Turkcell Iletisim Hizmetleri A.S. Reports Q2 2006 Results; ''Improved operating margin despite macroeconomic volatility''

Figures in parentheses following the operational and financialresults for the second quarter of 2006 refer to the same item in thefirst quarter of 2006. For further details, please refer to theconsolidated interim financial statements and notes for the quarterended June 30, 2006 which can be accessed at our web site on investorrelations pages.

Please note that all financial data are consolidated and compriseTurkcell Iletisim Hizmetleri A.S., (the "Company", "Turkcell") and itssubsidiaries and its associates (together referred to as the "Group")whereas non-financial data are unconsolidated. The terms "we", "us",and "our" in this press release refer only to the Company, except indiscussions of financial data, where such terms refer to the Group,and where context otherwise requires.

Highlights of the Quarter

-- Turkcell added approximately 1.1 million (0.8 million) net new subscribers in the second quarter of 2006. The subscriber base grew by 3.8% to 29.8 million (28.7 million) as of June 30, 2006

-- Minutes of usage per subscriber ("MoU") in the second quarter of 2006 increased by 17% to 67.5 minutes (57.9 minutes) mainly due to the introduction of new offers as well as seasonality

-- Turkcell's quarterly churn rate remained almost flat at 3.6% (3.5%) in the second quarter of 2006 in line with our expectations

-- Average revenue per user ("ARPU") increased slightly to US$12.5 (US$12.2) in the second quarter of 2006 mainly due to seasonally higher MoU as well as retention campaigns and incentives provided despite the 9% depreciation of TRY against US$ on an average basis during the second quarter of 2006

-- Revenue increased 3% to US$1,165.3 million (US$1,132.2 million) in the second quarter of 2006 mainly due to the higher MoU and increasing subscriber base, despite the depreciation of TRY against US$

-- EBITDA* increased to US$463.5 million (US$414.3 million) in the second quarter of 2006 mainly due to sustained strong operational performance

-- Net income decreased to US$87 million (US$187 million) in the second quarter of 2006 mainly due to the reversal of deferred tax assets as a result of the decrease in corporate tax rate from 30% to 20% and foreign exchange losses as a result of the 19% depreciation of TRY against US$ in the second quarter of 2006

* EBITDA is a non-GAAP financial measure. Please refer to thenotes on reconciliation of EBITDA to net cash used for operatingactivities.

QUARTER OVERVIEW

The macroeconomic stability in the Turkish economy deterioratedduring the second quarter of 2006 as a result of global developmentscoupled with local concerns such as the high volume of current accountdeficit. These led to devaluation of TRY against foreign currencies,an increase in interest rates and consequently higher inflationexpectations for 2006.

Despite the volatility in the macroeconomic environment, wecontinued to demonstrate strong operational performance during thesecond quarter of 2006 in line with seasonal trends supported by ourcampaigns and offers.

During the second quarter of 2006, the subscriber growth trendremained strong and we maintained our leading position in the Turkishmarket. The volatility in the macroeconomic environment has not had asignificant impact on Turkcell's customers' usage trends so far;however, we will continue to monitor macroeconomic developments andtheir possible impact on consumer sentiment.

In the competitive environment, the sale process of Telsim hasbeen finalized and the ownership structure of Avea has been furtherclarified. We believe these developments may further contribute toincreasing the visibility of the competitive environment. Meanwhile,price competition still exists in our market with a focus on newsubscriptions with efforts to promote on-net usage advantages.

We believe that we are well equipped for the increasingcompetition in the Turkish market and we take actions as necessary toachieve our revenue goals while ensuring satisfaction of our customersproactively. During this quarter, we continued to introduce offers,campaigns and tariff options with a segment-based approach to bettermeet the needs and expectations of our subscribers. Our aim is to dealwith competition by maintaining our leadership position through thestrength of our brand values as well as our customer focused bettervalue for money offers.

BUSINESS REVIEW

The Competitive Landscape and Our Offerings

The subscriber acquisition growth trend during the second quarterof 2006 has remained strong in the Turkish GSM market, despite thevolatility in the macroeconomic environment, with efforts of theoperators to increase subscriptions and usage of the mobile services.We increased our subscriber base to 29.8 million (28.7 million) as ofthe end of the second quarter of 2006, maintaining our leadingposition in the acquisition market. The volatility in the macroeconomic environment has not had a significant impact on ourcustomers' usage trends and our minutes of usage increased to 67.5minutes (57.9 minutes) mainly due to our retention-based offers aswell as seasonality.

During the second quarter of 2006, the transition stage in theTurkish GSM market continued, although during this period the saleprocess of Telsim was finalized and the ownership structure of Aveawas further clarified. Although we believe price based competitionstill exists in our market, we observed that all GSM operators appliedupward price adjustments to an extent, along with some new initiativesand renewed existing offerings. All in all, we can conclude that wehaven't seen a radical change in the competitive positionings of theoperators in our market.

In line with changing market dynamics, we made an upward priceadjustment of 5.2% for scratch cards on June 28, 2006 whichcorresponds to a 2.8% price adjustment on an average basis. At thesame time, we carried on our efforts to introduce new segmentedinitiatives for strengthening loyalty and promoting usage.

In the second quarter of 2006, we recorded moderate SubscriberAcquisition Costs ("SAC") of US$26 (US$37) relative to the firstquarter of 2006, mainly due to the decrease in the distribution andsales costs of low priced introduction packages. We are pleased withthe average incremental contribution of both postpaid and prepaidsubscribers, ensuring reasonable pay-back periods given these levelsof SAC.

Some of our actions and campaigns as well as various targetedoffers during the quarter using our Customer Relationship Management("CRM") infrastructure were as follows:

Counter Bank (Konbara) - A renewed loyalty program for our prepaidsubscribers enabling them to earn increasing bonus counters based ontheir top up amounts every time they refill to use their accumulatedcounters.

Night Talkers (Gece Kuu) - A retention campaign designed for themembers of the youth club - Gnctrkcll aimed at improving the value formoney perception against competitive offers, which enables 2 hours offree-of-charge talk time between 9:00pm - 9:00am with each 250 counterrefill.

Furthermore, various SMS offers for the youth club to increase SMSusage and campaigns including some counter offers to increaseacquisitions were launched during the quarter.

We also introduced another incentive program in July for both theconsumer and the corporate segment which we believe is in line withexpectations of our customers and an important step towards furtherstrengthening customer perception and brand image. For the consumersegment, all subscribers receive a 75% discount on on-net calls afterthe first minute of usage based on Turkcell's super on-net tariffpackage, BizBizeCell. Corporate subscribers, on the other hand, cantalk free of charge after the third minute up to the first 30 minutesof usage. This campaign demonstrates our efforts to incentivize highusage and give high value offers.

On the products and services front, our value added services (VAS)revenue constituted approximately 13% (14%) of our total net revenuein the second quarter of 2006. The decrease was mainly due toseasonally higher voice revenues as well as the SMS based campaigns inthe market. Our aim to increase Mobile Data and VAS Revenues mainlythrough promoting the penetration of existing and new innovative VASServices remains. With this in mind, we recently launched a "VisualRadio" application, which enables listening to FM stations on GSMphones on a visual and interactive level for the first time in Turkey.Another service, "Mobile Music" was launched in partnership with EMIand enables Turkcell customers to have access to EMI's catalogue ofalmost 200,000 songs. To increase customer satisfaction and thereforeloyalty, Turkcell also launched a phone book service - "TelephoneAddress Book Synchronisation", which enables Turkcell customers tocopy phone numbers stored on their phone to theTurkcellTelefonRehberim website as well as a "Prepaid credit transfer"service which enables Turkcell customer to transfer counters to otherprepaid users.

Regulatory Environment and Legal Developments

During the second quarter of 2006, there were no majordevelopments in the regulatory environment regarding the issuance ofany 3G license, or regulations on MVNO (Mobile Virtual NetworkOperators) or MNP (Mobile Number Portability). Previous announcementsmade by the Telecommunications Authority had pointed to a time frametowards the end of 2006 specifically for initiation of the 3G tenderprocess.

Regarding the revision of pricing terms of interconnectionagreements, the Telecommunications Authority issued new reference calltermination rates for all operators in the market as of June 2006.These call termination rates are lower than the rates currentlyapplied with the other GSM operators, as expected, but reveal nochange to the temporary interconnection rates applied between TurkTelekom and Turkcell since August 2005. Also these new reference ratesreveal asymmetry between Turkcell and other GSM operators' terminationrates, as Turkcell is to receive lower fees for calls terminated onits network relative to other GSM operators.

Given that the disagreements existed between us and the other GSMoperators regarding the revision of pricing terms of theinterconnection agreements, recently as per the "Conciliation Process"the Telecommunications Authority set rates applicable for Telsim /Vodafone (Telsim assets have been transferred to Vodafone as of May24, 2006), Turk Telekom and Avea, after the issue was escalated toTelecommunications Authority for resolution.

Based on the Telecommunications Authority's resolution, Turkcellhas applied these new call termination rates with Telsim, and TurkTelekom starting from March 2006, Vodafone starting from May 2006 andAvea starting from July 2006. However, we are currently in the processof discussions of new pricing terms of interconnection agreement withVodafone.

All in all, we believe the direct impact of the decline in calltermination charges going forward will be limited, given therelatively small percentage of our revenue derived frominterconnection revenues. These new call termination charges may havepossible impact on retail pricing schemes, which is an area we willcontinue to monitor.

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 operates in markets which generally have strong customergrowth due to relatively lower line penetration rates. In Kazakhstan,increased competition and the requirement to register customerinformation of prepaid subscribers during the second quarter of 2006affected the growth of subscribers. Fintur continued its strongperformance during the second quarter of 2006 and the GSM businessesin Azerbaijan, Kazakhstan, Georgia and Moldova added approximately166,000 net new subscribers in the second quarter of 2006, raising thetotal number of subscribers to approximately 6.6 million (6.4 million)as of June 30, 2006. Furthermore, in the second quarter of 2006consolidated revenue of Fintur increased to US$279 million (US$238million) mainly due to seasonality.

We own 41.45% of Fintur and account for this investment using theequity method, which totaled US$19.9 million (US$15.8 million) inincome in the second quarter of 2006.

Ukraine - life:)

In Ukraine, we operate through our indirect subsidiary, Astelit,under the brand "life:)" since February 2005. We hold our interest inAstelit through our subsidiary, Turktell Uluslararasi Yatirim HoldingA.S. ("Turktell Uluslararasi"), which holds an interest in Astelit'simmediate parent, Euroasia Telecommunications Holdings B.V.("Euroasia"). Euroasia currently holds a 100% interest in Astelit. InApril 2006, Astelit announced the merger of DCC with Astelit in orderto optimize the internal business processes of both companies. Themerger was finalized as of August 2006. As of August 2006, Turkcellholds 54.8% stake in Astelit.

life:) achieved one of the fastest network roll-outs in the regionreaching 80% population coverage with approximately 3,200 basestations as of the end of the second quarter of 2006. And today life:)offers the widest EDGE coverage in the Ukrainian market and associatedservices, continuing to differentiate itself from competition. Inaddition, life:) subscribers can order life:) services throughapproximately 16,500 non-exclusive shops ensuring fast subscribergrowth. life:) is perceived as a young and energetic brand and hassucceeded in reaching a high brand recognition in the market already.In June 2006 "Astelit" was named Best New Company by the prestigiousInternational Business Awards - the Stevie(R) Awards.

The subscriber base of Astelit reached approximately to 3.9million (3.3 million) by the end of the second quarter of 2006, whichrepresents 18% quarterly growth.

During the second quarter of 2006, Euroasia recorded net revenueof US$19.7 million (US$17.1 million), gross loss of US$23.4 million(US$22.1 million) including depreciation and amortisation of US$24.6million (US$22.0 million) and net loss of US$54.3 million (US$55.9million). Also during this quarter, US$34.0 million of (US$55.6million) capital expenditure was recorded for the Ukrainianoperations.

Please note that all financial and operational results for Astelitinclude the TDMA business in Ukraine unless otherwise specified.

In addition to the long term financing package obtained by Astelitamounting to US$540 million that consisted of a syndicated loan and ajunior loan, we participated in the US$40 milllion capital increase ofAstelit, proportionate to our shareholding, during the second quarterof 2006 to support the financing of the operation in Ukraine. Inaddition, as previously agreed, the main shareholders of Astelit,Turkcell and System Capital Management Limited (SCM), have committedto contribute their respective share of a total amount ofapproximately US$150 million required by the facility agent to Astelitto obtain the waiver letter from the lender during the first quarterof 2006. Consequently, we participated in the first tranche payment ofUS$50 million in the form of a capital increase to Astelit in Julyproportionate to our shareholding.

Based on Astelit's interim financial statements as at and for thesix months ended June 30, 2006, Astelit is in breach of its covenantscontained in its syndicated long term project financing. Therefore,Astelit's long term debt amounting to US$459 million (including itsjunior loan) is classified as short term debt as at June 30, 2006.Astelit requested that the facility agent, the senior creditors andExport Credit Agencies (ECA) to waive the breach in order to makefurther drawings under the syndicated long term financing. In August2006, Astelit obtained a waiver letter from the lead arranger bankswaiving the breach of covenants.

Investment plans

Purchase of A-Tel

Pursuant to the Board of Directors' decision dated March 22, 2006,an option to purchase the 50% stake of shares of A-Tel Pazarlama veServis Hizmetleri A.S. (A-Tel) owned by Yapi ve Kredi Bankasi A.S. wasto be exercised by Turkcell. As of August 9, 2006, Turkcell exercisedthis option, completing the transaction by paying US$150 million incash for a 50% stake in A-Tel.

International

In line with our strategy to evaluate potential investmentopportunities in the international GSM arena, our Board of Directorstook a decision to bid for the tender of the third GSM license in theArab Republic of Egypt which took place on July 4, 2006. In thisrespect, we participated in the auction process of the tender. Howeveras per our evaluation based on our business plans, we subsequentlydecided to withdraw from the tender.

We will continue to follow potential investment opportunities inthe international arena as specific opportunities may becomeavailable.

Operational and Financial Review of Second Quarter of 2006

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

Macroenvironment Information

During the second quarter of 2006 Turkish macroeconomic dynamicschanged and the TRY/US$ exchange rate went as high as 1.76 in Junewhereas currently we see a trend towards stabilization. US$1.00equaled TRY1.6029 as of June 30, 2006, while US$1.00 equaled TRY1.3427as of March 31, 2006, which implies a quarter on quarter 19%depreciation of TRY against US$ in the second quarter of 2006.However, during the second quarter, there was approximately a 9%depreciation of TRY against US$ on a quarterly average basis. Theconsumer price index and producer price index in Turkey increased by4.9% and 11.7%, respectively, in the first six months of 2006.

The devaluation of TRY against US$ during the second quarter of2006 had an adverse effect on our consolidated financial statementsand results of operations due to the effects of translating ourconsolidated financial statements and results of operations from TRYinto US$ for reporting purposes.

During the second quarter of 2006, we recorded foreign exchangelosses on US$ denominated debt due to the devaluation of TRY againstUS$, although it should be noted that our consolidated subsidiaryAstelit did not experience such exchange rate volatility in its homemarket, Ukraine. Therefore our foreign currency exposure wasrelatively low as Turkcell stand-alone financial statements carriedlow US$ denominated debt. In addition, we have low foreign currencyexposure on our Profit and Loss Statement, as a majority of ourrevenue base as well as our cost base is denominated in TRY.

Furthermore, Turkcell entered into several structured forwardcontracts in 2006 in line with our treasury policies in order to hedgeagainst foreign currency risks, and the majority of these contractsmature in the third and fourth quarters of 2006. However, as theexchange rates in the market during the second quarter of 2006 wentabove the rates agreed in the forward contracts, we booked the changein the fair value of these forward contracts as foreign exchange lossamounting to US$65.4 million (US$12.7 million gain). However, wecurrently see a trend towards stabilization in US$ exchange rates asof July 31, 2006 and total foreign exchange losses resulting fromthese contracts have decreased significantly to US$16.3 million. Aspart of our hedging policy, we continuously monitor our forwardcontracts to align them with macroeconomic developments in Turkey.

Our second quarter 2006 results of operations and consolidatedfinancial statements should be reviewed in light of the foregoingstatements. And note that, the volatility in the Turkish macroeconomicenvironment has not had a significant impact on Turkcell's customers'usage trends so far. However we will continue to monitor macroeconomicdevelopments and their possible impact on consumer sentiment.

For your information, you can find below the exchange rates usedin translating our consolidated financial statements and results ofoperations into US$:
TRY / US$ rate Q2 2005 Q1 2006 Q2 2006 % Chg

Used in Balance Sheet
(Closing) 1.3413* 1.3427 1.6029 19%
Used in Profit and
Loss (Average) 1.3687 1.3252 1.4417 9%

(*) Since Turkey was accepted as a hyperinflationary economy until the
end of December 31, 2005, closing rate was used for the
translation of income statements as well as balance sheet.

OPERATIONAL REVIEW
Q2 Q1 Q2 Q1-Q2 2006
Summary of Operational Data 2005 2006 2006 % Chg

Number of total subscribers (million) 25.6 28.7 29.8 4%
Number of post-paid subscribers (million) 5.2 5.5 5.6 2%
Number of pre-paid subscribers (million) 20.4 23.2 24.2 4%

ARPU (Average Monthly Revenue per User)
ARPU, blended (US$) 14.7 12.2 12.5 3%
ARPU, postpaid (US$) 35.8 30.5 32.1 5%
ARPU, prepaid (US$) 9.2 7.9 8.0 1%

Churn (%) 2.6 3.5 3.6 -

MOU (Average Monthly Minutes of usage
per subscriber), blended 67.8 57.9 67.5 17%

Subscribers

Turkcell's total number of subscribers reached 29.8 million as ofJune 30, 2006. This corresponds to an increase of 3.8% from 28.7million as of March 31, 2006.

Turkcell added approximately 1.1 million net new subscribers inthe second quarter of 2006. Turkcell's subscriber base consists of5.57 million postpaid and 24.26 million prepaid subscribers. New grosssubscribers acquired in the second quarter of 2006 consisted of 90%prepaid and 10% postpaid subscribers.

The subscriber acquisition growth trend during the second quarterof 2006 remained strong despite the volatility in the macroeconomicenvironment and we maintained our leadership position in the market.In 2006, we expect the market growth to continue at a slower pacecompared to that in 2005. We will continue to monitor macroeconomicdevelopments and their possible impact on consumer sentiment.

Turkcell Group Subscribers

We have approximately 35.6 million (33.7 million) proportionateGSM subscribers as of June 30, 2006, which is calculated by taking thenumber of GSM subscribers in Turkcell and each of our subsidiaries andmultiplying such numbers by our percentage ownership interest in eachsubsidiary. This figure includes the proportionate rather than totalnumber of Fintur's GSM subscribers of 1.6 million (1.5 million)subscribers. However, it includes the total number of GSM subscribersin Ukraine (we have a 54% direct and indirect stake in the Ukraniansubsidiary) and in our operations in Turkish Republic of NorthernCyprus ("Northern Cyprus") (we have a 100% stake in Northern Cyprus)amounting to 3.9 million (3.3 million) and 0.2 million (0.2 million)subscribers respectively, because the financials of our subsidiariesin Ukraine and Northern Cyprus are consolidated with Turkcell'sfinancial statements.
Q2 Q1 Q2 Q1-Q2 2006
Turkcell Group Subscribers (million) 2005 2006 2006 % Chg

Turkcell 25.6 28.7 29.8 4%
Ukraine* 0.6 3.3 3.9 18%
Fintur (pro rata) 1.1 1.5 1.6 7%
Northern Cyprus 0.1 0.2 0.2 0%
TURKCELL GROUP 27.4 33.7 35.6 6%

* excluding TDMA

Churn Rate

Churn refers to disconnected subscribers, whether disconnectedvoluntarily or involuntarily. Turkcell's churn rate remained almoststable at 3.6% (3.5%) in the second quarter of 2006 in line with ourexpectations.

In 2006, our churn rate is expected to be higher than in 2005 dueto the changing competitive playground.

MoU

Our blended MoU in the second quarter of 2006 increased by 17% to67.5 minutes (57.9) minutes mainly due to seasonality as well asretention based offers such as our new loyalty programs for the youthclub.

In 2006, we expect our blended MoU to increase compared to 2005through our various incentives as well as strengthened offersthroughout the year.

The volatility in the macroeconomic environment over the lastquarter has not had a significant impact on Turkcell's customers'usage trends so far. We will continue to monitor macroeconomicdevelopments and their possible impact on consumer sentiment.

ARPU

ARPU increased to US$12.5 (US$12.2) due to seasonally higher MoUas well as retention campaigns and incentives provided during thequarter despite the 9% devaluation of TRY against US$ on an averagebasis during the second quarter of 2006 and dilutive impact of prepaidsubscribers.

Overall, our 2006 ARPU is likely to decrease in comparison to 2005mainly due to the dilutive impact of prepaid subscribers and campaignsas well as the devaluation of TRY against US$.

FINANCIAL REVIEW

Profit and Loss Statement Analysis
Profit & Loss Statement Q1 06-
Q2 06
(million US$) Q2 2005 Q1 2006 Q2 2006 % Chg

Total revenues 1,152.1 1,132.2 1,165.3 3%
Direct cost of revenues (681.9) (667.4) (647.0) (3%)
Administrative expenses (37.9) (41.3) (44.3) 7%
Selling and marketing expenses (176.5) (206.1) (196.9) (4%)
EBITDA 445.6 414.3 463.5 12%

Financial expense (40.1) (20.2) (88.6) 339%
Financial income 43.3 53.6 26.9 (50%)
Share of profit of associates 12.9 15.8 19.9 26%
Income tax expense (90.4) (87.4) (164.9) 89%
Net income 187.9 187.2 86.8 (54%)

Revenue

Our revenues increased to US$1,165.3 million (US$1,132.2 million)in the second quarter of 2006 mainly due to 17% higher MoU mainly dueto seasonality and retention based offers as well as the 3.8% growthin the subscriber base, despite the 9% depreciation of TRY against US$on an average basis.

As the applicable date for the new call termination rates withTelsim is retroactive and applicable from March 2006, as per theresolution of the Telecommunications Authority, we reflected the newcall termination rates to our financial statements retroactivelyeffective from March 2006.

Direct cost of revenue

The direct cost of revenue, including depreciation andamortization decreased to US$647.0 million (US$667.4 million) in thesecond quarter of 2006 while the proportion of direct cost of revenuesin total revenue declined to 56% (59%). The improvement was mainly dueto lower treasury fee payments as well as the decrease in depreciationand amortization.

As the applicable date for the new call termination rates withTelsim is retroactive and applicable from March 2006, as per theresolution of the Telecommunications Authority, we reflected the newcall termination rates to our financial statements retroactivelyeffective from March 2006.

Treasury share fee decreased 6% to US$187.3 million (US$ 198.5million) in the second quarter of 2006 due to the amendment in ourlicense agreement regarding definition of gross revenue, which becameeffective as of March 10, 2006 and led to lower treasury fee payments.

Depreciation and amortization decreased to US$186.4 million(US$196.8 million) in the second quarter of 2006 solely due to thedepreciation of TRY against US$.

Interconnection costs decreased 6% to US$84.5 million (US$89.9million) in the second quarter of 2006 mainly resulting from theretroactive application of new call termination rates with Telsim.

Selling and marketing expenses

Our selling and marketing expenses decreased by 4% to US$196.9million (US$206.1 million) in the second quarter of 2006 mainly due tothe decrease in the subscriber acquisition costs and depreciation ofTRY against US$. Consequently, the proportion of selling and marketingexpenses to revenue decreased to 17% (18%) during the second quarterof 2006. We expect the proportion of sales and marketing expenses as apercentage of revenue to increase in 2006, compared to 2005, in acontrolled manner, as we take actions to strengthen loyalty. Sales andMarketing expenses are expected to be realized during the second halfof 2006 at similar levels as in the first half of 2006 as a percentageof revenues considering that we expect the market dynamics willlargely prevail as it is.

Subscriber acquisition costs ("SAC")

Turkcell's subscriber acquisition costs per subscriber ("SAC")decreased to US$26.2 (US$37.1) in the second quarter of 2006 mainlydue to the decrease in the distribution and sales costs of low pricedintroduction packages. The depreciation of TRY against US$ alsocontributed to the decline in SAC. Under the current circumstances, weexpect the 2006 year end average SAC to be lower than the firstquarter's SAC level.

Administrative expenses

Our administrative expenses increased to US$44.3 million (US$41.3million) in the second quarter of 2006, however as a proportion ofrevenue remained flat at 4% (4%).

Share of profit of associates

In the second quarter of 2006, we recorded US$19.9 million(US$15.8 million) of equity in net income of unconsolidated investeesmainly due to solid operational growth in Fintur operations.

Net financing costs

Financial income declined to US$26.9 million (US$53.6 million) inthe second quarter of 2006. This was mainly due to the decrease ininterest income on deposits in line with lower cash in hand as aresult of tax and dividend payments during the quarter. Also, foreignexchange gain amounting to US$7.9 million in the first quarter of 2006was recorded in financial income whereas due to the depreciation ofTRY against US$, no foreign exchange gain was realized as financialincome in the second quarter of 2006.

Financial expense, on the other hand, increased to US$88.6 million(US$20.2 million) in the second quarter of 2006 mainly due to theforeign exchange loss of US$65.5 million which was mainly attributableto the fair value change of forward transactions. Since the exchangerate in the second quarter of 2006 was above the foreign exchangerates agreed in our structured forward contracts, we booked US$65.4million foreign exchange loss (US$12.7 million gain) in the incomestatement in the second quarter of 2006.

Overall, our net financing costs were US$61.7 million (US$33.4million gain) in the second quarter of 2006 mainly resulting fromincreasing foreign exchange losses due to the macroeconomicenvironment and decreasing interest income as a result of a decreasein the cash balance attributable to the dividend and tax paymentsduring the quarter.

Income tax expense
Q1 06-Q2 06
Q2 2005 Q1 2006 Q2 2006 % Chg

Current Tax benefit /(charge) (36.0) (69.5) (84.8) 22%
Deferred Tax benefit /(expense) (54.4) (17.9) (80.1) 347%
Income Tax benefit /(expense) (90.4) (87.4) (164.9) 89%

The total taxation charge in the second quarter of 2006 increasedto US$164.9 million (US$87.4 million).

The income tax rate, which was 30% for the fiscal year endedDecember 31, 2005, has been decreased to 20% effective from January 1,2006. The tax law was enacted during June 2006 however the decrease inthe corporate tax rate is retroactively effective starting fromJanuary 1, 2006.

The change in corporate tax rate has two major effects in taxationexpense during the second quarter of 2006.

First, our investment incentive certificates have provided a taxbenefit in the past in the form of deductions for corporate taxpurposes, which exempted us from the 30% corporate tax; instead, suchdeductions were subject to withholding tax at the rate of 19.8%. As aresult of the change in tax rates, the difference of 30% corporate taxand 19.8% withholding tax, which had been recorded as a deferred taxbenefit has been reversed in the second quarter of 2006 since this10.2% deferred tax benefit has decreased to 0.2% as a result ofchanging tax rate.

Second, we were recording deferred tax liabilities resulting fromtemporary differences between IFRS and statutory financial statementsat a rate of 30%. As a result of the decrease in the tax rate, we havebegun to record less deferred tax liabilities.

As a result, total deferred tax expense in this quarter increasedto US$80.1 million (US$17.9 million).

Out of the total tax charge US$84.8 million (US$69.5 million) wasrelated to current tax charges, which increased mainly due toincreasing operational profitability.

EBITDA

EBITDA in the second quarter of 2006 was realized at US$463.5million (US$414.3 million) posting a 12% increase mainly due to anincrease in revenues and a decrease in the direct cost of revenues andselling and marketing expenses. The increase in revenues mainlystemmed from the higher MoU and an increase in the subscriber basewhile the decrease in direct cost of revenues and selling andmarketing expenses were attributed to lower treasury fee, retroactiveapplication of new call termination rate with Telsim and reduction inSAC respectively. Consequently, the increase in revenues coupled withthe decrease in proportion of the direct cost of revenues and sellingand marketing expenses in revenues led to an increase in EBITDA marginto 40% (37%) in the second quarter of 2006.
Q1 06-Q2 06
EBITDA Q2 2005 Q1 2006 Q2 2006 % Chg

Net revenues 1,152.1 1,132.2 1,165.3 3%
Direct cost of revenues 681.9 667.4 647.0 (3%)
Depreciation and amortization 189.8 196.8 186.4 (5%)
Selling and marketing expenses 176.5 206.1 196.9 (4%)
Administrative expenses 37.9 41.3 44.3 7%
EBITDA 445.6 414.3 463.5 12%
EBITDA Margin 39% 37% 40% NA

Net income

We recorded US$86.8 million (US$187.2 million) net income in thesecond quarter of 2006. The decrease was mainly due to an increase intaxation charge with respect to the decrease in tax rate from 30% to20% effective from January 1, 2006 as well as an increase in foreignexchange loss due to currency fluctuation.

Balance Sheet Analysis

Total Debt

Our consolidated indebtedness including indebtedness from ourUkraine operation amounted to US$678.4 million (US$830.6 million) asof June 30, 2006. Of this total amount, US$459.6 million (US$394.2million) was related to our Ukraine operations.

Total assets

As of June 30, 2006, our total assets decreased to US$4,705.5million (US$5,576.7 million) mainly due to the depreciation of TRYagainst US$ of approximately 19% by the end of second quarter of 2006compared to the first quarter of 2006.

Cash Flow Analysis
Consolidated Cash Flow
(million) Q2 2005 Q1 2006 Q2 2006

Net cash provided by operating activities 249.2 125.3 385.0
Net cash used for investing activities (200.3) (113.4) (57.5)
Net cash provided by/(used for) financing
activities (234.0) 169.2 (496.2)
Cash Balance 683.8 1,000.3 629.5

Our net cash flow from operating activities increased to US$385.0million (US$125.3 million) in the second quarter of 2006 mainly due tothe increase in revenues coupled with the decrease in proportion ofthe direct cost of revenues and selling and marketing expenses.

Capital expenditures in the second quarter of 2006 amounted toUS$80.2 million (US$137.7 million) of which US$34.0 million (US$55.6million) was related to Ukrainian operations.

The change in debt in the second quarter of 2006 was mainly due tothe repayment of short term loans which have been used in the firstquarter of 2006 with a maturity of one month.

In addition to the debt repayment, dividend payment amounting toUS$342.2 million resulted in cash outflow of US$ 496.2 million infinancing activities.

Consequently, our cash position at the end of second quarter of2006 reached US$629.5 million (US$1,000.3 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.

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), 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),financial income, income on unconsolidated subsidiaries, gain on saleof investments, income/(loss) from related parties, minority interestand other 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 Q2 2005 Q1 2006 Q2 2006

EBITDA 445.6 414.3 463.5
Other operating income/(expense) 3.4 (2.0) 5.6
Financial income 43.3 53.6 26.9
Financial expense (40.1) (20.2) (88.6)
(Loss)/gain on net monetary position, net 4.2 0.0 0.0
Net increase (decrease) in assets
and liabilities (207.2) (320.2) (22.4)
Net cash provided by operating activities 249.2 125.3 385.0

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 29.8 millionpost-paid and pre-paid customers as of June 30, 2006 operating in athree player market with a market share of approximately 62% as ofMarch 31, 2006 (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 with532 operators in 192 countries as of August 9, 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$1,165.3 million net revenue for the threemonths as of June 30, 2006 as per IFRS financial statements. Turkcellhas interests in international GSM operations in Azerbaijan, Georgia,Kazakhstan, Moldova, Northern Cyprus and Ukraine. Turkcell has beenlisted on the NYSE (New York Stock Exchange) and the ISE (IstanbulStock Exchange) since July 2000 and is the only NYSE listed company inTurkey. 51.00% of Turkcell's share capital is held by TurkcellHolding, 13.29% by Cukurova Group, 13.07% by Sonera Holding, 5.07% byM.V. Group and 0.01% by others while the remaining 17.56% is freefloat.
TURKCELL ILETISIM HIZMETLERI A.S.
SELECTED FINANCIALS


--------- --------- --------- --------- ---------
Quarter Quarter Quarter Half Half
Ended Ended Ended Ended Ended
June 30, March 31, June 30, June 30, June 30,
2005 2006 2006 2005 2006
--------- --------- --------- --------- ---------


Consolidated
Statement of
Operations Data
Revenues
Communication fees 1,095.6 1,047.6 1,111.2 1,960.9 2,158.8
Commission income 26.5 60.0 27.8 49.0 87.8
Monthly fixed fees 14.3 13.9 13.4 27.5 27.3
SIM card sales 13.6 5.8 6.3 24.9 12.1
Call center revenues
and other revenues 2.1 4.9 6.6 4.7 11.5
Total revenues 1,152.1 1,132.2 1,165.3 2,067.0 2,297.5
Direct cost of
revenues (681.9) (667.4) (647.0) (1,258.4) (1,314.4)
--------- --------- --------- --------- ---------
Gross profit 470.2 464.8 518.3 808.6 983.1
Administrative
expenses (37.9) (41.3) (44.3) (72.4) (85.6)
Selling & marketing
expenses (176.5) (206.1) (196.9) (310.9) (403.0)
Other operating
income / (expense) 3.4 (2.0) 5.6 4.5 3.6
--------- --------- --------- --------- ---------

Operating profit
before financing
costs 259.2 215.4 282.7 429.8 498.1
Financial expense (40.1) (20.2) (88.6) (118.5) (108.8)
Financial income 43.3 53.6 26.9 81.9 80.5
Share of profit of
associates 12.9 15.8 19.9 26.2 35.7
Gain on net monetary
position, net 4.2 - - 5.8 -
--------- --------- --------- --------- ---------
Income before taxes
and minority
interest 279.5 264.6 240.9 425.2 505.5
Income tax benefit /
(expense) (90.4) (87.4) (164.9) (151.9) (252.3)
--------- --------- --------- --------- ---------
Income before
minority interest 189.1 177.2 76.0 273.3 253.2
Minority interest (1.2) 10.0 10.8 0.7 20.8
--------- --------- --------- --------- ---------
Net income 187.9 187.2 86.8 274.0 274.0
========= ========= ========= ========= =========


Net income per share 0.085399 0.085084 0.039482 0.124541 0.124566

Other Financial Data

Gross margin 41% 41% 44% 39% 43%
EBITDA(*) 445.6 414.3 463.5 785.5 877.8
Capital expenditures 239.2 137.7 80.2 450.1 217.9

Consolidated Balance
Sheet Data (at
period end)
Cash and cash
equivalents 683.8 1,000.3 629.5 683.8 629.5
Total assets 5,161.6 5,576.7 4,705.5 5,161.6 4,705.5
Long term debt 82.4 16.2 114.5 82.4 114.5
Total debt 859.7 830.6 678.4 859.7 678.4
Total liabilities 1,983.9 1,696.1 1,630.2 1,983.9 1,630.2
Total shareholders'
equity / Net Assets 3,177.7 3,880.6 3,075.3 3,177.7 3,075.3

Consolidated Cash
Flow Information
Net cash provided by /
(used in) operating
activities 249.2 125.3 385.0 514.5 510.3
Net cash used in
investing activities (200.3) (113.4) (57.5) (377.1) (170.9)
Net cash provided by /
(used in) financing
activities (234.0) 169.2 (496.2) (195.3) (327.0)

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