Turkcell Iletisim Hizmetleri A.S. Reports Q1 2006 Results; 'Sustained margins in an increasingly competitive environment'

Figures in parentheses following the operational and financialresults for the first quarter of 2006 refer to the same item in thefourth quarter of 2005. For further details, please see theconsolidated interim financial statements and notes for the quarterended March 31, 2006.

Please note that all financial data is consolidated and iscomprised of Turkcell Iletisim Hizmetleri A.S., (the "Company","Turkcell") and its subsidiaries and its associates (together referredto as the "Group") whereas non-financial data is unconsolidated. Theterms "we", "us", and "our" in this press release refer only to theCompany, except in discussions of financial data, where such termsrefer to the Group, and where context otherwise requires.

Highlights of the Quarter

-- Turkcell added approximately 843,000 (1,157,000) net new subscribers in the first quarter of 2006. The subscriber base grew by 3% to 28.7 million (27.9 million) as of March 31, 2006

-- Minutes of usage per subscriber ("MoU") in the first quarter of 2006 decreased by 17% to 57.9 minutes (70.1 minutes) mainly due to seasonality and the effect of community offers

-- Turkcell's quarterly churn increased to 3.5% (2.9%) in the first quarter of 2006 mainly due to low priced acquisition packages and seasonal increase in subscriber base in previous quarters

-- Average revenue per user ("ARPU") remained almost flat at US$12.2 (US$12.3) in the first quarter of 2006 mainly due to the tariff increase in January and the appreciation of TRY on average basis despite seasonally lower MoU and the dilutive impact of prepaid subscribers

-- Revenue increased 5% to US$1,132 million (US$1,080 million) in the first quarter of 2006 mainly due to the increasing subscriber base, the 3.4% average tariff increase in January, and the appreciation of TRY on an average basis, despite seasonally lower MoU

-- EBITDA* increased to US$414 million (US$344 million) in the first quarter of 2006 due to sustained strong operational performance

-- Net income decreased 15% to US$187 million (US$221 million) in the first quarter of 2006 mainly due to an increase in taxation charges

-- As disclosed previously on March 23, 2006, Turkcell's Board of Directors proposed a dividend distribution in the form of both cash and bonus shares to be submitted for approval at the Annual General Assembly of Shareholders planned for May 22, 2006

* EBITDA is a non-GAAP financial measure. See page 16 for thereconciliation of EBITDA to net cash used for operating activities.

Comments from the CEO, Muzaffer Akpynar

We continued to demonstrate strong performance during the firstquarter of 2006 despite the increasingly aggressive competitiveenvironment in Turkey. We maintained our leadership in gross additionsin the market during the quarter and increased our subscriber base inTurkey to 28.7 million and our Turkcell Group subscriber base to 33.71million as of the end of the first quarter 2006.

Although the majority of the uncertainties in the Turkish GSMmarket in terms of ownership structures of the sector players haslifted, we believe the transitional period in the Turkish GSM marketis still continuing as we have not seen a change towards more rationalplay in our market. Meanwhile, the continuation of aggressive pricecompetition of our competitors especially for communities and theyouth segments, as well as low priced acquisition packages, acted as acatalyst in the market resulting in increasing growth of subscribersand mobile line penetration.

We believe our leading position in the Turkish market in terms ofgrowth, availability and quality remained strong during the quarter.We will continue to develop and modify incentive and loyalty programsfor different customer groups, to keep our competitive edge in dynamicmarket conditions and remain the preferred operator in Turkey. Our aimstill is to deal with competition by maintaining our leadershipposition through our better value for money approach while monitoringchanging market conditions carefully.

BUSINESS REVIEW

The Competitive Landscape and Our Offerings

The continued stability in the macro-economic environment andpositive consumer sentiment during the first quarter of 2006, coupledwith efforts of the operators led to an overall market growth aboveour expectations. Meanwhile, we continued to lead the new acquisitionmarket, growing our subscriber base to 28.7 million (27.9 million).Minutes of usage decreased to 57.9 minutes (70.1 minutes) mainly dueto seasonality as well as community offers. Revenue, on the otherhand, increased 5% to US$1,132 million (US$1,080 million) mainly dueto the increase in subscriber base, a 3.4% average tariff increase inJanuary and the appreciation of TRY against US$ on average basis.

As far as the transition stage in the Turkish market is concerned,the price emphasis of the competition on community tariffs remainedstrong and these tariffs were extended to wider communities, while lowpriced acquisition packages were introduced. Although we have recordedrelatively higher Subscriber Acquisition Costs ("SAC") during thequarter, we are pleased with the average contribution of our post andprepaid subscribers, ensuring reasonable pay back periods.Additionally we may conclude that the majority of subscriber churnfrom our network is involuntary, consisting mainly of prepaidsubscribers who had generated lower than average revenues.

During the first quarter of 2006, we kept monitoring the Turkishmarket dynamics and made an average tariff increase of 3.4% in Januaryas well as introducing new initiatives as necessary.

We also maintained our customer focused approach through offers,campaigns and tariff options with a segment-based approach to bettermeet the needs and expectations of our subscribers. We made offers toour subscribers on a segmented basis using our Customer RelationshipManagement ("CRM") infrastructure consistently.

Some of our actions and campaigns offered to the mass marketduring the quarter were as follows:

-- Counter Bank (Konbara) - A renewed loyalty program enabling prepaid subscribers to use their counter incentives in denominations of 50 counters up to twice a month.

-- "Options" enabled our prepaid subscribers to talk at special rates with selected numbers.

-- "Packages" enabled our postpaid subscribers to purchase 45, 90 or 300 minute bundles.

-- "Win as you go" enabled our corporate subscribers to earn staggered free minutes and availability of advantageous tariff options with daily minute packages and advantages per call.

On the products and services front, our value added servicesrevenue constituted approximately 14% (14%) of our total net revenuein the first quarter of 2006. SMS, content services and dataapplications were widely used by our subscribers during the firstquarter.

All in all, we may assume that the competition in our market willcontinue at these levels, until there is further clarity regarding thepositioning of the competitors. In this environment, our aim is toremain the leading GSM operator, along with our continued focus on"better value for money" approach.

We believe that we are well positioned to meet upcoming challengesin the Turkish market, although we will continue to reposition on anas needed basis to achieve our revenue goals while satisfying theneeds and expectations of our subscribers.

Regulatory Environment and Legal Developments

There were no major developments in the regulatory environmentregarding the issuance of any 3G license, and regulations on MVNO(Mobile Virtual Network Operators) or MNP (Mobile Number Portability),however our understanding is that these items remain on theTelecommunications Authority's agenda for 2006.

Revision of pricing terms of interconnection agreements:

The Telecommunications Authority is expected to issue temporaryprices for call terminations between Turkcell and the two other GSMoperators however there is no clarity regarding the timing. Meanwhile,our discussions with the two other GSM operators continue. As ofDecember 31, 2005, the Telecommunications Authority had designated thetwo other GSM operators in Turkey as ''operators holding significantmarket power'' in the GSM mobile call termination services marketalong with us. We believe that current call termination rates arealready below European averages, and our aim is to maintain currentlevels of pricing as much as possible. However, we foresee that adecline in current price levels is likely, but that the impact of apossible decline in call termination charges should be limited, giventhe percentage of our revenue derived from interconnection revenues.

Revision of the gross revenue definition to be used for the 15%Treasury Share calculation:

We announced in March 2006 that our license agreement was revised,as per the law numbered 5398 that was introduced on July 21, 2005regarding the gross revenue definition used in the calculation of the15% treasury fee (the ongoing license fee and universal fund paid tothe Turkish Treasury and the Ministry of Transportation,respectively), following the completion of the studies with therelated ministries and authorities. According to the revision,Turkcell will continue to pay 15% treasury fee, based on the new grossrevenue definition which excludes interest charges for latecollections from subscribers and indirect taxes, such as 18% ValueAdded Taxes (VAT), and few other expenses as well as the accruedrevenues. The revised definition is effective as of March 10, 2006.Prior to this revision, the gross revenue definition included indirecttaxes, such as 18% VAT.

Even though the law has given us the right not to include theobligations listed above in the calculation of the treasury feepayment, we made payments including such items with reservationbetween July 21, 2005 when the law numbered 5398 became effective andMarch 10, 2006 when the amendment in our license agreement becameeffective, in order not to incur default interest, interest latepayment, and the enforcements under the law numbered 406 of thelicense agreement.

In April 2006, we initiated a lawsuit against the Turkish Treasuryfor the difference between the payments that were made starting fromJuly 21, 2005 until March 10, 2006 and the required payments based onArticle 15 of the law numbered 5398, totaling to TRY111.3 million(approximately US$82.9 million as of March 31, 2006) as of the date ofthe lawsuit, which consists of the principal and interest. In May2006, we initiated another lawsuit, in principle, regarding the samedispute with a claim totaling to TRY112.3 million (approximatelyUS$83.7 million as of March 31, 2006) including principal and interestagainst the Telecommunications Authority.

International Operations

Fintur:

We hold a 41.45% stake in Fintur, which currently holds our entireinterest in our international GSM investments other than our TurkishRepublic of Northern Cyprus and Ukraine operations.

Fintur continued its strong performance in the first quarter of2006. The GSM businesses in Azerbaijan, Kazakhstan, Georgia andMoldova added approximately 263,000 net new subscribers, raising thetotal number of subscribers to approximately 6.4 million (6.1 million)as of March 31, 2006. Furthermore, in the first quarter of 2006consolidated revenue of Fintur decreased to US$238 million (US$252million) mainly due to seasonality.

We own 41.45% of Fintur and account for this investment using theequity method, which totaled US$15.8 million (US$22.0 million) inincome in the first quarter of 2006.

Ukraine - Life:)

In Ukraine, we operate through our indirect subsidiary, Astelit,under the brand "life:)". We hold our interest in Astelit through oursubsidiary, Turktell Uluslararasi Yatirim Holding A.S. ("TurktellUluslararasi"), which holds an interest in Astelit's immediate parent,Euroasia Telecommunications Holdings B.V. ("Euroasia"). Euroasiacurrently holds a 100% interest in Astelit. Prior to April 2006,Euroasia held its interest in Astelit through JSC Digital CellularCommunications ("DCC"). In April 2006, Astelit announced the merger ofDCC with Astelit in order to optimize the internal business processesof both companies. In Ukraine, Astelit has been operational sinceFebruary 2005 under the new brand "life:)". The life:) brand iseffectively implemented as an energetic, young and innovative brand.Astelit launched new philosophy of using value-added services in oneconvenient access in interactive package of innovative services viabrand "lifebox". Astelit was the first on market to introduce EDGEtechnology which provides data transfer speed up to five times fasterthan GPRS. Today, Astelit offers the widest EDGE coverage on themarket, in all of the 25 oblast centers of Ukraine and the city ofSevastopol. In general, Astelit currently offers more than 120 newservices, out of which 42 are totally unique for the Ukraine mobilemarket. Astelit was the first operator in Ukraine to introduce aunique convergent system allowing pre-paid subscribers to shift tocontract while keeping their numbers and providing flexible paymentchannels for all subscribers. Astelit introduced ring-back tone to themarket, Voice SMS, and many other innovative services never present onthe market before.

The subscriber base of Astelit reached approximately to 3.3million (2.5 million) excluding approximately 45,000 (43,000) TDMAsubscribers, by the end of first quarter 2006, which represents 32%quarterly growth.

During the first quarter of 2006, Euroasia recorded net revenue ofUS$17.1 million (US$18.0 million), gross loss of US$22.1 million(US$21.8 million) including depreciation and amortisation of US$22.0million (US$19.5 million) and net loss of US$55.9 million (US$56.3million). Also during this quarter, US$55.6 million of (US$90.0million) in capital expenditure was recorded for the Ukrainianoperations.

Please note that all financial and operational results include theTDMA business in Ukraine unless otherwise specified.

In December 2005, Astelit signed an agreement amounting to US$540million long term financing. The total financing package consists of asyndicated loan and a junior loan. The long term syndicated loan inthe amount of US$390 million has a term of six years of which US$270million is guaranteed by Export Credit Agency (ECA) and US$90 millionhas no guarantees. Nokia Corporation and Ericsson Credit AB, the twomajor suppliers of Astelit's GSM network also took part in thefinancing with US$30 million. The junior loan in the amount of US$150million has a term of six years and is fully guaranteed by Turkcell.The proceeds from these facilities have been used to refinanceAstelit's existing vendor loans and local bank loans and financeadditional capital expenditures and working capital requirements. Inaddition to this financing package, we intend to participate in theUS$40 million capital increase of Astelit, proportionate to ourshareholding, which is expected to occur in second quarter of 2006.

Based on Astelit's separate interim financial statements as at andfor the three months ended 31 March 2006, Astelit is in breach of itscovenants contained in its syndicated long term project financing.Therefore, the Group have reclassified Astelit's total long term debtamounting US$382 million (including its junior loan) as short termdebt payable as at March 31, 2006. Astelit requested that the facilityagent, the senior creditors and ECA to waive the requirement in orderto make further drawings under the syndicated long term financing. Andas main shareholders of Astelit, Turkcell and System CapitalManagement Limited (SCM) have agreed, subject to the approval of boardof directors of each to be obtained on or before May 31, 2006, tocontribute their respective share of a total amount of approximatelyUS$150 million required by the facility agent to Astelit. As at May10, 2006, Astelit has obtained the waiver letter from the lendersenabling Astelit to draw loans under the syndicated long termfinancing.

Investment plans

Purchase of A-Tel

Pursuant to the Board of Directors' decision dated March 22, 2006,an option to purchase the 50% shares of A-Tel Pazarlama ve ServisHizmetleri A.S. owned by Yapy ve Kredi Bankasy A.S. will be exercisedby us. The transaction is expected to be completed in the secondquarter of 2006.

Egypt

In line with our strategy to evaluate potential investmentopportunities in the international GSM arena, our Board of Directorsmade a decision regarding our intention to conduct the requiredstudies for the pre-qualification stage and submit a prequalificationapplication in accordance with the relevant provisions of the RequestFor Proposals for the tender of the third GSM license in the ArabRepublic of Egypt. In this respect, we signed a Memorandum ofUnderstanding ("MOU") with Amwal El Khaleej and Banque Misr in orderto form a consortium to apply for the pre-qualification of the thirdGSM license. Under the MOU we will have a 60% stake in the consortiumwhere the remaining stake will be equally divided between the otherconsortium members. As of May 4, 2006, we submitted necessarypre-qualification documentation to the Authorities in Egypt.

Dividend Distribution Proposal

Our Board of Directors has decided to recommend payment of a totalnet cash dividend of TRY509.1 million (approximately US$379 million asof March 23, 2006) which corresponds to a net cash dividend ofTRY0.274451 (approximately US$0.2044 as of March 23, 2006) perordinary share with a nominal value of TRY1 and approximatelyTRY0.6861275 (approximately US$0.5110 as of March 23, 2006) per ADRand a total stock dividend in the form of bonus shares amounting toTRY345.1 million (approximately US$257 million as of March 23, 2006),representing an 18.605586% stock dividend per share with a nominalvalue of TRY1 to be approved at the Annual General Meeting planned tobe held on May 22, 2006. The Annual General Meeting on April 28, 2006was postponed to May 22, 2006 due to lack of quorum. The Board ofDirectors also resolved to amend and propose that the cash dividendpayment to our shareholders shall commence as of May 29, 2006. For thedetails of the dividend proposal please refer to our press releasesdated March 23, 2006 and May 5, 2006.

Transition to IFRS

We have historically prepared and presented our financialstatements on a consolidated basis in accordance with US GAAP in USdollars for purposes of reporting to the Securities and ExchangeCommission ("SEC") of USA and in New Turkish Lira ("TRY") inaccordance with Turkish GAAP and Turkish Capital Market Board ("CMB")requirements in Turkey. As announced earlier, beginning from the 2006fiscal year, we are preparing our interim and annual consolidatedfinancial statements in accordance with International FinancialReporting Standards (IFRS). Consequently, starting from the firstquarter of 2006, we are reporting our financial results in accordancewith IFRS in US dollars to international markets for the convenienceof investors and in SEC filings and in accordance with IFRS in TRY inTurkey in line with the requirements of CMB.

For a discussion of the major differences between US GAAPreporting and IFRS reporting please refer to our press release datedApril 26, 2006.

Operational and Financial Review of First Quarter of 2006

The following discussion focuses principally on the developmentsand trends in our business in the first quarter of 2006. For yourinformation, selected financial information for the fourth quarter of2005, year end 2005 and first quarter of 2006 are included at the endof this press release.

Macro Environment Information

US$1.00 equaled TRY1.3427 as of March 31, 2006, which implies aquarterly 0.1% depreciation of TRY against US$ in the first quarter of2006. The consumer price index and producer price index in Turkeyincreased by 1.25% and 2.48%, respectively, in the first quarter of2006. In the first quarter of 2006, there was approximately 1%appreciation of TRY against US$ on average basis.

OPERATIONAL REVIEW

Q1 Q4 Q1 Q4 05-Q1
2005 2005 2006 06 % Chg

Summary of Operational Data

Number of total subscribers (million) 24.3 27.9 28.7 3%
Number of post-paid subscribers (million) 5.2 5.4 5.5 2%
Number of pre-paid subscribers (million) 19.1 22.5 23.2 3%

ARPU (Average Monthly Revenue per User)
ARPU, blended (US$) 12.2 12.3 12.2 (1%)
ARPU, postpaid (US$) 28.1 29.1 30.5 5%
ARPU, prepaid (US$) 7.9 8.2 7.9 (4%)

Churn (%) 2.5 2.9 3.5 NA

MOU (Average Monthly Minutes of usage per
subscriber), blended 59.6 70.1 57.9 (17%)

Subscribers

Turkcell's total number of subscribers reached 28.7 million as ofMarch 31, 2006 in a stable macroeconomic environment. This is anincrease of 2.9% compared to 27.9 million as of December 31, 2005.

Turkcell added approximately 843,000 net new subscribers in thefirst quarter of 2006. Our subscriber base consists of 5.5 millionpostpaid and 23.2 million prepaid subscribers. New gross subscribersacquired in the first quarter of 2006 consisted of 89% prepaid and 11%postpaid subscribers.

The growth in the Turkish market continued in 2006 and during thequarter. This overall growth has been above our expectations mainlydue to continuation of price based community offers of competitors andlower countered acquisition packages introduced in the market.

Turkcell Group Subscribers

We have approximately 33.7 million proportionate GSM subscribers,which is calculated by taking the number of GSM subscribers inTurkcell and each of our subsidiaries and multiplying such numbers byour percentage ownership interest in each subsidiary. This figureincludes the proportionate rather than total number of Fintur's GSMsubscribers of 1.5 million subscribers. However, it includes the totalnumber of GSM subscribers in Ukraine (we have a 54% direct andindirect stake in the Ukrainian subsidiary) and in our operations inTurkish Republic of Northern Cyprus ("Northern Cyprus") (we have a100% stake in Northern Cyprus) amounting to 3.3 million and 0.2million subscribers respectively, because the financials of oursubsidiaries in Ukraine and Northern Cyprus are consolidated withTurkcell's financial statements.
Q1 Q4 Q1 Q4 05-Q1
Turkcell Group Subscribers (million) 2005 2005 2006 06 % Chg

Turkcell 24.3 27.9 28.7 3%
Ukraine* 0.2 2.5 3.3 32%
Fintur (pro rata) 1.03 1.47 1.54 5%
Northern Cyprus 0.15 0.19 0.21 11%
TURKCELL GROUP 25.7 32.1 33.7 5%

* including TDMA

Churn Rate

Churn refers to disconnected subscribers, whether disconnectedvoluntarily or involuntarily. Turkcell's churn rate increased to 3.5%(2.9%) in the first quarter of 2006 mainly due to low pricedacquisition packages, a seasonal increase in subscriber base inprevious quarters and intensified competition in the market. This ledto an increase in the churn rate in this quarter, primarilyinvoluntary churn of subscribers at the lower-value end of thesubscriber base. While the competition's mainly price focused approachto increase market share through new acquisitions remains, we willcontinue with our segmented retention and mass loyalty programs aswell as proactive churn prevention activities.

MoU

Our blended MoU in the first quarter of 2006 decreased to 57.9minutes (70.1) minutes mainly due to the effect of seasonality and theeffect of community offers. Although, price based competition andparticularly community offers expanded in the market have not helpedour path towards more rational play during the quarter, we aim toincrease MoU through various incentive and loyalty programs throughoutthe year. We will continue to monitor impacts of irrational play andits effect on usage levels, carefully.

ARPU

ARPU remained almost flat at US$12.2 (US$12.3) mainly due to the3.4% tariff increase in January and appreciation of TRY against US$ onaverage basis, despite seasonally lower MoU, the dilutive impact ofprepaid subscribers, as well as retention campaigns and incentivesprovided during the quarter.

FINANCIAL REVIEW

Profit and Loss Statement Analysis

Profit & Loss Statement Q1 2005 Q4 2005 Q1 2006 Q4 05-Q1 06
(million US$) % Chg

Total revenues 914.9 1,079.9 1,132.2 5%
Direct cost of revenues (576.6) (673.5) (667.4) (1%)
Administrative expenses (34.5) (41.4) (41.3) 0%
Selling and marketing expenses (134.4) (215.2) (206.1) (4%)
EBITDA 339.9 344.4 414.3 20%

Financial expense (78.3) (15.5) (20.2) 30%
Financial income 38.6 35.3 53.6 51%
Share of profit of associates 13.3 22.0 15.8 (28%)
Income tax expense (61.5) (13.1) (87.4) 567%
Net income 86.1 220.7 187.2 (15%)

Revenue

Our revenues increased to US$1,132.2 million (US$1,079.9 million)in the first quarter of 2006 mainly due to the increase in thesubscriber base, 3.4% average tariff increase in January, andappreciation of TRY against US$ on average basis despite seasonallylower MoU.

Direct cost of revenue

The direct cost of revenue, including depreciation andamortization remained almost flat at US$667.4 million (US$673.5million) in the first quarter of 2006. The proportion of direct costof revenues in total revenue decreased to 59% (62%) in the firstquarter of 2006. This improvement was mainly due to the decrease ininterconnection costs and in treasury fee as a percentage of revenueas per the amendment effective as of March 10, 2006. Treasury feeincreased 3% to US$198.5 million (US$ 193.3 million) in the firstquarter of 2006 due to impact of increase in revenues partiallyoffset by the effect of amendment made in gross revenue definition.

Depreciation and amortization remained almost flat at US$196.8million (US$194.6 million) in the first quarter of 2006.

Interconnection costs decreased 21% to US$89.9 million (US$113.9million) in the first quarter of 2006 mainly due to decrease inoutgoing MOU.

Selling and marketing expenses

Our selling and marketing expenses decreased by 4% to US$206.1million (US$215.2 million) in the first quarter of 2006 mainly due tothe absence of expenses in 2006 that were incurred during thelegalization process of unregistered handsets in the last quarter of2005, which was partially offset by the increase in subscriberacquisition cost and increasing frequency usage payment in line withincreasing fees and number of subscribers. Consequently, theproportion of selling and marketing expenses to revenue decreased to18% (20%) during the first quarter of 2006. We expect proportion ofsales and marketing expenses as a percentage of revenue to increase in2006 though in a controlled manner, as we take actions to strengthenloyalty.

Subscriber acquisition costs ("SAC")

Turkcell's subscriber acquisition costs per subscriber ("SAC")increased to US$37.1 (US$ 26.9) in the first quarter of 2006. This wasmainly due to the price decrease of acquisition packages and anincrease in dealer activities and campaigns during the quarter. Underthe current circumstances, we do not expect the year end average SACto be higher than first quarter 2006 SAC level.

Administrative expenses

Our administrative expenses remained stable at US$41.3 million(US$41.4 million). The proportion of administrative expenses torevenue also stayed flat at 4% (4%) in the first quarter of 2006.

Share of profit of associates

In the first quarter of 2006, we recorded US$15.8 million (US$22.0million) of equity in net income of unconsolidated investees mainlydue to Fintur's continued strong performance. Please note that thedecrease in income from Fintur operations compared to the previousquarter is mainly due to seasonality and the tax charge of Kcell inKazakhstan due to the end of its tax holiday.

Net financing costs

Financial income increased in the first quarter of 2006 to US$53.6million (US$35.3 million) mainly due to increase in interest income ondeposits in line with the increase in TRY deposits and positive effectof foreign exchange gains realized in the first quarter of 2006.

Financial expense, on the other hand, increased to US$20.2 million(US$15.5 million) in the first quarter of 2006 mainly due to theincrease in the Ukrainian indebtedness.

Overall, net interest income increased to US$33.4 million (US$19.8million) in the first quarter of 2006.

Income tax expense
Q1 2005 Q4 2005 Q1 2006 Q4 05-Q1 06
% Chg

Current Tax benefit /(charge) (28.1) 48.8 (69.5) 242%
Deferred Tax benefit /(expense) (33.4) (61.8) (17.9) (71%)
Income Tax benefit /(expense) (61.5) (13.1) (87.4) 567%

The total taxation charge in the first quarter of 2006 was US$87.4million (US$13.1 million). The lower tax base in the fourth quarter of2005 stemmed from the early payment made to Turk Telekom in December2005, which was not foreseen until the last quarter of 2005, in thecontext of the settlement agreements with Turk Telekom and theTreasury.

Please note that since our investment incentive certificatesprovide tax benefit in the form of deductions for corporate taxpurposes, we are exempt from 30% corporate tax; instead, suchdeductions are subject to withholding tax at the rate of 19.8%.

The corporate tax rate is 30% for the fiscal year ended December31, 2005. However the Prime Minister of Turkey has announced inDecember 2005 that the corporate tax rate will be reduced to 20%starting from January 1, 2006. The issue is still debated by thegovernment and the change in tax rate is not effective today.Therefore, the tax rate of 30% is used in the calculation of deferredtax.

EBITDA

EBITDA(2) in the first quarter of 2006 increased by 20% toUS$414.3 million (US$344.4 million) mainly due to increasing revenuesalong with 3.4% average tariff increase in January, increase insubscriber base and the appreciation of TRY against US$ on averagebasis while direct cost of revenues declined as a percentage ofrevenue as a result of effect of interconnection costs and thiscoupled with the decrease in proportion of the administrative expensesand selling and marketing expenses in revenues led to an increase inEBITDA margin. Consequently, EBITDA margin increased to 37% (32%) inthe first quarter of 2006.

EBITDA Q1 2005 Q4 2005 Q1 2006 Q4 05-Q1 06 %
Chg

Net revenues 914.9 1,079.9 1,132.2 5%
Direct cost of revenues 576.6 673.5 667.4 (1%)
Depreciation and amortization 170.4 194.6 196.8 1%
Selling and marketing expenses 134.4 215.2 206.1 (4%)
Administrative expenses 34.5 41.4 41.3 0%
EBITDA 339.9 344.4 414.3 20%
EBITDA Margin 37% 32% 37% NA

Net income

We recorded US$187.2 million (US$220.7 million) net income in thefirst quarter of 2006. The decrease was mainly due to increase intaxation charge and the decrease in other income. The positive impactof other income incurred during the legalization process ofunregistered handsets improved net income in the fourth quarter of2005.

Balance Sheet Analysis

Total Debt:

Our consolidated indebtedness including indebtedness from ourUkraine operation amounted to US$830.6 million (US$657.3 million) asof March 31, 2006. Of this total amount, US$394.2 million (US$377.2million) was related to our Ukraine operations.

Total assets:

As of March 31, 2006, our total assets increased to US$5,576.7million (US$5,215.1 million.)

Cash Flow Analysis
Consolidated Cash Flow
(million) Q1 2005 Q4 2005 Q1 2006

Net cash provided by operating activities 265.3 212.6 125.3
Net cash used for investing activities (176.8) (161.3) (113.4)
Net cash provided by/(used for) financing
activities 38.7 112.7 169.2
Cash Balance 874.8 808.2 1,000.3

Our net cash flow from operating activities decreased by 41% toUS$125.3 million (US$212.6 million) in the first quarter of 2006.Increase in EBITDA line was offset by the cash out flows due toincreasing trading marketable securities and payment made in February2006 for frequency usage fee for prepaid subscribers.

Capital expenditures in the first quarter of 2006 amounted toUS$137.7 million (US$196.5 million) of which US$55.6 million (US$90.0million) was related to Ukrainian operations.

The change in debt in the first quarter of 2006 was mainly due tothe increase in the short-term indebtedness of Turkcell due toutilization of short term facilities for making advantageous long termreturns on deposits while being able to fund operations withrelatively lower costs.

Consequently, our cash position at the end of first quarter of2006 reached US$1,000.3 million (US$808.2 million).

Reconciliation of Non-GAAP Financial Measures

We believe that EBITDA is a measure commonly used by companies,analysts and investors in the telecommunications industry, whichenhances the understanding of our operating results and assists in theevaluation of our capacity to meet our financial obligations. We alsouse EBITDA as an internal measurement tool and, accordingly, webelieve that the presentation of EBITDA provides useful and relevantinformation to analysts and investors.

The EBITDA definition used in our previous releases had includedRevenues, Direct Cost of Revenues excluding depreciation andamortization, Selling and Marketing expenses, Administrative expenses,translation gain/(loss), financial income, income on unconsolidatedsubsidiaries, gain on sale of investments, income/(loss) from relatedparties, minority interest and other income/(expense). Our new EBITDAdefinition includes Revenues, Direct Cost of Revenues excludingdepreciation and amortization, Selling and Marketing expenses,Administrative expenses, but excludes translation gain/(loss financialincome, income on unconsolidated subsidiaries, gain on sale ofinvestments, income/(loss) from related parties, minority interest andother income/(expense).

EBITDA is not a measure of financial performance under IFRS andshould not be construed as a substitute for net earnings (loss) as ameasure of performance or cash flow from operations as a measure ofliquidity

The following table provides a reconciliation of EBITDA, which isa non-GAAP financial measure, to net cash provided by operatingactivities, which we believe is the most directly comparable financialmeasure calculated and presented in accordance with IFRS.
US$ million Q1 2005 Q4 2005 FY 2005 Q1 2006


EBITDA 339.9 344.4 1,722.2 414.3
Other operating income/(expense) 1.2 4.5 10.5 (2.1)
Financial income 38.6 35.3 142.7 53.6
Financial expense (78.3) (15.5) (166.3) (20.2)
Loss/gain on net monetary position,
net 1.6 19.1 11.0 0.0
Net increase (decrease) in assets and
liabilities (37.6) (175.1) (726.1)(320.2)
Net cash provided by operating
activities 265.3 212.6 994.0 125.3

Forward Looking Statements

This release may include forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, Section 21E ofthe Securities Exchange Act of 1934 and the Safe Harbor provisions ofthe US Private Securities Litigation Reform Act of 1995. Allstatements other than statements of historical facts included in thispress release, including, without limitation, certain statementsregarding our operations, financial position and business strategy mayconstitute forward-looking statements. In addition, forward-lookingstatements generally can be identified by the use of forward-lookingterminology such as, among others, "may," "will," "expect," "intend,""plan," "estimate," "anticipate," "believe" or "continue."

Although Turkcell believes that the expectations reflected in suchforward-looking statements are reasonable at this time, it can give noassurance that such expectations will prove to be correct. Given theseuncertainties, readers are cautioned not to place undue reliance onsuch forward-looking statements. All subsequent written and oralforward-looking statements attributable to us are expressly qualifiedin their entirety by reference to these cautionary statements.

www.turkcell.com.tr

ABOUT TURKCELL

Turkcell is the leading GSM operator in Turkey with 28.7 millionpost-paid and pre-paid customers as of March 31, 2006 operating in athree player market with a market share of approximately 64% as ofyear end 2005 (Source: Telecommunication Authority). In addition tothe high-quality wireless telephone services, Turkcell currentlyoffers General Packet Radio Service (GPRS) countrywide and EnhancedData Rates for GSM Evolution (EDGE) in dense areas, which provide forboth improved data and voice services. Turkcell provides roaming with501 operators in 191 countries as of May 5, 2006. Serving a largesubscriber base in Turkey with its high-quality wireless telephonenetwork, Turkcell reported US$4,528 million net revenues as ofDecember 31, 2005 and US$1,132 million net revenue as of March 31,2006 as per IFRS financial statements. Turkcell has interests ininternational GSM operations in Azerbaijan, Georgia, Kazakhstan,Moldova, Northern Cyprus and Ukraine. Turkcell has been listed on theNYSE (New York Stock Exchange) and the ISE (Istanbul Stock Exchange)since July 2000 and is the only NYSE listed company in Turkey. 51.00%of Turkcell's share capital is held by Turkcell Holding, 13.29% byCukurova Group, 13.07% by Sonera Holding, 5.07% by M.V. Group and0.01% by others while the remaining 17.56% is free float.

(1)See breakdown of the Turkcell Group subscriber numbers

(2)Beginning from the 2006 fiscal year, we have revised thedefinition of EBITDA which we use and we report EBITDA using this newdefinition starting from the first quarter of 2006 resultsannouncement to provide a new measure to reflect solely cash flow fromoperations.

The EBITDA definition used in our previous releases had includedRevenues, Direct Cost of Revenues excluding depreciation andamortization, Selling and Marketing expenses, Administrative expenses,translation gain/(loss), interest income, income on unconsolidatedsubsidiaries, gain on sale of investments, income/(loss) from relatedparties, minority interest and other income/(expense). The new EBITDAdefinition, includes Revenues, Direct Cost of Revenues excludingdepreciation and amortization, Selling and Marketing expenses,Administrative expenses, but excludes translation gain/(loss),interest income, income on unconsolidated subsidiaries, gain on saleof investments, income/(loss) from related parties, minority interestand other income/(expense).

Differences between previously reported EBITDA amounts and theEBITDA amounts we now report are due to adjustments made in the EBITDAdefinition we use and do not constitute a change in operational orfinancial performance of the company.

TURKCELL ILETISIM HIZMETLERI A.S.
SELECTED FINANCIALS

--------- --------- --------- ---------
Quarter Quarter Year Quarter
Ended Ended Ended Ended
March 31, Dec. 31, Dec. 31, March 31,
2005 2005 2005 2006
--------- --------- --------- ---------

Consolidated Statement of
Operations Data
Revenues
Communication fees 865.3 1,013.9 4,295.9 1,047.6
Commission income 22.5 34.7 112.5 60.0
Monthly fixed fees 13.2 12.5 54.9 13.9
SIM card sales 11.3 13.7 50.3 5.8
Call center revenues 2.0 0.7 10.1 2.4
Other revenues 0.6 4.4 4.3 2.5
Total revenues 914.9 1,079.9 4,528.0 1,132.2
Direct cost of revenues (576.6) (673.5) (2,701.6) (667.4)
--------- --------- --------- ---------
Gross profit 338.3 406.4 1,826.4 464.8
Administrative expenses (34.5) (41.4) (154.0) (41.3)
Selling & marketing
expenses (134.4) (215.2) (700.5) (206.1)
Other Operating Income /
(Expense) 1.2 4.6 10.5 (2.0)
--------- --------- --------- ---------

Operating profit before
financing costs 170.6 154.4 982.4 215.4
Financial expense (78.3) (15.5) (166.4) (20.2)
Financial income 38.6 35.3 142.7 53.6
Share of profit of associates 13.3 22.0 68.2 15.8
Loss/gain on net monetary
position, net 1.5 19.2 11.0 -
--------- --------- --------- ---------
Income before taxes and
minority interest 145.7 215.4 1,037.9 264.6
Income tax benefit / (expense) (61.5) (13.1) (290.5) (87.4)
--------- --------- --------- ---------
Income before minority interest 84.2 202.3 747.4 177.2
Minority interest 1.9 18.4 24.8 10.0
--------- --------- --------- ---------
Net income 86.1 220.7 772.2 187.2
========= ========= ========= =========


Net income per share 0.046425 0.118960 0.416330 0.100915

Other Financial Data

Gross margin 37% 38% 40% 41%
EBITDA(*) 339.9 344.4 1,722.2 414.3
Capital expenditures 210.9 196.5 773.7 137.7

Consolidated Balance Sheet Data (at
period end)
Cash and cash equivalents 874.8 808.2 808.2 1,000.3
Total assets 5,082.1 5,215.1 5,215.1 5,576.7
Long term debt 148.9 79.2 79.2 16.2
Total debt 885.2 657.3 657.3 830.6
Total liabilities 2,038.3 1,524.8 1,524.8 1,696.2
Total shareholders' equity /
Net Assets 3,043.8 3,690.3 3,690.3 3,880.6
- - - -

Consolidated Cash Flow Information
Net cash provided by operating
activities 265.3 212.6 994.0 125.3
Net cash used in investing
activities (176.8) (161.3) (601.2) (113.4)
Net cash provided by / (used
in) financing activities 38.7 112.7 (348.9) 169.2

* Please refer to the note on reconciliation of Non-GAAP Financial
measures.