to the Company due to the implementation of the double opt-out method in the cancellation process of consumers, (iii) the ICTA 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 TL 1,262 (1/4 discounted) on 24 February 2023 by taking advantage of the early payment discount. Additionally, an application (IYUK 11) has been made to the ICTA with request for re-evaluation and revocation of the decision. In addition, the amount to be refunded under the aforementioned Board Decision is calculated as TL 3,036 and refund transactions were completed. Investigation Regarding the Subscription Agreements (Anonymous Lines) The ICTA initiated an investigation to examine whether the obligations regarding the establishment and implementation of subscription agreements and open lines were fulfilled and as a result of this investigation, the ICTA decided to impose an administrative fine of TL 99,132 on the Company. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 74,349 (with 1/4 discount) by taking advantage of the early payment discount. In addition, an application has been made to the ICTA for the revocation of the decision. In regard to Turkcell; although the legislative provisions of the same nature regarding subscription agreements are not examined, the examination process of open lines, subscription agreements and number portability investigation, in which the establishment of the subscription agreement is also examined, is currently ongoing. The examination process of a similar investigation about Superonline subscription agreements is also ongoing. Investigation on Value Added Services The ICTA initiated an investigation to examine whether the obligations imposed by the Board Decision No. 2016/DK-THD/496 and the "Procedures and Principles Regarding the Protection of Consumer Rights in the Execution of Value Added Electronic Communication Services" have been fulfilled. As a result of this investigation, the Company was imposed an administrative fine amounting to TL 9,476 and it was decided to refund the overcharges collected from the subscribers after 30 June 2017, the effective date of the Procedures and Principles Regarding Value Added Service, to the subscribers within the framework of the relevant legislation and the Procedures and Principles to be Applied in within the framework of the relevant legislation and the Procedures and Principles to be Applied in Refunds to Subscribers approved by the Board Decision No. 2018/DK-THD/57. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 7,107 (with 1/4 discount) by taking advantage of the early payment discount. In addition, an application was made to the ICTA for the revocation of the decision and the correction of the mistake in the refund paragraph. As a result of the application, the ICTA has corrected the mistake in the decision and notified that the said refunds must be made to the subscribers within the framework of the Procedures and Principles to be Applied in Refunds to Subscribers approved by the Board Decision No. 2018/DK-THD/57. The relevant teams are calculating the amount to be refunded within the scope of the Board Decision. Investigation on Number Portability The ICTA initiated an investigation to examine whether our obligations under the Number Portability Regulation were fulfilled after February 2018 and as a result of this audit the ICTA decided to impose an administrative fine of TL 894 on the Company. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 670 (with 1/4 discount) by taking advantage of the early payment discount. Inspection on SimCard Change The ICTA initiated an investigation to examine whether our obligations imposed by the Board Decision No. 445 were fulfilled or not, as it was also the subject of a file of Gaziosmanpaşa Chief Public Prosecutor's Office, and as a result of this investigation, the ICTA decided to impose a total administrative fine of TL 375 on the Company. The decision was notified to the Company and the administrative fine was paid in due time (31 January 2024) as TL 281 (with 1/4 discount) by taking advantage of the early payment discount. ICTA – Facility Sharing Investigation Within the scope of the investigation initiated by the ICTA on Superonline in order to examine the compliance of the works and transactions carried out in the processes from the submission to the finalisation of the facility sharing request starting from the January 2020 period with the relevant legislation, some penalty assessments were included in the Investigation Report prepared by the Supervisory Board. Our written defenses regarding the Investigation Report were submitted to the ICTA on 2 June 2023. ICTA – Investigation of Committed Subscriptions Within the scope of the investigation initiated by the ICTA on Our Company in order to examine whether the obligations stipulated in the Regulation on Consumer Rights in the Electronic Communications Sector and other relevant legislation regarding committed subscriptions have been fulfilled or not, the Investigation Report prepared by the Supervisory Board has been notified. It is assessed that administrative fines may be imposed for 9 different violations and for 6 of these determinations, all amounts unfairly collected from the subscribers should be refunded to the subscribers within the scope of the relevant legislation. Our written defenses regarding the Investigation Report were submitted to the ICTA on 22 January 2024. ICTA – Investigation on Idendity Verification Regulation Within the scope of the investigations initiated by the ICTA separately for Turkcell and Superonline due to the fact that the subscription process applied by Our Companies for the purpose of verifying the identity of the applicant for the types of transactions in the electronic communications sector within the scope of the Identity Verification Regulation (IVR) is not in compliance with the procedures in the IVR 322 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 96 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 323 97 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 37. Commitments and Contingencies (continued) ICTA – Investigation on Idendity Verification Regulation (continued) It was assessed that an administrative fine of 12% could be imposed on Turkcell and Superonline within the scope of four separate violations within the scope of the relevant legislation due to the violation of the face-to-face identification verification provisions and the recording of some biometric data such during the tablet signature process in violation of the Identity Verification Regulation. On the other hand, the ICTA has also stated that may be take necessary measures for the scope of provision "...national security, public order or the proper execution of public service and the implementation of the provisions introduced by laws, to take over the facilities in return for compensation when necessary, to cancel the authorisation granted in case of non-payment of the authorisation fee within the specified period or in case of gross negligence.". Our written defenses were submitted to the ICTA on 11 March 2024. 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, TL 379,519 provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2023, under the account of other real operating expense (31 December 2022: TL 4,629). The results of ongoing investigations, inquiries, lawsuits, and audits may differ from the Group's assessments. 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, TL 128,429 was paid in November 2019 by reserving our right to take legal actions and legal actions were taken for 2018 fiscal year. The Court rejected the cases. The Company appealed the decisions before the Regional Administrative Court. The Regional Administrative Court rejected the appeal request. The Company appealed the decision in due time. The appeal process is pending. On the other hand, additional TL 13,465 for December 2018 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 Turkcell Ödeme 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 Turkcell Ödeme in the amount of TL 18,763. Turkcell Ödeme 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. As a result of the appeal examination made by the Regional Court of Appeal, the defendant’s appeal request was accepted and the decision of the first instance court was revoked. Within the scope of the Law No. 7440 on the Restructuring Some Receivables and Amending Some Laws, a restructuring application has been filed for the administrative fine which is the subject of the lawsuit. The administrative fine restructured by paying TL 1,443 on 31 July 2023. The court decided there is no need to make a decision regarding the essence of the case, due to waiving the case according to the Law No. 7440. 324 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 98 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 37. Commitments and Contingencies (continued) Other ongoing lawsuits and tax investigations (continued) While this case was ongoing, the Tax Office sent a payment order for collection of the aforementioned administrative fine. Turkcell Ödeme 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 Council of State rejected the appeal request of the Tax Office. 38. 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 2023 and 2022. The Group provides additional benefits to key management personnel and contributions to retirement plans based on a pre-determined ratio of compensation. Short-term benefits Long-term benefits Termination benefits Share based payments 31 December 31 December 2023 393,758 2,672 729 43,010 440,169 2022 337,928 3,326 1,847 - 343,101 31 December 2021 297,725 3,587 618 1,380 303,310 The following transactions occurred with related parties: Revenue from related parties Türk Telekom Mobil Iletisim Hizmetleri A.S. (“TT Mobil”) (*) Enerji Piyasaları İşletme A.S. (“EPIAS”)(*) Türk Hava Yolları A.S. (“THY”) (*) Ziraat Bankası A.S. (“Ziraat Bankası”) (*) "Türkiye Sigorta A.Ş. (""Türkiye Sigorta"")(*)" Gunes Express Havacilik A.S. (“Sun Express”) (*) Turk Telekomunikasyon A.S. (“TT”)(*) Turksat Uydu Haberlesme Kablo TV ve Isletme A.S.(“Turksat”)(*) TOGG TVF IFM Gayrimenkul Insaat ve Yonetim A.S. (*) Turkiye Vakiflar Bankası TAO (“Vakifbank”)(*) Turkiye Halk Bankası A.S. (“Halkbank”) (*) Turkiye Hayat ve Emeklilik A.S.(*) Ziraat Katilim Bankasi A.S. (“Ziraat Katilim”)(*) BIST (*) Sofra Other 31 December 31 December 2023 1,176,788 300,134 335,102 755,729 354,587 172,160 131,734 89,455 18,485 87,817 80,656 28,259 34,319 75,047 18,075 4,035 32,632 3,695,014 2022 1,110,129 353,776 315,803 134,451 2,199 115,657 93,051 95,996 108,534 72,200 55,127 30,311 27,104 15,316 11,269 3,385 39,517 2,583,825 31 December 2021 - 671,196 241,830 159,661 - 54,698 - 130,338 17,744 4,323 48,814 27,164 35,538 10,678 39,120 3,362 54,370 1,498,836 99 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 325 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 38. Related parties (continued) Related party expenses EPIAS (*) Turk Telekomunikasyon A.S (*) TT Mobil (*) Istanbul Takas ve Saklama Bankasi A.S. ("Takasbank") (*) Turksat (*) Sofra Boru Hatlari ile Petrol Tasima A.S. (“BOTAS”) (*) PTT (*) Others 31 December 31 December 2023 902,554 1,593,359 1,271,666 449,463 76,415 147,485 63,880 84,608 289,880 4,879,310 2022 3,232,571 1,227,920 1,039,068 152,631 156,930 88,059 75,528 46,221 97,926 6,116,854 31 December 2021 2,736,860 - - 149 190,541 96,300 63,241 46,921 60,054 3,194,066 (*) Related parties, which TVF directly and / or indirectly has control or joint control or significant influence. TVF becomes the largest shareholder of Turk Telekom with 61.68% of the shares as of 31 March 2022. Therefore, companies of Turk Telekom have been reported as related party as of 31 March 2022. Transactions between the Group and Turk Telekom are related with telecommunication services. Details of the financial assets and liabilities with related parties as of 31 December 2023 and 2022 are as follows: Banks - Time deposits (*) Banks - Demand deposits (*) Currency protected time deposit (**) Receivables from reverse repo (*) Bank borrowings Debt securities issued Lease liabilities Impairment loss provision 31 December 2023 31,369,567 720,613 6,173,875 - (7,064,169) (956,914) (146,028) (31,883) 30,065,061 31 December 2022 23,362,376 385,761 2,240,337 6,103,453 (6,789,667) (589,058) (206,594) (34,559) 24,472,049 (*) Related balances are included in cash and cash equivalents. (**) The Group has converted its currency deposit account in Vakifbank amounting to USD 102,941 and EUR 85,000 into currency protected TL time deposit accounts (Note 24). As of 31 December 2023, the amounts of letters of guarantee given to the related parties is TL 333,604 (31 December 2022:TL 226,195). Details of the time deposits at related parties as of 31 December 2023 and 2022 are as follows: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 38. Related parties (continued) Details of the time deposits at related parties Effective Interest Rate 4.4% 3.7% 40.7% Maturity January - February 2024 January - February 2024 January 2024 31 December 2023 10,090,875 14,879,110 6,399,582 31,369,567 Amount in Original Currency 342,372 455,757 6,376,563 Currency USD EUR TL Details of the bank borrowings at related parties Principle Amount Currency 4,673,500 1,349,880 553,450 104,860 72,206 TL TL TL TL TL Effective Interest Rate 12.2% - 54.4% 41.7% - 42.3% 18.8% - 55.2% 34.8% 28.8% - 49.8% Maturity February - October 2024 January 2024 January – September 2024 February 2024 August 2024- April 2025 Details of the debt securities issued at related parties Principle Amount Currency Effective Interest Rate 900,000 TL 39.0% - 44.5% Maturity January – March 2024 Details of the lease liabilities at related parties Currency EUR TL Effective Interest Rate 0.3% - 3.7% 12.5% - 55.25% Payment Period 2023 - 2025 2023 - 2036 Interest income from related parties: 31 December 2023 4,964,669 1,356,571 555,411 110,239 77,279 7,064,169 31 December 2023 956,914 956,914 31 December 2023 61,252 84,776 146,028 31 December 2021 329,828 304,760 521,864 1,112 6,909 1,164,473 Ziraat Bankasi Halkbank Vakifbank Ziraat Katilim Bankasi A.S. 326 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 100 31 December 2023 11,341,528 8,674,948 8,080,071 3,273,020 31,369,567 31 December 2022 8,470,287 9,471,793 3,301,326 2,118,970 23,362,376 Vakifbank Ziraat Bankasi Halkbank Ziraat Katilim Other 31 December 31 December 2023 2,521,142 401,599 575,333 175,320 386 3,673,780 2022 879,363 360,592 320,371 64,685 81 1,625,092 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 327 101 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 38. Related parties (continued) Interest expense to related parties: Vakifbank Ziraat Bankasi Halk Varlık Kiralama A.S. ("Halk Varlık Kiralama") Halkbank Ziraat Katilim Other 31 December 31 December 2023 719,985 185,581 340,443 17,525 4,531 3,277 1,271,342 2022 532,674 113,559 108,583 3,835 885 999 760,535 31 December 2021 55,342 16,439 12,408 - 102 358 84,649 Revenue from related parties is generally related to telecommunication, call center and other miscellaneous services. Transactions between the Group and EPIAS are related to the energy services; transactions between the Group and Sofra are related to meal coupon services; transactions between the Group and BOTAS are related to infrastructure services; transactions between the Group and Halkbank, Ziraat Bankasi and Vakifbank are related to banking services; transactions between the Group and PTT are related to cargo transportation; transactions between the Group and Turksat are related to telecommunication services and transactions between the Group and BIST are related to stock market services. Receivables from related parties are not collateralized. 328 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 102 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 39. Subsidiaries The Group’s ultimate parent company is TVF, while subsidiaries, associates and a joint venture of the Company as at 31 December 2023 and 31 December 2022 are as follows: Subsidiaries Name Turktell Turkcell Superonline Turkcell Dijital Dijital Egitim Turkcell Satis Turkcell Teknoloji Turkcell Gayrimenkul Turkcell Enerji Boyut Enerji Turkcell Finansman Turkcell Sigorta Turkcell Dijital Sigorta Turkcell Odeme Lifecell Dijital Servisler Lifecell Bulut Lifecell TV Lifecell Muzik Global Tower Atmosware Teknoloji UkrTower Beltower Eastasia Kibris Telekom Lifecell Digital Turkcell Dijital Technologies Turkcell Global Bilgi Global LLC Rehberlik Lifecell Ventures lifecell Paycell LLC Paycell Europe Yaani BiP B.V. BiP A.S. Beltel BeST Turkcell GSYF W3 Lifetech Associates Name TOGG Joint Venture Name Sofra (*) Country of Incorporation Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Turkiye Ukraine Republic of Belarus Netherlands Turkish Republic of Northern Cyprus Turkish Republic of Northern Cyprus Turkish Republic of Northern Cyprus Turkiye Ukraine Turkiye Netherlands Ukraine Ukraine Germany Netherlands Netherlands Turkiye Turkiye Republic of Belarus Turkiye Turkiye Republic of Belarus Country of Incorporation Turkiye Country of Incorporation Turkiye Business Information technology, value added GSM services and entertainment investments Telecommunications, television services and content services Digitalization services and products Dijital educations Sales, delivery and digital sales services Research and development Property investments Electricity energy trade and wholesale and retail electricity sales Electricity energy trade and wholesale and retail electricity sales Consumer financing services Insurance agency activities Dijital agency activities Payment services and e-money license Development and providing of digital services and products Cloud solutions services Online radio, television and on-demand streaming services Radio, television and on-demand streaming services Telecommunications infrastructure business Develop software products and services, training software developers Telecommunications infrastructure business Telecommunications infrastructure business Telecommunications investments Telecommunications Telecommunications Electronic payment services Customer relations and human resources management Customer relations management Directory assistance Telecommunications investments Telecommunications Consumer financing services Payment services and e-money Internet search engine and browser services Providing digital services and products Providing digital services and products Telecommunications investments Telecommunications Venture capital investment fund Information technology Information technology, programming and technical support Business Electric passenger car development, production and trading activities Business Meal coupons and cards Effective Ownership Interest 31 December 2022 (%) 31 December 2023(%) 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 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 Effective Ownership Interest 31 December 2022 (%) 31 December 2023 (%) 23 23 Effective Ownership Interest 31 December 2022 (%) 33 31 December 2023 (%) 66 (*)As per the decision of our Company's Board of Directors dated April 13, 2023; it has been decided on the acquisition of the 33.3% share of Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş. ("Sofra") by our Company's 100% owned subsidiary Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. ("TÖHAŞ"), which has 33.3% shareholding in it, from Belbim Elektronik Para ve Ödeme Hizmetleri A.Ş., one of the other shareholders of Sofra, for TRY 762,690, by exercising its pre- emption right pursuant to the existing Shareholders Agreement. 103 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 329 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 40. Investments accounted for using the equity method The details of carrying values of investments accounted for using the equity method are as follows: a) Joint Ventures Sofra b) Associates TOGG 31 December 2023 12,347 31 December 2022 30,018 5,857,271 3,771,069 The movement of investments accounted for using the equity method is as follows: Opening balance Shares of profit Contribution to capital increase Closing balance 41. Discontinued operations 31 December 2023 3,801,087 1,525,175 543,356 5,869,618 31 December 2022 2,264,587 522,221 1,014,279 3,801,087 As per the Group's Board of Directors' decision dated December 20, 2023; a share transfer agreement was signed on 29 December 2023 for the transfer of all shares, along with all rights and debts, of Lifecell LLC, Global LLC, and Ukrtower, which are the Group's wholly owned subsidiaries. The sale is expected to be completed within a year from the reporting date. As of 31 December 2023, Lifecell, UkrTower and Global LLC have been classified as a disposal group held for sale and as a discontinued operation. The statement of profit or loss of a disposal group for the year are presented below: Revenue Cost of revenue Gross profit Selling and marketing expenses Administrative expenses Other operating income/(expense), net Operating profit Net finance costs / income Profit before income tax Tax benefit /(expense) Profit/(loss) for the year from discontinued operations 31 December 31 December 2023 2022 31 December 2021 7,737,020 (4,763,836) 2,973,184 (443,848) (254,215) 192,786 2,467,907 (206,260) 2,261,647 (291,973) 4,807,496 (3,441,589) 1,365,907 7,665,767 (5,436,914) 2,228,853 (269,901) (157,104) 92,488 1,031,390 (445,090) 586,300 (75,069) (509,207) (258,037) (4,907) 1,456,702 (695,285) 761,417 (42,690) 1,969,674 511,231 718,727 330 | TURKCELL 2023 INTEGRATED ANNUAL REPORT 104 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 41. Discontinued operations (continued) The major classes of assets and liabilities of the disposal group classified as held for sale as at 31 December are, as follows: Assets Property, plant and equipment (Note 12) Right-of-use assets (Note 16) Intangible assets (Note 13) Trade receivables Deferred tax assets (Note 18) Inventories Other non current asset Financial assets at amortized cost Cash and cash equivalents Other current asset Assets held for sale Liabilities Borrowings Employee benefit obligations Current tax liabilities Trade and other payables Other non current liabilities Deferred revenue Contract liabilities Provisions (Note 32) Liabilities directly associated with the assets held for sale Net assets directly associated with disposal group Amounts included in accumulated OCI: Foreign currency translation reserve Reserve of disposal group classified as held for sale The net cash flows incurred by the disposal group are, as follows: 31 December 2023 5,797,891 1,327,438 3,299,805 269,898 1,315,876 53,042 151,771 736,174 4,017,443 136,432 17,105,770 4,524,403 34,730 4,200 891,447 5,337 17,804 460,244 389,511 6,327,676 10,778,094 6,140,191 6,140,191 Cash flows from operating activities Cash flows from financing activities Cash flows from financing activities Net cash (outflow)/inflow 31 December 2023 4,878,305 (1,842,419) (826,913) 2,208,973 31 December 2022 2,501,678 (1,920,030) (476,831) 104,817 31 December 2021 1,610,120 (1,143,775) (336,496) 129,849 TURKCELL 2023 INTEGRATED ANNUAL REPORT | 331 105 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES TURKCELL ILETISIM HIZMETLERI AS TURKCELL ILETISIM HIZMETLERI AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 43. Subsequent events Turkcell Superonline, a 100% subsidiary of the Group, issued lease certificates in the amount of TL 300,000 with a maturity of 18 April 2024 on 10 January 2024 and in the amount of TL 300,000 with a maturity of 29 May 2024 on 14 February 2024. Turkcell Ödeme, a 100% subsidiary of the Group, issued a lease certificate in the amount of TL 200,000 with a maturity of 8 May 2024 on 1 February 2024, an amount of TL 100,000 with a maturity of 5 June 2024 on 28 February 2024, and an amount of TL 200,000 with a maturity of 13 June 2024 on 14 March 2024. Turkcell Finansman, one of the Group's 100% subsidiaries, issued a financial bond amounting to TL 143,000 with a maturity of 16 May 2024 on 17 January 2024. Turkcell issued financial bills in the amount of TL 2,500,000 on 31 January 2024, with a maturity of 12 July 2024, in an amount of TL 250,000 with a maturity of 2 August 2024 on 8 February 2024, and in an amount of TL 800,000 with a maturity of 6 August 2024 on 9 February 2024. Turkcell received loan on 29 January, 2024, in the amount of 38,000 CNY with an interest rate of 5.15%, on 14 March 2024, in the amount of 50,000 EUR with an interest rate of 6M Euribor + 2.29% in accordance with the loan agreement signed with China Development Bank ("CDB") on 7 August 2020, which was extended until 7 August 2023. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2023 (All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units and are expressed in terms of purchasing power of Turkish Lira as of 31 December 2023 unless otherwise stated.) 41. Discontinued operations (continued) Deferred tax asset related to discontinued operations Lifecell, which is in the discontinued operation group, has recorded a deferred tax asset of TL 1,177,312 as of 31 December 2023, since it is highly unlikely to benefit from the deductible financial losses amounting to TL 6,540,624 (31 December 2022: TL 5,816,742) by making a taxable profit in the future (31 December 2022: TL 1.047.014). The mentioned financial losses are of unlimited duration. The group has used business plans for the following years when determining the amount of deferred tax assets available for use and evaluates that accumulated losses can be utilized within 4 years as of 31 December 2023. As of 31 December 2023, sensitivity analysis conducted by reducing the key inputs of the business plans, namely the subscriber count and the forecasted revenue per subscriber, by 5%, resulted in an extended projected utilization period by one year. 42. Cash flow information Net financial liabilities reconciliation: Balance at 1 January 2023 Cash inflows Cash outflows Other non-cash movements Transfer to asset held for sale Inflation adjustment Balance at 31 December 2023 Balance at 1 January 2022 Cash inflows Cash outflows Other non-cash movements Inflation adjustment Balance at 31 December 2022 Debt securities issued (31.534.111) (7.824.254) 7.367.659 Loans (52.169.081) (62.689.793) 59.288.115 Lease liabilities (5.034.193) - 4.121.990 Total (88.737.385) (70.514.047) 70.777.764 Derivative Assets, net 3.100.189 (7.749.663) 4.756.730 Total (85.637.196) (78.263.710) 75.534.494 (15.440.923) (22.663.080) (5.561.514) (43.665.517) 2.413.278 (41.252.239) 2.744.051 1.780.352 4.524.403 4.524.403 15.563.673 25.701.123 2.265.777 43.530.573 (830.139) 42.700.434 (31.867.956) (49.788.665) (2.427.588) (84.084.209) 1.690.395 (82.393.814) Debt securities issued (36.292.848) (4.472.292) 5.489.265 Loans (55.389.833) (53.139.280) 47.130.897 Lease liabilities (7.865.357) - 4.310.581 Total (99.548.038) (57.611.572) 56.930.743 Derivative Assets. net 5.575.149 (5.961.522) 5.264.741 Total (93.972.889) (63.573.094) 62.195.484 - - - - - - (12.025.739) (15.506.487) (4.597.576) (32.129.802) (2.413.270) (34.543.073) 15.767.503 24.735.622 3.118.159 43.621.284 635.091 44.256.375 332 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 333 106 107 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Address Abbreviation Description Glossary Our Offices Location ADANA PLAZA SAKARYA NDC ANKARA PLAZA BAŞKENT NDC Turhan Cemal Berikel Bulvarı No: 212 Seyhan/Adana Bahçelievler Mah. Cumhuriyet Cad. Kamelya Sok. No:14 –Adapazarı/ Sakarya Eskişehir Yolu 9.Km No:264 Pk.06510 Söğütözü /Ankara Başkent İvedik Mah. 1323. Cadde No:37 Yenimahalle/Ankara ANKARA VERİ MERKEZİ 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 Şükrü Paşa Mah. Kıyık Cad. Hilly Otel Yanı No:254 Edirne Ilıca yolu Organize Sanayi Bölgesi 4. Sokak Erzurum Kocaoğlan Mah. Demokrasi Bulvarı No:185 / 1 Şahinbey/Gaziantep Güzelbirlik Mah. Yunus Emre Cad. No:11-B Güzelburç/Hatay KÜÇÜKYALI PLAZA /GENEL MÜDÜRLÜK Aydınevler Mahallesi İnönü Caddesi No:20 B Blok 34854 Maltepe/İstanbul KARTAL VERİ MERKEZİ Topselvi Mahallesi Dipçik Sokak No:31 Kartal/İstanbul TEPEBAŞI PLAZA MAHMUTBEY NDC Meşrutiyet Cad.No:71 Tepebaşı 34430 Beyoğlu/İstanbul Mahmutbey Mah İnönü Caddesi No:89 Bağcılar/İstanbul DUDULU VERİ MERKEZİ Dudullu OSB Nato Yolu 4. Cadde No:1 Ümraniye/İstanbul İZMİR PLAZA Kazım Dirik Mah. 367/7 Sokak No:12 Bornova/İzmir İZMİR VERİ MERKEZİ 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 VERİ MERKEZİ Gebze OSB, Tembelova Mevkii Mah. 3300 Sok. No: 3314 Gebze/Kocaeli KONYA OFİS KONYA NDC MALATYA NDC MERSİN PLAZA MUĞLA PLAZA SAMSUN 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 Mimar Sinan Mah. 160.sok.No:18 PK:55200 Atakum/Samsun AVRUPA VERİ MERKEZİ Karaağaç OSB Mh.48.Sok.No: 1/1 Kale Kilit Yanı Kapaklı/Tekirdağ TRABZON PLAZA VAN PLAZA Mısırlı Mah. Hasan Turfanda yolu No:3 Çukurçayır/Trabzon 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 m-TOD M2M 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 communication 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 structure being used in Europe, Japan and various other countries (The GSM Association - Global System for Mobile Communications) The GSM Association is a community 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 received 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 Association of Mobile Telecommunication Operators Machine to Machine is the general name of the technology that allows devices to exchange information and conduct transactions without human intervention 334 | TURKCELL 2023 INTEGRATED ANNUAL REPORT TURKCELL 2023 INTEGRATED ANNUAL REPORT | 335 TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALMANUFACTURED CAPITALINTELLECTUAL CAPITALSOCIAL CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELLNATURAL CAPITALAPPENDICES Abbreviation Description 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 Aggrega- tion Tbps TÇM TODİEK Togg TTK IFRS UN UN WEPs UNGC WBCSD WEF (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 technology 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), which 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 constituted 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 Türkiye'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 336 | TURKCELL 2023 INTEGRATED ANNUAL REPORT Contact Turkcell İletişim Hizmetleri A.Ş. Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İsmet İnönü Caddesi No:20 Küçükyalı B Blok Ofispark - Maltepe / İSTANBUL Registration No: 304844 www.turkcell.com.tr dahaiyibirdunya@turkcell.com.tr Reporting Advisor & Design: www.kiymetiharbiye.com 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 consti- tute 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 docu- ments 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. TURKCELL CREATING VALUEFINANCIAL CAPITALHUMAN CAPITALSTRONG CORPORATE GOVERNANCEABOUT TURKCELL

Continue reading text version or see original annual report in PDF format above